LAZARDFunds
SEMI-ANNUAL REPORT
JUNE 30, 1998
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THE LAZARD FUNDS, INC.
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BOARD OF DIRECTORS
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JOHN J. BURKE RETIRED VICE CHAIRMAN, MONTANA POWER COMPANY
KENNETH S. DAVIDSON PRIVATE INVESTOR
NORMAN EIG VICE CHAIRMAN, LAZARD FRERES & CO. LLC
CARL FRISCHLING PARTNER, KRAMER, LEVIN, NAFTALIS, NESSEN,
KAMIN & FRANKEL
HERBERT W. GULLQUIST VICE CHAIRMAN, LAZARD FRERES & CO. LLC
WILLIAM KATZ PRESIDENT, BBDO NEW YORK
LESTER Z. LIEBERMAN PRIVATE INVESTOR
RICHARD REISS CHAIRMAN, GEORGICA ADVISORS
JOHN RUTLEDGE PRESIDENT, RUTLEDGE AND COMPANY
OFFICERS
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NORMAN EIG CHAIRMAN OF THE BOARD
HERBERT W. GULLQUIST PRESIDENT
WILLIAM G. BUTTERLY, III VICE PRESIDENT AND SECRETARY
JAMES GIALLANZA TREASURER
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THE LAZARD FUNDS, INC.
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TABLE OF CONTENTS
Overview ............................................. 2
Growth Charts ....................................... 5
Performance Table .................................... 11
Portfolio of Investments
Lazard Equity Portfolio ........................... 14
Lazard Mid Cap Portfolio ........................ 17
Lazard Small Cap Portfolio ........................ 19
Lazard Bantam Value Portfolio ..................... 23
Lazard Global Equity Portfolio .................. 25
Lazard International Equity Portfolio ............ 28
Lazard International Small Cap Portfolio ......... 31
Lazard Emerging Markets Portfolio ............... 34
Lazard Bond Portfolio ........................... 37
Lazard High Yield Portfolio ..................... 43
Lazard International Fixed-Income Portfolio ...... 47
Lazard Strategic Yield Portfolio .................. 56
Notes to Portfolios of Investments ............... 70
Statements of
Assets and Liabilities ........................... 72
Operations ....................................... 74
Changes in Net Assets ........................... 76
Financial Highlights ................................. 82
Notes to Financial Highlights ........................ 94
Notes to Financial Statements ........................ 95
1
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THE LAZARD FUNDS, INC.
OVERVIEW
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In the wake of the disastrous events of the fourth quarter 1997, investors
greeted the New Year with a combination of apprehension and hope. Would the
turmoil in Asian markets spread to markets in the U.S. and Europe? Or would it
present only a temporary setback? Mid-year, there appears to be no solid answer.
Certainly, world markets have been affected by the Asian crisis, but the effects
have been far from ruinous, and the unprecedented level of M&A activity would
suggest that markets in the U.S. and Europe remain both healthy and optimistic.
Nevertheless, while fundamentals in the U.S. remain strong and Europe progresses
optimistically toward the inception of EMU, analysts keep a keen eye on Asia
and, in particular, on the region's largest economy, Japan.
JAPAN
An American professor based in Japan recently described the society as
resembling a giant air bag which has shielded citizens so effectively from the
recession that they have little reason to demand the reforms necessary to pull
the country out of its economic torpor. That may explain, in part, why none of
former Prime Minister Ryutaro Hashimoto's recent strategies took hold. In
December, for example, there was little response to the announcement of 2
trillion Yen in tax cuts and 10 trillion Yen in support for deposit insurance
and threatened banks. January's rash of ill-conceived accounting strategies that
were intended to rescue the weaker banks had little effect, and the announcement
in February of a stimulus package was greeted with catcalls.
Similarly, the Fiscal Reform Bill of March accomplished little. Even April's
enormous stimulus package failed to impress critics, as it was partially offset
by its short-term nature and prior tightening policies. All these good
intentions required nothing less dramatic than the rescue of the Yen by the U.S.
Treasury in June; Mr. Hashimoto resigned in July. To the extent that
fundamentally strong companies are still reliant on good governmental policy,
the real issue may not be whether Mr. Hashimoto's successor, Mr. Obuchi, will be
able to implement the necessary reforms to bring Japan back from recession, but
whether the Japanese public will demand them. Japanese corporations are still
largely characterized by lifetime employment, close links to the ruling party,
minimal transparency, and murky accounting. Return on equity targets are only
now starting to be set explicitly. In this environment, bottom-up stock picking
in Japan will be essential, and the most direct method of research, one-on-one
meetings with management, remains our prime indicator of an individual company's
commitment both to corporate reform and shareholder value.
EUROPE
The effects of the Asian crisis were reflected in the somewhat diminished pace
of returns in Europe, and the market did experience some volatility. However,
the European markets remained confident, particularly in light of the approach
of EMU. This confidence was reflected in the pace of M&A activity, which
accelerated in the second quarter as many European compa-
2
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THE LAZARD FUNDS, INC.
OVERVIEW (CONTINUED)
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nies sought to use their strong balance sheets to participate in much needed
industry consolidation. Most prominent in this endeavor was the financial
services sector, wherein banks, in an effort to eliminate overlapping costs and
earn a better return on capital, began to merge with other banks and with
insurance companies, both within the same country and cross-border. The second
quarter witnessed a continuation of this activity and its expansion to other
sectors and continents. The confidence of the European equity culture is perhaps
best reflected by Daimler-Benz's acquisition of American automaker Chrysler,
which marked the largest industrial takeover, as well as the largest takeover of
a U.S. company, ever. As BMW and Volkswagen battled over Rolls-Royce, the new
equity culture in Europe continued to attract increasing numbers of investors.
The upbeat outlook for equities in Europe is underpinned by the improvements in
corporate profitability and returns on capital, a strong liquidity backdrop, and
considerable scope for industry consolidation and reorganization. For a society
that has been steeped during the greater part of the twentieth century in
socialist political and economic structures, these reforms represent nothing
less than a massive paradigm shift. In the midst of this transformation,
attention to details normally overlooked in top-down investing will be
imperative: corporate accounting, cash flow, and emerging competition.
U.S.
In the U.S., the Asian crisis was reflected in a continuing flight to large
capitalization stocks, which resulted in a volatile mid and small cap market.
Despite the Asian crisis, S&P 500 stocks continue to be the best performing
asset class in the world, a distinction earned with the help of low inflation,
low interest rates, strong economic growth, and the effects of a decade's worth
of corporate restructuring. Management at the largest U.S. corporations
apparently understood the unusual position their current, high valuations
provide, and are using company stock to engage in what has become a frenzy of
M&A activity. According to the Justice Department, U.S. mergers this year are
likely to amount to $1.75 trillion, equal to over one-fifth of the entire U.S.
GDP, and representing the combined worth of all merger activity from 1990
through the start of 1996. The growth of mergers and acquisitions is further
spurred as margin pressures in U.S. companies mount, restructuring reaches its
final stages, and pricing flexibility is severely restrained by low inflation, a
strong dollar, and overcapacity in many industries. In many of these cases, a
merger provides the ideal solution to developing cross-selling opportunities,
driving down suppliers' costs, and pooling research and development.
CONCLUSION
In the current environment, the U.S. economy has served as a beacon for markets
across the world, showing how corporate restructuring, transparent business
practices, and a relative freedom from government constraints can provide strong
returns for investors. While markets in Europe have begun to reap the benefits
of following this example, Japan and other Asian markets
3
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THE LAZARD FUNDS, INC.
OVERVIEW (CONTINUED)
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have seemed almost too stunned by the bright light to cut through the
corruption, turbid accounting, and suffocating governmental constraints that are
hampering their progress.
Despite the rather black and white scenario, one need not dismiss Japanese
businesses entirely, nor embrace companies in Europe and in the U.S. too
blindly. In the end, it is the performance of INDIVIDUAL companies that create
performance in any portfolio. In Japan, where valuations are at an all-time low,
we look for younger companies that have less entrenched hierarchies and are more
accountable to shareholders. And, as EMU's inception next January will make
individual European stock analysis and industrial knowledge even more crucial,
we search, company by company, for the managements most committed to shareholder
returns and structural reforms. Finally, in the U.S. market, where valuations
are just beginning to be reassessed, it is important not only to review the
individual company's potential for higher unit sales, but to monitor those
companies in which margins may have peaked. With a new Prime Minister in Japan,
and the inauguration of the euro less than half a year away, groundbreaking
changes are inevitable. With change will come volatility; the importance of
anchoring investments in fundamentally strong companies will remain critical.
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 equity securities of companies with relatively large
capitalizations that the Investment Manager considers to be inexpensively priced
relative to the return on total capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD EQUITY PORTFOLIO AND THE STANDARD & POOR'S 500 STOCK INDEX
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
Equity LEP S&P 500
Jun-88 10000 10000
Jul-88 9869.14 9962.1
Aug-88 9665.65 9623.89
Sep-88 10113.33 10033.96
Oct-88 10560.65 10313.31
Nov-88 10356.38 10166.34
Dec-88 10608.61 10343.74
Jan-89 11276.79 11101.22
Feb-89 11235.67 10824.57
Mar-89 11379.59 11077.11
Apr-89 11904.14 11652.24
May-89 12450.86 12123.68
Jun-89 12265.18 12054.94
Jul-89 13143.41 13143.38
Aug-89 13412.49 13400.34
Sep-89 13350.39 13345.93
Oct-89 12915.47 13036.04
Nov-89 13019.29 13301.84
Dec-89 13117.18 13621.22
Jan-90 12319.94 12706.69
Feb-90 12564.43 12870.35
Mar-90 12872.69 13211.42
Apr-90 12415.5 12881.79
May-90 13311.46 14137.9
Jun-90 13258.13 14042.47
Jul-90 13247.36 13997.39
Aug-90 12048.89 12732.17
Sep-90 11406.86 12112.49
Oct-90 11427.35 12060.89
Nov-90 12179.15 12840.51
Dec-90 12496.99 13198.25
Jan-91 12995.57 13773.03
Feb-91 13960.21 14758.08
Mar-91 14111.95 15115.52
Apr-91 14089.78 15151.34
May-91 14535.52 15804.97
Jun-91 13872.35 15080.94
Jul-91 14524.85 15783.87
Aug-91 15135.04 16157.79
Sep-91 14928.01 15887.47
Oct-91 15102.51 16100.99
Nov-91 14306.49 15452.29
Dec-91 15937.81 17219.56
Jan-92 16105.71 16898.76
Feb-92 16531.93 17117.6
Mar-92 16028.22 16784.66
Apr-92 15955.16 17277.46
May-92 15929.26 17362.12
Jun-92 15294.68 17103.77
Jul-92 15730.79 17802.46
Aug-92 15289.5 17438.05
Sep-92 15523.12 17642.94
Oct-92 15784.23 17703.81
Nov-92 16539.58 18306.63
Dec-92 16775.73 18531.25
Jan-93 17091.76 18686.17
Feb-93 17289.27 18940.86
Mar-93 18039.84 19340.51
Apr-93 17673.14 18873.05
May-93 18135.1 19377.91
Jun-93 18240.69 19434.69
Jul-93 18276.75 19356.56
Aug-93 18955.68 20090.95
Sep-93 18928.52 19936.85
Oct-93 19696.55 20349.34
Nov-93 19546.61 20155.41
Dec-93 19898.97 20399.09
Jan-94 20901.8 21092.66
Feb-94 20629.6 20520.21
Mar-94 19727.05 19625.52
Apr-94 20056.55 19877.12
May-94 20294.4 20203.31
Jun-94 19821.1 19708.12
Jul-94 20518.79 20355.34
Aug-94 21439.69 21189.91
Sep-94 21094.35 20671.81
Oct-94 21391.21 21136.31
Nov-94 20626.73 20366.53
Dec-94 20740.53 20668.56
Jan-95 21087.47 21204.5
Feb-95 22007.59 22030.84
Mar-95 22626.04 22680.97
Apr-95 23256.66 23348.92
May-95 24225.06 24282.18
Jun-95 24981.62 24846.25
Jul-95 25930.04 25670.15
Aug-95 26324.76 25734.59
Sep-95 27235.65 26820.59
Oct-95 27053.32 26724.84
Nov-95 28303.1 27898.06
Dec-95 28557.29 28435.37
Jan-96 29541.45 29403.31
Feb-96 30378 29675.88
Mar-96 30624.04 29961.66
Apr-96 31280.97 30403.3
May-96 31653.77 31187.4
Jun-96 31331.81 31306.22
Jul-96 29627.34 29923.11
Aug-96 30630.21 30554.19
Sep-96 31735.08 32273.78
Oct-96 32496.13 33163.89
Nov-96 34688.81 35670.75
Dec-96 34243.46 34964.11
Jan-97 35880.88 37148.67
Feb-97 36308.03 37439.92
Mar-97 34955.38 35901.51
Apr-97 36005.46 38044.83
May-97 38534.49 40361
Jun-97 39799.69 42169.17
Jul-97 42781.96 45524.57
Aug-97 41286.72 42974.29
Sep-97 43081 45327.99
Oct-97 40616.12 43814.03
Nov-97 41986.75 45842.18
Dec-97 42847.35 46629.29
Jan-98 42783.06 47145.01
Feb-98 45849.71 50535.21
Mar-98 48551.8 53123.12
Apr-98 48916.37 53657.54
May-98 47629.86 52734.63
Jun-98 48491.96 54876.71
LAZARD MID CAP PORTFOLIO
The Lazard Mid Cap Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with market capitalizations in the
range of companies represented in the Russell Midcap Index that the Investment
Manager considers to be inexpensively priced relative to the return on total
capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD MID CAP PORTFOLIO AND THE RUSSELL MIDCAP INDEX
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
Lazard Russell
Midcap Midcap
11-4-97 10000 10000
Nov-97 9990.00 10033.30
Dec-97 10274.67 10309.21
Jan-98 10284.68 10115.40
Feb-98 11145.91 10906.42
Mar-98 11656.64 11423.39
Apr-98 11696.70 11451.95
May-98 11115.87 11097.51
Jun-98 10915.78 11251.21
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
5
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THE LAZARD FUNDS, INC.
GROWTH CHARTS (CONTINUED)
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LAZARD SMALL CAP PORTFOLIO
The Lazard Small Cap Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with market capitalizations in the
range of companies represented in the Russell 2000 Index that the Investment
Manager considers to be inexpensively priced relative to the return on total
capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD SMALL CAP PORTFOLIO AND THE RUSSELL 2000 INDEX
[THE PLOT-POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LSCP Russell 2000
10-30-91 10000 10000
Nov-91 9720.00 9537.20
Dec-91 10453.51 10300.37
Jan-92 11316.28 11135.73
Feb-92 11827.92 11460.78
Mar-92 11827.92 11072.95
Apr-92 11547.02 10684.29
May-92 11557.05 10826.39
Jun-92 10955.12 10317.65
Jul-92 11256.09 10676.30
Aug-92 10935.06 10374.37
Sep-92 11015.32 10613.29
Oct-92 11547.02 10948.25
Nov-92 12560.27 11786.66
Dec-92 13041.26 12196.96
Jan-93 13443.15 12609.46
Feb-93 13563.71 12318.69
Mar-93 14216.78 12718.30
Apr-93 13885.23 12368.68
May-93 14528.25 12915.74
Jun-93 14920.09 12995.95
Jul-93 15045.60 13175.42
Aug-93 15925.82 13744.34
Sep-93 16232.87 14132.20
Oct-93 16386.40 14496.11
Nov-93 16171.46 14023.83
Dec-93 16965.56 14503.02
Jan-94 17588.15 14957.40
Feb-94 17599.26 14903.10
Mar-94 16765.44 14118.16
Apr-94 16743.20 14201.88
May-94 16787.67 14042.11
Jun-94 16598.67 13568.33
Jul-94 16947.64 13791.39
Aug-94 17926.49 14559.57
Sep-94 17926.49 14510.21
Oct-94 17641.94 14451.59
Nov-94 16754.15 13867.60
Dec-94 17310.35 14238.84
Jan-95 17237.97 14059.00
Feb-95 17973.81 14644.28
Mar-95 18408.08 14895.28
Apr-95 18794.09 15226.25
May-95 19348.99 15487.99
Jun-95 20217.52 16291.51
Jul-95 21146.93 17229.90
Aug-95 21255.63 17586.39
Sep-95 21267.70 17900.48
Oct-95 20047.92 17099.97
Nov-95 20893.31 17818.34
Dec-95 21036.36 18288.39
Jan-96 21221.01 18268.64
Feb-96 22012.35 18838.07
Mar-96 22408.01 19221.43
Apr-96 23283.42 20249.20
May-96 24063.06 21047.22
Jun-96 23375.92 20183.02
Jul-96 21697.72 18420.23
Aug-96 23098.42 19489.71
Sep-96 23930.92 20251.37
Oct-96 24142.34 19939.30
Nov-96 25582.69 20760.80
Dec-96 26070.43 21304.94
Jan-97 26819.74 21730.61
Feb-97 26720.78 21203.64
Mar-97 25745.26 20203.04
Apr-97 26494.57 20259.41
May-97 29083.24 22513.27
Jun-97 30426.21 23478.19
Jul-97 31942.47 24570.63
Aug-97 32621.18 25132.80
Sep-97 34108.55 26972.27
Oct-97 32765.58 25787.38
Nov-97 32621.09 25620.54
Dec-97 33384.95 26068.89
Jan-98 33068.14 25657.53
Feb-98 35436.11 27554.65
Mar-98 36703.47 28691.00
Apr-98 36803.53 28849.66
May-98 34869.13 27295.82
Jun-98 33784.70 27353.14
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 INDEX
[THE PLOT POINTS BELOW REPRESENT A LINE CHART IN THE PRINTED REPORT]
LBVP Russell 2000
3-5-96 10000 10000.00
Mar-96 10,630.00 10225.90
Apr-96 11,450.00 10772.68
May-96 11,880.00 11197.23
Jun-96 11,770.00 10737.47
Jul-96 11,160.00 9799.66
Aug-96 11,930.00 10368.63
Sep-96 12,210.00 10773.84
Oct-96 12,730.00 10607.81
Nov-96 13,310.00 11044.85
Dec-96 13,329.42 11334.34
Jan-97 14,082.31 11560.80
Feb-97 14,050.50 11280.45
Mar-97 13,520.29 10748.12
Apr-97 13,265.79 10778.11
May-97 14,979.59 11977.18
Jun-97 16,012.29 12490.52
Jul-97 17,131.96 13071.70
Aug-97 17,849.41 13370.78
Sep-97 19,284.32 14349.39
Oct-97 18,490.00 13719.02
Nov-97 18,121.17 13630.26
Dec-97 17,853.10 13868.79
Jan-98 17,204.80 13649.94
Feb-98 18,813.08 14659.22
Mar-98 19,897.73 15263.76
Apr-98 20,022.40 15348.17
May-98 18,700.87 14521.52
Jun-98 17,853.72 14552.01
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
6
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THE LAZARD FUNDS, INC.
GROWTH CHARTS (CONTINUED)
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LAZARD GLOBAL EQUITY PORTFOLIO
The Lazard Global Equity Portfolio seeks capital appreciation through investing
primarily in the equity securities of non-United States companies that the
Investment Manager considers 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
[THE PLOT-POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LGEP MSCI World
1-4-96 10000 10000
Jan-96 10010.00 10117.88
Feb-96 10170.00 10177.37
Mar-96 10310.00 10344.59
Apr-96 10430.00 10585.72
May-96 10460.00 10592.71
Jun-96 10530.00 10644.19
Jul-96 10160.00 10265.89
Aug-96 10290.00 10381.79
Sep-96 10620.00 10786.17
Oct-96 10720.00 10859.30
Nov-96 11570.00 11465.68
Dec-96 11578.38 11279.93
Jan-97 11550.00 11413.71
Feb-97 11749.84 11542.80
Mar-97 11679.24 11312.29
Apr-97 11911.21 11679.94
May-97 12451.39 12398.73
Jun-97 13215.21 13014.94
Jul-97 13717.46 13612.20
Aug-97 12974.56 12699.50
Sep-97 13780.24 13387.31
Oct-97 12900.00 12680.55
Nov-97 13131.50 12902.79
Dec-97 13345.50 13057.88
Jan-98 13592.23 13419.61
Feb-98 14500.62 14325.19
Mar-98 15442.66 14927.90
Apr-98 15610.88 15071.53
May-98 15644.52 14880.40
Jun-98 15779.06 15231.57
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
[THE PLOT POINTS BELOW REPRESENT A LINE CHART IN THE PRINTED REPORT]
LIEP EAFE
10-29-91 10000.00 10000.00
Nov-91 9990.00 9533.13
Dec-91 10319.15 10025.60
Jan-92 10459.41 9811.65
Feb-92 10569.61 9460.46
Mar-92 10319.15 8835.87
Apr-92 10539.56 8877.43
May-92 11030.47 9471.63
Jun-92 10820.08 9022.68
Jul-92 10198.93 8791.76
Aug-92 10078.70 9343.19
Sep-92 9627.87 9158.69
Oct-92 9457.55 8678.28
Nov-92 9417.48 8759.94
Dec-92 9635.88 8805.25
Jan-93 9554.57 8804.12
Feb-93 9768.02 9070.12
Mar-93 10042.46 9860.73
Apr-93 10266.08 10796.54
May-93 10550.68 11024.56
Jun-93 10428.71 10852.56
Jul-93 10744.82 11232.45
Aug-93 11539.22 11838.81
Sep-93 11203.13 11572.33
Oct-93 11793.84 11928.97
Nov-93 11569.78 10886.26
Dec-93 12627.59 11672.32
Jan-94 13826.80 12659.16
Feb-94 13396.32 12624.09
Mar-94 12842.84 12080.36
Apr-94 13324.57 12592.92
May-94 13242.57 12520.62
Jun-94 12955.58 12697.56
Jul-94 13598.43 12819.68
Aug-94 14217.01 13123.18
Sep-94 13526.27 12709.80
Oct-94 13763.39 13133.04
Nov-94 12938.62 12501.86
Dec-94 12657.40 12580.13
Jan-95 12048.76 12096.80
Feb-95 12127.66 12062.08
Mar-95 12285.46 12814.39
Apr-95 12815.20 13296.34
May-95 12927.91 13137.85
Jun-95 13142.06 12907.41
Jul-95 13976.12 13711.03
Aug-95 13728.15 13187.95
Sep-95 14032.47 13445.51
Oct-95 13807.05 13084.09
Nov-95 13942.30 13448.09
Dec-95 14320.59 13989.92
Jan-96 14400.79 14047.42
Feb-96 14607.00 14094.90
Mar-96 14962.15 14394.27
Apr-96 15333.92 14812.71
May-96 15230.31 14540.16
Jun-96 15518.11 14622.02
Jul-96 15091.36 14194.62
Aug-96 15114.38 14225.71
Sep-96 15471.23 14603.68
Oct-96 15540.30 14454.29
Nov-96 16357.61 15029.42
Dec-96 16559.83 14836.14
Jan-97 16134.24 14316.88
Feb-97 16535.47 14551.10
Mar-97 16936.70 14603.78
Apr-97 16814.76 14681.32
May-97 17520.06 15636.64
Jun-97 18609.71 16499.00
Jul-97 19038.22 16765.95
Aug-97 17838.38 15513.87
Sep-97 19344.30 16382.96
Oct-97 18144.47 15123.68
Nov-97 18266.93 14969.51
Dec-97 18520.41 15100.08
Jan-98 18957.91 15790.15
Feb-98 20045.00 16803.32
Mar-98 21291.19 17320.73
Apr-98 21635.88 17457.83
May-98 22220.05 17373.09
Jun-98 21982.29 17505.12
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
7
<PAGE>
================================================================================
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 the Investment Manager considers to
be inexpensively priced relative to the return on total capital or equity. The
Lazard International Small Cap Portfolio operates similarly to the Lazard Small
Cap Portfolio, except that this Portfolio, 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, THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST SMALL CAP INDEX AND
THE SALOMON EMI INDEX EX-US
[THE PLOT POINTS BELOW REPRESENT A LINE CHART IN THE PRINTED REPORT]
[GRAPHIC OMITTED]
LISCP EMI Index MSCI EAFE
12-1-93 10000.00 10000.00 10000.00
Dec-93 10872.50 10644.00 10854.30
Jan-94 12082.80 11707.30 12056.90
Feb-94 11882.70 11789.30 12286.40
Mar-94 11162.60 11595.90 12009.50
Apr-94 11042.60 11943.80 12515.70
May-94 10992.50 11773.00 12357.50
Jun-94 10712.50 12020.30 12610.70
Jul-94 10912.50 12157.30 12634.40
Aug-94 11352.60 12286.20 12761.00
Sep-94 11002.50 11934.80 12302.10
Oct-94 11092.60 12150.80 12476.10
Nov-94 10612.50 11392.60 11605.90
Dec-94 10382.40 11545.20 11756.30
Jan-95 10072.30 11170.00 11305.30
Feb-95 10012.30 11006.90 11155.00
Mar-95 9782.30 11474.70 11384.40
Apr-95 10002.30 11819.00 11637.60
May-95 10272.40 11612.10 11368.60
Jun-95 10362.40 11469.30 11115.40
Jul-95 10752.50 12138.00 11827.50
Aug-95 10652.50 11830.90 11495.10
Sep-95 10962.50 11923.20 11463.50
Oct-95 10532.40 11579.80 11004.70
Nov-95 10502.40 11702.50 11139.10
Dec-95 10567.70 12150.70 11519.00
Jan-96 10738.70 12367.00 11867.00
Feb-96 10829.10 12559.90 11977.80
Mar-96 10969.90 12848.80 12215.10
Apr-96 11412.30 13524.70 12856.00
May-96 11492.80 13415.10 12594.80
Jun-96 11533.00 13416.50 12579.10
Jul-96 11130.80 12909.30 11882.80
Aug-96 11482.70 13039.70 11922.40
Sep-96 11553.10 13112.70 11977.80
Oct-96 11643.60 13061.60 11764.20
Nov-96 12186.60 13275.80 11914.40
Dec-96 12221.40 13031.50 11503.10
Jan-97 12385.40 12750.00 11271.00
Feb-97 12621.00 12964.20 11481.20
Mar-97 12426.30 12791.80 11191.50
Apr-97 11985.80 12601.20 10818.40
May-97 12556.10 13409.00 11638.00
Jun-97 13124.00 13712.00 11847.60
Jul-97 13010.40 13504.90 11430.70
Aug-97 12618.00 12928.30 10701.20
Sep-97 13351.20 13158.40 10475.40
Oct-97 12711.00 12638.70 9895.20
Nov-97 12308.20 12075.00 9205.20
Dec-97 12254.20 11808.10 8668.50
Jan-98 12526.70 12300.50 9210.40
Feb-98 13679.80 13218.10 10035.70
Mar-98 14780.50 13839.40 10257.60
Apr-98 15440.90 13944.60 10237.90
May-98 15786.80 14203.90 10271.20
Jun-98 15314.80 13789.20 9862.50
LAZARD EMERGING MARKETS PORTFOLIO
The Lazard Emerging Markets Portfolio seeks long-term 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 market country and that the Investment Manager considers to be
inexpensively priced relative to the return on total capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD EMERGING MARKETS PORTFOLIO, THE MORGAN STANLEY CAPITAL
INTERNATIONAL EMERGING MARKETS FREE INDEX AND THE INTERNATIONAL
FINANCE CORP. INVESTABLE TOTAL RETURN INDEX
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LEMP IFC MSCI
7-15-94 10000 10000 10000
Jul-94 10210.00 10325.00 10280
Aug-94 11300.00 11652.00 11555.75
Sep-94 11660.00 11941.00 11687.48
Oct-94 11580.00 11548.00 11477.11
Nov-94 11320.00 11113.69 10880.3
Dec-94 9860.00 9929.64 10006.61
Jan-95 8640.00 8602.34 8941.91
Feb-95 8420.00 8491.12 8712.99
Mar-95 8400.00 8469.04 8768.76
Apr-95 8650.00 8824.48 9162.48
May-95 9160.00 9154.78 9649.92
Jun-95 9140.00 9209.71 9678.87
Jul-95 9490.00 9503.50 9896.16
Aug-95 9370.00 9248.81 9663.01
Sep-95 9460.00 9178.70 9617.11
Oct-95 9040.00 8832.39 9248.96
Nov-95 8920.00 8788.23 9084.05
Dec-95 9280.04 9093.97 9486.93
Jan-96 10163.86 9856.50 10161.26
Feb-96 10244.20 9637.69 9999.7
Mar-96 10244.20 9778.40 10077.6
Apr-96 10897.53 10172.76 10480.5
May-96 11269.15 10083.34 10433.65
Jun-96 11168.71 10203.33 10498.76
Jul-96 10676.56 9532.97 9781.27
Aug-96 10867.39 9828.59 10031.67
Sep-96 11168.71 9975.04 10118.55
Oct-96 11048.18 9760.87 9848.69
Nov-96 11369.58 9905.33 10013.75
Dec-96 11472.68 9949.21 10059.01
Jan-97 12240.26 10651.63 10745.14
Feb-97 12762.21 11173.35 11205.35
Mar-97 12639.40 10893.44 10910.99
Apr-97 12772.44 10708.49 10930.3
May-97 13189.13 11072.59 11243.12
Jun-97 14164.56 11550.70 11844.86
Jul-97 14143.81 11662.22 12021.7
Aug-97 12597.64 10173.25 10491.94
Sep-97 13178.75 10504.50 10782.65
Oct-97 10770.00 8780.89 9013.36
Nov-97 10252.45 8372.07 8684.48
Dec-97 10343.93 8482.76 8893.76
Jan-98 9781.73 7926.54 8196.22
Feb-98 10624.99 8735.89 9051.71
Mar-98 11243.37 9078.18 9444.52
Apr-98 11175.91 9101.65 9341.64
May-98 9837.95 7963.81 8061.45
Jun-98 9276.20 7149.74 7215.84
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
8
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
The Lazard Bond Portfolio seeks to build and preserve capital through investing
in a range of bonds, including obligations issued or guaranteed by the U.S.
Government, 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
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LBP Lehman Int. G/C
11/12/91 10000 10000
Nov-91 10103.50 10114.80
Dec-91 10392.20 10361.90
Jan-92 10277.70 10268.00
Feb-92 10304.80 10308.60
Mar-92 10242.60 10268.00
Apr-92 10323.30 10358.30
May-92 10467.00 10518.80
Jun-92 10599.70 10674.60
Jul-92 10810.90 10886.80
Aug-92 10912.90 10995.70
Sep-92 11037.20 11145.00
Oct-92 10891.40 11000.40
Nov-92 10843.60 10958.60
Dec-92 10983.30 11105.30
Jan-93 11180.90 11321.30
Feb-93 11360.50 11499.80
Mar-93 11383.20 11545.50
Apr-93 11464.60 11638.50
May-93 11409.80 11612.60
Jun-93 11626.00 11794.90
Jul-93 11713.30 11823.80
Aug-93 11912.00 12011.30
Sep-93 11901.70 12061.10
Oct-93 11939.30 12093.40
Nov-93 11903.30 12026.00
Dec-93 11926.30 12081.10
Jan-94 12117.80 12215.30
Feb-94 11910.10 12034.60
Mar-94 11640.60 11836.00
Apr-94 11494.60 11755.50
May-94 11441.80 11763.30
Jun-94 11434.40 11765.00
Jul-94 11635.30 11934.30
Aug-94 11648.20 11971.60
Sep-94 11396.70 11861.50
Oct-94 11405.80 11859.90
Nov-94 11369.80 11806.00
Dec-94 11421.20 11847.80
Jan-95 11608.40 12047.50
Feb-95 11841.20 12297.40
Mar-95 11910.40 12367.70
Apr-95 12070.80 12520.40
May-95 12550.10 12899.00
Jun-95 12643.00 12985.40
Jul-95 12573.30 12987.20
Aug-95 12703.90 13105.40
Sep-95 12843.20 13200.40
Oct-95 13022.20 13347.50
Nov-95 13167.20 13522.90
Dec-95 13271.50 13664.60
Jan-96 13387.20 13782.50
Feb-96 13239.00 13620.70
Mar-96 13151.70 13550.50
Apr-96 13119.80 13502.60
May-96 13108.10 13492.40
Jun-96 13222.80 13635.80
Jul-96 13262.50 13676.30
Aug-96 13303.60 13687.10
Sep-96 13504.50 13877.80
Oct-96 13713.00 14123.00
Nov-96 13916.30 14309.20
Dec-96 13850.60 14217.50
Jan-97 13949.50 14272.80
Feb-97 13984.30 14300.10
Mar-97 13876.20 14201.40
Apr-97 14048.20 14368.20
May-97 14187.40 14487.50
Jun-97 14318.80 14619.70
Jul-97 14578.10 14917.20
Aug-97 14531.80 14842.20
Sep-97 14717.40 15014.80
Oct-97 14865.80 15181.10
Nov-97 14894.50 15214.70
Dec-97 15036.60 15336.30
Jan-98 15228.00 15537.20
Feb-98 15223.10 15525.30
Mar-98 15233.20 15575.10
Apr-98 15303.50 15653.30
May-98 15404.70 15768.00
Jun-98 15504.80 15868.80
LAZARD HIGH YIELD PORTFOLIO
The Lazard High Yield Portfolio seeks maximum total return, from a combination
of capital appreciation and current income, by investing primarily in domestic,
high-yielding fixed-income securities that are rated below investment grade.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD HIGH YIELD PORTFOLIO AND THE MERRILL LYNCH HIGH YIELD MASTER II INDEX
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LHYP Merrill Lynch High Yield
1/2/98 10000.00 10000.00
Jan-98 10222.27 10159.40
Feb-98 10473.66 10200.55
Mar-98 10715.86 10297.45
Apr-98 10848.05 10341.63
May-98 10849.67 10420.43
Jun-98 10878.96 10474.30
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
9
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
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-US
[PLOT-POINTS BELOW REPRESENTS MOUNTAIN CHART]
LIFIP SWGBI Non-US
11/8/91 10000.00 10000.00
Nov-91 10036.50 10156.00
Dec-91 10394.50 10684.10
Jan-92 10093.00 10495.00
Feb-92 10106.30 10436.20
Mar-92 9966.70 10325.60
Apr-92 10027.90 10398.90
May-92 10311.90 10718.20
Jun-92 10507.00 11018.30
Jul-92 10664.40 11275.00
Aug-92 10974.10 11590.70
Sep-92 10958.80 11706.60
Oct-92 10712.40 11388.20
Nov-92 10536.00 11207.10
Dec-92 10606.00 11274.40
Jan-93 10780.40 11428.80
Feb-93 10985.40 11656.30
Mar-93 11184.50 11945.30
Apr-93 11550.90 12303.70
May-93 11746.60 12527.60
Jun-93 11625.30 12293.30
Jul-93 11657.80 12302.00
Aug-93 12045.50 12739.90
Sep-93 12228.80 12955.20
Oct-93 12212.10 12895.60
Nov-93 12132.20 12836.30
Dec-93 12267.50 12978.80
Jan-94 12353.80 13034.60
Feb-94 12323.50 13071.10
Mar-94 12412.50 13230.50
Apr-94 12389.60 13316.50
May-94 12309.30 13136.80
Jun-94 12613.80 13454.70
Jul-94 12603.20 13489.70
Aug-94 12505.10 13411.40
Sep-94 12749.00 13677.00
Oct-94 13068.70 14029.80
Nov-94 12838.60 13747.80
Dec-94 12779.10 13754.70
Jan-95 12966.20 14054.60
Feb-95 13374.60 14452.30
Mar-95 14465.50 15740.20
Apr-95 14872.20 16077.10
May-95 15226.30 16428.30
Jun-95 15311.40 16509.90
Jul-95 15316.00 16597.40
Aug-95 14508.60 15648.40
Sep-95 14894.10 16110.00
Oct-95 14998.80 16161.50
Nov-95 15108.80 16302.90
Dec-95 15255.60 16444.60
Jan-96 14986.20 16081.10
Feb-96 15010.80 16127.20
Mar-96 15014.50 16166.90
Apr-96 15035.60 16134.50
May-96 15090.40 16143.40
Jun-96 15176.40 16233.80
Jul-96 15569.40 16681.90
Aug-96 15659.90 16793.60
Sep-96 15684.60 16761.70
Oct-96 15935.70 17045.00
Nov-96 16132.20 17240.30
Dec-96 16097.20 17118.30
Jan-97 15456.40 16422.60
Feb-97 15337.20 16232.10
Mar-97 15190.80 16128.20
Apr-97 14886.40 15800.80
May-97 15387.00 16382.30
Jun-97 15580.30 16583.80
Jul-97 15203.70 16151.00
Aug-97 15175.00 16223.60
Sep-97 15550.00 16617.90
Oct-97 15729.00 16990.10
Nov-97 15405.90 16555.20
Dec-97 15199.70 16388.00
Jan-98 15267.30 16499.40
Feb-98 15514.10 16732.00
Mar-98 15269.20 16456.00
Apr-98 15603.60 16818.00
May-98 15492.00 16791.10
Jun-98 15459.50 16730.60
LAZARD STRATEGIC YIELD PORTFOLIO
The Lazard Strategic Yield Portfolio seeks total return by placing approximately
equal emphasis on capital appreciation and current income through investing
primarily in a wide variety of domestic and foreign 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
[THE PLOT POINTS BELOW REPRESENT A MOUNTAIN CHART IN THE PRINTED REPORT]
LSYP 30 Day Libor
10/1/91 10000.00 10000.00
Oct-91 10359.70 10041.80
Nov-91 10493.20 10084.20
Dec-91 10212.90 10119.70
Jan-92 10133.80 10154.30
Feb-92 10298.70 10189.60
Mar-92 10421.40 10225.00
Apr-92 10420.10 10257.90
May-92 10536.40 10291.50
Jun-92 10640.30 10324.60
Jul-92 10841.50 10353.10
Aug-92 10955.80 10382.70
Sep-92 11071.40 10409.80
Oct-92 10596.50 10437.60
Nov-92 10594.00 10473.90
Dec-92 10821.10 10502.30
Jan-93 11106.50 10529.20
Feb-93 11322.10 10556.80
Mar-93 11506.00 10584.30
Apr-93 11516.10 10611.50
May-93 11617.20 10639.80
Jun-93 11928.00 10667.60
Jul-93 12086.00 10695.40
Aug-93 12184.60 10723.40
Sep-93 12172.40 10751.50
Oct-93 12354.40 10779.60
Nov-93 12391.50 10811.10
Dec-93 12508.80 10840.00
Jan-94 12759.90 10867.80
Feb-94 12574.30 10899.60
Mar-94 12322.00 10932.50
Apr-94 12151.30 10968.30
May-94 12146.90 11007.60
Jun-94 12057.00 11048.60
Jul-94 12191.70 11089.20
Aug-94 12357.70 11133.30
Sep-94 12288.50 11179.10
Oct-94 12258.60 11225.20
Nov-94 12315.90 11280.30
Dec-94 12216.50 11335.20
Jan-95 12206.50 11391.20
Feb-95 12267.80 11447.80
Mar-95 12329.60 11504.70
Apr-95 12613.80 11561.30
May-95 12959.50 11618.10
Jun-95 13033.50 11675.80
Jul-95 13135.40 11731.60
Aug-95 13276.80 11787.60
Sep-95 13399.80 11843.80
Oct-95 13492.70 11899.90
Nov-95 13663.80 11957.60
Dec-95 13873.30 12012.90
Jan-96 14155.60 12066.00
Feb-96 14102.50 12118.20
Mar-96 14205.90 12171.80
Apr-96 14340.30 12225.00
May-96 14478.10 12279.10
Jun-96 14643.00 12333.70
Jul-96 14732.30 12388.20
Aug-96 14891.40 12443.00
Sep-96 15216.80 12498.00
Oct-96 15387.00 12552.60
Nov-96 15619.50 12609.40
Dec-96 15780.60 12665.80
Jan-97 15977.10 12721.80
Feb-97 16135.30 12778.10
Mar-97 16052.20 12837.10
Apr-97 16140.60 12896.40
May-97 16338.90 12956.00
Jun-97 16499.20 13015.80
Jul-97 16611.40 13075.30
Aug-97 16526.90 13135.40
Sep-97 16702.10 13195.80
Oct-97 16487.40 13256.10
Nov-97 16582.40 13320.30
Dec-97 16618.30 13382.20
Jan-98 16761.20 13443.40
Feb-98 16926.10 13505.50
Mar-98 17145.90 13567.90
Apr-98 17241.60 13630.20
May-98 17234.20 13692.90
Jun-98 17199.70 13755.80
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
10
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 1998
------------------------------------------------------------
INSTITUTIONAL SHARES
------------------------------------------------------------
ONE THREE FIVE TEN SINCE
YEAR YEAR YEAR YEAR INCEPTION*
------------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 21.84% 24.74% 21.60% 17.10% 15.33%
Standard & Poor's 500 Stock Index 30.13% 30.23% 23.07% 18.56% 16.37%
Lazard Mid Cap Portfolio - - - - -
Russell Midcap Index - - - - -
Lazard Small Cap Portfolio 11.04% 18.67% 17.76% - 20.03%
Russell 2000 Index 16.50% 18.85% 16.05% - 16.29%
Lazard Bantam Value Portfolio 11.50% - - - 28.33%
Russell 2000 Index 16.50% - - - 17.52%
Lazard Global Equity Portfolio 19.40% - - - 20.10%
MSCI World Index 17.03% - - - 18.41%
Lazard International Equity Portfolio 18.11% 18.71% 16.08% - 12.54%
MSCI EAFE Index 6.10% 10.69% 10.03% - 8.76%
Lazard International Small Cap Portfolio 16.70% 13.91% - - 9.75%
MSCI EAFE Small Cap Index (16.76%) (3.91%) - - (0.30%)
Salomon EMI Index Ex-US 0.56% 6.33% - - 7.26%
Lazard Emerging Markets Portfolio (34.51%) 0.49% - - (1.88%)
MSCI Emerging Markets Free Index (39.08%) (9.33%) - - (7.91%)
IFC Investable Total Return Index (38.10%) (8.10%) - - (8.13%)
Lazard Bond Portfolio 8.28% 7.04% 5.93% - 6.80%
Lehman Intermediate Gov't/Corp. Bond Index 8.54% 6.91% 6.11% - 7.17%
Lazard High Yield Portfolio - - - - -
Merrill Lynch High Yield Master II Index - - - - -
Lazard International Fixed-Income Portfolio+ (0.77%) 0.32% 5.87% - 6.75%
Salomon World Government Bond Index Ex-US+ 0.89% 0.44% 6.36% - 8.03%
Lazard Strategic Yield Portfolio 4.25% 9.68% 7.59% - 8.36%
One Month LIBOR USD Fixed Index 5.69% 5.62% 5.22% - 4.84%
</TABLE>
NOTES TO PERFORMANCE TABLE
* Performance is measured for Lazard Equity Portfolio from: June 1,
1987-Institutional, February 5, 1997-Open; Lazard Mid Cap Portfolio from:
November 4, 1997-Institutional, November 4, 1997-Open; Lazard Small Cap
Portfolio from: October 30, 1991-Institutional, January 30, 1997-Open; Lazard
Bantam Value Portfolio from: March 5, 1996-Institutional, January 23,
1997-Open; Lazard Global Equity Portfolio from: January 4, 1996-Institutional,
January 30, 1997-Open; Lazard International Equity Portfolio from: October 29,
1991-Institutional, January 23, 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 Bond Portfolio from: November 12, 1991-Institutional, March
5, 1997-Open; Lazard High Yield Portfolio: January 2, 1998-Institutional,
February 24, 1998-Open; Lazard International Fixed-Income Portfolio from:
November 8, 1991-Institutional, January 8, 1997-Open; Lazard Strategic Yield
Portfolio from: October 1, 1991-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 all dividends and
distributions, if any. Certain expenses of a Portfolio may have been waived
and/or reimbursed by the Investment Manager; without such waiver/reimbursement
of expenses the Portfolio's total return would have been lower.
+ 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.
See additional footnotes on next page.
11
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PERFORMANCE TABLE (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 1998
-----------------------------------------------------------------------------
INSTITUTIONAL SHARES
-----------------------------------------------------------------------------
ONE THREE FIVE TEN SINCE
YTD YEAR YEAR YEAR YEAR INCEPTION*
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 13.17% 21.84% 94.11% 165.84% 384.92% 386.16%
Standard & Poor's 500 Stock Index 17.69% 30.13% 120.87% 182.36% 448.77% 436.71%
Lazard Mid Cap Portfolio 6.24% - - - - 9.16%
Russell Midcap Index 9.14% - - - - 12.52%
Lazard Small Cap Portfolio 1.20% 11.04% 67.11% 126.44% - 237.85%
Russell 2000 Index 4.93% 16.50% 67.90% 110.47% - 173.53%
Lazard Bantam Value Portfolio 0.00% 11.50% - - - 78.53%
Russell 2000 Index 4.93% 16.50% - - - 45.52%
Lazard Global Equity Portfolio 18.24% 19.40% - - - 57.79%
MSCI World Index 16.64% 17.03% - - - 52.31%
Lazard International Equity Portfolio 18.68% 18.11% 67.27% 110.79% - 119.82%
MSCI EAFE Index 15.93% 6.10% 35.62% 61.30% - 75.05%
Lazard International Small Cap Portfolio 24.98% 16.70% 47.79% - - 53.15%
MSCI EAFE Small Cap Index 13.77% (16.76%) (11.27%) - - (1.37%)
Salomon EMI Index Ex-US 16.78% 0.56% 20.23% - - 37.89%
Lazard Emerging Markets Portfolio (10.33%) (34.51%) 1.49% - - (7.24%)
MSCI Emerging Markets Free Index (18.87%) (39.08%) (25.45%) - - (27.84%)
IFC Investable Total Return Index (15.71%) (38.10%) (22.39%) - - (28.52%)
Lazard Bond Portfolio 3.11% 8.28% 22.63% 33.36% - 55.05%
Lehman Intermediate Gov't/Corp. Bond Index 3.47% 8.54% 22.20% 34.54% - 58.69%
Lazard High Yield Portfolio 8.79% - - - - 8.79%
Merrill Lynch High Yield Master II Index 4.74% - - - - 4.74%
Lazard International Fixed-Income Portfolio+ 1.71% (0.77%) 0.97% 32.99% - 54.60%
Salomon World Government Bond Index Ex-US+ 2.09% 0.89% 1.34% 36.10% - 67.31%
Lazard Strategic Yield Portfolio 3.50% 4.25% 31.96% 44.19% - 71.99%
One Month LIBOR USD Fixed Index 2.79% 5.69% 17.81% 28.95% - 37.56%
</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 The McGraw-Hill Companies. The Russell Midcap Index measures the
performance of the 800 smallest companies in the Russell 1000 Index. The Russell
2000 Index is an index of common stocks and is a registered trademark of the
Frank Russell Company. The Morgan Stanley Capital International (MSCI) World
Index is an arithmetic, market value-weighted average return net of dividends
taxation, which is derived from equities of Europe, Australia and Far East
(EAFE) Index countries plus equities from Canada and the United States. The
Morgan Stanley Capital International (MSCI) Europe, Australia and Far East
(EAFE) Index is comprised of international equities and is compiled by
See additional footnotes on next page.
12
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PERFORMANCE TABLE (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR CUMULATIVE TOTAL RETURNS FOR
PERIODS ENDED JUNE 30, 1998 PERIODS ENDED JUNE 30, 1998
---------------------------------------------------------------------------
OPEN SHARES
---------------------------------------------------------------------------
ONE SINCE ONE SINCE
YEAR INCEPTION* YTD YEAR INCEPTION*
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 21.44% 23.52% 12.98% 21.44% 34.34%
Standard & Poor's 500 Stock Index 30.13% 35.54% 17.69% 30.13% 52.95%
Lazard Mid Cap Portfolio - - 6.14% - 9.02%
Russell Midcap Index - - 9.14% - 11.97%
Lazard Small Cap Portfolio 10.73% 18.40% 1.10% 10.73% 26.97%
Russell 2000 Index 16.50% 17.68% 4.93% 16.50% 25.87%
Lazard Bantam Value Portfolio 11.15% 18.49% (0.14%) 11.15% 27.57%
Russell 2000 Index 16.50% 17.15% 4.93% 16.50% 25.51%
Lazard Global Equity Portfolio 19.06% 25.44% 18.05% 19.06% 37.77%
MSCI World Index 17.03% 22.59% 16.64% 17.03% 33.45%
Lazard International Equity Portfolio 17.74% 23.41% 18.57% 17.74% 35.25%
MSCI EAFE Index 6.10% 14.91% 15.93% 6.10% 22.08%
Lazard International Small Cap Portfolio 16.33% 14.65% 24.72% 16.33% 20.68%
MSCI EAFE Small Cap Index (16.76%) (8.86%) (13.77%) (16.76%) (11.98%)
Salomon EMI Index Ex-US 0.56% 5.86% (16.78%) 0.56% 8.15%
Lazard Emerging Markets Portfolio (34.74%) (14.88%) (10.43%) (34.74%) (21.17%)
MSCI Emerging Markets Free Index (39.08%) (20.79%) (18.87%) (39.08%) (29.12%)
IFC Investable Total Return Index (38.10%) (21.24%) (15.71%) (38.10%) (29.71%)
Lazard Bond Portfolio 7.81% 7.74% 2.94% 7.81% 10.37%
Lehman Intermediate Gov't/Corp. Bond Index 8.54% 8.26% 3.47% 8.54% 11.07%
Lazard High Yield Portfolio - - 3.35% - 3.35%
Merrill Lynch High Yield Master II Index - - 2.58% - 2.58%
Lazard International Fixed-Income Portfolio (1.10%) (2.21%) 1.65% (1.10%) (3.25%)
Salomon World Government Bond Index Ex-US 0.89% (0.86%) 2.09% 0.89% (1.26%)
Lazard Strategic Yield Portfolio 3.67% 4.88% 3.20% 3.67% 7.08%
One Month LIBOR USD Fixed Index 5.69% 5.69% 2.79% 5.69% 8.27%
</TABLE>
Morgan Stanley Capital International. The Morgan Stanley Capital International
(MSCI) Europe, Australia and Far East (EAFE) Small Cap Index is an arithmetic,
market value-weighted average of the performance of securities listed on the
stock exchanges of EAFE index countries. The Salomon Extended Market Index (EMI)
Ex-US and the Salomon World Government Bond Index Ex-US are compiled by Salomon
Smith Barney. The Morgan Stanley Capital International (MSCI) Emerging Markets
Free (EMF) Index is comprised of emerging market securities in countries open to
non-local investors that are complied by Morgan Stanley Capital International.
The IFC Investable Total Return Index is an index of emerging markets securities
that represent 65% of market capital compiled by the International Finance
Corporation. The Lehman Intermediate Gov't/Corp. Bond Index is an index
calculated by Lehman Brothers. The Merrill Lynch High Yield Master II Index
provides a broad-based measure of the performance of the non-investment grade
U.S. domestic bond market. The London Interbank Offered Rates (LIBOR) US Dollar
Fixed Index is an average derived from sixteen quotations provided by banks
determined by the British Bankers Association.
This performance data is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective prospectus.
Effective January 1, 1998 Lazard International Small Cap Portfolio changed its
comparative index to the MSCI EAFE Small Cap Index from the Salomon EMI Index
Ex-US. Also on January 1, 1998 Lazard Emerging Markets Portfolio changed its
comparative index to the MSCI Emerging Markets Free Index from the IFC
Investable Total Return Index. The Investment Manager feels that these indices
are a more accurate comparison given each Portfolio's investment objectives.
13
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO
COMMON STOCKS-94.8%
AEROSPACE & DEFENSE-4.6%
AlliedSignal, Inc. ............... 172,300 $ 7,645,812
Gulfstream Aerospace Corp. (a) .... 85,600 3,980,400
United Technologies Corp. ......... 108,900 10,073,250
-----------
21,699,462
-----------
AGRICULTURAL MACHINERY-1.1%
Deere & Co. ....................... 100,500 5,313,938
-----------
AIRLINES-0.8%
UAL Corp. (a) ..................... 45,000 3,510,000
-----------
AUTOMOTIVE-1.2%
General Motors Corp. .............. 86,700 5,792,644
-----------
AUTO PARTS-0.7%
TRW, Inc. ......................... 62,700 3,424,988
-----------
BANKING-8.9%
BankAmerica Corp. ................. 93,300 8,064,619
Bankers Trust New York Corp. ...... 38,700 4,491,619
Chase Manhattan Corp. ............ 109,024 8,231,312
First Union Corp. ............... 75,200 4,380,400
Fleet Financial Group, Inc. ...... 37,700 3,147,950
KeyCorp. ........................ 125,400 4,467,375
Mellon Bank Corp. ................. 64,700 4,504,737
Washington Mutual, Inc. ........... 105,900 4,600,031
-----------
41,888,043
-----------
CHEMICALS & PLASTICS-1.8%
Du Pont (E.I.) de Nemours &
Co. .............................. 114,800 8,566,950
-----------
COMPUTERS & BUSINESS
EQUIPMENT-7.1%
3Com Corp. (a) .................... 151,300 4,643,019
Compaq Computer Corp. ............ 136,900 3,884,537
Electronic Data Systems Corp. ..... 132,100 5,284,000
Hewlett-Packard Co. ............... 123,800 7,412,525
International Business
Machines Corp. ................... 56,300 6,463,944
NCR Corp. (a) ..................... 177,200 5,759,000
-----------
33,447,025
-----------
CONGLOMERATES-2.2%
Philip Morris Companies, Inc. ..... 259,700 10,225,687
-----------
DRUGS & HEALTH CARE-8.4%
American Home Products
Corp. ........................... 208,000 10,764,000
Amgen, Inc. ....................... 100,700 6,583,262
Astra AB (b) ...................... 184,133 3,774,727
Bristol-Myers Squibb Co. .......... 81,300 9,344,419
Johnson & Johnson ................. 119,400 8,805,750
-----------
39,272,158
-----------
ELECTRONICS-4.5%
Honeywell, Inc. ................... 86,800 7,253,225
Motorola, Inc. .................... 83,800 4,404,738
Texas Instruments, Inc. ........... 163,300 9,522,431
-----------
21,180,394
-----------
ENERGY-5.5%
Atlantic Richfield Co. ............ 49,000 3,828,125
Elf Aquitaine SA (b) .............. 110,500 7,845,500
Mobil Corp. ....................... 121,400 9,302,275
Noble Affiliates, Inc. ............ 126,600 4,810,800
-----------
25,786,700
-----------
ENTERTAINMENT-0.2%
Brunswick Corp. ................... 45,000 1,113,750
-----------
FOOD & BEVERAGES-6.1%
Cadbury Schweppes PLC (b) ......... 81,500 5,022,437
ConAgra, Inc. ..................... 120,000 3,802,500
Diageo PLC (b) .................... 143,572 6,918,376
Heineken NV (b) ................... 198,750 7,806,483
PepsiCo, Inc. ..................... 121,500 5,004,281
-----------
28,554,077
-----------
HOTELS & RESTAURANTS-1.6%
McDonald's Corp. .................. 109,700 7,569,300
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO (CONTINUED)
INDUSTRIAL & MACHINERY-1.2%
Ingersoll-Rand Co. .................. 127,300 $ 5,609,156
------------
INSURANCE-6.9%
Aetna, Inc. ........................ 78,900 6,006,262
Allstate Corp. ..................... 56,199 5,145,721
The Hartford Financial Services
Group, Inc. ........................ 85,600 9,790,500
Travelers Group, Inc. ............... 189,049 11,461,096
------------
32,403,579
------------
MULTIMEDIA-1.4%
Gannett Company, Inc. ............... 95,400 6,779,363
------------
OIL & GAS-2.8%
Chevron Corp. ..................... 64,300 5,340,919
Diamond Offshore Drilling,
Inc. .............................. 109,500 4,380,000
Dresser Industries, Inc. ............ 74,100 3,265,031
------------
12,985,950
------------
PAPER PRODUCTS-0.7%
Kimberly-Clark Corp. ............... 70,212 3,220,976
------------
PUBLISHING-1.6%
New York Times Co. .................. 92,700 7,346,475
------------
RETAIL-7.8%
Circuit City Stores - Circuit City
Group .............................. 82,900 3,885,938
Federated Department Stores,
Inc. (a) ........................... 121,800 6,554,362
Office Depot, Inc. (a) ............ 34,300 1,082,594
Republic Industries, Inc. (a) ...... 180,600 4,515,000
Sears, Roebuck & Co. ............... 129,000 7,877,062
Toys "R" Us, Inc. (a) ............... 238,900 5,629,081
Wal-Mart Stores, Inc. ............... 120,600 7,326,450
------------
36,870,487
------------
SERVICES-4.0%
Cendant Corp. (a) .................. 240,000 5,010,000
Cognizant Corp. ..................... 83,900 5,285,700
First Data Corp. .................. 257,600 8,581,300
------------
18,877,000
------------
TECHNOLOGY-1.3%
Advanced Micro Devices,
Inc. (a) ........................... 174,600 2,979,112
LSI Logic Corp. (a) ............... 143,500 3,309,469
------------
6,288,581
------------
TELECOMMUNICATIONS-7.0%
Ameritech Corp. ..................... 132,900 5,963,887
AT&T Corp. ........................ 152,000 8,683,000
Bell Atlantic Corp. ............... 312,400 14,253,250
SBC Communications, Inc. ............ 99,800 3,992,000
------------
32,892,137
------------
TRANSPORTATION & FREIGHT
SERVICES-1.0%
Federal Express Corp. (a) ......... 73,100 4,587,025
------------
UTILITIES-4.4%
Consolidated Edison, Inc. ......... 66,400 3,058,550
Duke Energy Corp. .................. 87,100 5,160,675
Edison International ............... 281,100 8,310,019
PacifiCorp ........................ 183,000 4,140,375
------------
20,669,619
------------
TOTAL COMMON STOCKS
(Identified cost
$362,028,673) ..................... 445,875,464
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO (CONTINUED)
REPURCHASE AGREEMENT-6.3%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $29,715,000 United
States Treasury Note, 5.750%,
10/31/02, with a value of
$30,204,287) (Identified cost
$29,608,000) .................. $29,608 $ 29,608,000
------------
TOTAL INVESTMENTS
(Identified cost
$391,636,673) (d) ............... 101.1% $475,483,464
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ..................... (1.1) (4,944,796)
------- ------------
NET ASSETS ........................ 100.0% $470,538,668
======= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ------------------------------------- ---------- ------------
<S> <C> <C>
LAZARD MID CAP PORTFOLIO
COMMON STOCKS-94.4%
AEROSPACE & DEFENSE-3.7%
Gulfstream Aerospace Corp. (a) 26,200 $1,218,300
Litton Industries, Inc. (a) ...... 17,800 1,050,200
----------
2,268,500
----------
AGRICULTURAL MACHINERY-1.0%
AGCO Corp. ........................ 30,400 625,100
----------
APPAREL & TEXTILES-5.7%
Gucci Group NV (b) ............... 23,600 1,250,800
Liz Claiborne, Inc. ............... 18,200 950,950
Warnaco Group, Inc. Class A ........ 30,000 1,273,125
----------
3,474,875
----------
AUTO PARTS-3.3%
Borg-Warner Automotive, Inc. ....... 21,600 1,038,150
Meritor Automotive, Inc. ......... 39,900 957,600
----------
1,995,750
----------
BANKING-5.2%
North Fork Bancorporation,
Inc. .............................. 45,450 1,110,684
Sovereign Bancorp, Inc. ............ 72,000 1,176,750
Union Planters Corp. ............... 14,700 864,544
----------
3,151,978
----------
BROADCASTING-2.9%
Hearst-Argyle Television,
Inc. (a) ........................ 28,300 1,132,000
The E.W. Scripps Co., Class A ...... 11,100 608,419
----------
1,740,419
----------
COMMERCIAL SERVICES-3.2%
H & R Block, Inc. .................. 24,000 1,011,000
Pittston Brink's Group ............ 25,100 925,562
----------
1,936,562
----------
COMPUTERS & BUSINESS
EQUIPMENT-4.8%
CompUSA, Inc. (a) .................. 58,200 1,051,237
NCR Corp. (a) ..................... 26,900 874,250
Quantum Corp. (a) .................. 48,600 1,008,450
----------
2,933,937
----------
CONSTRUCTION MATERIALS-2.0%
Johns Manville Corp. ............... 78,500 1,182,406
----------
DRUGS & HEALTH CARE-3.9%
Mallinckrodt, Inc. ............... 32,000 950,000
Perrigo Co. (a) .................. 100,000 1,006,250
St. Jude Medical, Inc. (a) ......... 10,500 386,531
----------
2,342,781
----------
ELECTRICAL EQUIPMENT-1.3%
Lam Research Corp. (a) ............ 42,300 808,988
----------
ENERGY-1.7%
Noble Affiliates, Inc. ............ 27,700 1,052,600
----------
FINANCIAL SERVICES-7.0%
Firstar Corp. ..................... 24,500 931,000
Heller Financial, Inc. (a) ......... 41,600 1,248,000
The CIT Group, Inc., Class A ...... 28,500 1,068,750
Waddell & Reed Financial, Inc. 41,600 995,800
----------
4,243,550
----------
GAS & PIPELINE UTILITIES-1.9%
Cooper Cameron Corp. (a) ......... 22,700 1,157,700
----------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS-1.8%
Maytag Corp. ..................... 22,100 1,091,188
----------
HOUSEHOLD PRODUCTS-1.1%
Dial Corp. ........................ 25,200 653,625
----------
INDUSTRIAL & MACHINERY-1.1%
Briggs & Stratton Corp. ............ 17,700 662,644
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD MID CAP PORTFOLIO (CONTINUED)
INSURANCE-6.3%
Foundation Health Systems,
Inc. (a) ........................ 29,400 $ 775,425
Old Republic International
Corp. ........................... 37,050 1,086,028
Reliance Group Holdings, Inc. 56,000 980,000
SCOR SA (a), (b) .................. 14,800 943,500
------------
3,784,953
------------
LEISURE TIME-1.4%
Callaway Golf Co. ............... 43,100 848,531
------------
MACHINERY-3.1%
Crane Co. ........................ 18,300 888,694
Mark IV Industries, Inc. ......... 46,000 994,750
------------
1,883,444
------------
OIL & GAS-3.7%
Enron Oil & Gas Co. ............... 42,600 862,650
R & B Falcon Corp. (a) ............ 59,800 1,352,975
------------
2,215,625
------------
PAPER PRODUCTS-1.9%
Temple-Inland, Inc. ............... 21,100 1,136,763
------------
REAL ESTATE-1.4%
Mack California Realty Corp. ...... 23,800 818,125
------------
RETAIL-2.3%
Tandy Corp. ..................... 26,600 1,411,462
------------
RETAIL TRADE-3.4%
Consolidated Stores Corp. (a) ..... 29,900 1,083,875
Proffitt's, Inc. (a) ............ 23,600 952,850
------------
2,036,725
------------
SOFTWARE-1.3%
Autodesk, Inc. .................. 19,700 760,913
------------
STEEL-3.3%
Carpenter Technology Corp. ...... 24,000 1,206,000
Ispat International NV (a) ...... 41,800 783,750
------------
1,989,750
------------
TECHNOLOGY-2.0%
Advanced Micro Devices,
Inc. (a) ........................ 33,600 573,300
LSI Logic Corp. (a) ............... 28,400 654,975
------------
1,228,275
------------
TELEPHONE-2.0%
Frontier Corp. .................. 39,300 1,237,950
------------
TRANSPORTATION & FREIGHT
SERVICES-1.9%
CNF Transportation, Inc. ......... 27,600 1,173,000
------------
UTILITIES-8.8%
CalEnergy Company, Inc. (a) ...... 33,900 1,019,119
Illinova Corp. .................. 41,600 1,248,000
Ipalco Enterprises, Inc. ......... 12,600 559,912
Niagara Mohawk Power
Corp. (a) ........................ 90,100 1,345,869
NIPSCO Industries, Inc. ......... 40,800 1,142,400
------------
5,315,300
------------
TOTAL COMMON STOCKS
(Identified cost
$56,283,816) ..................... 57,163,419
------------
PRINCIPAL
AMOUNT
(000)
------
REPURCHASE AGREEMENT-9.1%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98,
collateral-
ized by $5,555,000 United
States Treasury Note, 5.000%,
02/15/99, with a value of
$5,641,769) (Identified cost
$5,528,000) ..................... $5,528 5,528,000
------------
TOTAL INVESTMENTS
(Identified cost $61,811,816) (d) 103.5% $ 62,691,419
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ..................... (3.5) (2,146,763)
------ ------------
NET ASSETS ........................ 100.0% $ 60,544,656
====== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO
COMMON STOCKS-98.0%
APPAREL & TEXTILES-1.7%
Mohawk Industries, Inc. (a) ...... 38,200 $ 1,210,462
Stride Rite Corp. ............... 332,400 5,006,775
WestPoint Stevens, Inc. (a) ...... 670,000 22,110,000
-----------
28,327,237
-----------
AUTO PARTS-3.9%
Borg-Warner Automotive, Inc. ...... 213,000 10,237,313
Dura Automotive Systems,
Inc. (a) ........................ 237,100 7,616,838
Exide Corp. ..................... 544,000 9,146,000
Superior Industries
International, Inc. ............ 477,100 13,448,256
Tower Automotive, Inc. (a) ...... 575,900 24,691,712
-----------
65,140,119
-----------
BANKING-5.3%
AMRESCO, Inc. (a) ............... 635,500 18,508,937
Bancorp Queens County, Inc. ....... 222,697 9,715,157
Coast Federal Trust (a) ......... 310,000 4,688,750
Cullen/Frost Bankers, Inc. ...... 324,000 17,577,000
Hibernia Corp., Class A ......... 908,770 18,345,794
HUBCO, Inc. ..................... 277,500 9,937,969
Independence Community
BankCorp. (a) .................. 500,000 8,500,000
-----------
87,273,607
-----------
BUILDING & CONSTRUCTION-0.9%
Apogee Enterprises, Inc. ......... 982,700 15,047,594
-----------
BUSINESS SERVICES AND
SUPPLIES-1.3%
CDI Corp. (a) ..................... 325,500 8,707,125
Norrell Corp. ..................... 623,000 12,421,063
-----------
21,128,188
-----------
CHEMICALS & PLASTICS-1.7%
A. Schulman, Inc. ............... 517,200 10,117,725
Ferro Corp. ..................... 290,400 7,350,750
Mississippi Chemical Corp. ...... 623,845 10,254,452
-----------
27,722,927
-----------
COMMERCIAL SERVICES-1.7%
Inacom Corp. (a) .................. 380,000 12,065,000
Pittston Brink's Group ............ 449,200 16,564,250
-----------
28,629,250
-----------
COMMUNICATION SERVICES-0.0%
Dynatech Corp. (a) ............... 196,550 614,219
-----------
COMPUTERS & BUSINESS
EQUIPMENT-3.3%
Bell & Howell Co. (a) ............ 525,500 13,564,469
Data General Corp. (a) ............ 572,700 8,554,706
Komag, Inc. (a) .................. 1,205,100 6,439,753
Stratus Computer, Inc. (a) ...... 437,300 11,069,156
Wang Laboratories, Inc. (a) ...... 565,400 14,382,363
-----------
54,010,447
-----------
CONGLOMERATES-0.6%
ACX Technologies, Inc. (a) ...... 440,000 9,570,000
-----------
CONTAINERS: PAPER & PLASTIC-1.2%
First Brands Corp. ............... 753,900 19,318,688
-----------
COSMETICS & TOILETRIES-0.9%
Alberto Culver Co., Class A ...... 553,800 14,052,675
-----------
DRUGS & HEALTH CARE-4.6%
Apria Healthcare Group,
Inc. (a) ........................ 1,019,800 6,819,913
Integrated Health Services, Inc. 502,130 18,829,875
Magellan Health Services,
Inc. (a) ........................ 759,160 19,263,685
Perrigo Co. (a) .................. 1,923,620 19,356,426
Sun Healthcare Group, Inc. (a) .... 863,700 12,631,612
-----------
76,901,511
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
ELECTRICAL EQUIPMENT-3.3%
Anixter International, Inc. (a) ... 988,500 $ 18,843,281
Belden, Inc. ..................... 355,020 10,872,488
BMC Industries, Inc. ............ 633,900 5,546,625
Lam Research Corp. (a) ............ 624,400 11,941,650
MagneTek, Inc. (a) ............... 524,700 8,264,025
------------
55,468,069
------------
ELECTRONICS-3.5%
AMETEK, Inc. ..................... 527,900 15,474,069
Credence Systems Corp. (a) ...... 787,100 14,954,900
International Rectifier Corp. (a).. 504,000 4,284,000
Kemet Corp. (a) .................. 701,200 9,225,162
Silicon Valley Group, Inc. (a) .... 915,700 14,708,431
------------
58,646,562
------------
FINANCIAL SERVICES-0.1%
Federated Investors, Inc.,
Class B (a) ..................... 92,100 1,703,850
------------
FOOD & BEVERAGES-0.3%
Vlasic Foods International,
Inc. (a) ........................ 266,800 5,369,350
------------
GAS EXPLORATION-1.1%
Barrett Resources Corp. (a) ...... 475,700 17,809,019
------------
HOMEBUILDERS-3.0%
Kaufman & Broad Home Corp. 625,000 19,843,750
Toll Brothers, Inc. (a) ......... 612,500 17,571,094
Walter Industries, Inc. (a) ...... 617,200 11,688,225
------------
49,103,069
------------
HOTELS & RESTAURANTS-2.0%
Lone Star Steakhouse &
Saloon, Inc. (a) ............... 699,200 9,657,700
Morton's Restaurant
Group, Inc. (a) .................. 356,900 8,587,906
NPC International, Inc. (a) ...... 303,000 3,711,750
Prime Hospitality Corp. (a) ...... 639,000 11,142,563
------------
33,099,919
------------
HOUSEHOLD APPLIANCES &
HOME FURNISHINGS-3.7%
Bassett Furniture Industries,
Inc. ........................... 322,900 9,101,744
Bush Industries, Inc., Class A .... 466,600 10,148,550
Furniture Brands
International, Inc. (a) ......... 839,400 23,555,662
Harman International
Industries, Inc. ............... 495,300 19,069,050
------------
61,875,006
------------
INDUSTRIAL & MACHINERY-4.8%
Briggs & Stratton Corp. ......... 354,530 13,272,717
Manitowoc Company, Inc. ......... 243,850 9,830,203
Regal-Beloit Corp. ............... 422,100 12,029,850
Roper Industries, Inc. ............ 526,000 13,741,750
United Dominion Industries,
Ltd. ........................... 616,700 20,582,362
Wyman-Gordon Co. (a) ............ 490,100 9,771,369
------------
79,228,251
------------
INSURANCE-6.8%
Amerin Corp. (a) .................. 586,900 17,130,144
ARM Financial Group, Inc.,
Class A ........................ 458,000 10,133,250
Delphi Financial Group, Inc.,
Class A (a) ..................... 284,172 16,002,436
Frontier Insurance Group, Inc. 371,690 8,386,256
HCC Insurance Holdings, Inc. ...... 621,900 13,681,800
NAC Re Corp. ..................... 309,505 16,519,829
Reliance Group Holdings, Inc. ..... 1,180,000 20,650,000
United Wisconsin
Services, Inc. .................. 382,900 10,864,787
------------
113,368,502
------------
INVESTMENT COMPANIES-0.6%
Affiliated Managers Group,
Inc. (a) ........................ 285,100 10,584,338
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
LEISURE TIME-2.0%
Polaris Industries, Inc. ......... 524,400 $ 19,730,550
Vail Resorts, Inc. (a) ............ 486,000 12,939,750
------------
32,670,300
------------
MACHINERY-2.4%
JLG Industries, Inc. ............... 1,261,200 25,539,300
McDermott International, Inc. ...... 431,800 14,870,112
------------
40,409,412
------------
MANUFACTURING-7.2%
Aeroquip-Vickers, Inc. ............ 199,400 11,639,975
Alltrista Corp. (a) ............... 448,400 11,462,225
Carlisle Companies, Inc. ......... 287,200 12,367,550
Crane Co. ........................ 464,340 22,549,511
Mark IV Industries, Inc. ......... 1,073,964 23,224,472
Modine Manufacturing Co. ......... 356,700 12,350,738
Varlen Corp. ..................... 748,455 25,821,697
------------
119,416,168
------------
MEDICAL SUPPLIES-2.8%
ADAC Laboratories (a) ............ 378,200 8,509,500
Datascope Corp. (a) ............... 676,200 17,961,562
Dentsply International, Inc. ...... 478,000 11,950,000
The West Company,
Inc. .............................. 305,100 8,638,144
------------
47,059,206
------------
OIL & GAS-3.0%
Atwood Oceanics, Inc. (a) ......... 271,600 10,813,075
Devon Energy Corp. ............... 224,000 7,826,000
Helmerich & Payne, Inc. ............ 611,920 13,615,220
Tuboscope, Inc. (a) ............... 273,800 5,407,550
Vintage Petroleum, Inc. ............ 674,000 12,721,750
------------
50,383,595
------------
PAPER PRODUCTS-0.7%
Chesapeake Corp. .................. 307,500 11,973,281
------------
PRINTING-0.6%
Electronics for Imaging, Inc. (a) .. 507,200 10,714,600
------------
PUBLISHING-2.7%
Banta Corp. ........................ 671,350 20,727,931
Mecklermedia Corp. (a) ............ 420,000 9,397,500
World Color Press, Inc. (a) ...... 402,000 14,070,000
------------
44,195,431
------------
REAL ESTATE-4.3%
Entertainment Properties Trust ..... 350,000 6,387,500
FelCor Suite Hotels, Inc. ......... 468,825 14,709,384
Glenborough Realty Trust, Inc. 566,600 14,944,075
Homestead Village, Inc. (a) ...... 550,000 6,531,250
Kilroy Realty Corp. ............... 511,000 12,775,000
Reckson Associates Realty
Corp. (a) ........................ 51,192 169,574
Reckson Associates Realty
Corp. ........................... 639,900 15,117,637
------------
70,634,420
------------
RETAIL-3.5%
Eagle Hardware & Garden,
Inc. (a) ........................ 818,200 18,920,875
Genesis Direct, Inc. (a) ......... 750,000 8,343,750
Hughes Supply, Inc. ............... 325,000 11,903,125
Oakley, Inc. (a) .................. 750,000 10,031,250
Talbots, Inc. ..................... 343,500 8,995,406
------------
58,194,406
------------
RETAIL TRADE-1.7%
Cole National Corp. (a) ............ 194,900 7,796,000
Movado Group, Inc. ............... 304,800 9,220,200
The Wet Seal, Inc., Class A (a) .... 327,000 10,464,000
------------
27,480,200
------------
STEEL-1.5%
UCAR International, Inc. (a) ...... 261,800 7,641,288
WHX Corp. (a) ..................... 1,340,000 17,252,500
------------
24,893,788
------------
TECHNOLOGY-0.9%
VLSI Technology, Inc. (a) ......... 890,300 14,940,347
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
TELECOMMUNICATIONS-2.7%
Associated Group, Inc.,
Class B (a) .................. 298,500 $ 11,865,375
NTL, Inc. (a) .................. 399,500 21,373,250
Vanguard Cellular Systems,
Inc. (a) ..................... 605,600 11,430,700
Verbex Voice Systems,
Inc. (a), (j) .................. 180,501 0
--------------
44,669,325
--------------
TELECOMMUNICATIONS
EQUIPMENT-1.5%
Allen Telecom, Inc. (a) ......... 838,365 9,745,993
Oak Industries, Inc. (a) ...... 433,685 15,341,607
--------------
25,087,600
--------------
TRANSPORTATION-1.1%
Budget Group, Inc., Class A (a).. 296,000 9,453,500
Pittston Burlington Group ...... 596,520 9,283,343
--------------
18,736,843
--------------
TRUCKING & FREIGHT
FORWARDING-1.2%
Xtra Corp. ..................... 336,000 20,328,000
--------------
UTILITIES-1.4%
Calpine Corp. (a) ............... 706,600 14,264,487
Sierra Pacific Resources ...... 266,700 9,684,544
--------------
23,949,031
--------------
WHOLESALE TRADE-0.5%
Unisource Worldwide, Inc. ...... 684,500 7,401,156
--------------
TOTAL COMMON STOCKS
(Identified cost
$1,432,504,749) ............... 1,627,129,506
--------------
PRINCIPAL
AMOUNT
(000)
--------
CONVERTIBLE BONDS-0.6%
COMMUNICATIONS-0.5%
International Cable Tel, Inc.,
7.00% , 6/15/08 ..................$ 5,589 8,383,500
------------
RESTAURANTS, LODGING &
ENTERTAINMENT-0.1%
Interactive Light Holdings, Inc.
8.00%, 1/25/99 (a), (j) ......... 1,000 500,000
------------
TELECOMMUNICATIONS-0.0%
Verbex Voice Systems, Inc.,
10.00% , 12/31/98 (a), (j) ...... 100 0
------------
TOTAL CONVERTIBLE BONDS
(Identified cost $6,689,000) ...... 8,883,500
------------
SHARES
---------
PREFERRED STOCKS-0.0%
TELECOMMUNICATIONS
Verbex Voice Systems, Inc.
Series F (a), (j)
(Identified cost $1,500,000) ...... 687,285 0
------------
PRINCIPAL
AMOUNT
(000)
-------
REPURCHASE AGREEMENT-3.6%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $59,630,000 United
States Treasury Note, 5.375%,
01/31/00, with a value of
$60,798,748) (Identified cost
$59,605,000) .................. $59,605 59,605,000
--------------
TOTAL INVESTMENTS
(Identified cost
$1,500,298,749) (d) ......... 102.2% $1,695,618,006
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS ............ (2.2) (35,707,299)
------ --------------
NET ASSETS ..................... 100.0% $1,659,910,707
====== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE PORTFOLIO
COMMON STOCKS-96.6%
APPAREL & TEXTILES-6.2%
Candie's, Inc. (a) ............... 248,900 $1,928,975
Novel Denim Holdings, Ltd. (a) ..... 80,200 2,085,200
Tefron, Ltd. (a) .................. 50,000 1,100,000
----------
5,114,175
----------
AUTO PARTS-1.3%
Excel Industries, Inc. ............ 73,500 1,051,969
----------
BANKING-0.9%
Republic Banking Corp. (a) ......... 45,000 720,000
----------
BUSINESS SERVICES AND
SUPPLIES-4.9%
Box Hill Systems Corp. (a) ......... 179,500 1,245,281
GP Strategies Corp. (a) ............ 84,000 1,228,500
Paxar Corp. (a) .................. 130,300 1,498,450
----------
3,972,231
----------
CHEMICALS & PLASTICS-0.8%
Mississippi Chemical Corp. ......... 42,000 690,375
----------
COMPUTER SERVICES-1.3%
Exabyte Corp. (a) .................. 125,000 1,042,969
----------
DRUGS & HEALTH CARE-6.3%
CorVel Corp. (a) .................. 74,000 2,886,000
Integrated Health Services, Inc. ... 60,000 2,250,000
----------
5,136,000
----------
EDUCATION-2.3%
Career Education Corp. (a) ......... 76,000 1,862,000
----------
ELECTRONICS-1.2%
OPTEK Technology, Inc. (a) ......... 52,700 1,007,888
----------
ENGINEERING &
CONSTRUCTION-3.0%
EMCOR Group, Inc. (a) ............ 130,000 2,486,250
----------
FINANCIAL SERVICES-1.1%
Freedom Securities Corp. (a) ...... 50,000 906,250
----------
HOTELS & RESTAURANTS-5.7%
Morton's Restaurant Group,
Inc. (a) ........................ 79,400 1,910,562
NPC International, Inc. (a) ...... 112,000 1,372,000
Rainforest Cafe, Inc. (a) ......... 96,900 1,344,488
----------
4,627,050
----------
INDUSTRIAL & MACHINERY-2.5%
OmniQuip International, Inc. ....... 111,100 2,055,350
----------
INSURANCE-6.7%
AmerUs Life Holdings, Inc. ......... 32,200 1,042,475
Delphi Financial Group, Inc.,
Class A (a) ..................... 28,443 1,601,696
ESG Re, Ltd. ..................... 47,400 1,025,025
Stirling Cooke Brown
Holdings, Ltd. (a) ............... 64,000 1,800,000
----------
5,469,196
----------
LEISURE TIME-11.1%
American Skiing Co. (a) ............ 111,400 1,448,200
Carmike Cinemas, Inc.,
Class A (a) ..................... 77,700 2,093,044
Powerhouse Technologies,
Inc. (a) ........................ 182,000 1,785,875
Steinway Musical
Instruments, Inc. (a) ............ 71,000 2,289,750
Trendwest Resorts, Inc. (a) ...... 116,000 1,471,750
----------
9,088,619
----------
MANUFACTURING-8.1%
EASCO, Inc. ........................ 174,600 1,756,912
Hawk Corp., Class A (a) ............ 101,000 1,780,125
Regal-Beloit Corp. ............... 35,500 1,011,750
Varlen Corp. ..................... 61,400 2,118,300
----------
6,667,087
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE PORTFOLIO (CONTINUED)
MEDICAL SUPPLIES-4.3%
ADAC Laboratories (a) ............... 90,000 $ 2,025,000
The West Company, Inc. ............ 52,800 1,494,900
------------
3,519,900
------------
METAL FABRICATE/HARDWARE-2.7%
Ladish Company, Inc. (a) ............ 135,000 1,687,500
Special Metals Corp. (a) ............ 40,000 560,000
------------
2,247,500
------------
OIL & GAS-7.2%
Atwood Oceanics, Inc. (a) ......... 41,400 1,648,237
Bayard Drilling Technologies,
Inc. (a) ........................... 94,100 764,563
Louis Dreyfus Natural Gas
Corp. (a) ........................ 82,000 1,552,875
Willbros Group, Inc. (a) ............ 124,500 1,945,312
------------
5,910,987
------------
RETAIL TRADE-3.0%
Vans, Inc. (a) ..................... 250,000 2,421,875
------------
STEEL-2.4%
WHX Corp. (a) ..................... 152,000 1,957,000
------------
TELECOMMUNICATIONS
EQUIPMENT-5.1%
Allen Telecom, Inc. (a) ............ 268,000 3,115,500
Cidco, Inc. (a) ..................... 234,200 1,083,175
------------
4,198,675
------------
TOBACCO-0.4%
Swisher International Group,
Inc. (a) ........................... 37,200 297,600
------------
TOYS & AMUSEMENTS-1.6%
GT Bicycles, Inc. (a) ............... 174,700 1,277,494
------------
TRANSPORTATION-6.5%
Genesee & Wyoming, Inc.,
Class A (a) ........................ 63,000 1,197,000
Interpool, Inc. ..................... 147,000 2,122,312
Pittston Burlington Group ......... 126,600 1,970,213
------------
5,289,525
------------
TOTAL COMMON STOCKS
(Identified cost $79,448,675) ...... 79,017,965
------------
PRINCIPAL
AMOUNT
(000)
-------
REPURCHASE AGREEMENT-5.2%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $3,435,000 United
States Treasury Note, 9.375%,
02/15/06, with a value of
$4,352,657) (Identified cost
$4,266,000) ........................ $4,266 4,266,000
-----------
TOTAL INVESTMENTS
(Identified cost
$83,714,675) (d) .................. 101.8% $ 83,283,965
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .................. (1.8) (1,443,022)
------- ------------
NET ASSETS ........................... 100.0% $ 81,840,943
======= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
24
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO*
COMMON STOCKS-96.7%
AUSTRALIA-0.9%
Broken Hill Proprietary
Company, Ltd. .................. 18,341 $ 155,408
----------
FRANCE-8.6%
Alcatel Alsthom (Cie Generale) 1,160 236,194
Axa-UAP ........................ 2,010 226,078
Banque Nationale de Paris ...... 2,800 228,791
Cie de Saint Gobain ............ 850 157,608
Cie Generale des Eaux ......... 850 181,509
Elf Aquitaine SA ............... 1,450 203,864
Rhone-Poulenc SA ............... 3,598 202,941
----------
TOTAL FRANCE .................. 1,436,985
----------
GERMANY-8.2%
Allianz AG ..................... 520 173,434
Daimler-Benz AG ............... 1,900 187,003
Daimler-Benz AG (e) ............ 1,900 2,107
Dresdner Bank AG (b) ............ 3,600 194,627
Hoechst AG ..................... 3,700 186,185
Mannesmann AG .................. 2,280 234,517
Thyssen AG ..................... 650 165,433
Viag AG ........................ 320 220,378
----------
TOTAL GERMANY .................. 1,363,684
----------
HONG KONG-0.9%
HSBC Holdings, Ltd. ............ 6,126 149,829
----------
ITALY-3.8%
Credito Italiano ............... 18,900 98,981
Ente Nazionale Idrocarburi
SPA (ENI) ..................... 25,100 164,578
Fiat SPA ........................ 22,990 100,668
Istituto Bancario San Paolo di
Torino (a) ..................... 12,000 173,238
Telecom Italia SPA (a) ......... 18,900 91,535
----------
TOTAL ITALY ..................... 629,000
----------
JAPAN-6.2%
Honda Motor Co. ............... 4,000 142,909
Matsushita Electric Industrial
Company, Ltd. .................. 11,000 177,406
Nippon Telegraph & Telephone
Corp. ........................ 16 133,073
Omron Corp. ..................... 4,000 61,329
Promise Company, Ltd. ......... 2,090 86,309
Ricoh Company, Ltd. ............ 13,000 137,362
Sony Corp. ..................... 1,600 138,280
Sumitomo Trust & Banking,
Ltd. ........................... 26,000 116,583
Sumitomo Trust & Banking,
Ltd. (a) ..................... 1 40,139
----------
TOTAL JAPAN ..................... 1,033,390
----------
NETHERLANDS-3.7%
Heineken NV ..................... 4,762 187,177
Koninklijke KPN NV ............ 3,600 138,669
Philips Electronics NV ......... 2,400 201,894
TNT Post Group NV (a) ......... 3,600 92,092
----------
TOTAL NETHERLANDS ............... 619,832
----------
SPAIN-2.6%
Corporacion Bancaria de
Espana SA (Argentaria) ......... 7,600 170,486
Telefonica de Espana ............ 5,727 264,783
----------
TOTAL SPAIN ..................... 435,269
----------
SWEDEN-3.5%
ABB AB ........................ 11,500 162,926
Astra AB ........................ 8,213 163,725
Svenska Handelsbanken,
Series A ..................... 4,600 213,390
Volvo AB, Series B ............ 1,500 44,665
----------
TOTAL SWEDEN .................. 584,706
----------
SWITZERLAND-3.7%
Nestle SA ..................... 100 214,356
Novartis AG ..................... 102 170,011
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO* (CONTINUED)
Zurich Versicherungs-
Gesellschaft ..................... 370 $ 236,519
-----------
TOTAL SWITZERLAND .................. 620,886
-----------
UNITED KINGDOM-10.0%
B.A.T. Industries PLC ............ 12,900 129,235
British Aerospace PLC ............ 24,400 187,000
British Petroleum Company
PLC .............................. 11,600 169,281
Cadbury Schweppes PLC ............ 10,042 155,515
Diageo PLC ........................ 15,448 183,134
EMI Group PLC ..................... 13,500 118,114
Granada Group PLC .................. 11,800 217,121
National Power PLC ............... 15,500 145,965
National Westminster Bank
PLC .............................. 9,500 169,884
Prudential Corporation PLC ......... 15,000 197,734
-----------
TOTAL UNITED KINGDOM ............... 1,672,983
-----------
UNITED STATES-44.6%
Aetna, Inc. ........................ 2,850 216,956
AlliedSignal, Inc. ............... 6,800 301,750
American Home Products
Corp. ........................... 5,900 305,325
AT&T Corp. ........................ 2,600 148,525
BankAmerica Corp. .................. 2,590 223,873
Bell Atlantic Corp. ............... 6,100 278,312
Chase Manhattan Corp. ............ 4,200 317,100
Cognizant Corp. .................. 4,100 258,300
Consolidated Edison, Inc. ......... 3,700 170,431
Deere & Co. ........................ 3,800 200,925
Dresser Industries, Inc. ......... 3,900 171,844
Du Pont (E.I.) de Nemours &
Co. .............................. 3,000 223,875
Edison International ............... 9,100 269,019
FDX Corp. (a) ..................... 3,600 225,900
Federated Department Stores,
Inc. (a) ........................ 3,200 172,200
First Union Corp. .................. 2,400 139,800
Fleet Financial Group, Inc. ...... 2,000 167,000
General Motors Corp. ............... 3,000 200,438
Hewlett-Packard Co. ............... 3,700 221,538
Honeywell, Inc. .................. 2,700 225,619
International Business
Machines Corp. .................. 1,480 169,923
Johnson & Johnson .................. 3,300 243,375
McDonald's Corp. .................. 3,500 241,500
Mobil Corp. ........................ 4,700 360,137
Motorola, Inc. ..................... 2,900 152,431
Philip Morris Companies, Inc. ...... 5,150 202,781
Sears, Roebuck & Co. ............... 3,770 230,206
Texas Instruments, Inc. ............ 2,900 169,106
The Hartford Financial Services
Group, Inc. ..................... 2,630 300,806
Toys "R" Us, Inc. (a) ............ 6,900 162,581
Travelers Group, Inc. ............ 4,750 287,969
TRW, Inc. ........................ 2,000 109,250
UAL Corp. (a) ..................... 1,800 140,400
United Technologies Corp. ......... 2,700 249,750
-----------
TOTAL UNITED STATES ............... 7,458,945
-----------
TOTAL COMMON STOCKS
(Identified cost $13,029,195) ...... 16,160,917
-----------
PRINCIPAL
AMOUNT
(000)
------
REPURCHASE AGREEMENT-4.7%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $635,000 United
States Treasury Note, 9.375%,
02/15/06, with a value of
$804,640) (Identified cost
$788,000) (h) ..................... $788 788,000
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
26
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO* (CONTINUED)
TOTAL INVESTMENTS
(Identified cost
$13,817,195) (d) ............... 101.4% $16,948,917
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ..................... (1.4) (230,910)
----- -----------
NET ASSETS ........................ 100.0% $16,718,007
===== ===========
</TABLE>
* Percentages of common stocks are presented in the portfolio by country.
Percentages by industry are as follows:
Aerospace & Defense 4.0%, Agricultural Machinery 1.2%, Airline 0.8%,
Automotive 4.1%, Banks and Financial Services 16.7%, Chemicals & Plastics
2.5%, Computers & Business Equipment 2.3%, Conglomerates 3.4%, Construction
Materials 0.9%, Consumer Goods 1.2%, Drugs & Healthcare 6.6%, Electrical
Equipment 4.3%, Electronics 4.8%, Energy 2.2%, Food & Beverages 4.4%, Gas
Exploration 1.2%, Hotels & Restaurants 1.4%, Insurance 6.7%,
Leisure/Entertainment 2.0%, Machinery 1.4%, Manufacturing 2.3%, Miscellaneous
1.0%, Office Equipment 0.8%, Oil & Gas 1.0%, Petroleum Equipment and Services
2.0%, Retail 3.4%, Services 1.5%, Telecommunications 6.3%, Tobacco 0.8%,
Transportation and Freight Services 2.0%, Utilities 3.5%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
27
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL EQUITY PORTFOLIO*
COMMON STOCKS-94.2%
AUSTRALIA-1.8%
Broken Hill Proprietary
Company, Ltd. .................. 3,232,763 $ 27,391,960
Westpac Banking Corp., Ltd. ..... 3,752,700 22,945,455
------------
TOTAL AUSTRALIA ............... 50,337,415
------------
DENMARK-1.3%
Unidanmark, Class A ............ 427,900 38,495,116
------------
FINLAND-1.0%
Merita, Ltd. .................. 2,239,300 14,789,622
UPM-Kymmene OYJ ............... 472,000 13,003,348
------------
TOTAL FINLAND .................. 27,792,970
------------
FRANCE-17.0%
Alcatel Alsthom (Cie Generale) 300,940 61,276,137
Axa-UAP ........................ 537,000 60,399,953
Banque Nationale de Paris ...... 599,022 48,946,667
Cie de Saint Gobain ............ 284,230 52,702,223
Cie Generale des Eaux ......... 311,992 66,622,835
Elf Aquitaine SA ............... 551,600 77,552,641
Michelin, Class B ............... 411,900 23,777,743
Rhone-Poulenc SA ............... 1,090,590 61,513,338
Suez Lyonnaise des Eaux ......... 195,100 32,109,516
------------
TOTAL FRANCE .................. 484,901,053
------------
GERMANY-11.1%
Allianz AG ..................... 78,320 26,121,866
Daimler-Benz AG ............... 386,400 38,030,442
Daimler-Benz AG (e) ............ 499,600 554,049
Dresdner Bank AG ............... 635,500 34,357,066
Hoechst AG ..................... 1,138,300 57,279,506
Mannesmann AG (b) ............... 341,250 35,105,071
Metro AG ........................ 603,270 36,461,465
Metro AG (e) .................. 819,070 31,792
Thyssen AG ..................... 116,500 29,650,670
Viag AG ........................ 85,310 58,751,293
------------
TOTAL GERMANY .................. 316,343,220
------------
HONG KONG-1.9%
HSBC Holdings, Ltd. ............ 1,657,948 40,549,967
Swire Pacific, Ltd. ............ 2,295,000 8,664,010
Wharf Holdings, Ltd. ............ 6,581,000 6,497,761
Wharf Holdings, Ltd.
12/31/99 warrant (a) ......... 329,050 0
------------
TOTAL HONG KONG ............... 55,711,738
------------
ITALY-5.7%
Credito Italiano ............... 3,767,400 19,730,214
Ente Nazionale Idrocarburi
SPA (ENI) ..................... 6,669,800 43,733,316
Fiat SPA ........................ 3,975,330 17,407,101
Istituto Bancario San Paolo di
Torino (a) ..................... 2,962,800 42,772,377
Telecom Italia SPA (a) ......... 8,098,000 39,219,524
------------
TOTAL ITALY ..................... 162,862,532
------------
JAPAN-14.1%
Asahi Breweries, Ltd. ......... 1,454,000 18,402,401
Honda Motor Co. ............... 815,000 29,117,668
Ito-Yokado Company, Ltd. ...... 50,000 2,361,322
Japan Tobacco, Inc. ............ 4,448 30,206,638
Matsushita Electric Industrial
Company, Ltd. .................. 3,213,000 51,818,831
Nintendo Co. .................. 426,600 39,645,692
Nippon Telegraph & Telephone
Corp. ........................ 5,649 46,983,075
Omron Corp. ..................... 942,000 14,443,046
Orix Corp. ..................... 609,800 41,323,684
Promise Company, Ltd. ......... 542,900 22,419,606
Ricoh Company, Ltd. ............ 2,506,000 26,479,105
Sekisui Chemical Co. ............ 630,000 3,234,975
Sony Corp. ..................... 478,700 41,371,699
Sumitomo Trust & Banking,
Ltd. ........................... 7,504,000 33,647,790
------------
TOTAL JAPAN ..................... 401,455,532
------------
MALAYSIA-0.3%
Genting Berhad .................. 4,167,500 7,531,173
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO* (CONTINUED)
<S> <C> <C>
NETHERLANDS-3.8%
Heineken NV ........................ 843,375 $ 33,150,000
Koninklijke KPN NV ............... 536,900 20,680,984
Philips Electronics NV ............ 483,800 40,698,463
TNT Post Group NV (a) ............ 536,900 13,734,497
--------------
TOTAL NETHERLANDS .................. 108,263,944
--------------
SINGAPORE-0.4%
United Overseas Bank, Ltd. ......... 3,547,000 11,051,484
--------------
SPAIN-4.0%
Corporacion Bancaria de
Espana SA (Argentaria) ............ 2,013,600 45,169,767
Telefonica de Espana ............... 1,502,118 69,449,078
--------------
TOTAL SPAIN ........................ 114,618,845
--------------
SWEDEN-6.9%
ABB AB ........................... 2,809,400 39,802,182
Astra AB ........................... 2,142,266 42,705,654
Electrolux AB, Series B ............ 1,769,000 30,385,281
Nordbanken Holding AB ............ 2,085,600 15,296,840
Svenska Handelsbanken,
Series A ........................ 952,600 44,190,321
Volvo AB, Series B ............... 848,650 25,270,107
--------------
TOTAL SWEDEN ..................... 197,650,385
--------------
SWITZERLAND-7.9%
Credit Suisse Group AG ............ 248,010 55,275,292
Holderbank Financiere Glarus
AG .............................. 670 853,926
Nestle SA ........................ 15,044 32,247,787
Novartis AG ........................ 18,156 30,261,998
SGS Holding SA ..................... 15,093 25,625,110
SMH AG ........................... 18,845 14,585,181
Zurich Versicherungs-
Gesellschaft ..................... 105,030 67,139,299
--------------
TOTAL SWITZERLAND .................. 225,988,593
--------------
UNITED KINGDOM-17.0%
B.A.T. Industries PLC ............ 3,700,400 37,071,346
British Aerospace PLC ............ 9,284,208 71,153,453
British Petroleum Company
PLC .............................. 3,533,000 51,557,696
Cadbury Schweppes PLC ............ 1,802,631 27,916,386
Diageo PLC ........................ 3,849,494 45,635,250
EMI Group PLC ..................... 1,850,300 16,188,696
Granada Group PLC .................. 1,684,308 30,991,425
Imperial Chemical
Industries PLC .................. 1,717,336 27,584,733
Lucas Varity PLC .................. 8,053,800 32,004,882
Mirror Group PLC .................. 3,579,000 13,505,435
National Power PLC ............... 2,924,700 27,542,215
National Westminster Bank
PLC .............................. 2,742,000 49,033,778
Prudential Corporation PLC ......... 2,166,300 28,556,776
Unilever PLC ..................... 2,487,000 26,493,229
--------------
TOTAL UNITED KINGDOM ............... 485,235,300
--------------
TOTAL COMMON STOCKS
(Identified cost
$2,055,190,208) .................. 2,688,239,300
--------------
PREFERRED STOCKS-0.3%
ITALY-0.3%
Fiat SPA,
(Identified cost $6,457,005) ...... 3,951,650 9,841,594
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL
EQUITY PORTFOLIO* (CONTINUED)
REPURCHASE AGREEMENT-5.0%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $141,515,000 United
States Treasury Note, 5.875%,
02/28/99, with a value of
$144,622,669) (Identified
cost $141,784,000) (h) ...... $141,784 $141,784,000
------------
TOTAL INVESTMENTS
(Identified cost
$2,203,431,213) (d)......... 99.5% $2,839,864,894
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ...... 0.5 14,002,973
----- --------------
NET ASSETS .................. 100.0% $2,853,867,867
===== ==============
</TABLE>
* Percentages of common and preferred stocks are presented in the portfolio by
country.
Percentages by industry are as follows:
Aerospace & Defense 2.5%, Automotive 5.0%, Auto Parts 1.1%, Banking 16.6%,
Chemicals & Plastics 3.1%, Conglomerates 2.3%, Construction Materials 1.9%,
Consumers Goods 3.1%, Drugs & Health Care 2.6%, Electrical Equipment 6.8%,
Electronics 1.9%, Financial Services 3.0%, Food & Beverages 5.6%, Household
Products 1.1%, Insurance 6.4%, Leisure/Entertainment 1.9%, Machinery 1.2%,
Manufacturing 3.6%, Miscellaneous 1.6%, Office Equipment 0.9%, Oil & Gas
6.1%, Paper Products 0.5%, Petroleum Equipment & Services 1.9%, Publishing
0.5%, Real Estate 0.2%, Retail 1.3%, Telecommunications 6.2%, Tobacco 2.4%,
Toys & Amusements 1.4%, Transportation 0.8%, Utilities 1.0%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
30
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO*
COMMON STOCKS-94.9%
AUSTRALIA-1.9%
Cochlear, Ltd. ..................... 931,000 $ 3,623,546
E.R.G., Ltd. ..................... 455,495 251,646
-----------
TOTAL AUSTRALIA .................. 3,875,192
-----------
AUSTRIA-7.2%
Austria Mikro SystemeInterna-
tional AG 37,025 2,509,675
Eybl International (a) ............ 79,200 4,088,749
Scala Business Solutions NV (a) .... 505,140 7,564,658
Scala Business Solutions NV
3/31/99 warrant (a) ............... 59,100 372,650
Scala Business Solutions NV
3/31/01 warrant (a) ............... 59,100 279,488
-----------
TOTAL AUSTRIA ..................... 14,815,220
-----------
CANADA-3.6%
Club Monaco, Inc. (a), (i) ......... 364,200 2,103,700
Legacy Hotels Real Estate
Investment Trust .................. 315,300 1,842,669
Maple Leaf Foods, Inc. ............ 146,186 1,887,489
Queensway Financial Holdings,
Ltd. (a) ........................ 80,000 1,522,205
-----------
TOTAL CANADA ..................... 7,356,063
-----------
DENMARK-0.4%
Falck AS ........................... 14,894 921,457
-----------
FINLAND-8.5%
Amer Group, Ltd. .................. 191,400 3,701,554
Asko OYJ-A, Class A ............... 101,730 2,162,276
Huhtamaki Group .................. 57,100 3,271,162
Rocla OY (a) ..................... 161,500 1,885,770
Sampo Insurance Company, Ltd. 61,800 2,931,555
Santasalo-JOT Group ............... 137,000 1,749,665
Vaisala OY ........................ 21,400 1,733,536
-----------
TOTAL FINLAND ..................... 17,435,518
-----------
FRANCE-4.9%
C.E.A. Industries .................. 16,871 1,925,499
Cie des Signaux SA ............... 39,700 3,821,791
Compagnie Plastic-Omnium
SA .............................. 13,860 2,049,529
SCOR SA (a), (b) .................. 33,500 2,135,625
-----------
TOTAL FRANCE ..................... 9,932,444
-----------
GERMANY-9.9%
A.S. Creation Tapeten AG (a) ...... 24,500 750,575
Data Modul AG ..................... 62,474 4,122,325
DIS Deutscher Industrie
Service AG ........................ 46,000 3,826,000
Fielmann AG ........................ 112,200 3,922,598
Hawesko Holding AG (a) ............ 31,600 1,541,934
Holsten Brauerei AG ............... 337 78,483
KSB AG ........................... 7,850 1,958,746
Marseille-Kliniken AG ............ 286,200 4,141,961
-----------
TOTAL GERMANY ..................... 20,342,622
-----------
HONG KONG-2.0%
CDL Hotels International, Ltd. . 4,976,600 1,477,308
Esprit Asia Holdings, Ltd. ......... 5,803,500 1,760,225
Peregrine Investment Holdings,
Ltd. (k) ........................ 2,163,800 0
Shaw Brothers (Hong Kong),
Ltd. .............................. 1,479,500 897,477
-----------
TOTAL HONG KONG .................. 4,135,010
-----------
IRELAND-3.0%
Adare Printing Group PLC ......... 308,000 4,044,016
Anglo Irish Bank Corporation
PLC .............................. 754,000 2,027,386
-----------
TOTAL IRELAND ..................... 6,071,402
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO* (CONTINUED)
ITALY-4.6%
Banca Popolare di Brescia ......... 215,400 $ 4,073,415
Manuli Rubber Industries
SPA (a) ........................... 699,800 3,781,106
Premafin Finanziaria SPA (a) ...... 1,805,000 1,551,279
------------
TOTAL ITALY ........................ 9,405,800
------------
JAPAN-3.3%
Aderans Company, Ltd. ............ 93,700 2,060,085
Honma Golf Company, Ltd. ......... 126,700 669,832
Kawasumi Laboratories ............ 66,000 1,155,131
Laox .............................. 160,000 989,369
Paris Miki, Inc. .................. 137,900 1,816,127
------------
TOTAL JAPAN ........................ 6,690,544
------------
NETHERLANDS-1.3%
Telegraaf Holdings ............... 110,100 2,653,991
------------
NORWAY-3.3%
P4 Radio Hele Norg ASA (a) ......... 724,800 3,309,805
Smedvig ASA ........................ 89,700 1,018,188
Sparebanken NOR .................. 85,700 2,459,912
------------
TOTAL NORWAY ..................... 6,787,905
------------
PORTUGAL-1.4%
Campanhia de Seguros
Mundial Confianca SA (a) ......... 110,600 2,941,744
------------
SPAIN-2.0%
Bancon Pastor SA .................. 72,400 4,083,860
------------
SWEDEN-6.1%
Caran AB ........................... 221,700 2,585,018
Elanders AB ........................ 124,750 2,002,006
Getinge Industries AB ............ 184,798 3,776,589
Information Highway AB (a) ......... 61,600 1,351,555
Lifco AB (a) ..................... 36,959 180,717
Monark Stiga AB (a) ............... 348,575 2,534,773
------------
TOTAL SWEDEN ..................... 12,430,658
------------
SWITZERLAND-8.9%
Brauerei Eoichof AG ............... 4,228 4,188,074
Edipresse SA ..................... 10,220 2,814,330
Gretag Imaging Group (a) ......... 33,800 3,247,639
Liechtenstein Global Trust AG ...... 3,000 3,288,648
Moevenpick Holding AG ............ 1,730 860,259
SAIA-Burgess Electronics
AG (a) ........................... 5,900 1,589,645
Swisslog Holding AG (a) ............ 19,600 2,265,073
------------
TOTAL SWITZERLAND .................. 18,253,668
------------
UNITED KINGDOM-22.6%
Ashtead Group PLC .................. 605,200 2,374,681
Avis Europe PLC (a), (i) ......... 636,100 2,881,785
Carpetright PLC .................. 357,300 1,563,049
Corporate Services Group PLC ....... 463,900 1,851,231
Denison International
PLC (a), (b) ..................... 121,500 2,399,625
Devro PLC ........................ 468,300 3,936,970
Euromoney Publications PLC ......... 50,644 2,008,307
Hogg Robinson PLC .................. 789,400 3,598,307
Hozelock Group PLC ............... 531,800 2,885,826
JBA Holdings PLC .................. 371,100 3,841,679
London Forfaiting Company
PLC .............................. 510,300 2,317,570
National Express Group PLC ......... 188,500 3,059,258
Scholl PLC ........................ 143,900 1,165,309
Seton Healthcare Group PLC ......... 264,500 3,334,349
Signet Group PLC (a), (b) ......... 217,312 4,631,462
Victrex PLC ........................ 779,900 2,604,398
Westminster Health
Care Holdings PLC ............... 337,700 1,793,067
------------
TOTAL UNITED KINGDOM ............... 46,246,873
------------
TOTAL COMMON STOCKS
(Identified cost
$169,013,305)..................... 194,379,971
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO* (CONTINUED)
REPURCHASE AGREEMENT-2.5%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $4,085,000 United
States Treasury Note, 9.375%,
02/15/06, with a value of
$5,176,304) (Identified cost
$5,069,000).................. $5,069 $ 5,069,000
------------
TOTAL INVESTMENTS
(Identified cost
$174,082,305) (d) ......... 97.4% $199,448,971
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ...... 2.6 5,238,434
------ ------------
NET ASSETS .................. 100.0% $204,687,405
====== ============
</TABLE>
* Percentages of common stocks are presented in the portfolio by country.
Percentages by industry are as follows:
Advertising 1.4%, Apparel & Textiles 3.9%, Banks & Financial Services 9.3%,
Business Services & Supplies 2.8%, Chemicals & Plastics 2.8%, Computer
Software 5.9%, Computer Services 1.9%, Construction & Mining Equipment 1.0%,
Cosmetics & Toiletries 0.6%, Distributions 1.6%, Diversified Holding Company
0.9%, Drugs & Health Care 6.4%, Electronics 5.6%, Food & Beverages 5.2%,
Hotels & Restaurants 1.1%, Household Products & Home Furnishings 1.9%,
Industrial & Machinery 5.2%, Insurance 4.7%, Leisure/Entertainment 2.0%,
Manufacturing 3.5%, Medical Supplies 1.8%, Miscellaneous 4.4%, Oil & Gas 0.5%,
Plastics 1.8%, Publishing 5.3%, Real Estate 1.7%, Retail 6.9%, Services 0.5%,
Toys & Amusements 0.3%, Transportation 2.9%, Trucking & Freight Forwarding
1.1%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS PORTFOLIO*
COMMON STOCKS-73.4%
ARGENTINA-4.4%
Capex SA (c), (i) .................. 68,700 $ 498,075
Capex SA ........................... 258,900 958,069
Quilmes Industrial
Quinsasa (b) ........................ 61,900 544,720
Telefonica de Argentina SA (b) 131,400 4,262,288
YPF Sociedad Anonima,
Class D (b) ........................ 216,200 6,499,512
-----------
TOTAL ARGENTINA ..................... 12,762,664
-----------
BRAZIL-5.5%
Companhia Cervejaria
Brahma (b) ........................ 84,900 1,061,250
Souza Cruz SA ........................ 797,600 5,930,881
Telecomunicacoes Brasileiras
SA (b) .............................. 82,600 9,018,887
-----------
TOTAL BRAZIL ........................ 16,011,018
-----------
CHILE-5.1%
AFP Provida SA (b) .................. 334,000 5,573,625
Banco BHIF (b) ..................... 289,000 4,316,937
Quinenco SA (b) ..................... 295,400 2,658,600
Santa Isabel SA (b) .................. 225,200 2,477,200
-----------
TOTAL CHILE ........................ 15,026,362
-----------
COLOMBIA-1.2%
Banco Ganadero SA (b) ............... 204,500 3,604,312
-----------
CZECH REPUBLIC-1.9%
Ceske Energeticke
Zavody AS (a) ..................... 158,000 4,394,083
Komercni Banka AS (c), (i) ......... 87,300 1,082,520
-----------
TOTAL CZECH REPUBLIC ............... 5,476,603
-----------
GREECE-2.4%
Hellenic Telecommunication
Organization SA ..................... 271,222 6,960,818
-----------
HONG KONG-4.6%
Chen Hsong Holdings .................. 5,406,000 781,456
Giordano International, Ltd. ......... 8,738,000 1,770,607
Guangshen Railway Company,
Ltd. (b) ........................... 309,300 2,107,106
Peregrine Investment Holdings,
Ltd. (k) ........................... 2,329,000 0
Shenzhen Expressway Co. (a) ......... 22,248,000 4,106,174
Yue Yuen Industrial Holdings ......... 2,574,300 4,601,711
-----------
TOTAL HONG KONG ..................... 13,367,054
-----------
INDIA-5.2%
Hindalco Industries, Ltd. (c) ...... 196,100 2,647,350
Larsen & Toubro, Ltd. (c), (i) ...... 206,000 1,854,000
Larsen & Toubro, Ltd. ............... 572,000 3,093,387
Mahanagar Telephone Nigam,
Ltd. (a), (c), (i) .................. 213,000 2,172,600
State Bank of India (a), (c), (i) .... 475,700 5,470,550
-----------
TOTAL INDIA ........................ 15,237,887
-----------
INDONESIA-0.2%
PT Indah Kiat Pulp & Paper
Corp. .............................. 877,500 169,211
PT Semen Gresik ..................... 586,000 336,000
-----------
TOTAL INDONESIA ..................... 505,211
-----------
ISRAEL-4.6%
ECI Telecom, Ltd. (b) ............... 183,100 6,934,912
Supersol, Ltd. (b) .................. 397,600 6,560,400
-----------
TOTAL ISRAEL ........................ 13,495,312
-----------
MALAYSIA-1.2%
Jaya Tiasa Holdings Berhad ......... 2,930,000 3,635,805
-----------
MEXICO-13.2%
Cemex SA de CV ..................... 1,662,604 6,244,826
Fomento Economico Mexicano
SA (a), (b) ........................ 155,500 4,912,997
Grupo Financiero Banamex
Accival SA de CV (a) ............... 3,017,100 5,876,050
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO* (CONTINUED)
Grupo Industrial Maseca SA de
CV (b) ........................... 508,100 $ 5,652,613
Panamerican Beverages, Inc.,
Class A (b) ..................... 198,300 6,234,056
Pepsi-Gemex SA de CV (c) ......... 442,700 5,340,069
Tubos de Acero de Mexico
SA (b) ........................... 343,500 4,401,094
------------
TOTAL MEXICO ..................... 38,661,705
------------
PERU-2.5%
Cerveceria Backus & Johnson
SA .............................. 1,252,931 639,794
Telefonica del Peru SA (b) ......... 321,700 6,574,744
------------
TOTAL PERU ........................ 7,214,538
------------
PHILIPPINES-1.3%
Benpres Holdings Corp. (a),
(c), (i) ........................ 680,000 1,700,000
Benpres Holdings Corp. (a) ......... 5,830,000 880,791
Philippine National Bank (a) ...... 913,400 1,084,252
------------
TOTAL PHILIPPINES .................. 3,665,043
------------
POLAND-2.3%
Bank Handlowy W.
Warszawie ........................ 346,500 6,608,044
------------
PORTUGAL-1.7%
Portugal Telecom SA (b) ............ 91,200 4,827,900
------------
RUSSIA-1.1%
AO Tatneft (b) ..................... 412,300 3,195,325
------------
SOUTH AFRICA-5.8%
Amalgamated Banks of South
Africa, Ltd. ..................... 871,723 5,439,081
Barlow, Ltd. ..................... 749,136 3,947,808
JD Group, Ltd. ..................... 528,978 3,559,228
Rembrandt Group, Ltd. ............ 651,100 4,062,513
------------
TOTAL SOUTH AFRICA ............... 17,008,630
------------
SOUTH KOREA-4.7%
Kookmin Bank (c), (i) ............ 67,018 258,019
Kookmin Bank ..................... 411,137 1,527,166
Korea Electric Power Corp. ......... 289,400 3,087,917
Korea Mobile Telecom Corp. ......... 8,493 3,838,861
Samsung Electronics Co. ............ 102,174 3,162,706
SK Telecom Company, Ltd. (b) ....... 344,900 1,918,506
------------
TOTAL SOUTH KOREA .................. 13,793,175
------------
THAILAND-1.3%
Bangkok Expressway Public
Company, Ltd. (a) ............... 4,900,000 1,973,933
Industrial Finance Corporation
of Thailand ..................... 5,159,800 1,063,750
Thai Farmers Bank Public
Company, Ltd. ..................... 865,000 763,537
------------
TOTAL THAILAND ..................... 3,801,220
------------
VENEZUELA-3.2%
Compania Anonima Nacional
Telefonos de Venezuela (b) ...... 174,800 4,370,000
Corporacion EDC SACA (a) ......... 4,409,666 0
Electricidad de Caracas ............ 6,113,754 2,762,988
Mavesa SA (b) ..................... 714,700 2,278,106
------------
TOTAL VENEZUELA .................. 9,411,094
------------
TOTAL COMMON STOCKS
(Identified cost
$268,139,477) ..................... 214,269,720
------------
PREFERRED STOCKS-17.7%
ARGENTINA-1.6%
Quilmes Industrial Quinsasa
(b) .............................. 470,350 4,585,913
------------
BRAZIL-16.1%
Banco Bradesco SA .................. 682,969,111 5,698,545
Banco Itau SA ..................... 10,726,000 6,120,929
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS
PORTFOLIO* (CONTINUED)
Cemig Cia Energetica de
MinasGerais ..................... 193,457,516 $ 6,021,763
Cia Riograndense Telecom (a) ....... 6,093,900 6,644,250
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar (c) ........................ 267,600 6,054,450
Companhia Cervejaria
Brahma (a) ........................ 7,551,100 4,700,871
Companhia Cimento Portland ......... 19,890,000 3,527,248
Companhia Paranaense
de Energia-Copel (b) ............ 329,300 3,046,025
Copel Paranqense de Energia ........ 236,399,000 2,207,522
Telesp de Sao Paulo SA ............ 9,620,000 2,262,453
Telesp Tel Sao Paulo (e) ......... 452,118 7,232
Telesp Celular SA (a) ............ 9,620,000 798,513
-----------
TOTAL BRAZIL ..................... 47,089,801
-----------
TOTAL PREFERRED STOCKS
(Identified cost $54,910,972) ...... 51,675,714
-----------
CONVERTIBLE BONDS-0.2%
PHILIPPINES-0.2%
Bacnotan Consolidated
Industries, 5.50%, 6/21/04 (i)
(Identified cost $1,050,775) ...... $1,112 $ 400,320
------------
REPURCHASE AGREEMENT-9.3%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $27,160,000 United
States Treasury Note, 5.875%,
02/28/99, with a value of
$27,756,434) (Identified cost
$27,212,000) (h) .................. 27,212 27,212,000
------------
TOTAL INVESTMENTS
(Identified cost
$351,313,224) (d) ............... 100.6% $293,557,754
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS ................. (0.6) (1,611,002)
------ ------------
NET ASSETS ........................ 100.0% $291,946,752
====== ============
</TABLE>
* Percentages of common stocks, preferred stocks, and convertible bonds are
presented in the portfolio by country.
Percentages by industry are as follows:
Banks & Financial Services 18.8%, Brewery 2.3%, Conglomerates 6.2%,
Construction & Materials 6.9%, Electrical Equipment 1.1%, Food & Beverages
9.2%, Machinery 0.3%, Metals 0.9%, Oil & Gas 3.3%, Paper Products 0.1%,
Railroad 0.7%, Retail 7.7%, Steel 1.5%, Telecommunications 20.8%, Tobacco
2.0%, Utilities 9.5%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
ASSET-BACKED SECURITIES-10.9%
Chase Manhattan Grantor
Trust, Series 1996-B, Class A
6.61%, 09/15/02 .................. $ 709 $ 714,572
Citibank Credit Card Master
Trust, Series 1998-1, Class B
5.875%, 01/15/03 .................. 993 987,414
Delta Funding Home
Equity Loan Trust:
Series 1996-1, Class A6
1.00%, 10/25/28 .................. 1,000 1,019,687
Series 1996-2, Class A3
7.54%, 10/25/14 .................. 37 38,474
Series 1997-3, Class A6
7.72%, 05/25/20 .................. 394 416,852
EQCC Home Equity Loan Trust,
Series 1994-2, Class A2
7.35%, 06/15/14 .................. 125 127,686
First USA Credit Card Master
Trust, Series 1997-6, Class B
6.58%, 03/17/05 .................. 1,461 1,489,986
Fleetwood Credit Grantor Trust,
Series 1997-B, Class A
6.40%, 05/15/13 .................. 674 680,751
IMC Home Equity Loan Trust:
Series 1996-3, Class A2
7.06%, 04/25/11 .................. 58 59,139
Series 1997-3, Class A6
7.52%, 08/20/28 .................. 1,186 1,219,350
NationsBank Auto Owner
Trust, Series 1996-A, Class A4
6.625%, 12/15/00 .................. 440 443,437
PNC Student Loan Trust I,
Series 1997-2, Class A7
6.728%, 01/25/07 .................. 867 907,125
Sears Credit Account Master
Trust: Series 1996-4, Class A
6.45%, 10/16/06 .................. 1,051 1,065,777
Series 1996-3, Class A
7.00%, 07/15/08 .................. 735 766,466
Southern Pacific Secured Assets
Corp., Series 1997-1, Class A6
7.15%, 04/25/27 .................. 1,155 1,191,587
The Money Store Trust:
Series 1996-C, Class A11
6.635%, 09/15/14 .................. 116 117,123
Series 1996-B, Class A14
7.35%, 05/15/12 .................. 116 119,405
Travelers Bank Credit Card
Master Trust, Series 1998-1,
Class A 0.99%, 01/01/05 ............ 91 91,107
UCFC Loan Trust, Series
1997-C, Class A
8.00%, 09/15/00 .................. 578 106,027
-----------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $11,360,238) ...... 11,561,965
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS-9.9%
Asset Securitization Corp.:
Series 1996-D2, Class ACS2
1.581%, 02/28/26 (f) ............ 2,125 203,635
Series 1996-MD6, Class A1B
6.88%, 11/13/29 (f) ............... 248 257,414
Series 1996-D3, Class A1A
7.01%, 10/13/26 .................. 88 89,907
Series 1995-MD4, Class A1
7.10%, 08/13/29 .................. 312 327,468
Series 1996-D3, Class A1B
7.21%, 10/31/26 .................. 375 394,492
BCF L.L.C., Series 1996-R1,
Class R2
6.104%, 03/25/37 (f) ............ 383 385,119
Bear Stearns Secured Investors
Trust, Series 1998, Class IO
3.152%, 10/30/18 (f) ............ 2,873 286,852
CS First Boston Mortgage,
Series 1997-C1, Class AIB
7.15%, 08/20/06 (f) ............... 780 817,565
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
37
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -----------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
DLJ Mortgage Acceptance
Corp., Series 1993-MF7,
Class A1 7.40%, 06/18/03 ......... $ 332 $ 345,223
Federal Home Loan Mortgage
Corp.:
Series 1679 Class J
6.00%, 02/15/09 .................. 359 354,849
Series 1478 Class H
6.50%, 03/15/08 .................. 373 379,877
Series 1946, Class PD
6.75%, 05/15/24 .................. 683 695,807
Federal National Mortgage
Association REMIC:
Series 1992-203, Class SA
3.375%, 11/25/07 (f) ............ 312 25,211
Series 1992-129 Class G
4.00%, 06/25/18 .................. 699 677,156
Series 1994-48, Class E
6.00%, 11/25/08 .................. 517 516,674
Series 1996-40, Class J
6.00%, 12/25/08 .................. 840 831,600
Series 1993-134, Class K
6.50%, 05/25/08 .................. 424 426,401
Series 1999-97, Class SA
10.00%, 04/25/21 .................. 104 5,328
First Union Lehman Brothers
Bank, Series 1998-C2, Class
A1 6.28%, 06/18/07 ............... 1,040 1,047,982
G3 Mortgage Reinsurance,
Ltd., 8.50%, 05/25/08 (i) ......... 300 300,000
GMAC Commercial Mortgage
Securities, Inc., Series
1996-C1, Class A2A
6.79%, 09/15/03 (f) ............... 290 296,204
Headlands Mortgage
Securities, Inc.:
Series 1997-1, Class X1
0.673%, 03/25/27 .................. 7,873 131,798
Series 1997-4, Class X
1.126%, 11/25/27 .................. 4,638 142,446
LB Commercial Conduit
Mortgage Trust, Series
1996-C2, Class A
0.00%, 10/25/26 .................. 321 336,544
Merrill Lynch Mortgage
Investments, Inc., Series
1996-C1, Class IO
0.569%, 04/25/28 (f), (i) ......... 4,664 129,720
Midland Realty Acceptance
Corp., Series 1996-C1, Class
A2 7.475%, 12/25/05 ............... 344 365,215
Morgan Stanley Capital One,
Inc.:
Series 1996-WF1,Class X
1.417%, 11/15/28 (f), (i) ......... 2,740 182,404
Series 1997-C1, Class IO
2.354%, 02/15/20 (f) ............ 668 16,506
Prudential Home Mortgage
Security, Series 1993-41,
Class A5 0.839%, 10/25/00 ......... 25,251 253,018
Structured Asset Securitization
Corp.:
Series 1996-CFL, Class X1
1.35%, 02/25/28 (f) ............... 2,521 133,185
Series 1996-CFL, Class X2
1.217%, 02/25/28 (f) ............ 1,509 38,197
United States Department of
Veteran Affairs, Series 1997-1,
Class IO 0.37%, 02/15/27 (f) ...... 9,364 130,225
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Identified cost $10,843,155) ....... 10,524,022
-----------
CORPORATE BONDS-27.7%
AEROSPACE & DEFENSE-1.4%
Lockheed Martin Corp.,
7.45%, 06/15/04 .................. 328 346,768
Raytheon Co.,
6.30%, 03/15/05 .................. 832 830,178
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -----------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
Sabreliner Corp.,
11.00%, 06/15/08 (i) ......... $ 300 $ 300,000
----------
1,476,946
----------
BANKING-0.6%
Capital One Bank:
6.70%, 05/15/08 ............ 416 420,393
7.15%, 09/15/06 ............ 268 271,484
----------
691,877
----------
BREWERY-0.8%
Anheuser Busch Company,
Inc., 7.10%, 06/15/07 ...... 799 834,148
----------
BROADCASTING-0.2%
Cox Communications, Inc.,
6.50%, 11/15/02 ............ 265 266,561
----------
BUILDING & CONSTRUCTION-0.3%
CSC Holdings, Ltd.,
10.50%, 05/15/16 ............ 258 300,570
----------
COMMUNICATION SERVICES-0.3%
Talton Holdings, Inc.,
11.00%, 06/30/07 ............ 253 271,975
----------
COMPUTERS-0.5%
Unisys Corp.,
12.00%, 04/15/03 (h) ......... 465 527,775
----------
COMPUTERS & BUSINESS EQUIPMENT-0.3%
PSINet Inc.,
10.00%, 02/15/05 (i) ......... 310 316,200
----------
CONGLOMERATES-0.3%
Climachem, Inc.,
10.75%, 12/01/07 (i) ......... 310 321,625
----------
CONTAINERS-0.1%
Amtrol Acquisition, Inc.,
10.625%, 12/31/06 ............ 82 82,000
----------
ENERGY-1.0%
Michael Petroleum Corp.,
11.50%, 04/01/05 (i) ......... 263 256,754
Midamerican Energy Co.,
6.375%, 06/15/06 ............ 454 453,509
Panenergy Corp.,
7.375%, 09/15/03 ............ 174 182,432
Transamerican Energy Corp.:
0.00%, 06/15/02 ............ 119 97,580
11.50%, 06/15/02 ............ 50 46,500
----------
1,036,775
----------
ENTERTAINMENT-0.5%
Casino America, Inc.,
12.50%, 08/01/03 ............ 84 94,920
Livent, Inc.,
9.375%, 10/15/04 ............ 400 401,500
----------
496,420
----------
ENVIROMENTAL SERVICES-0.3%
Envirosource, Inc.,
9.75%, 06/15/03 ............ 287 289,870
----------
EQUIPMENT RENTAL-0.2%
Neff Corp.,
10.25%, 06/01/08 (i) ......... 175 175,875
----------
FINANCIAL SERVICES-8.2%
AT&T Capital Corp.,
6.60%, 05/15/05 ............ 586 590,161
Aetna Services, Inc.,
6.75%, 08/15/01 ............ 192 195,170
Avco Financial Services, Inc.,
6.35%, 09/15/00 ............ 128 128,992
Bank of New York Company,
Inc., 6.625%, 06/15/03 ...... 235 239,507
Commercial Credit Group,
Inc., 6.50%, 08/01/04 ...... 428 436,474
Countrywide Home Loans,
Inc., 6.51%, 02/11/05 ...... 156 157,014
Finova Capital Corp.,
6.15%, 03/31/03 ............ 762 761,200
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
First USA Trust, Series 1998-1
6.50%, 01/18/06 (i) ......... $ 400 $ 402,432
Fleet Financial Group,
7.25%, 09/01/99 ............... 161 163,260
Ford Motor Credit Co.,
6.125%, 04/28/03 ............ 743 743,052
General Motors Acceptance
Corp.,
6.75%, 02/07/02 ............ 821 837,108
Goldman Sachs Group LP:
6.625%, 12/01/04 (i) ......... 521 529,705
8.00%, 03/01/13 (i) ......... 485 554,012
Heller Financial, Inc.,
6.50%, 11/01/01 ............... 279 280,741
MBNA Corp.,
6.75%, 03/15/08 (i) ......... 429 435,221
Merrill Lynch & Company, Inc.,
6.00%, 01/15/01 ............... 333 333,180
Norwest Financial, Inc.,
6.125%, 08/01/03 ............ 164 164,681
Republic New York Corp.,
7.25%, 07/15/02 ............... 838 872,777
Resolution Funding Strips,
0.00%, 04/15/07 ............... 1,248 765,423
Sears, Roebuck Acceptance
Corp.,
7.14%, 05/02/03 ............ 149 155,192
----------
8,745,302
----------
FUNERAL SERVICES-0.4%
Service Corp. International,
6.75%, 06/01/01 ............... 377 382,448
----------
HEALTHCARE-0.3%
Dynacare, Inc.,
10.75%, 01/15/06 ............ 122 129,320
Quest Diagnostics, Inc.,
10.75%, 12/15/06 ............ 218 243,615
----------
372,935
----------
INDUSTRIAL-0.7%
Aqua Chemical, Inc.,
11.25%, 07/01/08 (i) ......... 250 254,375
Iridium LLC,
10.875%, 07/15/05 ............ 125 124,062
J.H. Heafner, Inc.,
10.00%, 05/15/08 (i) ......... 310 317,750
----------
696,187
----------
INDUSTRIAL & MACHINERY-0.6%
High Voltage Engineering
Corp., 10.50%, 08/15/04 ...... 374 387,090
Orbcomm Global LP,
14.00%, 08/15/04 ............ 196 221,970
----------
609,060
----------
LEISURE TIME-0.4%
Booth Creek Ski Holdings,
Inc., 12.50%, 03/15/07 ...... 420 449,400
----------
MANUFACTURING-0.2%
Elgar Holdings, Inc.,
9.875%, 02/01/08 (i) ......... 220 198,000
W.R. Carpenter North America,
Inc., 10.625%, 06/15/07 ...... 54 56,835
----------
254,835
----------
MINING-0.4%
Pen Holdings, Inc.,
9.875%, 06/15/08 (i) ......... 400 406,000
----------
MORTGAGE BACKED SECURITIES-1.0%
Countrywide Funding Corp.,
7.26%, 05/10/04 ............... 353 368,645
Fort James Corp.,
6.875%, 09/15/07 ............ 636 652,390
----------
1,021,035
----------
OIL & GAS-1.4%
Abraxas Petroleum Corp.:
11.50%, 11/01/04 ............ 150 154,875
11.50%, 11/01/04 (i) ......... 150 154,875
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
Occidental Petroleum Corp.,
6.40%, 04/01/03 .................. $ 449 $ 448,097
Texaco Capital, Inc.,
6.00%, 06/15/05 .................. 776 775,193
-----------
1,533,040
-----------
OTHER-0.4%
RMOF, 2.16%, 01/31/22 ............... 4,929 466,802
-----------
RESTAURANTS, LODGING &
ENTERTAINMENT-0.4%
American Restaurant Group,
Inc., 11.50%, 02/15/03 (i) ......... 420 420,000
-----------
RETAIL-2.2%
Frank's Nursery & Crafts, Inc.,
10.25%, 03/01/08 (i) ............... 300 306,750
Home Interiors & Gifts, Inc.,
10.125%, 06/01/08 (i) ............ 300 306,375
Jitney-Jungle Stores of America,
Inc., 10.375%, 09/15/07 ............ 560 597,800
May Department Stores Co.,
9.875%, 12/01/02 .................. 680 777,519
Petro Shopping Centers,
10.50%, 02/01/07 .................. 365 386,900
-----------
2,375,344
-----------
TELECOMMUNICATIONS-2.1%
Communications Instruments,
Inc., 10.00%, 09/15/04 ............ 300 308,250
Fundy Cable Ltd.,
11.00%, 11/15/05 .................. 452 501,720
Globalstar LP,
11.50%, 06/01/05 (i) ............... 125 121,719
GTE Corp.,
9.10%, 06/01/03 .................. 395 443,024
LodgeNet Entertainment Corp.,
10.25%, 12/15/06 .................. 245 252,350
United States West Capital
Funding, Inc.,
6.25%, 07/15/05 .................. 594 593,329
-----------
2,220,392
-----------
TRANSPORTATION-0.4%
Atlantic Express, Inc.,
10.75%, 02/01/04 (i) ............... 407 433,455
-----------
TRANSPORTATION & FREIGHT SERVICES-0.3%
Atlas Air, Inc.,
9.25%, 04/15/08 (i) ............... 310 308,450
-----------
UTILITIES-1.5%
National Rural Utilities
Cooperative,
6.125%, 05/15/05 .................. 778 783,213
Texas Utilities Co.,
6.375%, 10/01/04 (i) ............... 821 835,285
-----------
1,618,498
-----------
TOTAL CORPORATE BONDS
(Identified cost $29,004,063) ....... 29,401,800
-----------
MUNICIPALS-1.9%
Atlanta, Georgia Water &
Sewer Revenue,
5.25%, 01/01/27 .................. 330 330,792
Long Island Power Authority
New York Electric,
5.25%, 12/01/26 .................. 1,040 1,013,480
Maryland Street Revenue,
4.75%, 03/01/05 .................. 645 665,253
-----------
TOTAL MUNICIPALS
(Identified cost $2,014,027) ...... 2,009,525
-----------
MORTGAGE PASS-THROUGH
SECURITIES-30.1%
Federal Home Loan Mortgage
Corp.:
6.097%, 09/25/36 (f) ............... 356 357,651
6.50%, 04/15/22 .................. 775 786,486
6.50%, TBA ........................ 3,315 3,337,774
6.75%, 05/15/08 .................. 619 637,056
7.00%, 10/01/12 .................. 329 335,537
7.871%, 09/01/26 (f) ............... 114 116,317
7.913%, 11/01/26 (f) ............... 128 131,445
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
Federal National Mortgage
Association:
6.089%, 12/01/36 .................. $ 455 $ 460,894
6.099%, 09/01/37 .................. 283 287,011
6.115%, 12/01/37 .................. 299 302,455
6.25%, 03/25/23 .................. 367 369,866
6.50%, 12/25/22 .................. 502 509,199
6.50%, 07/25/23 .................. 434 431,225
6.50%, TBA ........................ 1,843 1,853,358
6.50%, TBA ........................ 2,357 2,347,407
6.769%, 05/01/25 .................. 567 580,476
7.00%, TBA ........................ 2,578 2,624,713
7.075%, 05/01/06 .................. 451 465,330
7.603%, 06/01/25 (f) ............... 158 161,888
7.606%, 08/01/27 .................. 554 569,675
7.783%, 05/01/25 .................. 276 284,419
7.843%, 07/01/25 (f) ............... 235 240,811
7.86%, 04/01/24 .................. 391 404,425
10.00%, 08/01/18 .................. 301 78,716
10.095%, 05/25/21 (f) ............ 191 52,110
Government National
Mortgage Association:
0.00%, 12/20/27 .................. 1,960 1,988,376
5.50%, 07/20/27 .................. 261 265,854
5.50%, 09/20/27 .................. 390 395,825
5.50%, 10/20/27 .................. 952 965,833
6.00%, 05/20/28 .................. 110 112,358
6.00%, 06/20/28 .................. 2,557 2,585,766
6.50%, 11/20/26 .................. 874 893,904
6.50%, 03/20/27 .................. 729 745,574
7.00%, 09/20/26 .................. 391 400,668
7.00%, 10/20/26 .................. 733 749,577
7.00%, TBA ........................ 4,946 5,024,790
-------------
TOTAL MORTGAGE PASS-THROUGH
SECURITIES
(Identified cost $31,740,871) ...... 31,854,769
-------------
U.S. GOVERNMENT
OBLIGATIONS-20.2%
Tennessee Valley Authority
Federal,
0.00%, 11/15/29 .................. 751 708,869
United States Treasury Notes:
3.625%, 07/15/02 .................. 1,845 1,824,816
5.875%, 11/15/05 .................. 427 435,138
6.25%, 02/28/02 (h) ............... 6,673 6,826,279
7.75%, 12/31/99 .................. 1,058 1,091,390
United States Treasury Strips:
0.00%, 11/15/04 .................. 5,661 3,987,665
0.00%, 05/15/08 (h) ............... 7,017 4,046,283
0.00%, 02/15/16 .................. 5,892 2,160,243
0.00%, 02/15/25 .................. 1,500 333,795
-------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Identified cost $21,144,327) 21,414,478
-------------
REPURCHASE AGREEMENT-13.6%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $14,410,000 United
States Treasury Note, 5.750%,
10/31/02, with a value of
$14,647,275) (Identified cost
$14,358,000) (h) .................. 14,358 14,358,000
-------------
TOTAL INVESTMENTS
(Identified cost $120,464,681)
(d) .............................. 114.3% $ 121,124,559
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .................. (14.3) (15,182,118)
----- -------------
NET ASSETS ........................ 100.0% $ 105,942,441
===== =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------
<S> <C> <C>
LAZARD HIGH YIELD PORTFOLIO
CORPORATE BONDS-86.3%
AEROSPACE & DEFENSE-1.5%
Sabreliner Corp.,
11.00%, 06/15/08 (i) ............ $ 500 $ 500,000
----------
AUTOMOTIVE--2.3%
J.B. Poindexter & Co.,
12.50%, 05/15/04 ............... 500 505,000
United Auto Group, Inc.,
11.00%, 07/15/07 ............... 250 241,250
----------
746,250
----------
BROADCASTING-1.7%
Spanish Broadcasting Systems,
Inc., 11.00%, 03/15/04 ......... 500 540,000
----------
CHEMICALS-1.6%
Climachem, Inc.:
10.75%, 12/01/07 (i) ............ 250 259,375
10.75%, 12/01/07 ............... 260 271,050
----------
530,425
----------
COMPUTER SERVICES-1.6%
PSINet, Inc.:
10.00%, 02/15/05 (i) ............ 250 255,000
10.00%, 02/15/05 ............... 250 255,625
----------
510,625
----------
CONTAINERS-0.8%
Amtrol, Inc.,
10.625%, 12/31/06 ............... 250 250,000
----------
COSMETICS & TOILETRIES-3.1%
Jafra Cosmetics International,
Inc., 11.75%, 05/01/08 (i) ...... 500 500,000
Styling Technology Corp.,
10.875%, 07/01/08 (i) ............ 500 501,250
----------
1,001,250
----------
ELECTRONICS-1.6%
Communications Instruments,
Inc.,
10.00%, 09/15/04 ............... 500 510,000
----------
ENERGY-3.7%
Forman Petroleum Corp.,
Series B 13.50%, 06/01/04 ...... 250 227,500
Forman Petroleum Corp.
06/01/04 warrant ............... 250 2,500
Mariner Energy, Inc., Series B
10.50%, 08/01/06 ............... 500 507,500
Transamerican Energy Corp.
Series B:
0.00%, 06/15/02 ............... 300 244,500
11.50%, 06/15/02 ............... 250 232,500
----------
1,214,500
----------
ENTERTAINMENT-4.7%
LodgeNet Entertainment Corp.,
10.25%, 12/15/06 ............... 500 515,000
Penn National Gaming, Inc.,
10.625%, 12/15/04 (i) ............ 500 525,000
Young America Corp.,
11.625%, 02/15/06 (i) ............ 500 490,000
----------
1,530,000
----------
EQUIPMENT RENTAL-1.6%
Neff Corp.,
10.25%, 06/01/08 (i) ............ 500 502,500
----------
FOOD & BEVERAGES-4.4%
American Restaurant Group,
Inc.,
11.50%, 02/15/03 (i) ............ 700 700,000
Fresh Foods, Inc.,
10.75%, 06/01/06 (i) ............ 250 250,000
Mrs. Fields Original,
10.125%, 12/01/04 (i) ............ 500 485,000
----------
1,435,000
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------
<S> <C> <C>
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
GAMING-0.8%
Trump Atlantic City Associates,
11.25%, 05/01/06 ............ $ 250 $ 243,125
----------
HEALTHCARE-1.6%
Dynacare, Inc.,
10.75%, 01/15/06 ............ 500 530,000
----------
INDUSTRIAL-5.9%
Aqua Chemical, Inc.,
11.25%, 07/01/08 (i) ......... 500 508,750
J.H. Heafner, Inc.,
10.00%, 05/15/08 (i) ......... 500 512,500
Mediq, Inc.:
11.00%, 06/01/08 (i) ......... 500 513,750
13.00%, 06/01/09 (i) ......... 250 136,250
Pen Holdings, Inc.,
9.875%, 06/15/08 (i) ......... 250 250,625
----------
1,921,875
----------
LEISURE TIME-1.7%
Booth Creek Ski Holdings,
Inc., Series B
12.50%, 03/15/07 ............ 500 535,000
----------
MANUFACTURING-12.4%
American ECO Corp.,
9.625%, 05/15/08 (i) ......... 500 502,500
Axiohm Transaction Solutions,
9.75%, 10/01/07 ............ 250 253,125
9.75%, 10/01/07 (i) ......... 250 253,125
CSC Holdings, Inc.,
10.50%, 05/15/16 ............ 250 291,250
Doe Run Resources Corp.,
11.25%, 03/15/05 (i) ......... 500 505,000
Elgar Holdings, Inc.,
9.875%, 02/01/08 (i) ......... 500 450,000
Henry Co.,
10.00%, 04/15/08 (i) ......... 500 506,250
High Voltage Engineering
Corp.,
10.50%, 08/15/04 ............ 500 517,500
Ntex, Inc.,
11.50%, 06/01/06 (i) ......... 250 247,500
WHX Corp.,
10.50%, 04/15/05 (i) ......... 500 507,500
----------
4,033,750
----------
MORTGAGE BACKED
SECURITIES-4.3%
Orbcomm Global LP,
14.00%, 08/15/04 ............ 500 566,250
Precise Technology, Inc.,
11.125%, 06/15/07 ............ 500 511,250
Roller Bearing Company
America, Inc.,
9.625%, 06/15/07 ............ 300 305,250
----------
1,382,750
----------
OFFICE EQUIPMENT-0.8%
US Office Products Co.,
9.75%, 06/15/08 (i) ......... 250 247,500
----------
OIL & GAS-3.1%
Abraxas Petroleum Corp.,
11.50%, 11/01/04 ............ 500 516,250
Michael Petroleum Corp.,
11.50%, 04/01/05 (i) ......... 250 244,062
Transamerican Refining Corp.,
16.00%, 06/30/03 ............ 250 257,500
----------
1,017,812
----------
OTHER-0.8%
Livent, Inc.,
9.375%, 10/15/04 ............ 250 250,938
----------
PUBLISHING-1.6%
T/SF Communications Corp.,
10.375%, 11/01/07 (i) ...... 500 507,500
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
44
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------------
<S> <C> <C>
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
RETAIL-5.6%
Frank's Nursery & Crafts, Inc.,
10.25%, 03/01/08 (i) ............... $ 500 $ 505,000
Home Interiors & Gifts, Inc.,
10.125%, 06/01/08 (i) ............ 500 510,625
Jitney-Jungle Stores of America,
Inc.,
10.375%, 09/15/07 ............... 500 533,750
Petro Stopping Centers,
10.50%, 02/01/07 .................. 250 265,000
-----------
1,814,375
-----------
SECURITY-1.5%
Loomis Fargo & Co.,
10.00%, 01/15/04 .................. 500 500,000
-----------
TELECOMMUNICATIONS-12.7%
Dictaphone Corp.,
11.75%, 08/01/05 .................. 500 502,500
Dobson Communications
Corp.,
11.75%, 04/15/07 .................. 250 271,250
Econophone, Inc.,
13.50%, 07/15/07 .................. 250 280,000
Facilicom International, Inc.,
10.50%, 01/15/08 (i) ............... 250 245,000
Fundy Cable, Ltd.,
11.00%, 11/15/05 .................. 500 555,000
IPC Information Systems, Inc.,
1.00%, 05/01/08 (f) ............... 500 352,500
Iridium LLC,
10.875%, 07/15/05 .................. 250 248,125
Long Distance International,
Inc.,
12.25%, 04/15/08 (i) ............ 300 300,000
Teligent, Inc.,
11.50%, 12/01/07 .................. 250 252,500
USN Communications, Inc.,
0.00%, 08/15/04 .................. 500 370,000
Viatel, Inc.,
11.25%, 04/15/08 (i) ............... 250 262,500
Winstar Communications, Inc.,
15.00%, 03/01/07 .................. 150 197,250
Winstar Equipment Corp.,
12.50%, 03/15/04 .................. 250 283,125
-----------
4,119,750
-----------
TRANSPORTATION-3.2%
Atlantic Express, Inc.,
10.75%, 02/01/04 (i) ............... 495 527,175
Navigator Gas Transport,
10.50%, 06/30/07 (i) ............... 500 525,000
-----------
1,052,175
-----------
TRANSPORTATION & FREIGHT
SERVICES-0.8%
Atlas Air, Inc.,
9.25%, 04/15/08 (i) ............... 250 248,750
-----------
UTILITIES-0.9%
Empire Gas Corp.,
7.00%, 07/15/04 (f) ............... 300 277,500
-----------
TOTAL CORPORATE BONDS
(Identified cost $28,101,973) ...... 27,953,350
-----------
SHARES
------
PREFERRED STOCKS-5.1%
Adelphia Communications
Corp. .............................. 3,000 366,000
Dobson Communications
Corp. (i) ........................ 257 269,850
High Voltage Engineering
Corp. .............................. 250 260,000
Nextel Communications,
Inc. (i) ........................... 257 264,710
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
Paxson Communications
Corp. (a), (i) .................. 20 $ 200,000
Paxson Communications Corp. 16 16,880
Sinking Fund Holdings Group,
Inc. (i) ........................ 310 272,025
------------
TOTAL PREFERRED STOCKS
(Identified cost $1,612,595) ...... 1,649,465
------------
PRINCIPAL
AMOUNT
(000)
------
REPURCHASE AGREEMENT-15.3%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $4,970,000 United
States Treasury Note, 5.000%,
02/15/99, with a value of
$5,047,631) (Identified cost
$4,948,000)........................ $4,948 4,948,000
------------
TOTAL INVESTMENTS
(Identified cost
$34,662,568) (d).................. 106.7% $ 34,550,815
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .................. (6.7) (2,164,529)
------ ------------
NET ASSETS ........................ 100.0% $ 32,386,286
====== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO*
CURRENCY DENOMINATED BONDS-93.2%
ARGENTINE PESO-1.2%
Argentina Bocon, (USD),
0.00%, 09/01/02 .................. $ 150 $ 183,825
Banco Hipotecario Nacional,
(USD), 8.50%, 07/01/49 ......... 180 149,871
Republic of Argentina:
0.00%, 03/31/05 .................. 300 265,200
0.00%, 04/01/07 .................. 862 728,571
-----------
TOTAL ARGENTINE PESO ............ 1,327,467
-----------
AUSTRALIAN DOLLAR-1.5%
Commonwealth of Australia,
10.00%, 10/15/02 ............... 2,280 1,664,814
-----------
AUSTRIAN SCHILLING-1.2%
Republic of Austria,
8.00%, 03/18/02 .................. 14,670 1,296,741
-----------
BRAZILIAN REAL-0.4%
Salomon BRF Structured
Notes, (USD),
0.00%, 08/17/98 ............... 400 379,200
-----------
BRITISH POUND-10.9%
Bayerische Landesbank
Girozentrale,
8.50%, 02/26/03 ............... 275 485,570
Birmingham Midshires
Building Society,
9.125%, 01/05/06 (h) ............ 550 1,033,701
British Aerospace PLC,
11.875%, 12/29/08 (h) ............ 540 1,257,221
Chelsea Village PLC,
8.875%, 12/17/07 ............... 326 559,291
Coca Cola Enterprises,
6.75%, 03/12/08 .................. 163 272,841
Finance for Residence Society
House,
11.126%, 10/05/58 (f) ......... 300 794,881
Haven Funding PLC,
8.125%, 09/30/37 ............... 290 589,529
HMV Media Group PLC,
10.875%, 05/15/08 ............... 300 487,135
Merrill Lynch & Company, Inc.,
7.375%, 12/06/01 ............... 387 646,578
Middleweb PLC,
10.50%, 05/30/08 (a), (i) ...... 274 457,498
North American Capital Corp.,
8.25%, 11/17/03 (h) ............ 876 1,519,335
Sutton Bridge Financing, Ltd.,
8.625%, 06/30/22 ............... 438 867,502
United Kingdom Treasury
Bonds, 8.00%, 06/07/21 (h) ...... 526 1,141,741
West LB Finance Curacao NV,
8.50%, 06/02/03 (h) ............ 710 1,252,912
William Hill Finance PLC,
10.625%, 04/30/08 ............... 330 548,935
-----------
TOTAL BRITISH POUND ............... 11,914,670
-----------
CANADIAN DOLLAR-2.2%
Argos Funding Trust,
5.963%, 02/27/06 ............... 250 169,209
Call Net Enterprises, Inc.,
8.375%, 08/15/07 ............... 761 537,491
Government of Canada,
8.00%, 06/01/23 .................. 589 533,744
Molson Breweries Company,
Ltd.,
6.00%, 06/02/08 (i) ............ 800 548,266
Quebec Housing,
8.95%, 05/13/13 .................. 407 354,851
UniHost Corp.,
10.00%, 06/30/03 (a) ............ 402 269,084
-----------
TOTAL CANADIAN DOLLAR ............ 2,412,645
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO* (CONTINUED)
COLOMBIAN PESO-0.3%
Salomon COP Linked Clean
Notes, (USD):
0.00%, 09/23/98 ............... $ 84 $ 83,767
0.00%, 10/02/98 ............... 200 204,520
Salomon COP Swap,
0.00%, 01/06/99 ............... 50 50,140
-----------
TOTAL COLOMBIAN PESO ............ 338,427
-----------
DANISH KRONE-10.0%
Kingdom of Denmark,
7.00%, 11/10/24 ............... 5,452 962,939
Nykredit AS:
6.00%, 10/01/26 (h) ............ 56,451 8,192,976
8.00%, 10/01/26 (h) ............ 12,296 1,832,542
-----------
TOTAL DANISH KRONE ............... 10,988,457
-----------
ESTONIAN KROON-0.1%
Merita Bank CP,
10.00%, 12/28/98 (f) ............ 1,000 76,471
-----------
FRENCH FRANC-5.1%
Credit Foncier de France,
7.50%, 03/29/05 (h) ............ 18,250 3,441,590
Government of France,
0.00%, 04/25/21 (h) ............ 31,444 1,517,974
Neopost,
5.914%, 09/30/07 (f), (i) ...... 3,300 564,947
-----------
TOTAL FRENCH FRANC ............... 5,524,511
-----------
GERMAN MARK-8.1%
Autobahn Tank & Rast,
6.00%, 10/16/00 ............... 943 539,096
Baden Wurttemberg,
6.75%, 06/22/05 ............... 914 562,809
Derby Cycle Corp.,
9.375%, 05/15/08 ............... 379 207,000
Euronet Services, Inc.,
12.375%, 07/01/06 (a) ......... 1,061 364,021
Exide Holdings,
9.125%, 04/15/04 (i) ............ 1,005 557,265
Federal Republic of Germany,
0.00%, 01/04/21 (h) ............ 19,135 3,141,484
Haus,
4.493%, 05/14/35 (f) ............ 999 554,085
Impress Metal Pack Holding,
9.875%, 05/29/07 (i) ............ 927 537,788
Ineos PLC,
8.625%, 04/30/05 ............... 890 493,499
Land Hessen,
6.00%, 11/29/13 (h) ............ 1,000 616,491
Sirona Dental Systems,
9.125%, 07/15/08 (a), (i) ...... 550 305,733
Texon International PLC,
10.00%, 02/01/08 ............... 948 525,659
Viatel, Inc.,
11.15%, 04/15/08 (i) ............ 800 462,447
-----------
TOTAL GERMAN MARK ............... 8,867,377
-----------
GREEK DRACHMA-0.4%
Republic of Hellenic:
11.10%, 06/30/00 ............... 30,000 99,648
11.10%, 08/14/03 (f) ............ 113,000 375,155
-----------
TOTAL GREEK DRACHMA ............ 474,803
-----------
HUNGARIAN FORINT-0.7%
Government of Hungary:
16.00%, 01/12/00 ............... 110,000 500,823
16.50%, 04/12/99 ............... 39,000 178,046
23.00%, 05/06/99 ............... 7,000 33,526
Republic of Hungary,
19.50%, 01/12/99 ............... 12,000 55,459
-----------
TOTAL HUNGARIAN FORINT ......... 767,854
-----------
IRISH POUND-0.5%
Republic of Ireland,
8.00%, 08/18/06 ............... 295 491,377
-----------
ITALIAN LIRA-9.4%
Films PLC,
6.938%, 03/31/05 (f) ............ 1,000,000 562,825
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
48
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO* (CONTINUED)
Republic of Italy,
8.75%, 07/01/06 .................. $13,775,000 $ 9,672,543
-----------
TOTAL ITALIAN LIRA ............... 10,235,368
-----------
JAPANESE YEN-22.6%
Asterique,
2.48%, 01/23/02 .................. 191,549 1,385,187
European Investment Bank,
3.00%, 09/20/06 .................. 309,000 2,476,112
Export-Import Bank of Japan,
4.375%, 10/01/03 (h) ............ 798,000 6,694,728
Federal National Mortgage
Association,
2.125%, 10/09/07 ............... 920,000 6,998,973
International Bank for
Reconstruction and
Development,
4.75%, 12/20/04 (h) ............ 495,600 4,352,674
Isveimer,
4.15%, 03/23/99 .................. 187,000 1,406,523
Nippon Credit Bank, Ltd.:
1.80%, 07/27/00 .................. 60,000 412,324
3.05%, 05/25/01 .................. 30,000 204,621
Republic of Austria:
4.50%, 09/28/05 .................. 80,000 701,526
6.25%, 10/16/03 .................. 15,000 136,825
-----------
TOTAL JAPANESE YEN ............... 24,769,493
-----------
LEBANESE POUND-0.5%
Lebanon Treasury Notes,
21.62%, 10/22/98 ............... 397,310 279,673
Paribas LBP Treasury Bills:
0.00%, 07/09/98 .................. 350,000 230,610
0.00%, 09/24/98 .................. 80,000 51,386
-----------
TOTAL LEBANESE POUND ............ 561,669
-----------
LITHUANIAN LITAS-0.1%
Hansa Lithuanian Treasury Bill,
0.00%, 07/23/98 .................. 350 86,946
-----------
MEXICAN PESO-1.2%
Mexican Cetes:
0.00%, 09/24/98 .................. 2,500 264,334
0.00%, 01/14/99 .................. 6,200 606,594
0.00%, 04/08/99 .................. 2,226 207,237
Satelites Mexicanos SA de CV,
10.125%, 11/01/04 (h), (i) ...... 159 154,826
UDI Bonos,
7.00%, 05/27/99 .................. 350 85,296
-----------
TOTAL MEXICAN PESO ............... 1,318,287
-----------
NETHERLANDS GUILDER-0.8%
Government of Netherlands,
8.75%, 01/15/07 .................. 1,426 893,026
-----------
POLISH ZLOTY-0.4%
Government of Poland:
14.00%, 02/12/00 ............... 900 238,744
16.00%, 10/12/98 ............... 820 231,869
Polish Treasury Bill,
0.00%, 12/30/98 .................. 50 12,961
-----------
TOTAL POLISH ZLOTY ............... 483,574
-----------
RUSSIAN ROUBLE-0.2%
Lehman GKO Structured Note,
0.00%, 03/17/99 .................. 2,000 206,052
-----------
SOUTH AFRICAN RAND-0.1%
Government of Namibia:
12.00%, 04/15/02 ............... 210 31,192
12.00%, 04/15/05 ............... 210 29,626
South African Roads,
11.50%, 09/30/05 ............... 500 69,351
-----------
TOTAL SOUTH AFRICAN RAND ......... 130,169
-----------
SPANISH PESETA-6.5%
Catalunya Generalitat,
9.30%, 11/24/03 .................. 67,000 524,291
Kingdom of Spain,
7.90%, 02/28/02 .................. 910,170 6,610,380
-----------
TOTAL SPANISH PESETA ............ 7,134,671
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO* (CONTINUED)
SWEDISH KRONA-1.4%
Kingdom of Sweden,
9.00%, 04/20/09 ............... $ 9,000 $1,501,418
----------
THAILAND BAHT-0.0%
Finance One PLC, (USD),
2.00%, 08/31/01 ............... 220 17,600
----------
TURKISH LIRE-0.8%
Credit Suisse TRL Weekly Roll,
0.00%, 10/08/98 ............... 500,000 316,232
Turkey Treasury Bill,
0.00%, 09/30/98 ............... 188,611 607,581
----------
TOTAL TURKISH LIRE ............... 923,813
----------
UNITED STATES DOLLAR-6.6%
Cargill TRL Weekly Roll,
0.00%, 09/17/98 ............... 300 321,953
Conproca SA De C V,
12.00%, 06/16/10 (i) ............ 100 101,500
Credit Lyonnais Paris,
6.75%, 09/19/49 (f) ............ 580 565,964
Doe Run Resources Corp.,
11.25%, 03/15/05 (h), (i) ...... 159 160,590
Federal Farm Credit Banks,
5.55%, 07/01/99 ............... 450 449,716
Federal Home Loan Banks,
5.69%, 10/02/98 (h) ............ 110 110,034
Federal Republic of Brazil,
6.688%, 04/15/12 (f) ............ 49 34,300
Forman Petroleum Corp.,
13.50%, 06/01/04 (h) ............ 309 281,190
High Voltage Engineering
Corp.,
10.50%, 08/15/04 (h) ......... 157 162,495
ICF Kaiser International, Inc.,
13.00%, 12/31/03 (f), (h) ...... 115 124,200
Imasac SA,
11.00%, 05/02/05 (i) ............ 100 92,000
ING Bank NV, (London),
0.00%, 02/12/99 (h), (i) ...... 700 721,000
Innova S De R.L.,
12.875%, 04/01/07 ............... 234 237,510
Intertek Finance Corp. PLC,
10.25%, 11/01/06 (h) ............ 39 41,340
Mastellone Hermanos SA,
11.75%, 04/01/08 (i) ............ 209 208,216
Monterrey Power SA de CV,
9.625%, 11/15/09 (i) ............ 100 94,000
Poindexter (J.B.) & Co.,
12.50%, 05/15/04 (h) ............ 80 80,800
Rao Gazprom,
12.75%, 03/13/00 ............... 159 137,805
Reliance Industries, Ltd.,
9.375%, 06/24/26 (h), (i) ...... 250 233,575
Republic of Brazil,
6.688%, 04/15/06 (f) ............ 242 197,650
Republic of Korea,
8.875%, 04/15/08 ............... 40 36,178
Republic of Panama,
0.00%, 07/17/14 ............... 300 223,125
Salomon Corporation Linked
Clean Note,
0.00%, 09/30/98 ............... 130 117,247
Silgan Holdings, Inc.,
13.25%, 07/15/06 ............... 1 1,110
SK Telecom Company, Ltd.,
7.75%, 04/29/04 ............... 300 251,822
Standard Chartered Bank,
6.15%, 12/29/49 (f) ............ 360 229,104
Subic Power Corp.,
9.50%, 12/28/08 (h) ............ 189 178,276
Talton Holdings, Inc.,
11.00%, 06/30/07 (h) ............ 186 199,950
Total Access Communications,
2.00%, 05/31/06 ............... 100 82,000
Transamerican Energy Corp.,
11.50%, 06/15/02 ............... 38 35,340
Trump Atlantic City Associates,
11.25%, 05/01/06 ............... 9 8,753
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
50
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------- --------------- --------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO* (CONTINUED)
TTB Finance Cayman, Ltd.,
6.634%, 03/18/07 (f) ............ $ 486 $ 464,130
United States Treasury Bills:
0.00%, 08/20/98 .................. 15 14,899
0.00%, 10/15/98 .................. 50 49,263
5.16%, 05/27/99 .................. 160 152,432
United States Treasury Bonds,
0.00%, 11/15/24 .................. 3,334 753,418
United States Treasury Strips,
0.00%, 02/15/16 .................. 72 26,398
Waxman Industries, Inc.,
0.00%, 06/01/04 .................. 95 90,250
------------
TOTAL UNITED STATES DOLLAR ......... 7,269,533
------------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost
$104,140,339) .................. 102,056,433
------------
SHARES
----------
PREFERRED STOCKS-0.1%
Forman Petroleum Corp. ............ 142 7,100
Forman Petroleum Corp. (i) ......... 1,217 60,850
ICG Holdings, Inc. ............... 6 7,080
Paxson Communications Corp. 15 15,825
------------
TOTAL PREFERRED STOCKS
(Identified cost $93,414) ......... 90,855
------------
PRINCIPAL
AMOUNT
(000)
------------
COMMERCIAL PAPER-4.9%
American Express Credit Corp.:
5.48%, 09/09/98 .................. $ 72 71,233
5.49%, 07/08/98 .................. 160 159,829
5.49%, 08/10/98 .................. 225 223,627
5.50%, 07/10/98 .................. 70 69,904
Ford Motor Credit Corp.:
5.46%, 07/07/98 .................. 120 119,891
5.49%, 08/07/98 .................. 30 29,831
5.50%, 08/20/98 .................. 215 213,357
General Electric Capital Corp.:
5.26%, 07/13/98 .................. 100 99,825
5.30%, 09/14/98 .................. 130 128,565
5.30%, 11/06/98 .................. 100 98,115
5.37%, 08/10/98 .................. 100 99,403
5.37%, 08/24/98 .................. 110 109,114
5.41%, 09/17/98 .................. 110 108,711
5.43%, 10/15/98 .................. 330 324,724
5.48%, 11/23/98 .................. 120 117,351
5.50%, 08/06/98 .................. 325 323,212
5.50%, 08/31/98 .................. 185 183,276
5.50%, 09/09/98 .................. 460 455,081
5.50%, 10/13/98 .................. 100 98,411
5.51%, 08/24/98 .................. 110 109,091
5.52%, 07/27/98 .................. 100 99,601
5.54%, 07/22/98 .................. 110 109,645
General Motors Acceptance
Corp.:
5.52%, 09/02/98 .................. 60 59,421
5.54%, 07/22/98 .................. 320 318,966
5.69%, 07/07/98 .................. 180 179,829
Prudential Funding Corp.:
5.43%, 09/22/98 .................. 450 444,367
5.43%, 10/28/98 .................. 300 294,615
5.44%, 11/16/98 .................. 50 48,957
5.45%, 11/23/98 .................. 60 58,683
5.47%, 08/10/98 .................. 95 94,423
5.48%, 07/30/98 .................. 50 49,779
5.50%, 07/30/98 .................. 50 49,779
5.50%, 08/14/98 .................. 257 255,272
5.50%, 09/02/98 .................. 64 63,384
5.51%, 07/06/98 .................. 120 119,908
------------
TOTAL COMMERCIAL PAPER
(Identified cost $5,389,180) ...... 5,389,180
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
51
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO* (CONTINUED)
DISCOUNT NOTES-0.2%
Federal National Mortgage
Association:
5.26%, 04/23/99 ............... $30 $ 28,702
5.30%, 04/23/99 ............... 170 162,592
----------
TOTAL DISCOUNT NOTES
(Identified cost $191,294) ...... 191,294
----------
REPURCHASE AGREEMENT-1.5%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $1,385,000 United
States Treasury Note, 9.375%,
02/15/06, with a value of
$1,755,001) (Identified cost
$1,720,000) (h).................. 1,720 1,720,000
----------
TOTAL INVESTMENTS
(Identified cost
$111,534,227) (d)............ 99.9% $109,447,762
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ...... 0.1 74,430
------ ------------
NET ASSETS .................. 100.0% $109,522,192
====== ============
</TABLE>
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by type are as follows:
Collateralized Mortgage Obligations 6.5%, Commercial Paper 4.9%, Corporate
Bonds 48.8%, Discount Notes 0.2%, Foreign Government Obligations 33.8%,
Preferred Stocks 0.1%, Step-up Bonds 0.5%, Structured Notes 2.3%, United
States Government Obligations 1.3%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
52
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
Forward Foreign Currency Contracts open at June 30, 1998:
<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>
ARS 12/30/98 120,751 $ 118,500 $ 118,337 $ (163)
ARS 1/7/99 114,840 110,000 109,791 (209)
ATS 9/4/98 3,041,066 244,843 240,728 (4,115)
AUD 9/14/98 479,883 288,026 298,164 10,138
BEL 9/14/98 151,137,050 4,150,121 4,081,028 (69,093)
BRL 9/22/98 541,440 450,000 453,695 3,695
BRL 9/30/98 78,456 65,599 65,538 (61)
CAD 9/14/98 5,017,593 3,445,361 3,414,695 (30,666)
CHF 9/14/98 1,191,694 815,112 792,847 (22,265)
CLP 8/24/98 50,000,000 109,075 103,943 (5,132)
CLP 9/14/98 61,001,200 130,000 125,926 (4,074)
CLP 10/22/98 30,007,943 63,698 61,405 (2,293)
CNY 9/9/98 732,427 87,000 87,218 218
CNY 10/28/98 2,523,000 300,000 296,349 (3,651)
CNY 10/30/98 920,000 100,000 107,996 7,996
COP 8/10/98 137,655,000 95,000 96,394 1,394
COP 10/15/98 493,185,000 330,000 330,551 551
CZK 6/28/99 15,971,050 445,000 450,182 5,182
DEM 9/14/98 10,513,256 5,947,920 5,855,669 (92,251)
DKK 9/14/98 29,854,950 4,447,731 4,359,911 (87,820)
ESP 9/14/98 96,756,784 643,984 632,649 (11,335)
FIM 9/14/98 5,252,773 978,480 962,307 (16,173)
FRF 9/14/98 42,775,294 7,230,197 7,106,935 (123,262)
GBP 9/14/98 144,424 237,620 240,137 2,517
GRD 2/16/99 5,000,000 15,559 15,852 293
GRD 5/6/99 8,748,120 26,946 27,466 520
GTQ 11/9/98 644,370 100,000 101,421 1,421
HKD 7/2/98 2,496,960 322,326 322,214 (112)
HKD 7/9/98 2,496,960 322,118 322,012 (106)
HKD 7/16/98 1,317,874 169,121 169,849 728
HKD 9/9/98 2,496,960 320,000 320,174 174
IDR 10/14/98 539,000,000 140,000 32,623 (107,377)
IEP 7/3/98 48,239 67,534 67,375 (159)
ILS 6/11/99 611,200 160,000 159,034 (966)
INR 9/14/98 5,922,000 140,000 135,950 (4,050)
ITL 9/14/98 3,624,293,583 2,076,816 2,042,384 (34,432)
JPY 12/11/98 1,159,498,323 8,868,579 8,589,648 (278,931)
KES 9/2/98 3,645,154 59,600 58,941 (659)
KES 9/29/98 4,400,587 71,000 70,074 (926)
KRW 7/8/98 287,600,000 189,619 207,978 18,359
KRW 8/7/98 237,600,000 165,000 168,391 3,391
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
53
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
<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>
KRW 8/10/98 332,325,000 $ 225,000 $ 235,025 $ 10,025
KRW 11/23/98 189,360,000 120,000 126,347 6,347
KRW 4/20/99 174,900,000 110,000 110,929 929
KRW 4/27/99 270,300,000 170,000 171,057 1,057
MXN 7/2/98 1,378,960 160,000 153,426 (6,574)
MXN 11/23/98 556,800 60,000 57,509 (2,491)
NLG 9/14/98 8,792,690 4,419,326 4,345,241 (74,085)
NOK 9/14/98 6,000,000 780,843 784,156 3,313
PEN 7/13/98 212,700 75,000 72,138 (2,862)
PEN 7/30/98 106,412 37,000 35,914 (1,086)
PEN 8/20/98 620,351 214,580 208,346 (6,234)
PHP 7/7/98 9,990,000 277,007 238,141 (38,866)
PHP 8/6/98 6,408,000 160,000 150,630 (9,370)
PHP 9/17/98 4,587,000 110,000 106,396 (3,604)
PLN 10/13/98 330,858 90,000 90,801 801
PLN 11/16/98 90,000 24,617 24,393 (224)
ROL 7/6/98 1,068,952,443 122,059 122,107 48
ROL 7/22/98 992,906,184 113,485 110,536 (2,949)
ROL 9/2/98 581,943,040 64,000 64,000 0
RUB 8/14/98 1,666,645 257,000 252,993 (4,007)
SEK 9/14/98 9,325,158 1,190,954 1,172,713 (18,241)
SVC 8/10/98 889,010 100,000 101,328 1,328
THB 7/8/98 6,416,000 160,000 151,275 (8,725)
THB 8/7/98 1,228,200 30,514 28,419 (2,095)
THB 8/24/98 4,482,500 110,000 102,614 (7,386)
THB 8/31/98 7,615,000 183,053 173,561 (9,492)
THB 9/10/98 6,590,000 141,416 149,151 7,735
TRL 7/7/98 48,297,060,000 180,000 179,456 (544)
VEB 7/10/98 37,553,000 68,000 66,451 (1,549)
VEB 7/22/98 178,640,000 320,000 307,702 (12,298)
VEB 7/27/98 44,829,925 79,100 76,340 (2,760)
ZAR 10/5/98 4,399,058 869,321 712,916 (156,405)
ZAR 10/6/98 639,815 117,000 103,662 (13,338)
ZAR 10/14/98 478,512 94,682 77,367 (17,315)
ZAR 10/16/98 252,875 50,000 40,864 (9,136)
----------- ----------- ------------
$55,331,442 $54,107,685 $ (1,223,757)
----------- ----------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
54
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (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>
AUD 9/14/98 947,882 $ 556,407 $ 588,943 $ (32,536)
BEL 9/14/98 3,822,283 104,700 103,210 1,490
CAD 9/14/98 630,862 431,952 429,330 2,622
DEM 9/14/98 3,698,100 2,071,332 2,059,766 11,566
DKK 9/14/98 87,452,347 12,948,315 12,771,229 177,086
ESP 9/14/98 462,648,189 3,022,155 3,025,048 (2,893)
FRF 9/14/98 1,731,820 291,800 287,735 4,065
GBP 9/14/98 773,216 1,260,115 1,285,647 (25,532)
HKD 7/2/98 2,496,960 322,209 322,214 (5)
HKD 9/9/98 2,496,960 317,518 320,174 (2,656)
IDR 10/14/98 539,000,000 53,103 32,623 20,480
INR 9/14/98 6,262,500 150,000 143,767 6,233
ITL 9/14/98 1,079,161,255 609,631 608,135 1,496
JPY 12/11/98 1,659,182,953 12,618,301 12,291,348 326,953
KRW 7/8/98 287,600,000 198,777 207,978 (9,201)
KRW 8/10/98 100,000,000 67,340 70,721 (3,381)
KRW 11/23/98 127,840,000 80,000 85,299 (5,299)
KRW 4/20/99 174,900,000 99,658 110,929 (11,271)
MXN 7/2/98 1,378,960 157,362 153,426 3,936
NLG 9/14/98 547,126 271,550 270,383 1,167
NOK 9/14/98 6,482,658 872,509 847,236 25,273
PHP 7/7/98 18,135,750 460,000 432,318 27,682
SEK 9/14/98 2,512,431 321,400 315,958 5,442
XEU 9/14/98 502,365 560,328 553,305 7,023
ZAR 10/5/98 4,399,058 828,593 712,916 115,677
ZAR 10/6/98 639,815 115,594 103,662 11,932
ZAR 10/14/98 478,000 86,111 77,284 8,827
----------- ----------- -----------
$38,876,760 $38,210,584 $ 666,176
----------- ----------- -----------
Net unrealized depreciation on Forward Foreign Currency Contracts $(557,581)
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
55
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO*
CURRENCY DENOMINATED BONDS-82.2%
ARGENTINE PESO-2.9%
Republic of Argentina, (USD),
1.00%, 03/31/05 (f) ............ $1,200 $ 1,056,780
Argentina Bocon, (USD),
1.00%, 09/01/02 (f), (h) ...... 5,095 6,243,923
Banco Hipotecario Nacional,
8.50%, 07/01/49 ............... 1,650 1,373,824
Republic of Argentina:
1.00%, 04/01/07 (f) ............ 3,693 3,121,210
1.00%, 04/01/07 (f), (h) ...... 2,990 2,526,916
-----------
TOTAL ARGENTINE PESO ............ 14,322,653
-----------
AUSTRALIAN DOLLAR-1.0%
Commonwealth of Australia,
9.50%, 08/15/03 (h) ............ 886 650,280
Credit Foncier,
8.50%, 09/09/02 (h) ............ 6,000 4,055,979
-----------
TOTAL AUSTRALIAN DOLLAR ......... 4,706,259
-----------
BRAZILIAN REAL-1.3%
Cargill Brazilian Structured
Notes:
0.00%, 09/17/98 ............... 2,252 2,091,405
9.14%, 10/15/98 ............... 1,026 919,496
Republic of Brazil (USD):
6.688%, 04/15/06 (f) ............ 2,182 1,778,847
6.688%, 04/15/12 (f) ............ 1,968 1,377,600
-----------
TOTAL BRAZILIAN REAL ............ 6,167,348
-----------
BRITISH POUND-3.6%
Birmingham Midshires
Building Society,
9.125%, 01/05/06 ............... 450 845,755
British Aerospace PLC,
11.875%, 12/29/08 ............... 440 1,024,403
Chelsea Village PLC,
8.875%, 12/17/07 ............... 1,233 2,115,356
Coca Cola Enterprises,
6.75%, 03/12/08 ............... 697 1,166,690
Finance for Residence
Society House,
11.126%, 10/05/58 (f) ......... 600 1,589,763
HMV Media Group PLC,
10.875%, 05/15/08 ............... 1,270 2,062,205
Merrill Lynch & Company, Inc.,
7.375%, 12/06/01 ............... 85 142,013
Middleweb PLC,
10.50%, 05/30/08 (i) ............ 1,170 1,953,549
North American Capital Corp.,
8.25%, 11/17/03 ............... 1,225 2,124,641
Sutton Bridge Financing, Ltd.,
8.625%, 06/30/22 ............... 1,287 2,549,030
William Hill Finance PLC,
10.625%, 04/30/08 ............... 1,371 2,280,574
-----------
TOTAL BRITISH POUND ............ 17,853,979
-----------
CANADIAN DOLLAR-1.0%
Argos Funding Trust,
5.963%, 02/27/06 ............... 1,000 676,837
Call Net Enterprises, Inc.,
8.375%, 08/15/07 ............... 1,945 1,373,746
Molson Breweries Company,
Ltd., 6.00%, 06/02/08 (i) ...... 629 431,074
Ntex, Inc. (USD),
11.50%, 06/01/06 (i) ............ 1,100 1,089,000
UniHost Corp.,
10.00%, 06/30/03 ............... 1,714 1,147,287
-----------
TOTAL CANADIAN DOLLAR ............ 4,717,944
-----------
CHINESE RENMINBI-0.1%
SC CNY NDF Structured Note,
(USD), 10.068%, 11/04/98 ...... 720 706,320
-----------
COLOMBIAN PESO-0.5%
Salomon COP Linked Clean
Notes, (USD):
0.00%, 08/20/98 ............... 1,041 980,375
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
<PAGE>
===============================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
0.00%, 09/23/98 ............... $ 550 $ 542,622
0.00%, 10/02/98 ............... 300 306,780
Salomon COP Swap (USD),
0.00%, 01/06/99 ............... 380 381,064
-----------
TOTAL COLOMBIAN PESO ............ 2,210,841
-----------
CROATIAN KUNA-0.1%
Republic of Croatia,
12.50%, 12/18/98 ............... 4,600 717,933
-----------
DANISH KRONE-5.0%
Nykredit AS:
6.00%, 10/01/26 (h) ............ 154,585 22,435,584
8.00%, 10/01/26 ............... 15,705 2,340,604
-----------
TOTAL DANISH KRONE ............... 24,776,188
-----------
ESTONIAN KROON-0.1%
Merita Bank CP,
10.00%, 12/28/98 (f) ............ 9,000 688,239
-----------
FRENCH FRANC-3.5%
Credit Foncier de France,
7.50%, 03/29/05 ............... 46,200 8,712,411
Government of France,
5.75%, 03/12/01 ............... 34,607 5,949,196
Neopost,
5.914%, 09/30/07 (f), (i) ...... 14,400 2,465,223
-----------
TOTAL FRENCH FRANC ............... 17,126,830
-----------
GERMAN MARK-5.0%
Autobahn Tank & Rast,
6.00%, 10/16/00 ............... 3,539 2,023,183
Bt & Co. Croatia Index Note,
1.00%, 03/01/99 ............... 1,500 347,251
Bt Croatia,
1.00%, 10/01/99 ............... 1,000 310,516
Derby Cycle Corp.,
9.375%, 05/15/08 ............... 1,561 852,580
Euronet Services, Inc.,
12.375%, 07/01/06 ............... 4,525 1,552,493
Exide Holdings,
9.125%, 04/15/04 (i) ............ 44,051 2,246,250
Federal Republic of Germany:
5.25%, 02/21/01 (h) ............ 6,303 3,591,080
5.75%, 08/22/00 ............... 6,219 3,567,015
Haus, Ltd.,
4.493%, 05/14/35 (f) ............ 4,241 2,351,615
Impress Metal Pack Holding,
9.875%, 05/29/07 (i) ............ 4,157 2,411,634
Ineos PLC,
8.625%, 04/30/05 ............... 3,725 2,065,485
Sirona Dental Systems,
9.125%, 07/15/08 (i) ............ 2,472 1,374,133
Texon International PLC,
10.00%, 02/01/08 ............... 3,588 1,989,520
-----------
TOTAL GERMAN MARK ............... 24,682,755
-----------
GREEK DRACHMA-0.5%
Republic of Hellenic:
11.10%, 06/30/00 ............... 110,000 365,376
11.10%, 08/14/03 (f) ............ 605,000 2,008,571
-----------
TOTAL GREEK DRACHMA ............ 2,373,947
-----------
HUNGARIAN FORINT-1.1%
Government of Hungary:
16.00%, 01/12/00 ............... 555,000 2,526,881
23.00%, 05/06/99 ............... 110,000 526,833
Republic of Hungary:
16.50%, 04/12/99 ............... 287,000 1,310,238
16.50%, 07/24/99 ............... 165,000 755,536
19.50%, 01/12/99 ............... 64,000 295,778
-----------
TOTAL HUNGARIAN FORINT ......... 5,415,266
-----------
INDIAN RUPEE-0.3%
DMG INR Linked CD, (USD):
0.00%, 09/14/98 ............... 1,050 979,545
14.00%, 02/12/00 ............... 1,600 424,434
-----------
TOTAL INDIAN RUPEE ............... 1,403,979
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
57
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
INDONESIAN RUPIAH-0.0%
Polysindo Eka:
10.00%, 03/16/00 ............ $ 194 $ 19,417
19.00%, 04/26/99 ............ 5,000,000 34,130
-----------
TOTAL INDONESIAN RUPIAH ...... 53,547
-----------
ITALIAN LIRA-0.5%
Films PLC,
6.938%, 03/31/05 ............ 4,200,000 2,363,867
-----------
JAPANESE YEN-2.5%
Asterique,
2.48%, 01/23/02 ............ 286,282 2,070,249
Export-Import Bank of Japan:
4.375%, 10/01/03 ............ 183,000 1,535,257
8.00%, 06/04/00 ............ 182 183,149
Japan Development Bank,
6.50%, 09/20/01 (h) ......... 760,000 6,475,555
Nippon Credit Bank, Ltd.:
1.80%, 07/27/00 ............ 140,000 962,089
3.05%, 05/25/01 ............ 140,000 954,900
-----------
TOTAL JAPANESE YEN ............ 12,181,199
-----------
LEBANESE POUND-0.8%
Lebanon Treasury Notes:
21.62%, 10/22/98 ............ 176,870 124,502
21.74%, 09/10/98 ............ 2,205,390 1,580,155
Paribas LBP Treasury Bills:
0.00%, 09/24/98 ............ 1,800,000 1,156,195
1.00%, 07/09/98 (f) ......... 650,000 428,276
20.04%, 12/17/98 (f) ......... 930,000 631,239
-----------
TOTAL LEBANESE POUND ......... 3,920,367
-----------
LITHUANIAN LITAS-0.1%
Hansa Lithuanian Treasury Bill:
0.00%, 07/23/98 ............ 1,140 283,196
0.00%, 10/09/98 ............ 1,350 328,052
-----------
TOTAL LITHUANIAN LITAS ...... 611,248
-----------
MEXICAN PESO-2.6%
Conproca SA (USD),
12.00%, 06/16/10 (i) ......... 900 913,500
Mexican Cetes:
0.00%, 08/27/98 ............ 3,000 322,443
0.00%, 09/24/98 ............ 2,500 264,334
0.00%, 01/14/99 ............ 47,780 4,674,687
0.00%, 04/08/99 ............ 17,328 1,612,698
0.00%, 06/03/99 ............ 3,003 268,913
Satelites Mexicanos SA de CV
(USD),
10.125%, 11/01/04 (i) ...... 602 586,197
UDI Bonos,
7.00%, 05/27/99 ............ 2,100 511,773
United Mexican States, (USD):
6.693%, 12/31/19 (f) ......... 2,200 1,977,360
6.75%, 12/31/19 (f) ......... 1,950 1,752,660
-----------
TOTAL MEXICAN PESO ............ 12,884,565
-----------
MOROCCAN DIRHAM-0.2%
Morocco Restructuring &
Consolidation Agreement,
(USD),
5.844%, 01/01/09 (f) ...... 1,250 1,065,625
-----------
PERUVIAN NOUVEAU SOL-0.3%
Peru Trade Finance Paper,
0.00%, 09/04/04 ............ 2,099 1,430,224
-----------
PHILIPPINES PESO-0.1%
Government of Philippines,
11.875%, 01/16/99 ............ 10,000 233,165
-----------
POLISH ZLOTY-0.7%
Government of Poland:
12.00%, 06/12/02 ............ 1,300 319,128
14.00%, 02/12/00 ............ 500 132,636
15.00%, 06/12/99 ............ 1,800 499,426
16.00%, 10/12/98 ............ 8,960 2,533,591
-----------
TOTAL POLISH ZLOTY ............ 3,484,781
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
RUSSIAN ROUBLE-0.3%
Lehman GKO Structured
Notes:
0.00%, 03/17/99 .................. $ 4,500 $ 463,617
0.00%, 04/14/99 .................. 11,459 1,125,256
-----------
TOTAL RUSSIAN ROUBLE ............ 1,588,873
-----------
SOUTH AFRICAN RAND-0.1%
Government of Namibia:
12.00%, 04/15/02 ............... 1,460 216,858
12.00%, 04/15/05 ............... 1,460 205,976
South African Roads,
11.50%, 09/30/05 ............... 975 135,234
-----------
TOTAL SOUTH AFRICAN RAND ......... 558,068
-----------
SWEDISH KRONA-2.4%
Kingdom of Sweden,
10.25%, 05/05/03 (h) ............ 74,600 11,622,298
-----------
THAILAND BAHT-0.0%
Finance One PLC, (USD),
2.00%, 08/31/01 .................. 1,515 121,200
Morgan Guaranty Trust,
0.00%, 07/31/99 .................. 10,569 12,523
-----------
TOTAL THAILAND BAHT ............... 133,723
-----------
TURKISH LIRA-1.7%
Credit Suisse TRL Weekly Roll,
0.00%, 10/08/98 .................. 4,050,000 2,561,481
Turkey Treasury Bills:
0.00%, 09/30/98 .................. 1,356,017,000 4,293,122
0.01%, 04/21/99 .................. 351,496,080 1,495,200
-----------
TOTAL TURKISH LIRA ............... 8,349,803
-----------
UNITED STATES DOLLAR-43.2%
21st Century
Telecommunications Group,
Inc., 1.00%, 02/15/08 (i) ...... 1,694 948,640
Abraxas Petroleum Corp.:
11.50%, 11/01/04 ............... 479 494,568
11.50%, 11/01/04 (i) ............ 700 722,750
Acme Metals, Inc.,
10.875%, 12/15/07 (i) ............ 680 571,200
American Cellular
Corp.,10.50%, 05/15/08 (i) ...... 1,250 1,246,875
American Restaurant Group,
Inc., 11.50%, 02/15/03 (i) ...... 2,000 2,000,000
Americold Corp.,
12.875%, 05/01/08 ............... 64 74,470
Amtrol, Inc.,
10.625%, 12/31/06 ............... 1,760 1,760,000
Aqua Chemical, Inc.,
11.25%, 07/01/08 (i) ............ 1,500 1,526,250
Asset Securitization Corp.:
Series 1997-D5, Class C,
1.553%, 02/14/41 (f) ............ 13,052 1,392,999
Series 1996-D2, Class ACS2,
1.581%, 02/28/26 (f) ............ 7,035 674,151
Atlantic Express Transportation
Corp.,
10.75%, 02/01/04 (i) ............ 1,754 1,868,010
Atlas Air, Inc.,
9.25%, 04/15/08 (i) ............ 2,000 1,990,000
Axiohm Transaction Solutions,
9.75%, 10/01/07 (i) ............ 500 506,250
BCF LLC, Series 1997-R1,
Class WAC,
6.104%, 03/25/37 (f) ............ 2,085 2,092,847
Bear Stearns Secured Investors
Trust, Series 1998, Class IO,
3.152%, 10/30/18 (f) ............ 12,740 1,272,054
Booth Creek Ski Holdings,
Inc., 12.50%, 03/15/07 (h) ...... 2,142 2,291,940
Calpine Corp.,
10.50%, 05/15/06 ............... 470 512,300
Cargill TRL Weekly Roll,
0.00%, 09/17/98 .................. 400 429,271
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
59
<PAGE>
===============================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Carrols Corp.,
11.50%, 08/15/03 ............... $ 517 $ 540,265
Casino America, Inc.,
12.50%, 08/01/03 ............... 646 729,980
Ce Casecnan Water & Energy,
Inc., Series B,
11.95%, 11/15/10 ............... 865 868,244
Chatwins Group, Inc.,
13.00%, 05/01/03 ............... 1,032 1,099,080
Climachem, Inc.,
10.75%, 12/01/07 (h), (i) ...... 1,901 1,972,287
Communications Instruments,
Inc., 10.00%, 09/15/04 ......... 1,500 1,541,250
Community Distributors, Inc.,
10.25%, 10/15/04 (i) ............ 2,150 2,171,500
Courtyard by Marriott II, Ltd.,
Series B, 10.75%, 02/01/08 ...... 1,310 1,437,725
Credit Lyonnais Paris,
6.75%, 09/19/49 (f) ............ 2,130 2,078,454
CSC Holdings, Inc.,
10.50%, 05/15/16 ............... 1,883 2,193,695
CSK Auto, Inc.,
11.00%, 11/01/06 ............... 325 356,688
Dictaphone Corp.,
11.75%, 08/01/05 ............... 1,629 1,637,145
Dobson Communications
Corp.,11.75%, 04/15/07 (h) ...... 2,847 3,088,995
Doe Run Resources Corp.,
11.25%, 03/15/05 (i) ............ 702 709,020
Dynacare, Inc.,
10.75%, 01/15/06 (h) ............ 2,522 2,673,320
Echostar DBS Corp.,
12.50%, 07/01/02 (h) ............ 1,960 2,180,500
Empire Gas Corp.,
7.00%, 07/15/04 (f) ............ 2,375 2,196,875
Envirosource, Inc.:
9.75%, 06/15/03 .................. 449 453,490
9.75%, 06/15/03 (i) ............ 151 152,133
Federal Farm Credit Banks,
5.55%, 07/01/99 .................. 3,300 3,297,921
Federal Home Loan Banks,
5.69%, 10/02/98 .................. 30 30,009
Federal Home Loan Mortgage
Corp.:
Series 1974, Class VI,
0.25%, 03/15/09 ............... 21,386 216,004
Series T4, Class AWAC,
6.097%, 09/25/36 (f) ............ 1,673 1,680,867
Federal National Mortgage
Association:
Series 1992-203, Class SA,
3.375%, 11/25/07 (f) ......... 1,179 95,205
5.45%, 04/15/99 ............... 900 898,731
5.54%, 04/02/99 ............... 1,230 1,229,041
5.68%, 10/23/98 ............... 1,250 1,260,156
7.606%, 08/01/27 (f) ............ 1,039 1,068,400
7.832%, 05/01/25 (f) ............ 1,180 1,216,565
Series 38, Class 2,
10.00%, 08/01/18 ............... 1,252 327,379
Series 1992-97, Class SA,
10.00%, 04/25/21 (f) ......... 700 35,721
Series G-13, Class L,
10.095%, 05/25/21 (f) ......... 866 235,440
First USA Trust, Series 1998-1
6.50%, 01/18/06 (f), (i) ......... 1,600 1,609,728
Forman Petroleum Corp.,
13.50%, 06/01/04 ............... 1,144 1,041,040
Fundy Cable, Ltd.,
11.00%, 11/15/05 ............... 1,926 2,137,860
Furris Bishop, Inc.,
12.00%, 12/31/01 ............... 1,604 1,572,162
G3 Mortgage Reinsurance Ltd.,
8.50%, 05/25/08 (f), (i) ......... 1,500 1,500,000
Globalstar LP,
11.50%, 06/01/05 (i) ............ 400 389,500
Government National
Mortgage Association:
6.00%, 04/20/27 (f) ............ 1,409 1,444,266
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -----------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
6.00%, 11/20/27 (f) ............ $ 3 $ 3,389
6.50%, 11/20/26 (f) ............ 563 576,565
7.00%, 08/20/26 (f) ............ 1,398 1,430,415
7.00%, 09/20/26 (f) ............ 724 740,994
7.00%, 10/20/26 ............... 1,625 1,661,625
GST Equipment Funding, Inc.,
13.25%, 05/01/07 ............... 1,500 1,713,750
Headlands Mortgage
Securities, Inc.:
Series 1997-1, Class X1,
0.673%, 03/25/27 (f) ............ 101,756 1,703,398
Series 1997-4, Class X,
1.126%, 11/25/27 (f) ............ 39,242 1,205,142
HF RE Northeast Wino,
1.00%, 12/12/99 (f) ............ 500 500,000
High Voltage Engineering
Corp., 10.50%, 08/15/04 ......... 954 987,390
Home Interiors & Gifts, Inc.,
10.125%, 06/01/08 (i) ............ 1,000 1,021,250
ICF Kaiser International, Inc.,
13.00%, 12/31/03 (f), (h) ...... 1,980 2,138,400
Imasac SA,
11.00%, 05/02/05 (i) ............ 400 368,000
IMC Series Trust,
Series 1997-A,
7.41%, 11/26/28 ............... 2,022 2,018,912
ING Bank NV,
0.00%, 02/12/99 (i) ............ 2,200 2,266,000
Innova S De R.L.,
12.875%, 04/01/07 ............... 1,050 1,065,750
Interbank AKK Trust,
Series 1995-1, Class 1,
9.00%, 02/28/01 (i) ............ 1,000 965,000
Intertek Finance PLC,
10.25%, 11/01/06 ............... 484 513,040
IPC Information Systems, Inc.,
1.00%, 05/01/08 (f) ............ 2,500 1,762,500
Iridium LLC/CAP,
10.875%, 07/15/05 ............... 600 595,500
J.H. Heafner, Inc.,
10.00%, 05/15/08 (i) ............ 1,700 1,742,500
Jafra Cosmetics International,
Inc., 11.75%, 05/01/08 (i) ...... 1,530 1,530,000
Jitney-Jungle Stores of America,
Inc., 10.375%, 09/15/07 ......... 1,750 1,868,125
LodgeNet Entertainment Corp.,
10.25%, 12/15/06 ............... 1,835 1,890,050
Long Distance International,
Inc., 12.25%, 04/15/08 (i) ...... 1,497 1,497,000
Mastellone Hermanos SA,
11.75%, 04/01/08 (i) ............ 936 932,490
Maxxam Group Holdings, Inc.,
12.00%, 08/01/03 ............... 1,600 1,784,000
Mediq, Inc.:
11.00%, 06/01/08 (i) ............ 2,200 2,260,500
13.00%, 06/01/09 (i) ............ 850 463,250
Merrill Lynch Mortgage
Investments, Inc.,
Series 1996-C1, Class IO,
0.569%, 04/25/28 (f), (i) ...... 18,606 517,501
Monterrey Power SA de CV,
9.625%, 11/15/09 (i) ............ 900 846,000
Morgan Stanley Capital One,
Inc.:
Series 1996-WF1, Class X,
1.417%, 11/15/28 (f), (i) ...... 6,415 427,050
Series 1997-C1, Class IO,
2.354%, 02/15/20 (f) ............ 2,804 69,232
Mrs. Fields Original,
10.125%, 12/01/04 (h), (i) ...... 2,232 2,165,040
Neff Corp.,
10.25%, 06/01/08 (i) ............ 1,400 1,407,000
Nextlink Communications,
Inc., 12.50%, 04/15/06 ......... 750 843,750
Orbcomm Global LP,
14.00%, 08/15/04 ............... 1,503 1,702,147
Pacific Reinsurance,
9.388%, 05/31/03 ............... 1,340 1,346,700
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
61
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Paribas Senior Tranche
Structured Notes,
14.00%, 12/25/98 ............... $ 100 $ 100,500
Paxson Communications
Corp.,
11.625%, 10/01/02 (h) ......... 1,600 1,716,000
Pen Holdings Inc.,
9.875%, 06/15/08 (i) ............ 750 761,250
Penn National Gaming, Inc.,
10.625%, 12/15/04 (i) ............ 1,750 1,837,500
Perkins Family Restaurant,
10.125%, 12/15/07 (i) ............ 1,322 1,394,710
Petro Stopping Centers,
10.50%, 02/01/07 ............... 2,170 2,300,200
Pierce Leahy Corp.,
11.125%, 07/15/06 ............... 916 1,025,920
Poindexter (J.B.) & Co.,
12.50%, 05/15/04 ............... 1,472 1,486,720
Production Resource Group,
11.50%, 01/15/08 (i) ............ 1,467 1,430,325
Prudential Home Mortgage
Security:
Series 1993-5, Class A9,
0.457%, 03/25/00 (f) ............ 79,381 300,858
Series 1993-24, Class A7,
0.462%, 07/25/00 ............... 72,603 401,499
Series 1993-41, Class A5,
0.839%, 10/25/00 (f) ......... 25,252 253,026
PSINet, Inc.:
10.00%, 02/15/05 (i) ............ 460 469,200
10.00%, 02/15/05 ............... 410 419,225
Quest Diagnostics, Inc.,
10.75%, 12/15/06 ............... 1,248 1,394,640
Rao Gazprom,
12.75%, 03/13/00 ............... 702 608,423
Reliance Industries, Ltd.,
9.375%, 06/24/26 (i) ............ 500 467,150
Republic of Croatia,
6.625%, 07/31/10 ............... 1,750 1,485,400
Republic of Korea,
8.875%, 04/15/08 ............... 464 419,665
Republic of Panama,
1.00%, 07/17/14 (f) ............ 1,200 892,500
Residential Mortgage Funding,
2.011%, 01/03/20 ............... 12,861 1,135,421
Residential Reinsurance,
9.848%, 06/01/99 ............... 1,489 1,490,489
Rifkin Acquisitions Partners LP,
11.125%, 01/15/06 ............... 1,380 1,518,000
RMOF:
2.16%, 01/31/22 .................. 19,587 1,854,687
2.185%, 07/15/22 ............... 30,000 2,920,374
Sabreliner Corp.,
11.00%, 06/15/08 (i) ............ 2,300 2,300,000
Salomon Corporation Linked
Clean Note,
0.00%, 09/30/98 ............... 850 766,615
SBA Communications Corp.,
1.00%, 03/01/08 (i) ............ 3,000 1,875,000
Sino Properties,
6.756%, 03/27/03 (h) ............ 2,200 1,914,000
SK Telecom Company, Ltd.,
7.75%, 04/29/04 .................. 2,000 1,678,814
Spanish Broadcasting Systems,
Inc., 11.00%, 03/15/04 ......... 2,006 2,166,480
Standard Chartered Bank,
6.15%, 12/29/49 (f) ............ 1,520 967,328
Structured Asset Securitization
Corp.:
Series 1996-CFL, Class X1,
1.35%, 02/25/28 (f) ............ 6,634 350,392
Series 1996-CFL, Class X2,
1.217%, 02/25/28 (f) ............ 2,950 74,678
Subic Power Corp.,
9.50%, 12/28/08 .................. 872 820,070
Swiss Re Earthquake Fund,
10.493%, 07/16/00 ............... 1,000 1,001,950
T/SF Communications Corp.,
10.375%, 11/01/07 (h), (i) ...... 2,360 2,395,400
Talton Holdings, Inc.,
11.00%, 06/30/07 ............... 2,301 2,473,575
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
<PAGE>
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THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD
PORTFOLIO* (CONTINUED)
Total Access Communications,
2.00%, 05/31/06 .................. $ 150 $ 123,000
Transamerican Energy Corp.:
0.00%, 06/15/02 .................. 740 606,800
11.50%, 06/15/02 ............... 841 782,130
Transamerican Refining Corp.,
16.00%, 06/30/03 ............... 750 772,500
Trinity Resources, Ltd.,
9.875%, 12/31/98 (i) ............ 1,000 994,000
Trump Atlantic City Associates,
11.25%, 05/01/06 ............... 900 875,250
TTB Finance Cayman, Ltd.,
6.634%, 03/18/07 (f) ............ 1,926 1,839,330
UCFC Loan Trust,
8.00%, 09/15/00 .................. 2,304 422,640
Unisys Corp.,
12.00%, 04/15/03 ............... 1,185 1,344,975
United States Department of
Veteran Affairs REMIC,
Series 1997-1, Class IO,
0.37%, 02/15/27 (f) ............ 36,941 513,722
United States Treasury Notes,
7.75%, 12/31/99 (h) ............ 27,697 28,571,117
US Can Corp.,
10.125%, 10/15/06 ............... 1,861 1,963,355
W.R. Carpenter North America,
Inc.,
10.625%, 06/15/07 (h) ......... 2,417 2,543,892
Waxman Industries, Inc.,
12.75%, 06/01/04 (f) ............ 270 256,500
Winstar Communications, Inc.,
1.00%, 10/15/05 (f) ............ 2,102 1,749,915
Winstar Equipment
Corp.,12.50%, 03/15/04 ......... 800 906,000
Wright Medical Technology,
Inc., 11.75%, 07/01/00 (h) ...... 2,343 2,319,570
Young America Corp.,
11.625%, 02/15/06 (i) ............ 980 960,400
------------
TOTAL UNITED STATES DOLLAR ...... 212,683,651
------------
VENEZUELAN BOLIVAR-0.7%
Chase Veb Tem, Structure:
40.30%, 08/14/98 ............... 325,000 580,981
40.44%, 08/10/98 ............... 100,000 179,053
41.37%, 07/10/98 ............... 245,000 443,201
Republic of Venezuela, (USD):
6.75%, 03/31/07 (f), (g) ......... 1,285 1,063,929
6.75%, 12/18/07 .................. 1,356 1,129,407
------------
TOTAL VENEZUELAN BOLIVAR ......... 3,396,571
------------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost
$413,964,864) .................. 404,432,056
------------
SHARES
--------
PREFERRED STOCKS-3.2%
Adelphia Communications
Corp. ........................... 18,220 2,222,840
Dobson Communications
Corp. (i) ........................ 1,028 1,079,400
Echostar Communications
Corp. ........................... 2,124 2,336,400
Forman Petroleum Corp. ............ 468 23,400
Forman Petroleum Corp.
06/01/04 warrant ............... 184 1,840
Forman Petroleum Corp. (i) ...... 4,038 201,900
Georgetown Re, Ltd. ............... 2 1,000,000
High Voltage Engineering
Corp. ........................... 1,374 1,428,960
ICG Holdings, Inc. ............... 735 867,300
IXC Communications, Inc. ......... 705 817,800
Nextel Communications, Inc. ....... 9 10,080
Nextel Communications,
Inc. (i) ........................ 1,844 1,899,320
Nextel Communications, Inc.,
Class A (a) ..................... 3,598 89,500
Paxson Communications
Corp. (i) ........................ 100 1,000,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
63
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
Paxson Communications
Corp. .............................. 51 $ 53,805
Pegasus Communications
Corp., Series A .................. 560 630,000
Pegasus Communications
Corp. .............................. 1,380 1,597,350
RSL Communications, Ltd. (e) ........ 1,160 136,880
Spanish Broadcasting Systems,
Inc. (e), (i) ..................... 800 164,000
XCL, Ltd. (i) ..................... 2,053 221,725
-----------
TOTAL PREFERRED STOCKS
(Identified cost $14,957,962) ....... 15,782,500
-----------
PRINCIPAL
AMOUNT
(000)
----------
COMMERCIAL PAPER-8.2%
American Express Credit Corp.:
5.48%, 09/08/98 .................. $ 365 361,166
5.49%, 07/08/98 .................. 850 849,092
5.49%, 09/24/98 .................. 860 848,852
5.49%, 09/29/98 .................. 606 597,683
5.49%, 09/30/98 .................. 1,420 1,400,294
5.50%, 07/10/98 .................. 230 229,684
5.55%, 07/02/98 .................. 625 624,904
Ford Motor Credit Corp.:
5.35%, 07/02/98 .................. 50 49,992
5.46%, 07/07/98 .................. 740 739,327
5.47%, 07/02/98 .................. 75 74,988
5.48%, 08/27/98 .................. 150 148,699
5.50%, 08/20/98 .................. 350 347,326
General Electric Capital Corp.:
5.30%, 09/14/98 .................. 920 909,842
5.41%, 09/17/98 .................. 950 923,732
5.43%, 10/15/98 .................. 1,300 1,279,215
5.43%, 10/21/98 ................... 900 884,796
5.46%, 09/30/98 ................... 1,550 1,528,607
5.46%, 11/09/98 ................... 620 607,682
5.48%, 11/23/98 ................... 1,975 1,931,407
5.50%, 08/06/98 ................... 1,610 1,601,145
5.50%, 08/31/98 ................... 1,150 1,139,283
5.50%, 09/09/98 ................... 3,150 3,116,312
5.51%, 07/27/98 ................... 1,350 1,344,628
5.51%, 08/06/98 ................... 500 497,245
5.51%, 08/24/98 ................... 1,000 991,735
5.51%, 10/30/98 ................... 1,500 1,472,220
5.52%, 07/27/98 ................... 516 513,943
5.52%, 08/31/98 ................... 450 445,791
5.53%, 08/31/98 ................... 450 445,783
5.54%, 07/22/98 ................... 460 458,514
General Motors Acceptance Corp.:
5.43%, 12/29/98 ................... 670 651,708
5.48%, 08/07/98 ................... 620 616,508
5.48%, 09/15/98 ................... 964 952,848
5.52%, 09/02/98 ................... 479 474,373
5.54%, 07/22/98 ................... 930 926,995
5.55%, 07/08/98 ................... 615 614,336
5.69%, 07/07/98 ................... 2,420 2,417,705
Prudential Funding Corp.:
5.43%, 09/22/98 ................... 1,150 1,135,603
5.43%, 10/28/98 ................... 800 785,641
5.44%, 11/16/98 ................... 420 411,241
5.45%, 07/09/98 ................... 90 89,891
5.45%, 11/23/98 ................... 410 401,000
5.47%, 07/15/98 ................... 1,000 997,873
5.48%, 07/30/98 ................... 400 398,234
5.49%, 09/14/98 ................... 775 766,136
5.50%, 07/30/98 ................... 400 398,228
5.50%, 08/14/98 ................... 1,018 1,011,157
5.50%, 09/02/98 ................... 558 552,629
5.51%, 07/06/98 ................... 555 554,575
-----------
TOTAL COMMERCIAL PAPER
(Identified cost $40,520,568) ....... 40,520,568
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO* (CONTINUED)
DISCOUNT NOTES-0.7%
Federal National Mortgage
Association:
0.00%, 10/09/98 ............... $ 305 $ 300,374
0.00%, 10/16/98 ............... 80 78,714
5.19%, 03/11/99 ............... 90 86,717
5.30%, 04/23/99 ............... 730 698,188
5.35%, 09/14/98 ............... 673 665,499
5.41%, 10/09/98 ............... 90 88,647
5.41%, 10/16/98 ............... 670 659,227
5.42%, 10/09/98 ............... 683 672,717
5.46%, 10/09/98 ............... 49 46,384
Federal Farm Credit Bank,
5.69%, 09/29/98 ............... 40 39,458
----------
TOTAL DISCOUNT NOTES
(Identified cost $3,335,925) ...... 3,335,925
----------
U.S. GOVERNMENT OBLIGATIONS-0.2%
United States Treasury Bills,
5.16%, 05/27/99 (Identified
cost $1,152,767) ............... 1,210 1,152,767
----------
REPURCHASE AGREEMENT-0.8%
State Street Bank and Trust
Company, 5.65%, 07/01/98
(Dated 06/30/98, collateral-
ized by $3,130,000 United
States Treasury Note, 9.375%,
02/15/06, with a value of
$3,966,176) (Identified cost
$3,886,000) (h) ............ 3,886 3,886,000
---------
TOTAL INVESTMENTS
(Identified cost
$477,818,086) (d) ............ 95.3% $ 469,109,816
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ...... 4.7 23,167,393
------ ------------
NET ASSETS .................. 100.0% $ 492,277,209
====== =============
</TABLE>
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by type are as follows:
Asset-Backed Securities 0.1%, Collateralized Mortgage Obligations 3.5%,
Commercial Paper 8.2%, Corporate Bonds 49.1%, Discount Notes 0.7%, Foreign
Government Obligations 20.5%, Preferred Stocks 3.1%, REMICs 0.2%, Step-up
Bonds 1.8%, Structured Notes 3.9%, United States Government Obligations 3.3%,
Warrants 0.1%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
65
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Forward Foreign Currency Contracts open at June 30, 1998:
<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>
ARS 12/30/98 987,207 $ 968,800 $ 967,471 $ (1,329)
ARS 7/1/99 929,160 890,000 888,307 (1,693)
AUD 9/14/98 7,326,961 4,300,926 4,552,423 251,497
BRL 9/22/98 1,383,680 1,150,000 1,159,444 9,444
BRL 9/30/98 5,012,747 4,168,957 4,187,409 18,452
CAD 9/14/98 18,682,307 12,822,754 12,714,138 (108,616)
CHF 9/14/98 82 56 54 (2)
CLP 8/3/98 163,278,720 343,600 343,600 0
CLP 8/26/98 129,221,028 300,000 268,453 (31,547)
CLP 9/8/98 168,984,270 365,569 349,537 (16,032)
CLP 9/14/98 431,700,800 920,000 891,172 (28,828)
CLP 10/22/98 415,824,353 958,757 850,892 (107,865)
CNY 9/9/98 475,701 55,327 56,647 1,320
CNY 10/28/98 17,264,628 1,964,845 2,027,888 63,043
CNY 10/30/98 12,268,000 1,337,059 1,440,109 103,050
COP 7/15/98 1,426,500,000 1,000,000 1,026,783 26,783
COP 8/27/98 226,601,230 153,800 157,100 3,300
COP 10/15/98 1,942,850,000 1,300,000 1,302,169 2,169
COP 11/9/98 943,020,000 620,000 620,021 21
CZK 8/31/98 7,828,150 215,000 236,190 21,190
CZK 6/28/99 118,257,550 3,295,000 3,333,371 38,371
DEM 9/14/98 36,398,440 20,337,534 20,273,188 (64,346)
DKK 9/14/98 14,473,684 2,139,294 2,113,685 (25,609)
ESP 9/14/98 1,819,840 12,100 11,899 (201)
GBP 9/14/98 23,223 37,900 38,613 713
GRD 12/29/98 209,700,000 670,654 668,957 (1,697)
GRD 3/18/99 30,000,000 90,498 94,761 4,263
GRD 4/14/99 300,000,000 903,614 944,454 40,840
HKD 7/2/98 18,415,080 2,377,152 2,376,327 (825)
HKD 7/9/98 18,415,080 2,375,618 2,374,840 (778)
HKD 7/16/98 9,690,250 1,243,535 1,248,889 5,354
HKD 9/9/98 18,415,080 2,360,000 2,361,286 1,286
IDR 8/5/98 1,500,000,000 424,328 98,272 (326,056)
IDR 8/6/98 1,000,000,000 281,690 65,439 (216,251)
IDR 9/22/98 2,000,000,000 600,601 124,005 (476,596)
IDR 10/2/98 2,000,000,000 546,448 122,622 (423,826)
IDR 10/14/98 4,812,500,000 1,250,000 291,273 (958,727)
ILS 6/11/99 4,622,200 1,210,000 1,202,696 (7,304)
ITL 9/14/98 8,152,662,470 4,681,735 4,594,238 (87,497)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
<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>
JPY 12/11/98 4,565,651,777 $34,707,467 $33,822,681 $ (884,786)
KES 9/2/98 29,283,552 478,800 473,503 (5,297)
KES 9/29/98 34,832,816 562,000 554,753 (7,247)
KRW 7/8/98 1,381,500,000 900,000 999,031 99,031
KRW 8/7/98 1,324,800,000 920,000 938,908 18,908
KRW 10/30/98 2,229,750,000 1,500,000 1,501,375 1,375
KRW 11/23/98 1,538,550,000 975,000 1,026,571 51,571
KRW 4/20/99 3,466,200,000 2,180,000 2,198,403 18,403
KRW 4/27/99 1,160,700,000 730,000 734,541 4,541
MXN 7/2/98 15,728,763 1,825,000 1,750,012 (74,988)
MXN 9/14/98 7,159,450 775,000 766,824 (8,176)
MXN 10/21/98 8,180,190 900,000 859,264 (40,736)
MXN 11/23/98 3,804,800 410,000 392,977 (17,023)
NOK 9/14/98 16,040,000 2,087,454 2,096,310 8,856
NZD 9/14/98 10,333,129 5,200,354 5,350,837 150,483
PEN 7/13/98 56,720 19,741 19,237 (504)
PEN 7/30/98 1,150,604 400,071 388,324 (11,747)
PEN 8/7/98 1,782,144 617,621 600,352 (17,269)
PEN 8/20/98 1,013,296 350,500 340,317 (10,183)
PEN 9/24/98 2,573,000 859,070 856,838 (2,232)
PHP 7/7/98 35,989,000 935,012 857,902 (77,110)
PHP 7/9/98 64,640,000 1,600,000 1,539,469 (60,531)
PHP 8/5/98 32,548,000 790,000 765,326 (24,674)
PHP 8/6/98 20,025,000 491,411 470,718 (20,693)
PHP 9/17/98 51,359,500 1,233,000 1,191,285 (41,715)
PLN 11/16/98 1,530,000 418,490 414,679 (3,811)
PLN 11/23/98 3,734,609 1,000,000 1,009,618 9,618
ROL 7/6/98 4,875,412,404 556,702 556,921 219
ROL 7/22/98 4,044,020,925 462,213 450,203 (12,010)
ROL 8/31/98 7,733,380,000 836,000 816,473 (19,527)
ROL 9/2/98 5,073,815,880 558,000 558,000 0
RUB 8/14/98 6,601,730 1,018,000 1,002,130 (15,870)
RUB 9/15/98 6,481,936 964,000 939,820 (24,180)
SVC 7/9/98 800,000 91,058 91,335 277
THB 7/8/98 60,285,500 1,468,932 1,421,395 (47,537)
THB 8/7/98 18,272,000 400,000 422,797 22,797
THB 8/24/98 40,546,250 995,000 928,191 (66,809)
THB 8/31/98 32,257,000 775,409 735,202 (40,207)
THB 9/10/98 36,640,000 786,266 829,272 43,006
TRL 7/7/98 649,327,140,000 2,420,000 2,412,689 (7,311)
VEB 7/10/98 127,017,500 230,000 224,760 (5,240)
VEB 7/22/98 519,172,500 930,000 894,258 (35,742)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
67
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
<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>
VEB 7/27/98 1,051,943,000 $ 1,854,916 $ 1,791,327 $ (63,589)
VEB 8/11/98 53,321,500 94,000 88,308 (5,692)
ZAR 10/5/98 27,765,186 5,479,835 4,499,654 (980,181)
ZAR 10/6/98 1,592,640 314,202 258,038 (56,164)
ZAR 10/14/98 11,425,000 2,255,868 1,847,227 (408,641)
ZAR 10/16/98 3,843,700 760,000 621,138 (138,862)
------------ ------------ ------------
$164,789,543 $159,687,815 $ (5,101,728)
------------ ------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD 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>
AUD 9/14/98 15,256,550 $ 9,179,866 $ 9,479,274 $ (299,408)
BRL 9/30/98 1,440,000 1,200,000 1,202,907 (2,907)
CAD 9/14/98 1,694,735 1,158,239 1,153,342 4,897
CNY 9/9/98 6,905,827 825,000 822,347 2,653
DEM 9/14/98 71,408,520 40,362,083 39,773,087 588,996
DKK 9/14/98 184,404,916 27,357,091 26,929,837 427,254
ESP 9/14/98 1,833,199 12,203 11,986 217
FRF 9/14/98 103,555,305 17,483,364 17,205,279 278,085
GBP 9/14/98 20,222,843 33,221,407 33,625,048 (403,641)
HKD 7/2/98 18,415,080 2,376,293 2,376,327 (34)
HKD 9/9/98 18,415,080 2,341,694 2,361,286 (19,592)
IDR 7/13/98 2,500,000,000 166,003 168,122 (2,119)
IDR 8/5/98 1,500,000,000 153,061 98,272 54,789
IDR 8/6/98 1,000,000,000 106,610 65,439 41,171
IDR 9/22/98 2,000,000,000 208,333 124,005 84,328
IDR 10/2/98 2,000,000,000 201,005 122,622 78,383
IDR 10/14/98 4,812,500,000 474,138 291,273 182,865
INR 9/14/98 41,083,500 985,000 943,147 41,853
ITL 9/14/98 12,269,478,150 7,043,328 6,914,171 129,157
JPY 12/11/98 9,227,075,626 72,536,487 68,354,849 4,181,638
KRW 7/8/98 1,381,500,000 954,569 999,031 (44,462)
KRW 8/7/98 888,000,000 600,000 629,341 (29,341)
KRW 10/30/98 300,650,000 202,186 202,439 (253)
KRW 11/23/98 974,780,000 610,000 650,405 (40,405)
KRW 4/20/99 1,682,500,000 958,689 1,067,109 (108,420)
MXN 7/2/98 13,305,412 1,513,505 1,480,386 33,119
NOK 9/14/98 17,981,996 2,420,220 2,350,115 70,105
NZD 9/14/98 10,052,719 5,102,928 5,205,631 (102,703)
PHP 7/7/98 62,487,000 1,590,000 1,489,559 100,441
PLN 10/13/98 2,904,198 790,000 797,031 (7,031)
SEK 9/14/98 97,934,856 12,531,991 12,316,088 215,903
XEU 9/14/98 4,091,875 4,431,938 4,506,793 (74,855)
ZAR 10/5/98 27,765,186 5,298,548 4,499,654 798,894
ZAR 10/6/98 9,871,949 1,809,033 1,599,442 209,591
ZAR 10/16/98 2,800,000 531,309 452,478 78,831
------------ ------------ ----------
$256,736,121 $250,268,122 $6,467,999
------------ ------------ ----------
Net unrealized appreciation on Forward Foreign Currency Contracts $1,366,271
==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
69
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 1998 (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 $ 391,739,698 $ 92,825,669 $ 9,081,903 $ 83,743,766
Mid Cap 61,811,816 5,179,812 4,300,209 879,603
Small Cap 1,500,298,749 298,227,854 102,908,597 195,319,257
Bantam Value 83,714,675 8,938,500 9,369,210 (430,710)
Global Equity 13,760,658 3,483,830 295,571 3,188,259
International Equity 2,224,915,197 747,143,034 132,193,337 614,949,697
International Small Cap 174,082,305 43,601,042 18,234,376 25,366,666
Emerging Markets 351,337,632 15,668,066 73,447,944 (57,779,878)
Bond 120,637,795 1,377,164 890,400 486,764
High Yield 34,662,568 218,462 330,215 (111,753)
International Fixed-Income 111,171,702 2,546,062 4,270,002 (1,723,940)
Strategic Yield 476,710,248 8,041,375 15,641,807 (7,600,432)
</TABLE>
(e) Rights.
(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, 1998, these securities amounted
to $4,985,485, $13,436,084, $7,966,982, $14,991,572, $5,260,501 and
$71,214,563 or 2.4%, 4.6%, 7.5%, 46.3%, 4.8% and 14.5% of net assets for the
International Small Cap Portfolio, Emerging Markets Portfolio, Bond
Portfolio, High Yield Portfolio, International Fixed-Income Portfolio and
Strategic Yield Portfolio, respectively.
(j) At June 30, 1998, Small Cap Portfolio held the following securities which
were private placements and therefore restricted as to resale, and
represented 0.03% (at value) of the net assets of the Portfolio:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ------------------------------------------------------------- ------------- ------------
<S> <C> <C>
Interactive Light Holdings, Inc. 8.00%, 01/25/99 02/04/94 $1,000,000
Verbex Voice Systems, Inc. Series F Preferred (conv.) 07/12/93 1,500,000
Verbex Voice Systems, Inc. 06/07/94 76,661
Verbex Voice Systems, Inc. 10.00%, 12/31/98 07/06/94 103,840
----------
$2,680,501
==========
</TABLE>
Interactive Light Holdings, Inc. and Verbex Voice Systems, Inc. are valued as
determined, in good faith and in accordance with, the procedures adopted by
the Board of Directors. Small Cap Portfolio will bear any cost, including
those involved in registration under the Securities Act of 1933, in connection
with the disposition of such securities.
(k) Bankrupt security valued at zero.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
Abbreviations:
TBA-Settlement is on a delayed delivery or when issued basis with final
maturity to be announced in the future.
REMIC-Real Estate Mortgage Investment Conduit
CURRENCY TERMS
--------------
ARS- Argentine Peso ILS- Israeli Shekel
ATS-Austrian Schilling INR-Indian Rupee
AUD- Australian Dollar ITL- Italian Lira
BEL- Belgian Franc JPY- Japanese Yen
BRL-Brazilian Real KES-Kenyan Shilling
CAD- Canadian Dollar KRW-South Korean Won
CHF- Swiss Franc MXN- Mexican Peso
CLP- Chilean Peso NLG-Netherlands Guilder
CNY-Chinese Yuan Renminbi NOK- Norwegian Krone
COP- Colombian Peso NZD-New Zealand Dollar
CZK- Chechoslovakian Koruna PEN-Peruvian Nouveau Sol
DEM-Deutsche Mark PHP-Philippine Peso
DKK- Danish Krone PLN- Polish Zloty
ESP-Spanish Peseta ROL-Romanian Leu
FIM-Finnish Markka RUB-New Russian Rouble
FRF- French Franc SEK- Swedish Krona
GBP- Pound Sterling SVC-El Salvador Colon
GRD- Greek Drachma THB-Thailand Baht
GTQ- Guatemalan Quetzal TRL-Turkish Lira
HKD-Hong Kong Dollar USD-United States Dollar
HRK- Croatian Kuna VEB-Venezuelan Bolivar
IDR-Indonesian Rupiah XEU- European Currency Unit (ECU)
IEP- Irish Pound ZAR- South African Rand
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
71
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD
LAZARD LAZARD LAZARD BANTAM
EQUITY MID CAP SMALL CAP VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $362,028,673,
$56,283,816, $1,440,693,749, $79,448,675, $13,029,195,
$2,061,647,213, $169,013,305, $324,101,224, $106,106,681,
$29,714,568, $109,814,227 and $473,932,086, respectively) ...... $445,875,464 $57,163,419 $1,636,013,006 $79,017,965
Repurchase Agreements, at value ................................. 29,608,000 5,528,000 59,605,000 4,266,000
Cash ............................................................ 425 559 877 288
Foreign currency (cost $0, $0, $0, $0, $55,375, $0,
$5,197,877, $5,093,432, $0, $0, $614,009 and $977,745,
respectively) ................................................ - - - -
Receivables for:
Net foreign currency contracts ................................. - - - -
Investments sold ............................................. 624,953 728,638 2,038,181 -
Dividends and interest ....................................... 752,853 39,164 1,118,876 10,443
Capital stock sold ............................................. 2,380,753 109,780 4,540,243 30,591
Due from Manager ................................................ - - - -
Deferred organizational expenses .............................. - 34,866 - 596
------------ ------------ -------------- -----------
Total assets ................................................... 479,242,448 63,604,426 1,703,316,183 83,325,883
------------ ------------ -------------- -----------
LIABILITIES
Payables for:
Investments purchased .......................................... 6,993,114 2,734,156 1,794,243 1,062,908
Capital stock repurchased .................................... 1,081,321 48,836 40,328,081 53,214
Dividends payable ............................................. - - - -
Net foreign currency contracts ................................. - - - -
Investment management fees payable .............................. 491,925 141,566 1,016,753 299,704
Due to Custodian (cost $0, $0, $0, $0, $0, $1,689,729, $0,
$0, $0, $0, $0 and $133,381, respectively) ..................... - - - -
Due to Manager ................................................ - 64,348 - 5,951
Accrued directors' fees payable ................................. 2,784 2,865 2,784 2,784
Accrued expenses and other payables ........................... 134,636 67,999 263,615 60,379
------------ ------------ -------------- -----------
Total liabilities ............................................. 8,703,780 3,059,770 43,405,476 1,484,940
------------ ------------ -------------- -----------
Net assets ...................................................... 470,538,668 60,544,656 1,659,910,707 81,840,943
============ ============ ============== ===========
NET ASSETS
Paid in capital ................................................ 352,793,879 56,074,925 1,346,270,262 73,870,458
Undistributed (distributions in excess of) investment
income-net ................................................... 1,184,789 97,195 3,674,348 (221,072)
Unrealized appreciation (depreciation) on:
Investments-net ................................................ 83,846,791 879,603 195,319,257 (430,710)
Foreign currency-net .......................................... - - - -
Accumulated realized gain (loss)-net ........................... 32,713,209 3,492,933 114,646,840 8,622,267
------------ ------------ -------------- -----------
Net assets ...................................................... $470,538,668 $60,544,656 $1,659,910,707 $81,840,943
============ ============ ============== ===========
INSTITUTIONAL SHARES
Net assets ...................................................... $380,040,460 $54,837,241 $1,540,000,635 $72,446,978
Shares of capital stock outstanding* ........................... 16,884,442 5,030,367 76,008,459 5,059,111
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ...... $ 22.51 $10.90 $ 20.26 $ 14.32
OPEN SHARES
Net assets ...................................................... $ 90,498,208 $5,707,415 $ 119,910,072 $ 9,393,965
Shares of capital stock outstanding* ........................... 4,022,156 524,291 5,923,660 659,636
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ...... $ 22.50 $10.89 $ 20.24 $ 14.24
</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.
72
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD
GLOBAL INTERNATIONAL INTERNATIONAL EMERGING
EQUITY EQUITY SMALL CAP MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 16,160,917 $ 2,698,080,894 $194,379,971 $ 266,345,754
788,000 141,784,000 5,069,000 27,212,000
121 243 597 840
55,499 - 5,151,097 5,092,943
32 - - 86
9,691 19,404,095 6,052,108 503,928
50,970 11,266,142 395,448 1,532,615
468 184,037,906 27,171 2,801,856
43,070 - - -
452 - 1,464 2,218
------------ --------------- ------------- --------------
17,109,220 3,054,573,280 211,076,856 303,492,240
------------ --------------- ------------- --------------
330,588 187,505,600 5,789,263 9,204,258
1,000 8,714,189 328,207 1,826,974
- - - -
- 67,928 5,959 -
- 1,703,449 121,449 272,774
- 1,705,460 - -
- - - 20,680
2,784 2,784 2,784 2,784
56,841 1,006,003 141,789 218,018
------------ --------------- ------------- --------------
391,213 200,705,413 6,389,451 11,545,488
------------ --------------- ------------- --------------
16,718,007 2,853,867,867 204,687,405 291,946,752
============ =============== ============= ==============
13,058,679 2,138,862,420 160,106,674 377,109,542
75,195 7,722,508 1,059,918 2,523,679
3,131,722 636,433,681 25,366,666 (57,755,470)
(504) (225,035) 30,957 158,067
452,915 71,074,293 18,123,190 (30,089,066)
------------ --------------- ------------- --------------
$ 16,718,007 $ 2,853,867,867 $204,687,405 $ 291,946,752
============ =============== ============= ==============
$ 12,036,537 $ 2,821,655,330 $201,314,878 $ 279,232,680
855,483 170,182,358 13,779,162 33,852,697
$ 14.07 $ 16.58 $ 14.61 $ 8.25
$ 4,681,470 $ 32,212,537 $ 3,372,527 $ 12,714,072
332,993 1,948,259 231,334 1,543,795
$ 14.06 $ 16.53 $ 14.58 $ 8.24
<PAGE>
<CAPTION>
LAZARD
LAZARD LAZARD INTERNATIONAL LAZARD
BOND HIGH YIELD FIXED-INCOME STRATEGIC
PORTFOLIO PORTFOLIO PORTFOLIO YIELD PORTFOLIO
- ------------------------------------------------------------------
<S> <C> <C> <C>
$106,766,559 $ 29,602,815 $107,727,762 $ 465,223,816
14,358,000 4,948,000 1,720,000 3,886,000
579 746 846 -
- - 615,603 966,301
- - - 1,366,271
4,162,345 305,044 1,122,624 15,755,093
957,127 670,049 2,066,535 7,368,490
266,000 25,217 75,201 10,424,197
- - - -
- 42,144 - -
------------ ------------ ------------ -------------
126,510,610 35,594,015 113,328,571 504,990,168
------------ ------------ ------------ -------------
19,699,670 3,080,465 2,858,814 10,768,505
511,838 - 202,287 291,245
37,813 5,808 7,375 964,056
- - 557,581 -
248,247 7,089 67,861 360,235
- - - 133,381
- 64,348 - -
2,784 2,865 2,784 2,784
67,817 47,154 109,677 192,753
------------ ------------ ------------ -------------
20,568,169 3,207,729 3,806,379 12,712,959
------------ ------------ ------------ -------------
105,942,441 32,386,286 109,522,192 492,277,209
============ ============ ============ =============
104,535,521 31,688,741 115,238,524 505,005,098
(146,875) (1,106) (296,267) (590,373)
659,878 (111,753) (2,086,465) (8,708,270)
- - (650,329) 1,157,804
893,917 810,404 (2,683,271) (4,587,050)
------------ ------------ ------------ -------------
$105,942,441 $ 32,386,286 $109,522,192 $ 492,277,209
============ ============ ============ =============
$ 95,231,261 $ 32,173,100 $105,864,146 $ 469,682,998
9,470,405 3,078,463 10,934,631 48,690,702
$ 10.06 $ 10.45 $ 9.68 $ 9.65
$ 10,711,180 $ 213,186 $ 3,658,046 $ 22,594,211
1,065,539 20,390 377,984 2,340,575
$ 10.05 $ 10.46 $ 9.68 $ 9.65
</TABLE>
73
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD
LAZARD LAZARD LAZARD BANTAM
EQUITY MID CAP SMALL CAP VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------ ------------ --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Interest ......................................................... $ 410,739 $ 92,877 $ 3,116,578 $ 123,595
Dividends ......................................................... 4,756,996 303,001 6,823,234 110,038
----------- ----------- ------------- -------------
Total investment income* .......................................... 5,167,735 395,878 9,939,812 233,633
----------- ----------- ------------- -------------
EXPENSES:
Management fees ................................................... 1,613,356 217,323 6,290,326 314,627
Administration fees ................................................ 64,810 21,011 155,776 30,705
Distribution fees (Open Shares) .................................... 87,631 5,430 124,965 11,857
Custodian fees ................................................... 45,583 29,298 130,501 32,158
Professional services ............................................. 22,561 26,044 48,706 20,005
Registration fees ................................................ 49,463 19,869 96,625 17,001
Shareholders' services ............................................. 35,807 29,607 75,766 30,182
Directors' fees and expenses ....................................... 8,419 8,564 8,418 8,418
Shareholders' reports ............................................. 9,482 7,325 10,177 4,069
Amortization of organizational expenses ........................... - 22,328 - 91
Other ............................................................ 8,232 3,476 25,469 3,103
----------- ----------- ------------- -------------
Total expenses before fees waived and expenses reimbursed ......... 1,945,344 390,275 6,966,729 472,216
Management fees waived and expenses reimbursed ..................... - (75,757) - (14,923)
Administration fees waived ....................................... - (3,750) - -
Expense reductions ................................................ (1,421) - (19,284) (2,588)
----------- ----------- ------------- -------------
Expenses-net ...................................................... 1,943,923 310,768 6,947,445 454,705
----------- ----------- ------------- -------------
INVESTMENT INCOME (LOSS)-NET ....................................... 3,223,812 85,110 2,992,367 (221,072)
----------- ----------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY-NET
Realized gain (loss) on:
Investments-net ................................................ 26,378,282 3,494,076 106,369,145 7,725,593
Foreign currency-net ............................................. - - - -
Net change in unrealized appreciation (depreciation):
Investments-net ................................................ 22,295,293 (406,267) (94,566,283) (7,434,457)
Foreign currency-net ............................................. - - - -
----------- ----------- ------------- -------------
Realized and unrealized gain (loss) on investments and
foreign currency-net ............................................. 48,673,575 3,087,809 11,802,862 291,136
----------- ----------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $51,897,387 $ 3,172,919 $ 14,795,229 $ 70,064
=========== =========== ============= =============
*Net of foreign withholding taxes of: ............................. $ 18,107 $ 1,416 $ 18,651 $ -
=========== =========== ============= =============
**Commenced operations on January 2, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
74
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD LAZARD
GLOBAL INTERNATIONAL INTERNATIONAL EMERGING LAZARD LAZARD INTERNATIONAL LAZARD
EQUITY EQUITY SMALL CAP MARKETS BOND HIGH YIELD FIXED-INCOME STRATEGIC
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO** PORTFOLIO YIELD PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 15,404 $ 2,660,722 $ 218,475 $ 827,536 $3,249,601 $ 1,003,868 $ 3,124,531 $ 16,818,815
169,336 37,383,624 1,781,290 3,496,911 - 41,595 22,134 786,813
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
184,740 40,044,346 1,999,765 4,324,447 3,249,601 1,045,463 3,146,665 17,605,628
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
53,262 9,195,510 673,342 1,402,839 255,559 82,713 423,559 1,680,371
23,735 194,435 40,271 50,372 32,538 23,548 33,610 67,125
3,749 28,704 3,864 14,555 12,266 122 4,489 23,591
37,647 1,435,196 118,338 254,023 57,009 26,100 121,534 169,778
10,594 57,772 13,597 20,728 14,636 13,912 15,406 28,163
14,669 119,662 34,392 64,764 23,703 18,948 28,008 42,066
23,252 55,053 24,875 36,306 25,847 16,337 26,887 35,383
5,718 8,419 8,418 8,417 8,418 5,837 8,418 8,418
773 6,581 5,477 5,467 1,684 1,910 5,130 4,189
91 - 1,750 2,460 - 22,204 - -
1,911 40,883 4,513 5,370 1,073 1,190 3,890 8,594
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
175,401 11,142,215 928,837 1,865,301 432,733 212,821 670,931 2,067,678
(96,332) (9,213) (7,004) (10,487) (7,312) (75,624) (11,869) -
- - - - - (21,250) - -
- (4,712) - (5,195) (2,148) - (6,351) (21,212)
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
79,069 11,128,290 921,833 1,849,619 423,273 115,947 652,711 2,046,466
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
105,671 28,916,056 1,077,932 2,474,828 2,826,328 929,516 2,493,954 15,559,162
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
287,198 62,330,230 14,977,548 (23,819,921) 760,956 810,404 (1,595,487) (10,630,046)
(256) (3,468,601) (463,681) (603,779) - - (788,796) 6,135,651
1,873,315 322,895,252 21,723,024 (8,821,163) (473,896) (111,753) 1,681,703 3,482,831
(1,210) (9,810) 37,469 203,968 - - 152,792 (205,897)
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
2,159,047 381,747,071 36,274,360 (33,040,895) 287,060 698,651 (549,788) (1,217,461)
---------- ------------- ----------- -------------- ---------- ----------- ------------ --------------
$2,264,718 $ 410,663,127 $37,352,292 $ (30,566,067) $3,113,388 $ 1,628,167 $ 1,944,166 $ 14,341,701
========== ============= =========== ============== ========== =========== ============ ==============
$ 14,911 $ 5,134,246 $ 280,237 $ 344,586 $ 844 $ 527 $ 8,908 $ 9,137
========== ============= =========== ============== ========== =========== ============ ==============
</TABLE>
75
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD EQUITY
PORTFOLIO
--------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------------ -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)-net ................................................ $ 3,223,812 $ 3,266,345
Realized gain (loss) on investments and foreign currency-net ............... 26,378,282 58,942,717
Change in unrealized appreciation (depreciation)-net ........................ 22,295,293 9,469,216
------------- --------------
Net increase (decrease) in net assets resulting from operations ............... 51,897,387 71,678,278
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income-net
Institutional Shares ...................................................... (1,726,610) (3,202,517)
Open Shares ............................................................... (331,905) (70,473)
From realized gains-net
Institutional Shares ...................................................... - (53,939,994)
Open Shares ............................................................... - (2,267,870)
In excess of investment income-net
Institutional Shares ...................................................... - -
Open Shares ............................................................... - -
In excess of realized gains-net
Institutional Shares ...................................................... - -
Open Shares ............................................................... - -
------------- --------------
Net decrease in net assets resulting from distributions ..................... (2,058,515) (59,480,854)
------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ...................................................... 42,519,771 90,619,277
Open Shares ............................................................... 70,182,012 30,083,744
Net proceeds from reinvestment of distributions
Institutional Shares ...................................................... 1,521,904 54,569,340
Open Shares ............................................................... 329,178 2,261,137
Cost of shares redeemed
Institutional Shares ...................................................... (39,843,979) (103,551,489)
Open Shares ............................................................... (10,395,262) (8,398,580)
------------- --------------
Net increase (decrease) in net assets from capital stock transactions ......... 64,313,624 65,583,429
------------- --------------
Total increase in net assets ................................................ 114,152,496 77,780,853
Net assets at beginning of period ............................................. 356,386,172 278,605,319
------------- --------------
Net assets at end of period* ................................................ $ 470,538,668 $ 356,386,172
============= ==============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of period .................................... 16,695,862 14,480,367
------------- --------------
Shares sold .................................................................. 1,957,707 4,234,980
Shares issued to shareholders from reinvestment of distributions ............ 65,811 2,733,379
Shares repurchased ......................................................... (1,834,938) (4,752,864)
------------- --------------
Net increase (decrease) ...................................................... 188,580 2,215,495
------------- --------------
Shares outstanding at end of period .......................................... 16,884,442 16,695,862
============= ==============
OPEN SHARES:
Shares outstanding at beginning of period .................................... 1,141,207 -
------------- --------------
Shares sold .................................................................. 3,346,064 1,390,648
Shares issued to shareholders from reinvestment of distributions ............ 14,387 113,384
Shares repurchased ......................................................... (479,502) (362,825)
------------- --------------
Net increase (decrease) ...................................................... 2,880,949 1,141,207
------------- --------------
Shares outstanding at end of period .......................................... 4,022,156 1,141,207
============= ==============
* Includes undistributed (distributions in excess of) investment income-net .. $ 1,184,789 $ 19,492
============= ==============
** Commenced operations on November 4, 1997.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
76
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD MID CAP LAZARD SMALL CAP LAZARD BANTAM VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997** (UNAUDITED) 1997 (UNAUDITED) 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 85,110 $ 76,325 $ 2,992,367 $ 4,109,963 $ (221,072) $ (242,145)
3,494,076 (1,143) 106,369,145 180,850,768 7,725,593 10,157,779
(406,267) 1,285,870 (94,566,283) 111,151,369 (7,434,457) 3,977,235
- --------------- ------------- -------------- -------------- -------------- ---------------
3,172,919 1,361,052 14,795,229 296,112,100 70,064 13,892,869
- --------------- ------------- -------------- -------------- -------------- ---------------
- (69,578) - (3,427,982) - -
- (1,235) - - - -
- - - (188,272,138) - (9,019,744)
- - - (5,550,731) - (964,614)
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- --------------- ------------- -------------- -------------- -------------- ---------------
- (70,813) - (197,250,851) - (9,984,358)
- --------------- ------------- -------------- -------------- -------------- ---------------
6,676,597 48,808,885 317,527,174 580,429,963 6,941,861 31,919,201
3,952,780 2,003,215 95,152,403 52,536,821 4,337,993 10,151,848
- 64,808 3,083,797 179,673,475 - 8,989,030
- 809 - 5,399,865 (10,931) 900,973
(4,651,861) (346,699) (241,251,060) (399,682,887) (4,622,574) (10,133,057)
(191,268) (235,768) (20,569,206) (7,451,540) (3,195,431) (1,965,892)
- --------------- ------------- -------------- -------------- -------------- ---------------
5,786,248 50,295,250 153,943,108 410,905,697 3,450,918 39,862,103
- --------------- ------------- -------------- -------------- -------------- ---------------
8,959,167 51,585,489 168,738,337 509,766,946 3,520,982 43,770,614
51,585,489 - 1,491,172,370 981,405,424 78,319,961 34,549,347
- --------------- ------------- -------------- -------------- -------------- ---------------
$ 60,544,656 $ 51,585,489 $1,659,910,707 $1,491,172,370 $ 81,840,943 $ 78,319,961
=============== ============= ============== ============== ============== ===============
4,851,388 - 72,186,366 53,230,190 4,887,256 2,746,889
- --------------- ------------- -------------- -------------- -------------- ---------------
594,396 4,879,588 15,223,659 28,061,127 472,521 2,177,512
- 6,442 158,061 9,286,832 - 647,359
(415,417) (34,642) (11,559,627) (18,391,783) (300,666) (684,504)
- --------------- ------------- -------------- -------------- -------------- ---------------
178,979 4,851,388 3,822,093 18,956,176 171,855 2,140,367
- --------------- ------------- -------------- -------------- -------------- ---------------
5,030,367 4,851,388 76,008,459 72,186,366 5,059,111 4,887,256
=============== ============= ============== ============== ============== ===============
176,048 - 2,302,364 - 585,520 -
- --------------- ------------- -------------- -------------- -------------- ---------------
365,213 199,579 4,584,179 2,362,406 296,772 642,453
- 80 - 277,559 (780) 64,441
(16,970) (23,611) (962,883) (337,601) (221,876) (121,374)
- --------------- ------------- -------------- -------------- -------------- ---------------
348,243 176,048 3,621,296 2,302,364 74,116 585,520
- --------------- ------------- -------------- -------------- -------------- ---------------
524,291 176,048 5,923,660 2,302,364 659,636 585,520
=============== ============= ============== ============== ============== ===============
$ 97,195 $ 12,085 $ 3,674,348 $ 681,981 $ (221,072) $ -
=============== ============= ============== ============== ============== ===============
</TABLE>
77
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD GLOBAL EQUITY
PORTFOLIO
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)-net ............................................. $ 105,671 $ 115,429
Realized gain (loss) on investments and foreign currency-net ............... 286,942 856,254
Change in unrealized appreciation (depreciation)-net ..................... 1,872,105 652,357
----------- ------------
Net increase (decrease) in net assets resulting from operations ............ 2,264,718 1,624,040
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income-net
Institutional Shares ...................................................... - (105,741)
Open Shares ............................................................... - (13,063)
From realized gains-net
Institutional Shares ...................................................... - (947,173)
Open Shares ............................................................... - (128,664)
In excess of investment income-net
Institutional Shares ...................................................... - (6,344)
Open Shares ............................................................... - (830)
In excess of realized gains-net
Institutional Shares ...................................................... - -
Open Shares ............................................................... - -
----------- ------------
Net decrease in net assets resulting from distributions ..................... - (1,201,815)
----------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ...................................................... 380,485 2,036,594
Open Shares ............................................................... 2,354,494 2,834,230
Net proceeds from reinvestment of distributions
Institutional Shares ...................................................... - 1,020,486
Open Shares ............................................................... - 141,752
Cost of shares redeemed
Institutional Shares ...................................................... (521,336) (2,916,057)
Open Shares ............................................................... (409,111) (674,496)
----------- ------------
Net increase (decrease) in net assets from capital stock transactions ...... 1,804,532 2,442,509
----------- ------------
Total increase in net assets ................................................ 4,069,250 2,864,734
Net assets at beginning of period .......................................... 12,648,757 9,784,023
----------- ------------
Net assets at end of period* ................................................ $16,718,007 $ 12,648,757
=========== ============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of period ................................. 870,086 852,071
----------- ------------
Shares sold ............................................................... 29,206 173,237
Shares issued to shareholders from reinvestment of distributions ......... - 86,767
Shares repurchased ......................................................... (43,809) (241,989)
----------- ------------
Net increase (decrease) ................................................... (14,603) 18,015
----------- ------------
Shares outstanding at end of period ....................................... 855,483 870,086
=========== ============
OPEN SHARES:
Shares outstanding at beginning of period ................................. 192,168 -
----------- ------------
Shares sold ............................................................... 173,032 233,628
Shares issued to shareholders from reinvestment of distributions ......... - 11,953
Shares repurchased ......................................................... (32,207) (53,413)
----------- ------------
Net increase (decrease) ................................................... 140,825 192,168
----------- ------------
Shares outstanding at end of period ....................................... 332,993 192,168
=========== ============
*Includes undistributed (distributions in excess of) investment Income-net $ 75,195 $ (30,476)
=========== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
78
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL EQUITY LAZARD INTERNATIONAL SMALL CAP LAZARD EMERGING MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------- ------------------------------------- --------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 28,916,056 $ 23,690,976 $ 1,077,932 $ 1,030,350 $ 2,474,828 $ 3,029,620
58,861,629 135,333,682 14,513,867 4,797,715 (24,423,700) 9,698,759
322,885,442 57,416,855 21,760,493 (6,500,094) (8,617,195) (56,098,361)
- ---------------- --------------- ------------- ------------- --------------- ---------------
410,663,127 216,441,513 37,352,292 (672,029) (30,566,067) (43,369,982)
- ---------------- --------------- ------------- ------------- --------------- ---------------
- (23,615,628) - (779,553) - (2,195,662)
- (75,348) - (2,605) - (50,943)
- (132,849,456) - (2,420,014) - (12,058,986)
- (407,971) - (20,012) - (403,361)
- (19,997,743) - - - -
- (49,197) - - - -
- - - - - (6,127,590)
- - - - - (163,296)
- ---------------- --------------- ------------- ------------- --------------- ---------------
- (176,995,343) - (3,222,184) - (20,999,838)
- ---------------- --------------- ------------- ------------- --------------- ---------------
644,582,865 540,108,125 60,691,864 33,547,354 97,298,580 224,014,461
61,158,278 14,105,912 5,906,424 3,051,529 19,832,133 17,560,383
3,977,827 165,563,968 58,886 2,967,819 2,857,133 16,809,709
- 496,902 - 21,902 (48,374) 582,273
(333,645,250) (461,972,317) (37,893,716) (17,963,195) (28,254,987) (88,595,351)
(43,387,363) (3,403,545) (4,995,609) (1,136,469) (13,280,753) (7,220,528)
- ---------------- --------------- ------------- ------------- --------------- ---------------
332,686,357 254,899,045 23,767,849 20,488,940 78,403,732 163,150,947
- ---------------- --------------- ------------- ------------- --------------- ---------------
743,349,484 294,345,215 61,120,141 16,594,727 47,837,665 98,781,127
2,110,518,383 1,816,173,168 143,567,264 126,972,537 244,109,087 145,327,960
- ---------------- --------------- ------------- ------------- --------------- ---------------
$ 2,853,867,867 $ 2,110,518,383 $ 204,687,405 $ 143,567,264 $ 291,946,752 $ 244,109,087
================ =============== ============= ============= =============== ===============
150,349,803 133,302,794 12,122,940 10,640,540 25,697,597 12,969,409
- ---------------- --------------- ------------- ------------- --------------- ---------------
40,852,303 36,635,849 4,301,819 2,689,836 10,917,356 18,858,547
281,317 11,731,335 5,003 253,037 315,045 1,776,539
(21,301,065) (31,320,175) (2,650,600) (1,460,473) (3,077,301) (7,906,898)
- ---------------- --------------- ------------- ------------- --------------- ---------------
19,832,555 17,047,009 1,656,222 1,482,400 8,155,100 12,728,188
- ---------------- --------------- ------------- ------------- --------------- ---------------
170,182,358 150,349,803 13,779,162 12,122,940 33,852,697 25,697,597
================ =============== ============= ============= =============== ===============
773,878 - 160,229 - 844,049 -
- ---------------- --------------- ------------- ------------- --------------- ---------------
3,855,795 967,597 410,386 251,402 2,135,212 1,447,155
- 35,205 - 1,866 (96,370) 62,861
(2,681,414) (228,924) (339,281) (93,039) (1,339,096) (665,967)
- ---------------- --------------- ------------- ------------- --------------- ---------------
1,174,381 773,878 71,105 160,229 699,746 844,049
- ---------------- --------------- ------------- ------------- --------------- ---------------
1,948,259 773,878 231,334 160,229 1,543,795 844,049
================ =============== ============= ============= =============== ===============
$ 7,722,508 $ (21,193,548) $ 1,059,918 $ (18,014) $ 2,523,679 $ 48,851
================ =============== ============= ============= =============== ===============
</TABLE>
79
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD BOND
PORTFOLIO
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Investment income (loss)-net ................................................ $ 2,826,328 $ 4,977,490
Realized gain (loss) on investments and foreign currency-net ............... 760,956 1,191,253
Change in unrealized appreciation (depreciation)-net ..................... (473,896) 976,970
------------- ------------
Net increase (decrease) in net assets resulting from operations ............ 3,113,388 7,145,713
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income-net
Institutional Shares ...................................................... (2,579,338) (4,784,961)
Open Shares ............................................................... (257,547) (218,630)
From realized gains-net
Institutional Shares ...................................................... - (622,871)
Open Shares ............................................................... - (47,549)
In excess of investment income-net
Institutional Shares ...................................................... - (103,346)
Open Shares ............................................................... - (6,061)
In excess of realized gains - net
Institutional Shares ...................................................... - -
Open Shares ............................................................... - -
From capital-net
Institutional Shares ...................................................... - -
Open Shares ............................................................... - -
------------- ------------
Net decrease in net assets resulting from distributions ..................... (2,836,885) (5,783,418)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ...................................................... 12,158,508 30,149,655
Open Shares ............................................................... 4,808,200 7,728,016
Net proceeds from reinvestment of distributions
Institutional Shares ...................................................... 2,348,106 5,018,654
Open Shares ............................................................... 228,462 248,171
Cost of shares redeemed
Institutional Shares ...................................................... (11,965,447) (13,915,433)
Open Shares ............................................................... (1,622,515) (786,886)
------------- ------------
Net increase (decrease) in net assets from capital stock transactions ...... 5,955,314 28,442,177
------------- ------------
Total increase in net assets ................................................ 6,231,817 29,804,472
Net assets at beginning of period .......................................... 99,710,624 69,906,152
------------- ------------
Net assets at end of period* ................................................ $ 105,942,441 $ 99,710,624
============= ============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of period 9,217,915 7,073,035
------------- ------------
Shares sold ............................................................... 1,209,087 3,039,325
Shares issued to shareholders from reinvestment of distributions ......... 233,600 503,472
Shares repurchased ......................................................... (1,190,197) (1,397,917)
------------- ------------
Net increase (decrease) ................................................... 252,490 2,144,880
------------- ------------
Shares outstanding at end of period ....................................... 9,470,405 9,217,915
============= ============
OPEN SHARES:
Shares outstanding at beginning of period ................................. 726,613 -
------------- ------------
Shares sold ............................................................... 477,718 779,924
Shares issued to shareholders from reinvestment of distributions ......... 22,750 24,775
Shares repurchased ......................................................... (161,542) (78,086)
------------- ------------
Net increase (decrease) ................................................... 338,926 726,613
------------- ------------
Shares outstanding at end of period ....................................... 1,065,539 726,613
============= ============
*Includes undistributed (distributions in excess of) investment Income-net $ (146,875) $ (136,318)
============= ============
</TABLE>
** Commenced operations on January 2, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
80
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD HIGH YIELD LAZARD INTERNATIONAL FIXED-INCOME LAZARD STRATEGIC YIELD
PORTFOLIO** PORTFOLIO PORTFOLIO
- ------------------ ------------------------------------- -----------------------------------------
PERIOD ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) (UNAUDITED) 1997 (UNAUDITED) 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 929,516 $ 2,493,954 $ 5,281,736 $ 15,559,162 $ 24,177,268
810,404 (2,384,283) (4,062,403) (4,494,395) 4,985,365
(111,753) 1,834,495 (6,930,080) 3,276,934 (15,784,090)
------------- ------------- ------------- ----------------- ----------------
1,628,167 1,944,166 (5,710,747) 14,341,701 13,378,543
------------- ------------- ------------- ----------------- ----------------
(926,611) (1,301,621) (856,065) (14,950,620) (24,262,314)
(4,011) (38,530) (4,392) (624,491) (625,698)
- - (162,035) - (1,819,161)
- - - - (77,090)
- - (561,048) - (2,563,969)
- - (8,622) - (73,087)
- - (1,193,276) - -
- - (18,323) - -
- - (2,677,113) - -
- - (41,142) - -
------------ ------------- ------------- ----------------- ----------------
(930,622) (1,340,151) (5,522,016) (15,575,111) (29,421,319)
------------ ------------- ------------- ----------------- ----------------
36,512,707 10,024,285 62,994,956 242,055,910 420,086,629
211,150 1,479,933 2,930,820 68,333,326 18,214,057
908,556 1,662,082 4,103,522 9,976,916 22,349,566
3,081 49,554 57,737 527,676 692,322
(5,946,753) (16,609,104) (34,229,843) (180,633,828) (226,654,290)
- (645,811) (97,029) (61,501,602) (2,976,085)
- ------------- ------------- ------------- ----------------- ----------------
31,688,741 (4,039,061) 35,760,163 78,758,398 231,712,199
- ------------- ------------- ------------- ----------------- ----------------
32,386,286 (3,435,046) 24,527,400 77,524,988 215,669,423
- 112,957,238 88,429,838 414,752,221 199,082,798
- ------------- ------------- ------------- ----------------- ----------------
$ 32,386,286 $ 109,522,192 $ 112,957,238 $ 492,277,209 $ 414,752,221
============= ============= ============= ================= ================
- 11,439,832 8,201,037 41,370,616 19,892,579
- ------------- ------------- ------------- ----------------- ----------------
3,555,268 1,033,146 6,263,605 24,871,109 41,987,849
86,823 172,295 410,505 1,025,837 2,253,081
(563,628) (1,710,642) (3,435,315) (18,576,860) (22,762,893)
- ------------- ------------- ------------- ----------------- ----------------
3,078,463 (505,201) 3,238,795 7,320,086 21,478,037
- ------------- ------------- ------------- ----------------- ----------------
3,078,463 10,934,631 11,439,832 48,690,702 41,370,616
============= ============= ============= ================= ================
- 287,789 - 1,584,672 -
- ------------- ------------- ------------- ----------------- ----------------
20,097 152,259 291,721 7,009,476 1,813,716
293 5,134 5,813 54,224 70,193
- (67,198) (9,745) (6,307,797) (299,237)
- ------------- ------------- ------------- ----------------- ----------------
20,390 90,195 287,789 755,903 1,584,672
- ------------- ------------- ------------- ----------------- ----------------
20,390 377,984 287,789 2,340,575 1,584,672
============= ============= ============= ================= ================
$ (1,106) $ (296,267) $ (1,450,070) $ (590,373) $ (574,424)
============= ============= ============= ================= ================
</TABLE>
81
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED --------------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 19.98 $ 19.24 $ 17.41 $ 13.75 $ 13.89 $ 12.74
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.17 0.22 0.33 0.23 0.14 0.16
Net realized and unrealized gain (loss) ..... 2.46 4.54 3.06 4.93 0.44 2.17
-------- -------- -------- -------- -------- --------
Total from investment operations ............ 2.63 4.76 3.39 5.16 0.58 2.33
-------- -------- -------- -------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.10) (0.22) (0.33) (0.18) (0.15) (0.17)
Net realized gain ........................... - (3.80) (1.23) (1.32) (0.57) (1.01)
-------- -------- -------- -------- -------- --------
Total distributions ........................ (0.10) (4.02) (1.56) (1.50) (0.72) (1.18)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............... $ 22.51 $ 19.98 $ 19.24 $ 17.41 $ 13.75 $ 13.89
======== ======== ======== ======== ======== ========
TOTAL RETURN (A) ........................... 13.2% 25.1% 19.9% 37.7% 4.2% 18.6%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $380,040 $333,575 $278,605 $163,787 $ 89,105 $ 47,123
Ratios to average net assets:
Net expenses (b) ........................... 0.86% 0.86% 0.89% 0.92% 1.05% 1.05%
Gross expenses (b) ........................ 0.86% 0.87% 0.89% 0.92% 1.05% 1.18%
Net investment income (b) .................. 1.54% 1.00% 1.87% 1.45% 1.15% 1.31%
Portfolio turnover rate ..................... 28% 78% 66% 81% 67% 64%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 2/5/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 19.99 $ 20.19
-------- --------
Income (loss) from investment operations:
Net investment income ........................ 0.13 0.13
Net realized and unrealized gain (loss) ...... 2.47 3.62
-------- --------
Total from investment operations ............ 2.60 3.75
-------- --------
Less distributions from and in excess of:
Net investment income ........................ (0.09) (0.15)
Net realized gain ........................... - (3.80)
-------- --------
Total distributions ........................ (0.09) (3.95)
-------- --------
Net asset value, end of period ............... $ 22.50 $ 19.99
======== ========
TOTAL RETURN (A) .............................. 13.0% 18.9%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...... $ 90,498 $ 22,811
Ratios to average net assets:
Net expenses (b) ........................... 1.13% 1.22%
Gross expenses (b) ........................... 1.13% 1.35%
Net investment income (b) .................. 1.27% 0.60%
Portfolio turnover rate ..................... 28% 78%
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
82
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD MID CAP PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 11/4/97* TO
6/30/98+ 12/31/97
INSTITUTIONAL SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 10.26 $ 10.00
--------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.02 0.02
Net realized and unrealized gain (loss) ..... 0.62 0.26
--------- --------
Total from investment operations ............ 0.64 0.28
--------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.02)
Net realized gain ........................... - -
--------- --------
Total distributions ........................ - ( 0.02)
--------- --------
Net asset value, end of period ............... $ 10.90 $ 10.26
========= ========
TOTAL RETURN (A) ........................... 6.2 % 2.8 %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $ 54,837 $ 49,779
Ratios to average net assets:
Net expenses (b) ........................... 1.05% 1.05%
Gross expenses (b) ........................ 1.29% 1.44%
Net investment income (b) .................. 0.32% 1.02%
Portfolio turnover rate ..................... 53% 1%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 11/4/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 10.26 $ 10.00
--------- --------
Income (loss) from investment operations:
Net investment income ..................... - 0.01
Net realized and unrealized gain (loss) 0.63 0.26
--------- --------
Total from investment operations ............ 0.63 0.27
--------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.01)
Net realized gain ........................... - -
--------- --------
Total distributions ........................ - ( 0.01)
--------- --------
Net asset value, end of period ............... $ 10.89 $ 10.26
========= ========
TOTAL RETURN (A) ........................... 6.1% 2.7 %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $ 5,707 $ 1,806
Ratios to average net assets:
Net expenses (b) ........................... 1.35% 1.35%
Gross expenses (b) ........................ 2.05% 4.97%
Net investment income (b) .................. 0.03% 0.72%
Portfolio turnover rate ..................... 53% 1%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
83
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED -----------------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES -------------- -------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 20.02 $ 18.44 $ 15.95 $ 14.35 $ 15.26 $ 12.98
---------- ---------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.04 0.07 0.11 0.13 0.07 0.02
Net realized and unrealized gain (loss) 0.20 4.92 3.68 2.95 0.22 3.83
---------- ---------- -------- -------- -------- --------
Total from investment operations ......... 0.24 4.99 3.79 3.08 0.29 3.85
---------- ---------- -------- -------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.06) ( 0.11) ( 0.16) ( 0.04) ( 0.02)
Net realized gain ........................ - ( 3.35) ( 1.19) ( 1.32) ( 1.16) ( 1.55)
---------- ---------- -------- -------- -------- --------
Total distributions ........................ - ( 3.41) ( 1.30) ( 1.48) ( 1.20) ( 1.57)
---------- ---------- -------- -------- -------- --------
Net asset value, end of period ............ $ 20.26 $ 20.02 $ 18.44 $ 15.95 $ 14.35 $ 15.26
========== ========== ======== ======== ======== ========
TOTAL RETURN (A) ........................... 1.2% 28.1% 23.9% 21.5% 2.0% 30.1%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $1,540,001 $1,445,075 $981,405 $646,371 $429,673 $350,952
Ratios to average net assets:
Net expenses (b) ........................... 0.81% 0.82% 0.84% 0.84% 0.85% 0.88%
Gross expenses (b) ........................ 0.81% 0.82% 0.84% 0.84% 0.85% 0.88%
Net investment income (b) .................. 0.38% 0.35% 0.60% 0.90% 0.51% 0.16%
Portfolio turnover rate ..................... 21% 56% 51% 70% 70% 98%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/30/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 20.02 $ 18.75
-------- --------
Income (loss) from investment operations:
Net investment income ........................ - 0.01
Net realized and unrealized gain (loss) ...... 0.22 4.61
-------- --------
Total from investment operations ............ 0.22 4.62
-------- --------
Less distributions from and in excess of:
Net investment income ........................ - -
Net realized gain ........................... - (3.35)
-------- --------
Total distributions ........................ - (3.35)
-------- --------
Net asset value, end of period ............... $ 20.24 $ 20.02
======== ========
TOTAL RETURN (A) .............................. 1.1% 25.6%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...... $119,910 $ 46,097
Ratios to average net assets:
Net expenses (b) ........................... 1.09% 1.14%
Gross expenses (b) ........................... 1.09% 1.23%
Net investment income (b) .................. 0.07% 0.12%
Portfolio turnover rate ..................... 21% 56%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
84
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD BANTAM VALUE PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR FOR THE PERIOD
ENDED ENDED 3/5/96* TO
6/30/98+ 12/31/97 12/31/96
INSTITUTIONAL SHARES ------------ ----------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ......... $ 14.32 $ 12.58 $ 10.00
--------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... ( 0.04) - 0.22
Net realized and unrealized gain (loss) ..... 0.04 4.12 3.11
--------- -------- --------
Total from investment operations ............ - 4.12 3.33
--------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... - - ( 0.22)
Net realized gain ........................... - ( 2.38) ( 0.53)
--------- -------- --------
Total distributions ........................ - ( 2.38) ( 0.75)
--------- -------- --------
Net asset value, end of period ............... $ 14.32 $ 14.32 $ 12.58
========= ======== ========
TOTAL RETURN (A) ........................... 0.0% 33.9% 33.3%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $ 72,447 $ 69,972 $ 34,549
Ratios to average net assets:
Net expenses (b) ........................... 1.05% 1.05% 1.05%
Gross expenses (b) ........................ 1.07% 1.14% 1.91%
Net investment income (b) .................. (0.49)% (0.42)% 2.80%
Portfolio turnover rate ..................... 49% 110% 262%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/23/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 14.26 $ 13.13
--------- ----------
Income (loss) from investment operations:
Net investment income (loss) ............... (0.06) -
Net realized and unrealized gain (loss) 0.04 3.51
--------- ----------
Total from investment operations ............ (0.02) 3.51
--------- ----------
Less distributions from and in excess of:
Net investment income ..................... - -
Net realized gain ........................... - (2.38)
--------- ----------
Total distributions ........................ - (2.38)
--------- ----------
Net asset value, end of period ............... $ 14.24 $ 14.26
========= ==========
TOTAL RETURN (A) ........................... (0.1)% 27.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $ 9,394 $ 8,348
Ratios to average net assets:
Net expenses (b) ........................... 1.35% 1.35%
Gross expenses (b) ........................ 1.57% 1.88%
Net investment income (b) .................. (0.80)% (0.69)%
Portfolio turnover rate ..................... 49% 110%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
85
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR FOR THE PERIOD
ENDED ENDED 1/4/96* TO
6/30/98+ 12/31/97 12/31/96
INSTITUTIONAL SHARES ------------ ----------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ...... $ 11.91 $ 11.48 $ 10.00
--------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.10 0.14 0.09
Net realized and unrealized gain (loss) 2.06 1.58 1.49
--------- -------- --------
Total from investment operations ......... 2.16 1.72 1.58
--------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.15) ( 0.10)
Net realized gain ........................ - ( 1.14) -
--------- -------- --------
Total distributions ........................ - ( 1.29) ( 0.10)
--------- -------- --------
Net asset value, end of period ............ $ 14.07 $ 11.91 $ 11.48
========= ======== ========
TOTAL RETURN (A) ........................... 18.2% 15.3% 15.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $ 12,037 $ 10,359 $ 9,784
Ratios to average net assets:
Net expenses (b) ........................... 1.05% 1.05% 1.05%
Gross expenses (b) ........................ 2.31% 2.55% 5.06%
Net investment income (b) .................. 1.52% 1.02% 1.70%
Portfolio turnover rate ..................... 25% 64% 74%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/30/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 11.92 $ 11.31
--------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.08 0.08
Net realized and unrealized gain (loss) 2.06 1.78
--------- --------
Total from investment operations ......... 2.14 1.86
--------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.11)
Net realized gain ........................ - ( 1.14)
--------- --------
Total distributions ..................... - ( 1.25)
--------- --------
Net asset value, end of period ............ $ 14.06 $ 11.92
========= ========
TOTAL RETURN (A) ........................... 18.1% 16.7%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 4,681 $ 2,290
Ratios to average net assets:
Net expenses (b) ........................ 1.35% 1.35%
Gross expenses (b) ........................ 3.08% 4.23%
Net investment income (b) ............... 1.36% 0.67%
Portfolio turnover rate .................. 25% 64%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
86
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ---------------------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES -------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 13.97 $ 13.62 $ 12.50 $ 11.23 $ 12.32 $ 9.48
---------- ---------- ---------- ---------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.18 0.22 0.17 0.19 0.08 0.02
Net realized and unrealized gain (loss) 2.43 1.40 1.76 1.29 ( 0.05) 2.92
---------- ---------- ---------- ---------- -------- --------
Total from investment operations ......... 2.61 1.62 1.93 1.48 0.03 2.94
---------- ---------- ---------- ---------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.34) ( 0.19) ( 0.09) - ( 0.02)
Net realized gain ........................ - ( 0.93) ( 0.62) ( 0.12) ( 1.12) ( 0.08)
---------- ---------- ---------- ---------- -------- --------
Total distributions ........................ - ( 1.27) ( 0.81) ( 0.21) ( 1.12) ( 0.10)
---------- ---------- ---------- ---------- -------- --------
Net asset value, end of period ............ $ 16.58 $ 13.97 $ 13.62 $ 12.50 $ 11.23 $ 12.32
========== ========== ========== ========== ======== ========
TOTAL RETURN (A) ........................... 18.7% 11.8% 15.6% 13.1% 0.2% 31.0%
RATIOS AND SUPPLEMENTAL DATA :
Net assets, end of period (in thousands) .... $2,821,655 $2,099,724 $1,816,173 $1,299,549 $831,877 $603,642
Ratios to average net assets:
Net expenses (b) ........................... 0.90% 0.89% 0.91% 0.95% 0.94% 0.99%
Gross expenses (b) ........................ 0.90% 0.89% 0.91% 0.95% 0.94% 0.99%
Net investment income (b) .................. 2.36% 1.18% 1.93% 1.82% 0.75% 1.13%
Portfolio turnover rate ..................... 21% 37% 39% 63% 106% 87%
</TABLE>
SIX MONTHS FOR THE PERIOD
ENDED 1/23/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
Net asset value, beginning of period ...... $ 13.95 $ 13.29
--------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.22 0.16
Net realized and unrealized gain (loss) 2.36 1.71
--------- --------
Total from investment operations ......... 2.58 1.87
--------- --------
Less distributions from and in excess of:
Net investment income ..................... - ( 0.28)
Net realized gain ........................ - ( 0.93)
--------- --------
Total distributions ..................... - ( 1.21)
--------- --------
Net asset value, end of period ............ $ 16.53 $ 13.95
========= ========
TOTAL RETURN (A) ........................... 18.6% 14.1%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 32,213 $ 10,794
Ratios to average net assets:
Net expenses (b) ........................ 1.25% 1.25%
Gross expenses (b) ........................ 1.33% 1.61%
Net investment income (b) ............... 2.39% 0.37%
Portfolio turnover rate .................. 21% 37%
SEE NOTES TO FINANCIAL HIGHLIGHTS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
87
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED FOR THE PERIOD
ENDED -------------------------------------------------- 12/01/93* TO
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES ------------ ------------ ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 11.69 $ 11.93 $ 10.52 $ 10.38 $ 10.86 $ 10.00
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.08 0.07 0.08 0.14 0.07 0.01
Net realized and unrealized gain (loss) 2.84 ( 0.03) 1.55 0.06 (0.55) 0.86
-------- -------- -------- -------- -------- --------
Total from investment operations ......... 2.92 0.04 1.63 0.20 (0.48) 0.87
-------- -------- -------- -------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... - (0.07) (0.08) - - (0.01)
Net realized gain ........................ - (0.21) (0.14) (0.06) - -
-------- -------- -------- -------- -------- --------
Total distributions ........................ - (0.28) (0.22) (0.06) - (0.01)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 14.61 $ 11.69 $ 11.93 $ 10.52 $ 10.38 $ 10.86
======== ======== ======== ======== ======== ========
TOTAL RETURN (A) ........................... 25.0% 0.3% 15.6% 1.9% (4.5)% 8.7%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $201,315 $141,695 $126,973 $115,534 $ 83,432 $ 13,522
Ratios to average net assets:
Net expenses (b) ........................... 1.02% 1.09% 1.12% 1.13% 1.05% 1.05%
Gross expenses (b) ........................ 1.02% 1.09% 1.12% 1.13% 1.26% 2.87%
Net investment income (b) .................. 1.21% 0.73% 1.67% 1.56% 0.95% 1.76%
Portfolio turnover rate ..................... 34% 63% 101% 118% 113% 1%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 2/13/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ --------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 11.69 $ 12.32
--------- ---------
Income (loss) from investment operations:
Net investment income ........................ 0.06 0.02
Net realized and unrealized gain (loss) ...... 2.83 (0.42)
--------- ---------
Total from investment operations ............ 2.89 (0.40)
--------- ---------
Less distributions from and in excess of:
Net investment income ........................ - (0.02)
Net realized gain ........................... - (0.21)
--------- ---------
Total distributions ........................... - (0.23)
--------- ---------
Net asset value, end of period ............... $ 14.58 $ 11.69
========= =========
TOTAL RETURN (A) .............................. 24.7% (3.2)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...... $ 3,373 $ 1,873
Ratios to average net assets:
Net expenses (b) .............................. 1.43% 1.43%
Gross expenses (b) ........................... 1.88% 3.39%
Net investment income (b) ..................... 0.88% 0.34%
Portfolio turnover rate ........................ 34% 63%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
88
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ----------------------------------------- 7/15/94* TO
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94
INSTITUTIONAL SHARES ---------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 9.20 $ 11.21 $ 9.24 $ 9.86 $ 10.00
-------- -------- -------- ------- ---------
Income (loss) from investment operations:
Net investment income ..................... 0.07 0.10 0.07 0.08 0.01
Net realized and unrealized gain (loss) (1.02) (1.18) 2.11 (0.66) (0.15)
-------- -------- -------- ------- ---------
Total from investment operations ......... (0.95) (1.08) 2.18 (0.58) (0.14)
-------- -------- -------- ------- ---------
Less distributions from and in excess of:
Net investment income ..................... - (0.09) (0.08) (0.04) -
Net realized gain ........................ - (0.84) (0.13) - -
-------- -------- -------- ------- ---------
Total distributions ........................ - (0.93) (0.21) (0.04) -
-------- -------- -------- ------- ---------
Net asset value, end of period ............ $ 8.25 $ 9.20 $ 11.21 $ 9.24 $ 9.86
======== ======== ======== ======= =========
TOTAL RETURN (A) ........................... (10.3)% (9.8)% 23.6% (5.9)% (1.4)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $279,233 $236,340 $145,328 $35,216 $ 17,025
Ratios to average net assets:
Net expenses (b) ........................... 1.31% 1.32% 1.38% 1.30% 1.30%
Gross expenses (b) ........................ 1.31% 1.33% 1.48% 2.00% 2.31%
Net investment income (b) .................. 1.77% 1.26% 1.40% 1.22% 0.31%
Portfolio turnover rate ..................... 17% 40% 51% 102% 31%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/8/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 9.20 $ 11.45
--------- ----------
Income (loss) from investment operations:
Net investment income ..................... 0.06 0.07
Net realized and unrealized gain (loss) (1.02) (1.42)
--------- ----------
Total from investment operations ......... (0.96) (1.35)
--------- ----------
Less distributions from and in excess of:
Net investment income ..................... - (0.07)
Net realized gain ........................ - (0.83)
--------- ----------
Total distributions ..................... - (0.90)
--------- ----------
Net asset value, end of period ............ $ 8.24 $ 9.20
========= ==========
TOTAL RETURN (A) ........................... (10.4)% (12.0)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 12,714 $ 7,769
Ratios to average net assets:
Net expenses (b) ........................ 1.60% 1.60%
Gross expenses (b) ........................ 1.78% 1.93%
Net investment income (b) ............... 1.60% 1.01%
Portfolio turnover rate .................. 17% 40%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
89
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED -----------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 10.03 $ 9.88 $ 10.10 $ 9.24 $ 10.28 $ 10.21
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.28 0.59 0.56 0.60 0.58 0.55
Net realized and unrealized gain (loss) 0.03 0.23 (0.14) 0.86 (1.01) 0.30
-------- -------- -------- -------- -------- --------
Total from investment operations ......... 0.31 0.82 0.42 1.46 (0.43) 0.85
-------- -------- -------- -------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.28) (0.60) (0.57) (0.60) (0.58) (0.55)
Net realized gain ........................ - (0.07) (0.07) - (0.03) (0.23)
-------- -------- -------- -------- -------- --------
Total distributions ........................ (0.28) (0.67) (0.64) (0.60) (0.61) (0.78)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 10.06 $ 10.03 $ 9.88 $ 10.10 $ 9.24 $ 10.28
======== ======== ======== ======== ======== ========
TOTAL RETURN (A) ........................... 3.1% 8.6% 4.4% 16.2% (4.2)% 8.6%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $ 95,231 $ 92,428 $ 69,906 $ 46,083 $ 24,494 $ 13,562
Ratios to average net assets:
Net expenses (b) ........................... 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
Gross expenses (b) ........................ 0.80% 0.81% 0.88% 0.97% 1.23% 1.76%
Net investment income (b) .................. 5.56% 5.81% 5.77% 6.07% 6.11% 5.22%
Portfolio turnover rate ..................... 136% 447% 460% 244% 121% 175%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 3/5/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 10.02 $ 9.86
-------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.27 0.46
Net realized and unrealized gain (loss) 0.02 0.24
-------- --------
Total from investment operations ......... 0.29 0.70
-------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.26) (0.47)
Net realized gain ........................ - (0.07)
-------- --------
Total distributions ..................... (0.26) (0.54)
-------- --------
Net asset value, end of period ............ $ 10.05 $ 10.02
======== ========
TOTAL RETURN (A) ........................... 2.9% 7.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 10,711 $ 7,283
Ratios to average net assets:
Net expenses (b) ........................ 1.10% 1.10%
Gross expenses (b) ........................ 1.25% 1.49%
Net investment income (b) ............... 5.25% 5.46%
Portfolio turnover rate .................. 136% 447%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
90
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
1/2/98* TO
6/30/98+
INSTITUTIONAL SHARES ---------------
<S> <C>
Net asset value, beginning of period ...... $ 10.00
--------
Income (loss) from investment operations:
Net investment income ..................... 0.42
Net realized and unrealized gain (loss) 0.45
--------
Total from investment operations ......... 0.87
--------
Less distributions from and in excess of:
Net investment income ..................... (0.42)
Net realized gain ........................ -
--------
Total distributions ..................... (0.42)
--------
Net asset value, end of period ............ $ 10.45
========
TOTAL RETURN (A) ........................... 8.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 32,173
Ratios to average net assets:
Net expenses (b) ........................ 1.05%
Gross expenses (b) ........................ 1.86%
Net investment income (b) ............... 8.43%
Portfolio turnover rate .................. 397%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
2/24/98* TO
6/30/98+
OPEN SHARES ---------------
<S> <C>
Net asset value, beginning of period ...... $ 10.37
--------
Income (loss) from investment operations:
Net investment income ..................... 0.27
Net realized and unrealized gain (loss) 0.09
--------
Total from investment operations ......... 0.36
--------
Less distributions from and in excess of:
Net investment income ..................... (0.27)
Net realized gain ........................ -
--------
Total distributions ..................... (0.27)
--------
Net asset value, end of period ............ $ 10.46
========
TOTAL RETURN (A) ........................... 3.4%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .. $ 213
Ratios to average net assets:
Net expenses (b) ........................ 1.35%
Gross expenses (b) ........................ 16.71%
Net investment income (b) ............... 8.06%
Portfolio turnover rate .................. 397%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
91
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ------------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES ------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 9.63 $ 10.78 $ 10.85 $ 10.23 $ 10.51 $ 9.79
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.26 0.40 0.54 0.70 0.59 0.57
Net realized and unrealized gain (loss) (0.05) (1.05) 0.03 1.25 (0.16) 0.91
-------- -------- -------- -------- -------- --------
Total from investment operations ......... 0.21 (0.65) 0.57 1.95 0.43 1.48
-------- -------- -------- -------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.16) (0.13) (0.59) (1.13) (0.59) (0.57)
Net realized gain ........................ - (0.12) (0.05) (0.20) (0.12) (0.19)
Capital .................................... - (0.25) - - - -
-------- -------- -------- -------- -------- --------
Total distributions ........................ (0.16) (0.50) (0.64) (1.33) (0.71) (0.76)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 9.68 $ 9.63 $ 10.78 $ 10.85 $ 10.23 $ 10.51
======== ======== ======== ======== ======== ========
TOTAL RETURN (A) ........................... 1.7% ( 5.6)% 5.5% 19.4% 4.2% 15.7%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $105,864 $110,185 $ 88,430 $ 45,624 $ 35,803 $ 13,546
Ratios to average net assets:
Net expenses (b) ........................... 1.15% 1.06% 1.05% 1.05% 1.05% 1.05%
Gross expenses (b) ........................ 1.16% 1.10% 1.21% 1.25% 1.51% 2.08%
Net investment income (b) .................. 4.42% 5.13% 5.54% 5.99% 5.68% 5.50%
Portfolio turnover rate ..................... 78% 166% 242% 190% 66% 116%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/8/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 9.63 $ 10.64
------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.27 0.43
Net realized and unrealized gain (loss) (0.07) (0.98)
------- --------
Total from investment operations ......... 0.20 (0.55)
------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.15) (0.08)
Net realized gain ........................ - (0.12)
Capital ................................. - (0.26)
------- --------
Total distributions ..................... (0.15) (0.46)
------- --------
Net asset value, end of period ............ $ 9.68 $ 9.63
======= ========
TOTAL RETURN (A) ........................... 1.7% (4.8)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $ 3,658 $ 2,772
Ratios to average net assets:
Net expenses (b) ........................ 1.35% 1.35%
Gross expenses (b) ........................ 2.02% 2.71%
Net investment income (b) ............... 4.24% 4.68%
Portfolio turnover rate .................. 78% 166%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
92
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED -------------------------------------------------------------
6/30/98+ 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
INSTITUTIONAL SHARES ------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 9.66 $ 10.01 $ 9.52 $ 9.10 $ 10.13 $ 9.50
-------- -------- -------- ------- -------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.34 0.81 0.76 0.75 0.76 0.64
Net realized and unrealized gain (loss) (0.01) (0.28) 0.50 0.43 (0.99) 0.74
-------- -------- -------- ------- -------- --------
Total from investment operations ......... 0.33 0.53 1.26 1.18 (0.23) 1.38
-------- -------- -------- ------- -------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.34) (0.82) (0.77) (0.76) (0.76) (0.63)
Net realized gain ........................ - (0.06) - - (0.04) (0.12)
-------- -------- -------- ------- -------- --------
Total distributions ........................ (0.34) (0.88) (0.77) (0.76) (0.80) (0.75)
-------- -------- -------- ------- -------- --------
Net asset value, end of period ............ $ 9.65 $ 9.66 $ 10.01 $ 9.52 $ 9.10 $ 10.13
======== ======== ======== ======= ======== ========
TOTAL RETURN (A) ........................... 3.5% 5.3% 13.7% 13.6% (2.3)% 15.6%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $469,683 $399,452 $199,083 $78,474 $ 62,328 $ 34,943
Ratios to average net assets:
Net expenses (b) ........................... 0.90% 0.94% 1.08% 1.09% 1.05% 1.05%
Gross expenses (b) ........................ 0.91% 0.95% 1.08% 1.09% 1.15% 1.63%
Net investment income (b) .................. 6.96% 7.42% 7.88% 8.02% 8.03% 6.36%
Portfolio turnover rate ..................... 93% 161% 189% 205% 195% 216%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 1/23/97* TO
6/30/98+ 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 9.66 $ 10.08
------- --------
Income (loss) from investment operations:
Net investment income ..................... 0.32 0.72
Net realized and unrealized gain (loss) ... (0.01) (0.35)
------- --------
Total from investment operations ......... 0.31 0.37
------- --------
Less distributions from and in excess of:
Net investment income ..................... (0.32) (0.73)
Net realized gain ........................ - (0.06)
------- --------
Total distributions ..................... (0.32) (0.79)
------- --------
Net asset value, end of period ............ $ 9.65 $ 9.66
======= ========
TOTAL RETURN (A) ........................... 3.2% 3.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $22,594 $ 15,300
Ratios to average net assets:
Net expenses (b) ........................ 1.28% 1.39%
Gross expenses (b) ........................ 1.29% 1.44%
Net investment income (b) ............... 6.60% 6.92%
Portfolio turnover rate .................. 93% 161%
SEE NOTES TO FINANCIAL HIGHLIGHTS
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
93
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
* Commencement of operations
+ Unaudited
(a) Total Returns are historical and assume changes in share price,
reinvestments of all dividends and distributions, and no sales charge. Had
certain expenses not been reduced during the periods shown, total returns
would have been lower. Periods of less than one year are not annualized.
(b) Annualized for periods of less than one year.
94
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
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 twelve portfolios (each referred to as a "Portfolio"), as follows:
Lazard Equity Portfolio, Lazard Mid Cap Portfolio, Lazard Small Cap Portfolio,
Lazard Bantam Value Portfolio, Lazard Global Equity Portfolio, Lazard
International Equity Portfolio, Lazard International Small Cap Portfolio, Lazard
Emerging Markets Portfolio, Lazard Bond Portfolio, Lazard High Yield Portfolio,
Lazard International Fixed-Income Portfolio and Lazard Strategic Yield
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. 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 determined in good faith using methods
approved by the Board of Directors. The 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 and 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
using the effective yield method.
95
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THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(C) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS-The
accounting records of the Portfolios are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the prevailing rate of exchange at period
end. Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the respective
dates of transactions.
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 net
investment income recorded on the Portfolios accounting records and the U.S.
dollar equivalent amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities, as a result of changes in
exchange 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. Certain Portfolios may enter
into forward foreign currency contracts for risk management. Risk management
includes hedging strategies which serve to reduce a 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. 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.
The U.S. dollar value of forward foreign currency contracts is determined using
forward exchange rates provided by a quotation service. 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 shareholders. Therefore, no federal income tax provision is required.
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, 1997, the following Portfolios have elected to defer net capital
and currency losses arising between November 1, 1997 and December 31, 1997 as
follows:
PORTFOLIO AMOUNT
- --------- -----------
Mid Cap $ 1,143
Global Equity 1,815
International Equity 358,865
International Small Cap 79,638
Emerging Markets 5,655,681
International Fixed-Income 2,024,637
(E) DIVIDENDS AND DISTRIBUTIONS-The Fund intends to declare dividends from net
investment income daily on shares of Bond Portfolio, High Yield Portfolio,
International
96
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
Fixed-Income Portfolio and Strategic Yield Portfolio and to 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 Mid Cap Portfolio, Small Cap Portfolio, Bantam Value Portfolio, Global Equity
Portfolio, International Equity Portfolio, International Small Cap Portfolio,
and Emerging Markets 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, realized gains-net and paid in capital.
(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 Mid Cap
Portfolio and High Yield 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 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 will 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) EXPENSE REDUCTIONS-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 an expense reduction.
(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 at the custodian in a
segregated account in an amount at least equal to these commitments.
97
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THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(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 AGREEMENTS 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%; Mid Cap Portfolio, 0.75%; Small Cap
Portfolio, 0.75%; Bantam Value Portfolio, 0.75%; Global Equity Portfolio, 0.75%;
International Equity Portfolio, 0.75%; International Small Cap Portfolio, 0.75%;
Emerging Markets Portfolio, 1.00%; Bond Portfolio, 0.50%; High Yield Portfolio,
0.75%; International Fixed-Income Portfolio, 0.75%; and Strategic Yield
Portfolio, 0.75%. The investment management fees are accrued daily and payable
monthly.
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%
Mid Cap ........................ 1.05 1.35
Small Cap ..................... - -
Bantam Value .................. 1.05 1.35
Global Equity .................. 1.05 1.35
International Equity ............ - 1.25
International Small Cap ......... - 1.43
Emerging Markets ............... - 1.60
Bond ........................... 0.80 1.10
High Yield ..................... 1.05 1.35
International Fixed-Income ...... - 1.35
Strategic Yield ............... - 1.39
</TABLE>
For the period ended June 30, 1998, the Manager did not impose all or part of
its management fee, resulting in waivers of: $61,106 for the Mid Cap Portfolio -
Institutional, $14,651 for the Mid Cap Portfolio - Open, $4,883 for Bantam Value
Portfolio - Institutional, $10,040 for Bantam Value Portfolio - Open, $42,005
for Global Equity Portfolio- Institutional, $11,257 for Global Equity Portfolio
- - Open, $9,213 for International Equity Portfolio - Open, $7,004 for
International Small Cap Portfolio - Open, $10,487 for Emerging Markets Portfolio
- - Open, $7,312 for Bond Portfolio - Open, $70,490 for High Yield Portfolio -
Institutional, $373 for High Yield Portfolio - Open, $11,869 for International
Fixed-Income Portfolio - Open. For the same period, the Manager has agreed to
reimburse expenses amounting to $28,330 for Global Equity Portfolio -
Institutional, $14,740 for Global Equity Portfolio - Open, and $4,761 for High
Yield Portfolio - Open.
Effective June 1, 1995, the Fund engaged State Street Bank and Trust Company
("State Street") to provide certain administrative services. Each Portfolio
bears 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
98
<PAGE>
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THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
High Yield Portfolio for one year or until the Portfolio reaches net assets of
$50 million, if sooner than one year.
The Fund has a distribution agreement with Lazard Freres & Co. LLC (the
"Distributor"). The Distributor 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 Act. 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 will 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 its allocable share of a fixed fee of $20,000 per year, plus $1,000 per
meeting attended for the Fund and Lazard Retirement Series, Inc., a related
party, and reimburses them for travel and out of pocket expenses.
4. SECURITIES TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales of portfolio securities (excluding short-term securities),
for the period ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- --------- -----
<S> <C> <C>
Equity ..................... $ 168,564,674 $117,226,775
Mid Cap .................. 36,076,732 29,272,234
Small Cap .................. 577,545,578 336,088,367
Bantam Value ............... 41,702,846 38,697,743
Global Equity ............ 5,182,652 3,392,996
International Equity 744,815,123 499,073,818
International Small Cap..... 77,106,261 58,385,939
Emerging Markets ......... 107,327,896 43,583,154
Bond(1) .................. 145,871,666 138,897,432
High Yield ............... 107,871,818 78,976,978
International Fixed-
Income(2) ............... 82,134,643 88,353,649
Strategic Yield(3) ...... 452,328,305 361,662,013
</TABLE>
(1) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $119,163,173
AND $116,513,116, RESPECTIVELY.
(2) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $3,126,943
AND $2,515,789, RESPECTIVELY.
(3) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $107,415,954
AND $88,908,896, RESPECTIVELY.
For the period ended June 30, 1998, Global Equity Portfolio paid brokerage
commissions of $561 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, 1998, the Fund had no
borrowings under this Agreement.
99
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<PAGE>
THE LAZARD FUNDS, INC.
30 Rockefeller Plaza
New York, New York 10112
TELEPHONE
(800) 823-6300
INVESTMENT MANAGER
Lazard 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
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LAZARDFUNDS
30 Rockefeller Plaza
58th Floor
New York, NY 10112
Telephone 800.823.6300
http://www.lazardfunds.com
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.
