FILED PURSUANT TO RULE 497(e)
REGISTRATION FILE NO. 33-40682
June 25, 1998
THE LAZARD FUNDS, INC.
SUPPLEMENT TO PROSPECTUS
DATED MAY 1, 1998
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION CONTAINED IN THE
PROSPECTUS UNDER THE CAPTION "APPENDIX--INVESTMENT TECHNIQUES."
SWAP AGREEMENTS--(All Portfolios) To the extent consistent with the Portfolio's
investment objective and management policies as set forth herein, each Portfolio
may enter into equity, interest rate, index, total return and currency rate swap
agreements. These transactions are entered into in an attempt to obtain a
particular return when it is considered desirable to do so, possibly at a lower
cost to the Portfolio than if the Portfolio had invested directly in the asset
that yielded the desired return. Swap agreements are two-party contracts entered
into primarily by institutional investors for periods ranging from a few weeks
to more than a year. In a standard swap transaction, two parties agree to
exchange the returns (or differentials in rates of return) earned or realized on
particular predetermined investments or instruments, which may be adjusted for
an interest factor. The gross returns to be exchanged or "swapped" between the
parties are generally calculated with respect to a "notional amount," i.e., the
return on or increase in value of a particular dollar amount invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index. Forms of swap agreements include
interest rate caps, under which, in return for a premium, one party agrees to
make payments to the other to the extent interest rates exceed a specified rate
or "cap"; interest rate floors, under which, in return for a premium, one party
agrees to make payments to the other to the extent interest rates fall below a
specified level or "floor"; and interest rate collars, under which a party sells
a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.
Most swap agreements entered into by a Portfolio would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, the
Portfolio's current obligations (or rights) under a swap agreement generally
will be equal only to the net amount to be paid or received under the agreement
based on the relative values of the positions held by each party to the
agreement (the "net amount"). The risk of loss with respect to swaps is limited
to the net amount of payments that the Portfolio is contractually obligated to
make. If the other party to a swap defaults, the Portfolio's risk of loss
consists of the net amount of payments that the Portfolio contractually is
entitled to receive.
