<PAGE> 1
LAZARDFunds
SEMI-ANNUAL
REPORT
JUNE 30, 1997
<PAGE> 2
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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) Vice Chairman, Lazard Freres & Co. LLC
CARL FRISCHLING Partner, Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel
HERBERT W. GULLQUIST(2) Vice Chairman, Lazard Freres & Co. LLC
WILLIAM KATZ(1) President, BBDO New York
LESTER Z. LIEBERMAN(1) Private Investor
RICHARD REISS(1) Chairman, Georgica Advisors
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.................................................................. 5
Performance Table.............................................................. 10
Portfolio of Investments
Lazard Equity Portfolio.................................................... 12
Lazard International Equity Portfolio...................................... 14
Lazard International Fixed-Income Portfolio................................ 16
Lazard Bond Portfolio...................................................... 24
Lazard Strategic Yield Portfolio........................................... 29
Lazard Small Cap Portfolio................................................. 40
Lazard International Small Cap Portfolio................................... 44
Lazard Emerging Markets Portfolio.......................................... 46
Lazard Global Equity Portfolio............................................. 49
Lazard Bantam Value Portfolio.............................................. 52
Notes to Portfolios of Investments......................................... 54
Statements of
Assets and Liabilities..................................................... 56
Operations................................................................. 58
Changes in Net Assets...................................................... 60
Financial Highlights........................................................... 66
Notes to Financial Highlights.................................................. 72
Notes to Financial Statements.................................................. 74
</TABLE>
1
<PAGE> 4
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The Lazard Funds, Inc.
OVERVIEW
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DEAR SHAREHOLDERS,
A broad spectrum of asset classes around the globe rewarded investors in the
first half of 1997. During the second quarter, the S&P 500 Index generated its
single largest quarterly gain since the first quarter of 1987, while US small
cap stocks enjoyed a strong rebound, buoyed by relatively lower valuations,
healthy profits and the prospect of a capital gains cut. Despite the brief
disturbance to local markets resulting from the Labor party victory in the UK
and the Socialist-led coalition upset in France, European bourses registered
positive returns for the quarter. Improving sentiment in Japan drove the Nikkei
to return the strongest dollar performance in the MSCI EAFE index, while China
peacefully regained control of Hong Kong after 156 years of British rule. News
of the devaluation of Thailand's baht, a long-expected event, pushed the local
market up sharply, while Latin American stocks achieved stellar returns for the
quarter, benefiting partially from increased foreign capital investment.
The US bond market also posted strong absolute returns. Persistently good news
on inflation, a Federal budget accord and reduced issuance of Treasury
securities outweighed the effects of the Fed's tightening in late March.
Non-traditional asset classes, including international bonds, emerging market
debts and high-yield bonds, benefited from low interest rate volatility,
generating excellent quarterly performance.
Robust quarterly returns are not new. Indeed, if the market continues its
momentum, the S&P 500 will have achieved its third 15-year bull run next month.
The first one ended brutally in 1929, with the Crash and the Great Depression.
The second one closed on a more gentle note in 1957, a victim of rising
inflation. Both these previous market runs behaved according to a common
economic principal: reversion to the mean, translated simply as "All good things
must end."
The questions facing investors today are: "Will this current bull run end; or,
has there been such a dramatic shift of economic paradigms that the markets will
stabilize at today's record high levels or, even, rise further?"
There is no question that the data reflects a strength in the US market today
that is virtually unprecedented. Among the litany of glowing statistics:
- - While the annual earnings growth of S&P 500 companies since the 1920's has
averaged 6.6%, it almost doubled to 13.1% from 1993 to 1996.
- - While the annualized return for American stocks over the past 70 years has
averaged 10.5%, over the last five years through 1996, total annualized gains
have risen nearly 45%, to 15.2%.
- - While the standard deviation (an indication of investment risk) of returns of
the S&P 500 has measured 19.7% for the 70 years through 1996, it has tracked at
a mere 8.7% for the last 5 years of this period.
- - Inflation is at record low levels, with June's wholesale price index
registering the sixth monthly drop in a row, the longest streak of producer
price deflation since the government started measuring such figures 50 years
ago. (This statistic is particularly noteworthy considering that US unemployment
hovers at a quarter-century low.)
- - Consumer confidence, as tracked by the New York-based Conference Board's
index, has climbed to a 28-year peak.
2
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The Lazard Funds, Inc.
OVERVIEW (CONTINUED)
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The abundance of signs of US economic prosperity have led some to conclude that
such good news can't continue and that statistical odds favor a reversion to
more modest returns, higher inflation and lower multiples. However, while we
can't forecast the future with certainty, we believe that unprecedented
structural changes in the world's economy support the argument that the current
economic vigor is not an aberration, that we are witnessing a change in world
economies and that current high real rates of return may be sustainable for the
foreseeable future.
We believe that three key factors explain this transformation. First, the
ongoing absorption of computer technology into every fiber of today's workplace
has contributed to enormous efficiency and productivity gains while moderating
inflation. Second, competition from lesser-developed markets has restricted wage
growth in the developed world, enhancing profit margins. Third, the rapid
elimination of trade barriers and the deregulation of capital and labor markets
has enhanced capital flows and entrepreneurship, boosting stock markets around
the globe.
Furthermore, while current multiples of trailing operating earnings -- the
highest in three decades -- are often cited as aberrations, they may simply
reflect mathematical reality. Given that the price of a stock is directly
related to its expected stream of future earnings discounted by an appropriate
risk-adjusted interest rate, it stands to reason that P/E ratios should expand
as profits reach record highs while risk premiums and rates head south.
What does this mean for investors?
Although negative surprises are possible, we currently foresee no reason for a
significant correction in world markets as we believe that corporate
profitability will remain strong and that interest rates will remain at
relatively modest levels around the world. The massive restructuring that has
transformed the largest American corporations since the 1980's is being pursued
with equal vigor by mid- and small-sized companies in the United States as well
as worldwide, from Japan to Italy to Argentina. Efficiency and productivity have
become global currencies; only those companies which heed the new rules can
succeed in business in the new millennium. The potential for further rewards for
equity investors, in particular, is truly appealing.
Where is Lazard finding value in today's new paradigm?
We continue to favor companies that compensate senior management for generating
total returns that exceed the cost of capital required to generate those
returns. Economic value added, or EVA, is an evolving process, which is rapidly
migrating from US companies to such global names as Cadbury-Schweppes, Britain's
candy and beverage leader, and ENI, the energy giant, which is one of the first
companies in Italy to adopt the process.
Another strategic directive that has benefited shareholders is a commitment to
quality process and execution against key benchmarks. Companies as diverse as
American Standard (plumbing, air-conditioning and brakes) and General Electric
(NBC News, financial services, and aircraft) pursue rigorous regimes aimed at
reducing manufacturing cycle time, improving product quality, cutting working
capital requirements and allocating resources better. The payoff: funds freed up
to make acquisitions or repurchase shares.
With the risk that further expansion of peak operating margins may be hard to
accomplish, given the extent of cost-cutting already achieved, Lazard is looking
to invest
3
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The Lazard Funds, Inc.
OVERVIEW (CONTINUED)
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in companies that can deliver unit growth. One reason we invested in Deere is
our expectation of significant volume growth, driven mainly by international
demand for its farm equipment products. This division recently reported a 16%
increase in unit growth in the second quarter alone. We recently initiated a
position in the Brunswick Corporation, a leader in consumer leisure goods, which
is broadening its product offerings through acquisitions to gain market share.
Small- and mid-cap stocks worldwide are attracting our attention. The month of
May saw a rally in small cap stocks that extended from the US to Japan and Hong
Kong. We are currently finding considerable value in mid-cap US companies, with
market capitalization ranging roughly between $1 to $4 billion. Although we
believe the so-called "Red Chip" stocks of the People's Republic of China to be
currently overvalued, we do see attractive investment opportunities in certain
small and mid-cap industrial companies elsewhere in the Pacific. Likewise, other
emerging market equity opportunities in Asia need to be unearthed, as these
markets are expected to deregulate further and as investors seek higher returns
from non-traditional sectors.
On the fixed income front, we are finding nuggets of gold in markets which
compensate local investors liberally for the high risk of currency devaluation
and subsequent inflation in their territories. Are we taking on the same risk?
Not really, because the low correlation among currency movements allows global
investors to diversify much of the currency risk away by investing in over 30
countries' securities.
In short, while the economy has experienced a metamorphosis of almost
unprecedented proportions in recent years, Lazard's investment philosophy has
not wavered. Rather, across our entire product range -- from small cap European
stocks to enhanced core fixed income, from local currency emerging markets debt
to mid-cap equities -- we continue to seek companies with that rare combination
of financial soundness, higher than average potential for return on capital and
relative undervaluation.
THE LAZARD FUNDS, INC.
4
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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 capitalizations
that appear to the Investment Manager to be inexpensively priced relative to the
productivity of their equity or assets employed. Current income is incidental.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD EQUITY PORTFOLIO AND THE STANDARD & POOR'S 500 STOCK INDEX
<TABLE>
<CAPTION>
Lazard Equity Portfolio S & P 500
<S> <C> <C>
6/1/87 $10000 $10000
10310 10503
10846.1 11034.5
11117.3 11444.9
10772.6 11194.3
8908.97 8790.88
8454.61 8067.39
8826.62 8679.7
9197.33 9058.14
9574.43 9463.94
9497.83 9175.29
9668.79 9289.98
9610.78 9349.44
Jun-88 10024 9781.38
9893.73 9757.91
9685.96 9412.48
10131.5 9815.33
10577.3 10099
10376.3 9939.43
10625.4 10116.4
11294.8 10866
11249.6 10584.5
11395.8 10837.5
11920 11411.9
12468.4 11845.5
Jun-89 12281.3 11785.1
13165.6 12858.8
13428.9 13092.8
13361.8 13043
12920.8 12752.2
13024.2 12999.6
13128.4 13314.2
12327.5 12438.1
12574.1 12582.4
12888.5 12924.6
12424.5 12615.7
13319 13811.7
Jun-90 13265.8 13728.8
13252.5 13695.9
12059.8 12448.2
11420.6 11851.9
11443.4 11811.6
12198.7 12558.1
12515.9 12908.5
13016.5 13470
13979.7 14433.1
14133.5 14782.4
14105.2 14817.9
14556.6 15456.5
Jun-91 13887 14748.6
14539.7 15435.9
15150.4 15801.7
14938.2 15537.8
15117.5 15746
14316.3 15111.5
15948.3 16840.2
16123.8 16527
16543 16741.8
16046.7 16415.4
15966.5 16898
15934.5 16980.8
Jun-92 15297.1 16727.8
15740.8 17411.9
15300 17055
15529.5 17256.2
15793.5 17314.9
16551.6 17905.4
16783.3 18125.6
17102.2 18277.8
17307.5 18526.4
18051.7 18917.3
17690.6 18459.5
18150.6 18952.4
Jun-93 18259.5 19007.4
18296 18931.3
18973 19648.8
18954 19497.5
19731.1 19901.1
19573.3 19712.1
19925.6 19950.6
20921.9 20628.9
20649.9 20069.9
19741.3 19194.8
20076.9 19440.5
20317.8 19759.3
Jun-94 19850.5 19275.2
20545.3 19907.5
21469.8 20723.7
21126.3 20218
21422 20723.5
20650.9 19969.1
20774.8 20264.7
21127.9 20789.5
22057.6 21600.3
22675.2 22237.5
23310.1 22891.3
24289.1 23807
Jun-95 25042.1 24359.3
25993.7 25168
26383.6 25230.9
27307 26295.7
27115.8 26201
28363.2 27351.2
28618.4 27879.1
29591.5 28827
30420 29095.1
30663.4 29374.4
31307.3 29806.2
31683 30575.2
Jun-96 31366.2 30691.4
29672.4 29325.6
30681.3 29950.3
31785.8 31636.5
32548.7 32519.1
34729.4 34993.8
34277.9 34311.5
35923.3 36445.6
36354.3 36740.8
34998.3 35212.4
36048.3 37307.6
38578.9 39594.5
Jun-97 39844.2 41356.5
</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 that
the Investment Manager considers inexpensively priced relative to the return on
total capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD INTERNATIONAL EQUITY PORTFOLIO AND THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX
<TABLE>
<CAPTION>
Lazard International
Equity Portfolio MSCI EAFE
<S> <C> <C>
10/31/91 $10000 $10000
9990 9533
10319.67 10025.86
10464.15 9812.31
10579.25 9460.04
10325.35 8835.68
10542.18 8877.21
11037.66 9471.98
10827.95 9023.01
10210.76 8792.02
10088.23 9343.28
9634.26 9158.28
Oct-92 9460.84 8677.47
9423 8759.04
9639.72 8804.59
9562.61 8802.83
9772.98 9068.67
10046.63 9859.46
10267.65 10795.12
10555.15 11022.9
10428.49 10850.94
10741.34 11230.73
11536.2 11836.06
11201.65 11569.75
Oct-93 11795.34 11926.1
11571.23 10883.76
12624.21 11669.57
13823.51 12655.64
13394.98 12620.21
12845.78 12076.28
13333.92 12588.31
13253.92 12516.56
12962.33 12693.04
13610.45 12816.16
14222.92 13119.91
13526 12706.63
Oct-94 13769.47 13129.76
12943.3 12498.22
12658.55 12576.96
12050.94 12094
12135.29 12060.14
12293.05 12811.49
12821.65 13293.2
12937.05 13135.01
13156.98 12903.83
13985.87 13707.74
13734.12 13186.85
14036.27 13443.99
Oct-95 13811.69 13094.45
13949.81 13458.47
14326.45 14000.85
14412.41 14058.25
14614.19 14106.05
14964.93 14405.1
15339.05 14824.29
15231.68 14551.52
15521.08 14633.01
15102.01 14205.73
15132.21 14236.98
15495.39 14615.68
Oct-96 15557.37 14466.6
16381.91 15042.37
16578.49 14848.33
16147.45 14331.61
16551.14 14569.51
16953.33 14626.33
16831.26 14706.78
17536.49 15667.13
Jun-97 18627.26 16535.09
</TABLE>
5
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The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
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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 $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO AND THE
SALOMON WORLD GOVERNMENT BOND INDEX EX-U.S.
<TABLE>
<CAPTION>
Lazard International
Fixed-Income Portfolio SWGBI Ex-U.S.
<S> <C>
10/31/91 $10000 $10000
10040 10156
10401.4 10684.1
10099.8 10493.9
10109.9 10435.2
9968.4 10324.6
10028.2 10398.9
10309 10718.1
10504.8 11018.2
10662.4 11275
10971.6 11590.7
10960.6 11706.6
Oct-92 10719.5 11388.2
10548 11207.1
10621.8 11274.3
10791.8 11428.8
10996.8 11656.2
11194.8 11945.3
11564.2 12303.7
11760.8 12527.6
11643.2 12293.3
11678.1 12301.9
12063.5 12739.9
12244.4 12955.2
Oct-93 12232.2 12895.6
12146.6 12836.3
12280.2 12978.7
12366.1 13034.5
12341.4 13071
12427.8 13230.5
12402.9 13316.5
12328.5 13138.1
12636.7 13456
12624.1 13491
12523.1 13412.7
12773.6 13678.3
Oct-94 13092.9 14031.2
12857.2 13749.2
12792.9 13756.1
12984.8 14055.8
13387.4 14454.2
14485.1 15742.3
14890.7 16079
15248.1 16430
15339.6 16511.9
15339.6 16599.2
14526.6 15650.1
14918.8 16111
Oct-95 15023.2 16159.3
15128.4 16304.7
15264.6 16451.5
14989.8 16089.5
15019.8 16137.8
15019.8 16186.2
15034.8 16153.9
15094.9 16170
15185.5 16267
15580.3 16716
15673.8 16828
15705.2 16796
Oct-96 15956.4 17079.9
16147.9 17276.3
16115.6 17153.6
15487.1 16457.2
15367.9 16266.3
15221.9 16163.8
14917.4 15835.7
15418.7 16418.4
Jun-97 15612.9 16620.4
</TABLE>
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 $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD BOND PORTFOLIO AND THE LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX
<TABLE>
<CAPTION>
Lazard Bond Portfolio Lehman Int. G/C
<S> <C> <C>
10/31/91 $10000 $10000
10100 10115
10392.9 10361.8
10278.6 10267.5
10309.4 10307.6
10247.6 10267.4
10329.5 10357.7
10474.2 10518.3
10610.3 10673.9
10822.5 10886.3
10919.9 10995.2
11040 11144.7
Oct-92 10896.5 10999.9
10852.9 10958.1
10994 11104.9
11191.9 11321.4
11371 11500.3
11393.7 11546.3
11473.5 11638.7
11416.1 11613.1
11633 11795.4
11714.5 11823.7
11913.6 12011.7
11901.7 12062.2
Oct-93 11937.4 12094.7
11901.6 12027
11925.4 12082.3
12116.2 12216.4
11910.2 12352
11636.3 12169.2
11485 11968.4
11427.6 11887.1
11416.2 11895.4
11621.6 11896.6
11633.3 11933.4
11377.3 11823.7
Oct-94 11388.7 11822.5
11354.5 11769.3
11411.3 11810.5
11593.9 12010.1
11825.8 12258.7
11896.7 12328.5
12051.4 12480.2
12533.4 12857.1
12621.2 12943.2
12545.5 12944.5
12670.9 13062.3
12810.3 13156.4
Oct-95 12989.6 13302.4
13132.5 13476.7
13237.6 13618.2
13356.7 13735.3
13209.8 13574.6
13183.4 13505.4
13157 13458.1
13143.9 13447.3
13262.1 13589.9
13301.9 13630.6
13341.8 13641.5
13542 13831.1
Oct-96 13745.1 14076
13951.3 14261.8
13881.5 14170.5
13978.7 14225.8
14006.6 14252.8
13898.8 14154.4
14071.1 14320
14211.8 14438.9
Jun-97 14344 14570.3
</TABLE>
6
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The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
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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 Lazard 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 $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD STRATEGIC YIELD PORTFOLIO AND ONE MONTH LIBOR USD FIXED INDEX
<TABLE>
<CAPTION>
Lazard Strategic
Yield Portfolio One Month LIBOR
<S> <C> <C>
10/1/91 $10000.00 $10000.00
10360 10042
10494.7 10084.2
10211.3 10119.5
10229.6 10153.9
10291.7 10189.4
10415.2 10225.1
10415.2 10257.8
10529.8 10291.6
10635.1 10324.6
10837.1 10353.5
10956.3 10383.5
11076.9 10410.5
Oct-92 10600.6 10438.6
10600.6 10475.2
10823.2 10503.4
11104.6 10530.7
11315.6 10558.1
11496.6 10585.6
11508.1 10613.1
11611.7 10641.8
11925.2 10669.4
12080.2 10697.2
12176.9 10725
12164.7 10752.9
Oct-93 12347.2 10780.8
12384.2 10812.1
12495.7 10841.3
12745.6 10869.5
12554.4 10901
12303.3 10933.7
12131.1 10969.8
12131.1 11009.3
12046.1 11050
12178.6 11090.9
12349.1 11135.2
12275.1 11180.9
Oct-94 12250.5 11226.7
12299.5 11281.8
12201.1 11337
12188.9 11392.6
12249.9 11449.5
12311.1 11506.8
12594.3 11563.2
12934.3 11619.8
13011.8 11677.9
13116 11734
13260.3 11790.3
13379.6 11846.9
Oct-95 13473.3 11900.9
13648.4 11957.7
13853.2 12015.3
14130.2 12068.2
14073.7 12122.5
14172.2 12175.8
14299.8 12229.4
14442.8 12283.2
14601.6 12337.3
14689.2 12391.6
14850.8 12446.1
15177.5 12500.8
Oct-96 15344.5 12555.9
15574.7 12612.4
15730.4 12669.1
15919.2 12724.9
16078.4 12780.8
15994.8 12839.6
16082.7 12898.7
16275.7 12958
Jun-97 16435.2 13017.6
</TABLE>
LAZARD SMALL CAP PORTFOLIO
The Lazard Small Cap Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with market capitalizations under $1
billion that are believed by the Investment Manager to be inexpensively priced
relative to the productivity of their equity or assets employed.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD SMALL CAP PORTFOLIO AND THE RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
Lazard Small
Cap Portfolio Russell 2000
<S> <C> <C>
10/31/91 $10000 $10000
9720 9537
10449 10305.68
11316.27 11140.44
11825.5 11465.74
11825.5 11078.2
11541.69 10690.46
11553.23 10832.65
10952.46 10320.26
11248.18 10679.41
10921.98 10378.25
10998.43 10617.99
Oct-92 11526.36 10955.64
12540.68 11793.74
13017.22 12204.17
13420.76 12616.67
13541.54 12325.22
14191.54 12724.56
13865.13 12375.91
14502.93 12922.92
14894.51 13003.04
15013.67 13182.49
15899.47 13751.97
16201.56 14139.78
Oct-93 16347.38 14503.17
16134.86 14026.01
16925.47 14505.7
17551.71 14961.18
17569.26 14907.32
16743.51 14120.22
16726.76 14203.52
16776.94 14044.45
16592.4 13566.93
16940.84 13789.43
17923.41 14557.5
17923.41 14509.46
Oct-94 17636.63 14452.88
16754.8 13868.98
17307.71 14242.06
17238.48 14062.61
17979.73 14647.61
18411.25 14899.55
18797.88 15230.32
19361.82 15492.28
20233.1 16296.33
21163.82 17235
21269.64 17591.76
21290.91 17906.66
Oct-95 20077.33 17106.23
20920.58 17824.69
21067.02 18295.26
21256.62 18275.14
22043.12 18845.32
22439.9 19229.77
23315.05 20258.56
24084.45 21056.75
23386 20191.31
21702.21 18434.67
23112.85 19503.88
23944.91 20264.53
Oct-96 24160.42 19960.56
25610.04 20778.95
26096.63 21319.2
26853.44 21745.58
26746.02 21219.34
25769.79 20217.79
26519.69 20274.4
29110.67 22528.91
Jun-97 30455.58 23495.4
</TABLE>
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
The Lazard International Small Cap Portfolio seeks capital appreciation through
investing primarily in equity securities of non-United States companies with
market capitalizations under $1 billion that are believed by the Investment
Manager to be inexpensively priced relative to the productivity of their equity
or assets employed. The Lazard International Small Cap Portfolio operates
similarly to the Lazard Small Cap Portfolio, except that this Portfolio, by
investing primarily in the equity securities of non-United States issuers,
considers additional investment determinations including, among other items, the
effect of currency fluctuations and the political and economic factors of other
jurisdictions.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO AND THE SALOMON EMI INDEX EX-US
<TABLE>
<CAPTION>
Lazard International
Small Cap Portfolio EMI Index Ex-U.S.
<S> <C> <C>
12/1/93 $10000 $10000
10870 10710
12076 11779.9
11871.3 11862.4
Mar-94 11147.1 11667.8
11024.5 12017.9
10969.4 11846
Jun-94 10695.1 12094.8
10898.4 12232.7
11334.3 12362.3
Sep-94 10982.9 12008.8
11070.8 12226.1
10594.7 11463.2
Dec-94 10361.7 11616.8
10050.8 11239.3
9990.5 11075.2
Mar-95 9760.7 11545.9
9975.5 11892.3
10244.8 11684.1
Jun-95 10337 11540.4
10729.8 11398.5
10633.2 12063
Sep-95 10941.6 11757.8
10514.9 11849.5
10483.3 11975.1
Dec-95 10546.2 12433.8
10715 12655.1
10800.7 12852.5
Mar-96 10941.1 13148.1
11378.7 13839.7
11458.4 13727.6
Jun-96 11492.8 13729
11090.5 13210
11445.4 13343.5
Sep-96 11514.1 13418.2
11606.2 13365.9
12151.7 13585.1
Dec-96 12176 13335.1
12334.3 13047.1
12568.6 13266.2
Mar-97 12375.1 13089.8
11937 13284.8
12505.2 14136.4
Jun-97 13070.4 14455.9
</TABLE>
LAZARD EMERGING MARKETS PORTFOLIO
The Lazard Emerging Markets Portfolio seeks capital appreciation through
investing primarily in equity securities of non-United States issuers who are
located, or doing significant business, in emerging market countries. Emerging
market countries include countries where political and economic trends have
recently produced, or are producing, a more stable economy, or countries that
have recently developed, 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 employed.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE LAZARD
EMERGING MARKETS PORTFOLIO AND INTERNATIONAL FINANCE CORP. INVESTABLE TOTAL
RETURN INDEX
<TABLE>
<CAPTION>
Lazard Emerging
Markets Portfolio IFCI
<S> <C> <C>
7/15/94 $10000 $10000
10210 10336
11302.47 11669.34
Sep-94 11664.15 11957.58
11582.5 11565.37
11327.68 11125.88
Dec-94 9866.41 9946.54
8642.98 8612.71
8426.9 8502.47
Mar-95 8410.05 8483.76
8662.35 8842.62
9173.43 9170.69
Jun-95 9155.08 9224.79
9502.98 9513.53
9379.44 9265.23
Sep-95 9473.23 9190.18
9056.41 8843.71
8938.68 8799.49
Dec-95 9296.22 9102.19
10179.37 9884.98
10260.8 9667.51
Mar-96 10260.8 9802.86
10917.49 10194.97
11288.69 10104.23
Jun-96 11187.09 10217.4
10694.86 9546.12
10887.36 9842.05
Sep-96 11192.21 9986.73
11069.1 9772.01
11390.1 9916.64
Dec-96 11492.61 9960.27
12262.61 10663.47
12789.91 11185.98
Mar-97 12667.12 10909.68
12800.13 10725.31
13217.41 11089.97
Jun-97 14195.5 11567.95
</TABLE>
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
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, located anywhere in the world, and 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 $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD GLOBAL EQUITY PORTFOLIO AND MORGAN STANLEY CAPITAL INTERNATIONAL WORLD
INDEX
<TABLE>
<CAPTION>
Lazard Global
Equity Portfolio MSCI World
<S> <C> <C>
1/3/96 $10000 $10000
Jan-96 10010 10179
10170.16 10239.06
Mar-96 10312.54 10406.98
10436.29 10649.46
10467.6 10656.91
Jun-96 10540.87 10709.13
10171.94 10332.17
10304.18 10453.06
Sep-96 10633.91 10863.86
10729.62 10942.08
11577.26 11557.13
Dec-96 11588.84 11374.43
11558.7 11513.19
11760.98 11647.9
Mar-97 11690.42 11416.11
11923.06 11791.7
12464.36 12516.88
Jun-97 13220 13209
</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 $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD BANTAM VALUE PORTFOLIO AND THE RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
Lazard Bantam
Value Portfolio Russell 2000
<S> <C> <C>
3/4/96 $10000 $10000
Mar-96 10630 10160
11448.51 10703.56
11883.55 11125.28
Jun-96 11776.6 10668.03
11164.22 9739.91
11934.55 10304.83
Sep-96 12209.04 10706.72
12734.03 10546.11
13319.8 10978.51
Dec-96 16014 12414
</TABLE>
Past performance is not indicative, nor a guarantee, of future results.
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 1997
-----------------------------------------------------------------------
INSTITUTIONAL SHARES OPEN
-------------------------------------------------------------- SHARES
ONE THREE FIVE TEN SINCE ------
YTD YEAR YEAR YEAR YEAR INCEPTION* YTD**
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------
Lazard Equity Portfolio 16.23% 27.01% 100.79% 160.22% 286.92% 299.02% 10.62%
Standard & Poor's 500 Stock Index 20.49% 34.67% 113.76% 146.25% 291.56% 315.60% 13.83%
Lazard International Equity Portfolio 12.38% 19.93% 43.65% 72.01% -- 86.11% 14.87%
MSCI EAFE Index++ 11.21% 12.84% 29.94% 82.85% -- 65.03% 15.24%
Lazard International Fixed-Income Portfolio+ (3.21%) 2.66% 23.52% 48.29% -- 55.80% (2.17%)
Salomon World Government Bond Index Ex-US+ (3.12%) 2.16% 23.23% 50.51% -- 65.83% (2.12%)
Lazard Bond Portfolio 3.38% 8.28% 25.23% 35.09% -- 43.19% 2.38%
Lehman Intermediate Gov't/Corp Bond Index 2.83% 7.23% 24.25% 36.96% -- 46.22% 2.33%
Lazard Strategic Yield Portfolio 4.55% 12.68% 36.83% 55.05% -- 64.97% 3.29%
One Month LIBOR USD Fixed Index 2.84% 5.68% 18.31% 26.75% -- 30.39% 2.84%
Lazard Small Cap Portfolio 16.71% 30.20% 83.34% 177.74% -- 204.26% 14.67%
Russell 2000 Stock Index++ 10.21% 16.35% 73.14% 127.69% -- 134.83% 8.05%
Lazard International Small Cap Portfolio 7.39% 13.80% 22.51% -- -- 31.24% 3.74%
Salomon EMI Index Ex-US++ 5.22% 2.20% 14.07% -- -- 37.11% 5.74%
Lazard Emerging Markets Portfolio 23.46% 26.82% -- -- -- 41.65% 20.79%
IFC Investable Total Return Index 16.14% 13.22% -- -- -- 15.56% 13.59%
Lazard Global Equity Portfolio 14.14% 25.52% -- -- -- 32.15% 15.72%
MSCI World Index++ 15.38% 22.27% -- -- -- 30.19% 14.03%
Lazard Bantam Value Portfolio 20.13% 36.04% -- -- -- 60.12% 14.77%
Russell 2000 Stock Index++ 10.21% 16.35% -- -- -- 24.55% 8.05%
</TABLE>
NOTES TO PERFORMANCE
* Performance is measured for Lazard Equity Portfolio from: June 1,
1987--Institutional, February 5, 1997--Open; Lazard International Equity
Portfolio from: October 31, 1991--Institutional, January 23, 1997--Open; Lazard
International Fixed-Income Portfolio from: October 31, 1991--Institutional,
January 8, 1997--Open; Lazard Bond Portfolio from: October 31,
1991--Institutional, March 5, 1997--Open; Lazard Strategic Yield Portfolio from:
October 1, 1991--Institutional, January 23, 1997--Open; Lazard Small Cap
Portfolio from: October 31, 1991--Institutional, January 30, 1997--Open; Lazard
International Small Cap Portfolio from: December 1, 1993--Institutional,
February 13, 1997--Open; Lazard Emerging Markets Portfolio from: July 15,
1994--Institutional, January 8, 1997--Open; Lazard Global Equity Portfolio from:
January 3, 1996-- Institutional, January 30, 1997--Open; Lazard Bantam Value
Portfolio from: March 4, 1996--Institutional, January 23, 1997-- Open. 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. Certain expenses of a portfolio may have been reimbursed
by the adviser. Without such reimbursement of expenses, the portfolio's total
return would have been lower.
** Since Open Shares were only first offered in 1997, YTD and Since Inception
Cumulative Total Returns are, by definition, identical during the period ended
June 30, 1997.
+ Effective January 1, 1993, the Portfolio is measured by the Index "excluding
U.S." Performance of the index "Since Inception" is a blended return of the
index "including U.S." and the index "excluding U.S." for the applicable
periods.
++ Broad market index returns for the Open Shares only are calculated from the
nearest month end to the Funds' inception date.
See additional footnotes on next page.
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PERFORMANCE TABLE (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1997
--------------------------------------------------------
ONE THREE FIVE TEN SINCE
YEAR YEAR YEAR YEAR INCEPTION*
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------
INSTITUTIONAL SHARES
Lazard Equity Portfolio 27.01% 26.16% 21.08% 14.35% 14.70%
Standard & Poor's 500 Stock Index 34.67% 28.82% 19.75% 14.49% 15.17%
Lazard International Equity Portfolio 19.93% 12.83% 11.46% -- 11.58%
MSCI EAFE Index 12.84% 9.12% 12.83% -- 9.24%
Lazard International Fixed-Income Portfolio+ 2.66% 7.30% 8.20% -- 8.14%
Salomon World Government Bond Index Ex-US+ 2.16% 7.21% 8.52% -- 9.33%
Lazard Bond Portfolio 8.28% 7.79% 6.20% -- 6.54%
Lehman Intermediate Gov't/Corp Bond Index 7.23% 7.51% 6.49% -- 6.93%
Lazard Strategic Yield Portfolio 12.68% 11.02% 9.17% -- 9.10%
One Month LIBOR USD Fixed Index 5.68% 5.76% 4.86% -- 4.72%
Lazard Small Cap Portfolio 30.20% 22.39% 22.67% -- 21.69%
Russell 2000 Stock Index 16.35% 20.08% 17.89% -- 16.25%
Lazard International Small Cap Portfolio 13.80% 7.00% -- -- 7.89%
Salomon EMI Index Ex-US 2.20% 4.49% -- 9.21%
Lazard Emerging Markets Portfolio 26.82% -- -- -- 12.48%
IFC Investable Total Return Index 13.22% -- -- -- 5.00%
Lazard Global Equity Portfolio 25.52% -- -- -- 20.57%
MSCI World Index 22.27% -- -- -- 19.36%
Lazard Bantam Value Portfolio 36.04% -- -- -- 42.41%
Russell 2000 Stock Index 16.35% -- -- -- 17.93%
</TABLE>
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, when redeemed,
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 Stock Index is an index of common stocks and is a registered
trademark of Standard & Poor's Corporation. The Morgan Stanley Capital
International (MSCI) Europe, Australia and Far East Index (EAFE) is comprised of
international equities that are compiled by Morgan Stanley Capital
International. The Salomon World Government Bond Index Ex-US and the Salomon
Extended Market Index (EMI) Ex-US are compiled by Salomon Brothers. The Lehman
Intermediate Gov't/Corp. Bond Index is an index calculated by Lehman Brothers.
The London Interbank Offered Rates (LIBOR) US Dollar Fixed rates is an average
derived from sixteen quotations provided by banks determined by the British
Bankers Association. The Russell 2000 Stock 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 represents
65% of market capital compiled by the International Finance Corporation. The
Morgan Stanley Capital International (MSCI) World Index (Net) is an arithmetic,
market value-weighted average return net of dividends taxation, which is derived
from equities of EAFE Index countries plus equities from Canada and the United
States.
This performance data is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective prospectus.
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO
COMMON STOCKS--96.6%
AEROSPACE & DEFENSE--3.5%
Lockheed Martin Corp. ....... 55,000 $ 5,695,937
McDonnell Douglas Corp. ..... 82,600 5,658,100
------------
11,354,037
------------
AGRICULTURAL MACHINERY--2.2%
Deere & Co. ................. 131,400 7,210,575
------------
AUTOMOTIVE--3.2%
Chrysler Corp. .............. 152,800 5,013,750
General Motors Corp. ........ 97,400 5,423,962
------------
10,437,712
------------
BANKS--9.0%
Bank of New York Company,
Inc. ....................... 192,600 8,378,100
BankAmerica Corp. ........... 109,200 7,050,225
Chase Manhattan Corp. ....... 67,212 6,523,765
Fleet Financial Group,
Inc. ....................... 56,800 3,592,600
KeyCorp. .................... 61,000 3,408,375
------------
28,953,065
------------
BEVERAGES--4.1%
Cadbury Schweppes PLC (b) ... 139,500 5,109,187
Heineken NV (b) ............. 17,800 3,043,398
PepsiCo, Inc. ............... 134,400 5,048,400
------------
13,200,985
------------
BROADCASTING--1.4%
Viacom, Inc. Class B (a) .... 152,800 4,584,000
------------
CHEMICALS & PLASTICS--1.5%
Du Pont (E.I.) De Nemours &
Co. ........................ 76,500 4,809,938
------------
COMPUTERS & BUSINESS
EQUIPMENT--9.9%
Bay Networks Inc. (a) ....... 165,400 4,393,438
Electronic Data Systems
Corp. ...................... 122,000 5,002,000
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
EMC Corp. (a) ............... 77,600 $ 3,026,400
International Business
Machines Corp. ............. 101,200 9,126,975
NCR Corp. (a) ............... 119,600 3,558,100
Silicon Graphics, Inc.
(a) ........................ 249,100 3,736,500
Sun Microsystems, Inc.
(a) ........................ 78,100 2,906,784
------------
31,750,197
------------
CONGLOMERATES--2.7%
Philip Morris Companies,
Inc. ....................... 197,100 8,746,312
------------
DRUGS & HEALTH CARE--6.3%
Astra AB (b) ................ 249,333 4,737,332
Bristol-Myers Squibb Co. .... 69,400 5,621,400
Columbia/HCA Healthcare
Corp. ...................... 113,037 4,443,767
United Healthcare Corp. ..... 108,000 5,616,000
------------
20,418,499
------------
ENERGY--7.3%
Atlantic Richfield Co. ...... 66,000 4,653,000
Elf Aquitaine SA (b) ........ 120,600 6,565,162
Mobil Corp. ................. 112,000 7,826,000
Noble Affiliates, Inc. ...... 116,900 4,522,569
------------
23,566,731
------------
ENTERTAINMENT--2.3%
Brunswick Corp. ............. 157,600 4,925,000
Carnival Corp. Class A ...... 56,900 2,347,125
------------
7,272,125
------------
ENVIRONMENTAL SERVICES--1.5%
Waste Management, Inc. ...... 146,900 4,719,163
------------
FOOD PROCESSING--1.0%
IBP, Inc. ................... 139,100 3,234,075
------------
GAS EXPLORATION--1.2%
Burlington Resources,
Inc. ....................... 90,400 3,988,900
------------
HEALTHCARE--1.8%
Aetna Inc. .................. 55,100 5,640,863
------------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO
(CONTINUED)
HOTELS & RESTAURANTS--1.1%
McDonalds Corp. ............. 23,500 $ 1,135,215
Wendy's International,
Inc. ....................... 88,600 2,298,062
------------
3,433,277
------------
INSURANCE--6.5%
Allstate Corp. .............. 51,899 3,788,627
Cigna Corp. ................. 19,800 3,514,500
The Hartford Financial
Services Group, Inc. ....... 79,000 6,537,250
Travelers Group, Inc. ....... 113,266 7,142,837
------------
20,983,214
------------
MANUFACTURING--3.0%
American Standard Companies,
Inc. (a) ................... 74,300 3,324,925
General Electric Co. ........ 95,100 6,217,162
------------
9,542,087
------------
MULTIMEDIA--2.0%
Gannett Company, Inc. ....... 66,000 6,517,500
------------
PAPER PRODUCTS--2.4%
Georgia Pacific Corp. ....... 39,300 3,355,238
Kimberly-Clark Corp. ........ 88,412 4,398,497
------------
7,753,735
------------
PUBLISHING--2.1%
Knight Ridder, Inc. ......... 75,900 3,723,844
New York Times Co. .......... 63,000 3,118,500
------------
6,842,344
------------
RAILROAD--1.6%
Union Pacific Corp. ......... 74,700 5,266,350
------------
RETAIL--7.4%
American Stores Co. ......... 46,500 2,295,938
Federated Department Stores,
Inc. (a) ................... 156,200 5,427,950
Gap, Inc. ................... 98,600 3,833,075
Safeway, Inc. (a) ........... 71,300 3,288,712
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
Sears Roebuck & Co. ......... 75,600 $ 4,063,500
Wal-Mart Stores, Inc. ....... 148,000 5,004,250
------------
23,913,425
------------
SERVICES--1.8%
Cognizant Corp. ............. 141,300 5,722,650
------------
TECHNOLOGY--1.7%
Advanced Micro Devices, Inc.
(a) ........................ 153,900 5,540,400
------------
TELECOMMUNICATIONS--4.5%
Ameritech Corp. ............. 71,600 4,864,325
Bell Atlantic Corp. ......... 91,800 6,965,325
U.S. West Media Group (a) ... 140,000 2,835,000
------------
14,664,650
------------
TRUCKING & FREIGHT
FORWARDING--0.7%
Federal Express Corp. (a) ... 36,600 2,113,650
------------
UTILITIES--2.9%
Edison International ........ 195,200 4,855,600
National Power PLC (b) ...... 130,000 4,574,375
------------
9,429,975
------------
TOTAL COMMON STOCKS
(Identified cost
$239,000,880)............... 311,610,434
------------
PREFERRED STOCKS--1.1%
(Identified cost $2,626,127)
FINANCIAL SERVICES--1.1%
Time Warner Finance Trust ... 82,500 3,465,000
------------
TOTAL INVESTMENTS
(Identified cost
$241,627,007) (d)........... 97.7% 315,075,434
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES........ 2.3 7,259,373
----- ------------
NET ASSETS.................... 100.0% $322,334,807
===== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
EQUITY PORTFOLIO*
COMMON STOCKS--94.2%
AUSTRALIA--1.0%
Westpac Banking Corp.,
Ltd. ................... 3,527,900 $ 21,249,695
--------------
DENMARK--1.0%
Unidanmark Class A....... 382,400 21,481,528
--------------
FINLAND--0.7%
UPM Kymmene OY........... 612,400 14,152,039
--------------
FRANCE--12.3%
Alcatel Alsthom (Cie
Generale)............... 282,100 35,330,304
Banque Nationale de
Paris................... 753,122 31,038,874
Cie de Saint Gobain...... 171,080 24,948,621
Elf Aquitaine SA......... 442,900 47,781,680
Generale des Eaux........ 336,492 43,115,775
Generale des Eaux (a),
(e)..................... 313,092 187,535
Havas SA................. 126,800 9,137,747
Rhone-Poulenc SA......... 1,305,190 53,302,976
Total SA Class B......... 105,681 10,681,933
--------------
TOTAL FRANCE............. 255,525,445
--------------
GERMANY--12.3%
Daimler-Benz AG.......... 468,300 37,993,492
Deutsche Bank AG......... 721,400 42,148,191
Hoechst AG............... 1,001,500 42,480,919
Mannesmann AG (b)........ 73,405 32,707,434
Metallgesellschaft AG.... 847,600 17,641,121
Metro AG................. 183,800 20,138,857
Thyssen AG............... 89,800 21,264,492
Viag AG.................. 92,860 42,221,191
--------------
TOTAL GERMANY............ 256,595,697
--------------
HONG KONG--2.8%
HSBC Holdings, Ltd....... 1,057,148 31,793,720
Swire Pacific, Ltd....... 2,963,500 26,680,795
--------------
TOTAL HONG KONG.......... 58,474,515
--------------
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
ITALY--4.0%
Ente Nazionale
Idrocarburi SPA (ENI)... 5,631,000 $ 31,889,462
Fiat SPA................. 3,347,300 12,053,328
Istituto Nazionale delle
Assicurazioni (INA)..... 5,377,700 8,195,157
Stet Societa Finanziaria
Telefonica SPA.......... 9,215,400 31,990,949
--------------
TOTAL ITALY.............. 84,128,896
--------------
JAPAN--22.7%
Honda Motor Co........... 614,000 18,481,069
Ito-Yokado Company,
Ltd..................... 429,000 24,889,636
Matsushita Electric
Industrial Company,
Ltd..................... 2,640,000 53,205,377
Mitsubishi Heavy
Industries, Ltd......... 4,669,000 35,805,716
Mitsui Marine & Fire
Insurance Co............ 1,138,000 8,220,765
Nintendo Co.............. 394,900 33,074,857
Nippon Telegraph &
Telephone Corp.......... 4,556 43,723,610
NKK Corp................. 1,494,000 3,206,456
Omron Corp............... 700,000 14,840,343
Orix Corp................ 668,000 49,479,325
Promise Company, Ltd..... 311,000 17,799,338
Ricoh Company, Ltd....... 3,818,000 49,965,104
Sekisui Chemical Co...... 2,907,000 29,419,998
Sony Corp................ 519,400 45,269,641
Sumitomo Trust & Banking,
Ltd. (a)................ 4,330,000 46,465,715
--------------
TOTAL JAPAN.............. 473,846,950
--------------
MALAYSIA--0.3%
Genting Berhad........... 1,421,000 6,812,243
--------------
NETHERLANDS--4.0%
Heineken NV.............. 109,400 18,670,844
Philips Electronics NV... 416,400 29,826,196
Royal Dutch Petroleum Co.
(b)..................... 644,400 35,039,250
--------------
TOTAL NETHERLANDS........ 83,536,290
--------------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL EQUITY
PORTFOLIO* (CONTINUED)
NEW ZEALAND--0.3%
Lion Nathan, Ltd......... 2,516,400 $ 6,375,557
--------------
SPAIN--1.1%
Telefonica de Espana..... 771,200 22,295,975
--------------
SWEDEN--3.4%
Astra AB................. 1,014,166 17,895,890
Electrolux AB Series B... 334,300 24,114,718
Svenska Handelsbanken
Series A................ 896,500 28,509,987
--------------
TOTAL SWEDEN............. 70,520,595
--------------
SWITZERLAND--8.4%
Elektrowatt AG........... 23,600 8,744,932
Holderbank Financiere
Glarus AG............... 23,260 21,969,548
Nestle SA................ 23,505 31,007,281
Novartis AG.............. 29,461 47,097,242
SGS Holding SA........... 9,557 20,423,178
SMH AG................... 17,685 10,102,253
Zurich
Versicherungsgesellschaft.. 91,430 36,384,130
--------------
TOTAL SWITZERLAND........ 175,728,564
--------------
UNITED KINGDOM--19.9%
Allied Domecq PLC........ 884,900 6,366,060
B.A.T Industries PLC..... 3,456,400 30,938,214
British Aerospace PLC.... 2,531,187 56,335,995
BTR PLC.................. 6,818,300 23,333,544
Cadbury Schweppes PLC.... 4,294,831 38,335,722
EMI Group PLC............ 950,500 17,094,982
General Electric Co.
PLC..................... 2,784,200 16,645,148
Grand Metropolitan PLC... 4,776,910 45,979,863
LucasVarity PLC.......... 9,078,500 31,446,347
Mirror Group PLC......... 3,345,900 10,475,230
National Power PLC....... 4,280,600 37,210,707
Prudential Corp. PLC..... 2,034,100 19,881,264
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Rank Group PLC........... 2,365,800 $ 14,990,823
Redland PLC.............. 2,672,400 15,131,192
Sears PLC................ 16,729,500 18,944,565
Unilever PLC............. 1,084,900 31,056,918
--------------
TOTAL UNITED KINGDOM..... 414,166,574
--------------
TOTAL COMMON STOCKS
(Identified cost
$1,591,962,787)......... 1,964,890,563
--------------
PREFERRED STOCKS--1.1%
(Identified cost
$25,689,004)
ITALY--1.1%
Fiat SPA................. 11,851,500 21,895,955
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
----------
<S> <C> <C>
REPURCHASE AGREEMENT--3.9%
State Street Bank and Trust
Company, 5.65%, 7/1/97,
(Dated 06/30/97,
collateralized by
$83,180,000 United
States Treasury Notes,
5.75%, 12/31/98, with a
value of $82,959,074)
(Identified cost
$81,331,000)............ $ 81,331 81,331,000
--------------
TOTAL INVESTMENTS
(Identified cost
$1,698,982,791) (d)..... 99.2% $2,068,117,518
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES.... 0.8 17,274,354
----- --------------
NET ASSETS................ 100.0% $2,085,391,872
===== ==============
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO* (CONTINUED)
* Percentages of common and preferred stocks are presented in the portfolio by
country.
Percentages by industry are as follows:
Advertising 0.4%, Aerospace & Defense 4.4%, Automotive 5.8%, Banks & Financial
Services 10.7%, Beverages 1.2%, Chemicals & Plastics 6.0%, Commercial Services
1.0%, Conglomerates 9.5%, Construction Materials 1.8%, Drugs & Health Care
3.1%, Electronics 6.9%, Financial Services 3.2%, Food & Beverage 3.6%, Food
Processing 2.2%, Household Appliances & Home Furnishings 1.2%, Insurance 3.5%,
Iron & Steel 1.2%, Leisure Time 3.5%, Machinery 1.6%, Manufacturing 1.7%,
Office Equipment 2.4%, Oil & Gas 6.0%, Paper Products 0.7%, Publishing 0.5%,
Retail 2.1%, Repurchase Agreement 3.9%, Telecommunication 4.7%,
Telecommunication Equipment 1.7%, Tobacco 1.5%, Utilities 2.2%, Wholesale
Trade 1.0%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
CURRENCY DENOMINATED
BONDS--76.6%
ARGENTINA PESO--0.6%
Argentina Bocon, (USD),
5.71%, 9/1/02 (f)........ 50 $ 58,875
Republic of Argentina,
3.24%, 4/1/07 (f)........ 600 631,298
-----------
TOTAL ARGENTINA PESO....... 690,173
-----------
AUSTRALIAN DOLLAR--1.4%
Bayerische Vereinsbank,
10.00%, 12/16/99......... 210 172,099
Commonwealth of Australia,
9.00%, 9/15/04........... 1,742 1,475,209
-----------
TOTAL AUSTRALIAN DOLLAR.... 1,647,308
-----------
AUSTRIAN SCHILLING--1.2%
Republic of Austria,
8.00%, 3/18/02 (h)....... 14,670 1,359,518
-----------
BRAZILIAN REAL--0.1%
Chase Brazil Note,
16.58%, 7/1/97........... 170 157,912
-----------
BRITISH POUND--7.6%
Barclays Bank PLC,
12.75%, 11/26/97......... 310 526,891
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Bayerische Landesbank
Girozentrale,
8.50%, 2/26/03........... 275 $ 479,138
Birmingham Midshires
Building Society,
9.125%, 1/5/06........... 500 886,773
British Aerospace PLC,
11.875%, 12/29/08........ 540 1,169,941
Deut Pfandbriefe Bank,
6.50%, 12/31/98.......... 300 493,033
Finance For Residence
Society House,
11.125%, 10/5/58 (f)..... 300 676,789
Merrill Lynch & Co.,
7.375%, 12/6/01.......... 387 638,832
North American Capital
Corp.,
8.25%, 11/17/03.......... 876 1,480,686
Sutton Bridge Financing
Ltd.,
8.625%, 6/30/22.......... 438 740,416
United Kingdom Treasury
Bonds,
7.75%, 9/8/06............ 289 500,824
West LB Finance Curacao NV,
8.50%, 6/2/03 (h)........ 710 1,229,658
-----------
TOTAL BRITISH POUND........ 8,822,981
-----------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
CANADIAN DOLLAR--0.9%
Government of Canada,
4.27%, 12/1/21 (f)....... 336 $ 262,683
8.00%, 6/1/23............ 470 386,292
Quebec Housing,
8.95%, 5/13/13........... 411 347,473
-----------
TOTAL CANADIAN DOLLAR...... 996,448
-----------
COLOMBIAN PESO--0.1%
Salomon Linked Clean Note,
(USD),
0.00%, 10/8/97........... 100 92,587
0.00%, 12/3/97........... 70 73,587
-----------
TOTAL COLOMBIAN PESO....... 166,174
-----------
CZECH KORUNA--0.4%
Komercni Banka,
11.40%, 9/28/01.......... 10,000 282,533
Wood & Co.,
0.00%, 6/4/98............ 8,000 209,074
-----------
TOTAL CZECH KORUNA......... 491,607
-----------
DANISH KRONE--4.3%
Kreditforeningen Denmark,
10.20%, 4/15/04 (f)...... 5,000 869,366
Nykredit,
6.00%, 10/1/26 (h)....... 20,005 2,737,171
Unikredit,
8.00%, 10/1/26........... 8,982 1,408,193
-----------
TOTAL DANISH KRONE......... 5,014,730
-----------
EGYPTIAN POUND--0.2%
Egyptian Discounted
Treasury Bill,
0.00%, 12/2/97........... 1,000 283,463
-----------
ESTONIAN KROON--0.1%
Merita Bank,
10.00%, 12/28/98 (f)..... 1,000 73,374
-----------
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
FINNISH MARKKA--0.9%
Republic of Finland,
7.25%, 4/18/06........... 4,000 $ 834,363
10.00%, 9/15/01.......... 1,000 230,441
-----------
TOTAL FINNISH MARKKA....... 1,064,804
-----------
FRENCH FRANC--6.2%
Credit Foncier de France,
7.50%, 3/29/05........... 12,010 2,260,292
Government of France,
8.50%, 11/25/02 (h)...... 17,014 3,409,633
8.50%, 4/25/03 (h)....... 5,416 1,089,799
8.50%, 10/25/19 (h)...... 2,106 450,786
-----------
TOTAL FRENCH FRANC......... 7,210,510
-----------
GERMAN MARK--7.8%
Autobahn Tank & Rast,
6.00%, 10/16/00.......... 610 365,489
Baden Wurttemberg,
6.75%, 6/22/05........... 914 564,667
Bank Nederlandse Gemeenten,
6.50%, 11/4/08........... 2,000 1,203,486
Exide Holdings,
9.125%, 4/15/04 (i)...... 528 310,303
Federal Republic of
Germany,
6.00%, 2/16/06 (h)....... 8,238 4,868,360
Impress Metal Pack Holding,
9.875%, 5/29/07 (i)...... 208 123,731
Land Hessen,
6.00%, 11/29/13 (h)...... 1,000 597,730
World Bank,
7.125%, 4/12/05 (h)...... 1,700 1,075,598
-----------
TOTAL GERMAN MARK.......... 9,109,364
-----------
GREEK DRACHMA--0.5%
Republic of Hellenic,
14.30%, 8/14/03 (f)...... 120,000 451,174
14.80%, 6/30/00 (f)...... 30,000 111,680
-----------
TOTAL GREEK DRACHMA........ 562,854
-----------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
HUNGARIAN FORINT--0.2%
ING,
21.60%, 7/9/97........... 7,000 $ 37,376
ING, (USD),
0.00%, 3/18/98........... 75 69,517
Republic of Hungary,
16.50%, 4/12/99.......... 12,000 62,509
19.50%, 1/12/99.......... 12,000 65,179
-----------
TOTAL HUNGARIAN FORINT..... 234,581
-----------
INDONESIAN RUPIAH--1.2%
Asia Investment
International Ltd, (USD),
0.00%, 11/12/97.......... 135 129,864
0.00%, 2/4/98............ 170 155,865
0.00%, 2/13/98........... 400 285,120
Asia Investment
International, Ltd.,
0.00%, 8/14/97........... 240,000 97,052
0.00%, 1/16/98........... 725,000 273,290
0.00%, 2/4/98............ 370,000 138,293
PT Davomas Abadi,
0.00%, 2/4/98............ 1,000,000 376,183
-----------
TOTAL INDONESIAN RUPIAH.... 1,455,667
-----------
IRISH POUND--0.4%
Republic of Ireland,
8.00%, 8/18/06........... 262 434,946
-----------
ITALIAN LIRA--9.0%
Republic of Italy,
11.50%, 3/1/03 (h)....... 3,545,000 2,557,635
12.50%, 3/1/01 (h)....... 11,305,000 7,948,760
-----------
TOTAL ITALIAN LIRA......... 10,506,395
-----------
JAPANESE YEN--17.4%
Asterique,
2.48%, 1/23/02........... 191,549 1,671,166
European Investment Bank,
3.00%, 9/20/06 (h)....... 623,000 5,660,919
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Export-Import Bank of
Japan,
4.38%, 10/1/03 (h)....... 205,000 $ 2,018,790
Government of Japan,
3.70%, 3/21/16........... 181,100 1,700,242
International Bank for
Reconstruction and
Development,
4.75%, 12/20/04 (h)...... 528,500 5,394,739
Isveimer,
4.15%, 3/23/99........... 177,000 1,612,180
Nippon Credit Bank,
1.80%, 7/27/00........... 60,000 472,431
3.05%, 5/25/01........... 30,000 237,288
Republic of Austria,
4.50%, 9/28/05 (h)....... 80,000 804,397
6.25%, 10/16/03.......... 15,000 162,030
World Bank,
5.25%, 3/20/02........... 52,300 528,441
-----------
TOTAL JAPANESE YEN......... 20,262,623
-----------
KENYAN SHILLING--0.2%
Kenyan Treasury Bill,
0.00%, 7/28/97........... 9,500 172,076
0.00%, 9/8/97............ 6,000 106,859
-----------
TOTAL KENYAN SHILLING...... 278,935
-----------
LEBANESE POUND--0.8%
DMG ING Linked CD, (USD),
0.00%, 6/15/98........... 100 89,860
DMG LBP Treasury Bills,
(USD),
0.00%, 1/21/99........... 130 130,000
Paribas LBP Treasury Bill,
0.00%, 4/30/98........... 65,000 37,508
0.00%, 5/28/98........... 360,000 205,865
0.00%, 9/4/98............ 200,000 116,447
16.08%, 5/13/99.......... 50,000 32,521
18.70%, 1/14/99.......... 420,000 283,137
-----------
TOTAL LEBANESE POUND....... 895,338
-----------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
MALAYSIAN RINGGIT--0.1%
Peregrine Investment
Holdings Ltd.,
7.90%, 7/30/97........... 300 $ 118,792
-----------
MEXICAN PESO--0.9%
Mexican Cetes,
0.00%, 10/16/97.......... 1,300 153,822
0.00%, 11/6/97........... 380 44,443
0.00%, 12/4/97........... 3,900 449,255
0.00%, 5/7/98............ 2,380 252,383
0.00%, 6/4/98............ 148 15,517
UDI Bonos,
7.00%, 5/27/99........... 350 83,687
-----------
TOTAL MEXICAN PESO......... 999,107
-----------
NETHERLAND GUILDER--1.5%
Government of Netherlands,
8.75%, 1/15/07........... 2,757 1,725,495
-----------
NORWEGIAN KRONE--0.7%
Sparebanken Norway,
10.25%, 6/23/03 (f)...... 6,000 865,388
-----------
POLISH ZLOTY--0.3%
Government of Poland,
16.00%, 10/12/98......... 820 232,289
Poland Treasury Bill,
0.00%, 8/27/97........... 550 161,946
-----------
TOTAL POLISH ZLOTY......... 394,235
-----------
RUSSIAN ROUBLE--0.8%
Chase Russian GKO, (USD),
0.00%, 12/3/97........... 191 218,177
0.00%, 6/19/98........... 220 222,035
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
Sal Delay Holdings,
0.00%, 10/29/97.......... 50 $ 54,184
0.00%, 11/28/97.......... 350 389,490
-----------
TOTAL RUSSIAN ROUBLE....... 883,886
-----------
SOUTH AFRICAN RAND--0.4%
Eskom,
15.00%, 10/1/98.......... 225 49,667
Lesotho Water,
13.00%, 9/15/10.......... 2,000 395,856
-----------
TOTAL SOUTH AFRICAN RAND... 445,523
-----------
SPANISH PESETA--3.4%
Catalunya Generalitat,
9.30%, 11/24/03.......... 67,000 531,317
Kingdom of Spain,
8.00%, 5/30/04........... 362,110 2,732,720
11.30%, 1/15/02 (h)...... 83,250 693,401
-----------
TOTAL SPANISH PESETA....... 3,957,438
-----------
SWEDISH KRONA--1.5%
Kingdom of Sweden,
10.25%, 5/5/00........... 11,600 1,696,370
-----------
THAILAND BAHT--0.1%
Finance One PLC, (USD),
2.00%, 8/31/01........... 220 111,100
-----------
UNITED STATES DOLLAR--5.1%
Affinity Group Holdings
Inc.,
11.00%, 4/1/07 (i)....... 109 114,450
American Rice, Inc.,
13.00%, 7/31/02.......... 265 272,950
Americold Corp.,
12.875%, 5/1/08.......... 105 112,350
Amtrol Inc.,
10.625%, 12/31/06........ 186 193,905
Archibald Candy Corp.,
10.25%, 7/1/04 (i)....... 130 132,275
Atlantic Express
Transportation Corp.,
10.75%, 2/1/04 (i)....... 100 104,000
Bankers Trust,
0.00%, 10/29/97.......... 115 107,627
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
Cablevision Systems Corp.,
10.50%, 5/15/16.......... 129 $ 140,610
Calpine Corp.,
10.50%, 5/15/06.......... 60 65,100
Carrols Corp.,
11.50%, 8/15/03.......... 100 106,250
Carter (William) Co.,
10.375%, 12/1/06......... 100 104,750
Casino America, Inc.,
12.50%, 8/1/03........... 70 72,275
Cobb Theatres LLC/ Finance
Corp.,
10.625%, 3/1/03.......... 50 55,250
Collins & Aikman Corp.,
11.50%, 4/15/06.......... 3 3,375
Commemorative Brands Inc.,
11.00%, 1/15/07.......... 100 104,750
Commodore Media Inc.,
7.50%, 5/1/03 (f)........ 50 54,500
Commonwealth Aluminum
Corp.,
10.75%, 10/1/06.......... 100 104,000
Courtyard by Marriott II
Ltd., Series B,
10.75%, 2/1/08........... 50 54,000
Dade International Inc.,
11.125%, 5/1/06.......... 90 100,350
Den Norske Credit,
6.06%, 11/29/49 (f),
(h)...................... 700 625,205
Econophone, Inc.,
13.50%, 7/15/07 (i)...... 82 82,000
Federal National Mortgage
Association,
5.42%, 12/16/97.......... 35 34,984
Federal National Mortgage
Association, Series 23,
Class 2,
10.00%, 9/1/17........... 537 173,127
Forman Petroleum Corp.,
13.50%, 6/1/04 (f)....... 285 282,150
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Greyhound Lines Inc.,
11.50%, 4/15/07 (i)...... 82 $ 86,920
Hong Kong & Shanghai Bank,
5.88%, 8/29/49 (f)....... 100 90,365
ICF Kaiser International
Inc.,
13.00%, 12/31/03 (f)..... 115 116,150
International Specialty
Products Holdings, Inc.,
9.75%, 2/15/02........... 2 2,145
Intertek Finance PLC,
10.25%, 11/1/06.......... 139 143,865
Maxus Energy Corp.,
10.83%, 9/1/04........... 16 18,280
Morgan Guarantee Trust,
0.00%, 2/13/98........... 240 225,883
Nextel Communications Inc.,
11.50%, 9/1/03........... 98 84,770
Orbcomm Global LP,
14.00%, 8/15/04.......... 50 50,500
PhoneTel Technologies,
Inc.,
12.00%, 12/15/06......... 100 101,000
Pierce Leahy Corp.,
11.13%, 7/15/06.......... 86 93,740
Plains Resources Inc.,
10.25%, 3/15/06.......... 95 100,700
Poindexter (J.B.) & Co.,
12.50%, 5/15/04.......... 80 80,000
Quest Diagnostics, Inc.,
10.75%, 12/15/06......... 50 54,375
Reliance Industries Ltd.,
9.375%, 6/24/26 (h),
(i)...................... 250 267,450
Sabreliner Corp.,
12.50%, 4/15/03.......... 48 48,480
Spanish Broadcasting System
Inc.,
11.00%, 3/15/04 (i)...... 65 68,575
Subic Power Corp.,
9.50%, 12/28/08.......... 206 213,764
Transamerican Energy Corp.,
11.50%, 6/15/02 (i)...... 222 215,340
Unisys Corp.,
12.00%, 4/15/03.......... 111 121,267
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
United States Treasury
Notes,
5.00%, 1/31/98 (h)....... 426 $ 424,471
5.13%, 3/31/98........... 74 73,711
Waxman Industries Inc.,
0.00%, 6/1/04............ 95 80,275
-----------
TOTAL UNITED STATES
DOLLAR.................... 5,962,259
-----------
VENEZUELAN BOLIVAR--0.3%
Venezuela FLIRB, (USD),
6.75%, 3/31/07 (f), (g).. 238 220,833
Venezuela Titulos Establ
Monetaria,
18.42%, 2/6/98 (f)....... 70,000 139,291
-----------
TOTAL VENEZUELAN BOLIVAR... 360,124
-----------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost
$90,092,169).............. 89,239,422
-----------
<CAPTION>
SHARES
----------
<S> <C> <C>
PREFERRED STOCKS--0.9%
ICG Holdings, Inc. (i)..... 207 215,280
Cablevision Systems Corp.
(a)....................... 2,461 247,946
Paxson Communications Corp.
12.50%................... 219 220,095
Silgan Holdings Inc........ 1,021 1,102
Spanish Broadcasting System
Inc. (i).................. 435 404,550
-----------
TOTAL PREFERRED STOCKS
(Identified cost
$1,037,741)............... 1,088,973
-----------
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER--2.0%
Ford Motor Credit Corp.,
5.35%, 7/22/97........... $ 200 $ 199,376
5.35%, 7/28/97........... 180 179,278
5.48%, 12/19/97.......... 160 155,835
5.59%, 7/7/97............ 100 99,907
5.63%, 11/3/97........... 145 142,166
5.64%, 12/5/97........... 100 97,540
General Electric Capital
Corp.,
5.31%, 11/4/97........... 275 269,889
5.58%, 8/25/97........... 260 257,784
5.65%, 11/24/97.......... 200 195,417
5.69%, 12/3/97........... 200 195,100
5.70%, 11/7/97........... 126 124,304
5.70%, 2/13/98........... 170 163,890
5.75%, 12/17/97.......... 100 97,301
Prudential Funding Corp.,
5.30%, 8/5/97............ 110 109,433
-----------
TOTAL COMMERCIAL PAPER
(Identified cost
$2,287,220)............... 2,287,220
-----------
DISCOUNT NOTES--0.4%
Federal Farm Credit Bank
Discount Note,
5.27%, 12/18/97.......... 205 199,898
Federal National Mortgage
Association Discount Note,
5.19%, 2/13/98........... 110 106,400
5.34%, 1/12/98........... 180 174,794
-----------
TOTAL DISCOUNT NOTES
(Identified cost $481,092) 481,092
-----------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
FIXED-INCOME PORTFOLIO*
(CONTINUED)
REPURCHASE AGREEMENT--1.3%
State Street Bank and Trust
Company, 5.65%, 7/1/97
(Dated 06/30/97,
collateralized by
$1,555,000 United States
Treasury Notes, 6.25%,
03/31/99, with a value of
$1,585,239) (h)
(Identified cost
$1,553,000)............... $ 1,553 $ 1,553,000
-----------
<CAPTION>
DESCRIPTION VALUE
- -------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified cost
$95,451,222) (d).......... 81.2% $ 94,649,707
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES...... 18.8 21,889,109
----- ------------
NET ASSETS.................. 100.0% $116,538,816
===== ============
</TABLE>
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by type are as follows:
Collateralized Mortgage Obligations 0.2%, Commercial Paper 2.0%, Corporate
Bonds 32.0%, Foreign Government Obligations 37.5%, Mortgage Backed Securities
3.6%, Preferred Stock 0.9%, Repurchase Agreement 1.3%, Structured Notes 2.9%,
United States Government Obligations 0.8%.
Forward Foreign Currency Contracts open at June 30, 1997:
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Unrealized
Foreign Currency Expiration Foreign on Origination Current Appreciation
Purchase Contracts Date Currency Date Value (Depreciation)
- ------------------- ---------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ATS 9/12/97 2,398,691 $ 198,436 $ 196,527 $ 1,909
AUD 9/12/97 320,977 244,472 242,778 1,695
DEM 9/12/97 1,071,372 623,507 617,566 5,940
DKK 9/12/97 6,425,060 980,643 971,802 8,840
FIM 9/12/97 1,941,408 376,293 375,945 348
GBP 9/12/97 1,188,233 1,937,445 1,974,428 (36,983)
IEP 9/12/97 139,007 206,599 210,213 (3,614)
ITL 9/12/97 2,886,621,770 1,692,088 1,694,742 (2,653)
JPY 9/12/97 72,720,756 637,989 641,215 (3,226)
NOK 9/12/97 6,818,317 958,302 934,458 23,844
PHP 11/12/97 4,320,435 160,194 160,687 (493)
XEU 9/12/97 525,209 594,694 593,944 750
-------------- -------------- -------
8,610,662 8,614,305 (3,643)
<CAPTION>
Foreign Currency
Sale Contracts
- -------------------
<S> <C> <C> <C> <C> <C>
ATS 9/12/97 925,000 76,126 75,786 (340)
BEL 9/12/97 81,004,472 2,286,389 2,262,543 (23,846)
CHF 9/12/97 212,556 148,775 146,861 (1,915)
CLP 12/23/97 90,925,167 205,000 214,900 9,900
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO* (CONTINUED)
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Unrealized
Foreign Currency Expiration Foreign on Origination Current Appreciation
Sale Contracts Date Currency Date Value (Depreciation)
- ------------------- ---------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
CLP 1/28/98 103,155,624 $ 235,000 $ 243,092 $ 8,093
CAD 9/12/97 5,068,311 3,708,816 3,686,693 (22,123)
COP 7/22/97 219,600,000 200,000 199,793 (207)
COP 7/28/97 199,854,000 180,000 181,449 1,449
COP 10/29/97 50,000,000 44,028 43,893 (135)
COP 12/3/97 229,700,000 200,000 199,190 (810)
COP 12/17/97 54,256,200 47,369 46,822 (548)
CRC 8/5/97 26,203,707 110,000 111,113 1,114
CRC 8/21/97 13,162,591 55,000 55,451 451
DEM 9/12/97 1,090,431 634,939 628,552 (6,386)
ESP 9/12/97 60,032,447 411,297 407,735 (3,562)
FRF 9/12/97 10,604,676 1,830,161 1,813,280 (16,881)
GBP 9/12/97 1,133,472 1,862,632 1,883,436 20,804
HUF 11/10/97 51,881,748 275,000 263,541 (11,459)
IEP 9/12/97 184,800 273,051 279,464 6,413
INR 10/6/97 1,453,800 40,000 40,344 344
INR 1/23/98 7,742,000 200,000 212,218 12,218
INR 2/18/98 3,843,000 100,000 104,945 4,945
JPY 9/12/97 680,341,847 5,981,932 5,998,911 16,978
KES 7/7/97 5,649,300 100,000 103,535 3,535
KES 8/25/97 4,718,350 85,000 85,363 363
KES 9/17/97 3,491,886 62,841 62,694 (147)
KRW 8/8/97 44,762,500 50,000 50,217 217
KRW 10/1/97 168,900,000 188,557 188,419 (138)
MYR 11/7/97 320,000 126,896 126,141 (755)
MYR 11/24/97 504,440 200,000 198,694 (1,306)
NLG 9/12/97 5,180,400 2,680,395 2,652,775 (27,620)
PHP 11/12/97 4,920,435 183,340 183,002 (337)
PLN 8/28/97 584,658 175,000 173,485 (1,515)
ROL 7/11/97 421,200,000 50,000 59,761 9,761
SEK 9/12/97 2,998,260 388,376 388,727 351
UYU 11/3/97 1,435,606 145,000 142,333 (2,667)
VEB 12/5/97 31,467,600 60,000 60,823 822
VEB 12/12/97 18,077,500 35,000 34,875 (125)
VEB 12/22/97 82,440,000 160,000 158,477 (1,523)
VEB 1/15/98 107,918,000 200,000 205,337 5,337
VEB 2/19/98 90,355,000 170,000 169,086 (914)
VEB 3/11/98 42,912,800 80,000 79,519 (481)
-------------- -------------- -------
24,245,920 24,223,275 (22,645)
$(26,288)
==============
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
ASSET-BACKED SECURITIES--15.5%
Advanta Home Equity Loan
Trust, Series 1993-2, Class
A2, 6.15%, 10/25/09 (h)..... $ 413 $ 405,415
Chase Manhattan Auto Owner
Trust, Series 1997-A, Class
A5, 6.50%, 7/16/01.......... 265 265,331
Chase Manhattan Credit Card
Master Trust, Series 1996-3,
Class A, 7.04%, 2/15/05
(h)......................... 1,616 1,640,741
Chase Manhattan Grantor
Trust, Series 1996-B, Class
A, 6.61%, 9/15/02 (h)....... 1,155 1,159,584
Chemical Master Credit Card
Trust 1, Series 1995-2,
Class A, 6.23%, 6/15/03..... 473 468,861
Chemical Master Credit Card
Trust, Series 1995-3, Class
A, 6.23%, 4/15/05........... 823 806,540
Delta Funding Home Equity
Loan Trust, Series 1996-1,
Class A6, 7.72%, 5/25/20.... 394 396,462
Delta Funding Home Equity
Loan Trust, Series 1996-2,
Class A3, 7.54%, 10/25/14... 37 37,675
EQCC Home Equity Loan Trust,
Series 1994-2, Class A2,
7.35%, 6/15/14.............. 125 127,348
Equivantage Home Equity Loan
Trust, Series 1996-2, Class
A4, 8.05%, 6/25/27.......... 201 208,932
Green Tree Recreational
Equipment, Series 1997-B,
Class A1, 6.55%, 7/15/28,
(f)......................... 474 472,963
IMC Home Equity Loan Trust,
Series 1996-3, Class A2,
7.06%, 4/25/11 (h).......... 518 522,496
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------
<S> <C> <C>
Lehman FHA Title I Loan
Trust, Series 1996-2, Class
A2, 6.78%, 3/25/08.......... $ 882 $ 885,984
NationsBank Auto Owner Trust,
Series 1996-A, Class A4,
6.625%, 12/15/00 (h)........ 440 442,886
NationsBank Credit Card
Master Trust, Series 1993-2,
Class A, 6.00%, 12/15/05.... 380 364,561
PNC Student Loan Trust I,
Series 1997-2, Class A7,
6.728%, 1/25/07............. 867 863,207
Sears Credit Account Master
Trust, Series 1996-3, Class
A, 7.00%, 7/15/08........... 735 745,106
Sears Credit Account Master
Trust, Series 1996-4, Class
A, 6.45%, 10/15/06 (h)...... 1,051 1,044,095
Southern Pacific Secured
Assets Corp., Series 1997-1,
Class A6, 7.15%, 4/25/27.... 1,155 1,161,136
Standard Credit Card Master
Trust I, Series 1995-3,
Class A, 7.85%, 2/7/02 (h).. 540 557,377
The Money Store Home Equity
Trust, Series 1996-C, Class
A11, 6.96%, 8/15/10 (h)..... 419 423,976
The Money Store Home Equity
Trust, Series 1997-A, Class
A7, 7.41%, 11/15/24 (f)..... 265 267,565
The Money Store Trust, Series
1996-B, Class A14, 7.35%,
5/15/12..................... 116 117,801
The Money Store Trust, Series
1996-C, Class A11, 6.635%,
9/15/14..................... 116 114,622
--------------
TOTAL ASSET-BACKED SECURITIES
(Identified cost
$13,492,397)................ 13,500,664
--------------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
COLLATERALIZED MORTGAGE
OBLIGATIONS--5.9%
Asset Securitization Corp.,
Series 1995-MD4, Class A1,
7.10%, 8/13/29.............. $ 318 $ 321,329
Asset Securitization Corp.,
Series 1996-D2, Class ACS2,
1.61%, 2/28/26 (f).......... 2,125 211,836
Asset Securitization Corp.,
Series 1996-D3, Class A1A,
7.01%, 10/13/26............. 106 107,479
Asset Securitization Corp.,
Series 1996-MD6, Class A1B,
6.88%, 11/13/26 (f)......... 248 247,884
BCF L.L.C., Series 1996-R1,
Class R2,
6.162%, 9/25/26 (f)......... 342 339,908
Bear Stearns Secured
Investors Trust, Series
1998, Class IO,
3.152%, 10/30/18 (f)........ 3,646 451,222
CS First Boston Mortgage,
Series 1997-C1, Class AIB,
7.15%, 8/20/06 (f).......... 780 788,288
DLJ Mortgage Acceptance
Corp., Series 1993-MF7,
Class A1, 7.40%, 6/18/03.... 340 345,074
Federal National Mortgage
Association, Series 23,
Class 2, 10.00%, 9/1/17..... 1,145 368,499
GMAC Commercial Mortgage
Securities Inc. Series
1996-C1, Class A2A, 6.79%,
9/15/03 (f)................. 304 304,605
LB Commercial Conduit
Mortgage Trust, Series
1996-C2, Class A, 1.00%,
10/25/26.................... 338 345,047
Merrill Lynch Mortgage
Investments Inc., Series
1996-C1, Class IO, 0.57%,
4/25/28 (f), (i)............ 4,728 145,759
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------
<S> <C> <C>
Midland Realty Acceptance
Corp. Series 1996-C1, Class
A2, 7.475%, 12/25/05........ $ 344 $ 353,460
Morgan Stanley Capital One
Inc., Series 1996-WF1, Class
X,
1.42%, 1/15/13 (f), (i)..... 2,793 225,627
Morgan Stanley Capital, Inc.
Series 1997-C1, Class I0,
2.22%, 2/15/20 (f).......... 2,894 165,520
Structured Asset
Securitization Corp., Series
1996-CFL, Class X1,
1.32%, 2/25/28 (f).......... 2,942 151,686
Structured Asset
Securitization Corp., Series
1996-CFL, Class X2,
1.23%, 2/25/28 (f).......... 1,619 48,601
United States Department of
Veteran Affairs REMIC,
Series 1997-1, Class IO,
0.37%, 2/15/27 (f).......... 9,711 206,363
--------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Identified cost
$5,084,253)................. 5,128,187
--------------
CORPORATE BONDS--21.9%
AEROSPACE & DEFENSE--0.5%
BE Aerospace Inc.,
9.875%, 2/1/06.............. 77 81,043
Lockheed Martin Corp., 7.45%,
6/15/04..................... 328 336,682
--------------
417,725
--------------
BANKS--0.6%
Chase Manhattan Corp. New,
7.625%, 1/15/03............. 470 485,167
--------------
BROADCASTING--1.1%
Cablevision Systems Corp.,
10.50%, 5/15/16 (h)......... 258 281,220
Cox Communications Inc.,
6.50%, 11/15/02............. 265 260,556
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
(CONTINUED)
Rifkin Acquisitions Partners
LP, 11.125%, 1/15/06........ $ 187 $ 197,285
Sullivan Broadcasting,
10.25%, 12/15/05............ 170 175,525
------------
914,586
------------
BUSINESS SERVICES AND
SUPPLIES--0.8%
American Pad & Paper Co.,
13.00%, 11/15/05............ 155 178,250
Pierce Leahy Corp.,
11.125%, 7/15/06 (h)........ 501 546,090
------------
724,340
------------
CHEMICALS & PLASTICS--0.2%
Collins & Aikman Corp.,
11.50%, 4/15/06............. 188 211,500
------------
COMMUNICATION SERVICES--0.4%
IXC Communications Inc.,
12.50%, 10/1/05............. 300 340,125
------------
COMPUTERS--1.7%
Oracle Corp.,
6.72%, 2/15/04 (h).......... 603 594,998
Seagate Technology,
7.125%, 3/1/04.............. 379 378,420
Unisys Corp.,
12.00%, 4/15/03 (h)......... 465 508,013
------------
1,481,431
------------
CONTAINERS--0.6%
Amtrol Acquisition Inc.,
10.625%, 12/31/06........... 382 403,010
Silgan Holdings, Inc.,
9.00%, 6/1/09 (i)........... 150 151,500
------------
554,510
------------
ENERGY--1.0%
Maxus Energy Corp.,
10.83%, 9/1/04.............. 62 70,835
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
Panenergy Corp.,
7.375%, 9/15/03............. $ 174 $ 178,235
Tenaga Nasional,
7.20%, 4/29/07 (i).......... 350 355,618
Transamerican Energy Corp.,
11.50%, 6/15/02 (i)......... 247 239,590
------------
844,278
------------
ENTERTAINMENT--0.6%
AMF Group Inc., 10.875%,
3/15/06..................... 150 162,000
Casino America, Inc., 12.50%,
8/1/03...................... 125 129,062
Hollywood Casino Inc.,
12.75%, 11/1/03............. 186 197,625
------------
488,687
------------
ENVIRONMENTAL SERVICES--0.4%
Envirosource Inc., 9.75%,
6/15/03..................... 376 364,720
------------
FINANCIAL SERVICES--6.2%
Aetna Services Inc., 6.75%,
8/15/01..................... 192 191,921
Avco Financial Services Inc.,
6.35%, 9/15/00.............. 128 126,559
Bank of New York Co., Inc.,
6.625%, 6/15/03............. 235 231,470
BankAmerica Corp., 6.875%,
6/1/03...................... 463 461,986
Capital One Bank,
7.15%, 9/15/06............. 268 271,128
7.35%, 6/20/00............. 266 268,990
Cobb Theatres LLC/Finance
Corp., 10.625%, 3/1/03...... 165 182,325
Countrywide Funding Corp.,
7.45%, 9/16/03.............. 175 178,395
Finova Capital Corp., 7.125%,
5/1/02...................... 376 379,147
Fleet Financial Group, 7.25%,
9/1/99...................... 161 163,679
GMAC Acceptance Corp.,
7.125%, 5/1/01.............. 342 346,114
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
(CONTINUED)
Heller Financial Inc.,
6.50%, 11/1/01.............. $ 279 $ 275,234
Household Finance Corp.,
7.25%, 7/15/03.............. 495 500,910
International Lease Finance
Corp., 6.375%, 2/15/02...... 519 511,791
MBNA Corp.,
6.50%, 9/15/00.............. 196 194,985
McDonnell Douglas Finance
Corp., 6.45%, 12/5/02....... 230 221,393
Merrill Lynch & Co., Inc.,
6.00%, 1/15/01.............. 333 326,024
NationsBank Corp.,
5.75%, 1/17/01.............. 159 153,996
Norwest Financial Inc.,
6.125%, 8/1/03.............. 164 157,637
Paine Webber Group Inc.,
7.75%, 9/1/02............... 132 135,483
Sears Roebuck Acceptance
Corp., 7.14%, 5/2/03........ 149 150,173
------------
5,429,340
------------
FUNERAL SERVICES--0.4%
Service Corp. International,
6.75%, 6/1/01............... 377 376,600
------------
HEALTHCARE--1.2%
Dynacare Inc.,
10.75%, 1/15/06............. 331 345,067
Columbia/HCA Healthcare
Corp., 6.87%, 9/15/03....... 275 274,615
Quest Diagnostics, Inc.,
10.75%, 12/15/06............ 418 454,575
------------
1,074,257
------------
MANUFACTURING--0.7%
Commonwealth Aluminum Corp.,
10.75%, 10/1/06............. 104 108,160
Philip Morris Co., Inc.,
6.80%, 12/1/03.............. 148 145,485
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
Silgan Corp.,
11.75%, 6/15/02............. $ 316 $ 336,540
------------
590,185
------------
OIL & GAS--0.2%
Plains Resources Inc.,
10.25%, 3/15/06............. 145 153,700
------------
OTHER--0.7%
RMOF, 2.16%, 1/31/22......... 5,862 566,999
------------
RESTAURANTS, LODGING
& ENTERTAINMENT--1.2%
Carrols Corp.,
11.50%, 8/15/03 (h)......... 467 496,187
Courtyard by Marriott II
Ltd., Series B,
10.75%, 2/1/08 (h).......... 525 567,000
------------
1,063,187
------------
RETAIL--0.8%
May Department Stores Co.,
9.875%, 12/1/02 (h)......... 407 460,179
Pathmark Stores Inc.,
9.625%, 5/1/03.............. 240 234,600
------------
694,779
------------
TECHNOLOGY--0.7%
Wright Medical Technology
Inc., 10.75%, 7/1/00........ 557 562,570
------------
TELECOMMUNICATIONS--0.2%
Phonetel Technologies, Inc.,
12.00%, 12/15/06............ 200 202,000
------------
TRANSPORTATION--0.7%
Greyhound Lines Inc., 11.50%,
4/15/07 (i)................. 547 579,820
------------
UTILITIES--0.9%
Calpine Corp.,
10.50%, 5/15/06............. 275 298,375
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
(CONTINUED)
United States West Capital
Funding Inc.,
6.85%, 1/15/02.............. $ 476 $ 475,491
------------
773,866
------------
WHOLESALE TRADE--0.1%
Smith's Food & Drug Centers
Inc., 11.25%, 5/15/07....... 100 117,000
------------
TOTAL CORPORATE BONDS
(Identified cost
$18,653,679)................ 19,011,372
------------
MORTGAGE PASS-THROUGH
SECURITIES--40.3%
Federal Home Loan Mortgage
Corp.,
5.753%, 10/1/26 (f)........ 369 377,434
5.979%, 1/1/27 (f)......... 356 352,183
6.14%, 9/25/36 (f)......... 311 305,304
6.20%, 11/1/26 (f)......... 339 349,454
6.373%, 10/1/25............ 527 530,659
6.50%, 4/1/11.............. 82 80,416
6.50%, 2/1/11.............. 732 718,285
6.50%, 4/15/22............. 775 760,227
6.50%, TBA................. 1,511 1,481,717
6.878%, 9/1/26 (f)......... 458 470,309
7.00%, TBA................. 1,082 1,080,301
7.00%, 1/1/11.............. 639 639,887
7.00%, 3/1/11.............. 78 78,444
7.00%, 8/1/25.............. 926 910,096
7.00%, 9/1/25.............. 571 561,023
Federal National Mortgage
Association,
5.933%, 3/1/27 (f)......... 351 348,349
6.126%, 8/1/26 (f)......... 427 427,215
6.25%, 3/25/23............. 367 352,893
6.309%, 7/1/36 (f)......... 343 345,105
6.50%, TBA................. 499 492,917
6.50%, 12/25/22............ 502 488,430
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------
<S> <C> <C>
6.503%, 1/1/26 (f)......... $ 381 $ 388,335
7.00%, TBA................. 2,206 2,161,174
7.00%, 3/1/27.............. 451 441,914
7.00%, 2/1/27.............. 1,393 1,365,175
7.50%, TBA................. 1,265 1,267,758
7.50%, 12/1/26............. 116 115,602
7.506%, 6/1/25 (f)......... 300 308,010
7.898%, 7/1/25 (f)......... 450 466,383
8.00%, TBA................. 2,609 2,666,868
10.00%, 8/1/18............. 368 120,008
10.095%, 5/25/21 (f)....... 257 88,595
Government National Mortgage
Association,
6.00%, TBA................. 5,609 5,612,534
6.50%, TBA................. 5,566 5,624,276
7.00%, 1/20/24 (f)......... 421 431,614
7.125%, 9/20/20 (f)........ 344 354,308
8.50%, TBA................. 2,336 2,427,660
9.00%, 9/15/25............. 99 104,595
------------
TOTAL MORTGAGE PASS-THROUGH
SECURITIES (Identified cost
$35,006,662)................ 35,095,457
------------
U.S. GOVERNMENT
OBLIGATIONS--15.3%
United States Treasury Notes,
3.375%, 1/15/07............ 1,617 1,578,480
5.875%, 11/15/05........... 380 363,554
6.375%, 3/31/01............ 2,080 2,082,933
7.50%, 11/15/01............ 4,052 4,222,305
United States Treasury
Strips,
0.00%, 5/15/05............. 6,010 3,599,209
0.00%, 5/15/07............. 2,262 1,179,588
0.00%, 2/15/08............. 582 287,630
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified cost
$13,240,538)................ 13,313,699
------------
</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, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -----------------------------------------------------
<S> <C> <C>
LAZARD BOND
PORTFOLIO (CONTINUED)
REPURCHASE AGREEMENT--25.8%
State Street Bank and Trust
Company, 5.65%, 7/1/97
(Dated 06/30/97,
collateralized by
$22,460,000 United States
Treasury Notes, 6.25%,
03/31/99, with a value of
$22,896,757) (h)
(Identified
cost $22,444,000)........... $22,444 $ 22,444,000
------------
<CAPTION>
DESCRIPTION VALUE
- --------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified cost
$107,921,529) (d)........... 124.7% $108,493,379
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS............. (24.7) (21,523,311)
----- ------------
NET ASSETS.................... 100.0% $ 86,970,068
===== ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO*
CURRENCY DENOMINATED
BONDS--83.5%
ARGENTINA PESO--2.1%
Argentina Bocon, (USD),
5.71%, 9/1/02 (f)........ 1,050 $ 1,236,375
Republic of Argentina,
3.24%, 4/1/07 (f)........ 5,105 5,371,293
------------
TOTAL ARGENTINA PESO....... 6,607,668
------------
AUSTRALIAN DOLLAR--2.4%
Commonwealth of Australia,
9.00%, 9/15/04 (h)....... 8,976 7,601,308
------------
BRAZILIAN REAL--0.4%
Chase Brazil Note,
16.58%, 7/1/97........... 1,250 1,161,117
------------
BRITISH POUND--1.6%
Birmingham Midshires
Building Society,
9.125%, 1/5/06........... 350 620,741
British Aerospace PLC,
11.88%, 12/29/08......... 400 866,623
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Finance For Residence
Society House,
11.13%, 10/5/58 (f)...... 600 $ 1,353,577
North American Capital
Corp.,
8.25%, 11/17/03.......... 662 1,118,966
Sutton Bridge Financing
Ltd.,
8.63%, 6/30/22........... 517 873,961
------------
TOTAL BRITISH POUND........ 4,833,868
------------
CANADIAN DOLLAR--0.9%
Government of Canada,
4.25%, 12/1/21 (f)....... 3,245 2,536,925
Quebec Housing,
8.95%, 5/13/13........... 386 326,337
------------
TOTAL CANADIAN DOLLAR...... 2,863,262
------------
COLOMBIAN PESO--0.8%
Cargil GMAC Columbian Note,
0.00%, 11/4/97........... 147,000 123,473
Salomon COP Linked Clean
Note, (USD),
0.00%, 10/8/97........... 960 888,835
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 32
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Salomon Corp. Linked Clean
Note, (USD),
0.00%, 12/3/97........... 633 $ 665,435
0.00%, 12/19/97.......... 859 767,728
------------
TOTAL COLOMBIAN PESO....... 2,445,471
------------
CZECH KORUNA--1.2%
CEZ AS,
11.30%, 6/6/05........... 34,000 951,174
Credit Local Czk,
10.63%, 3/12/98.......... 6,500 191,866
Komercni Banka,
11.40%, 9/28/01.......... 5,000 141,267
Skofin,
11.625%, 2/9/98.......... 22,700 675,658
Wood & Co.,
0.00%, 6/4/98............ 62,000 1,620,326
------------
TOTAL CZECH KORUNA......... 3,580,291
------------
DANISH KRONE--2.8%
Kreditforeningen Denmark,
10.20%, 4/15/04 (f)...... 9,590 1,667,443
Unikredit,
8.00%, 10/1/26 (h)....... 45,236 7,092,076
------------
TOTAL DANISH KRONE......... 8,759,519
------------
EGYPTIAN POUND--1.2%
Egyptian Discounted
Treasury Bill,
0.00%, 8/26/97........... 1,000 290,184
0.00%, 11/25/97.......... 2,000 567,869
0.00%, 12/2/97........... 10,000 2,834,630
------------
TOTAL EGYPTIAN POUND....... 3,692,683
------------
ESTONIAN KROON--0.2%
Merita Bank,
10.00%, 12/28/98 (f)..... 7,000 513,622
------------
FRENCH FRANC--1.5%
Credit Foncier de France,
7.50%, 3/29/05........... 24,895 4,685,261
------------
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
GERMAN MARK--1.0%
Autobahn Tank & Rast,
6.00%, 10/16/00.......... 1,050 $ 629,121
Bt & Co Croatia Index Note,
0.00%, 3/1/99............ 1,500 713,233
Bt Croatia,
0.00%, 10/1/99........... 1,000 536,666
Exide Holdings,
9.13%, 4/15/04 (i)....... 1,687 991,443
Impress Metal Pack Holding,
9.88%, 5/29/07 (i)....... 669 397,963
------------
TOTAL GERMAN MARK.......... 3,268,426
------------
GREEK DRACHMA--1.1%
Republic of Hellenic,
14.30%,
8/14/03 (f), (h)......... 830,000 3,120,621
14.80%, 6/30/00 (f)...... 110,000 409,492
------------
TOTAL GREEK DRACHMA........ 3,530,113
------------
HUNGARIAN FORINT--1.0%
ING,
21.60%, 7/9/97........... 243,000 1,297,465
ING, (USD),
0.00%, 3/18/98........... 313 290,924
Republic of Hungary,
16.50%, 4/12/99.......... 102,000 531,324
19.50%, 1/12/99.......... 50,000 271,579
30.00%, 7/5/97........... 94,000 751,222
------------
TOTAL HUNGARIAN FORINT..... 3,142,514
------------
INDONESIAN RUPIAH--3.4%
Asia Investment
International, Ltd.,
0.00%, 8/14/97........... 860,000 347,768
0.00%, 2/4/98............ 1,320,000 493,371
Asia Investment
International, Ltd.,
(USD),
0.00%, 8/25/97........... 90 88,356
0.00%, 11/12/97.......... 1,225 1,178,396
0.00%, 2/4/98............ 200 183,370
0.00%, 2/13/98........... 2,500 1,782,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 33
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Barito Pacific Timber,
0.00%, 10/7/97........... 1,000,000 $ 395,341
BDNI Corp.,
0.00%, 12/3/97........... 1,500,000 582,685
Matahari MGS,
0.00%, 7/15/97........... 800,000 327,334
Polysindo Eka,
0.00%, 3/16/98........... 1,000,000 367,457
19.00%, 4/26/99.......... 5,000,000 2,111,431
PT Davomas Abadi,
0.00%, 2/4/98............ 1,000,000 376,183
Sekar BUMI,
0.00%, 8/14/97........... 4,000,000 1,616,572
0.00%, 9/3/97............ 2,000,000 803,928
------------
TOTAL INDONESIAN RUPIAH.... 10,654,192
------------
ITALIAN LIRA--2.1%
Republic of Italy,
12.00%, 1/17/99 (h)...... 5,065,000 3,212,321
12.50%, 3/1/01 (h)....... 4,775,000 3,357,393
------------
TOTAL ITALIAN LIRA......... 6,569,714
------------
JAPANESE YEN--1.4%
Asterique,
2.48%, 1/23/02........... 262,675 2,291,703
Nippon Credit Bank,
1.80%, 7/27/00........... 140,000 1,102,338
3.05%, 5/25/01........... 120,000 949,154
------------
TOTAL JAPANESE YEN......... 4,343,195
------------
KENYAN SHILLING--0.7%
Kenyan Treasury Bill,
0.00%, 7/28/97........... 26,000 470,945
0.00%, 9/8/97............ 57,000 1,015,155
0.00%, 6/29/98........... 34,000 623,853
------------
TOTAL KENYAN SHILLING...... 2,109,953
------------
LEBANESE POUND--2.5%
DMG ING Linked CD, (USD),
0.00%, 6/15/98........... 1,415 1,271,519
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
DMG LBP Treasuary Bills,
(USD),
0.00%, 1/21/99........... 1,160 $ 1,160,000
Paribas LBP Treasury Bill,
0.00%, 4/30/98........... 1,160,000 669,368
0.00%, 5/28/98........... 2,500,000 1,429,615
0.00%, 9/4/98............ 910,000 529,836
16.08%, 3/11/99 (f)...... 360,000 234,389
16.08%, 5/13/99.......... 694,612 451,797
18.70%, 1/14/99.......... 2,040,000 1,375,236
20.04%, 12/17/98 (f)..... 930,000 637,214
------------
TOTAL LEBANESE POUND....... 7,758,974
------------
MALAYSIAN RINGGIT--0.1%
Peregrine Investment
Holdings Ltd.,
7.90%, 7/30/97........... 1,000 395,973
------------
MEXICAN PESO--3.0%
Mexican Cetes,
0.00%, 10/16/97.......... 10,450 1,236,494
0.00%, 11/6/97........... 9,350 1,093,630
0.00%, 12/4/97........... 19,228 2,215,000
0.00%, 3/5/98............ 840 92,036
0.00%, 5/7/98............ 15,010 1,591,722
0.00%, 6/4/98............ 8,818 922,095
UDI Bonos,
7.00%, 5/27/99........... 1,600 382,570
United Mexican States,
(USD),
6.81%, 12/31/19.......... 750 695,625
6.84%, 12/31/19 (f)...... 750 695,625
6.87%, 12/31/19 (f)...... 35 32,463
7.88%, 8/6/01 (f)........ 281 281,815
------------
TOTAL MEXICAN PESO......... 9,239,075
------------
MOROCCAN DIRHAM--0.4%
Morocco Restructuring &
Consolidation Agreement,
(USD),
6.81%, 1/1/09 (f)........ 1,500 1,368,750
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 34
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
NEW ZEALAND DOLLAR--2.2%
Government of New Zealand,,
10.00%, 3/15/02 (h)...... 8,963 $ 6,855,221
------------
NORWEGIAN KRONE--0.6%
Sparebanken Norway,
10.25%, 6/23/03 (f)...... 12,250 1,766,833
------------
PHILIPPINES PESO--0.1%
Government of Philippines,
11.88%, 1/16/99.......... 10,000 377,578
------------
POLISH ZLOTY--1.1%
Government of Poland,
16.00%, 10/12/98......... 8,420 2,385,218
Poland Treasury Bill,
0.00%, 8/27/97........... 400 117,779
12.00%, 6/12/02.......... 1,300 310,513
15.00%, 6/12/99.......... 1,800 492,925
------------
TOTAL POLISH ZLOTY......... 3,306,435
------------
RUSSIAN ROUBLE--2.6%
Chase Russian GKO, (USD),
0.00%, 12/3/97........... 1,588 1,807,748
0.00%, 6/19/98........... 1,640 1,654,377
Russia IAN, (USD),
0.00%, 12/15/15.......... 2,250 1,718,437
Sal Delay Holdings, (USD),
0.00%, 10/29/97.......... 340 368,451
0.00%, 11/20/97.......... 345 366,164
0.00%, 11/28/97.......... 436 463,314
0.00%, 11/28/97.......... 1,350 1,502,320
0.00%, 12/10/97.......... 300 330,816
------------
TOTAL RUSSIAN ROUBLE....... 8,211,627
------------
SOUTH AFRICAN RAND--1.1%
Eskom,
15.00%, 10/1/98.......... 2,245 495,562
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Lesotho Water,
13.00%, 9/15/10.......... 15,050 $ 2,978,819
------------
TOTAL SOUTH AFRICAN RAND... 3,474,381
------------
SPANISH PESETA--1.3%
Government of Spain,
11.30%, 1/15/02 (h)...... 467,170 3,891,128
------------
SWITZERLAND FRANC--0.1%
Cesar Co.,
0.13%, 9/30/98........... 250 159,247
0.13%, 9/30/00........... 300 184,931
------------
TOTAL SWITZERLAND FRANC.... 344,178
------------
THAILAND BAHT--0.4%
Finance One Bill of
Exchange,
0.00%, 8/28/97........... 10,000 96,506
0.00%, 10/15/97.......... 10,000 96,506
Finance One PLC, (USD),
2.00%, 8/31/01........... 1,375 694,375
Phatra Thanakit Co., Ltd.,
0.00%, 12/18/97.......... 10,000 333,569
------------
TOTAL THAILAND BAHT........ 1,220,956
------------
UNITED STATES DOLLAR--41.1%
Affinity Group Holdings,
Inc.,
11.00%, 4/1/07 (i)....... 1,085 1,139,250
American Builders &
Contractors Supply Co.,
10.63%, 5/15/07 (i)...... 1,000 1,032,500
American Pad & Paper Co.,
13.00%, 11/15/05......... 374 430,100
American Rice, Inc.,
13.00%, 7/31/02.......... 854 879,620
Americold Corp.,
12.875%, 5/1/08 (h)...... 1,345 1,439,150
AMF Group Inc.,
10.875%, 3/15/06 (h)..... 950 1,026,000
Amtrol Inc.,
10.625%, 12/31/06........ 1,791 1,867,117
Archibald Candy Corp.,
10.25%, 7/1/04 (i)....... 464 472,120
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 35
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Asset Securitization Corp.,
Series 1996-D2, Class
ACS2,
1.61%, 2/14/29 (f)....... 5,720 $ 570,212
Atlantic Express
Transportation Corp.,
10.75%, 2/1/04 (h), (i).. 1,672 1,738,880
Bankers Trust,
0.00%, 10/29/97.......... 1,444 1,345,339
BCF LLC,
6.10%, 3/25/37 (f)....... 2,003 1,990,889
BE Aerospace Inc.,
9.88%, 2/1/06............ 521 548,353
Bear Stearns Secured
Investors Trust, Series
1998, Class IO,
3.15%, 10/30/18 (f)...... 13,897 1,719,802
Booth Creek Ski Group,
Inc.,
12.50%, 3/15/07 (i)...... 1,750 1,802,500
Cablevision Systems Corp.,
10.50%, 5/15/16.......... 162 176,580
Calpine Corp.,
10.50%, 5/15/06.......... 380 412,300
Carpenter W R North America
Inc.,
10.63%, 6/15/07 (i)...... 895 895,000
Carrols Corp.,
11.50%, 8/15/03.......... 820 871,250
Carter (William) Co.,
10.38%, 12/1/06.......... 1,150 1,204,625
Casino America, Inc.,
12.50%, 8/1/03........... 701 723,782
Ce Casecnan Water & Energy,
Inc. Series B,
11.95%, 11/15/10 (h)..... 1,650 1,881,000
Chatwins Group Inc.,
13.00%, 5/1/03........... 1,000 1,042,500
Chief Auto Parts Inc.,
10.50%, 5/15/05.......... 1,270 1,270,000
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Cobb Theatres LLC/Finance
Corp.,
10.625%, 3/1/03 (h)...... 1,000 $ 1,105,000
Collins & Aikman Corp.,
11.50%, 4/15/06.......... 1,205 1,355,625
Commemorative Brands Inc.,
11.00%, 1/15/07.......... 1,500 1,571,250
Commodore Media Inc.,
7.50%, 5/1/03 (f)........ 650 708,500
Commonwealth Aluminum
Corp.,
10.75%, 10/1/06 (h)...... 1,500 1,560,000
Courtyard by Marriott II
Ltd., Series B,
10.75%, 2/1/08 (h)....... 1,150 1,242,000
CSK Auto, Inc.,
11.00%, 11/1/06.......... 500 520,000
Dade International Inc.,
11.125%, 5/1/06.......... 200 223,000
Den Norske Credit,
6.06%, 11/29/49 (f)...... 800 714,520
Dictaphone Corp.,
11.75%, 8/1/05........... 960 883,200
Dobson Communications
Corp.,
11.75%, 4/15/07.......... 500 492,500
Dynacare Inc.,
10.75%, 1/15/06 (h)...... 1,965 2,048,512
Econophone, Inc.,
13.50%, 7/15/07 (i)...... 261 261,000
Empire Gas Corp.,
7.00%, 7/15/04 (f)....... 1,038 934,200
Envirodyne Industries,
Inc.,
10.25%, 12/1/01 (h)...... 1,720 1,726,450
Envirosource Inc.,
9.75%, 6/15/03........... 245 237,650
Export-Import Bank of
Japan,
8.00%, 6/4/00............ 287 287,519
Falcon Holdings Group LP,
11.00%, 9/15/03.......... 1,846 1,855,481
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE> 36
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Federal Home Loan Mortgage
Corp., Series T4, Class
AWAC,
6.14%, 9/25/36 (f)....... 665 $ 652,840
Federal National Mortgage
Association,
5.42%, 12/16/97.......... 870 869,591
Federal National Mortgage
Association, Series 23,
Class 2,
10.00%, 9/1/17........... 3,989 1,284,208
Federal National Mortgage
Association, Series 38,
Class 2,
10.00%, 8/1/18........... 1,405 458,459
Federal National Mortgage
Association, Series G-13,
Class L,
10.10%, 5/25/21 (f)...... 1,054 364,077
Federal Republic of Brazil,
6.94%, 4/15/12 (f)....... 250 205,938
Forman Petroleum Corp.,
13.50%, 6/1/04 (f)....... 885 876,150
Freedom Chemical Co.,
10.63%, 10/15/06......... 1,093 1,146,284
Fundy Cable Ltd.,
11.00%, 11/15/05......... 475 513,000
Government National
Mortgage Association,
6.00%, TBA............... 4,430 4,432,791
Government National
Mortgage Association,
6.50%, TBA............... 4,380 4,425,859
Greyhound Lines Inc.,
11.50%, 4/15/07 (i)...... 1,583 1,677,980
Hayes Wheels International,
Inc.,
11.00%, 7/15/06.......... 615 676,500
Hollywood Casino Inc.,
12.75%, 11/1/03.......... 1,040 1,105,000
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Hong Kong & Shanghai Bank,
5.88%, 8/29/49 (f), (h).. 1,200 $ 1,084,380
Huntingdon International
Holdings Capital Ltd.,
7.50%, 9/25/06........... 50 40,000
7.50%, 9/25/06 (i)....... 680 537,200
ICF Kaiser International
Inc.,
13.00%, 12/31/03 (f)..... 1,892 1,910,920
ICO Inc.,
10.38%, 6/1/07 (i)....... 415 426,413
Interbank AKK Trust, Series
1995-1, Class 1,
9.00%, 2/28/01 (i)....... 1,000 972,100
International Specialty
Products Holdings, Inc.,
9.75%, 2/15/02........... 250 268,125
Intertek Finance Corp. PLC,
10.25%, 11/1/06.......... 372 385,020
Isveimer,
6.43%, 12/18/97.......... 475 474,525
IXC Communications Inc.,
12.50%, 10/1/05.......... 950 1,077,062
K & F Industries, Inc.,
10.38%, 9/1/04 (h)....... 1,300 1,378,000
Lennar Central Partners
Ltd., Series 1994-1, Class
D,
9.89%, 9/15/04 (i)....... 102 103,043
Lodgenet Entertainment
Corp.,
10.25%, 12/15/06......... 1,750 1,785,000
Maxus Energy Corp.,
10.83%, 9/1/04........... 369 421,583
Maxxam Group Holdings Inc.,
12.00%, 8/1/03........... 1,500 1,556,250
Merrill Lynch Mortgage
Investments Inc., Series
1996-C1, Class IO,
0.57%, 4/25/28 (f), (i).. 15,130 466,398
Morgan Guarantee Trust,
0.00%, 7/31/97........... 400 111,232
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE> 37
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
0.00%, 12/19/97.......... 300 $ 287,136
0.00%, 2/13/98........... 600 564,709
Morgan Stanley Capital One
Inc., Series 1996-WF1,
Class X,
1.42%, 1/15/13 (f), (i).. 5,981 483,190
Morgan Stanley Capital,
Inc. Series 1997-C1, Class
I0,
2.22%, 2/15/20 (f)....... 11,031 630,869
Nextel Communications Inc.,
9.75%, 9/1/03............ 1,916 1,657,340
Nextlink Communications,
Inc.,
12.50%, 4/15/06.......... 750 798,750
Orbcomm Global LP,
14.00%, 8/15/04.......... 1,850 1,868,500
Parker Drilling Corp.,
9.75%, 11/15/06.......... 500 525,625
Pathmark Stores Inc.,
9.63%, 5/1/03............ 1,340 1,309,850
Paxson Communications
Corp.,
11.63%, 10/1/02.......... 1,000 1,080,000
Pen-Tab Industries Inc.,
10.88%, 2/1/07 (i)....... 1,750 1,789,375
Petro Stopping Centers,
10.50%, 2/1/07 (i)....... 1,865 1,934,937
Petrobras,
0.00%, 2/9/98............ 800 707,200
Phonetel Technologies,
Inc.,
12.00%, 12/15/06......... 1,450 1,464,500
Pierce Leahy Corp.,
11.13%, 7/15/06 (h)...... 1,380 1,504,200
Plains Resources Inc.,
10.25%, 3/15/06.......... 315 333,900
Poindexter (J.B.) & Co.,
12.50%, 5/15/04.......... 1,433 1,433,000
Quest Diagnostics, Inc.,
10.75%, 12/15/06......... 1,248 1,357,200
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Ralph's Grocery Co.,
11.00%, 6/15/05 (i)...... 500 $ 540,000
Reliance Industries Ltd.,
8.13%, 9/27/05........... 350 353,719
8.13%, 9/27/05 (i)....... 100 100,500
9.38%, 6/24/26 (i)....... 500 534,900
Renaissance Cosmetics,
11.75%, 2/15/04.......... 791 808,797
Residential Mortgage
Funding,
2.01%, 1/3/20 (f)........ 13,491 1,304,908
Residential Reina Ltd.,
12.50%, 12/15/08 (f)..... 1,000 1,005,500
Rifkin Acquisitions
Partners LP,
11.13%, 1/15/06 (h)...... 1,223 1,290,265
RMOF,
2.16%, 1/31/22........... 21,029 2,033,918
2.19%, 7/15/22........... 30,464 3,036,975
RSL Communications LTD,
12.25%, 11/15/06......... 808 828,200
Sabreliner Corp.,
12.50%, 4/15/03.......... 689 695,890
Silgan Corp.,
11.75%, 6/15/02.......... 777 827,505
Smith's Food & Drug Centers
Inc.,
11.25%, 5/15/07.......... 710 830,700
Spanish Broadcasting System
Inc.,
11.00%, 3/15/04 (i)...... 717 756,435
Structured Asset
Securitization Corp.,
Series 1996-CFL, Class X1,
1.34%, 2/25/28 (f)....... 6,285 324,080
Structured Asset
Securitization Corp.,
Series 1996-CFL, Class X2,
1.25%, 2/25/28 (f)....... 3,392 101,818
Subic Power Corp.,
9.50%, 12/28/08.......... 662 684,046
Sullivan Broadcasting,
10.25%, 12/15/05......... 400 413,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE> 38
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Terex Corp.,
13.25%, 5/15/02.......... 1,000 $ 1,130,000
Tokheim Corp.,
11.50%, 8/1/06 (h)....... 1,500 1,638,750
Transamerican Energy Corp.,
11.50%, 6/15/02 (i)...... 1,764 1,711,080
Trumps Castle Funding Inc.,
11.75%, 11/15/03......... 1,050 934,500
Unisys Corp.,
12.00%, 4/15/03 (h)...... 1,761 1,923,892
United States Department of
Veteran Affairs REMIC,
Series 1997-1, Class IO,
0.37%, 2/15/27 (f)....... 34,793 739,370
United States Treasury
Notes,
3.38%, 1/15/07........... 3,012 2,940,203
5.00%, 1/31/98........... 1,356 1,351,132
5.13%, 3/31/98........... 604 601,638
6.13%, 3/31/98........... 183 183,571
Urohealth Systems Inc.,
12.50%, 4/1/04 (i)....... 754 731,380
Waxman Industries Inc.,
12.75%, 6/1/04........... 220 185,900
Wright Medical Technology
Inc.,
10.75%, 7/1/00........... 1,679 1,695,790
------------
TOTAL UNITED STATES
DOLLAR.................... 127,859,847
------------
VENEZUELAN BOLIVAR--1.1%
Chase Veb Tem,
21.53%, 12/12/97 (f)..... 150,319 309,073
Republic of Venezuela,
15.55%, 12/26/97......... 500,000 992,736
Republic of Venezuela,
(USD),
6.75%, 3/31/07........... 952 883,333
Venezuela DCB, (USD),
6.88%, 12/18/08 (f)...... 500 448,594
Venezuela FLIRB, (USD),
6.75%, 3/31/07 (f), (g).. 476 441,666
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Venezuela TEM,
18.81%, 10/3/97.......... 180,000 $ 367,786
------------
TOTAL VENEZUELAN BOLIVAR... 3,443,188
------------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost
$259,832,984)............. 259,876,321
------------
<CAPTION>
SHARES
----------
<S> <C> <C>
PREFERRED STOCKS--2.3%
ICG Holdings, Inc. (i)..... 683 710,320
Cablevision Systems Corp... 2,648 274,730
Cablevision Systems
Corp. (a)................ 7,876 793,507
Georgetown Re Limited...... 2 1,000,000
Intermedia Communications,
Inc....................... 120 1,239,000
Paxson Communications Corp.
12.50%................... 700 703,500
Pegasus Communications
Corp...................... 1,329 1,299,098
Spanish Broadcasting System
Inc. (i).................. 1,250 1,162,500
Spanish Broadcasting
Systems Inc. (e), (i)..... 750 90,000
United Mexican States,
(USD) (l)................. 909,000 0
------------
TOTAL PREFERRED STOCKS
(Identified cost
$7,077,971)............... 7,272,655
------------
COMMERCIAL PAPER--6.4%
American Express Credit
Corp.,
5.55%, 7/30/97........... 200 199,106
Ford Motor Credit Corp.,
5.26%, 8/21/97........... 435 431,759
5.35%, 7/22/97........... 1,250 1,246,099
5.35%, 7/28/97........... 105 104,579
5.36%, 9/15/97........... 340 336,153
5.48%, 12/19/97.......... 1,165 1,134,675
5.54%, 9/18/97........... 425 419,833
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE> 39
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
5.56%, 7/11/97........... $ 360 $ 359,444
5.59%, 7/7/97............ 940 939,124
5.63%, 11/3/97........... 1,200 1,176,542
5.64%, 12/5/97........... 350 341,391
General Electric Capital
Corp.,
5.29%, 8/13/97........... 100 99,368
5.31%, 11/4/97........... 750 736,061
5.45%, 12/5/97........... 305 297,751
5.57%, 9/11/97........... 135 133,496
5.58%, 8/25/97........... 1,735 1,720,209
5.59%, 7/10/97........... 100 99,860
5.60%, 10/6/97........... 190 187,133
5.62%, 7/25/97........... 1,500 1,494,380
5.65%, 11/24/97.......... 2,660 2,599,049
5.67%, 11/12/97.......... 494 483,574
5.69%, 12/3/97........... 1,740 1,697,372
5.70%, 11/7/97........... 202 198,109
5.73%, 2/2/98............ 1,335 1,289,103
5.75%, 12/17/97.......... 210 205,286
5.76%, 10/29/97.......... 1,150 1,127,920
Prudential Funding Corp.,
5.30%, 8/5/97............ 800 795,878
5.62%, 10/6/97........... 130 128,031
------------
TOTAL COMMERCIAL PAPER
(Identified cost
$19,981,285).............. 19,981,285
------------
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
DISCOUNT NOTES--1.4%
Federal Farm Credit Bank
Discount Note,
5.27%, 12/18/97.......... $ 2,160 $ 2,106,246
Federal Home Loan Bank
Consolidated Discount
Note,
5.53%, 5/22/98........... 623 591,898
Federal National Mortgage
Association Discount Note,
5.19%, 2/13/98........... 895 865,710
5.34%, 1/12/98........... 810 786,571
------------
TOTAL DISCOUNT NOTES
(Identified cost
$4,350,425)............... 4,350,425
------------
REPURCHASE AGREEMENT--6.9%
State Street Bank and Trust
Company, 5.65%, 7/1/97
(Dated 06/30/97,
collateralized by
$21,315,000 United States
Treasury Notes, 6.25%,
03/31/99, with a value of
$21,729,491) (h)
(Identified cost
$21,301,000).............. 21,301 21,301,000
------------
TOTAL INVESTMENTS
(Identified cost
$312,543,665) (d)......... 100.5% $312,781,686
LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS...... (0.5) (1,595,095)
----- ------------
NET ASSETS.................. 100.0% $311,186,591
===== ============
</TABLE>
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by type are as follows:
Collateralized Mortgage Obligations 4.7%, Commercial Paper 6.4%, Corporate
Bonds 41.4%, Foreign Government Obligations 21.2%, Mortgage Backed Securities
2.9%, Preferred Stock 2.0%, Repurchase Agreement 6.8%, Structured Notes 8.7%,
United States Government Obligations 6.4%.
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 40
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
Forward Foreign Currency Contracts open at June 30, 1997:
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Cost Unrealized
Foreign Currency Expiration Foreign on Origination Current Appreciation
Purchase Contracts Date Currency Date Value (Depreciation)
- ------------------- ---------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
AUD 9/12/97 13,157,884 $ 10,020,159 $ 9,952,231 $ 67,928
CAD 9/12/97 4,195,552 3,070,785 3,051,848 18,937
CHF 9/12/97 807,647 565,302 558,026 7,276
DEM 7/25/97 2,552,535 1,499,999 1,466,292 33,707
DEM 9/12/97 24,956,714 14,543,741 14,385,683 158,058
DKK 9/12/97 58,814,849 8,984,579 8,895,854 88,725
ESP 9/12/97 925,617,936 6,348,689 6,286,713 61,976
FRF 9/12/97 27,484,634 4,745,275 4,699,562 45,714
GBP 9/12/97 4,480,963 7,320,663 7,445,797 (125,135)
GRD 11/28/97 165,000,000 604,152 590,248 13,904
ITL 9/12/97 11,243,113,630 6,595,168 6,600,856 (5,688)
JPY 9/12/97 989,689,918 8,691,384 8,726,586 (35,202)
NOK 9/12/97 13,884,708 1,951,470 1,902,914 48,556
PHP 11/12/97 800,000 29,786 29,754 32
THB 8/28/97 10,000,000 371,333 377,993 (6,660)
THB 10/15/97 10,000,000 367,918 371,596 (3,678)
THB 12/18/97 10,000,000 363,901 365,455 (1,554)
XEU 9/12/97 3,334,948 3,776,161 3,771,396 4,765
-------------- -------------- --------------
79,850,465 79,478,804 371,661
</TABLE>
<TABLE>
<CAPTION>
Foreign Currency
Sale Contracts
- -------------------
<S> <C> <C> <C> <C> <C>
CHF 9/12/97 316,233 219,776 218,495 (1,281)
CLP 7/10/97 42,000,000 100,000 100,797 797
CLP 12/23/97 958,040,784 2,160,000 2,264,315 104,315
CLP 1/28/98 373,116,085 850,000 879,271 29,271
CLP 6/3/98 177,890,870 410,000 415,335 5,335
COP 7/22/97 1,372,500,000 1,250,000 1,248,705 (1,295)
COP 7/28/97 116,581,500 105,000 105,845 845
COP 10/29/97 1,315,000,000 1,157,947 1,154,388 (3,560)
COP 12/3/97 1,998,390,000 1,740,000 1,732,953 (7,047)
COP 12/17/97 241,685,900 210,981 208,568 (2,413)
COP 6/3/98 220,312,800 180,000 179,676 (324)
CRC 8/5/97 190,572,416 800,000 808,098 8,098
CRC 8/21/97 104,104,130 435,000 438,566 3,566
DEM 9/12/97 1,131,161 657,348 652,030 (5,318)
ESP 9/12/97 342,715,020 2,328,069 2,327,689 (379)
GBP 9/12/97 1,107,226 1,805,010 1,839,824 34,814
GRD 11/28/97 165,000,000 609,306 590,248 (19,058)
HRK 7/25/97 9,171,450 1,500,000 1,473,750 (26,250)
HUF 11/10/97 141,495,675 750,000 718,747 (31,253)
INR 8/13/97 3,503,600 95,000 97,774 2,774
INR 10/6/97 11,703,200 320,000 324,771 4,771
INR 1/23/98 20,516,300 530,000 562,377 32,377
INR 2/18/98 32,473,350 845,000 886,783 41,783
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE> 41
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Cost Unrealized
Foreign Currency Expiration Foreign on Origination Current Appreciation
Sale Contracts Date Currency Date Value (Depreciation)
- ------------------- ---------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INR 3/13/98 7,435,000 $ 200,000 $ 202,361 $ 2,361
JPY 9/12/97 92,686,589 820,168 817,264 (2,905)
KES 7/7/97 53,103,420 940,000 973,233 33,233
KES 8/25/97 43,575,350 785,000 788,357 3,357
KES 9/17/97 24,734,188 445,120 444,082 (1,038)
KRW 8/8/97 510,292,500 570,000 572,479 2,479
KRW 9/15/97 307,768,000 340,000 343,907 3,907
KRW 10/1/97 1,670,800,000 1,865,253 1,863,886 (1,367)
MXN 12/11/97 2,745,915 305,000 324,013 19,013
MYR 7/30/97 503,400 200,000 199,258 (742)
MYR 11/7/97 800,088 317,240 315,388 (1,852)
MYR 11/24/97 6,709,052 2,660,000 2,642,631 (17,368)
MYR 12/5/97 117,345 70,000 69,820 (180)
PHP 11/12/97 13,256,490 494,000 493,040 (960)
PLN 8/28/97 3,173,855 950,000 941,776 (8,224)
ROL 7/11/97 3,032,640,000 360,000 430,279 70,279
ROL 9/9/97 1,029,983,850 135,000 135,603 603
UYU 11/3/97 11,880,876 1,200,000 1,177,932 (22,068)
VEB 12/5/97 146,848,800 280,000 283,838 3,838
VEB 12/12/97 449,355,000 870,000 866,891 (3,109)
VEB 12/22/97 600,266,250 1,165,000 1,153,911 (11,089)
VEB 1/15/98 539,590,000 1,000,000 1,026,684 26,684
VEB 2/9/98 707,883,750 1,335,000 1,331,106 (3,894)
VEB 3/11/98 348,666,500 650,000 646,091 (3,909)
-------------- -------------- --------------
37,015,218 37,272,835 257,617
--------------
$ 629,278
==============
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
39
<PAGE> 42
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO
COMMON STOCKS--92.9%
AEROSPACE & DEFENSE--1.5%
Alliant Techsystems, Inc.
(a)....................... 332,855 $ 18,307,025
--------------
AIRLINES--1.7%
Atlas Air, Inc. (a)........ 337,000 11,626,500
USAir Group, Inc. (a)...... 279,100 9,768,500
--------------
21,395,000
--------------
APPAREL & TEXTILES--0.8%
Warnaco Group, Inc.
Class A.................. 319,875 10,196,016
--------------
AUTO PARTS--1.9%
Durakon Industries, Inc.
(a)....................... 430,000 4,085,000
Exide Corp. ............... 75,100 1,647,506
Standard Motor Products,
Inc. ..................... 218,435 3,003,481
Tower Automotive, Inc.
(a)....................... 336,800 14,482,400
--------------
23,218,387
--------------
BANKING & FINANCIAL
SERVICES--5.5%
AMRESCO, Inc. (a).......... 587,800 12,637,700
Coast Savings Financial,
Inc. (a).................. 310,000 14,085,625
Cullen/Frost Bankers,
Inc. ..................... 324,000 13,729,500
Hibernia Corp. Class A..... 908,770 12,665,982
North Fork Bancorp, Inc. .. 747,540 15,978,667
--------------
69,097,474
--------------
BROADCASTING--0.9%
Cablevision Systems Corp.,
Class A (a)............... 58,000 3,132,000
Emmis Broadcasting Corp.,
Class A (a)............... 182,500 7,961,563
--------------
11,093,563
--------------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES AND
SUPPLIES--0.9%
American Pad & Paper Co.
(a)....................... 667,400 $ 11,262,375
--------------
CHEMICALS & PLASTICS--1.0%
Mississippi Chemical
Corp. .................... 623,845 12,944,784
--------------
COMPUTERS & BUSINESS
EQUIPMENT--4.0%
Lexmark International
Group, Inc. Class A (a)... 667,100 20,263,162
Stratus Computer, Inc.
(a)....................... 377,500 18,875,000
Wang Laboratories, Inc.
(a)....................... 545,600 11,628,100
--------------
50,766,262
--------------
CONGLOMERATES--0.2%
ACX Technologies, Inc.
(a)....................... 127,600 2,871,000
--------------
CONSTRUCTION MATERIALS--0.1%
Puerto Rican Cement
Company, Inc. ............ 35,000 1,139,688
--------------
CONTAINERS PAPER
& PLASTIC--0.6%
First Brands Corp. ........ 332,200 7,619,838
--------------
COSMETICS & TOILETRIES--1.0%
Alberto Culver Co. Class
A......................... 553,800 12,910,463
--------------
DRUGS & HEALTH CARE--6.5%
Integrated Health Services,
Inc. ..................... 477,230 18,373,355
Lincare Holdings, Inc.
(a)....................... 186,000 7,998,000
Magellan Health Services,
Inc. (a).................. 708,860 20,911,370
Perrigo Co. (a)............ 1,156,820 14,460,250
Sun Healthcare Group, Inc.
(a)....................... 660,000 13,736,250
Trigon Healthcare, Inc.
(a)....................... 256,500 6,220,125
--------------
81,699,350
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE> 43
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO
(CONTINUED)
ELECTRICAL EQUIPMENT--3.1%
American Power Conversion
Corp. (a)................. 357,215 $ 6,787,085
Anixter International, Inc.
(a)....................... 820,000 14,093,750
Belden, Inc. .............. 356,720 12,150,775
Fisher Scientific
International............. 113,300 5,381,750
--------------
38,413,360
--------------
ELECTRONICS--0.3%
AFA Protective Systems,
Inc. ..................... 15,100 2,008,300
Allen Organ Co. Class B.... 35,000 1,382,500
Boston Acoustics, Inc. .... 40,000 960,000
--------------
4,350,800
--------------
ENTERTAINMENT--0.5%
Scientific Games Holdings
Corp. (a)................. 281,500 5,805,938
--------------
FOOD & BEVERAGE--0.2%
Farmer Brothers Co. ....... 15,000 1,905,000
--------------
GAS EXPLORATION--0.3%
Barrett Resources Corp.
(a)....................... 134,000 4,011,625
--------------
HOTELS & RESTAURANTS--1.2%
Lone Star Steakhouse &
Saloon (a)................ 400,000 10,400,000
Morton's Restaurant Group,
Inc. (a).................. 209,900 4,171,762
--------------
14,571,762
--------------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--3.6%
Ethan Allen Interiors, Inc.
(a)....................... 222,700 12,693,900
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
Furniture Brands
International, Inc. (a)... 712,900 $ 13,812,437
Harman International
Industries, Inc. ......... 415,000 17,481,875
National Presto Industries,
Inc. ..................... 42,000 1,693,125
--------------
45,681,337
--------------
INDUSTRIAL & MACHINERY--6.0%
Briggs & Stratton Corp. ... 254,630 12,731,500
Durco International,
Inc. ..................... 611,785 17,894,711
Manitowoc Company, Inc. ... 309,500 14,469,125
Roper Industries, Inc. .... 249,100 12,922,063
United Dominion Industries,
Ltd. ..................... 696,000 17,095,500
--------------
75,112,899
--------------
INSURANCE--6.8%
American Bankers Insurance
Group, Inc. .............. 208,600 13,193,950
Amerin Corp. (a)........... 567,800 13,769,150
Delphi Financial Group,
Inc. Class A (a).......... 188,600 7,261,100
NAC Re Corp. .............. 339,905 16,442,904
Penncorp Financial Group,
Inc. ..................... 519,300 19,993,050
Reliance Group Holdings,
Inc. ..................... 1,180,000 14,012,500
--------------
84,672,654
--------------
LEISURE TIME--2.2%
Polaris Industries,
Inc. ..................... 338,100 11,009,381
Vail Resorts, Inc. (a)..... 650,000 16,453,125
--------------
27,462,506
--------------
MACHINERY--1.7%
McDermott International,
Inc. ..................... 713,200 20,816,525
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE> 44
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP
PORTFOLIO (CONTINUED)
MANUFACTURING--8.4%
Aeroquip-Vickers, Inc. .... 383,500 $ 18,120,375
Alltrista Corp. (a)........ 358,400 9,811,200
Carlisle Companies,
Inc. ..................... 372,000 12,973,500
Crane Co. ................. 471,290 19,705,813
Mark IV Industries,
Inc. ..................... 1,032,285 24,774,840
Modine Manufacturing
Co. ...................... 207,500 6,173,125
Varlen Corp. .............. 493,970 13,275,444
--------------
104,834,297
--------------
MEDICAL SUPPLIES--1.6%
Dentsply International,
Inc. ..................... 401,000 19,649,000
--------------
OFFICE EQUIPMENT--0.9%
Knoll, Inc. (a)............ 486,900 11,563,875
--------------
OIL & GAS--1.9%
Helmerich & Payne, Inc. ... 182,760 10,531,545
Vintage Petroleum, Inc. ... 432,900 13,311,675
--------------
23,843,220
--------------
PUBLISHING--2.8%
Banta Corp. ............... 646,750 17,543,094
Mecklermedia Corp. (a)..... 420,000 7,980,000
World Color Press, Inc.
(a)....................... 402,000 9,547,500
--------------
35,070,594
--------------
REAL ESTATE--4.3%
Alexander's, Inc. (a)...... 45,000 3,166,875
FelCor Suite Hotels,
Inc. ..................... 468,825 17,463,731
Glenborough Realty Trust,
Inc. ..................... 450,000 11,362,500
Kilroy Realty Corp. (a).... 411,000 10,377,750
Reckson Associates Realty
Corp. .................... 520,000 11,960,000
--------------
54,330,856
--------------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
RETAIL--0.9%
HSN, Inc. (a).............. 362,790 $ 11,337,188
--------------
RETAIL TRADE--2.7%
Carson Pirie Scott & Co.
(a)....................... 509,280 16,169,640
Proffitt's, Inc. (a)....... 393,000 17,242,875
--------------
33,412,515
--------------
STEEL--1.6%
UCAR International, Inc.
(a)....................... 432,000 19,764,000
--------------
TECHNOLOGY--1.4%
VLSI Technology, Inc. (a).. 765,300 18,080,212
--------------
TELECOMMUNICATIONS--2.2%
Associated Group, Inc.
Class A (a)............... 56,650 2,266,000
Class B (a)............... 256,650 9,945,187
CoreComm, Inc. (a)......... 230,058 3,968,501
NTL, Inc. (a).............. 476,000 11,840,500
Verbex Voice Systems, Inc.
(a), (j).................. 180,501 0
--------------
28,020,188
--------------
TELECOMMUNICATIONS
EQUIPMENT--5.5%
Allen Group, Inc. (a)...... 726,465 15,074,148
Glenayre Technologies, Inc.
(a)....................... 419,600 6,870,950
Network Equipment
Technologies, Inc. (a).... 604,335 10,878,030
Oak Industries, Inc. (a)... 461,485 13,267,694
Scientific-Atlanta,
Inc. ..................... 1,056,400 23,108,750
--------------
69,199,572
--------------
TEXTILES, SHOES AND
APPAREL--0.7%
WestPoint Stevens, Inc.
(a)....................... 237,700 9,300,013
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE> 45
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP
PORTFOLIO (CONTINUED)
TRANSPORTATION--3.5%
Budget Group, Inc. (a)..... 500,000 $ 17,250,000
Landstar Systems, Inc.
(a)....................... 600,000 16,875,000
Pittston Burlington Group.. 359,720 10,117,125
--------------
44,242,125
--------------
TRUCKING & FREIGHT FORWARDING--2.0%
Rollins Truck Leasing
Co. ...................... 694,990 10,337,976
Xtra Corp. ................ 336,000 14,763,000
--------------
25,100,976
--------------
TOTAL COMMON STOCKS
(Identified cost
$868,595,303)............ 1,165,074,262
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------
<S> <C> <C>
CONVERTIBLE BONDS--0.7%
COMMUNICATIONS--0.7%
International CableTel,
Inc. (i)
7.00%, 6/15/08............ $ 5,589 5,169,825
7.25%, 4/15/05............ 3,400 3,680,500
--------------
8,850,325
--------------
RESTAURANTS, LODGING
& ENTERTAINMENT--0.0%
Interactive Light Holdings,
Inc. 8.00%, 1/25/99 (a),
(j)....................... 1,000 500,000
--------------
TELECOMMUNICATIONS--0.0%
Verbex Voice Systems, Inc.
10.00%, 12/31/97 (a),
(j)....................... 100 0
--------------
TOTAL CONVERTIBLE BONDS
(Identified cost
$10,233,040).............. 9,350,325
--------------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS--0.0%
(Identified cost $1,500,000)
TELECOMMUNICATIONS--0.0%
Verbex Voice Systems,
Inc. (a), (j)............. 687,285 $ 0
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------
<S> <C> <C>
REPURCHASE AGREEMENT--8.7%
State Street Bank and Trust
Company, 5.65%, 7/1/97
(Dated 06/30/1997,
collateralized by
$111,800,000 United States
Treasury Notes, 5.75%,
12/31/1998, with a value
of $111,503,059)
(Identified cost
$109,314,000)............. $ 109,314 109,314,000
----------
TOTAL INVESTMENTS
(Identified cost
$989,642,343) (d)......... 102.3% 1,283,738,587
LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS...... (2.3) (29,175,147)
----- --------------
NET ASSETS.................. 100.0% $1,254,563,440
===== ==============
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
43
<PAGE> 46
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
SMALL CAP PORTFOLIO*
COMMON STOCKS--87.0%
AUSTRALIA--7.8%
Bibury, Ltd. (a), (k)....... 472,100 $ 0
Cochlear Limited............ 894,000 2,905,254
E.R.G., Ltd. ............... 1,983,278 2,248,293
Energy Equity Corporation,
Ltd. (a)................... 3,346,200 4,046,225
Pasminco, Ltd. ............. 1,084,500 2,204,753
------------
TOTAL AUSTRALIA............. 11,404,525
------------
AUSTRIA--2.4%
Austria Mikro Systeme
International AG........... 35,675 3,025,400
Schoeller-Bleckman Oil Field
Equipment AG (a)........... 5,500 446,557
------------
TOTAL AUSTRIA............... 3,471,957
------------
BELGIUM--1.5%
Audiofina SA................ 46,500 1,912,729
Audiofina SA (Lux).......... 7,100 285,303
------------
TOTAL BELGIUM............... 2,198,032
------------
CANADA--4.4%
Club Monaco, Inc. (a), (i).. 353,300 3,070,060
Maple Leaf Foods, Inc. ..... 319,500 3,435,733
------------
TOTAL CANADA................ 6,505,793
------------
FINLAND--6.7%
Amer Group, Ltd. ........... 126,600 2,279,543
Huhtamaki Group............. 54,800 2,358,635
Rocla OY (a)................ 64,000 517,645
Sampo Insurance Company,
Ltd. ...................... 32,300 3,141,206
Vaisala OY.................. 20,500 1,559,386
------------
TOTAL FINLAND............... 9,856,415
------------
FRANCE--4.5%
Credit National............. 44,300 2,517,020
Europeene d' Extincteurs.... 16,300 1,120,561
Europeene d' Extincteurs
(a)........................ 16,300 205,251
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Scor SA (a), (b)............ 68,600 $ 2,786,875
------------
TOTAL FRANCE................ 6,629,707
------------
GERMANY--3.5%
Data Modul AG............... 59,830 1,749,516
Holsten Brauerei AG......... 337 70,526
Marseille-Kliniken AG....... 132,600 3,307,207
------------
TOTAL GERMANY............... 5,127,249
------------
HONG KONG--5.9%
Esprit Asia Holdings,
Ltd. ...................... 5,588,000 3,967,059
Peregrine Investment
Holdings, Ltd. ............ 1,499,000 3,086,114
Shaw Brothers (Hong Kong),
Ltd. ...................... 1,427,000 1,602,481
------------
TOTAL HONG KONG............. 8,655,654
------------
IRELAND--3.5%
Fitzwilton PLC.............. 1,066,350 839,516
Jurys Hotel Group PLC....... 265,606 1,459,636
Jurys Hotel Group PLC
(Dublin)................... 299,653 1,655,913
Ryanair Holdings PLC (a),
(b)........................ 44,200 1,198,925
------------
TOTAL IRELAND............... 5,153,990
------------
ITALY--2.3%
Editoriale L' Espresso
SPA........................ 558,000 1,858,282
SONDEL-Societa Nordelettrica
SPA (a).................... 937,200 1,532,985
------------
TOTAL ITALY................. 3,391,267
------------
JAPAN--6.4%
Aderans Company, Ltd. ...... 90,000 2,559,763
Dowa Fire & Marine Insurance
Co. ....................... 301,000 1,494,233
Honma Golf Company, Ltd. ... 50,600 1,103,647
Kanamoto Company, Ltd. ..... 77,000 574,376
Laox........................ 154,000 2,163,148
Namco....................... 39,000 1,503,926
------------
TOTAL JAPAN................. 9,399,093
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE> 47
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO* (CONTINUED)
NEW ZEALAND--3.3%
The Warehouse Group, Ltd. .. 678,200 $ 2,022,330
Tranz Rail Holdings, Ltd.
(a), (b)................... 162,300 2,738,812
------------
TOTAL NEW ZEALAND........... 4,761,142
------------
NORWAY--3.1%
P4 Radio Hele Norge ASA
(a)........................ 281,000 2,377,067
Smedvig ASA................. 86,000 2,112,100
------------
TOTAL NORWAY................ 4,489,167
------------
PAKISTAN--0.0%
Packages Ltd. .............. 90 138
------------
PORTUGAL--1.9%
Banco Totta & Acores SA..... 169,300 2,828,881
------------
SINGAPORE--3.1%
Flextronics International,
Ltd. (a), (b).............. 113,100 3,053,700
Robinson & Company, Ltd. ... 280,000 1,459,047
------------
TOTAL SINGAPORE............. 4,512,747
------------
SPAIN--3.1%
Corporacion Financiera
Reunida SA (a)............. 1,070,400 4,503,889
------------
SWEDEN--7.9%
Getinge Industries AB....... 148,598 2,631,753
Monark Stiga AB (a)......... 210,200 1,956,486
Monark Stiga AB (New) (a)... 46,450 408,325
Prosolvia AB (a)............ 77,400 1,190,692
Scala International AB
(a)........................ 36,600 2,081,831
TV 4 AB, Series A........... 172,900 3,263,319
------------
TOTAL SWEDEN................ 11,532,406
------------
SWITZERLAND--6.7%
Attisholz Holding AG........ 2,600 1,123,699
Brauerei Eichhof AG......... 1,300 3,339,041
Edipresse SA................ 9,800 2,315,753
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Liechtenstein Global Trust
AG......................... 5,000 $ 3,065,069
------------
TOTAL SWITZERLAND........... 9,843,562
------------
UNITED KINGDOM--9.0%
Avis Europe PLC (a), (i).... 608,000 1,377,004
Care First Group PLC........ 1,035,900 2,001,099
Eidos PLC (a)............... 95,200 1,149,391
Filofax Group PLC........... 457,100 1,065,693
Hogg Robinson PLC........... 759,000 2,730,161
Scholl PLC.................. 736,400 3,507,297
Westminster Health Care
Holdings PLC............... 323,500 1,422,234
------------
TOTAL UNITED KINGDOM........ 13,252,879
------------
TOTAL COMMON STOCKS
(Identified cost
$113,545,810).............. 127,518,493
------------
PREFERRED STOCKS--6.6%
GERMANY--4.5%
Hornbach Holding AG......... 42,000 3,564,016
Moebel Walther AG........... 50,770 2,969,176
------------
TOTAL GERMANY............... 6,533,192
------------
UNITED KINGDOM--2.1%
Signet Group PLC (a), (b)... 23 3,093,500
------------
TOTAL PREFERRED STOCKS
(Identified cost
$5,959,485)................ 9,626,692
------------
PRINCIPAL
AMOUNT
(000)
---------
REPURCHASE AGREEMENT--6.8%
State Street Bank and Trust
Company, 5.65%, 7/1/97,
(Dated 06/30/97,
collateralized by
$10,015,000 United States
Treasury Notes, 6.25%,
03/31/99, with a value of
$10,209,752) (Identified
cost
$10,007,000)............... $ 10,007 10,007,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE> 48
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO* (CONTINUED)
TOTAL INVESTMENTS
(Identified cost
$129,512,295) (d).......... 100.4% $147,152,185
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS............ (0.4) (587,292)
----- ------------
NET ASSETS................... 100.0% $146,564,893
===== ============
</TABLE>
* Percentages of common stocks, preferred stocks, and convertible bonds are
presented in the portfolio by country.
Percentages by industry are as follows:
Advertising 1.6%, Airline 0.8%, Apparel & Textiles 4.8%, Banks & Financial
Services 1.9%, Brewery 2.3%, Broadcasting 5.3%, Computer Software 3.0%,
Cosmetics & Toiletries 2.4%, Distribution 0.4%, Drugs & Healthcare 2.0%,
Electrical Equipment 1.5%, Electronics 4.3%, Financial Services 9.0%, Food &
Beverage 1.6%, Food Processing 2.3%, Gas Exploration 2.8%, Holding
Company-Diversified 3.4%, Hospitals & Long Term Care 4.6%, Hotels &
Restaurants 2.1%, Household Appliances & Home Furnishings 1.5%, Insurance
5.1%, Leisure Time 2.1%, Machinery 0.7%, Manufacturing 2.5%, Medical Supplies
1.8%, Non-Ferrous Metals 1.5%, Oil & Gas 1.4%, Paper Products 1.5%, Publishing
1.3%, Repurchase Agreement 6.8%, Retail 11.4%, Semiconductor Manufacturers
2.1%, Toys & Amusement 0.8%, Transportation 2.8%, Utilities 1.0%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO*
COMMON STOCKS--79.6%
ARGENTINA--3.2%
Capex SA.................. 258,900 $ 2,434,037
Capex SA (c), (i)......... 68,700 1,308,735
Quilmes Industrial
Quinsasa (b)............. 61,900 634,475
YPF Sociedad Anonima Class
D (b).................... 152,100 4,677,075
------------
TOTAL ARGENTINA........... 9,054,322
------------
BRAZIL--4.1%
Souza Cruz SA............. 508,000 5,355,812
Telecomunicacoes
Brasileiras SA (b)....... 40,500 6,145,875
------------
TOTAL BRAZIL.............. 11,501,687
------------
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
CHILE--3.6%
AFP Provida SA (b)........ 176,400 $ 3,858,750
Banco BHIF (b)............ 122,300 2,583,588
Chilectra SA (b).......... 128,800 3,706,954
------------
TOTAL CHILE............... 10,149,292
------------
COLOMBIA--1.0%
Banco Ganadero SA (b)..... 108,700 2,826,200
------------
CZECH REPUBLIC--0.9%
Komercni Banka AS (a),
(c), (i)................. 120,700 2,474,350
------------
ECUADOR--0.7%
La Cemento Nacional CA
(c), (i)................. 10,000 2,030,000
------------
GREECE--3.7%
Ergo Bank SA.............. 637 38,266
</TABLE>
The accompanying notes are an integral part of these financial statements.
46
<PAGE> 49
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO* (CONTINUED)
Hellenic Telecommunication
Organization SA.......... 309,000 $ 7,256,162
Hellenic Telecommunication
Organization SA (a),
(l)...................... 309,000 0
Titan Cement Co. SA....... 61,000 3,009,248
------------
TOTAL GREECE.............. 10,303,676
------------
HONG KONG--7.7%
Chen Hsong Holdings....... 5,606,000 3,256,231
Giordano International,
Ltd. .................... 5,362,000 3,668,194
Guangshen Railway Co.,
Ltd. (a), (b)............ 163,100 3,567,813
Peregrine Investment,
Holdings, Ltd. .......... 2,030,000 4,179,327
Shenzhen Expressway (a)... 15,094,000 4,140,120
Yue Yuen Industrial
Holdings................. 1,272,200 2,635,603
------------
TOTAL HONG KONG........... 21,447,288
------------
INDIA--4.7%
Industrial Credit &
Investment India Ltd.
(a), (c)................. 25,000 356,250
Industrial Credit &
Investment India Ltd.
(a), (c), (i)............ 336,000 4,788,000
Larsen & Toubro, Ltd. (c),
(i)...................... 206,000 3,450,500
State Bank of India (a),
(c), (i)................. 177,100 4,631,165
------------
TOTAL INDIA............... 13,225,915
------------
INDONESIA--7.6%
Asia Pulp & Paper Co.,
Ltd. (a), (b)............ 281,500 4,257,687
PT Astra International.... 822,000 3,379,934
PT Kalbe Farma............ 3,065,000 4,095,909
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
PT Matahari Putra Prima... 2,558,500 $ 5,154,873
PT Semen Gresik........... 1,925,000 4,313,836
------------
TOTAL INDONESIA........... 21,202,239
------------
ISRAEL--1.5%
ECI Telecom, Ltd. (b)..... 140,000 4,165,000
------------
MALAYSIA--1.4%
Edaran Otomobil Nasional
Berhad................... 471,000 4,012,084
------------
MEXICO--7.9%
Cemex SA de CV............ 1,078,800 4,683,057
Fomento Economico Mexicano
SA de CV Series B........ 648,500 3,859,585
Grupo Financiero Banamex
Accival SA de CV (a)..... 1,695,000 4,350,802
Panamerican Beverages,
Inc. Class A (b)......... 138,600 4,556,475
Pepsi-Gemex SA de CV
(c)...................... 369,800 4,622,500
------------
TOTAL MEXICO.............. 22,072,419
------------
MOROCCO--1.0%
Banque Marocaine de
Commerce (a), (c), (i)... 153,600 2,918,400
------------
PERU--3.4%
Cerveceria Backus &
Johnson SA (a)........... 4,577,473 4,762,988
Telefonica del Peru SA
(b)...................... 176,300 4,616,856
------------
TOTAL PERU................ 9,379,844
------------
PHILIPPINES--3.1%
Benpres Holdings Corp.
(a), (c), (i)............ 311,900 2,354,845
Fil-Estate Land Inc. ..... 12,232,000 3,570,913
Philippine National Bank
(a)...................... 399,000 2,707,803
------------
TOTAL PHILIPPINES......... 8,633,561
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
47
<PAGE> 50
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO* (CONTINUED)
POLAND--0.5%
Bank Handlowy W. Warszawie
(a)...................... 106,500 $ 1,320,613
------------
PORTUGAL--2.6%
Banco Totta & Acores SA... 302,500 5,054,556
Portugal Telecom SA (b)... 58,000 2,327,250
------------
TOTAL PORTUGAL............ 7,381,806
------------
SOUTH AFRICA--4.7%
Amalgamated Banks of South
Africa................... 569,523 4,085,954
Barlow, Ltd. ............. 330,900 3,599,276
Ellerine Holdings,
Ltd. .................... 1,201 8,550
Foodcorp, Ltd. ........... 965 7,338
JD Group, Ltd. ........... 550,180 3,395,424
Malbak, Ltd. ............. 597,140 947,633
Malbak, Ltd. (c), (i)..... 8,610 13,668
New Clicks Holdings,
Ltd. .................... 115,151 124,364
S A Druggists............. 103,086 852,044
------------
TOTAL SOUTH AFRICA........ 13,034,251
------------
SOUTH KOREA--10.2%
Chosun Brewery............ 113,189 2,957,190
Kookmin Bank (c), (i)..... 40,199 864,279
Kookmin Bank (i).......... 178,416 3,342,688
Korea Chemical Co.,
Ltd. .................... 30,750 2,524,409
Korea Electric Power
Corp. ................... 154,000 4,595,721
Korea Mobile Telecom
Corp. ................... 8,066 5,936,049
Korean Air Lines (a)...... 186,977 3,797,654
Seoul City Gas Co. ....... 16,400 746,126
Shinhan Bank.............. 253,910 3,774,338
------------
TOTAL SOUTH KOREA......... 28,538,454
------------
THAILAND--2.3%
Bangkok Expressway (a).... 3,469,000 3,682,591
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
Industrial Finance
Corporation of Thailand.. 2,117,200 $ 2,697,070
------------
TOTAL THAILAND............ 6,379,661
------------
VENEZUELA--3.8%
Compania Anonima Nacional
Telefonos de Venezuela
(b)...................... 101,700 4,385,813
Electricidad de Caracas
(a)...................... 1,175,000 1,882,563
Mavesa SA (b)............. 438,200 4,436,775
------------
TOTAL VENEZUELA........... 10,705,151
------------
TOTAL COMMON STOCKS
(Identified cost
$189,453,139)............ 222,756,213
------------
PREFERRED STOCKS--14.3%
ARGENTINA--0.7%
Quilmes Industrial
Quinsasa (b)............. 163,850 1,904,756
------------
BRAZIL--13.6%
Banco Bradesco SA......... 522,004,000 5,261,013
Banco Itau SA............. 7,812,000 4,375,678
Cemig Cia Energetica de
Minas Gerais............. 85,997,000 4,433,453
Cia Riograndense Telecom
(a)...................... 3,139,500 4,753,504
Companhia Cervejaria
Brahma (a)............... 7,008,400 5,338,245
Companhia Cimento Portla
Itau..................... 10,826,000 3,720,894
Copel Paranqense de
Energia.................. 236,399,000 4,391,789
Dixie Toga SA............. 3,276,800 1,765,402
Pao de Acucar (b), (i).... 129,700 2,975,785
Pao de Acucar (c)......... 50,000 1,137,500
------------
TOTAL BRAZIL.............. 38,153,263
------------
TOTAL PREFERRED STOCKS
(Identified cost
$32,740,153)............ 40,058,019
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE> 51
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO* (CONTINUED)
CONVERTIBLE BONDS--0.3%
(Identified cost
$1,050,775)
PHILIPPINES--0.3%
Bacnotan Consolidated
Industries, 5.50%,
6/21/04 (i).............. $ 1,112 $ 822,880
------------
REPURCHASE AGREEMENT--5.7%
State Street Bank and Trust
Company, 5.65%, 7/1/97,
(Dated 06/30/97,
collateralized by
$15,875,000 United States
Treasury Notes, 6.25%,
03/31/99, with a value of
$16,183,705)
(Identified cost
$15,864,000)............. 15,864 15,864,000
------------
<CAPTION>
DESCRIPTION VALUE
- -------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified cost
$239,108,067) (d)........ 99.9% $279,501,112
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES..... 0.1 226,445
----- ------------
NET ASSETS................. 100.0% $279,727,557
===== ============
</TABLE>
* Percentages of common stocks, preferred stocks, and convertible bonds are
presented in the portfolio by country.
Percentages by industry are as follows:
Airline 1.4%, Apparel & Textiles 2.3%, Automotive 2.6%, Banks & Financial
Services 16.4%, Brewery 7.0%, Chemicals & Plastics 0.9%, Construction
Materials 7.9%, Containers Paper & Plastic 0.6%, Drug & Healthcare 1.8%,
Expressway 2.8%, Financial Services 7.2%, Food & Beverages 6.3%, Holding
Company -- Diversified 1.2%, Industrial & Machinery 2.5%, Oil & Gas 1.9%,
Paper Products 1.5%, Railroad 1.3%, Real Estate 1.3%, Repurchase Agreement
5.7%, Retail 3.1%, Telecommunication 14.2%, Tobacco 1.9%, Utilities 8.1%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO*
COMMON STOCKS--95.3%
FRANCE--7.1%
Alcatel Alsthom (Cie Gen El).. 1,000 $ 125,240
Cie de Saint Gobain........... 800 116,664
Elf Aquitaine SA (b).......... 2,000 215,767
Generale des Eaux............. 1,570 201,169
Generale des Eaux (a), (e).... 1,180 707
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Rhone-Poulenc SA.............. 4,598 $ 187,779
Rhone-Poulenc SA (b).......... 1,100 45,788
-----------
TOTAL FRANCE.................. 893,114
-----------
GERMANY--6.5%
Daimler-Benz AG (a)........... 1,750 141,979
Deutsche Bank AG.............. 2,600 151,906
Hoechst AG.................... 3,000 127,252
Mannesmann AG................. 340 151,471
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE> 52
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY
PORTFOLIO* (CONTINUED)
Thyssen AG.................... 550 $ 130,239
Viag AG....................... 240 109,122
-----------
TOTAL GERMANY................. 811,969
-----------
HONG KONG--1.5%
HSBC Holdings, Ltd. .......... 6,126 184,239
-----------
ITALY--2.6%
Ente Nazionale Idrocarburi SPA
(ENI)........................ 30,600 173,294
Fiat SPA...................... 12,900 46,452
Istituto Nazionale delle
Assicurazioni (INA).......... 38,200 58,214
Stet Societa Finanziaria
Telefonica SPA............... 13,900 48,253
-----------
TOTAL ITALY................... 326,213
-----------
JAPAN--13.2%
Honda Motor Co. .............. 4,000 120,398
Ito-Yokado Company, Ltd. ..... 3,000 174,054
Matsushita Electric Industrial
Company, Ltd. ............... 9,000 181,382
Mitsubishi Heavy Industries,
Ltd. ........................ 20,000 153,376
Mitsui Marine & Fire Insurance
Co. ......................... 9,000 65,015
Nippon Telegraph & Telephone
Corp. ....................... 13 124,760
Omron Corp. .................. 4,000 84,802
Promise Company, Ltd. ........ 1,900 108,742
Ricoh Company, Ltd. .......... 15,000 196,301
Sekisui Chemical Co. ......... 11,000 111,324
Sony Corp. ................... 1,500 130,736
Sumitomo Trust & Banking...... 14,000 150,236
Sumitomo Trust & Banking, Ltd.
(a).......................... 1 49,075
-----------
TOTAL JAPAN................... 1,650,201
-----------
NETHERLANDS--3.5%
Heineken NV................... 780 133,119
Philips Electronics NV........ 2,400 171,909
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------
<S> <C> <C>
Royal Dutch Petroleum Co.
(b).......................... 2,440 $ 132,675
-----------
TOTAL NETHERLANDS............. 437,703
-----------
SPAIN--1.0%
Telefonica de Espana.......... 4,400 127,207
-----------
SWEDEN--2.3%
Astra AB...................... 8,213 144,926
Svenska Handelsbanken Series
A............................ 3,500 111,305
Svenska Handelsbanken Series
B............................ 1,000 29,475
-----------
TOTAL SWEDEN.................. 285,706
-----------
SWITZERLAND--4.9%
Holderbank Financiere Glarus
AG........................... 130 122,788
Nestle SA..................... 85 112,130
Novartis AG................... 105 167,856
SMH AG........................ 103 58,837
Zurich
Versicherungsgesellschaft.... 380 151,219
-----------
TOTAL SWITZERLAND............. 612,830
-----------
UNITED KINGDOM--13.8%
B.A.T Industries PLC.......... 22,800 204,083
British Aerospace PLC......... 9,100 202,536
BTR PLC....................... 34,800 119,092
Cadbury Schweppes PLC......... 21,142 188,714
EMI Group PLC................. 7,500 134,889
General Electric Co. PLC...... 23,900 142,884
Grand Metropolitan PLC........ 18,305 176,194
National Power PLC............ 20,500 178,204
Prudential Corp. PLC.......... 14,000 136,836
Redland PLC................... 8,800 49,826
Sears PLC..................... 66,200 74,965
Unilever PLC.................. 3,980 113,934
-----------
TOTAL UNITED KINGDOM.......... 1,722,157
-----------
UNITED STATES--38.9%
Aetna Inc. ................... 2,400 245,700
BankAmerica Corp. ............ 3,940 254,376
Bell Atlantic Corp. .......... 2,500 189,687
</TABLE>
The accompanying notes are an integral part of these financial statements.
50
<PAGE> 53
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO* (CONTINUED)
Bristol-Myers Squibb Co. ..... 2,500 $ 202,500
Burlington Resources, Inc. ... 1,900 83,838
Champion International
Corp. ....................... 1,980 109,395
Chase Manhattan Corp. ........ 2,350 228,097
Cognizant Corp. .............. 3,400 137,700
Columbia/HCA Healthcare
Corp. ....................... 2,500 98,281
Deere & Co. .................. 3,800 208,525
Du Pont (E.I.) De Nemours &
Co. ......................... 2,500 157,187
Edison International.......... 5,100 126,863
General Electric Co. ......... 3,000 196,125
General Motors Corp. ......... 2,800 155,925
International Business
Machines Corp. .............. 2,720 245,310
Kimberly-Clark Corp. ......... 3,500 174,125
Lockheed Martin Corp. ........ 1,900 196,769
McDonalds Corp. .............. 1,300 62,806
McDonnell Douglas Corp. ...... 2,900 198,650
Mobil Corp. .................. 2,900 202,637
Philip Morris Companies,
Inc. ........................ 4,650 206,344
Sears Roebuck & Co. .......... 3,320 178,450
Sun Microsystems, Inc. (a).... 3,500 130,266
Travelers Group, Inc. ........ 3,700 233,331
U.S. West Media Group (a)..... 4,730 95,783
Union Pacific Corp. .......... 3,010 212,205
Viacom, Inc. Class B (a)...... 5,330 159,900
Waste Management, Inc. ....... 5,600 179,900
-----------
TOTAL UNITED STATES........... 4,870,675
-----------
TOTAL COMMON STOCKS
(Identified cost
$10,209,385)................. 11,922,014
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS--0.6%
(Identified cost $74,298)
ITALY--0.6%
Fiat SPA...................... 43,000 $ 79,443
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
------
<S> <C> <C>
REPURCHASE AGREEMENT--6.9%
State Street Bank and Trust
Company, 5.65%, 7/1/97,
(Dated 06/30/97,
collateralized by $865,000
United States Treasury Notes,
6.25%, 03/31/99, with a value
of $881,821)
(Identified cost $864,000)... $ 864 864,000
-----------
TOTAL INVESTMENTS
(Identified cost $11,147,683)
(d).......................... 102.8% 12,865,457
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS.............. (2.8) (352,771)
----- -----------
NET ASSETS..................... 100.0% $12,512,686
===== ===========
</TABLE>
* Percentages of common stocks and preferred stocks are presented in the
portfolio by country.
Percentages by industry are as follows:
Aerospace & Defense 4.8%, Agricultural Machinery 1.7%, Automotive 4.3%, Banks
and Financial Services 9.2%, Beverages 2.6%, Broadcasting 1.3%, Chemicals &
Plastics 5.0%, Communications 2.3%, Computers & Business Equipment 4.6%,
Conglomerates 4.3%, Construction Materials 1.4%, Drug & Healthcare 6.0%,
Electronics 7.3%, Energy 1.6%, Environmental Services 1.4%, Food & Beverage
3.2%, Gas Exploration 0.7%, Hotels & Restaurants 0.5%, Insurance 7.1%, Leisure
Time 1.1%, Machinery 2.4%, Manufacturing 1.4%, Oil & Gas 4.2%, Paper Products
2.3%, Railroad 1.7%, Repurchase Agreement 6.9%, Retail 3.4%, Steel 1.0%,
Telecommunication 2.4%, Telecommunication Equipment 1.0%, Tobacco 3.3%,
Utilities 2.4%.
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
51
<PAGE> 54
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE PORTFOLIO
COMMON STOCKS--92.4%
AEROSPACE & DEFENSE--1.6%
DONCASTERS PLC (a), (b)...... 37,000 $ 855,625
-----------
AIRLINE--2.0%
World Airways, Inc. (a)...... 119,700 1,062,338
-----------
BANKS--3.9%
Southwest Bancorporation of
Texas, Inc. (a)............. 40,000 1,105,000
Westamerica Bancorporation... 13,000 988,000
-----------
2,093,000
-----------
BUSINESS SERVICES AND
SUPPLIES--4.0%
American Pad & Paper Co.
(a)......................... 71,500 1,206,562
RCM Technologies, Inc. (a)... 90,000 956,250
-----------
2,162,812
-----------
CHEMICALS & PLASTICS--1.6%
Mississippi Chemical Corp.... 42,000 871,500
-----------
COMMERCIAL SERVICES--2.9%
MoneyGram Payment Systems,
Inc. (a).................... 100,000 1,575,000
-----------
CONTAINERS PAPER &
PLASTIC--1.1%
U. S. Can Corp. (a).......... 41,400 589,950
-----------
DRUGS & HEALTH CARE--4.3%
ChiRex, Inc. (a)............. 40,000 475,000
CorVel Corp. (a)............. 34,000 977,500
Integrated Health Services,
Inc......................... 23,400 900,900
-----------
2,353,400
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
ELECTRONICS--2.8%
Flextronics International,
Ltd. (a), (b)............... 40,000 $ 1,080,000
OPTEK Technology, Inc. (a)... 30,000 438,750
-----------
1,518,750
-----------
FINANCIAL SERVICES--3.2%
National Auto Credit, Inc.
(a)......................... 87,450 776,119
Phoenix Duff & Phelps Corp... 130,000 958,750
-----------
1,734,869
-----------
HOTELS & RESTAURANTS--7.1%
Morton's Restaurant Group,
Inc. (a).................... 63,300 1,258,087
NPC International, Inc.
(a)......................... 112,000 1,302,000
Silverleaf Resorts, Inc.
(a)......................... 85,000 1,306,875
-----------
3,866,962
-----------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--2.3%
Stanley Furniture, Inc.
(a)......................... 54,300 1,255,688
-----------
INDUSTRIAL & MACHINERY--8.0%
Applied Power, Inc. Class
A........................... 22,400 1,156,400
DT Industries, Inc........... 32,500 1,161,875
Gardner Denver Machinery,
Inc. (a).................... 43,800 1,303,050
Graco, Inc................... 23,300 701,912
-----------
4,323,237
-----------
INSURANCE--3.6%
AmerUs Life Holdings, Inc.... 32,200 897,575
Delphi Financial Group, Inc.
Class A (a)................. 27,887 1,073,642
-----------
1,971,217
-----------
LEISURE TIME--7.1%
Carmike Cinemas, Inc. Class A
(a)......................... 36,200 1,185,550
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE> 55
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE
PORTFOLIO (CONTINUED)
Steinway Musical Instruments,
Inc. (a).................... 71,000 $ 1,384,500
WMS Industries, Inc. (a)..... 50,000 1,253,125
-----------
3,823,175
-----------
MANUFACTURING--9.0%
EASCO, Inc................... 142,000 1,384,500
Figgie International, Inc.
(a)......................... 74,000 1,017,500
Regal-Beloit Corp............ 42,500 1,112,969
Varlen Corp.................. 51,000 1,370,625
-----------
4,885,594
-----------
MEDICAL SUPPLIES--4.3%
Lunar Corp. (a).............. 54,000 1,174,500
West Company, Inc............ 40,000 1,145,000
-----------
2,319,500
-----------
METAL FABRICATE/HARDWARE--3.3%
Citation Corp. (a)........... 59,000 1,010,375
Special Metals Corp. (a)..... 40,000 780,000
-----------
1,790,375
-----------
OIL & GAS--3.2%
Houston Exploration Co. (a).. 60,000 933,750
Titan Exploration, Inc.
(a)......................... 65,000 788,125
-----------
1,721,875
-----------
PUBLISHING--1.7%
Mecklermedia Corp. (a)....... 48,000 912,000
-----------
RETAIL--2.7%
Kenneth Cole Productions,
Inc. (a).................... 47,700 778,106
Lazare Kaplan International,
Inc. (a).................... 40,000 670,000
-----------
1,448,106
-----------
STEEL--2.5%
Atchinson Casting Corp. (a).. 80,000 1,330,000
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS
EQUIPMENT--5.3%
Allen Group, Inc. (a)........ 58,400 $ 1,211,800
Cidco, Inc. (a).............. 69,000 948,750
Oak Industries, Inc. (a)..... 25,000 718,750
-----------
2,879,300
-----------
TOBACCO--2.4%
Swisher International Group,
Inc. (a).................... 75,500 1,302,375
-----------
TRANSPORTATION--2.2%
Pittston Burlington Group.... 41,600 1,170,000
-----------
TRUCKING & FREIGHT
FORWARDING--0.3%
Interpool, Inc............... 11,100 163,725
-----------
TOTAL COMMON STOCKS
(Identified
cost $41,613,977)........... 49,980,373
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------
<S> <C> <C>
REPURCHASE AGREEMENT--7.4%
State Street Bank and Trust
Company, 5.65%, 7/1/97
(Dated 06/30/97,
collateralized by $3,995,000
United States Treasury
Notes, 6.25%, 03/31/99, with
a value of $4,072,687)
(Identified cost $3,990,000) $ 3,990 3,990,000
-----------
TOTAL INVESTMENTS
(Identified cost $45,603,977)
(d)......................... 99.8% 53,970,373
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES........ 0.2 98,058
----- -----------
NET ASSETS.................... 100.0% $54,068,431
===== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
53
<PAGE> 56
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) American Depositary Receipts.
(c) Global Depositary Receipts.
(d) For federal income tax purposes, the aggregate cost, aggregate gross
unrealized appreciation, aggregate gross unrealized depreciation and the net
unrealized appreciation (depreciation) is as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Net
Gross Gross Unrealized
Aggregate Unrealized Unrealized Appreciation
Portfolio Cost Appreciation Depreciation (Depreciation)
--------------------------- -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Equity $ 241,873,053 $ 77,471,718 $ 3,777,245 $ 73,694,473
International Equity 1,703,055,836 410,877,678 37,669,906 373,207,772
International Fixed-Income 95,455,114 2,155,179 2,952,802 (797,623)
Bond 107,952,583 878,964 276,060 602,904
Strategic Yield 312,711,600 6,592,004 6,186,048 405,956
Small Cap 989,642,343 301,424,709 7,328,465 294,096,244
International Small Cap 129,536,166 24,494,047 6,830,286 17,663,761
Emerging Markets 239,216,712 47,617,600 7,115,910 40,501,690
Global Equity 11,157,852 1,889,880 161,937 1,727,943
Bantam Value 45,613,882 9,086,126 709,825 8,376,301
</TABLE>
(e) Warrant.
(f) Variable rate security. Interest rate shown is the current rate.
(g) Front Loaded Interest Reduction Bond.
(h) Segregated securities for when-issued purchases and/or forward foreign
currency contracts.
(i) Pursuant to Rule 144A of the Securities Act of 1933, these securities may
only be resold in transactions exempt from registration, normally to
qualified institutional buyers. At June 30, 1997, these securities amounted
to $2,124,874, $1,697,914, $23,812,126, $8,850,325, $4,447,064 and
$32,035,295, or 1.8%, 2.0%, 7.7%, 0.7%, 3.0% and 11.5% of net assets for
the Lazard International Fixed-Income Portfolio, Lazard Bond Portfolio,
Lazard Strategic Yield Portfolio, Lazard Small Cap Portfolio, Lazard
International Small Cap Portfolio and Lazard Emerging Markets Portfolio,
respectively.
(j) At June 30, 1997, Small Cap Portfolio held the following securities which
were private placements and therefore restricted as to resale, and
represented 0.04% (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%, 12/31/97 3/17/95 0
--------
$500,000
========
</TABLE>
Verbex Voice Systems Inc. and Interactive Light Holdings Inc. are valued as
determined in good faith and in accordance with the procedures adopted by
the Board of Directors. The Small Cap Portfolio will bear any costs,
including those involved in registration under the Securities Act of 1933,
in connection with the disposition of such securities.
(k) Bankrupt security valued at zero.
54
<PAGE> 57
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(l) Rights
Abbreviations:
TBA--Settlement is on a delayed delivery or when-issued basis with final
maturity to be announced (TBA) in the future.
Currency Terms
<TABLE>
<S> <C>
ATS -- Austrian Schilling INR -- Indian Rupee
AUD -- Australian Dollar ITL -- Italian Lira
BEL -- Belgian Franc JPY -- Japanese Yen
CAD -- Canadian Dollar KES -- Kenya Shilling
CHF -- Swiss Franc KRW -- South Korean Won
CLP -- Chilean Peso MXN -- Mexican Peso
COP -- Colombian Peso MYR -- Malaysian Ringgit
CRC -- Costa Rican Colon NLG -- Netherlands Guilder
DEM -- Deutsche Mark NOK -- Norwegian Krone
DKK -- Danish Krone PHP -- Philippine Peso
ESP -- Spanish Peseta PLN -- Polish Zloty
FIM -- Finnish Markka ROL -- Romanian Leu
FRF -- French Franc SEK -- Swedish Krona
GBP -- Pound Sterling THB -- Thailand Baht
GRD -- Greek Drachma USD -- United States Dollar
HRK -- Croatian Kuna UYU -- Uruguayan Peso
HUF -- Hungarian Forint VEB -- Venezuelan Bolivar
IEP -- Irish Pound XEU -- European Currency Unit (ECU)
</TABLE>
55
<PAGE> 58
================================================================================
The Lazard Funds, Inc.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL LAZARD
EQUITY EQUITY FIXED-INCOME BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost
$241,627,007; $1,617,651,791; $93,898,222;
$85,477,529; $291,242,665; $880,328,343;
$119,505,295; $223,244,067; $10,283,683 and
$41,613,977, respectively)........................... $315,075,434 $1,986,786,518 $ 93,096,707 $ 86,049,379
Repurchase Agreements, at value....................... -- 81,331,000 1,553,000 22,444,000
Cash.................................................. -- 892 214,326 452
Foreign currency, at value (cost $0; $4,354,198;
$245,388; $0; $713,638; $0; $0; $645,563; $62,429 and
$0, respectively).................................... -- 4,338,531 242,324 --
Receivables for:
Net foreign currency contracts....................... -- -- -- --
Investments sold..................................... 14,307,511 2,260,503 1,355,171 14,984,702
Dividends and interest............................... 800,094 11,210,059 2,273,792 791,421
Capital stock sold................................... 1,198,065 3,702,318 20,850,061 --
Due from Manager...................................... -- -- -- --
Deferred organizational expenses...................... -- -- -- --
------------ -------------- ------------ ------------
Total assets.......................................... 331,381,104 2,089,629,821 119,585,381 124,269,954
------------ -------------- ------------ ------------
LIABILITIES
Payables for:
Investments purchased................................ 1,818,483 -- 2,412,126 36,989,564
Capital stock repurchased............................ 35,586 2,564,110 170,829 2,000
Dividends declared................................... -- -- 95,703 84,480
Net foreign currency contracts....................... -- -- 26,288 --
Investment management fees payable.................... 204,889 1,255,089 292,939 179,668
Due to Custodian...................................... 6,892,047 -- -- --
Due to Manager........................................ -- -- -- --
Accrued directors' fees payable....................... 3,015 3,015 2,753 2,753
Accrued expenses and other payables................... 92,277 415,735 45,927 41,421
------------ -------------- ------------ ------------
Total liabilities..................................... 9,046,297 4,237,949 3,046,565 37,299,886
------------ -------------- ------------ ------------
Net assets............................................ 322,334,807 2,085,391,872 116,538,816 86,970,068
============ ============= ============ ============
NET ASSETS
Paid in capital....................................... 224,479,545 1,605,051,851 119,662,926 86,842,237
Undistributed (distributions in excess of)
Investment income--net............................... 968,493 16,787,638 (386,075) 1,340
Unrealized appreciation (depreciation) on:
Investments--net..................................... 73,448,427 369,134,727 (801,515) 571,850
Foreign currency--net................................ -- (148,271) (54,965) --
Accumulated realized gain (loss)--net................. 23,438,342 94,565,927 (1,881,555) (445,359)
------------ -------------- ------------ ------------
Net assets............................................ $322,334,807 $2,085,391,872 $116,538,816 $ 86,970,068
============ ============= ============ ============
INSTITUTIONAL SHARES
Net assets............................................ $317,642,976 $2,080,607,155 $114,631,159 $ 81,886,170
Shares of capital stock outstanding*.................. 14,423,269 136,898,909 11,312,177 8,253,932
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE................................................ $ 22.02 $ 15.20 $ 10.13 $ 9.92
OPEN SHARES
Net assets............................................ $ 4,691,831 $ 4,784,717 $ 1,907,657 $ 5,083,898
Shares of capital stock outstanding*.................. 213,187 315,640 188,217 512,709
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE................................................ $ 22.01 $ 15.16 $ 10.14 $ 9.92
</TABLE>
* $0.001 par value, 1,550,000,000 shares authorized for the Portfolios in total
The accompanying notes are an integral part of these financial statements.
56
<PAGE> 59
================================================================================
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD LAZARD
STRATEGIC LAZARD INTERNATIONAL EMERGING GLOBAL BANTAM
YIELD SMALL CAP SMALL CAP MARKETS EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$291,480,686 $1,174,424,587 $ 137,145,185 $ 263,637,112 $12,001,457 $49,980,373
21,301,000 109,314,000 10,007,000 15,864,000 864,000 3,990,000
1,581,154 -- 498 7,421 226 809
711,619 -- -- 643,463 62,105 --
629,278 -- -- -- -- --
16,133,611 1,776,283 1,539,127 1,269,855 -- 964,344
6,429,930 511,980 239,643 833,117 45,934 9,404
5,898,685 8,954,934 57,740 4,714,497 20,000 36,024
-- -- -- -- 55,053 --
-- -- 4,994 7,179 635 778
------------ -------------- ------------ ------------ ----------- -----------
344,165,963 1,294,981,784 148,994,187 286,976,644 13,049,410 54,981,732
------------ -------------- ------------ ------------ ----------- -----------
31,997,875 38,974,388 1,211,697 4,760,280 486,268 724,941
137,000 545,677 51,223 2,154,218 -- 18,000
521,777 -- -- -- -- --
-- -- -- -- -- --
188,958 711,515 76,262 220,244 -- 105,029
-- 28,468 1,000,808 -- -- --
-- -- -- 20,680 -- 5,951
2,753 2,784 2,753 2,817 2,784 2,795
131,009 155,512 86,551 90,848 47,672 56,585
------------ -------------- ------------ ------------ ----------- -----------
32,979,372 40,418,344 2,429,294 7,249,087 536,724 913,301
------------ -------------- ------------ ------------ ----------- -----------
311,186,591 1,254,563,440 146,564,893 279,727,557 12,512,686 54,068,431
============ ============== ============ ============ =========== ===========
304,896,147 904,427,151 126,684,574 227,904,093 10,425,666 43,268,025
(10,914) 1,604,511 817,113 1,403,702 65,276 (101,446)
238,021 294,096,244 17,639,890 40,393,045 1,717,774 8,366,396
534,856 -- (15,819) (13,249) (529) --
5,528,481 54,435,534 1,439,135 10,039,966 304,499 2,535,456
------------ -------------- ------------ ------------ ----------- -----------
$311,186,591 $1,254,563,440 $ 146,564,893 $ 279,727,557 $12,512,686 $54,068,431
============ ============== ============ ============ =========== ===========
$301,281,036 $1,248,663,029 $ 145,202,522 $ 270,918,324 $11,025,844 $51,739,133
29,885,174 59,253,225 11,427,873 19,852,222 873,023 3,513,135
$ 10.08 $ 21.07 $ 12.71 $ 13.65 $ 12.63 $ 14.73
$ 9,905,555 $ 5,900,411 $ 1,362,371 $ 8,809,233 $ 1,486,842 $ 2,329,298
981,883 280,351 107,429 645,959 117,778 158,482
$ 10.09 $ 21.05 $ 12.68 $ 13.64 $ 12.62 $ 14.70
</TABLE>
57
<PAGE> 60
================================================================================
The Lazard Funds, Inc.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL LAZARD
EQUITY EQUITY FIXED-INCOME BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest................................................. $ 316,187 $ 2,113,728 $ 2,884,551 $2,525,865
Dividends................................................ 2,717,508 26,271,821 -- --
----------- ------------ ----------- ----------
Total investment income*.................................. 3,033,695 28,385,549 2,884,551 2,525,865
----------- ------------ ----------- ----------
EXPENSES:
Management fees.......................................... 1,138,331 6,977,453 333,261 188,296
Administration fees...................................... 52,034 164,185 30,565 28,635
Distribution fees (Open Shares).......................... 1,531 1,509 583 1,394
Custodian fees........................................... 48,947 946,821 86,721 39,964
Professional services.................................... 22,687 75,766 15,636 14,651
Registration fees........................................ 10,256 39,937 12,959 12,168
Shareholders' services................................... 25,318 36,951 14,206 12,219
Directors' fees and expenses............................. 7,099 7,099 6,837 6,837
Shareholders' reports.................................... 8,210 11,921 3,749 4,784
Amortization of organizational expenses.................. -- -- -- --
Other.................................................... 7,035 36,023 3,069 3,323
----------- ------------ ----------- ----------
Total expenses before fees waived and expenses
reimbursed............................................... 1,321,448 8,297,665 507,586 312,271
Management fees waived and expenses reimbursed........... (4,247) (5,301) (40,322) (8,628)
Administration fees waived............................... -- -- -- --
Fees paid indirectly..................................... -- -- -- (734)
----------- ------------ ----------- ----------
Expenses--net............................................. 1,317,201 8,292,364 467,264 302,909
----------- ------------ ----------- ----------
INVESTMENT INCOME (LOSS)--NET............................. 1,716,494 20,093,185 2,417,287 2,222,956
----------- ------------ ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net**..................................... 23,684,855 97,292,043 (921,508) (55,338)
Foreign currency--net.................................. -- (1,944,479) (941,213) --
Net unrealized appreciation (depreciation) during the
period on:
Investments--net....................................... 21,366,145 113,239,190 (3,364,853) 415,046
Foreign currency--net.................................. -- (159,083) 149,582 --
----------- ------------ ----------- ----------
Realized and unrealized gain (loss) on investments and
foreign currency--net.................................... 45,051,000 208,427,671 (5,077,992) 359,708
----------- ------------ ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $46,767,494 $228,520,856 $(2,660,705) $2,582,664
=========== ============ =========== ==========
*Net of foreign withholding taxes of:..................... $ 37,608 $ 4,013,023 $ 28,244 $ 651
=========== ============ =========== ==========
</TABLE>
** Includes net gains of $36,208,012 from in-kind redemptions for International
Equity Portfolio.
The accompanying notes are an integral part of these financial statements.
58
<PAGE> 61
================================================================================
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD LAZARD
STRATEGIC LAZARD INTERNATIONAL EMERGING GLOBAL BANTAM
YIELD SMALL CAP SMALL CAP MARKETS EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$11,556,223 $ 2,088,717 $ 138,172 $ 440,307 $ 13,818 $ 58,680
-- 3,761,903 1,458,134 2,389,281 121,748 56,572
----------- ------------ ---------- ----------- ---------- ----------
11,556,223 5,850,620 1,596,306 2,829,588 135,566 115,252
----------- ------------ ---------- ----------- ---------- ----------
1,001,067 3,873,015 503,282 1,029,705 39,568 154,020
48,373 122,594 35,099 42,257 22,733 26,024
3,632 1,605 728 3,456 693 868
117,530 88,241 120,124 172,542 36,739 23,647
18,585 47,887 17,448 17,691 13,285 13,997
42,791 51,109 12,536 38,890 12,460 12,336
19,360 39,470 25,796 20,878 12,393 18,659
6,837 6,869 6,837 6,902 6,868 6,944
7,462 12,937 8,034 6,769 3,512 7,330
-- -- 1,750 2,463 90 5,173
4,950 15,830 5,358 3,768 2,499 3,566
----------- ------------ ---------- ----------- ---------- ----------
1,270,587 4,259,557 736,992 1,345,321 150,840 272,564
(2,698) (5,549) (4,640) (4,679) (94,621) (48,991)
-- -- -- -- -- (6,875)
(7,923) (7,899) (107) (20,356) -- --
----------- ------------ ---------- ----------- ---------- ----------
1,259,966 4,246,109 732,245 1,320,286 56,219 216,698
----------- ------------ ---------- ----------- ---------- ----------
10,296,257 1,604,511 864,061 1,509,302 79,347 (101,446)
----------- ------------ ---------- ----------- ---------- ----------
(94,302) 54,451,434 1,632,218 10,348,680 317,281 2,545,361
6,020,262 -- (190,034) (305,264) (7,495) --
(4,284,204) 115,362,073 7,502,181 33,275,270 1,111,310 5,339,884
100,391 -- (15,334) (13,628) (820) --
----------- ------------ ---------- ----------- ---------- ----------
1,742,147 169,813,507 8,929,031 43,305,058 1,420,276 7,885,245
----------- ------------ ---------- ----------- ---------- ----------
$12,038,404 $171,418,018 $9,793,092 $44,814,360 $1,499,623 $7,783,799
=========== ============ ========== =========== ========== ==========
$ 77,873 $ 11,760 $ 195,182 $ 222,994 $ 13,322 $ --
=========== ============ ========== =========== ========== ==========
</TABLE>
59
<PAGE> 62
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD EQUITY
PORTFOLIO
---------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
1997 DECEMBER 31,
(UNAUDITED) 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)--net............................................ $ 1,716,494 $ 4,554,663
Realized gain (loss) on investments and foreign currency--net............ 23,684,855 13,281,290
Unrealized appreciation (depreciation)--net.............................. 21,366,145 26,925,773
------------ ------------
Net increase (decrease) in net assets resulting from operations........... 46,767,494 44,761,726
------------ ------------
Distributions to shareholders:
From investment income--net
Institutional Shares................................................... (771,322) (4,528,526)
Open Shares............................................................ (2,816) --
From realized gains--net
Institutional Shares................................................... (3,826,217) (16,346,609)
Open Shares............................................................ (20,370) --
In excess of realized gains--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
------------ ------------
(4,620,725) (20,875,135)
------------ ------------
Capital stock transactions:
Net proceeds from sales
Institutional Shares................................................... 51,819,452 119,520,042
Open Shares............................................................ 4,496,431 --
Net proceeds from reinvestment of distributions
Institutional Shares................................................... 4,226,840 19,399,464
Open Shares............................................................ 23,186 --
Cost of shares redeemed
Institutional Shares................................................... (58,945,459) (47,987,766)
Open Shares............................................................ (37,731) --
------------ ------------
Net increase (decrease) in net assets from capital stock transactions..... 1,582,719 90,931,740
------------ ------------
Total increase in net assets.............................................. 43,729,488 114,818,331
Net assets at beginning of period......................................... 278,605,319 163,786,988
------------ ------------
Net assets at end of period*.............................................. $322,334,807 $278,605,319
============ ============
SHARES ISSUED AND REPURCHASED:
Institutional Shares:
Shares outstanding at beginning of period................................ 14,480,367 9,405,110
------------ -----------
Shares sold.............................................................. 2,532,183 6,564,476
Shares issued to shareholders from reinvestment of distributions......... 212,181 1,026,374
Shares repurchased....................................................... (2,801,462) (2,515,593)
------------ -----------
Net increase (decrease).................................................. (57,098) 5,075,257
------------ -----------
Shares outstanding at end of period...................................... 14,423,269 14,480,367
============ ===========
Open Shares:
Shares outstanding at beginning of period................................ -- --
------------ -----------
Shares sold.............................................................. 213,753 --
Shares issued to shareholders from reinvestment of distributions......... 1,165 --
Shares repurchased....................................................... (1,731) --
------------ -----------
Net increase............................................................. 213,187 --
------------ -----------
Shares outstanding at end of period...................................... 213,187 --
============ ===========
*Includes undistributed (distributions in excess of) investment
Income--net.............................................................. $ 968,493 $ 26,137
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
60
<PAGE> 63
================================================================================
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL LAZARD INTERNATIONAL LAZARD BOND
EQUITY PORTFOLIO FIXED-INCOME PORTFOLIO PORTFOLIO
-------------------------------------- -------------------------------------- --------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1997 DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,093,185 $ 30,155,710 $ 2,417,287 $ 3,416,057 $ 2,222,956 $ 3,534,432
95,347,564 77,886,214 (1,862,721) (8,440) (55,338) (361,558)
113,080,107 129,031,917 (3,215,271) 581,859 415,046 (186,850)
----------- ----------- ----------- ----------- ---------- -----------
228,520,856 237,073,841 (2,660,705) 3,989,476 2,582,664 2,986,024
----------- ----------- ----------- ----------- ---------- -----------
-- (24,135,758) (2,405,174) (2,820,888) (2,191,176) (3,534,447)
-- -- (12,115) -- (31,780) --
(13,068,740) (77,796,782) (239,110) (160,803) -- (398,228)
(8,245) -- (1,169) -- -- --
-- -- -- (734,353) -- --
-- -- -- -- -- --
----------- ----------- ----------- ----------- ---------- -----------
(13,076,985) (101,932,540) (2,657,568) (3,716,044) (2,222,956) (3,932,675)
----------- ----------- ----------- ----------- ---------- -----------
224,003,067 724,862,042 39,099,510 50,423,517 16,237,362 37,705,183
4,690,526 -- 1,891,245 -- 5,046,936 --
13,076,390 97,822,842 2,129,043 2,918,749 1,915,426 3,369,069
8,245 -- 11,288 -- 27,091 --
(187,822,508) (441,202,464) (9,700,304) (10,810,163) (6,500,822) (16,304,852)
(180,887) -- (3,531) -- (21,785) --
----------- ----------- ----------- ----------- ---------- -----------
53,774,833 381,482,420 33,427,251 42,532,103 16,704,208 24,769,400
----------- ----------- ----------- ----------- ---------- -----------
269,218,704 516,623,721 28,108,978 42,805,535 17,063,916 23,822,749
1,816,173,168 1,299,549,447 88,429,838 45,624,303 69,906,152 46,083,403
----------- ----------- ----------- ----------- ---------- -----------
$2,085,391,872 $ 1,816,173,168 $116,538,816 $88,429,838 $ 86,970,068 $ 69,906,152
=========== =========== =========== =========== ========== ===========
133,302,794 103,988,517 8,201,037 4,204,312 7,073,035 4,560,693
----------- ----------- ----------- ----------- ---------- -----------
15,812,725 55,561,307 3,857,366 4,741,001 1,646,587 3,820,205
947,206 7,337,457 210,895 274,229 194,254 343,410
(13,163,816) (33,584,487) (957,121) (1,018,505) (659,944) (1,651,273)
----------- ----------- ----------- ----------- ---------- -----------
3,596,115 29,314,277 3,111,140 3,996,725 1,180,897 2,512,342
----------- ----------- ----------- ----------- ---------- -----------
136,898,909 133,302,794 11,312,177 8,201,037 8,253,932 7,073,035
=========== =========== =========== =========== ========== ===========
-- -- -- -- -- --
----------- ----------- ----------- ----------- ---------- -----------
327,231 -- 187,456 -- 512,190 --
598 -- 1,119 -- 2,733 --
(12,189) -- (358) -- (2,214) --
----------- ----------- ----------- ----------- ---------- -----------
315,640 -- 188,217 -- 512,709 --
----------- ----------- ----------- ----------- ---------- -----------
315,640 -- 188,217 -- 512,709 --
=========== =========== =========== =========== ========== ===========
$ 16,787,638 $ (3,305,547) $ (386,075) $ (386,092) $ 1,340 $ 1,340
=========== =========== =========== =========== ========== ===========
</TABLE>
61
<PAGE> 64
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
LAZARD STRATEGIC
YIELD PORTFOLIO
---------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
1997 DECEMBER 31,
(UNAUDITED) 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)--net............................................ $ 10,296,257 $ 9,542,264
Realized gain (loss) on investments and foreign currency--net............ 5,925,960 2,908,999
Unrealized appreciation (depreciation)--net.............................. (4,183,813) 3,741,348
----------- ----------
Net increase (decrease) in net assets resulting from operations........... 12,038,404 16,192,611
----------- ----------
Distributions to shareholders:
From investment income--net
Institutional Shares................................................... (10,184,852) (9,541,005)
Open Shares............................................................ (111,405) --
From realized gains--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
In excess of investment income--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
In excess of realized gains--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
----------- ----------
(10,296,257) (9,541,005)
----------- ----------
Capital stock transactions:
Net proceeds from sales
Institutional Shares................................................... 167,148,914 136,188,901
Open Shares............................................................ 9,913,287 --
Net proceeds from reinvestment of distributions
Institutional Shares................................................... 8,717,245 8,738,563
Open Shares............................................................ 88,961 --
Cost of shares redeemed
Institutional Shares................................................... (75,384,650) (30,970,196)
Open Shares............................................................ (122,111) --
----------- ----------
Net increase (decrease) in net assets from capital stock transactions..... 110,361,646 113,957,268
----------- ----------
Total increase in net assets.............................................. 112,103,793 120,608,874
Net assets at beginning of period......................................... 199,082,798 78,473,924
----------- ----------
Net assets at end of period*.............................................. $311,186,591 $199,082,798
=========== ==========
SHARES ISSUED AND REPURCHASED:
Institutional Shares:
Shares outstanding at beginning of period................................ 19,892,579 8,245,403
----------- ----------
Shares sold.............................................................. 16,639,283 13,957,489
Shares issued to shareholders from reinvestment of distributions......... 865,798 896,358
Shares repurchased....................................................... (7,512,486) (3,206,671)
----------- ----------
Net increase (decrease).................................................. 9,992,595 11,647,176
----------- ----------
Shares outstanding at end of period...................................... 29,885,174 19,892,579
=========== ==========
Open Shares:
Shares outstanding at beginning of period................................ -- --
----------- ----------
Shares sold.............................................................. 985,184 --
Shares issued to shareholders from reinvestment of distributions......... 8,820 --
Shares repurchased....................................................... (12,121) --
----------- ----------
Net increase............................................................. 981,883 --
----------- ----------
Shares outstanding at end of period...................................... 981,883 --
=========== ==========
*Includes undistributed (distributions in excess of) investment
Income--net.............................................................. $ (10,914) $ (10,914)
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
62
<PAGE> 65
================================================================================
<TABLE>
<CAPTION>
LAZARD SMALL CAP LAZARD INTERNATIONAL LAZARD EMERGING
PORTFOLIO SMALL CAP PORTFOLIO MARKETS PORTFOLIO
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1997 DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,604,511 $ 4,976,988 $ 864,061 $ 1,941,413 $ 1,509,302 $ 1,378,881
54,451,434 80,557,846 1,442,184 2,550,566 10,043,416 5,813,649
115,362,073 101,358,499 7,486,847 12,550,118 33,261,642 8,058,764
----------- ---------- ----------- ---------- ----------- ----------
171,418,018 186,893,333 9,793,092 17,042,097 44,814,360 15,251,294
----------- ---------- ----------- ---------- ----------- ----------
-- (4,976,988) -- (725,223) -- (1,060,033)
-- -- -- -- -- --
(21,233,520) (59,176,170) (1,029,623) (1,565,580) (2,714,499) (1,656,767)
(32,176) -- (5,801) -- (49,495) --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
----------- ---------- ----------- ---------- ----------- ----------
(21,265,696) (64,153,158) (1,035,424) (2,290,803) (2,763,994) (2,716,800)
----------- ---------- ----------- ---------- ----------- ----------
183,602,258 414,195,319 12,755,106 27,263,092 103,185,282 102,675,561
5,790,083 -- 1,962,039 -- 9,040,257 --
19,959,611 61,545,749 1,012,644 2,230,609 2,640,289 2,454,675
25,396 -- 5,744 -- 43,702 --
(86,120,998) (263,446,823) (4,223,860) (32,806,897) (21,678,964) (7,553,028)
(250,656) -- (676,985) -- (881,335) --
----------- ---------- ----------- ---------- ----------- ----------
123,005,694 212,294,245 10,834,688 (3,313,196) 92,349,231 97,577,208
----------- ---------- ----------- ---------- ----------- ----------
273,158,016 335,034,420 19,592,356 11,438,098 134,399,597 110,111,702
981,405,424 646,371,004 126,972,537 115,534,439 145,327,960 35,216,258
----------- ---------- ----------- ---------- ----------- ----------
$1,254,563,440 $981,405,424 $146,564,893 $126,972,537 $279,727,557 $145,327,960
=========== ========== =========== ========== =========== ==========
53,230,190 40,536,196 10,640,540 10,986,319 12,969,409 3,812,846
----------- ---------- ----------- ---------- ----------- ----------
9,461,697 24,088,616 1,050,343 2,437,042 8,383,047 9,629,141
1,078,898 3,410,098 86,922 191,087 214,309 220,357
(4,517,560) (14,804,720) (349,932) (2,973,908) (1,714,543) (692,935)
----------- ---------- ----------- ---------- ----------- ----------
6,023,035 12,693,994 787,333 (345,779) 6,882,813 9,156,563
----------- ---------- ----------- ---------- ----------- ----------
59,253,225 53,230,190 11,427,873 10,640,540 19,852,222 12,969,409
=========== ========== =========== ========== =========== ==========
-- -- -- -- -- --
----------- ---------- ----------- ---------- ----------- ----------
291,201 -- 161,930 -- 707,495 --
1,374 -- 494 -- 3,547 --
(12,224) -- (54,995) -- (65,083) --
----------- ---------- ----------- ---------- ----------- ----------
280,351 -- 107,429 -- 645,959 --
----------- ---------- ----------- ---------- ----------- ----------
280,351 -- 107,429 -- 645,959 --
=========== ========== =========== ========== =========== ==========
$ 1,604,511 $ -- $ 817,113 $ (46,947) $ 1,403,702 $ (105,600)
=========== ========== =========== ========== =========== ==========
</TABLE>
63
<PAGE> 66
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY
PORTFOLIO
---------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
1997 DECEMBER 31,
(UNAUDITED) 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)--net............................................ $ 79,347 $ 88,254
Realized gain (loss) on investments and foreign currency--net............ 309,786 359,747
Unrealized appreciation (depreciation)--net.............................. 1,110,490 606,756
---------- --------
Net increase (decrease) in net assets resulting from operations........... 1,499,623 1,054,757
---------- --------
Distributions to shareholders:
From investment income--net
Institutional Shares................................................... (3,375) (82,372)
Open Shares............................................................ -- --
From realized gains--net
Institutional Shares................................................... (354,441) --
Open Shares............................................................ (27,171) --
In excess of investment income--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
In excess of realized gains--net
Institutional Shares................................................... -- --
Open Shares............................................................ -- --
---------- --------
(384,987) (82,372)
---------- --------
Capital stock transactions:
Net proceeds from sales
Institutional Shares................................................... 1,704,730 9,221,560
Open Shares............................................................ 1,363,470 --
Net proceeds from reinvestment of distributions
Institutional Shares................................................... 357,783 75,948
Open Shares............................................................ 27,171 --
Cost of shares redeemed
Institutional Shares................................................... (1,839,127) (485,870)
Open Shares............................................................ -- --
---------- --------
Net increase (decrease) in net assets from capital stock transactions..... 1,614,027 8,811,638
---------- --------
Total increase in net assets.............................................. 2,728,663 9,784,023
Net assets at beginning of period......................................... 9,784,023 --
---------- --------
Net assets at end of period*.............................................. $ 12,512,686 $9,784,023
========== ========
SHARES ISSUED AND REPURCHASED:
Institutional Shares:
Shares outstanding at beginning of period................................ 852,071 --
---------- --------
Shares sold.............................................................. 146,885 891,432
Shares issued to shareholders from reinvestment of distributions......... 31,357 6,692
Shares repurchased....................................................... (157,290) (46,053)
---------- --------
Net increase (decrease).................................................. 20,952 852,071
---------- --------
Shares outstanding at end of period...................................... 873,023 852,071
========== ========
Open Shares:
Shares outstanding at beginning of period................................ -- --
---------- --------
Shares sold.............................................................. 115,397 --
Shares issued to shareholders from reinvestment of distributions......... 2,381 --
Shares repurchased....................................................... -- --
---------- --------
Net increase............................................................. 117,778 --
---------- --------
Shares outstanding at end of period...................................... 117,778 --
========== ========
*Includes undistributed (distributions in excess of) investment
Income--net.............................................................. $ 65,276 $ (10,696)
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
64
<PAGE> 67
================================================================================
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
LAZARD BANTAM
VALUE PORTFOLIO
---------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
1997 DECEMBER 31,
(UNAUDITED) 1996
----------------------------------
<S> <C>
$ (101,446) $ 501,401
2,545,361 2,286,480
5,339,884 3,026,512
------------ -----------
7,783,799 5,814,393
------------ -----------
-- (501,401)
-- --
(928,625) (1,351,185)
(16,575) --
-- --
-- --
-- --
-- --
------------ -----------
(945,200) (1,852,586)
------------ -----------
13,410,967 29,848,114
2,154,411 --
924,256 1,737,733
15,380 --
(3,774,442) (998,307)
(50,087) --
------------ -----------
12,680,485 30,587,540
------------ -----------
19,519,084 34,549,347
34,549,347 --
------------ -----------
$ 54,068,431 $34,549,347
============ ===========
2,746,889 --
------------ -----------
984,024 2,685,157
73,763 140,707
(291,541) (78,975)
------------ -----------
766,246 2,746,889
------------ -----------
3,513,135 2,746,889
============ ===========
-- --
------------ -----------
161,171 --
1,229 --
(3,918) --
------------ -----------
158,482 --
------------ -----------
158,482 --
============ ===========
$ (101,446) $ --
============ ===========
</TABLE>
65
<PAGE> 68
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME (LOSS) FROM INVESTMENT OPERATIONS: LESS DISTRIBUTIONS
----------------------------------------- FROM
REALIZED AND AND IN EXCESS OF:
NET ASSET VALUE, INVESTMENT UNREALIZED TOTAL FROM ----------------------
BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED
PERIOD OF PERIOD (LOSS)-NET INVESTMENTS-NET OPERATIONS INCOME-NET GAINS-NET
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LAZARD EQUITY PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... $19.24 $0.117 $ 2.972 $ 3.089 $ (0.052) $(0.257)
Year ended
12/31/96....................... 17.41 0.331 3.064 3.395 (0.329) (1.236)
12/31/95....................... 13.75 0.226 4.931 5.157 (0.175) (1.322)
12/31/94....................... 13.89 0.141 0.441 0.582 (0.152) (0.574)
12/31/93....................... 12.74 0.158 2.172 2.330 (0.165) (1.015)
12/31/92....................... 12.34 0.123 0.518 0.641 (0.132) (0.109)
Open Shares
Period from
2/5/97* to 6/30/97+++.......... 20.19 0.052 2.061 2.113 (0.036) (0.257)
- ---------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 13.62 0.215 1.462 1.677 -- (0.097)
Year ended
12/31/96....................... 12.50 0.166 1.767 1.933 (0.191) (0.622)
12/31/95....................... 11.23 0.187 1.288 1.475 (0.091) (0.114)
12/31/94....................... 12.32 0.078 (0.049) 0.029 -- (1.123)
12/31/93....................... 9.48 0.021 2.919 2.940 (0.021) (0.079)
12/31/92....................... 10.30 0.097 (0.779) (0.682) (0.138) --
Open Shares
Period from
1/23/97* to 6/30/97+++......... 13.29 0.069 1.898 1.967 -- (0.097)
- ---------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 10.78 0.322 (0.673) (0.351) (0.273) (0.026)
Year ended
12/31/96....................... 10.85 0.539 0.032 0.571 (0.592) (0.049)
12/31/95....................... 10.23 0.701 1.250 1.951 (1.129) (0.202)
12/31/94....................... 10.51 0.592 (0.161) 0.431 (0.593) (0.116)
12/31/93....................... 9.79 0.571 0.912 1.483 (0.570) (0.193)
12/31/92....................... 10.28 0.614 (0.403) 0.211 (0.614) (0.087)
Open Shares
Period from
1/8/97* to 6/30/97+++.......... 10.64 0.238 (0.474) (0.236) (0.238) (0.026)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
66
<PAGE> 69
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS NET ASSETS,
NET ASSET ----------------------------- PORTFOLIO AVERAGE END OF
VALUE, END TOTAL INVESTMENT TURNOVER COMMISSION PERIOD
OF PERIOD RETURN++ EXPENSES-NET+ INCOME-NET+ RATE RATE** (000'S)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$22.02 16.2% 0.87% 1.13% 35.36% $ 0.0582 $ 317,643
19.24 19.9 0.89(f),(g) 1.87 65.80 0.0582 278,605
17.41 37.7 0.92(e) 1.45 80.72 163,787
13.75 4.2 1.05 1.15 66.52 89,105
13.89 18.6 1.05(b) 1.31 63.92 47,123
12.74 5.3 1.05(a) 1.19 174.45 26,646
22.01 10.6 1.22(h),(i) 1.04 35.36 0.0582 4,692
- ---------------------------------------------------------------------------------------------------------
15.20 12.4 0.89 2.16 24.95 0.0317 2,080,607
13.62 15.6 0.91(f),(g) 1.93 38.59 0.0219 1,816,173
12.50 13.1 0.95(e) 1.82 62.54 1,299,549
11.23 0.2 0.94 0.75 106.15 831,877
12.32 31.0 0.99 1.13 86.95 603,642
9.48 (6.6) 1.05(a) 2.13 60.37 176,005
15.16 14.9 1.25(h),(i) 3.58 24.95 0.0317 4,785
- ---------------------------------------------------------------------------------------------------------
10.13 (3.2) 1.05(h),(i) 5.44 68.79 -- 114,631
10.78 5.5 1.05(f) 5.54 241.85 -- 88,430
10.85 19.4 1.05(d),(e) 5.99 189.97 45,624
10.23 4.2 1.05(c) 5.68 65.90 35,803
10.51 15.7 1.05(b) 5.50 115.84 13,546
9.79 2.0 1.05(a) 6.08 256.20 8,183
10.14 (2.2) 1.35(h),(i) 5.19 68.79 -- 1,908
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
67
<PAGE> 70
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME (LOSS) FROM INVESTMENT OPERATIONS: LESS DISTRIBUTIONS
----------------------------------------- FROM
REALIZED AND AND IN EXCESS OF:
NET ASSET VALUE, INVESTMENT UNREALIZED TOTAL FROM ----------------------
BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED
PERIOD OF PERIOD (LOSS)-NET INVESTMENTS-NET OPERATIONS INCOME-NET GAINS-NET
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LAZARD BOND PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... $ 9.88 $0.293 $ 0.036 $ 0.329 $ (0.289) $ --
Year ended
12/31/96....................... 10.10 0.559 (0.141) 0.418 (0.568) (0.070)
12/31/95....................... 9.24 0.595 0.863 1.458 (0.594) (0.004)
12/31/94....................... 10.28 0.584 (1.010) (0.426) (0.584) (0.029)
12/31/93....................... 10.21 0.551 0.302 0.853 (0.551) (0.232)
12/31/92....................... 10.25 0.577 (0.004) 0.573 (0.577) (0.036)
Open Shares
Period from
3/5/97* to 6/30/97+++.......... 9.86 0.172 0.060 0.232 (0.172) --
- ----------------------------------------------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 10.01 0.382 0.067 0.449 (0.379) --
Year ended
12/31/96....................... 9.52 0.758 0.498 1.256 (0.766) --
12/31/95....................... 9.10 0.748 0.430 1.178 (0.758) --
12/31/94....................... 10.13 0.762 (0.990) (0.228) (0.761) (0.039)
12/31/93....................... 9.50 0.644 0.738 1.382 (0.633) (0.119)
12/31/92....................... 9.97 1.049 (0.450) 0.599 (1.049) (0.020)
Open Shares
Period from
1/23/97* to 6/30/97+++......... 10.08 0.317 0.010 0.327 (0.317) --
- ----------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 18.44 0.023 3.003 3.026 -- (0.396)
Year ended
12/31/96***.................... 15.95 0.105 3.680 3.785 (0.105) (1.190)
12/31/95....................... 14.35 0.126 2.951 3.077 (0.154) (1.323)
12/31/94....................... 15.26 0.070 0.220 0.290 (0.042) (1.158)
12/31/93....................... 12.98 0.019 3.830 3.849 (0.020) (1.549)
12/31/92....................... 10.42 0.019 2.560 2.579 (0.019) --
Open Shares
Period from
1/30/97* to 6/30/97+++......... 18.75 0.007 2.689 2.696 -- (0.396)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
68
<PAGE> 71
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS NET ASSETS,
NET ASSET ----------------------------- PORTFOLIO AVERAGE END OF
VALUE, END TOTAL INVESTMENT TURNOVER COMMISSION PERIOD
OF PERIOD RETURN++ EXPENSES-NET+ INCOME-NET+ RATE RATE** (000'S)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9.92 3.4% 0.80%(h),(i) 5.91% 261.45% -- $ 81,886
9.88 4.4 0.80(f),(g) 5.77 460.29 -- 69,906
10.10 16.2 0.80(d),(e) 6.07 244.28 46,083
9.24 (4.2) 0.80(c) 6.11 120.51 24,494
10.28 8.6 0.80(b) 5.22 174.63 13,562
10.21 5.7 0.80(a) 5.59 131.38 8,532
9.92 2.4 1.10(h),(i) 5.70 261.45 -- 5,084
- ---------------------------------------------------------------------------------------------------------
10.08 4.6 0.94(h),(i) 7.71 84.49 -- 301,281
10.01 13.7 1.08(f),(g) 7.88 188.88 -- 199,083
9.52 13.6 1.09(e) 8.02 205.33 78,474
9.10 (2.3) 1.05(c) 8.03 195.18 62,328
10.13 15.6 1.05(b) 6.36 215.60 34,943
9.50 6.0 1.05(a) 10.57 122.88 9,641
10.09 3.3 1.39(h),(i) 7.67 84.49 -- 9,906
- ---------------------------------------------------------------------------------------------------------
21.07 16.7 0.82(h),(i) 0.27 24.45 0.0582 1,248,663
18.44 23.9 0.84(f),(g) 0.60 50.58 0.0575 981,405
15.95 21.5 0.84(e) 0.90 69.68 646,371
14.35 2.0 0.85 0.51 70.11 429,673
15.26 30.1 0.88 0.16 98.47 350,952
12.98 24.8 1.05(a) 0.29 106.91 168,171
21.05 14.7 1.14(h),(i) (0.07) 24.45 0.0582 5,900
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
69
<PAGE> 72
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME (LOSS) FROM INVESTMENT OPERATIONS: LESS DISTRIBUTIONS
----------------------------------------- FROM
REALIZED AND AND IN EXCESS OF:
NET ASSET VALUE, INVESTMENT UNREALIZED TOTAL FROM ----------------------
BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED
PERIOD OF PERIOD (LOSS)-NET INVESTMENTS-NET OPERATIONS INCOME-NET GAINS-NET
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... $11.93 $0.173 $ 0.700 $ 0.873 $ -- $(0.093)
Year ended
12/31/96....................... 10.52 0.079 1.551 1.630 (0.082) (0.138)
12/31/95....................... 10.38 0.139 0.056 0.195 -- (0.055)
12/31/94....................... 10.86 0.072 (0.548) (0.476) -- --
12/1/93* to 12/31/93........... 10.00 0.004 0.859 0.863 (0.003) --
Open Shares
Period from
2/13/97* to 6/30/97+++......... 12.32 0.044 0.409 0.453 -- (0.093)
- ---------------------------------------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 11.21 0.099 2.513 2.612 -- (0.172)
Year ended
12/31/96....................... 9.24 0.074 2.107 2.181 (0.083) (0.128)
12/31/95....................... 9.86 0.080 (0.660) (0.580) (0.040) --
7/15/94* to 12/31/94........... 10.00 0.010 (0.154) (0.144) -- --
Open Shares
Period from
1/8/97* to 6/30/97+++.......... 11.45 0.036 2.326 2.362 -- (0.172)
- ---------------------------------------------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 11.48 0.091 1.486 1.577 (0.004) (0.423)
Year ended
1/3/96* to 12/31/96............ 10.00 0.085 1.492 1.577 (0.097) --
Open Shares
Period from
1/30/97* to 6/30/97+++......... 11.31 0.048 1.685 1.733 -- (0.423)
- ---------------------------------------------------------------------------------------------------------------------
LAZARD BANTAM VALUE PORTFOLIO
Institutional Shares
Six months ended
6/30/97+++..................... 12.58 (0.040) 2.505 2.465 -- (0.315)
Year ended
3/4/96* to 12/31/96............ 10.00 0.218 3.108 3.326 (0.218) (0.528)
Open Shares
Period from
1/23/97* to 6/30/97+++......... 13.13 (0.014) 1.899 1.885 -- (0.315)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
70
<PAGE> 73
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS NET ASSETS,
NET ASSET ----------------------------- PORTFOLIO AVERAGE END OF
VALUE, END TOTAL INVESTMENT TURNOVER COMMISSION PERIOD
OF PERIOD RETURN++ EXPENSES-NET+ INCOME-NET+ RATE RATE** (000'S)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$12.71 7.4% 1.09%(h),(i) 1.29% 31.41% $ 0.0116 $ 145,203
11.93 15.6 1.12 1.67 100.98 0.0150 126,973
10.52 1.9 1.13(e) 1.56 117.53 115,534
10.38 (4.5) 1.05(c) 0.95 112.92 83,432
10.86 8.7 1.05(b) 1.76 0.84 13,522
12.68 3.7 1.43(h),(i) 1.59 31.41 0.0116 1,362
- -------------------------------------------------------------------------------------------------------
13.65 23.5 1.28(h),(i) 1.46 27.60 0.0008 270,918
11.21 23.6 1.38(f),(g) 1.40 50.87 0.0042 145,328
9.24 (5.9) 1.30(d),(e) 1.22 102.22 35,216
9.86 (1.4) 1.30(c) 0.31 30.68 17,025
13.64 20.8 1.60(h),(i) 1.66 27.60 0.0008 8,809
- --------------------------------------------------------------------------------------------------------
12.63 14.1 1.05(h),(i) 1.47 30.03 0.0393 11,026
11.48 15.8 1.05(f),(g) 1.70 73.71 0.0422 9,784
12.62 15.7 1.35(h),(i) 2.05 30.03 0.0393 1,487
- -------------------------------------------------------------------------------------------------------
14.73 20.1 1.05(h),(i) (0.49) 64.21 0.0554 51,739
12.58 33.3 1.05(f),(g) 2.80 261.60 0.0402 34,549
14.70 14.8 1.35(h),(i) (0.73) 64.21 0.0554 2,329
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights on pages 72 and 73.
The accompanying notes are an integral part of these financial statements.
71
<PAGE> 74
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
* 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 Special Equity Portfolio from January 1,
1996 through June 28, 1996 (acquisition date), whose net assets were
acquired by Small Cap Portfolio.
+ Annualized for periods less than one year.
++ Total return represents aggregate total return for the periods indicated.
+++ Unaudited.
(a) 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 Equity
Portfolio, 1.37% ($0.014) for International Equity Portfolio, 2.80%
($0.176) for International Fixed-Income Portfolio, 3.23% ($0.0251) for Bond
Portfolio, 2.99% ($0.192) for Strategic Yield Portfolio, and 1.14% ($0.006)
for Small Cap Portfolio.
(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 1.18% ($0.020) for Equity
Portfolio, 2.08% ($0.119) for International Fixed-Income Portfolio, 1.76%
($0.101) for Bond Portfolio, 1.63% ($0.058) for Strategic Yield Portfolio,
and 2.87%+ ($0.010) for International 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 1.51% ($0.048) for
International Fixed-Income Portfolio, 1.23% ($0.041) for Bond Portfolio,
1.15% ($0.009) for Strategic Yield Portfolio, 1.26% ($0.016) for
International Small Cap Portfolio, and 2.31%+ ($0.034) for Emerging Markets
Portfolio,.
(d) 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
International Fixed-Income Portfolio, 0.97% ($0.578) for Bond Portfolio,
and 2.00% ($0.034) for Emerging Markets Portfolio.
(e) Includes fees paid indirectly. Excluding fees paid indirectly, the ratio of
expenses to average net assets would have been 0.92% for Equity
Portfolio, 0.95% for International Equity Portfolio, 1.05% for
International Fixed-Income Portfolio, 0.80% for Bond Portfolio, 1.08% for
Strategic Yield Portfolio, 0.84% for Small Cap Portfolio, 1.13% for
International Small Cap Portfolio, and 1.30% for 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 0.89% ($0.331) for Equity
Portfolio, 0.91% ($0.166) for International Equity Portfolio, 1.21%
($0.523) for International Fixed-Income Portfolio, 0.88% ($0.551) for Bond
Portfolio, 1.08% ($0.756) for Strategic Yield Portfolio, 0.84% ($0.105)
for Small Cap Portfolio, 1.48% ($0.068) for Emerging Markets Portfolio,
5.06% (-$0.115) for Global Equity Portfolio, and 1.91% ($0.151) for Bantam
Value Portfolio.
(g) Includes fees paid indirectly. Excluding fees paid indirectly, the ratio
of expenses to average net assets would have been 0.89% for Equity
Portfolio, 0.90% for International Equity Portfolio, 0.80% for Bond
Portfolio, 1.05% for Strategic Yield Portfolio, 0.84% for Small Cap
Portfolio, 1.36% for Emerging Markets Portfolio, 1.05% for Global Equity
Portfolio, and 1.05% for Bantam Value 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 1.91% ($0.039) for Equity
Portfolio--Open, 2.13% ($0.061) for International Equity Portfolio--Open,
1.13% ($0.318) for International Fixed-Income Portfolio--Institutional,
3.89% ($0.183) for International Fixed-Income Portfolio--Open, 0.81%
($0.293) for Bond Portfolio--Institutional, 1.87% ($0.165) for Bond
Portfolio--Open, 0.94% ($0.381) for Strategic Yield
Portfolio--Institutional, 1.58% ($0.313) for Strategic Yield
Portfolio--Open, 0.82% ($0.023) for Small Cap Portfolio--Institutional,
2.01% ($0.039) for Small Cap Portfolio-- Open, 1.09% ($0.173) for
International Small Cap Portfolio--Institutional, 3.04% ($0.027) for
International Small Cap Portfolio--Open, 1.30% ($0.098) for Emerging
Markets Portfolio--Institutional, 1.96% ($0.032) for Emerging Markets
72
<PAGE> 75
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Portfolio--Open, 2.74% ($-0.013) for Global Equity Portfolio--
Institutional, 5.03% ($0.014) for Global Equity Portfolio--Open, 1.30%
($-0.060) for Bantam Value Portfolio--Institutional, and 3.18% ($-0.030)
for Bantam Value Portfolio--Open.
(i) Includes fees paid indirectly. Excluding fees paid indirectly, the ratio of
expenses to average net assets would have been 1.22% for Equity
Portfolio--Open, 1.25% for International Equity Portfolio--Open, 1.05% for
International Fixed-Income Portfolio--Institutional, 1.35% for
International Fixed-Income Portfolio--Open, 0.80% for Bond Portfolio--
Institutional, 1.10% for Bond Portfolio--Open, 0.94% for Strategic Yield
Portfolio--Institutional, 1.40% for Strategic Yield Portfolio--Open, 0.82%
for Small Cap Portfolio--Institutional, 1.14% for Small Cap
Portfolio--Open, 1.09% for International Small Cap Portfolio, 1.43% for
International Small Cap Portfolio--Open, 1.30% for Emerging Markets--
Institutional, 1.62% for Emerging Markets Portfolio--Open, 1.05% for Global
Equity Portfolio--Institutional, 1.35% for Global Equity Portfolio--Open,
1.05% for Bantam Value Portfolio--Institutional and 1.35% for Bantam Value
Portfolio-- Open.
73
<PAGE> 76
- --------------------------------------------------------------------------------
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 a no-load, open-end management investment company. The Fund is
comprised of eleven portfolios (each referred to as a "Portfolio"), only ten of
which are currently being offered, as follows: Lazard Equity Portfolio, Lazard
International Equity Portfolio, Lazard International Fixed-Income Portfolio,
Lazard Bond Portfolio, Lazard Strategic Yield Portfolio, Lazard Small Cap
Portfolio, Lazard International Small Cap Portfolio, Lazard Emerging Markets
Portfolio, Lazard Global Equity Portfolio and Lazard Bantam Value Portfolio.
Effective November 1, 1996, the Board of Directors of the Fund approved the
offering of two different classes of shares for the Portfolios--Institutional
Shares and Retail ("Open") Shares. Institutional Shares and Open Shares are
identical, except as to minimum investment requirements and the services offered
to and expenses borne by each class of shares. Please refer to Note 2 for a
description of allocation of income, expenses and gains and losses between the
Shares.
Offering of Open Shares commenced as follows: International Fixed-Income
Portfolio and Emerging Markets Portfolio on January 8, 1997; International
Equity Portfolio, Strategic Yield Portfolio and Bantam Value Portfolio on
January 23, 1997; Small Cap Portfolio and Global Equity Portfolio on January 30,
1997; Equity Portfolio on February 5, 1997; International Small Cap Portfolio on
February 13, 1997; and Bond Portfolio on March 5, 1997.
The Equity Portfolio is operated as a "diversified" fund 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--Market values for equity securities listed on the
New York Stock Exchange ("NYSE"), other U.S. exchanges or NASDAQ are based on
the last quoted sales prices on the principal exchange on which the security is
traded as of the close of regular trading on the NYSE (normally 4:00 p.m.
Eastern Time) on each valuation date; securities not traded on the valuation
date are valued at the closing bid price. Any securities not listed for which
current over-the-counter market quotations or bids are readily available are
valued at the last quoted bid price, or, if available, the mean of two such
prices. Securities listed on foreign exchanges are valued at the last quoted
sales price; securities not traded on the valuation date are valued at the
closing bid price. Bonds and other fixed income securities are valued on the
basis of prices provided by a pricing service which are based primarily on
institutional size trading in similar groups of securities, or using brokers
quotations. Mortgage-backed securities issued by certain government-related
organizations are valued using pricing services or brokers quotations based on a
matrix system which considers such factors as other security prices, yields and
maturities. Debt securities maturing in sixty days or less are valued at
amortized cost except where to do so would not accurately reflect their fair
value, in which case such securities are valued at fair value as determined in
good faith in accordance with procedures adopted by the Board of Directors.
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. Eastern Time). Securities for which market quotations are not readily
available are valued at fair value as
74
<PAGE> 77
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
determined in good faith using methods approved 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 specific identification basis. Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily. The
Portfolios amortize premiums and accrete discounts on fixed income securities.
(c) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS--The
books and records of the Portfolios are maintained in U.S. dollars. Foreign
currency transactions are translated into U.S. dollars at the rates of exchange
prevailing on the respective dates of such transactions. Assets and liabilities
stated in foreign currency are translated at the exchange rate at the end of the
period. The Portfolios do not isolate the portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in their market prices. Such fluctuations are
included in net realized and unrealized gain or loss from investments. Net
realized exchange gains (losses) from foreign currency transactions represent
net foreign exchange gains (losses) from forward foreign currency contracts,
disposition of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amount of dividends, interest and foreign withholding taxes recorded
on the Portfolio's books and the U.S. dollar equivalent amounts actually
received or paid. Net unrealized foreign exchange gains (losses) arise from
changes in the value of assets and liabilities, other than investments in
securities, as a result of changes in exchanges rates.
A forward foreign currency contract is an agreement between two parties to buy
or sell currency at a set price on a future date. International Equity
Portfolio, International Fixed-Income Portfolio, Strategic Yield Portfolio,
International Small Cap Portfolio, Emerging Markets Portfolio and Global Equity
Portfolio (the "Eligible Portfolios") may enter into forward foreign currency
contracts for risk management. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts. Risks may also arise from unanticipated movements in the value
of the foreign currency relative to the U.S. dollar. 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.
Daily fluctuations in the value of such contracts are recorded as unrealized
gains or losses. When the contract is closed, the Portfolio records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. Such gains and losses are disclosed in
the realized or unrealized gain (loss) on foreign currency in the accompanying
Statements of Operations.
(d) FEDERAL INCOME TAXES--The Fund's policy is to continue to have each
Portfolio qualify as a regulated investment company under the Internal Revenue
Code and to distribute all of its taxable income, including any realized net
capital gains to share-
75
<PAGE> 78
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
holders. Therefore, no federal income tax provision is required.
At December 31, 1996, the following Portfolios had available for federal income
tax purposes unused realized capital losses which can be used to offset future
realized capital gains. The capital loss carryforwards will expire on the
indicated dates:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
PORTFOLIO 2003 2004
- ------------------------- -------- --------
<S> <C> <C>
Strategic Yield $388,193 --
Bond -- $383,093
</TABLE>
Under current tax law, certain capital and net foreign currency losses realized
after October 31 within the taxable year may be deferred and treated as
occurring on the first day of the following tax year. For the tax year ended
December 31, 1996, the following Portfolios have elected to defer the following
net capital and currency losses arising between November 1, 1996 and December
31, 1996:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
- --------------------------- --------
<S> <C>
International Fixed-Income $477,781
International Small Cap 25,995
Global Equity 9,189
</TABLE>
(e) DIVIDENDS AND DISTRIBUTIONS--The Fund intends to declare dividends from net
investment income daily on shares of International Fixed-Income Portfolio, Bond
Portfolio, and Strategic Yield Portfolio and pay such dividends monthly.
Dividends from net investment income on shares of Equity Portfolio will be
declared and paid quarterly. Dividends from net investment income on shares of
International Equity Portfolio, Small Cap Portfolio, International Small Cap
Portfolio, Emerging Markets Portfolio, Global Equity Portfolio, and 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
carryforwards would be taxable to the Portfolio if not distributed. The
Portfolios intend to declare and distribute these amounts annually to
shareholders; however, to avoid taxation, a second distribution may be required.
Income dividends 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. 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.
As a result of these book-tax differences, the Portfolios made the following
reclassifications to the capital accounts for the period ended December 31,
1996:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-----------------------------------------------
UNDISTRIBUTED ACCUMULATED
INVESTMENT REALIZED GAIN
PORTFOLIO PAID IN CAPITAL INCOME-NET (LOSS)-NET
- ----------------- --------------- ------------- -------------
<S> <C> <C> <C>
International
Equity $ 52,636 $ (9,388,800) $ 9,336,164
International
Fixed-Income 37,253 (1,005,298) 968,045
Bond 37,806 (38,844) 1,038
Strategic Yield (8,181) (75,141) 83,322
International
Small Cap (62,270) (1,240,612) 1,302,882
Emerging Markets -- (428,175) 428,175
Global Equity -- (16,578) 16,578
</TABLE>
(f) 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 with the exception of the initial registration costs for Global Equity
Portfolio and Bantam Value Portfolio, which are being amortized over a one year
period. 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
76
<PAGE> 79
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
(g) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets. The
Portfolios accrue distribution fees and shareholders services fees to the
respective class. Each Portfolio's income, expenses (other than the fees
mentioned above) and realized and unrealized gains and losses are allocated
proportionally each day between the classes based upon the relative net assets
of each class.
(h) 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 expenses, and reflect the amount
of such credits as a reduction in total expenses.
(i) STRUCTURED INVESTMENTS--Certain Portfolios may invest in structured
investments whose values are linked either directly or inversely to changes in
foreign currencies, interest rates, commodities, indices, or other underlying
instruments. A Portfolio uses these securities to increase or decrease its
exposure to different underlying instruments and to gain exposure to markets
that might be difficult to invest in through conventional securities. Structured
investments may be more volatile than their underlying instruments, but any loss
is limited to the amount of the original investment.
(j) DELAYED DELIVERY COMMITMENTS--Each Portfolio may purchase or sell securities
on a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated. Collateral
consisting of liquid securities or cash is maintained in an amount at least
equal to these commitments.
(k) 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 investment management agreements (the "Management
Agreements") with Lazard Asset Management (the "Manager"), a division of Lazard
Freres & Co. LLC, on behalf of each Portfolio. Pursuant to the Management
Agreements, 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 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
Portfolio, 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.
77
<PAGE> 80
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The Manager has voluntarily agreed to reduce its fees and, if necessary,
reimburse the following Portfolios if annualized operating expenses exceed the
following percentages of average daily net assets for the respective shares:
<TABLE>
<CAPTION>
INSTITUTIONAL OPEN
SHARES SHARES
ANNUAL ANNUAL
OPERATING OPERATING
PORTFOLIO EXPENSES EXPENSES
- ------------------------------ ------------- ---------
<S> <C> <C>
Equity --% 1.22%
International Equity -- 1.25
International Fixed-Income 1.05 1.35
Bond 0.80 1.10
Strategic Yield -- 1.39
Small Cap -- 1.14
International Small Cap -- 1.43
Emerging Markets -- 1.60
Global Equity 1.05 1.35
Bantam Value 1.05 1.35
</TABLE>
For the six months ended June 30, 1997, the Manager did not impose all or part
of its management fee amounting to $4,247 for Equity Portfolio, $5,301 for
International Equity Portfolio, $40,322 for International Fixed-Income
Portfolio, $8,628 for Bond Portfolio, $2,698 for Strategic Yield Portfolio,
$5,549 for Small Cap Portfolio, $4,640 for International Small Cap Portfolio,
$4,679 for Emerging Markets Portfolio, $39,568 for Global Equity Portfolio, and
$48,991 for Bantam Value Portfolio. For the same period the Manager reimbursed
expenses amounting to $55,053 for Global Equity Portfolio.
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 $7,500 per
additional class and 0.02% of average assets up to $1 billion plus 0.01% of
average assets over $1 billion. State Street has agreed to waive the $37,500 fee
for the Bantam Value Portfolio for one year or until the Portfolio reaches net
assets of $50 million.
The Fund has a distribution agreement with Lazard Freres & Co. LLC (the
"Distributor") As the distributor, Lazard Freres & Co. LLC acts as distributor
for shares of each of the portfolios and bears the cost of printing and mailing
prospectuses to potential investors and of any advertising expenses incurred in
connection with distribution of shares.
The Distributor provides the Open Shares of each Portfolio with distribution
services pursuant to a separate Distribution Plan (the "Plan") in accordance
with Rule 12b-1 under the Investment Company Act of 1940. Under the Plan, the
Distributor is entitled to distribution fees from the Open Shares. The
distribution fee is an asset-based fee to support distribution efforts and/or
servicing of accounts. The Open Shares pay a monthly distribution fee at an
annual rate of 0.25% of the average daily net assets of the Portfolio's Open
Shares for such services under the 12b-1 plan adopted by the Fund. The
distribution fee may be retained by the Distributor if an Open Shares
shareholder invests directly through the Distributor. Usually the fees are paid
to external organizations such as 401(k) alliance sponsors, discount brokers and
bank trust departments who distribute the Fund to the public.
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
Purchases and sales of portfolio securities (excluding short-term securities),
for the
78
<PAGE> 81
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
six months ended June 30, 1997 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- --------------- ------------ ------------
<S> <C> <C>
Equity $102,775,443 $104,382,261
International 474,833,783 449,110,806
Equity
International 67,807,804 57,941,194
Fixed-
Income(1)
Bond(2) 159,889,823 148,391,756
Strategic 276,650,090 182,068,965
Yield(3)
Small Cap 316,372,073 242,109,003
International 46,147,417 41,012,505
Small Cap
Emerging 139,566,559 53,535,913
Markets
Global Equity 4,294,128 3,088,605
Bantam Value 35,134,154 25,646,069
</TABLE>
(1) Includes purchases and sales of U.S. Government securities of $423,002 and
$0, respectively
(2) Includes purchases and sales of U.S. Government securities of $54,471,177
and $50,138,141, respectively
(3) Includes purchases and sales of U.S. Government securities of $17,347,346
and $12,861,620, respectively
For the six month period ended June 30, 1997, the Global Equity Portfolio paid
brokerage commissions of $45 to Lazard Freres & Co. LLC for portfolio
transactions executed on behalf of the Portfolio.
5. 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. During the period ended June 30, 1997, the Fund had no
borrowings under this Agreement.
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<PAGE> 83
THE LAZARD FUNDS, INC.
30 Rockefeller Plaza
New York, New York 10112
TELEPHONE
(800) 823-6300
INVESTMENT MANAGER
Lazard Freres Asset Management
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 632-6400
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10112
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
Telephone: 1-800-986-3455
INDEPENDENT PUBLIC ACCOUNTANTS
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
LEGAL COUNSEL
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
<PAGE> 84
[LAZARDFUNDS LOGO]
30 Rockefeller Plaza
58th Floor
New York, NY 10112
Telephone 800.823.6300
This report is for the information of the stockholders of the Lazard Funds,
Inc. Its use in connection with any offering of the Fund's shares is
authorized only in the case of a concurrent or prior delivery of the Fund's
current prospectus.
