LAZARDFunds
ANNUAL REPORT
DECEMBER 31, 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 SENIOR PARTNER, KRAMER, LEVIN, NAFTALIS, NESSEN,
KAMIN & FRANKEL
HERBERT W. GULLQUIST VICE CHAIRMAN, LAZARD FRERES & CO. LLC
WILLIAM KATZ PRESIDENT AND CHIEF OPERATING OFFICER, BBDO NEW YORK
LESTER Z. LIEBERMAN PRIVATE INVESTOR
RICHARD REISS, JR. MANAGING PARTNER, GEORGICA ADVISERS, LLC
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 ............... 27
Lazard International Small Cap Portfolio ............ 29
Lazard Emerging Markets Portfolio ................... 32
Lazard Bond Portfolio ............................... 35
Lazard High Yield Portfolio ......................... 41
Lazard International Fixed-Income Portfolio ......... 45
Lazard Strategic Yield Portfolio .................... 54
Notes to Portfolios of Investments .................. 66
Statements of
Assets and Liabilities .............................. 70
Operations .......................................... 72
Changes in Net Assets ............................... 74
Financial Highlights ................................... 80
Notes to Financial Highlights .......................... 92
Notes to Financial Statements .......................... 93
Report of Independent Auditors ......................... 99
Tax Information (unaudited) ............................ 100
1
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THE LAZARD FUNDS, INC.
OVERVIEW
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The record-breaking merger and acquisition activity that began 1998 was
briefly, if dramatically, interrupted by extreme volatility following the
devaluation of the Russian ruble in late August. This devaluation led to the
unraveling of the hedge fund industry, with highly sophisticated, highly
leveraged players developing stunning losses. This crisis-within-a-crisis
further upset the U.S. market, and the temporary loss of confidence was at
least as perilous as the devaluation that inspired it. When the market finally
regained momentum, it was partially due to the re-emergence of more merger and
acquisition activity. While spring had brought the remarkable union of Chrysler
and Daimler-Benz, few could have foreseen the unbelievable fourth quarter union
of Deutsche Bank and Bankers Trust, nor the Herculean joining of Exxon and
Mobil. Encouraged by these remarkable mergers, the Dow shot back up to 9000 and
investors regained much of their lost confidence. As capital markets have once
again asserted many of their fundamental strengths, analysts and consultants
are scrambling to make sense of it all. What lessons are to be derived from the
volatility? Have we truly averted a crisis, or merely postponed its arrival on
our shores? And how do the latest mergers figure into the picture? The analyses
have been diverse, with some analysts predicting a soft landing for the
economy, while the economic Cassandras augur disaster. Despite the panicky
headlines, it's our belief that 1998 didn't so much introduce risk into the
general economy as much as it reminded investors of the risk that has always
been inherent in financial markets. The real question this poses to investors
is, how does one protect one's money? And what areas of the market will be able
to maintain a reasonable degree of stability?
EUROPE
Throughout 1998, Europe prepared for the inception of its single currency, the
Euro, with remarkable cross-border merger and acquisition activity. European
Daimler-Benz's decision to reach across the Atlantic to "merge" with American
car manufacturer Chrysler (the action more closely resembled an acquisition)
set the pace for a large number of equally stunning corporate unions. All of
this was only briefly interrupted by the currency crisis in Russia before
European companies continued with an impressive show of corporate
consolidations. Such unions are underpinned by what can only be described as a
new global paradigm. Governments of industrialized countries have turned away
from state-operated socialist programs and have begun to solve economic
development problems by more aggressively undertaking capital, trade, labor and
currency deregulation as well as by privatizing enterprises that have long been
public. The result has been intense competition. Deregulated Europe is becoming
less an aggregate of separate markets and more one, sprawling market in which
all companies compete for both customers and capital. Moreover, with one
European currency, the Euro, consumers may more easily compare prices with
their neighbors. To attract capital, companies must generate competitive
returns, not just relative to peers within
2
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THE LAZARD FUNDS, INC.
OVERVIEW (CONTINUED)
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their own country, but to industry peers across the globe as well. For example,
a French investor today should buy the most promising company within the global
automobile industry, not the most promising auto stock in France alone. Amidst
the changing environment, the typical focus of bottom-up investing--corporate
accounting, cash flow, and emerging competition--
will be crucial.
JAPAN
In 1998, Japan watched helplessly as countless economic reforms failed to
effect real change. The early summer rescue of the Yen by the U.S. Treasury did
little to reassure investors, and ultimately resulted in the Prime Minister's
resignation in July. Japanese corporations continue to be characterized by
lifetime employment, close links to the ruling party, minimal transparency, and
murky accounting. However, by the fourth quarter it was clear that at least
some of the newer reforms introduced by Hashimoto's successor, Obuchi, were
slowly taking effect, and many analysts are watching Japan expectantly. With
the valuations of Japanese corporations at record lows, and with reforms being
taken more seriously, the hope is that Japan will be able to raise itself from
its current malaise. In light of volatility in the U.S. markets, Japan is also
being regarded as having the potential to outperform, particularly if the U.S.
economy is damaged by crises in neighboring Latin America. In this uncertain
but potentially rewarding environment, bottom-up stock picking with an emphasis
on thorough research and one-on-one meetings with management will be crucial.
UNITED STATES
The volatility of late summer took many investors by surprise, as the Dow fell
over 500 points in a single day following the devaluation of the ruble. One of
the more stunning effects of the ruble's fall was the collapse of hedge fund
management team Long-Term Capital Management, Inc. ("LTCM"). Requiring a $3.65
billion bailout by a consortium of investment banks, LTCM's collapse recalled,
in its magnitude, the disastrous hubris displayed by the previous decade's
similarly-fated financial risk-takers. The shock waves created by the hedge
fund industry's downfall caused investors to seek security in large cap stocks,
which, in turn, resulted in a rocky environment for small and mid
capitalization stocks. Following the Dow's surging comeback after a shaky
fourth quarter beginning, S&P 500 stocks continue to be the best performing
asset class in the world, spurred further by low inflation, interest rate cuts
from the Federal Reserve, strong economic growth, and the advantage of a decade
of corporate restructuring. The most recent flurry of merger and acquisition
activity has benefited small and mid cap stocks, since it is those undervalued
stocks which tend to be taken over. In light of the continuing M&A phenomenon,
a focus on thoroughly knowing undervalued small and mid cap companies will be
beneficial.
CONCLUSION
Insofar as we watched the most elaborate investments collapse, while most of
the more conservative investments
3
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THE LAZARD FUNDS, INC.
OVERVIEW (CONTINUED)
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regained their earnings for the year, the lesson would seem clear. That is,
sometimes, the simplest things are the best constructed. In a turbulent
environment, we place our faith in the plain logic of investing in undervalued
companies that have strong management teams and real growth potential.
Admittedly, our emphasis on researching and understanding individual companies
(in an era when many investors are chasing internet companies based on pro-
jected earnings for the year 2010) might be considered old-fashioned. Indeed,
it's not an elaborate plan--more like the investment process stripped down to
its most basic level. Which is why, when the markets turn volatile, we don't
have to move our clients' investments from company to company in search of a
safer place to put the money. It's already there.
4
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THE LAZARD FUNDS, INC.
GROWTH CHARTS
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LAZARD EQUITY PORTFOLIO
The Lazard Equity Portfolio seeks long-term capital appreciation through
investing primarily in equity securities of relatively large U.S. companies
that the Investment Manager believes are undervalued based on their 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
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LEP S&P 500
Dec-88 10,000.00 10,000.00
Jan-89 10,629.84 10,732.30
Feb-89 10,591.09 10,464.85
Mar-89 10,726.74 10,709.00
Apr-89 11,221.20 11,265.01
May-89 11,736.56 11,720.79
Jun-89 11,561.53 11,654.33
Jul-89 12,389.38 12,706.60
Aug-89 12,643.02 12,955.02
Sep-89 12,584.49 12,902.42
0ct-89 12,174.51 12,602.82
Nov-89 12,272.38 12,859.80
Dec-89 12,364.65 13,168.56
Jan-90 11,613.15 12,284.42
Feb-90 11,843.61 12,442.65
Mar-90 12,134.19 12,772.38
Apr-90 11,703.23 12,453.71
May-90 12,547.79 13,668.07
Jun-90 12,497.52 13,575.81
Jul-90 12,487.37 13,532.23
Aug-90 11,357.65 12,309.05
Sep-90 10,752.45 11,709.97
Oct-90 10,771.77 11,660.08
Nov-90 11,480.44 12,413.79
Dec-90 11,780.05 12,759.64
Jan-91 12,250.02 13,315.32
Feb-91 13,159.32 14,267.63
Mar-91 13,302.36 14,613.20
Apr-91 13,281.46 14,647.83
May-91 13,701.63 15,279.74
Jun-91 13,076.50 14,579.77
Jul-91 13,691.56 15,259.34
Aug-91 14,266.75 15,620.83
Sep-91 14,071.60 15,359.49
Oct-91 14,236.08 15,565.92
Nov-91 13,485.73 14,938.77
Dec-91 15,023.46 16,647.32
Jan-92 15,181.73 16,337.18
Febo92 15,583.50 16,548.75
Mar-92 15,108.69 16,226.88
Apt-92 15,039.82 16,703.30
May-92 15,015.40 16,785.14
Jun-92 14,417.23 16,535.38
Jul-92 14,828.32 17,210.85
Aug-92 14,412.35 16,858.54
Sep-92 14,632.57 17,056.63
Oct-92 14,878.69 17,115.48
Nov-92 15,590.71 17,698.26
Dec-92 15,813.32 17,915.42
Jan-93 16,111.21 18,065.19
Feb-93 16,297.40 18,311.42
Mar-93 17,004.90 18,697.79
Apr-93 16,659.24 18,245.86
May-93 17,094.69 18,733.94
Jun-93 17,194.23 18,788.83
Jul-93 17,228.22 18,713.30
Aug-93 17,868.20 19,423.28
Sep-93 17,842.60 19,274.31
0ct-93 18,566.57 19,673.09
Nov-93 18,425.23 19,485.61
Dec-93 18,757.37 19,721.19
Jan-94 19,702.67 20,391.71
Feb-94 19,446.09 19,838.28
Mar-94 18,595.32 18,973.33
Apr-94 18,905.92 19,216.57
May-94 19,130.12 19,531.91
Jun-94 18,683.97 19,053.18
Jul-94 19,341.64 19,678.89
Aug-94 20,209.71 20,485.72
Sep-94 19,884.18 19,984.85
Oct-94 20,164.01 20,433.91
Nov-94 19,443.38 19,689.70
Dec-94 19,550.66 19,981.70
Jan-95 19,877.69 20,499.83
Feb-95 20,745.03 21,298.71
Mar-95 21,327.99 21,927.23
Apr-95 21,922.44 22,572.99
May-95 22,835.28 23,475.23
Jun-95 23,548.44 24,020.56
Jul-95 24,442.45 24,817.08
Aug-95 24,814.52 24,879.37
Sep-95 25,673.15 25,929.28
Oct-95 25,501.28 25,836.71
Nov-95 26,679.37 26,970.95
Dec-95 26,918.97 27,490.41
Jan-96 27,846.68 28,426.18
Feb-96 28,635.23 28,689.69
Mar-96 28,867.15 28,965.97
Apr-96 29,486.40 29,392.93
May-96 29.837.81 30,150.97
Jun-96 29.534.32 30,265.85
Jul-96 27,927.63 28928.7O
Aug-96 28,872.97 29,538.81
Sep-96 29,914.45 31,201.26
0ct-96 30,631.84 32,061.79
Nov-96 32,698.73 34,485.34
Dec-96 32,278.93 33,802.18
Jan-97 33,822.41 35,914.14
Feb-97 34,225.06 36,195.71
Mar-97 32,950.01 34,708.43
Apr-97 33,939.85 36,780.52
May-97 36,323.78 39,019.72
Jun-97 37,516.40 40,767.80
Jul-97 40,327.58 44,011.70
Aug-97 38,918.12 41,546.16
Sep-97 40,609.47 43,821.64
Oct-97 38,286.00 42,358.00
Nov-97 39,577.99 44,318.75
Dec-97 40,389.22 45,079.71
Jan-98 40,328.61 45,578.29
Feb-98 43,219.33 48,865.39
Mar-98 45,766.40 51,367.79
Apr-98 46,110.06 51,884.55
May-98 44,897.36 50,992.14
Jun-98 45,710.00 53,063.44
Jul-98 44,530.68 52,495.66
Aug-98 37,481.47 44,895.34
Sep-98 38,845.80 47,775.37
0ct-98 42,998.42 51,663.81
Nov-98 45,621.32 54,796.70
Dec-98 47,379.56 57,957.93
LAZARD MID CAP PORTFOLIO
The Lazard Mid Cap Portfolio seeks long-term capital appreciation through
investing primarily in equity securities of medium size U.S. companies in the
range of the Russell Midcap Index that the Investment Manager believes are
undervalued based on their 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
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
Lazard Midcap Russell Midcap
11-4-97 $10000.00 $10000.00
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
Jul-98 $10174.60 $10714.64
Aug-98 $8674.86 $9000.83
Sep-98 $9095.59 $9583.37
Oct-98 $9536.73 $10236.86
Nov-98 $10128.01 $10721.57
Dec-98 $10650.11 $11350.39
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 long-term capital appreciation through
investing primarily in equity securities of small U.S. companies in the range
of the Russell 2000 Index that the Investment Manager believes are undervalued
based on their 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
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LSCP Russell 2000
10-30-91 10000 10000
Nov-91 9720 9537.2
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 15045.6 13175.42
Aug-93 15925.82 13744.34
Sep-93 16232.87 14132.20
Oct-93 16386.4 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 16743.2 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 13867.6
Dec-94 17310.35 14238.84
Jan-95 17237.97 14059
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 17229.9
Aug-95 21255.63 17586.39
Sep-95 21267.7 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 20249.2
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 19939.3
Nov-96 25582.69 20760.8
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 25132.8
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
Apr-98 36803.53 28849.66
May-98 34869.13 27295.82
Jun-98 33784.7 27353.14
Jul-98 31399.5 25138.9
Aug-98 25144.72 20257.43
Sep-98 25833.69 21842.78
Oct-98 27326.87 22733.52
Nov-98 28450.01 23924.53
Dec-98 29172.64 25404.98
LAZARD BANTAM VALUE PORTFOLIO
The Lazard Bantam Value Portfolio seeks long-term capital appreciation through
investing primarily in equity securities of small U.S. companies with market
capitalizations under $500 million that the Investment Manager believes are
undervalued based on their return on total capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD BANTAM VALUE PORTFOLIO AND THE RUSSELL 2000 INDEX
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LBVP Russell 2000
3-1-96 10000 10000
Mar-96 10630 10204
Apr-96 11450 10749.61
May-96 11880 11173.25
Jun-96 11770 10714.48
Jul-96 11160 9778.67
Aug-96 11930 10346.42
Sep-96 12210 10750.76
0ct-96 12730 10585.09
Nov-96 13310 11021.2
Dec-96 13329.42 11310.06
Jan-97 14082.31 11536.04
Feb-97 14050.5 11256.29
Mar-97 13520.29 10725.11
Apr-97 13265.79 10755.03
May-97 14979.59 11951.53
Jun-97 16012.29 12463.77
Jul-97 17131.96 13043.71
Aug-97 17849.41 13342.15
Sep-97 19284.32 14318.66
Oct-97 18490 13689.64
Nov-97 18121.17 13601.07
Dec-97 17853.1 13839.09
Jan-98 17204.8 13620.71
Feb-98 18813.08 14627.82
Mar-98 19897.73 15231.07
Apr-98 20022.4 15315.3
May-98 18700.87 14490.42
Jun-98 17853.72 14520.85
Jul-98 16507.55 13345.39
Aug-98 13202.74 10753.98
Sep-98 13745.37 11595.59
Oct-98 14376.28 12068.45
Nov-98 15550.83 12700.72
Dec-98 15385.37 13486.26
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 long-term capital appreciation through
investing primarily in the equity securities of relatively large companies,
both U.S. and non-U.S., that the Investment Manager believes are undervalued
based on their return on total capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD GLOBAL EQUITY PORTFOLIO AND THE MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD INDEX
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LGEP MSCI World
1-4-96 10000 10000
Jan-96 10010 10117.88
Feb-96 10170 10177.37
Mar-96 10310 10344.59
Apr-96 10430 10585.72
May-96 10460 10592.71
Jun-96 10530 10644.19
Jul-96 10160 10265.89
Aug-96 10290 10381.79
Sep-96 10620 10786.17
0ct-96 10720 10859.3
Nov-96 11570 11465.68
Dec-96 11578.38 11279.93
Jan-97 11550 11413.71
Feb-97 11749.84 11542.8
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 13612.2
Aug-97 12974.56 12699.5
Sep-97 13780.24 13387.31
0ct-97 12900 12680.55
Nov-97 13131.5 12902.79
Dec-97 13345.5 13057.88
Jan-98 13592.23 13419.61
Feb-98 14500.62 14325.19
Mar-98 15442.66 14927.9
Apr-98 15610.88 15071.53
May-98 15644.52 14880.4
Jun-98 15779.06 15231.57
Jul-98 15768.02 15204.87
Aug-98 13454.85 13174.98
Sep-98 13193.29 13405.72
0ct-98 14349.02 14615.29
Nov-98 15211.4 15482.17
Dec-98 15627.28 16236.2
LAZARD INTERNATIONAL EQUITY PORTFOLIO
The Lazard International Equity Portfolio seeks long-term capital appreciation
through investing primarily in the equity securities of non-U.S. companies that
the Investment Manager believes are undervalued based on their return on total
capital or equity.
COMPARISON OF $10,000 INVESTMENT IN THE INSTITUTIONAL SHARES OF THE
LAZARD INTERNATIONAL EQUITY PORTFOLIO AND THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LIEP MSCI
10-29-91 10000 10000
Nov-91 9990 9533.13
Dec-91 10319.15 10025.6
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 10078.7 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 13826.8 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 12709.8
Oct-94 13763.39 13133.04
Nov-94 12938.62 12501.86
Dec-94 12657.4 12580.13
Jan-95 12048.76 12096.8
Feb-95 12127.66 12062.08
Mar-95 12285.46 12814.39
Apr-95 12815.2 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
0ct-95 13807.05 13084.09
Nov-95 13942.3 13448.09
Dec-95 14320.59 13989.92
Jan-96 14400.79 14047.42
Feb-96 14607 14094.9
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 15540.3 14454.29
Nov-96 16357.61 15029.42
Dec-96 16559.83 14836.14
Jan-97 16134.24 14316.88
Feb-97 16535.47 14551.1
Mar-97 16936.7 14603.78
Apr-97 16814.76 14681.32
May-97 17520.06 15636.64
Jun-97 18609.71 16499
Jul-97 19038.22 16765.95
Aug-97 17838.38 15513.87
Sep-97 19344.3 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 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
Jul-98 22248.28 17682.59
Aug-98 19193.59 15491.91
Sep-98 18220.47 15016.96
0ct-98 19605.23 16582.33
Nov-98 20724.69 17431.87
Dec-98 21493.37 18119.39
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 long-term capital
appreciation through investing primarily in equity securities of relatively
small, non-U.S. companies in the range of the Morgan Stanley Capital
International Europe, Australia and Far East Small Cap Index that the
Investment Manager believes are undervalued based on their 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-U.S. 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
[TABLE BELOW REPRESENTS LINE CHART IN THE PRINTED REPORT]
LISCP Salomon EMI Ex-US MSCI
Small Cap
12-1-93 10000 10000 10000
Dec-93 10872.5 10644 10854.3
Jan-94 12082.8 11707.3 12056.9
Feb-94 11882.7 11789.3 12286.4
Mar-94 11162.6 11595.9 12009.5
Apr-94 11042.6 11943.8 12515.7
May-94 10992.5 11773 12357.5
Jun-94 10712.5 12020.3 12610.7
Jul-94 10912.5 12157.3 12634.4
Aug-94 11352.6 12286.2 12761
Sep-94 11002.5 11934.8 12302.1
Oct-94 11092.6 12150.8 12476.1
Nov-94 10612.5 11392.6 11605.9
Dec-94 10382.4 11545.2 11756.3
Jan-95 10072.3 11170 11305.3
Feb-95 10012.3 11006.9 11155
Mar-95 9782.3 11474.7 11384.4
Apr-95 10002.3 11819 11637.6
May~95 10272.4 11612.1 11368.6
Jun-95 10362.4 11469.3 11115.4
Jul-95 10752.5 12138 11827.5
Aug-95 10652.5 11830.9 11495.1
Sep-95 10962.5 11923.2 11463.5
Oct-95 10532.4 11579.8 11004.7
Nov-95 10502.4 11702.5 11139.1
Dec-95 10567.7 12150.7 11519
Jan-96 10738.7 12367 11867
Feb-96 10829.1 12559.9 11977.8
Mar-96 10969.9 12848.8 12215.1
Apr-96 11412.3 13524.7 12856
May-96 11492.8 13415.1 12594.8
Jun-96 11533 13416.5 12579.1
Jul-96 11130.8 12909.3 11882.8
Aug-96 11482.7 13039.7 11922.4
Sep-96 11553.1 13112.7 11977.8
Oct-96 11643.6 13061.6 11764.2
Nov-96 12186.6 13275.8 11914.4
Dec-96 12221.4 13031.5 11503.1
Jan-97 12385.4 12750 11271
Feb-97 12621 12964.2 11481.2
Mar-97 12426.3 12791.8 11191.5
Apr-97 11985.8 12601.2 10818.4
May-97 12556.1 13409 11638
Jun-97 13124 13712 11847.6
Jul-97 13010.4 13504.9 11430.7
Aug-97 12618 12928.3 10701.2
Sep-97 13351.2 13158.4 10475.4
Oct-97 12711 12638.7 9895.2
Nov-97 12308.2 12075 9205.2
Dec-97 12254.2 11808.1 8668.5
Jan-98 12526.7 12300.5 9210.4
Feb-98 13679.8 13218.1 10035.7
Mar-98 14780.5 13839.4 10257.6
Apr-98 15440.9 13944.6 10237.9
May-98 15786.8 14203.9 10271.2
Jun-98 15314.8 13789.2 9862.5
Jul-98 15115.7 13694 9727.8
Aug-98 13341.1 12015.1 8433.4
Sep-98 12315.2 11702.7 8045.6
Oct-98 12657.5 12529 8690.1
Nov-98 12753.7 12929.9 9105.3
Dec-98 13179.7 13242.8 9140.2
LAZARD EMERGING MARKETS PORTFOLIO
The Lazard Emerging Markets Portfolio seeks long-term capital appreciation
through investing primarily in equity securities of non-U.S. issuers who are
located, or doing significant business, in emerging market countries. Emerging
market countries include countries where political and economic trends have
recently produced, or are producing, a more stable economy, or countries that
have recently developed, or are developing, financial markets and investment
liquidity. The Lazard Emerging Markets Portfolio seeks securities of issuers
whose potential is significantly enhanced by their relationship to the emerging
markets country that the Investment Manager believes are undervalued based on
their 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
LEMP MSCI IFC
Emerging
7-15-94 10000 10000 10000
Jul-94 10210 10280 10325
Aug-94 11300 11555.75 11652.28
Sep-94 11660 11687.48 11941.49
0ct-94 11580 11477.11 11548.85
Nov-94 11320 10880.3 11113.69
Dec-94 9860 10006.61 9929.64
Jan-95 8640 8941.91 8602.34
Feb-95 8420 8712.99 8491.12
Mar-95 8400 8768.76 8469.04
Apr-95 8650 9162.48 8824.48
May-95 9160 9649.92 9154.78
Jun-95 9140 9678.87 9209.71
Jul-95 9490 9896.16 9502.77
Aug-95 9370 9663.01 9248.09
Sep-95 9460 9617.11 9177.99
0ct-95 9040 9248.96 8831.71
Nov-95 8920 9084.05 8787.55
Dec-95 9280.04 9486.93 9093.27
Jan-96 10163.86 10161.26 9855.74
Feb-96 10244.2 9999.7 9636.94
Mar-96 10244.2 10077.6 9777.64
Apr-96 10897.53 10480.5 10171.97
May-96 11269.15 10433.65 10082.56
Jun-96 11168.71 10498.76 10202.34
Jul-96 10676.56 9781.27 9532.05
Aug-96 10867.39 10031.67 9827.64
Sep-96 11168.71 10118.55 9972.49
0ct-96 11048.18 9848.69 9758.39
Nov-96 11369.58 10013.75 9902.71
Dec-96 11472.68 10059.01 9946.58
Jan-97 12240.26 10745.14 10648.61
Feb-97 12762.21 11205.35 11170.18
Mar-97 12639.4 10910.99 10890.36
Apr-97 12772.44 10930.3 10705.46
May-97 13189.13 11243.12 11069.45
Jun-97 14164.56 11844.86 11547.42
Jul-97 14143.81 12021.7 11658.91
Aug-97 12597.64 10491.94 10170.36
Sep-97 13178.75 10782.65 10501.52
0ct-97 10770 9013.36 8778.4
Nov-97 10252.45 8684.48 8369.69
Dec-97 10343.93 8893.76 8480.36
Jan-98 9781.73 8196.22 7924.29
Feb-98 10624.99 9051.71 8733.42
Mar-98 11243.37 9444.52 9075.61
Apr-98 11175.91 9341.64 9,099.O7
May-98 9837.95 8061.45 7964.29
Jun-98 9276.2 7215.84 7147.8
Jul-98 9535.01 7444.62 7433.12
Aug-98 6649.72 5292.08 5343.19
Sep-98 7088.6 5627.79 5600.97
Oct-98 7684.75 6220.4 6244.51
Nov-98 8247.27 6737.74 6714.72
Dec-98 7914.91 6640.1 6612.54
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
LBP Lehman Int. G/C
11-12-91 10000.00 10000.00
Nov-91 10103.50 10114.80
Dec-91 10392.20 10361.90
Jan-92 10277.70 10268.00
Feb-92 10304.8 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
0ct-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
0ct-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
0ct-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
0ct-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
0ct-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
Jul-98 15543.60 15924.60
Aug-98 15627.50 16174.60
Sep-98 15869.70 16580.60
Oct-98 15719.00 16564.20
Nov-98 15807.00 16562.90
Dec-98 15905.00 16629.20
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 U.S.,
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
LHYP Merrill Lynch High Yield
1-2-98 10000 10000
Jan-98 10222.27 10159.4
Feb-98 10473.66 10200.55
Mar-98 10715.86 10297.45
Apr-98 10848.05 10341.63
May-98 10849.67 10403.78
Jun-98 10878.96 10457.57
Jul-98 10969.26 10524.18
Aug-98 10353.88 9992.92
Sep-98 10147.84 10018.9
Oct-98 9801.8 9805
Nov-98 10227.2 10313.68
Dec-98 10289.58 10295.22
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.
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
LIFIP SWGBI Ex-US
11-8-91 10000 10000
Nov-91 10036.5 10156
Dec-91 10394.5 10684.1
Jan-92 10093 10495
Feb-92 10106.3 10436.2
Mar-92 9966.7 10325.6
Apr-92 10027.9 10398.9
May-92 10311.9 10718.2
Jun-92 10507 11018.3
Jul-92 10664.4 11275
Aug-92 10974.1 11590.7
Sep-92 10958.8 11706.6
0ct-92 10712.4 11388.2
Nov-92 10536 11207.1
Dec-92 10606 11274.4
Jan-93 10780.4 11428.8
Feb-93 10985.4 11656.3
Mar-93 11184.5 11945.3
Apt-93 11550.9 12303.7
May-93 11746.6 12527.6
Jun-93 11625.3 12293.3
Jul-93 11657.8 12302
Aug-93 12045.5 12739.9
Sep-93 12228.8 12955.2
0ct-93 12212.1 12895.6
Nov-93 12132.2 12836.3
Dec-93 12267.5 12978.8
Jan-94 12353.8 13034.6
Feb-94 12323.5 13071.1
Mar-94 12412.5 13230.5
Apr-94 12389.6 13316.5
May-94 12309.3 13136.8
Jun-94 12613.8 13454.7
Jul-94 12603.2 13489.7
Aug-94 12505.1 13411.4
Sep-94 12749 13677
0ct-94 13068.7 14029.8
Nov-94 12838.6 13747.8
Dec-94 12779.1 13754.7
Jan-95 12966.2 14054.6
Feb-95 13374.6 14452.3
Mar-95 14465.5 15740.2
Apr-95 14872.2 16077.1
May-95 15226.3 16428.3
Jun-95 15311.4 16509.9
Jul-95 15316 16597.4
Aug-95 14508.6 15648.4
Sep-95 14894.1 16110
0ct-95 14998.8 16161.5
Nov-95 15108.8 16302.9
Dec-95 15255.6 16444.6
Jan-96 14986.2 16081.1
Feb-96 15010.8 16127.2
Mar-96 15014.5 16166.9
Apr-96 15035.6 16134.5
May-96 15090.4 16143.4
Jun-96 15176.4 16233.8
Jul-96 15569.4 16681.9
Aug-96 15659.9 16793.6
Sep-96 15684.6 16761.7
Oct-96 15935.7 17045
Nov-96 16132.2 17240.3
Dec-96 16097.2 17118.3
Jan-97 15456.4 16422.6
Feb-97 15337.2 16232.1
Mar-97 15190.8 16128.2
Apr-97 14886.4 15800.8
May-97 15387 16382.3
Jun-97 15580.3 16583.8
Jul-97 15203.7 16151
Aug-97 15175 16223.6
Sep-97 15550 16617.9
0ct-97 15729 16990.1
Nov-97 15405.9 16555.2
Dec-97 15199.7 16388
Jan-98 15267.3 16499.4
Feb-98 15514.1 16732
Mar-98 15269.2 16456
Apr-98 15603.6 16818
May-98 15492 16791.1
Jun-98 15459.5 16730.6
Jul-98 15507.4 16750.7
Aug-98 15443.8 17209.7
Sep-98 16339.5 18338.6
0ct-98 16949 19165.7
Nov-98 16740.5 18775.2
Dec-98 17205.9 19304
LAZARD STRATEGIC YIELD PORTFOLIO
The Lazard Strategic Yield Portfolio seeks total return from a combination of
current income and capital appreciation. The Lazard Strategic Yield Portfolio
may invest up to 50% of its total assets in non-U.S., 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 THE ONE MONTH LIBOR USD FIXED INDEX
LSYP 30 Day Libor
Oct 1, 91 10000 10000
0ct-91 10359.7 10041.8
Nov-91 10493.2 10084.2
Dec-91 10212.9 10119.7
Jan-92 10133.8 10154.3
Feb-92 10298.7 10189.6
Mar-92 10421.4 10225
Apr-92 10420.1 10257.9
May-92 10536.4 10291.5
Jun-92 10640.3 10324.6
Jul-92 10841.5 10353.1
Aug-92 10955.8 10382.7
Sep-92 11071.4 10409.8
0ct-92 10596.5 10437.6
Nov-92 10594 10473.9
Dec-92 10821.1 10502.3
Jan-93 11106.5 10529.2
Feb-93 11322.1 10556.8
Mar-93 11506 10584.3
Apr-93 11516.1 10611.5
May-93 11617.2 10639.8
Jun-93 11928 10667.6
Jul-93 12086 10695.4
Aug-93 12184.6 10723.4
Sep-93 12172.4 10751.5
0ct-93 12354.4 10779.6
Nov-93 12391.5 10811.1
Dec-93 12508.8 10840
Jan-94 12759.9 10867.8
Feb-94 12574.3 10899.6
Mar-94 12322 10932.5
Apr-94 12151.3 10968.3
May-94 12146.9 11007.6
Jun-94 12057 11048.6
Jul-94 12191.7 11089.2
Aug-94 12357.7 11133.3
Sep-94 12288.5 11179.1
Oct-94 12258.6 11225.2
Nov-94 12315.9 11280.3
Dec-94 12216.5 11335.2
Jan-95 12206.5 11391.2
Feb-95 12267.8 11447.8
Mar-95 12329.6 11504.7
Apr-95 12613.8 11561.3
May-95 12959.5 11618.1
Jun-95 13033.5 11675.8
Jul-95 13135.4 11731.6
Aug-95 13276.8 11787.6
Sep-95 13399.8 11843.8
0ct-95 13492.7 11899.9
Nov-95 13663.8 11957.6
Dec-95 13873.3 12012.9
Jan-96 14155.6 12066
Feb-96 14102.5 12118.2
Mar-96 14205.9 12171.8
Apr-96 14340.3 12225
May-96 14478.1 12279.1
Jun-96 14643 12333.7
Jul-96 14732.3 12388.2
Aug-96 14891.4 12443
Sep-96 15216.8 12498
0ct-96 15387 12552.6
Nov-96 15619.5 12609.4
Dec-96 15780.6 12665.8
Jan-97 15977.1 12721.8
Feb-97 16135.3 12778.1
Mar-97 16052.2 12837.1
Apr-97 16140.6 12896.4
May-97 16338.9 12956
Jun-97 16499.2 13015.8
Jul-97 16611.4 13075.3
Aug-97 16526.9 13135.4
Sep-97 16702.1 13195.8
0ct-97 16487.4 13256.1
Nov-97 16582.4 13320.3
Dec-97 16618.3 13382.2
Jan-98 16761.2 13443.4
Feb-98 16926.1 13505.5
Mar-98 17145.9 13567.9
Apr-98 17241.6 13630.2
May-98 17234.2 13692.9
Jun-98 17199.7 13755.8
Jul-98 17423.3 13819
Aug-98 16550.4 13882.5
Sep-98 16550.4 13942.9
0ct-98 16326.3 14002.5
Nov-98 16644.7 14066.5
Dec-98 16742.1 14124.4
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 DECEMBER 31, 1998
----------------------------------------------------------------
INSTITUTIONAL SHARES
---------------------------------------------------------------
ONE THREE FIVE TEN SINCE
YEAR YEAR YEAR YEAR INCEPTION*
------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 20.74% 20.36% 16.83% 14.98%
Standard & Poor's 500 Stock Index 28.57% 28.23% 24.06% 19.21% 16.50%
Lazard Mid Cap Portfolio 3.65% -- -- -- 5.58%
Russell Midcap Index 10.10% -- -- -- 11.58%
Lazard Small Cap Portfolio (12.62%) 11.52% 11.45% -- 16.11%
Russell 2000 Index (2.55%) 11.58% 11.86% -- 13.89%
Lazard Bantam Value Portfolio (13.82%) -- -- -- 16.39%
Russell 2000 Index (2.55%) -- -- -- 11.16%
Lazard Global Equity Portfolio 17.10% -- -- -- 16.09%
MSCI World Index 24.34% -- -- -- 17.57%
Lazard International Equity Portfolio 16.04% 14.49% 11.22% -- 11.26%
MSCI EAFE Index 20.00% 9.00% 9.19% -- 8.65%
Lazard International Small Cap Portfolio 7.55% 7.64% 3.94% -- 5.58%
MSCI EAFE Small Cap Index 5.44% (7.42%) (3.38%) -- (1.75%)
Salomon EMI Index Ex-US 12.15% 2.91% 4.47% 5.68%
Lazard Emerging Markets Portfolio (23.49%) (5.17% -- -- (5.10%)
MSCI Emerging Markets Free Index (25.34%) (11.22%) -- -- (8.70%)
IFC Investable Total Return Index (22.02%) (10.07%) (8.85%)
Lazard Bond Portfolio 5.77% 6.22% 5.93% -- 6.69%
Lehman Intermediate Gov't/Corp. Bond Index 8.43% 6.76% 6.60% -- 7.35%
Lazard High Yield Portfolio -- -- -- -- --
Merrill Lynch High Yield Master II Index -- -- -- -- --
Lazard International Fixed-Income Portfolio+ 13.20% 4.09% 7.00% -- 7.86%
Salomon World Government Bond Index Ex-US+ 17.79% 5.49% 8.26% -- 9.61%
Lazard Strategic Yield Portfolio 0.75% 6.47% 6.00% -- 7.36%
One Month LIBOR USD Fixed Index 5.54% 5.55% 5.44% -- 4.88%
</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 1, 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 from: 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
reimbursed by the Investment Manager and/or the Administrator, 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 DECEMBER 31, 1998
---------------------------------------------------------------------------------
INSTITUTIONAL SHARES
---------------------------------------------------------------------------------
ONE THREE FIVE TEN SINCE
YTD YEAR YEAR YEAR YEAR INCEPTION*
------------- ------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 17.31% 76.01% 152.59% 373.80% 403.93%
Standard & Poor's 500 Stock Index 28.57% 28.57% 110.83% 193.89% 479.58% 486.34%
Lazard Mid Cap Portfolio 3.65% 3.65% -- -- -- 6.50%
Russell Midcap Index 10.10% 10.10% -- -- -- 13.51%
Lazard Small Cap Portfolio (12.62%) (12.62%) 38.68% 71.95% -- 191.73%
Russell 2000 Index (2.55%) (2.55%) 38.91% 75.17% -- 154.05%
Lazard Bantam Value Portfolio (13.82%) (13.82%) -- -- -- 53.85%
Russell 2000 Index (2.55%) (2.55%) -- -- -- 34.86%
Lazard Global Equity Portfolio 17.10% 17.10% -- -- -- 56.27%
MSCI World Index 24.34% 24.34% -- -- -- 62.36%
Lazard International Equity Portfolio 16.04% 16.04% 50.09% 70.21% -- 114.93%
MSCI EAFE Index 20.00% 20.00% 29.52% 55.24% -- 81.20%
Lazard International Small Cap Portfolio 7.55% 7.55% 24.72% 21.33% -- 31.80%
MSCI EAFE Small Cap Index 5.44% 5.44% (20.65%) (15.79%) -- (8.60%)
Salomon EMI Index Ex-US 12.15% 12.15% 8.99% 24.42% -- 32.43%
Lazard Emerging Markets Portfolio (23.49%) (23.49%) (14.72%) -- -- (20.86%)
MSCI Emerging Markets Free Index (25.34%) (25.34%) (30.01%) -- -- (33.60%)
IFC Investable Total Return Index (22.02%) (22.02%) (27.28%) -- -- (33.87%)
Lazard Bond Portfolio 5.77% 5.77% 19.85% 33.36% -- 59.05%
Lehman Intermediate Gov't/Corp. Bond Index 8.43% 8.43% 21.70% 37.65% -- 66.30%
Lazard High Yield Portfolio 2.90% -- -- -- -- 2.90%
Merrill Lynch High Yield Master II Index 2.95% -- -- -- -- 2.95%
Lazard International Fixed-Income Portfolio+ 13.20% 13.20% 12.79% 40.26% -- 72.06%
Salomon World Government Bond Index Ex-US+ 17.79% 17.79% 17.40% 48.74% -- 93.04%
Lazard Strategic Yield Portfolio 0.75% 0.75% 20.68% 33.84% -- 67.42%
One Month LIBOR USD Fixed Index 5.54% 5.54% 17.57% 30.30% -- 41.24%
</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 worth 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 and equities from Canada and the United States.
See additional footnotes on next page.
12
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PERFORMANCE TABLE (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PERIOD ENDED DECEMBER 31, 1998
--------------------------------------------------------------------
OPEN SHARES
--------------------------------------------------------------------
ONE SINCE ONE SINCE
YEAR INCEPTION* YTD YEAR INCEPTION*
------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 16.98% 18.95% 16.98% 16.98% 39.08%
Standard & Poor's 500 Stock Index 28.57% 31.00% 28.57% 28.57% 67.09%
Lazard Mid Cap Portfolio 3.42% 5.34% 3.42% 3.42% 6.22%
Russell Midcap Index 10.10% 11.58% 10.10% 10.10% 13.50%
Lazard Small Cap Portfolio (12.86%) 4.82% (12.86%) (12.86%) 9.44%
Russell 2000 Index (2.55%) 8.49% (2.55%) (2.55%) 16.91%
Lazard Bantam Value Portfolio (14.02%) 4.96% (14.02%) (14.02%) 9.84%
Russell 2000 Index (2.55%) 8.22% (2.55%) (2.55%) 16.57%
Lazard Global Equity Portfolio 16.82% 17.52% 16.82% 16.82% 36.34%
MSCI World Index 24.34% 20.19% 24.34% 24.34% 42.25%
Lazard International Equity Portfolio 15.82% 15.44% 15.82% 15.82% 32.12%
MSCI EAFE Index 20.00% 12.82% 20.00% 20.00% 26.36%
Lazard International Small Cap Portfolio 7.21% 1.97% 7.21% 7.21% 3.74%
MSCI EAFE Small Cap Index 5.44% (10.27%) 5.44% 5.44% (18.43%)
Salomon EMI Index Ex-US 12.15% 2.04% 12.15% 12.15% 3.86%
Lazard Emerging Markets Portfolio (23.30%) (17.99%) (23.30%) (23.30%) (32.49%)
MSCI Emerging Markets Free Index (25.34%) (19.40%) (25.34%) (25.34%) (34.77%)
IFC Investable Total Return Index (22.02%) (19.53%) (22.02%) (22.02%) (34.97%)
Lazard Bond Portfolio 5.42% 6.93% 5.42% 5.42% 13.03%
Lehman Intermediate Gov't/Corp. Bond Index 8.43% 8.66% 8.43% 8.43% 16.40%
Lazard High Yield Portfolio -- -- (2.24%) -- (2.24%)
Merrill Lynch High Yield Master II Index -- -- 0.82% -- 0.82%
Lazard International Fixed-Income Portfolio 12.92% 3.72% 12.92% 12.92% 7.49%
Salomon World Government Bond Index Ex-US 17.79% 6.81% 17.79% 17.79% 13.93%
Lazard Strategic Yield Portfolio 0.37% 2.12% 0.37% 0.37% 4.15%
One Month LIBOR USD Fixed Index 5.54% 5.61% 5.54% 5.54% 11.17%
</TABLE>
The Morgan Stanley Capital International (MSCI) Europe, Australia and Far East
(EAFE) Index is comprised of International Equities and is compiled by 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 compiled by Morgan Stanley Capital International.
The IFC Investable Total Return Index is an index of emerging market 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
provide a more accurate comparison given each Portfolio's investment objective.
13
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
COMMON STOCKS--96.1%
AEROSPACE & DEFENSE--4.2%
Allied Signal, Inc. ......................... 116,300 $ 5,153,544
British Aerospace PLC ADR (a) ............... 102,000 3,582,750
Gulfstream Aerospace Corp. (a) .............. 65,800 3,503,850
United Technologies Corp. ................... 73,400 7,982,250
-----------
20,222,394
-----------
AUTOMOTIVE--2.2%
General Motors Corp. ........................ 144,300 10,326,469
-----------
AUTO PARTS--0.7%
TRW, Inc. ................................... 62,700 3,522,956
-----------
BANKING--12.3%
Bank One Corp. .............................. 125,200 6,393,025
BankAmerica Corp. ........................... 156,350 9,400,544
Chase Manhattan Corp. ....................... 109,024 7,420,446
First Union Corp. ........................... 206,700 12,569,943
Fleet Financial Group, Inc. ................. 189,200 8,454,875
Mellon Bank Corp. ........................... 106,900 7,349,375
Washington Mutual, Inc. ..................... 196,000 7,484,750
-----------
59,072,958
-----------
CHEMICALS & PLASTICS--0.3%
Du Pont (E.I.) de Nemours &
Co ......................................... 25,800 1,369,013
-----------
COMPUTERS & BUSINESS EQUIPMENT--6.3%
Hewlett-Packard Co. ......................... 163,700 11,182,756
International Business
Machines Corp. ............................. 75,200 13,893,200
NCR Corp. (a) ............................... 124,600 5,202,050
-----------
30,278,006
-----------
CONGLOMERATES--3.8%
Philip Morris Companies, Inc. ............... 343,400 18,371,900
-----------
DIVERSIFIED--0.9%
Minnesota Mining &
Manufacturing Co. .......................... 57,800 4,111,025
-----------
DRUGS & HEALTH CARE--9.6%
American Home Products
Corp ....................................... 224,000 12,614,000
Amgen, Inc. (a) ............................. 85,200 8,908,725
Bristol-Myers Squibb Co. .................... 80,900 10,825,431
Johnson & Johnson ........................... 70,700 5,929,963
Merck & Company, Inc. ....................... 53,100 7,842,206
-----------
46,120,325
-----------
ELECTRONICS--5.6%
Honeywell, Inc. ............................. 86,900 6,544,656
Intel Corp. ................................. 59,100 7,007,044
Motorola, Inc. .............................. 85,200 5,202,525
Texas Instruments, Inc. ..................... 94,500 8,085,656
-----------
26,839,881
-----------
ENERGY--2.2%
Mobil Corp. ................................. 105,600 9,200,400
Noble Affiliates, Inc. ...................... 54,800 1,349,450
-----------
10,549,850
-----------
FINANCIAL SERVICES--5.0%
American Express Co. ........................ 39,400 4,028,650
Citigroup, Inc. ............................. 130,349 6,452,276
Morgan Stanley Dean Witter &
Co ......................................... 78,100 5,545,100
The Hartford Financial
Services Group, Inc. ....................... 141,900 7,786,762
-----------
23,812,788
-----------
FOOD & BEVERAGES--7.8%
ConAgra, Inc. ............................... 194,300 6,120,450
Diageo PLC ADR .............................. 143,572 6,640,205
Heineken NV ADR ............................. 141,350 8,511,108
PepsiCo, Inc. ............................... 218,700 8,953,031
Unilever NV ADR ............................. 86,100 7,140,919
-----------
37,365,713
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO (CONTINUED)
HOTELS & RESTAURANTS-1.5%
McDonald's Corp. ............................ 90,400 $ 6,926,900
-----------
HOUSEHOLD PRODUCTS--0.4%
Procter & Gamble Co. ........................ 18,200 1,661,888
-----------
INDUSTRIAL & MACHINERY--
1.2%
Ingersoll-Rand Co. .......................... 119,000 5,585,563
-----------
INSURANCE--2.2%
Aetna, Inc. ................................. 78,900 6,203,512
Allstate Corp. .............................. 112,398 4,341,373
-----------
10,544,885
-----------
MULTIMEDIA--1.3%
Gannett Company, Inc. ....................... 93,600 6,037,200
-----------
OIL & GAS--1.7%
Chevron Corp. ............................... 24,500 2,031,969
Exxon Corp. ................................. 84,800 6,201,000
-----------
8,232,969
-----------
PAPER PRODUCTS--0.8%
Kimberly-Clark Corp. ........................ 70,212 3,826,554
-----------
PETROLEUM EQUIPMENT &
SERVICES--1.2%
Schlumberger Ltd. ........................... 128,900 5,945,512
-----------
PHOTOGRAPHY--1.1%
Eastman Kodak Co. ........................... 73,700 5,306,400
-----------
PUBLISHING--1.3%
New York Times Co. .......................... 185,400 6,431,062
-----------
RETAIL--5.8%
Federated Department Stores,
Inc. (a) ................................. 113,600 $ 4,948,700
Newell Co. ................................ 51,300 2,116,125
Office Depot, Inc. (a) .................... 166,100 6,135,319
Republic Industries, Inc. (a) ............. 188,900 2,786,275
Sears, Roebuck & Co. ...................... 88,300 3,752,750
TJX Companies, Inc. ....................... 111,400 3,230,600
Toys "R" Us, Inc. (a) ..................... 286,100 4,827,937
-----------
27,797,706
-----------
SERVICES--1.2%
First Data Corp. .......................... 176,600 5,596,012
------------
TELECOMMUNICATIONS--10.6%
Ameritech Corp. ........................... 200,000 12,675,000
AT&T Corp. ................................ 174,900 13,161,225
Bell Atlantic Corp. ....................... 333,700 17,686,100
SBC Communications, Inc. .................. 136,400 7,314,450
------------
50,836,775
------------
UTILITIES--4.9%
Consolidated Edison, Inc. ................. 117,600 6,218,100
Duke Energy Corp. ......................... 34,600 2,216,563
FPL Group, Inc. ........................... 103,800 6,396,675
PacifiCorp ................................ 286,700 6,038,619
Southern Co. .............................. 93,400 2,714,437
------------
23,584,394
------------
TOTAL COMMON STOCKS
(Identified cost
$374,279,275) ........................... 460,277,098
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO (CONTINUED)
REPURCHASE AGREEMENT--4.6%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateral-
ized by $18,990,000 United
States Treasury Note, 7.875%,
11/15/04, with a value of
$22,216,401) (Identified
cost $21,778,000) ......................... $ 21,778 $21,778,000
------------
TOTAL INVESTMENTS
(Identified cost
$396,057,275) (b) ........................ 100.7% $482,055,098
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .......................... (0.7) (3,305,278)
--------- -------------
NET ASSETS ................................. 100.0% $478,749,820
========= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD MID CAP PORTFOLIO
COMMON STOCKS--97.7%
AEROSPACE & DEFENSE--3.6%
Gulfstream Aerospace Corp. (a) .............. 22,800 $1,214,100
Litton Industries, Inc. (a) ................. 21,000 1,370,250
----------
2,584,350
----------
APPAREL & TEXTILES--1.6%
Polo Ralph Lauren Corp.,
Class A (a) ................................ 2,400 46,050
Warnaco Group, Inc., Class A ................ 42,500 1,073,125
----------
1,119,175
----------
AUTO PARTS--1.7%
Borg-Warner Automotive, Inc. ................ 21,600 1,205,550
----------
BANKING--7.7%
Hibernia Corp., Class A ..................... 64,200 1,115,475
North Fork Bancorporation,
Inc ........................................ 80,350 1,923,378
Sovereign Bancorp, Inc. ..................... 97,500 1,389,375
Union Planters Corp. ........................ 25,400 1,150,938
----------
5,579,166
----------
BROADCASTING--2.0%
King World Productions, Inc.(a) ............. 49,500 1,457,156
----------
COMMERCIAL SERVICES--4.1%
Gartner Group, Inc.,
Class A (a) ................................ 30,300 643,875
H & R Block, Inc. ........................... 29,900 1,345,500
Pittston Brink's Group ...................... 30,100 959,437
----------
2,948,812
----------
COMPUTERS & BUSINESS EQUIPMENT--4.7%
Fore Systems (a) ............................ 36,100 661,081
NCR Corp. (a) ............................... 34,500 1,440,375
Quantum Corp. (a) ........................... 59,800 1,270,750
----------
3,372,206
----------
CONSTRUCTION MATERIAL -- 1.4%
Johns Manville Corp. ........................ 63,200 $1,038,850
----------
DRUGS & HEALTH CARE--3.2%
Mallinckrodt, Inc. .......................... 43,100 1,328,019
Perrigo Co. (a) ............................. 112,900 994,931
----------
2,322,950
----------
ENERGY--0.9%
Noble Affiliates, Inc. ...................... 27,700 682,113
----------
FINANCIAL SERVICES--7.5%
Heller Financial, Inc. ...................... 54,200 1,592,125
Lennar Corp. ................................ 43,800 1,105,950
The CIT Group, Inc., Class A ................ 35,200 1,119,800
Waddell & Reed Financial, Inc. .............. 65,500 1,551,531
----------
5,369,406
----------
GAS & PIPELINE UTILITIES--0.9%
Cooper Cameron Corp. (a) .................... 25,300 619,850
----------
HOUSEHOLD APPLIANCES
& HOME FURNISHINGS--4.0%
Ethan Allen Interiors, Inc. ................. 38,900 1,594,900
Maytag Corp. ................................ 20,600 1,282,350
----------
2,877,250
----------
HOUSEHOLD PRODUCTS--1.6%
Dial Corp. .................................. 39,700 1,146,338
----------
INDUSTRIAL & MACHINERY--1.8%
Briggs & Stratton Corp. ..................... 26,300 1,311,713
----------
INSURANCE--11.2%
Ace, Ltd. ................................... 32,400 1,115,775
Ambac Financial Group, Inc. ................. 19,500 1,173,656
American Bankers Insurance
Group, Inc. ................................ 30,400 1,470,600
Everest Reinsurance Holdings ................ 39,300 1,530,244
HSB Group, Inc. ............................. 24,600 1,010,137
Old Republic International
Corp ....................................... 41,150 925,875
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD MID CAP PORTFOLIO (CONTINUED)
Reliance Group Holdings, Inc. ....................... 64,800 $ 834,300
----------
8,060,587
----------
MANUFACTURING--2.6%
Crane Co. ........................................... 33,300 1,005,244
Mark IV Industries, Inc. ............................ 64,700 841,100
----------
1,846,344
----------
OIL & GAS--1.9%
Enron Oil & Gas Co. ................................. 54,400 938,400
R & B Falcon Corp. (a) .............................. 56,900 433,862
----------
1,372,262
----------
REAL ESTATE--1.3%
Mack California Realty Corp. ........................ 29,300 904,638
----------
RESTAURANTS--2.0%
Tricon Global Restaurants, Inc.
(a) ................................................ 28,500 1,428,562
----------
RETAIL--5.0%
Circuit City Stores--Circuit
City Group ......................................... 39,300 1,962,544
Tandy Corp. ......................................... 39,800 1,639,262
----------
3,601,806
----------
RETAIL TRADE--7.5%
Consolidated Stores Corp. (a) ....................... 40,300 813,556
Ross Stores, Inc. ................................... 30,200 1,189,125
Saks, Inc. (a) ...................................... 62,400 1,969,500
TJX Companies, Inc. ................................. 50,200 1,455,800
----------
5,427,981
----------
SOFTWARE--1.1%
Autodesk, Inc. ...................................... 18,500 789,719
----------
STEEL--1.3%
Carpenter Technology Corp. .......................... 27,400 929,888
----------
TECHNOLOGY--1.8%
Advanced Micro Devices,
Inc. (a) ........................................... 33,600 $ 972,300
Altera Corp. (a) .................................... 5,900 359,162
----------
1,331,462
----------
TELEPHONE--2.7%
Cincinnati Bell, Inc. ............................... 50,800 1,920,875
----------
TRANSPORTATION & FREIGHT
SERVICES--2.2%
CNF Transportation, Inc. ............................ 43,100 1,618,944
----------
UTILITIES--10.4%
CalEnergy Company, Inc. (a) ......................... 39,300 1,363,219
Illinova Corp. ...................................... 57,400 1,435,000
Ipalco Enterprises, Inc. ............................ 33,300 1,846,069
Niagara Mohawk Power
Corp. (a) .......................................... 90,100 1,452,862
NIPSCO Industries, Inc. ............................. 47,100 1,433,606
----------
7,530,756
----------
TOTAL COMMON STOCKS
(Identified
cost $68,561,524) .................................. 70,398,709
----------
PRINCIPAL
AMOUNT
(000)
----------
REPURCHASE AGREEMENT--3.3%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateral-
ized by $2,155,000 United
States Treasury Note, 7.250%,
05/15/04, with a value of
$2,440,538) (Identified cost
$2,389,000) ............................. $2,389 2,389,000
------------
TOTAL INVESTMENTS (Identified
cost $70,950,524) (b) ................... 101.0% $72,787,709
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS ........................ (1.0) (711,630)
-------- ------------
NET ASSETS ................................ 100.0% $72,076,079
======== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
COMMON STOCKS--94.3%
APPAREL & TEXTILES--1.0%
Stride Rite Corp. ........................... 813,700 $ 7,119,875
The Timberland Co., Class A (a) ............. 179,500 8,178,469
-----------
15,298,344
-----------
AUTO PARTS--4.5%
Borg-Warner Automotive, Inc. ................ 213,000 11,888,062
Dura Automotive Systems,
Inc. (a) ................................... 357,600 12,203,100
Excel Industries, Inc. ...................... 344,700 6,032,250
Superior Industries
International, Inc. ........................ 477,100 13,269,344
Tower Automotive, Inc. (a) .................. 1,002,800 25,007,325
-----------
68,400,081
-----------
BANKING--6.1%
Bancorp Queens County, Inc. ................. 334,045 9,937,839
Coast Federal Trust (a) ..................... 310,000 2,053,750
Cullen/Frost Bankers, Inc. .................. 324,000 17,779,500
Enhance Financial Services
Group, Inc. ................................ 404,400 12,132,000
Hibernia Corp., Class A ..................... 908,770 15,789,879
HUBCO, Inc. ................................. 589,825 17,768,478
Independence Community
Bank Corp. ................................. 718,900 11,457,469
Staten Island Bancorp, Inc. ................. 214,700 4,280,581
-----------
91,199,496
-----------
BUILDING & CONSTRUCTION--0.7%
Apogee Enterprises, Inc. .................... 982,700 11,055,375
-----------
BUSINESS SERVICES AND SUPPLIES--0.8%
CDI Corp. (a) ............................... 386,100 7,794,394
Vanstar Corp. (a) ........................... 450,000 4,162,500
-----------
11,956,894
-----------
CHEMICALS & PLASTICS--1.9%
A. Schulman, Inc. ........................... 517,200 11,733,975
Ferro Corp. ................................. 290,400 $ 7,550,400
H.B. Fuller Co. ............................. 197,500 9,504,687
-----------
28,789,062
-----------
COMMERCIAL SERVICES--2.7%
Inacom Corp. (a) ............................ 592,000 8,806,000
Nielsen Media Research, Inc. ................ 940,533 16,929,594
Pittston Brink's Group ...................... 449,200 14,318,250
-----------
40,053,844
-----------
COMMUNICATION SERVICES--0.0%
Dynatech Corp. (a) .......................... 196,550 540,513
-----------
COMPUTERS & BUSINESS EQUIPMENT--2.3%
Bell & Howell Co. (a) ....................... 602,200 22,770,687
Silicon Valley Group, Inc. (a) .............. 53,500 682,125
Wang Laboratories, Inc. (a) ................. 390,400 10,833,600
-----------
34,286,412
-----------
CONSTRUCTION MATERIALS--0.7%
Lone Star Industries, Inc. .................. 273,000 10,049,813
-----------
CONTAINERS: PAPER & PLASTIC--2.0%
First Brands Corp. .......................... 753,900 29,731,931
-----------
COSMETICS & TOILETRIES--0.9%
Alberto Culver Co., Class A ................. 553,800 13,983,450
-----------
DRUGS & HEALTH CARE--1.6%
Apria Healthcare Group,
Inc. (a) ................................... 760,600 6,797,863
Magellan Health Services,
Inc. (a) ................................... 759,160 6,357,965
Perrigo Co. (a) ............................. 1,273,620 11,223,776
-----------
24,379,604
-----------
ELECTRICAL EQUIPMENT--2.7%
Anixter International, Inc. (a) ............. 988,500 20,078,906
Belden, Inc. ................................ 548,020 11,611,174
MagneTek, Inc. (a) .......................... 731,700 8,460,281
-----------
40,150,361
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
ELECTRONICS--3.9%
AMETEK, Inc. .................................. 733,100 $16,357,294
Credence Systems Corp. (a) .................... 700,000 12,950,000
Kemet Corp. (a) ............................... 1,230,200 13,839,750
Lattice Semiconductor
Corp. (a) .................................... 351,500 16,136,047
-----------
59,283,091
-----------
FOOD & BEVERAGES--2.7%
American Italian Pasta Co.,
Class A (a) .................................. 285,700 7,535,337
Lance, Inc. ................................... 565,600 11,276,650
Ralcorp Holdings, Inc. (a) .................... 314,200 5,734,150
Vlasic Foods International,
Inc. (a) ..................................... 648,800 15,449,550
-----------
39,995,687
-----------
GAS EXPLORATION--0.9%
Barrett Resources Corp. (a) ................... 577,800 13,867,200
-----------
HOMEBUILDERS--3.6%
Kaufman & Broad Home Corp. .................... 463,900 13,337,125
Lennar Corp. .................................. 499,800 12,619,950
Toll Brothers, Inc. (a) ....................... 738,500 16,662,406
Walter Industries, Inc. (a) ................... 753,400 11,536,438
-----------
54,155,919
-----------
HOTELS & RESTAURANTS--1.3%
Lone Star Steakhouse &
Saloon, Inc. (a) ............................. 1,047,900 9,627,581
Morton's Restaurant Group,
Inc. (a) ..................................... 356,900 6,736,487
NPC International, Inc. (a) ................... 303,000 3,654,938
-----------
20,019,006
-----------
HOUSEHOLD APPLIANCES &
HOME FURNISHINGS--3.6%
Bassett Furniture Industries,
Inc .......................................... 322,900 7,789,962
Bush Industries, Inc., Class A ................ 466,600 5,803,338
Furniture Brands International,
Inc. (a) ..................................... 839,400 $22,873,650
Harman International
Industries, Inc. ............................. 471,300 17,968,312
-----------
54,435,262
-----------
INDUSTRIAL & MACHINERY--4.7%
Briggs & Stratton Corp. ....................... 413,230 20,609,846
JLG Industries, Inc. .......................... 1,261,200 19,706,250
Regal-Beloit Corp. ............................ 640,100 14,722,300
Roper Industries, Inc. ........................ 551,800 11,242,925
Wyman-Gordon Co. (a) .......................... 340,100 3,486,025
-----------
69,767,346
-----------
INSURANCE--6.1%
American Medical Security
Group, Inc. .................................. 382,900 5,575,981
Amerin Corp. (a) .............................. 486,900 11,503,012
ARM Financial Group, Inc.,
Class A ...................................... 372,000 8,253,750
Arthur J. Gallagher & Co. ..................... 286,800 12,655,050
Delphi Financial Group, Inc.,
Class A ...................................... 289,855 15,199,272
HCC Insurance Holdings, Inc. .................. 621,900 10,960,988
NAC Re Corp. .................................. 333,505 15,653,891
Orion Capital Corp. ........................... 17,300 688,756
Reliance Group Holdings, Inc. ................. 900,400 11,592,650
-----------
92,083,350
-----------
INVESTMENT COMPANIES--0.6%
Affiliated Managers Group,
Inc. (a) ..................................... 285,100 8,517,363
-----------
LEISURE TIME--2.6%
Anchor Gaming (a) ............................. 6,000 338,250
Carmike Cinemas, Inc.,
Class A (a) .................................. 524,700 10,657,969
Polaris Industries, Inc. ...................... 524,400 20,549,925
Vail Resorts, Inc. (a) ........................ 366,000 8,052,000
-----------
39,598,144
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
MANUFACTURING--6.6%
Aeroquip-Vickers, Inc. ........................ 174,200 $ 5,215,113
Alltrista Corp. (a) ........................... 448,400 10,761,600
Carlisle Companies, Inc. ...................... 256,400 13,236,650
Crane Co. ..................................... 696,510 21,025,896
Mark IV Industries, Inc. ...................... 1,251,864 16,274,232
Modine Manufacturing Co. ...................... 356,700 12,930,375
Varlen Corp. .................................. 870,568 20,077,474
-----------
99,521,340
-----------
MEDICAL SUPPLIES--3.5%
ADAC Laboratories (a) ......................... 504,000 10,064,250
Datascope Corp. (a) ........................... 711,000 16,353,000
Dentsply International, Inc. .................. 600,800 15,470,600
The West Company, Inc. ........................ 305,100 10,888,256
-----------
52,776,106
-----------
OIL & GAS--2.5%
Atwood Oceanics, Inc. (a) ..................... 271,600 4,617,200
Devon Energy Corp. ............................ 297,400 9,126,462
Helmerich & Payne, Inc. ....................... 769,220 14,903,637
Tuboscope, Inc. (a) ........................... 364,500 2,961,563
Vintage Petroleum, Inc. ....................... 674,000 5,813,250
-----------
37,422,112
-----------
PAPER PRODUCTS--1.3%
Chesapeake Corp. .............................. 307,500 11,339,062
The Standard Register Co. ..................... 270,100 8,356,219
-----------
19,695,281
-----------
PRINTING--1.2%
Electronics for Imaging, Inc. (a) ............. 452,700 18,192,881
-----------
PUBLISHING--1.8%
Banta Corp. ................................... 671,350 18,378,206
World Color Press, Inc. (a) ................... 277,000 8,431,188
-----------
26,809,394
-----------
REAL ESTATE--4.1%
Catellus Development
Corp. (a) .................................... 528,900 $ 7,569,881
FelCor Suite Hotels, Inc. ..................... 587,025 13,538,264
Glenborough Realty Trust, Inc. ................ 681,600 13,887,600
Kilroy Realty Corp. ........................... 511,000 11,753,000
Reckson Services Industries,
Inc. (a) ..................................... 51,192 211,167
Reckson Associates Realty
Corp ......................................... 639,900 14,197,782
-----------
61,157,694
-----------
RETAIL--4.8%
Eagle Hardware & Garden,
Inc. (a) ..................................... 442,300 14,374,750
General Nutrition Companies,
Inc. (a) ..................................... 980,000 15,925,000
Genesis Direct, Inc. (a) ...................... 350,000 2,734,375
Hughes Supply, Inc. ........................... 361,400 10,570,950
Oakley, Inc. (a) .............................. 750,000 7,078,125
Pier 1 Imports, Inc. .......................... 1,011,400 9,797,937
Talbots, Inc. ................................. 379,200 11,897,400
-----------
72,378,537
-----------
RETAIL TRADE--2.1%
Cole National Corp. (a) ....................... 422,600 7,237,025
Movado Group, Inc. ............................ 304,800 8,115,300
The Elder-Beerman Stores
Corp. (a) .................................... 609,500 7,047,344
The Wet Seal, Inc., Class A (a) ............... 327,000 9,871,312
-----------
32,270,981
-----------
STEEL--0.9%
WHX Corp. (a) ................................. 1,340,000 13,483,750
-----------
TECHNOLOGY--0.5%
VLSI Technology, Inc. (a) ..................... 656,500 7,180,469
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
TELECOMMUNICATIONS--2.5%
Associated Group, Inc.,
Class B (a) .............................. 298,500 $ 12,686,250
NTL, Inc. (a) ............................. 161,700 9,125,944
Vanguard Cellular Systems,
Inc. (a) ................................. 605,600 15,632,050
Verbex Voice Systems,
Inc., (a), (h) ........................... 180,501 0
-------------
37,444,244
-------------
TELECOMMUNICATIONS EQUIPMENT--1.3%
Allen Telecom, Inc. (a) ................... 704,765 4,713,116
Oak Industries, Inc. (a) .................. 404,885 14,170,975
-------------
18,884,091
-------------
TRANSPORTATION--1.0%
Budget Group, Inc., Class A (a) ........... 538,400 8,547,100
Pittston Burlington Group ................. 596,520 6,636,285
-------------
15,183,385
-------------
UTILITIES--1.9%
Calpine Corp. (a) ......................... 668,200 16,872,050
Sierra Pacific Resources .................. 317,800 12,076,400
-------------
28,948,450
-------------
WHOLESALE TRADE--0.4%
Unisource Worldwide, Inc. ................. 927,700 6,725,825
-------------
TOTAL COMMON STOCKS
(Identified
cost $1,332,063,345) .................... 1,419,672,088
-------------
PREFERRED STOCKS--0.0%
Verbex Voice Systems,
Inc. Series F (a), (h)
(Identified cost $1,500,000) ............. 687,285 0
-------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS--0.6%
COMMUNICATIONS--0.6%
International Cable Tel, Inc.,
7.00%, 06/15/08 (a) ................... $ 5,589 $ 8,439,390
--------------
RESTAURANTS, LODGING &
ENTERTAINMENT--0.0%
Interactive Light Holdings, Inc.,
8.00%, 01/25/99 (a), (h) .............. 1,000 500,000
--------------
TELECOMMUNICATIONS--0.0%
Verbex Voice Systems, Inc.,
10.00%, 12/31/95 (a), (h) ............. 100 0
--------------
TOTAL CONVERTIBLE BONDS
(Identified
cost $6,689,000) ....................... 8,939,390
--------------
REPURCHASE AGREEMENT--4.7%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateral-
ized by $21,000,000 United
States Treasury Note, 0.000%,
07/01/99, with a value of
$21,309,500, and
$45,510,000 United States
Treasury Note, 5.625%,
12/31/99, with a value of
$45,908,213, and
$5,210,000 United States
Treasury Note, 0.000%,
06/17/99, with a value of
$5,103,195) (Identified
cost $70,890,000) ..................... 70,890 70,890,000
--------------
TOTAL INVESTMENTS
(Identified
cost $1,409,642,345) (b) ............... 99.6% $1,499,501,478
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ................. 0.4 5,548,791
-------------- --------------
NET ASSETS .............................. 100.0% $1,505,050,269
============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD BANTAM VALUE PORTFOLIO
COMMON STOCKS--92.0%
APPAREL & TEXTILES--6.9%
Candie's, Inc. (a) ............................... 365,800 $1,371,750
Novel Denim Holdings, Ltd. (a) 60,600 1,287,750
Stride Rite Corp. ................................ 113,300 991,375
Tefron, Ltd. (a) ................................. 150,300 986,344
----------
4,637,219
----------
AUTO PARTS--6.6%
Dura Automotive Systems,
Inc. (a) ........................................ 54,900 1,873,462
Excel Industries, Inc. ........................... 146,200 2,558,500
----------
4,431,962
----------
BANKING--0.8%
Republic Banking Corp. ........................... 47,500 504,688
----------
BUSINESS SERVICES AND SUPPLIES--7.0%
Box Hill Systems Corp. (a) ....................... 222,400 1,195,400
GP Strategies Corp. (a) .......................... 118,800 1,782,000
Paxar Corp. (a) .................................. 68,900 615,794
Vanstar Corp. (a) ................................ 116,400 1,076,700
----------
4,669,894
----------
COMMERCIAL SERVICES--1.4%
Inacom Corp. (a) ................................. 62,600 931,175
----------
DRUGS & HEALTH CARE--9.7%
Apria Healthcare Group,
Inc. (a) ........................................ 432,300 3,863,681
CorVel Corp. (a) ................................. 74,000 2,608,500
----------
6,472,181
----------
EDUCATION--3.4%
Career Education Corp. (a) ....................... 76,000 2,280,000
----------
ENGINEERING & CONSTRUCTION--3.1%
EMCOR Group, Inc. (a) ............................ 130,000 2,096,250
----------
HOTELS & RESTAURANTS---2.0%
NPC International, Inc. (a) ...................... 112,000 $1,351,000
----------
INDUSTRIAL & MACHINERY--2.9%
OmniQuip International, Inc. ..................... 127,700 1,915,500
----------
INSURANCE--5.4%
Delphi Financial Group, Inc.,
Class A ......................................... 29,011 1,521,264
ESG Re, Ltd. ..................................... 47,400 959,850
Stirling Cooke Brown
Holdings, Ltd. .................................. 64,000 1,112,000
----------
3,593,114
----------
LEISURE TIME--8.8%
Carmike Cinemas, Inc.,
Class A (a) ..................................... 77,700 1,578,281
Powerhouse Technologies,
Inc. (a) ........................................ 170,300 2,469,350
Steinway Musical
Instruments, Inc. (a) ........................... 42,900 1,115,400
Trendwest Resorts, Inc. (a) ...................... 56,300 703,750
----------
5,866,781
----------
MANUFACTURING--9.5%
Ballantyne of Omaha, Inc. (a) .................... 235,700 2,077,106
Hawk Corp., Class A (a) .......................... 120,700 1,010,863
Regal-Beloit Corp. ............................... 65,200 1,499,600
Varlen Corp. ..................................... 76,750 1,770,047
----------
6,357,616
----------
MEDICAL SUPPLIES--3.0%
ADAC Laboratories (a) ............................ 87,900 1,755,253
The West Company, Inc. ........................... 5,968 212,983
----------
1,968,236
----------
OIL & GAS--3.3%
Atwood Oceanics, Inc. (a) ........................ 61,300 1,042,100
Louis Dreyfus Natural Gas
Corp. (a) ....................................... 82,000 1,168,500
----------
2,210,600
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- ------------------------------------------------------------- -------------
LAZARD BANTAM VALUE PORTFOLIO (CONTINUED)
RETAIL TRADE--6.9%
Grand Union Co. (a) .............................. 97,000 $ 1,188,250
The Elder-Beerman Stores
Corp. (a) ....................................... 147,400 1,704,312
Vans, Inc. (a) ................................... 250,000 1,718,750
-----------
4,611,312
-----------
STEEL--2.3%
WHX Corp. (a) .................................... 152,000 1,529,500
-----------
TELECOMMUNICATIONS EQUIPMENT--2.7%
Allen Telecom, Inc. (a) .......................... 268,000 1,792,250
-----------
TOYS & AMUSEMENTS--2.1%
Midway Games, Inc. (a) ........................... 129,100 1,420,100
-----------
TRANSPORTATION--4.2%
Budget Group, Inc., Class A (a) 82,900 1,316,038
Genesee & Wyoming, Inc.,
Class A (a) ..................................... 63,000 803,250
Interpool, Inc. .................................. 39,000 653,250
-----------
2,772,538
-----------
TOTAL COMMON STOCKS
(Identified cost $66,553,100)..................... 61,411,916
-----------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------- ------------ -------------
<S> <C> <C>
REPURCHASE AGREEMENT--7.7%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateral-
ized by $5,125,000 United
States Treasury Note, 5.750%,
11/15/00, with a value of
$5,261,745) (Identified cost
$5,157,000).................... $ 5,157 $ 5,157,000
-----------
TOTAL INVESTMENTS
(Identified cost
$71,710,100) (b) .............. 99.7% $66,568,916
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ................. 0.3 225,326
------- -----------
NET ASSETS ...................... 100.0% $66,794,242
======= ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
24
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- -------------------------------- -------------------- ---------------------
LAZARD GLOBAL EQUITY PORTFOLIO
COMMON STOCKS--96.8%
AUSTRALIA--1.2%
Broken Hill Proprietary
Company, Ltd. ................ 36,541 $ 269,126
---------
FRANCE--7.1%
Alcatel Alsthom (Cie Generale) 1,560 190,850
Axa-UAP ....................... 1,870 270,918
Banque Nationale de Paris ..... 3,540 291,380
Cie de Saint Gobain ........... 850 119,952
Cie Generale des Eaux ......... 1,250 324,182
Elf Aquitaine SA .............. 1,850 213,754
Rhone-Poulenc SA .............. 3,798 195,368
---------
TOTAL FRANCE .................. 1,606,404
---------
GERMANY--5.5%
Allianz AG .................... 680 249,298
DaimlerChrysler AG (a) ........ 2,709 267,389
Hoechst AG .................... 4,500 186,577
Siemens AG .................... 3,000 193,508
Thyssen AG .................... 800 148,374
Viag AG ....................... 350 205,178
---------
TOTAL GERMANY ................. 1,250,324
---------
HONG KONG--1.0%
HSBC Holdings, Ltd. ........... 8,926 222,355
---------
ITALY--3.3%
Ente Nazionale Idrocarburi
SPA (ENI) .................... 33,700 220,121
Instituto Bancario San Paolo
di Torino (a) ................ 15,800 279,029
Telecom Italia SPA ............ 40,600 255,369
---------
TOTAL ITALY ................... 754,519
---------
JAPAN--7.3%
Matsushita Electric Industrial
Company, Ltd. ................ 16,000 282,919
Nippon Telegraph & Telephone
Corp. ........................ 24 $ 185,122
NTT Mobile Communications ..... 6 246,793
Omron Corp. ................... 9,000 123,238
Promise Company, Ltd. ......... 3,190 165,919
Ricoh Company, Ltd. ........... 31,000 285,732
Sony Corp. .................... 2,500 181,999
Sumitomo Trust & Banking,
Ltd. ......................... 45,000 119,416
Sumitomo Trust & Banking,
Ltd. (a) ..................... 1 42,902
---------
TOTAL JAPAN ................... 1,634,040
---------
NETHERLANDS--3.2%
Heineken NV ................... 5,862 352,587
ING Groep NV .................. 1,900 115,798
Philips Electronics NV ........ 3,600 241,444
---------
TOTAL NETHERLANDS ............. 709,829
---------
SPAIN--3.9%
Corporacion Bancaria de
Espana SA (Argentaria) ....... 11,500 297,372
Endesa SA ..................... 8,100 214,298
Telefonica de Espana .......... 8,227 365,271
Telefonica SA, rights (a) ..... 8,227 7,294
---------
TOTAL SPAIN ................... 884,235
---------
SWEDEN--3.1%
ABB AB ........................ 13,800 146,920
Astra AB ...................... 10,513 213,500
Svenska Handelsbanken,
Series A ..................... 5,900 248,351
Volvo AB, Series B ............ 3,800 86,993
---------
TOTAL SWEDEN .................. 695,764
---------
SWITZERLAND--3.9%
Nestle SA ..................... 133 289,488
Roche Holding AG .............. 18 219,612
Zurich Versicherungs -
Gesellschaft (a) ............. 512 379,052
---------
TOTAL SWITZERLAND ............. 888,152
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY PORTFOLIO (CONTINUED)
UNITED KINGDOM--12.8%
Allied Zurich PLC (a) ............. 8,300 $ 124,728
B.A.T Industries PLC .............. 24,900 219,256
British Aerospace PLC ............. 31,300 266,770
British Petroleum Company
PLC .............................. 15,100 224,781
Cadbury Schweppes PLC ............. 14,942 255,695
Diageo PLC ........................ 21,048 233,420
EMI Group PLC ..................... 16,800 112,484
Granada Group PLC ................. 14,400 252,401
National Westminster Bank
PLC .............................. 13,600 263,233
Prudential Corporation PLC ........ 25,500 388,990
Royal & Sun Alliance Insurance
Group PLC ........................ 29,400 239,342
Unilever PLC ...................... 26,200 294,690
-----------
TOTAL UNITED KINGDOM .............. 2,875,790
-----------
UNITED STATES--44.5%
Aetna, Inc. ....................... 2,750 216,219
AlliedSignal, Inc. ................ 3,900 172,819
American Home Products
Corp. ............................ 8,400 473,025
AT&T Corp. ........................ 6,600 496,650
BankAmerica Corp. ................. 3,930 236,291
Bell Atlantic Corp. ............... 8,100 429,300
Bristol-Myers Squibb Co. .......... 1,800 240,863
Chase Manhattan Corp. ............. 4,900 333,506
Citigroup, Inc. ................... 5,850 289,575
Exxon Corp. ....................... 3,000 219,375
Federated Department Stores,
Inc. (a) ......................... 4,800 209,100
First Data Corp. .................. 9,000 285,187
First Union Corp. ................. 3,900 237,169
Fleet Financial Group, Inc. ....... 7,300 326,219
FPL Group, Inc. ................... 3,300 203,363
General Motors Corp. .............. 5,000 357,812
Halliburton Co. ................... 3,600 106,650
Hewlett-Packard Co. ............... 4,000 273,250
Honeywell, Inc. ................... 2,800 210,875
International Business
Machines Corp. ................... 2,420 447,095
Johnson & Johnson ................. 4,400 369,050
McDonald's Corp. .................. 5,100 390,787
Merck & Company, Inc. ............. 2,000 295,375
Minnesota Mining &
Manufacturing Co. ................ 2,600 184,925
Mobil Corp. ....................... 4,900 426,912
Motorola, Inc. .................... 5,100 311,419
Philip Morris Companies, Inc. ..... 7,790 416,765
Sears, Roebuck & Co. .............. 6,470 274,975
Southern Co. ...................... 1,200 34,875
Texas Instruments, Inc. ........... 4,100 350,806
The Hartford Financial
Services Group, Inc. ............. 5,560 305,105
Toys "R" Us, Inc. (a) ............. 12,100 204,188
TRW, Inc. ......................... 4,000 224,750
United Technologies Corp. ......... 4,300 467,625
-----------
TOTAL UNITED STATES ............... 10,021,900
-----------
TOTAL COMMON STOCKS
(Identified cost $18,858,067)...... 21,812,438
-----------
PRINCIPAL
AMOUNT
(000)
----------
REPURCHASE AGREEMENT--2.4%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $540,000 United States
Treasury Note, 5.625%,
12/31/99, with a value of
$545,400) (Identified cost
$531,000)......................... $ 531 531,000
-----------
TOTAL INVESTMENTS
(Identified cost $19,389,067) (b) 99.2% $22,343,438
CASH AND OTHER ASSETS
IN EXCESS OF LIABILITIES .......... 0.8 190,858
----------- -----------
NET ASSETS ......................... 100.0% $22,534,296
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
26
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--97.6%
AUSTRALIA--2.1%
Broken Hill Proprietary
Company, Ltd. ..................... 5,093,963 $37,517,214
Westpac Banking Corporation,
Ltd. .............................. 3,669,600 24,555,446
-----------
TOTAL AUSTRALIA .................... 62,072,660
-----------
DENMARK--1.3%
Unidanmark, Class A ................ 419,700 37,918,938
-----------
FINLAND--1.0%
Merita, Ltd. ....................... 2,200,000 13,892,920
UPM-Kymmene OYJ .................... 559,600 15,584,075
-----------
TOTAL FINLAND ...................... 29,476,995
-----------
FRANCE--15.6%
Alcatel Alsthom (Cie Generale) ..... 337,540 41,294,466
Axa-UAP ............................ 363,100 52,604,364
Banque Nationale de Paris .......... 663,922 54,647,989
Cie de Saint Gobain ................ 314,630 44,400,478
Cie Generale des Eaux .............. 336,492 87,267,644
Elf Aquitaine SA ................... 438,100 50,619,317
Michelin, Class B .................. 510,900 20,423,207
Rhone-Poulenc SA ................... 1,244,690 64,026,622
Suez Lyonnaise des Eaux ............ 203,100 41,702,522
-----------
TOTAL FRANCE ....................... 456,986,609
-----------
GERMANY--10.5%
Allianz AG ......................... 114,156 41,851,264
DaimlerChrysler AG (a) ............. 430,043 42,446,942
Hoechst AG ......................... 1,300,200 53,908,448
Metro AG ........................... 922,924 73,652,281
Siemens AG ......................... 660,400 42,597,504
Thyssen AG ......................... 114,000 21,143,286
Viag AG ............................ 54,115 31,723,482
-----------
TOTAL GERMANY ...................... 307,323,207
-----------
HONG KONG--1.0%
HSBC Holdings, Ltd. ................ 1,117,148 $27,829,207
-----------
ITALY--6.0%
Ente Nazionale Idrocarburi SPA
(ENI) ............................. 6,544,800 42,749,306
Instituto Bancario San Paolo
di Torino (a) ..................... 3,695,500 65,262,693
Telecom Italia SPA ................. 10,507,400 66,090,272
-----------
TOTAL ITALY ........................ 174,102,271
-----------
JAPAN--14.5%
Asahi Breweries, Ltd. .............. 2,393,000 35,244,096
Japan Tobacco, Inc. ................ 5,083 50,807,519
Matsushita Electric Industrial
Company, Ltd. ..................... 1,861,000 32,907,023
Nintendo Co. ....................... 340,700 33,000,133
Nippon Telegraph & Telephone
Corp. ............................. 3,193 24,628,890
Nissan Motor Company, Ltd. ......... 4,495,000 13,757,364
NTT Mobile Communications .......... 1,093 44,957,541
Omron Corp. ........................ 1,225,000 16,773,994
Orix Corp. ......................... 611,300 45,637,965
Promise Company, Ltd. .............. 569,600 29,626,254
Ricoh Company, Ltd. ................ 4,400,000 40,555,506
Sony Corp. ......................... 510,800 37,186,059
Sumitomo Trust & Banking, Ltd. 7,369,000 19,555,064
-----------
TOTAL JAPAN ........................ 424,637,408
-----------
MALAYSIA--0.3%
Genting Berhad ..................... 4,167,500 9,047,862
-----------
NETHERLANDS--3.4%
Heineken NV ........................ 865,775 52,074,613
ING Groep NV ....................... 252,600 15,395,060
Philips Electronics NV ............. 483,800 32,447,331
-----------
TOTAL NETHERLANDS .................. 99,917,004
-----------
SINGAPORE--0.9%
United Overseas Bank, Ltd. ......... 4,096,800 26,302,895
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
27
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- ------------------------------------- ------------------- ---------------------
LAZARD INTERNATIONAL EQUITY
PORTFOLIO (CONTINUED)
SPAIN--6.0%
Corporacion Bancaria de
Espana SA (Argentaria) ............ 2,332,400 $ 60,312,201
Endesa SA .......................... 1,585,900 41,957,388
Telefonica de Espana ............... 1,649,618 73,241,553
Telefonica SA, rights (a) .......... 1,649,618 1,462,510
-------------
TOTAL SPAIN ........................ 176,973,652
-------------
SWEDEN--7.1%
ABB AB ............................. 2,968,000 31,598,562
Astra AB ........................... 2,601,666 52,835,133
Electrolux AB, Series B ............ 2,353,100 40,401,912
Nordbanken Holding AB .............. 2,291,600 14,666,601
Svenska Handelsbanken,
Series A .......................... 1,048,500 44,134,871
Volvo AB, Series B ................. 1,026,900 23,508,690
-------------
TOTAL SWEDEN ....................... 207,145,769
-------------
SWITZERLAND--6.1%
Nestle SA .......................... 14,754 32,113,606
Roche Holding AG ................... 3,082 37,602,329
SGS Holding SA ..................... 15,093 14,777,670
SMH AG ............................. 21,115 13,065,262
Zurich Versicherungs-
Gesellschaft ...................... 109,630 81,163,070
-------------
TOTAL SWITZERLAND .................. 178,721,937
-------------
UNITED KINGDOM--21.8%
Allied Zurich PLC (a) .............. 2,063,550 31,009,819
B.A.T Industries PLC ............... 4,823,150 42,470,003
British Aerospace PLC .............. 9,277,948 79,076,048
British Petroleum Company PLC 3,542,300 52,731,364
Cadbury Schweppes PLC .............. 1,246,431 21,329,522
Diageo PLC ......................... 3,950,194 43,807,186
EMI Group PLC ...................... 1,805,700 12,090,000
Granada Group PLC .................. 2,698,000 47,290,081
Great Universal Stores PLC ......... 3,020,600 31,867,104
Imperial Chemical Industries
PLC ............................... 3,754,300 32,528,119
Mirror Group PLC ................... 3,504,300 8,747,650
National Westminster Bank PLC 2,836,900 54,909,262
Prudential Corporation PLC ......... 3,804,500 58,035,849
Royal & Sun Alliance Insurance
Group PLC ......................... 5,400,300 43,963,233
Siebe PLC .......................... 9,911,700 38,945,291
Unilever PLC ....................... 3,376,400 37,976,787
-------------
TOTAL UNITED KINGDOM ............... 636,777,318
-------------
TOTAL COMMON STOCKS
(Identified cost
$2,363,965,380).................... 2,855,233,732
-------------
PRINCIPAL
AMOUNT
(000)
-------------
REPURCHASE AGREEMENT--2.2%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $13,895,000 United States
Treasury Note, 6.375%,
05/15/00, with a value of
$14,346,588, and
$50,560,000 United States
Treasury Note, 5.625%,
12/31/99, with a value of
$51,002,400) (Identified cost
$64,064,000) ..................... $ 64,064 64,064,000
----------
TOTAL INVESTMENTS
(Identified
cost $2,428,029,380) (b) ......... 99.8% $2,919,297,732
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ................... 0.2 7,294,704
-------- --------------
NET ASSETS ........................ 100.0% $2,926,592,436
======== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
COMMON STOCKS--94.5%
AUSTRALIA--2.9%
Cochlear, Ltd. ..................... 931,000 $5,248,606
----------
AUSTRIA--1.0%
KTM Motorradholding AG ............. 26,500 1,783,317
----------
CANADA--2.5%
Club Monaco, Inc. (a), (c) ......... 364,200 1,846,614
Maple Leaf Foods, Inc. ............. 146,186 1,410,693
Queensway Financial Holdings,
Ltd. (a) .......................... 80,000 1,256,133
----------
TOTAL CANADA ....................... 4,513,440
----------
DENMARK--0.7%
Falck AS ........................... 14,894 1,205,225
----------
FINLAND--5.4%
Amer Group, Ltd. ................... 191,400 1,978,188
Asko OYJ-A, Class A ................ 101,730 1,729,749
Rocla OY (a) ....................... 161,500 1,140,224
Sampo Insurance Company, Ltd. 61,800 2,345,224
Santasalo-JOT Group ................ 137,000 838,282
Vaisala OY ......................... 21,400 1,762,699
----------
TOTAL FINLAND ...................... 9,794,366
----------
FRANCE--6.0%
C.E.A. Industries .................. 16,871 2,063,989
Carbone-Lorraine ................... 46,900 2,222,948
Cie des Signaux SA ................. 39,700 2,911,286
Compagnie Plastic-Omnium SA 13,860 1,326,256
SCOR SA ADR (a) .................... 33,500 2,240,313
----------
TOTAL FRANCE ....................... 10,764,792
----------
GERMANY--10.0%
Data Modul AG ...................... 31,974 1,304,591
Fielmann AG ........................ 62,300 2,990,520
Hawesko Holding AG (a) ............. 62,700 3,498,800
Holsten Brauerei AG ................ 337 69,802
Kamps AG (a) ....................... 19,500 1,263,651
KSB AG ............................. 7,850 $1,332,983
Marseille-Kliniken AG .............. 286,200 5,151,806
Prosieben Media AG ................. 54,400 2,513,381
----------
TOTAL GERMANY ...................... 18,125,534
----------
HONG KONG--2.5%
CDL Hotels International, Ltd. ..... 4,976,600 1,278,258
Esprit Asia Holdings, Ltd. ......... 5,803,500 2,509,387
Peregrine Investment Holdings,
Ltd. (d) .......................... 2,163,800 0
Shaw Brothers (Hong Kong), Ltd. 1,479,500 639,724
----------
TOTAL HONG KONG .................... 4,427,369
----------
IRELAND--2.7%
Adare Printing Group PLC ........... 308,000 2,702,558
Anglo Irish Bank Corporation
PLC ............................... 754,000 2,175,431
----------
TOTAL IRELAND ...................... 4,877,989
----------
ITALY--7.5%
Banca Popolare di Brescia .......... 215,400 5,250,005
Industrie Natuzzi SPA .............. 98,800 2,457,650
Interpump Group SPA ................ 352,000 1,724,395
Manuli Rubber Industries
SPA (a) ........................... 699,800 2,581,741
Premafin Finanziaria SPA (a) ....... 1,805,000 1,561,069
----------
TOTAL ITALY ........................ 13,574,860
----------
JAPAN--4.8%
Aderans Company, Ltd. .............. 93,700 2,909,217
Honma Golf Company, Ltd. ........... 30,600 148,872
Kawasumi Laboratories .............. 66,000 1,296,064
Laox ............................... 160,000 1,174,702
Paris Miki, Inc. ................... 137,900 3,171,517
----------
TOTAL JAPAN ........................ 8,700,372
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO (CONTINUED)
NETHERLANDS--5.0%
Avalix Groep NV (a) ................. 162,700 $ 1,342,338
Scala Business Solutions NV,
3/31/99 warrants (a) ............... 59,100 75,611
Scala Business Solutions NV,
3/31/01 warrants (a) ............... 59,100 4,788
Scala Business Solutions NV (a) ..... 505,140 4,570,916
Telegraaf Holdings .................. 110,100 2,959,520
-----------
TOTAL NETHERLANDS ................... 8,953,173
-----------
NORWAY--2.8%
Electric Farm ASA (a) ............... 36,240 0
P4 Radio Hele Norg ASA (a) .......... 724,800 2,098,519
Schibsted ASA ....................... 240,800 3,042,285
-----------
TOTAL NORWAY ........................ 5,140,804
-----------
PORTUGAL--2.0%
Campanhia de Seguros Mundial
Confianca SA (a) ................... 110,600 3,519,135
-----------
SPAIN--2.5%
Banco Pastor SA ..................... 72,400 4,533,915
-----------
SWEDEN--6.7%
Caran AB ............................ 221,700 2,728,683
Elanders AB ......................... 124,750 2,333,842
Getinge Industries AB ............... 184,798 2,774,881
Industrial & Financial
Systems AB ......................... 239,400 2,755,009
Monark Stiga AB ..................... 348,575 1,540,203
-----------
TOTAL SWEDEN ........................ 12,132,618
-----------
SWITZERLAND--8.4%
Brauerei Eoichof AG ................. 4,228 4,355,114
Edipresse SA ........................ 12,660 3,640,314
Gretag Imaging Group (a) ............ 33,800 2,903,399
Moevenpick Holding AG ............... 1,730 967,198
SAIA-Burgess Electronics AG (a)...... 5,900 1,460,290
Swisslog Holding AG (a) ............. 19,600 1,854,845
-----------
TOTAL SWITZERLAND ................... 15,181,160
-----------
TAIWAN--1.1%
Want Want Holdings, Ltd. ............ 1,662,000 1,994,400
-----------
UNITED KINGDOM--20.0%
Ashtead Group PLC ................... 605,200 1,377,511
Carpetright PLC ..................... 357,300 1,335,645
Corporate Services Group PLC ........ 463,900 1,173,430
Denison International PLC,
ADR (a) ............................ 121,500 1,518,750
Devro PLC ........................... 468,300 1,346,003
Dialog Corp. PLC .................... 487,000 477,372
Euromoney Publications PLC .......... 50,644 1,156,928
Games Workshop Group PLC ............ 151,100 1,292,848
Goode Durrant PLC ................... 346,100 1,575,534
Hogg Robinson PLC ................... 789,400 2,698,439
Hozelock Group PLC .................. 531,800 2,650,606
Jardine Lloyd Thompson
Group PLC .......................... 769,800 2,442,795
JBA Holdings PLC .................... 535,900 1,691,660
Man (E D & F) Group PLC ............. 594,500 3,456,970
Manganese Bronze
Holdings PLC ....................... 82,800 258,621
Seton Healthcare Group PLC .......... 356,423 4,974,170
Signet Group PLC, ADR (a) ........... 217,312 3,368,336
Victrex PLC ......................... 779,900 2,163,869
Westminster Health Care
Holdings PLC ....................... 337,700 1,166,998
-----------
TOTAL UNITED KINGDOM ................ 36,126,485
-----------
TOTAL COMMON STOCKS
(Identified cost
$171,915,228)...................... 170,597,560
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
30
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------ ------------ ---------------
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO (CONTINUED)
REPURCHASE AGREEMENT--5.5%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $10,300,000 United States
Treasury Note, 0.000%,
07/01/99, with a value of
$10,068,250) (Identified cost
$9,867,000) ...................... $ 9,867 $ 9,867,000
------------
TOTAL INVESTMENTS
(Identified cost
$181,782,228) (b) ............... 100.0% $180,464,560
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ..................... 0.0 (39,229)
------- ------------
NET ASSETS ........................ 100.0% $180,425,331
======= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
COMMON STOCKS--83.2%
ARGENTINA--6.7%
Quilmes Industrial Quinsasa
ADR ................................. 722,150 $6,725,022
Telefonica de Argentina SA
ADR ................................. 213,500 5,964,656
YPF Sociedad Anonima
Class D ADR ......................... 280,300 7,830,881
----------
TOTAL ARGENTINA ...................... 20,520,559
----------
BRAZIL--5.8%
Companhia Cervejaria Brahma,
ADR ................................. 189,700 1,790,294
Eletropaulo Metropolitana -
Eletricidade de Sao Paulo SA ........ 78,020,000 3,615,923
Souza Cruz SA ........................ 861,700 5,562,576
Telecomunicacoes Brasileiras
SA ADR .............................. 95,100 6,912,581
----------
TOTAL BRAZIL ......................... 17,881,374
----------
CHILE--4.3%
AFP Provida SA ADR ................... 420,000 5,643,750
Banco BHIF ADR ....................... 216,900 1,680,975
Quinenco SA ADR ...................... 468,700 3,749,600
Santa Isabel SA ADR .................. 319,800 2,118,675
----------
TOTAL CHILE .......................... 13,193,000
----------
COLOMBIA--0.9
Banco Ganadero SA ADR ................ 295,300 2,676,156
----------
CZECH REPUBLIC--1.3%
Ceske Energeticke Zavody
AS (a) .............................. 172,000 3,868,704
----------
GREECE--2.9%
Hellenic Telecommunication
Organization SA ADR (a) ............. 17,500 231,875
Hellenic Telecommunication
Organization SA ..................... 254,222 6,767,021
Panafon Hellenic
Telecommunication Co.
ADR (a), (c) ........................ 69,400 1,839,100
----------
TOTAL GREECE ......................... 8,837,996
----------
HONG KONG--4.5%
Guangshen Railway Company,
Ltd. ADR ............................ 444,300 2,665,800
Peregrine Investment Holdings,
Ltd. (d) ............................ 2,329,000 0
Shenzhen Expressway Co. (a) .......... 21,334,000 4,956,528
Yue Yuen Industrial Holdings ......... 3,191,300 6,055,051
----------
TOTAL HONG KONG ...................... 13,677,379
----------
HUNGARY--1.1%
Magyar Olaj-es Gazipari RT. .......... 120,200 3,295,023
----------
INDIA--6.4%
Hindalco Industries, Ltd GDR ......... 264,800 3,031,960
Larsen & Toubro, Ltd. GDR (c) ........ 257,400 1,956,240
Larsen & Toubro, Ltd. ................ 798,000 3,015,752
Mahanagar Telephone Nigam,
Ltd. GDR (a), (c) ................... 545,100 6,745,613
State Bank of India GDR (a), (c) ..... 601,700 4,933,940
----------
TOTAL INDIA .......................... 19,683,505
----------
ISRAEL--4.6%
ECI Telecom, Ltd. ADR ................ 241,100 8,589,188
Supersol, Ltd. ADR ................... 452,600 5,544,350
----------
TOTAL ISRAEL ......................... 14,133,538
----------
MALAYSIA--1.3%
Jaya Tiasa Holdings Berhad ........... 2,980,000 3,960,263
----------
MEXICO--15.6%
Cemex SA de CV ....................... 2,158,904 4,652,529
Fomento Economico Mexicano
SA ADR .............................. 207,400 5,522,025
Grupo Financiero Banamex
Accival SA de CV (a) ................ 4,310,100 5,655,728
Grupo Industrial Maseca SA de
CV ADR .............................. 689,300 8,573,169
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARE VALUE
- ------------------------------------------------------------------------------
LAZARD EMERGING MARKETS
PORTFOLIO (CONTINUED)
Grupo Televisa SA (a) ................. 207,700 $ 5,127,594
Kimberly-Clark de Mexico SA ........... 2,082,800 6,643,432
Panamerican Beverages, Inc.,
Class A ADR .......................... 210,300 4,587,169
Pepsi-Gemex SA de CV GDR .............. 546,800 4,271,875
Tubos de Acero de Mexico
SA ADR ............................... 421,400 2,712,762
-----------
TOTAL MEXICO .......................... 47,746,283
-----------
PERU--2.2%
Credicorp, Ltd. ....................... 162,600 1,463,400
Telefonica del Peru SA ADR ............ 409,200 5,191,725
-----------
TOTAL PERU ............................ 6,655,125
-----------
PHILIPPINES--2.3%
Benpres Holdings Corp.
GDR (a), (c) ......................... 680,000 2,196,400
Benpres Holdings Corp. (a) ............ 29,316,000 4,747,836
-----------
TOTAL PHILIPPINES ..................... 6,944,236
-----------
POLAND--3.0%
Bank Handlowy W. Warszawie ............ 542,400 6,691,145
Telekomunikacja Polska SA
GDR (a) .............................. 495,300 2,501,265
-----------
TOTAL POLAND .......................... 9,192,410
-----------
RUSSIA--0.2%
AO Tatneft ADR ........................ 412,300 798,831
-----------
SOUTH AFRICA--10.1%
Amalgamated Banks of South
Africa, Ltd. ......................... 1,104,323 5,230,737
Barlow, Ltd. .......................... 958,515 3,677,646
JD Group, Ltd. ........................ 871,478 3,846,736
Naspers, Ltd. ......................... 873,100 3,409,215
Rembrandt Group, Ltd. ................. 835,200 5,104,528
Sanlam, Ltd. (a) ...................... 3,567,300 3,542,893
South African Breweries, Ltd. ......... 366,200 6,167,265
-----------
TOTAL SOUTH AFRICA .................... 30,979,020
-----------
SOUTH KOREA--6.6%
Samsung Electronics Co. ............... 150,215 10,076,767
SK Telecom Company, Ltd. .............. 8,493 6,224,176
SK Telecom Company, Ltd. ADR 390,061 3,973,746
-----------
TOTAL SOUTH KOREA ..................... 20,274,689
-----------
THAILAND--1.6%
Bangkok Expressway Public
Company, Ltd. (a) .................... 4,871,000 4,824,099
-----------
VENEZUELA--1.8%
Compania Anonima Nacional
Telefonos de Venezuela ADR ........... 145,500 2,591,719
Mavesa SA ADR ......................... 809,000 3,033,750
-----------
TOTAL VENEZUELA ....................... 5,625,469
-----------
TOTAL COMMON STOCKS
(Identified cost $309,980,625)........ 254,767,659
-----------
PREFERRED STOCKS--11.2%
BRAZIL--11.2%
Banco Bradesco SA ADR .................465,929,611 2,583,571
Banco Bradesco SA, rights (a) ......... 19,312,382 0
Banco Itau SA ......................... 11,786,000 5,754,881
Cemig Cia Energetica de Minas
Gerais ...............................224,447,516 4,272,360
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar GDR (a) ....................... 338,900 5,252,950
Companhia Cervejaria
Brahma (a) ........................... 8,091,100 3,535,629
Companhia Cimento Portland ............ 24,820,000 2,824,423
Companhia Paranaense de
Energia-Copel ADR .................... 433,300 3,087,262
Companhia Riograndense
Telecom .............................. 10,617,800 3,822,513
Copel Paranqense de Energia ...........236,399,000 1,702,120
Telesp Celular SA (a) ................. 36,140,000 1,588,210
-----------
TOTAL BRAZIL .......................... 34,423,919
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD EMERGING MARKETS
PORTFOLIO (CONTINUED)
THAILAND--0.0%
Industrial Finance Corp. of
Thailand, rights (a) ................. 2,031,350 $ 0
----------
TOTAL PREFERRED STOCKS
(Identified cost $53,499,641)......... 34,423,919
----------
PRINCIPAL
AMOUNT
(000)
---------------
CONVERTIBLE BONDS--1.4%
BRAZIL--1.3%
Telesp de Sao Paulo SA ............... $ 27,806,118 3,790,174
---------
PHILIPPINES--0.1%
Bacnotan Consolidated
Industries, 5.50%,
06/21/04 (c) ........................ 1,112 378,080
---------
TOTAL CONVERTIBLE BONDS
(Identified cost $6,868,313)......... 4,168,254
---------
REPURCHASE AGREEMENT--3.5%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $10,505,000 United States
Treasury Note, 6.750%,
04/30/00, with a value of
$10,925,200) (Identified cost
$10,708,000)......................... $ 10,708 $ 10,708,000
------------
TOTAL INVESTMENTS
(Identified cost
$381,056,579) (b) .................. 99.3% $304,067,832
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ...................... 0.7 2,156,066
-------- ------------
NET ASSETS ........................... 100.0% $306,223,898
======== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
ASSET-BACKED SECURITIES--5.9%
Chase Manhattan Grantor Trust,
Series 1996-B, Class A
6.61%, 09/15/02 .................................... $ 516 $ 521,369
Citibank Credit Card Master
Trust, Series 1998-1, Class B
5.95%, 01/15/03 .................................... 993 990,882
Delta Funding Home Equity
Loan Trust, Series 1997-3,
Class A6, 7.72%, 05/25/20 .......................... 394 405,210
Federal Express Corp. Trust,
Series 1998-1, Class 1A
6.72%, 01/15/22 .................................... 1,288 1,343,139
First USA Credit Card Master
Trust, Series 1997-6, Class B
6.58%, 03/17/05 .................................... 1,461 1,497,218
Fleetwood Credit Grantor Trust,
Series 1997-B, Class A
6.40%, 05/15/13 .................................... 566 576,930
NationsBank Auto Owner Trust,
Series 1996-A, Class A4
6.625%, 12/15/00 ................................... 440 443,300
PNC Student Loan Trust I,
Series 1997-2, Class A7
6.728%, 01/25/07 ................................... 867 903,414
Travelers Bank Credit Card
Master Trust, Series 1998-1,
Class A, 6.00%, 01/15/05 ........................... 91 91,487
UCFC Loan Trust, Series
1997-C, Class A
8.00%, 09/15/00 .................................... 578 72,160
---------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $6,698,101)......................... 6,845,109
---------
COLLATERALIZED MORTGAGE OBLIGATIONS--17.8%
Asset Securitization Corp.:
Series 1996-D2, Class ACS2
1.49%, 02/28/26 (e) ................................ 2,125 185,274
Series 1996-MD6, Class A1B
6.88%, 11/13/29 (e) ............................... 248 $ 260,539
Series 1996-D3, Class A1A
7.01%, 10/13/26 ................................... 78 80,855
Series 1995-MD4, Class A1
7.10%, 08/13/29 ................................... 309 318,026
Series 1996-D3, Class A1B
7.21%, 10/31/26 ................................... 375 401,310
CS First Boston Mortgage:
Series 1998-C2
6.30%, 11/11/30 ................................... 550 560,141
Series 1997-C1, Class AIB
7.15%, 08/20/06 (e) ............................... 780 821,574
DLJ Mortgage Acceptance
Corp., Series 1993-MF7, Class
A1, 7.40%, 06/18/03 ................................ 328 348,126
Federal Home Loan Mortgage
Corp.:
Series 1679, Class J
6.00%, 02/15/09 ................................... 359 356,420
Series 1697, Class D
6.00%, 03/15/09 ................................... 359 354,175
Series 1513, Class L
6.50%, 07/15/07 ................................... 230 235,030
Series 1478, Class H
6.50%, 03/15/08 ................................... 373 381,626
Series G025, Class B
6.50%, 12/25/08 ................................... 707 716,940
Series 1519, Class G
6.75%, 05/15/08 ................................... 619 635,875
Series 1946, Class PD
6.75%, 05/15/24 ................................... 683 699,861
7.00%, 11/01/28 .................................... 6,233 6,356,349
Federal National Mortgage
Association REMIC:
Series 1992-203, Class SA
3.844%, 11/25/07 (e) .............................. 243 15,739
Series 1992-129, Class G
4.00%, 06/25/18 ................................... 423 417,633
Series 1994-48, Class E
6.00%, 11/25/08 ................................... 517 521,358
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE>
===============================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO (CONTINUED)
Series 1996-40, Class J
6.00%, 12/25/08 ................. $ 840 $ 849,450
Series 1994-28, Class H
6.25%, 03/25/23 ................. 367 369,980
Series 1993-134, Class K
6.50%, 05/25/08 ................. 295 297,194
Series 1993-206, Class KA
6.50%, 12/25/22 ................. 502 512,511
Series 1994-30, Class LC
6.50%, 07/25/23 ................. 363 363,867
Series 1999-97, Class SA
10.00%, 04/25/21 ................ 37 927
Series 1991-G13, Class L
10.095%, 05/25/21 (e) ........... 158 36,418
First Union Lehman Brothers
Bank, Series 1998-C2,
Class A1, 6.28%, 06/18/07 ........ 1,015 1,038,705
G3 Mortgage Reinsurance, Ltd.,
7.892%, 05/25/08 (c) ............. 300 269,156
GMAC Commercial Mortgage
Securities, Inc., Series
1996-C1, Class A2A
6.79%, 09/15/03 (e) ............. 266 275,298
Headlands Mortgage Securities, Inc.:
Series 1997-1, Class X1
0.686%, 03/25/27 ................ 4,755 49,890
Series 1997-4, Class X
1.121%, 11/25/27 ................ 2,790 43,783
LB Commercial Conduit
Mortgage Trust, Series
1996-C2, Class A
1.00%, 10/25/26 ................. 311 328,711
Merrill Lynch Mortgage
Investments, Inc.:
Series 1996-C1, Class IO
0.736%, 04/25/28 (c), (e) ....... 4,489 115,210
Series 1998-C3, Class A1
5.65%, 12/15/30 ................. 1,000 994,844
Midland Realty Acceptance
Corp., Series 1996-C1, Class
A2, 7.475%, 12/25/05 ............ 344 368,479
Morgan Stanley Capital One, Inc.:
Series 1998-HF1, Class X
1.046%, 02/15/18 ................ 4,384 258,986
Series 1996-WF1,Class X
1.405%, 11/15/28 (c), (e) ....... 2,696 157,972
Series 1997-C1, Class IO
2.562%, 02/15/20 (e) ............ 663 9,336
Mortgage Capital Funding, Inc.,
1.367%, 11/20/12 ................. 3,378 259,216
Prudential Home Mortgage
Security, Series 1993-41,
Class A5, 0.914%, 10/25/00....... 15,432 111,424
Structured Asset Securitization
Corp.:
Series 1996-CFL, Class X1
1.461%, 02/25/28 (e) ............ 2,067 112,161
Series 1996-CFL, Class X2
1.153%, 02/25/28 (e) ............ 1,228 27,314
United States Department
Veteran Affairs, Series 1997-1,
Class IO, 0.368%, 02/15/27
(e) .............................. 8,650 85,155
----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Identified cost $20,995,437)..... 20,602,838
----------
CORPORATE BONDS--25.2%
AEROSPACE & DEFENSE--0.7%
Raytheon Co.,
6.30%, 03/15/05 .................. 832 858,641
----------
BANKING--1.3%
Capital One Bank:
6.70%, 05/15/08 .................. 416 402,280
7.15%, 09/15/06 .................. 268 269,394
U.S. Bancorp, Inc.,
7.50%, 06/01/26 .................. 728 831,616
----------
1,503,290
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO (CONTINUED)
BREWERY--0.8%
Anheuser Busch Company, Inc.,
7.10%, 06/15/07 ................ $ 799 $ 864,150
---------
BUILDING & CONSTRUCTION--0.8%
CSC Holdings, Ltd.,
10.50%, 05/15/16 ............... 308 361,900
Penhall Acquisition Corp.,
12.00%, 08/01/06 (c) ........... 550 517,000
---------
878,900
---------
CHEMICALS--0.2%
Climachem, Inc.,
10.75%, 12/01/07 ............... 260 261,300
---------
COMMUNICATION SERVICES--0.1%
Talton Holdings, Inc.,
11.00%, 06/30/07 ............... 73 69,350
---------
COMPUTERS & BUSINESS EQUIPMENT--0.3%
PSINet, Inc.,
10.00%, 02/15/05 ............... 310 306,900
---------
CONTAINERS--0.1%
Amtrol Acquisition, Inc.,
10.625%, 12/31/06 .............. 82 79,745
---------
ENERGY--0.4%
Midamerican Energy Co.,
6.375%, 06/15/06 ............... 454 459,689
---------
ENTERTAINMENT--1.3%
Casino America, Inc.,
12.50%, 08/01/03 ............... 144 159,120
Regal Cinemas, Inc.,
9.50%, 06/01/08 (c) ............ 730 751,900
Station Casinos, Inc.,
10.125%, 03/15/06 .............. 600 628,500
---------
1,539,520
---------
FINANCIAL SERVICES--4.9%
AT&T Capital Corp.,
6.60%, 05/15/05 ................ 586 561,423
First USA Trust,
6.50%, 01/18/06 (c) ............ 400 401,380
Ford Motor Credit Co.,
6.75%, 05/15/05 ................ 743 786,042
General Motors Acceptance
Corp.,
6.75%, 02/07/02 ............... 821 850,408
Goldman Sachs Group LP,
6.625%, 12/01/04 (c) ........... 521 532,413
Heller Financial, Inc.,
6.50%, 11/01/01 ................ 279 284,036
MBNA Corp.,
6.75%, 03/15/08 ................ 429 418,597
Republic New York Corp.,
7.25%, 07/15/02 ................ 838 872,398
Resolution Funding Strips,
0.00%, 04/15/07 ................ 1,248 825,901
Sears Roebuck Acceptance
Corp.,
7.14%, 05/02/03 ............... 149 157,553
---------
5,690,151
---------
FOOD & BEVERAGES--0.3%
Advantica Restaurant Group, Inc.,
11.25%, 01/15/08 ............... 250 253,125
Fleming Cos., Inc.,
10.50%, 12/01/04 ............... 65 61,100
---------
314,225
---------
FOOD PROCESSING--0.0%
Rifkin Acquisitions Partners LP,
11.125%, 01/15/06 .............. 40 44,000
---------
FUNERAL SERVICES--0.3%
Service Corp. International,
6.75%, 06/01/01 ................ 377 385,863
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
37
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO (CONTINUED)
HEALTHCARE--0.7%
Dynacare, Inc.,
10.75%, 01/15/06 ................. $ 122 $ 119,560
Quest Diagnostics, Inc.,
10.75%, 12/15/06 ................. 218 241,980
Tenet Healthcare Corp.,
8.625%, 01/15/07 ................. 400 418,000
---------
779,540
---------
INDUSTRIAL--1.1%
J.H. Heafner, Inc.,
10.00%, 05/15/08 (c) ............. 310 310,000
Mediq, Inc.,
11.00%, 06/01/08 (c) ............. 350 336,000
Pen Holdings, Inc.,
9.875%, 06/15/08 ................. 400 400,000
Transdigm, Inc.,
10.375%, 12/01/08 (c) ............ 250 251,250
---------
1,297,250
---------
INDUSTRIAL & MACHINERY--0.7%
High Voltage Engineering Corp.,
10.50%, 08/15/04 ................. 374 353,430
NationsRent, Inc.,
10.375%, 12/15/08 (c) ............ 210 209,475
United Rentals, Inc.,
9.25%, 01/15/09 (c) .............. 250 251,875
---------
814,780
---------
LEISURE TIME--0.2%
Booth Creek Ski Holdings, Inc.,
12.50%, 03/15/07 ................. 270 267,300
---------
MANUFACTURING--0.0%
W.R. Carpenter North America,
Inc., 10.625%, 06/15/07 .......... 54 54,675
---------
MORTGAGE BACKED SECURITIES--1.1%
Associates Corporation North
America, 6.25%, 11/01/08 ......... 645 667,911
Fort James Corp.,
6.875%, 09/15/07 ................. 636 657,980
---------
1,325,891
---------
OIL & GAS--0.7%
Texaco Capital, Inc.,
6.00%, 06/15/05 .................. 776 785,180
---------
OTHER--0.3%
RMOF,
2.16%, 01/31/22 .................. 4,434 321,492
---------
RESTAURANTS, LODGING &
ENTERTAINMENT--0.2%
American Restaurant Group,
Inc., 11.50%, 02/15/03 ........... 205 178,350
---------
RETAIL--0.9%
Frank's Nursery & Crafts, Inc.,
10.25%, 03/01/08 ................. 300 295,500
Home Interiors & Gifts, Inc.,
10.125%, 06/01/08 (c) ............ 300 297,000
Jitney-Jungle Stores of America,
Inc., 10.375%, 09/15/07 .......... 15 15,375
Petro Stopping Centers,
10.50%, 02/01/07 ................. 365 381,425
Renters Choice, Inc.,
11.00%, 08/15/08 (c) ............. 100 101,500
---------
1,090,800
---------
TELECOMMUNICATIONS--3.4%
Coaxial Communications
Central Ohio, LLC,
10.00%, 08/15/06 (c) ............ 500 516,250
Fundy Cable Ltd.,
11.00%, 11/15/05 ................. 452 476,860
GTE Corp.,
9.10%, 06/01/03 .................. 395 451,339
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO (CONTINUED)
ITC Deltacom, Inc.,
9.75%, 11/15/08 (c) .............. $ 650 $ 672,750
LodgeNet Entertainment Corp.,
10.25%, 12/15/06 ................. 245 242,550
TCI Communications, Inc.,
6.875%, 02/15/06 ................. 673 718,138
US West Communications,
Inc.,
5.625%, 11/15/08 ................ 836 843,616
-----------
3,921,503
-----------
TRANSPORTATION--0.5%
Atlantic Express, Inc.,
10.75%, 02/01/04 ................. 407 411,070
Atlas Air, Inc.,
9.25%, 04/15/08 .................. 120 119,700
-----------
530,770
-----------
UTILITIES--3.9%
Calpine Corp.,
8.75%, 07/15/07 .................. 650 687,921
GTE North, Inc.,
6.375%, 02/15/10 ................. 1,155 1,223,757
National Rural Utilities
Cooperative,
6.125%, 05/15/05 ................ 778 810,256
Texas Utilities Co., Series B
6.375%, 10/01/04 ................. 821 848,101
Western Resources, Inc.,
7.125%, 08/01/09 ................. 850 955,952
-----------
4,525,987
-----------
TOTAL CORPORATE BONDS
(Identified cost $29,029,261)..... 29,149,242
-----------
MUNICIPALS--3.6%
California Department Water
Resource Center, Series U
5.00%, 12/01/29 ................. 570 563,781
Denver City & County Airport
Revenue, Series A
5.00%, 11/15/25 ................. 1,145 1,111,978
Houston Airport Systems
Revenue, Series B
5.00%, 07/01/25 ................. 715 694,558
Long Island Power Authority,
5.125%, 04/01/11 ................. 570 599,919
Philadelphia Airport Systems
Revenue, Series A
5.125%, 07/01/28 ................ 570 559,370
Wayne Charter County Airport
Revenue, Series A
5.00%, 12/01/22 ................. 585 569,065
-----------
TOTAL MUNICIPALS
(Identified cost $4,133,313)...... 4,098,671
-----------
MORTGAGE PASS-THROUGH
SECURITIES--23.5%
Federal Home Loan Mortgage
Corp.:
6.50%, 04/15/11 .................. 682 689,884
6.50%, 08/01/13 .................. 1,792 1,819,132
6.50%, 10/01/13 .................. 787 798,670
6.50%, 11/01/13 .................. 623 632,150
6.50%, 09/01/28 .................. 1,591 1,603,361
6.50%, 10/01/28 .................. 442 445,366
6.50%, 11/01/28 .................. 127 128,813
6.50%, TBA ....................... 1,081 1,096,869
7.00%, 08/01/09 .................. 877 895,612
7.00%, 08/01/28 .................. 132 134,786
7.472%, 09/01/26 (e) ............. 70 71,268
7.50%, 12/01/28 .................. 563 578,128
7.504%, 11/01/26 (e) ............. 92 93,446
8.00%, 03/01/28 .................. 1,126 1,166,500
Federal National Mortgage
Association:
6.50%, 08/01/28 ................. 1,646 1,658,372
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE>
===============================================================================-
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO (CONTINUED)
6.50%, 09/01/28 ........................... $ 1,605 $ 1,617,154
6.50%, 12/01/28 ........................... 4,031 4,060,698
7.00%, 05/01/28 ........................... 592 604,004
7.00%, 08/01/28 ........................... 142 145,723
7.00%, TBA ................................ 1,060 1,082,525
7.075%, 05/01/06 .......................... 448 480,246
7.323%, 06/01/25 (e) ...................... 117 118,856
7.467%, 07/01/25 (e) ...................... 164 167,281
8.00%, 12/01/09 ........................... 318 327,595
8.00%, 06/01/12 ........................... 289 298,022
8.00%, 12/01/12 ........................... 480 494,325
10.00%, 08/01/18 .......................... 217 43,757
Government National Mortgage
Association:
1.00%, 06/20/28 .......................... 1,445 1,463,887
5.50%, 10/20/27 ........................... 864 874,364
6.50%, 07/20/27 ........................... 216 218,592
6.50%, 09/20/27 ........................... 324 328,592
6.625%, 09/20/26 .......................... 294 299,012
7.00%, 04/15/28 ........................... 860 880,717
8.00%, 11/15/28 ........................... 1,794 1,865,316
------------
TOTAL MORTGAGE PASS-THROUGH
SECURITIES
(Identified cost $27,180,737).............. 27,183,023
------------
U.S. GOVERNMENT
OBLIGATIONS--20.0%
Tennessee Valley Authority
Federal,
0.00%, 11/15/29 .......................... 751 731,767
United States Treasury Notes:
3.625%, 07/15/02 .......................... 1,845 1,831,163
4.75%, 11/15/08 ........................... 110 110,859
5.75%, 11/15/00 ........................... 2,700 2,752,299
United States Treasury Strips:
0.00%, 11/15/04 ........................... 13,564 10,274,458
0.00%, 05/15/09 ........................... 12,384 7,360,183
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Identified cost $22,981,825).............. 23,060,729
------------
REPURCHASE AGREEMENT--4.8%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $5,950,000 United States
Treasury Bill, 0.000%,
12/09/99, with a value of
$5,703,075) (g) (Identified cost
$5,588,000)................................ 5,588 5,588,000
------------
TOTAL INVESTMENTS
(Identified cost $116,606,674)
(b) ....................................... 100.8% $116,527,612
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS .............................. (0.8) (904,509)
------------ ------------
NET ASSETS ................................. 100.0% $115,623,103
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD HIGH YIELD PORTFOLIO
CORPORATE BONDS--88.2%
AEROSPACE & DEFENSE--0.8%
Sabreliner Corp.,
11.00%, 06/15/08 (c) ......................... $ 400 $ 352,000
---------
AUTOMOTIVE--2.4%
J.B. Poindexter & Co.,
12.50%, 05/15/04 ............................. 500 470,000
United Rentals, Inc.,
9.25%, 01/15/09 (c) .......................... 550 555,500
---------
1,025,500
---------
BROADCASTING--4.5%
Echostar DBS Corp.,
12.50%, 07/01/02 ............................. 400 460,000
Golden Sky Systems, Inc.,
12.375%, 08/01/06 (c) ........................ 500 512,500
Paxson Communications Corp.,
11.625%, 10/01/02 ............................ 310 314,650
Radio Unica Corp.,
1.00%, 08/01/06 (c) .......................... 250 135,000
Spanish Broadcasting Systems,
Inc., 11.00%, 03/15/04 ....................... 500 530,000
---------
1,952,150
---------
BUILDING & CONSTRUCTION--1.1%
Penhall Acquisition Corp.,
12.00%, 08/01/06 (c) ......................... 500 470,000
---------
CABLE T.V. OPERATOR--6.3%
CSC Holdings, Inc.:
9.875%, 04/01/23 ............................. 358 398,275
10.50%, 05/15/16 ............................. 500 587,500
Fundy Cable, Ltd.,
11.00%, 11/15/05 ............................. 600 633,000
Coaxial Communications
Central Ohio, LLC,
10.00%, 08/15/06 (c) ......................... 500 516,250
Rifkin Acquisitions Partners LP,
11.125%, 01/15/06 ............................ 500 550,000
---------
2,685,025
---------
CHEMICALS--2.3%
Climachem, Inc.,
10.75%, 12/01/07 ............................. 495 497,475
Geo Specialty Chemicals, Inc.,
10.125%, 08/01/08 (c) ........................ 500 480,000
---------
977,475
---------
COMMERCIAL SERVICES--0.6%
Fisher Scientific International, Inc.,
9.00%, 02/01/08 (c) .......................... 250 248,750
---------
COMMUNICATION SERVICES--2.5%
Centennial Cellular Operating Co.
10.75%, 12/15/08 (c) ......................... 600 603,000
Talton Holdings, Inc.,
11.00%, 06/30/07 ............................. 500 475,000
---------
1,078,000
---------
COMPUTER SERVICES--4.0%
Concentric Network Corp.,
12.75%, 12/15/07 ............................. 500 510,000
Primark Corp.,
9.25%, 12/15/08 (c) .......................... 550 550,000
PSINet, Inc.:
10.00%, 02/15/05 ............................. 140 138,600
11.50%, 11/01/08 (c) ......................... 500 523,750
---------
1,722,350
---------
CONSUMER DURABLES--1.2%
Generac Portable Products LLC,
11.25%, 07/01/06 (c) ......................... 500 500,000
---------
CONTAINERS--2.4%
Amtrol, Inc.,
10.625%, 12/31/06 ............................ 500 486,250
Silgan Holdings, Inc.,
13.25%, 07/15/06 ............................. 500 560,000
---------
1,046,250
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
ENERGY--0.4%
Mariner Energy, Inc., Series B
10.50%, 08/01/06 ................ $ 200 $ 166,000
---------
ENTERTAINMENT--7.7%
Casino America, Inc.,
12.50%, 08/01/03 ................ 500 552,500
Penn National Gaming, Inc.,
10.625%, 12/15/04 ............... 500 525,000
Production Resource Group LLC,
11.50%, 01/15/08 ................ 500 490,000
Regal Cinemas, Inc.:
8.875%, 12/15/10 ................ 150 148,875
9.50%, 06/01/08 (c) ............. 500 515,000
Station Casinos, Inc.,
10.125%, 03/15/06 ............... 500 523,750
TVN Entertainment Corp.,
14.00%, 08/01/08 ................ 500 445,000
Young America Corp.,
11.625%, 02/15/06 ............... 300 126,000
---------
3,326,125
---------
FOOD & BEVERAGES--4.3%
Advantica Restaurant Group,
Inc., 11.25%, 01/15/08 .......... 700 708,750
Agrilink Foods, Inc.,
11.875%, 11/01/08 (c) ........... 600 610,500
American Restaurant Group,
Inc., 11.50%, 02/15/03 .......... 575 500,250
Mrs. Field's Original,
1.00%, 12/01/05 ................. 80 45,800
---------
1,865,300
---------
HEALTHCARE--5.0%
Dynacare, Inc.,
10.75%, 01/15/06 ................ 625 612,500
Fresenius Medical Care Capital
Trust, 9.00%, 12/01/06 .......... 250 261,250
Genesis Health Ventures, Inc.,
9.875%, 01/15/09 (c) ............ 1,100 1,061,500
Tenet Healthcare Corp.,
8.625%, 01/15/07 ................ 200 209,000
---------
2,144,250
---------
INDUSTRIAL--11.1%
Dictaphone Corp.,
11.75%, 08/01/05 ................ 500 375,000
Globe Holdings, Inc.,
1.00%, 08/01/09 (c) ............. 300 126,000
Interpool Capital Trust,
9.875%, 02/15/27 ................ 500 440,455
J.H. Heafner, Inc.,
10.00%, 05/15/08 ................ 650 650,000
Mediq, Inc.,
11.00%, 06/01/08 ................ 800 768,000
Morris Material Handling, Inc.,
9.50%, 04/01/08 ................. 450 333,000
NationsRent, Inc.,
10.375%, 12/15/08 (c) ........... 600 598,500
Transdigm, Inc.,
10.375%, 12/01/08 (c) ........... 375 376,875
Unisys Corp.,
11.75%, 10/15/04 ................ 600 696,000
W.R. Carpenter North America,
Inc., 10.625%, 06/15/07 ......... 400 405,000
---------
4,768,830
---------
LEISURE TIME--2.1%
Booth Creek Ski Holdings, Inc.,
Series B
12.50%, 03/15/07 ................ 900 891,000
---------
LODGING & ENTERTAINMENT--1.0%
Courtyard by Marriott II Ltd.,
10.75%, 02/01/08 ................ 400 414,000
---------
MANUFACTURING--5.6%
Axiohm Transaction Solutions,
9.75%, 10/01/07 ................. 500 472,500
Exide Corp.,
10.00%, 4/15/05 ................. 500 493,750
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
Henry Co.,
10.00%, 04/15/08 ..................... $ 500 $ 500,000
High Voltage Engineering
Corp., 10.50%, 08/15/04 .............. 500 472,500
Precise Technology, Inc.,
11.125%, 06/15/07 .................... 500 482,500
----------
2,421,250
----------
MINING--1.3%
Pen Holdings, Inc.,
9.875%, 06/15/08 ..................... 550 550,000
----------
PUBLISHING--1.3%
T/SF Communications Corp.,
10.375%, 11/01/07 .................... 550 554,125
----------
RETAIL--5.2%
Frank's Nursery and Crafts, Inc.,
10.25%, 03/01/08 ..................... 350 344,750
Home Interiors & Gifts, Inc.,
10.125%, 06/01/08 (c) ................ 700 693,000
Jitney-Jungle Stores of America,
Inc., 10.375%, 09/15/07 .............. 500 512,500
Petro Stopping Centers, 10.50%,
02/01/07 ............................. 450 470,250
Renters Choice, Inc.,
11.00%, 08/15/08 (c) ................. 200 203,000
----------
2,223,500
----------
SECURITY--1.4%
Loomis Fargo & Co.,
10.00%, 01/15/04 ..................... 600 594,000
----------
TELECOMMUNICATIONS--11.3%
AMSC Acquisition, Inc.,
12.25%, 04/01/08 ..................... 500 310,000
Dobson Communications Corp.,
11.75%, 04/15/07 ..................... 250 248,750
Econophone, Inc.,
13.50%, 07/15/07 ..................... 500 511,875
Facilicom International, Inc.,
10.50%, 01/15/08 (c) ................. 249 201,690
IPC Information Systems, Inc.,
1.00%, 05/01/08 (f) .................. 200 126,000
Iridium LLC,
10.875%, 07/15/05 .................... 250 212,500
ITC Deltacom, Inc.:
9.75%, 11/15/08 (c) .................. 100 103,500
11.00%, 06/01/07 ..................... 500 547,500
LodgeNet Entertainment Corp.,
10.25%, 12/15/06 ..................... 500 495,000
Long Distance International,
Inc., 12.25%, 04/15/08 (c) ........... 300 250,500
McLeodUSA, Inc.,
9.50%, 11/01/08 (c) .................. 300 318,000
Nextel Communications, Inc.,
12.00%, 11/01/08 (c) ................. 500 552,500
Pegasus Communications Corp.,
9.75%, 12/01/06 (c) .................. 500 501,250
Qwest Communications
International, Inc.,
10.875%, 04/01/07 ................... 390 454,350
----------
4,833,415
----------
TRANSPORTATION--1.2%
Atlantic Express, Inc.,
10.75%, 02/01/04 ..................... 525 530,250
----------
TRANSPORTATION & FREIGHT
SERVICES--1.2%
Atlas Air, Inc.,
9.25%, 04/15/08 ...................... 500 498,750
----------
TOTAL CORPORATE BONDS
(Identified cost $38,613,745)......... 37,838,295
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------------
LAZARD HIGH YIELD PORTFOLIO (CONTINUED)
PREFERRED STOCKS--6.1%
Adelphia Communications
Corp. ............................ 5,000 $ 590,000
American Mobile Satellite
Corp., warrant 4/01/08 (c) ....... 500 1,940
American Restaurant Group,
Inc., 08/15/08 warrant ........... 200 2
American Restaurant Group,
Inc. ............................. 212 212,000
Dobson Communications Corp. 272 261,120
Forman Petroleum Corp.,
06/01/04 warrant ................. 250 0
Harborside Healthcare Corp. ....... 310 288,300
High Voltage Engineering Corp...... 265 259,700
Hyperion Telecommunications,
Inc. ............................. 318 252,810
Jitney-Jungle Stores of America,
Inc. ............................. 1,600 214,400
Long Distance International,
Inc., 04/13/08 warrant ........... 300 38
Nextel Communications, Inc. ....... 7 5,775
Paxson Communications Corp. ....... 17 15,385
Paxson Communications Corp. ....... 42 367,500
S.F. Holdings Group, Inc. (c) ..... 1,110 2,220
S.F. Holdings Group, Inc. ......... 330 145,200
---------
TOTAL PREFERRED STOCKS
(Identified cost $2,986,601)....... 2,616,390
---------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT--3.6%
State Street Bank and Trust
Company, 4.75%, 01/04/99,
(Dated 12/31/98, collateralized
by $1,530,000 United States
Treasury Note, 6.375%,
05/15/00, with a value of
$1,579,725) (Identified cost
$1,545,000).................... $ 1,545 $ 1,545,000
-----------
TOTAL INVESTMENTS
(Identified cost
$43,145,346) (b).............. 97.9% $41,999,685
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ................ 2.1 883,878
------- -----------
NET ASSETS ..................... 100.0% $42,883,563
======= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
44
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO
CURRENCY DENOMINATED BONDS--88.9%
ARGENTINE PESO--1.1%
Argentina Bocon, (USD),
5.01%, 09/01/02 (e) ............ $ 35 $ 38,220
Argentina Resolution Co.,
0.00%, 07/01/99 ................ 125 118,807
Mastellone Hermanos SA,
11.75%, 04/01/08 ............... 239 192,395
Republic of Argentina:
3.01%, 04/01/01 (e) ............ 816 563,547
3.01%, 09/01/02 (e) ............ 103 96,547
3.01%, 04/01/07 (e) ............ 385 284,259
Republic of Argentina, (USD),
6.188%, 03/31/05 (e) ........... 51 43,707
----------
TOTAL ARGENTINE PESO ............ 1,337,482
----------
AUSTRALIAN DOLLAR--1.2%
Commonwealth of Australia,
9.50%, 08/15/03 (g) ............ 1,988 1,455,836
----------
AUSTRIAN SCHILLING--1.2%
Republic of Austria,
8.00%, 03/18/02 ................ 14,670 1,421,393
----------
BELGIAN FRANC--2.7%
Kingdom of Belgium,
5.75%, 03/28/08 ................ 97,496 3,180,395
----------
BRITISH POUND--9.6%
Bayerische Landesbank
Girozentrale,
6.875%, 06/07/02 .............. 826 1,428,929
Birmingham Midshires Building
Society,
9.125%, 01/05/06 .............. 150 293,290
Brunner Mond Group PLC,
12.50%, 07/15/08 ............... 198 299,352
Chelsea Village PLC,
8.875%, 12/17/07 ............... 326 551,367
Coca Cola Enterprises PLC,
6.75%, 03/12/08 ................ 158 280,385
Finance for Resident Society
House,
11.126%, 10/05/58 .............. 300 879,403
Haven Funding PLC,
8.125%, 09/30/37 ............... 290 650,139
HMV Media Group PLC,
10.875%, 05/15/08 .............. 300 463,532
Landwirtschaftliche Rentenbank,
6.375%, 03/09/05 ............... 494 867,188
Middleweb PLC,
10.50%, 05/30/08 (c) ........... 274 430,188
North American Capital Corp.,
8.25%, 11/17/03 (g) ............ 876 1,590,925
Textron Golf & Turk PLC,
8.684%, 01/30/08 (c) ........... 303 583,447
United Kingdom Treasury
Bonds:
7.25%, 12/07/07 (g) ............ 387 773,164
8.00%, 06/07/21 (g) ............ 514 1,287,776
United Kingdom Treasury
Notes, 6.50%, 12/07/03 ......... 299 544,946
William Hill Finance PLC,
10.625%, 04/30/08 .............. 330 559,229
----------
TOTAL BRITISH POUND ............. 11,483,260
----------
CANADIAN DOLLAR--1.8%
Argos Funding Trust,
5.963%, 02/27/06 ............... 250 161,923
Government of Canada,
8.00%, 06/01/23 ................ 682 615,964
Molson Breweries Company, Ltd.,
6.00%, 06/02/08 (c) ............ 800 534,903
Province of Quebec,
8.625%, 11/04/11 ............... 111 232,899
Quebec Housing,
8.95%, 05/13/13 ................ 407 352,148
UniHost Corp.,
10.00%, 06/30/03 ............... 402 239,333
----------
TOTAL CANADIAN DOLLAR ........... 2,137,170
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
COLOMBIAN PESO--0.0%
Salomon COP Swap,
0.00%, 01/06/99 ................. $ 50 $ 52,385
----------
CROATIAN KUNA--0.1%
Republic of Croatia,
6.563%, 07/31/06 ................ 153 122,020
----------
DANISH KRONE--5.3%
Kingdom of Denmark:
7.00%, 11/10/24 ................. 5,452 1,096,517
8.00%, 03/15/06 ................. 15,774 3,056,502
Nykredit AS,
5.00%, 10/01/29 ................. 2,381 349,801
Realkredit Danmark,
5.00%, 10/01/29 ................. 11,757 1,726,335
Unikredit Realkred,
5.00%, 10/01/29 ................. 1,190 173,985
----------
TOTAL DANISH KRONE ............... 6,403,140
----------
FINNISH MARKKA--1.0%
Republic of Finland,
9.50%, 03/15/04 ................. 5,000 1,251,912
----------
FRENCH FRANC--6.1%
Credit Foncier de France
7.50%, 03/29/05 ................. 18,250 3,848,462
Government of France:
0.00%, 10/25/19 ................. 15,923 1,029,541
0.00%, 04/25/21 ................. 29,202 1,737,704
Neopost,
6.131%, 09/30/07 (c), (e) ....... 1,900 327,938
Republic of France,
4.00%, 07/12/00 ................. 1,958 354,758
----------
TOTAL FRENCH FRANC ............... 7,298,403
----------
GERMAN MARK--18.4%
AirTouch Communications, Inc.,
5.50%, 07/24/08 ................. 620 375,038
Autobahn Tank & Rast,
6.00%, 10/16/00 ................. 425 265,211
Bundesrepublik Deutschland,
0.00%, 01/04/24 ................. 4,011 687,112
Core Dem,
6.39%, 07/05/15 ................. 400 235,209
Derby Cycle Corp.,
9.375%, 05/15/08 ................ 379 167,146
Deutsche Bank AG,
11.00%, 04/15/99 ................ 100 106,440
Euronet Services, Inc.,
12.375%, 07/01/06 ............... 1,061 203,720
Exide Holdings,
9.125%, 04/15/04 (c) ............ 1,005 590,964
Federal Republic of Germany:
0.00%, 01/04/21 (g) ............. 5,587 1,110,964
6.00%, 09/15/03 (g) ............. 3,020 2,018,649
6.00%, 07/04/07 (g) ............. 11,377 7,847,713
6.50%, 10/14/05 (g) ............. 7,082 4,948,391
Geberit International SA,
10.125%, 04/15/07 ............... 302 208,388
Impress Metal Pack Holding,
9.875%, 05/29/07 (c) ............ 927 609,063
Ineos PLC,
8.625%, 04/30/05 ................ 890 499,310
Land Hessen,
6.00%, 11/29/13 ................. 1,000 711,998
LBK Hess Thur Giro,
9.00%, 09/06/04 ................. 60 115,135
Sirona Dental Systems,
9.125%, 07/15/08 (c) ............ 845 501,950
Texon International PLC,
10.00%, 02/01/08 ................ 948 443,682
Viatel, Inc.:
10.00%, 04/15/11 warrant (c)..... 41 0
11.15%, 04/15/08 (c) ............ 800 477,619
----------
TOTAL GERMAN MARK ................ 22,123,702
----------
GREEK DRACHMA--0.7%
Republic of Hellenic:
8.90%, 04/01/03 ................. 70,000 262,363
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
12.80%, 06/30/00 ............................ $ 30,000 $ 108,207
13.00%, 08/14/03 (e) ........................ 113,000 410,204
----------
TOTAL GREEK DRACHMA ......................... 780,774
----------
HUNGARIAN FORINT--0.7%
Government of Hungary:
16.00%, 01/12/00 ........................... 110,000 514,638
16.50%, 04/12/99 ........................... 39,000 180,869
23.00%, 05/06/99 ........................... 7,000 33,211
Republic of Hungary,
19.50%, 01/12/99 ........................... 12,000 55,725
----------
TOTAL HUNGARIAN FORINT ...................... 784,443
----------
IRISH POUND---0.5%
Republic of Ireland,
8.00%, 08/18/06 ............................ 295 556,964
----------
ITALIAN LIRA--0.9%
Films PLC,
5.785%, 03/31/05 (e) ....................... 1,000,000 586,652
Republic of Italy,
10.50%, 04/28/14 ........................... 40 101,387
Societa Sportiva Lazio SPA,
6.375%, 10/15/07 ........................... 723,544 426,657
----------
TOTAL ITALIAN LIRA .......................... 1,114,696
----------
JAPANESE YEN--18.4%
Asterique,
2.48%, 01/23/02 ............................ 191,549 1,694,374
European Investment Bank,
3.00%, 09/20/06 ............................ 562,000 5,321,725
Export-Import Bank of Japan,
4.375%, 10/01/03 (g) ....................... 509,000 5,132,773
International Bank for
Reconstruction and Development,
4.75%, 12/20/04 (g) ........................ 808,500 8,470,298
Nippon Credit Bank, Ltd.,
1.80%, 07/27/00 ............................ 60,000 519,328
Republic of Austria:
4.50%, 09/28/05 ............................ 80,000 841,220
6.25%, 10/16/03 ............................ 15,000 163,534
----------
TOTAL JAPANESE YEN .......................... 22,143,252
----------
LEBANESE POUND--0.7%
LBP Treasury Bill,
0.00%, 03/18/99 ............................ 125,600 81,015
LBP Treasury Note,
0.00%, 02/11/99 ............................ 534,830 377,970
Paribas LBP Treasury Note,
18.12%, 01/21/99 ........................... 546,220 388,938
----------
TOTAL LEBANESE POUND ........................ 847,923
----------
MEXICAN PESO--1.0%
Mexican Cetes:
0.00%, 01/14/99 ............................ 3,500 350,633
0.00%, 02/11/99 ............................ 780 75,618
0.00%, 04/08/99 ............................ 2,876 267,447
0.00%, 07/08/99 ............................ 680 58,898
UDI Bonos,
7.00%, 05/27/99 ............................ 350 83,789
United Mexican States, (USD):
0.00%, 01/01/03 ............................ 769 0
6.039%, 12/31/19 (e), (g) .................. 500 406,250
----------
TOTAL MEXICAN PESO .......................... 1,242,635
----------
MOROCCAN DIRHAM--0.1%
Morocco Restructuring &
Consolidation Agreement,
(USD), 6.063%, 01/01/09 (e)................ 200 156,000
----------
NETHERLANDS GUILDER--1.3%
Government of Netherlands,
8.75%, 01/15/07 ............................ 1,426 994,337
West LB Finance Curacao NV,
8.125%, 01/24/07 ........................... 310 581,990
----------
TOTAL NETHERLANDS GUILDER ................... 1,576,327
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
POLISH ZLOTY--0.1%
Polish Treasury Bill,
0.00%, 08/04/99 ................... $ 650 $ 171,815
---------
SOUTH AFRICAN RAND--0.3%
Government of Namibia:
12.00%, 04/15/02 .................. 210 30,662
12.00%, 04/15/05 .................. 210 28,531
Lesotho Highlands Water,
12.50%, 04/15/02 .................. 997 151,997
Republic of South Africa,
12.00%, 02/28/05 .................. 740 106,622
South African Roads,
11.50%, 09/30/05 .................. 500 66,728
---------
TOTAL SOUTH AFRICAN RAND ........... 384,540
---------
SPANISH PESETA--0.5%
Catalunya Generalitat,
9.30%, 11/24/03 ................... 67,000 582,219
---------
SWEDISH KRONA--2.6%
Forenings Sparbanken,
0.00%, 03/29/99 ................... 4,300 315,862
Kingdom of Sweden:
9.00%, 04/20/09 ................... 7,200 1,237,101
10.25%, 05/05/03 .................. 7,300 1,128,136
Svenska Kredit:
0.00%, 01/15/99 ................... 640 159,180
0.00%, 01/25/99 ................... 3,300 244,628
---------
TOTAL SWEDISH KRONA ................ 3,084,907
---------
TURKISH LIRA--0.8%
Turkey Daily Roll 2
0.00%, 02/18/99 ................... 62,000 214,227
Turkey DMG Daily Reset,
0.00%, 02/24/99 ................... 109,000 373,169
Turkey DMG Daily Reset 4,
0.00%, 02/26/99 ................... 71,576 242,551
Turkey DMG Daily Reset 5,
0.00%, 03/30/99 ................... 55,000 177,312
---------
TOTAL TURKISH LIRE ................. 1,007,259
---------
UNITED STATES DOLLAR--11.8%
Cellco Finance NV,
15.00%, 08/01/05 (c) .............. 50 43,000
Chase Credit Card Master Trust,
5.00%, 08/15/08 (g) .............. 1,800 1,115,253
Citibank,
17.00%, 06/21/99 (g) .............. 140 139,370
Credit Lyonnais Paris,
6.563%, 09/19/49 (e), (g) ......... 580 469,800
Federal Farm Credit Banks,
5.55%, 07/01/99 (g) ............... 450 451,197
Federal Home Loan Banks,
5.54%, 07/13/99 ................... 110 110,292
Federal National Mortgage
Association,
2.125%, 10/09/07 ................. 700,000 6,256,966
Finance One PLC, (USD),
2.00%, 08/31/01 (d) ............... 220 0
High Voltage Engineering Corp.,
10.50%, 08/15/04 (g) ............. 157 148,365
Imasac SA,
11.00%, 05/02/05 (c) .............. 100 66,000
ING Bank NV, (London):
0.00%, 02/12/99 (c) ............... 400 450,000
0.00%, 02/12/99 ................... 100 113,500
0.00%, 08/11/99 (c) ............... 400 424,000
Interbank AKK Trust,
9.00%, 02/28/01 (c) ............... 250 215,000
International Finance Corp.,
11.75%, 08/15/99 .................. 750 19,205
Merrill Lynch & Company, Inc.:
5.375%, 01/04/09 .................. 830 508,478
7.375%, 12/17/07 .................. 192 345,107
Rao Gazprom,
12.75%, 03/13/00 .................. 159 53,869
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
48
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
Republic of Panama,
4.00%, 07/17/14 ............................. $ 325 $ 242,125
Republic of Peru,
0.00%, 09/05/04 ............................. 600 399,420
Salomon Brothers Structured Note,
0.00%, 01/07/99 ............................. 230 233,149
Silgan Holdings, Inc.,
13.25%, 07/15/06 ............................ 1 1,120
SK Telecom Company, Ltd.,
7.75%, 04/29/04 (g) ......................... 300 269,103
Subic Power Corp.,
9.50%, 12/28/08 (g) ......................... 103 77,586
Talton Holdings, Inc.,
11.00%, 06/30/07 (g) ........................ 186 176,700
TTB Finance Cayman, Ltd.,
6.176%, 03/18/07 (e), (g) ................... 486 403,380
United States Treasury Bills,
5.16%, 05/27/99 ............................. 160 156,652
United States Treasury Bonds,
0.00%, 11/15/24 (g) ......................... 2,095 520,126
United States Treasury Strips,
0.00%, 02/15/16 (g) ......................... 2,090 814,870
-----------
TOTAL UNITED STATES DOLLAR ................... 14,223,633
-----------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost $102,541,756)............... 106,924,485
-----------
SHARES
------------
PREFERRED STOCKS--0.0%
Forman Petroleum Corp.
warrant 6/01/04 ............................. 309 0
Forman Petroleum Corp.,
rights ...................................... 51 5
ICG Holdings, Inc. ........................... 6 6,300
Paxson Communications Corp. 15 13,575
-----------
TOTAL PREFERRED STOCKS
(Identified cost $23,961).................... 19,880
-----------
PRINCIPAL
AMOUNT
---------------
COMMERCIAL PAPER--6.2%
American Express Credit Corp.:
4.50%, 05/27/99 ............................. $ 110 $ 107,993
4.70%, 07/06/99 ............................. 125 121,965
4.90%, 03/10/99 ............................. 124 122,852
4.95%, 03/16/99 ............................. 187 185,097
4.98%, 01/22/99 ............................. 50 49,855
5.00%, 02/19/99 ............................. 78 77,469
Ford Motor Credit Corp.,
5.25%, 06/16/08 ............................. 572 355,870
General Electric Capital
Corp.:
4.86%, 07/26/99 ............................. 250 243,047
4.90%, 03/31/99 ............................. 252 248,947
4.90%, 05/25/99 ............................. 100 98,040
4.90%, 06/07/99 ............................. 129 126,244
5.06%, 03/29/99 ............................. 172 169,897
5.08%, 02/23/99 ............................. 465 461,522
5.11%, 03/02/99 ............................. 100 99,148
5.12%, 01/08/99 ............................. 195 194,806
5.23%, 02/09/99 ............................. 197 195,884
5.32%, 01/11/99 ............................. 100 99,852
5.33%, 01/07/99 ............................. 466 465,599
5.42%, 02/25/99 ............................. 160 158,675
5.47%, 01/25/99 ............................. 143 142,479
General Motors Acceptance
Corp.:
5.05%, 02/24/99 ............................. 100 99,243
5.07%, 01/28/99 ............................. 275 273,954
5.08%, 01/14/99 ............................. 200 199,633
5.09%, 01/04/99 ............................. 240 239,898
5.15%, 01/20/99 ............................. 140 139,619
5.15%, 02/16/99 ............................. 426 423,197
5.16%, 01/12/99 ............................. 140 139,779
5.19%, 01/11/99 ............................. 100 99,852
5.19%, 01/22/99 ............................. 100 99,697
5.19%, 02/05/99 ............................. 290 288,523
5.21%, 02/09/99 ............................. 110 109,379
5.24%, 02/12/99 ............................. 100 99,389
5.24%, 02/16/99 ............................. 80 79,464
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
5.25%, 01/04/99 .............................. $ 100 $ 99,956
5.30%, 02/25/99 .............................. 160 158,705
5.32%, 01/13/99 .............................. 108 107,809
6.50%, 03/23/04 .............................. 77 131,510
Prudential Funding Corp.:
4.00%, 09/24/99 .............................. 150 145,567
4.50%, 09/09/99 .............................. 240 233,893
4.75%, 03/11/99 .............................. 144 142,290
4.80%, 06/07/99 .............................. 109 106,718
5.03%, 02/18/99 .............................. 130 129,128
5.05%, 02/01/99 .............................. 90 89,609
5.22%, 01/04/99 .............................. 150 149,935
------------
TOTAL COMMERCIAL PAPER
(Identified cost $7,509,188).................. 7,511,988
------------
DISCOUNT NOTES--0.8%
Federal Farm Credit Banks:
0.00%, 11/03/99 .............................. 449 431,902
0.00%, 12/21/99 .............................. 317 302,536
Federal National Mortgage
Association,
0.00%, 01/07/99 ............................. 191 190,839
------------
TOTAL DISCOUNT NOTES
(Identified cost $925,277).................... 925,277
------------
REPURCHASE AGREEMENT--1.3%
State Street Bank and Trust Co.,
4.75%, 01/04/99, (Dated
12/31/98, collateralized by
$1,510,000 United States
Treasury Note, 5.750%,
11/15/00, with a value of
$1,550,290) (g) (Identified cost
$1,517,000)................................... $ 1,517 $ 1,517,000
------------
TOTAL INVESTMENTS
(Identified cost
$112,517,182) (b)............................ 97.2% $116,898,630
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ............................... 2.8 3,352,144
-------- ------------
NET ASSETS .................................... 100.0% $120,250,774
========= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
50
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
Forward Foreign Currency Contracts open at December 31, 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 1/5/99 178,190 $ 173,000 $ 178,297 $ 5,297
ARS 7/1/99 114,840 110,000 112,247 2,247
ATS 3/11/99 2,964,511 252,654 253,709 1,055
BEL 3/11/99 39,479,722 1,153,670 1,146,361 (7,309)
BRL 1/6/99 339,360 280,000 279,792 (208)
CAD 3/11/99 4,468,208 2,876,924 2,923,719 46,795
CHF 3/11/99 1,215,274 888,813 891,087 2,274
CLP 1/12/99 10,351,000 22,000 21,787 (213)
CLP 1/20/99 65,730,000 140,000 137,986 (2,014)
CLP 2/5/99 108,813,000 230,000 227,379 (2,621)
CLP 2/24/99 47,260,000 100,000 98,308 (1,692)
CNY 1/7/99 291,295 35,000 35,159 159
CNY 1/28/99 2,305,875 275,000 277,579 2,579
COP 1/7/99 424,804,800 269,000 271,586 2,586
CRC 2/1/99 24,867,900 90,000 90,705 705
CRC 2/12/99 22,189,312 80,000 80,611 611
CZK 6/28/99 15,971,050 445,000 522,162 77,162
CZK 7/16/99 3,107,000 90,220 101,419 11,199
CZK 11/18/99 6,526,800 210,000 210,729 729
DEM 3/11/99 8,864,844 5,309,361 5,337,647 28,286
EEK 1/7/99 2,658,978 197,183 198,975 1,792
EEK 1/11/99 956,912 67,000 69,277 2,277
EEK 1/13/99 1,472,490 107,509 109,987 2,478
EEK 3/31/99 3,461,220 252,507 252,165 (342)
EGP 1/12/99 482,776 140,000 140,677 677
EGP 2/9/99 251,835 73,000 73,157 157
EGP 2/18/99 449,111 130,000 130,343 343
ESP 3/11/99 2,818,936,918 19,912,197 19,905,742 (6,455)
FRF 3/11/99 36,005,845 6,435,804 6,462,408 26,604
GBP 3/11/99 326,515 548,405 541,317 (7,088)
GRD 2/16/99 5,000,000 15,559 17,726 2,167
GRD 5/6/99 8,748,120 26,946 30,640 3,694
GRD 12/28/99 93,381,860 317,000 317,899 899
GTQ 1/11/99 644,370 95,846 95,853 7
GTQ 1/21/99 542,520 80,000 80,317 317
HUF 3/11/99 41,624,330 187,000 188,885 1,885
HUF 3/23/99 31,550,400 144,000 142,664 (1,336)
IDR 1/8/99 2,200,000,000 195,122 272,931 77,809
IDR 1/11/99 200,000,00 18,613 24,742 6,129
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
51
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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>
IDR 3/10/99 1,000,000,000 $ 123,916 $ 117,578 $ (6,338)
IDR 6/7/99 1,103,700,000 128,561 121,765 (6,796)
IEP 3/11/99 32,600 48,509 48,658 149
ILS 2/16/99 1,560,461 359,000 370,594 11,594
ILS 6/11/99 611,200 160,000 141,531 (18,469)
INR 1/14/99 8,620,000 200,000 202,118 2,118
INR 2/9/99 4,764,100 110,000 111,224 1,224
INR 2/25/99 7,352,000 160,000 170,897 10,897
INR 4/6/99 3,236,400 72,000 74,432 2,432
INR 5/25/99 1,790,000 40,000 40,574 574
ITL 3/11/99 20,828,940,081 12,606,730 12,641,073 34,343
JPY 3/11/99 347,781,419 2,950,398 3,105,200 154,802
KES 1/4/99 4,051,087 66,411 65,531 (880)
KES 2/4/99 7,629,100 124,000 121,509 (2,491)
KES 2/12/99 3,684,000 60,000 58,402 (1,598)
KRW 1/22/99 67,000,000 50,000 55,426 5,426
KRW 2/8/99 253,270,000 190,000 209,500 19,500
KRW 2/26/99 25,160,000 20,000 20,768 768
KRW 4/20/99 174,900,000 110,000 143,540 33,540
KRW 4/27/99 270,300,000 170,000 221,645 51,645
KRW 7/26/99 309,125,000 250,000 250,818 818
KRW 9/29/99 187,500,000 150,000 151,230 1,230
MXN 3/29/99 1,815,116 172,000 171,741 (259)
NLG 3/11/99 7,852,537 4,176,437 4,194,328 17,891
PEN 3/2/99 291,640 92,000 90,676 (1,324)
PLN 1/4/99 883,632 240,000 251,467 11,467
PLN 1/25/99 519,033 143,000 146,850 3,850
PLN 7/6/99 455,588 125,000 124,703 (297)
PLN 7/13/99 916,392 240,000 250,526 10,526
PLN 11/5/99 519,012 139,000 139,088 88
SKK 2/16/99 3,022,400 80,000 80,523 523
SKK 2/19/99 2,921,100 78,170 77,737 (433)
SVC 2/16/99 590,330 67,000 66,892 (108)
THB 1/8/99 6,870,000 190,833 188,895 (1,938)
THB 5/27/99 4,000,000 109,022 108,874 (148)
THB 12/21/99 7,071,000 187,113 188,976 1,863
UYU 6/7/99 1,244,235 109,000 109,263 263
XEU 3/11/99 12,640 15,000 14,883 (117)
ZAR 11/26/99 398,790 63,000 61,552 (1,448)
------------ ----------- ---------
$ 66,350,433 $66,964,961 $ 614,528
------------ ----------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
52
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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>
ARS 1/5/99 178,190 $ 177,604 $ 178,297 $ (693)
ARS 7/1/99 114,840 112,610 112,247 363
AUD 3/11/99 495,629 316,220 303,897 12,323
DEM 1/7/99 329,000 197,183 197,474 (291)
DEM 1/11/99 113,230 67,000 67,977 (977)
DEM 1/13/99 180,000 107,509 108,072 (563)
DEM 2/19/99 130,000 78,170 78,196 (26)
DEM 3/11/99 28,563,069 17,150,934 17,198,224 (47,290)
DKK 3/11/99 24,915,081 3,919,945 3,922,175 (2,230)
ESP 3/11/99 2,115,613,420 15,132,646 14,939,268 193,378
FIM 3/11/99 523,643 103,939 103,061 878
GBP 3/11/99 1,889,436 3,147,224 3,132,426 14,798
GRD 2/16/99 5,000,000 17,724 17,726 (2)
INR 4/6/99 1,000,000 22,573 22,998 (425)
JPY 3/11/99 305,539,788 2,667,800 2,728,042 (60,242)
KES 1/4/99 4,051,087 64,921 65,531 (610)
KRW 2/8/99 103,270,000 72,879 85,422 (12,543)
KRW 4/20/99 174,900,000 99,658 143,540 (43,882)
KRW 4/27/99 270,300,000 187,460 221,646 (34,186)
KRW 7/26/99 309,125,000 250,000 250,818 (818)
NOK 3/11/99 482,658 64,136 63,135 1,001
PLN 1/4/99 883,632 252,683 251,467 1,216
SEK 3/11/99 1,196,346 147,933 147,706 227
THB 1/8/99 6,870,000 186,939 188,895 (1,956)
XEU 3/11/99 1,981,566 1,156,811 1,155,768 1,043
------------ ----------- -----------
$ 45,702,501 $45,684,008 $ 18,493
------------ ----------- -----------
Gross unrealized appreciation on Forward Foreign Currency Contracts $ 911,677
===========
Gross unrealized depreciation on Forward Foreign Currency Contracts $(278,656)
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
53
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------- -------------------- ---------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO
CURRENCY DENOMINATED
BONDS--85.6%
ARGENTINE PESO--2.2%
Argentina Bocon, (USD):
1.00%, 04/01/01 (g) ........... $ 5,243 $ 3,620,929
1.00%, 09/01/02 ............... 1,955 2,134,860
Argentina Resolution Co.,
0.00%, 07/01/99 ............... 965 917,189
Mastellone Hermanos SA,
11.75%, 04/01/08 .............. 356 286,580
Republic of Argentina,
1.00%, 09/01/02 ............... 686 643,018
Republic of Argentina, (USD),
6.188%, 03/31/05 (e) .......... 1,804 1,525,778
-----------
TOTAL ARGENTINE PESO ........... 9,128,354
-----------
AUSTRALIAN DOLLAR--1.0%
Credit Foncier,
8.50%, 09/09/02 (g) ........... 6,000 3,994,730
-----------
BRITISH POUND--4.6%
Bimingham Midshires
Building Society,
9.125%, 01/05/06 ............. 650 1,270,923
Brunner Mond Group PLC,
12.50%, 07/15/08 .............. 884 1,336,501
Chelsea Village PLC,
8.875%, 12/17/07 (g) .......... 1,233 2,085,386
Coca Cola Enterprises,
6.75%, 03/12/08 ............... 778 1,380,630
Finance for Social Resources,
11.126%, 10/05/58 (g) ......... 600 1,758,806
HMV Media Group PLC,
10.875%, 05/15/08 ............. 670 1,035,222
Landwirtschaftliche Rentenbank,
6.375%, 03/09/05 .............. 1,829 3,210,702
Middleweb PLC,
10.50%, 05/30/08 (c) .......... 1,170 1,836,933
North American Capital Corp.,
8.25%, 11/17/03 ............... 1,225 2,224,752
Textron Golf & Turk PLC,
8.684%, 01/30/08 (c) .......... 1,121 2,158,563
William Hill Finance PLC,
10.625%, 04/30/08 (g) ......... 611 1,035,421
-----------
TOTAL BRITISH POUND ............ 19,333,839
-----------
CANADIAN DOLLAR--0.7%
Argos Funding Trust,
5.963%, 02/27/06 .............. 1,000 647,694
Molson Breweries Company, Ltd.,
6.00%, 06/02/08 (c) ........... 629 420,568
Quebec Province,
8.625%, 11/04/11 .............. 431 904,319
UniHost Corp.,
10.00%, 06/30/03 .............. 1,714 1,020,438
-----------
TOTAL CANADIAN DOLLAR .......... 2,993,019
-----------
COLOMBIAN PESO--0.1%
Salomon COP Swap (USD),
0.00%, 01/06/99 ............... 380 398,126
-----------
CROATIAN KUNA--0.2%
Republic of Croatia, (USD),
6.563%, 07/31/06 .............. 904 717,762
-----------
DANISH KRONE--4.2%
Kingdom of Denmark,
8.00%, 03/15/06 ............... 59,730 11,573,784
Nykredit AS,
5.00%, 10/01/29 ............... 20,427 3,000,997
Realkredit Danmark,
5.00%, 10/01/29 ............... 13,258 1,946,734
Unikredit Realkredit,
5.00%, 10/01/29 (g) ........... 8,904 1,301,820
-----------
TOTAL DANISH KRONE ............. 17,823,335
-----------
FRENCH FRANC--2.6%
Credit Foncier de France,
7.50%, 03/29/05 ............... 46,200 9,742,407
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
54
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ------------------------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Neopost,
6.131%, 09/30/07 (c), (e) ............................................. $ 7,800 $1,346,271
----------
TOTAL FRENCH FRANC ..................................................... 11,088,678
----------
GERMAN MARK--4.4%
AirTouch Communications, Inc.,
5.50%, 07/24/08 ....................................................... 2,420 1,463,856
Autobahn Tank & Rast,
6.00%, 10/16/00 (g) ................................................... 1,833 1,143,838
Bt & Co. Croatia Index Note,
1.00%, 03/01/99 ....................................................... 1,500 186,667
Bt Croatia,
1.00%, 10/01/99 ....................................................... 1,000 224,109
Core Dem,
6.39%, 07/05/15 ....................................................... 2,400 1,411,256
Derby Cycle Corp.,
9.375%, 05/15/08 ...................................................... 1,561 688,429
Deutsche Bank AG,
11.00%, 04/15/99 ...................................................... 1,300 1,383,720
Euronet Services, Inc.,
12.375%, 07/01/06 (g) ................................................. 4,525 868,835
Exide Holdings,
9.125%, 04/15/04 (c) .................................................. 4,051 2,382,083
Geberit International SA,
10.125%, 04/15/07 ..................................................... 1,189 820,443
Impress Metal Pack Holding,
9.875%, 05/29/07 (c), (g) ............................................. 4,157 2,731,258
Ineos PLC,
8.625%, 04/30/05 (g) .................................................. 3,725 2,089,809
Sirona Dental Systems,
9.125%, 07/15/08 (c) .................................................. 3,655 2,171,157
Texon International PLC,
10.00%, 02/01/08 ...................................................... 1,938 907,020
----------
TOTAL GERMAN MARK ...................................................... 18,472,480
----------
GREEK DRACHMA--0.7%
Republic of Hellenic:
8.90%, 04/01/03 ....................................................... 110,000 412,284
12.80%, 06/30/00 ...................................................... 110,000 396,759
13.00%, 08/14/03 (e) .................................................. 605,000 2,196,227
----------
TOTAL GREEK DRACHMA .................................................... 3,005,270
----------
HUNGARIAN FORINT--1.3%
Government of Hungary:
16.00%, 01/12/00 ...................................................... 555,000 2,596,579
23.00%, 05/06/99 ...................................................... 110,000 521,888
Republic of Hungary:
16.50%, 04/12/99 ...................................................... 250,000 1,159,417
16.50%, 07/24/99 ...................................................... 165,000 767,206
19.50%, 01/12/99 ...................................................... 64,000 297,202
----------
TOTAL HUNGARIAN FORINT ................................................. 5,342,292
----------
INDONESIAN RUPIAH---0.0%
Polysindo Eka:
10.00%, 03/16/00 ...................................................... 194 9,709
19.00%, 04/26/99 ...................................................... 5,000,000 31,250
----------
TOTAL INDONESIAN RUPIAH ................................................ 40,959
----------
ITALIAN LIRA--1.0%
Films PLC,
5.785%, 03/31/05 (e) .................................................. 4,200,000 2,463,939
Societa Sportiva Lazio SPA,
6.375%, 10/15/07 ...................................................... 3,038,887 1,791,960
----------
TOTAL ITALIAN LIRA ..................................................... 4,255,899
----------
JAPANESE YEN--1.0%
Asterique,
2.48%, 01/23/02 (g) ................................................... 286,282 2,532,349
Export-Import Bank of Japan,
8.00%, 06/04/00 ....................................................... 130 130,233
International Bank for
Reconstruction and Development,
4.50%, 03/20/03 (g) ................................................... 15,300 154,370
Nippon Credit Bank, Ltd.,
1.80%, 07/27/00 ....................................................... 140,000 1,211,765
----------
TOTAL JAPANESE YEN ..................................................... 4,028,717
----------
LEBANESE POUND--1.1%
LBP Treasury Bill,
0.00%, 03/18/99 ....................................................... 600,100 387,079
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
55
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
LBP Treasury Note,
0.00%, 02/11/99 ................. $1,697,090 $1,199,352
Paribas LBP Treasury Bills:
18.12%, 01/21/99 ................ 2,794,200 1,989,618
18.70%, 01/14/99 ................ 1,197,820 857,608
----------
TOTAL LEBANESE POUND ............. 4,433,657
----------
LITHUANIAN LITAS--0.0%
Lithuanian Treasury Bill,
0.00%, 01/22/99 ................. 358 89,036
----------
MEXICAN PESO--2.3%
Mexican Cetes:
0.00%, 01/14/99 ................. 8,280 829,499
0.00%, 04/08/99 ................. 21,318 1,981,932
0.00%, 07/08/99 ................. 9,610 832,368
1.00%, 06/03/99 ................. 3,003 267,169
UDI Bonos,
7.00%, 05/27/99 ................. 2,100 502,730
United Mexican States, (USD):
6.039%, 12/31/19 (e) ............ 1,000 812,500
6.098%, 12/31/19 (e) ............ 1,250 1,015,625
6.116%, 12/31/19 (e) ............ 1,250 1,015,625
6.25%, 12/31/19 (e) ............. 1,150 898,495
6.25%, 12/31/19 (e) ............. 2,000 1,562,600
----------
TOTAL MEXICAN PESO ............... 9,718,543
----------
MOROCCAN DIRHAM---0.4%
Morocco Restructuring &
Consolidation Agreement, (USD),
6.063%, 01/01/09 (e) ............ 1,900 1,482,000
----------
PERUVIAN NOUVEAU
SOL--0.3%
Peru Trade Finance Paper,
0.00%, 09/04/04 ................. 2,099 1,397,578
----------
PHILIPPINES PESO--0.1%
Government of Philippines,
11.875%, 01/16/99 ............... 10,000 257,391
Republic of the Philippines GDR
6.50%, 12/01/17 ................. 250 217,500
----------
TOTAL PHILIPPINES PESO ........... 474,891
----------
POLISH ZLOTY--0.6%
Government of Poland:
12.00%, 06/15/02 ................ 1,300 378,370
15.00%, 06/12/99 ................ 1,800 512,051
Polish Treasury Bill,
0.00%, 08/04/99 ................. 5,800 1,533,117
----------
TOTAL POLISH ZLOTY ............... 2,423,538
----------
SLOVAKIAN KORUNA--0.0%
International Finance Corp.,
11.75%, 08/15/99 ................ 3,550 90,903
----------
SOUTH AFRICAN RAND--0.5%
Government of Namibia:
12.00%, 04/15/02 ................ 1,460 213,172
12.00%, 04/15/05 ................ 1,460 198,359
Lesotho Highlands Water,
12.50%, 04/15/02 ................ 4,960 756,172
Republic of South Africa,
12.00%, 02/28/05 ................ 6,170 889,002
South African Roads,
11.50%, 09/30/05 ................ 975 130,120
----------
TOTAL SOUTH AFRICAN RAND ......... 2,186,825
----------
SWEDISH KRONA--1.0%
Forenings Sparbanken,
0.00%, 03/29/99 ................. 27,200 1,998,012
Svensk Exportkredit AB:
0.00%, 01/15/99 ................. 3,000 746,157
0.00%, 01/25/99 ................. 19,400 1,438,115
----------
TOTAL SWEDISH KRONA .............. 4,182,284
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
THAILAND BAHT--0.0%
Finance One PLC, (USD),
2.00%, 08/31/01 (d) ............... $ 1,515 $ 0
Morgan Guaranty Trust,
0.00%, 07/31/99 (d) ............... 10,569 0
---------
TOTAL THAILAND BAHT ................ 0
---------
TURKISH LIRA--1.2%
Turkey DMG Daily Reset,
0.00%, 02/24/99 ................... 398,000 1,362,582
Turkey DMG Daily Reset 4,
0.00%, 02/26/99 ................... 944,237 3,199,738
Turkey DMG Daily Reset 5,
0.00%, 03/30/99 ................... 210,000 677,011
---------
TOTAL TURKISH LIRE ................. 5,239,331
---------
UNITED STATES DOLLAR--54.1%
Advantica Restaurant Group, Inc.,
11.25%, 01/15/08 (g) .............. 2,500 2,531,250
Agrilink Foods, Inc.,
11.875%, 11/01/08 (c) ............. 725 737,687
American Restaurant Group,
Inc., 11.50%, 02/15/03 ............ 1,750 1,522,500
AMSC Acquisition, Inc.,
12.25%, 04/01/08 .................. 1,300 806,000
Amtrol, Inc.,
10.625%, 12/31/06 ................. 1,010 982,225
Asset Securitization Corp.:
Series 1997-D5, Class C
1.385%, 02/14/41 (e) ............. 12,951 1,252,617
Series 1996-D2, Class ACS2
1.49%, 02/28/26 (e) .............. 7,035 613,364
Atlantic Express Transportation
Corp.,
10.75%, 02/01/04 .................. 1,254 1,266,540
Atlas Air, Inc.,
9.25%, 04/15/08 ................... 250 249,375
Booth Creek Ski Holdings, Inc.,
12.50%, 03/15/07 .................. 1,542 1,526,580
Calpine Corp.,
10.50%, 05/15/06 .................. 470 518,175
Casino America, Inc.,
12.50%, 08/01/03 .................. 646 713,830
Cellco Finance NV,
15.00%, 08/01/05 (c) .............. 310 266,600
Citibank Pen Time Deposit,
17.00%, 06/21/99 .................. 720 716,760
Climachem, Inc.,
10.75%, 12/01/07 (g) .............. 2,074 2,084,370
Coaxial Communications
Central Ohio, LLC.,
10.00%, 08/15/06 (c), (g) ......... 2,100 2,168,250
Community Distributors, Inc.,
10.25%, 10/15/04 (g) .............. 150 138,000
Concentric Network Corp.,
12.75%, 12/15/07 .................. 1,695 1,728,900
Courtyard by Marriott II, Ltd.,
Series B
10.75%, 02/01/08 (g) ............. 1,310 1,355,850
Credit Lyonnais Paris,
6.563%, 09/19/49 (e) .............. 2,130 1,725,300
Credit Suisse First Boston Mortgage,
Series 1998-C2, Class A 1
5.96%, 11/11/30 (g) .............. 3,383 3,432,338
CSC Holdings, Inc.:
9.875%, 02/15/13 .................. 650 724,750
10.50%, 05/15/16 (g) .............. 1,883 2,212,525
Dictaphone Corp.,
11.75%, 08/01/05 (g) .............. 2,579 1,934,250
Dobson Communications
Corp.,
11.75%, 04/15/07 ................. 847 842,765
Dynacare, Inc.,
10.75%, 01/15/06 (g) .............. 2,522 2,471,560
Echostar DBS Corp.,
12.50%, 07/01/02 (g) .............. 1,241 1,427,150
Econophone, Inc.,
13.50%, 07/15/07 (g) .............. 2,800 2,866,500
Federal Farm Credit Banks,
5.55%, 07/01/99 ................... 3,300 3,308,778
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
57
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Federal Home Loan Mortgage
Corp.:
Series 1974, Class VI
0.25%, 03/15/09 ...................................................... $ 20,632 $ 116,057
5.54%, 07/13/99 ...................................................... 565 566,503
6.50%, 05/01/13 ...................................................... 17,376 17,631,335
6.50%, 09/01/13 ...................................................... 1,333 1,353,476
6.50%, 10/01/13 ...................................................... 1,644 1,668,944
6.50%, 11/01/28 ...................................................... 2,507 2,525,546
7.00%, 08/01/28 ...................................................... 2,455 2,503,167
7.00%, 11/01/28 ...................................................... 9,697 9,885,037
7.50%, 12/01/28 ...................................................... 1,046 1,074,106
8.00%, 03/01/28 ...................................................... 2,090 2,164,221
8.00%, 12/01/28 ...................................................... 2,828 2,927,857
Federal National Mortgage
Association:
Series 1992-203, Class SA
3.844%, 11/25/07 (e) ................................................. 935 60,493
5.45%, 04/15/99 ...................................................... 900 900,846
6.50%, 09/01/28 ...................................................... 6,780 6,824,576
6.50%, 10/01/28 ...................................................... 9,719 9,783,854
6.50%, 11/01/28 ...................................................... 2,884 2,903,241
6.50%, 12/01/28 ...................................................... 2,860 2,879,557
8.00%, 06/01/12 ...................................................... 1,287 1,325,303
8.00%, 12/01/12 ...................................................... 2,134 2,197,842
Series 38, Class 2
10.00%, 08/01/18 ..................................................... 904 182,184
Series 1992-97, Class SA
10.00%, 04/25/21 (e) ................................................. 248 6,215
Series G-13, Class L
10.095%, 05/25/21 (e) ................................................ 709 163,208
First USA Trust, Series 1998-1
6.50%, 01/18/06 (c), (e) .............................................. 1,600 1,605,520
Fisher Scientific International, Inc.,
9.00%, 02/01/08 (c) ................................................... 1,700 1,700,000
Ford Motor Credit Corp.,
5.25%, 06/16/08 (g) ................................................... 2,157 1,341,977
Frank's Nursery and Crafts,
Inc.,
10.25%, 03/01/08 ...................................................... 1,000 985,000
Fresenius Medical Care Capital Trust,
9.00%, 12/01/06 ....................................................... 500 522,500
Fundy Cable, Ltd.,
11.00%, 11/15/05 (g) .................................................. 1,208 1,274,440
G3 Mortgage Reinsurance Ltd.,
7.892%, 05/25/08 (c), (e) ............................................. 1,500 1,345,781
Generac Portable Products LLC,
11.25%, 07/01/06 (c) .................................................. 700 700,000
Genesis Health Ventures, Inc.,
9.875%, 01/15/09 (c) .................................................. 900 868,500
GMAC Commercial Mortgage
Security, Inc., Series 1997-C2,
Class A
6.451%, 12/15/04 ..................................................... 2,813 2,895,561
Government National
Mortgage Association:
7.00%, 04/15/28 ...................................................... 527 539,797
7.00%, 11/15/28 ....................................................... 1,083 1,108,280
8.00%, 11/15/28 ....................................................... 8,890 9,240,968
Headlands Mortgage
Securities, Inc.:
Series 1997-1, Class X1
0.686%, 03/25/27 (e) ................................................. 67,969 713,005
Series 1997-4, Class X
1.121%, 11/25/27 (e) ................................................. 25,621 402,001
High Voltage Engineering
Corp.,
10.50%, 08/15/04 ...................................................... 1,954 1,846,530
Home Interiors & Gifts,
10.125%, 06/01/08 (c) ................................................. 2,850 2,821,500
Imasac SA,
11.00%, 05/02/05 (c) .................................................. 400 264,000
ING Bank NV:
0.00%, 02/12/99 (c) ................................................... 1,400 1,575,000
0.00%, 02/12/99 ....................................................... 1,100 1,248,500
0.00%, 08/11/99 (c) ................................................... 1,300 1,378,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- -------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Interbank AKK Trust,
Series 1995-1, Class 1
9.00%, 02/28/01 (c) ............... $ 1,000 $ 860,000
IPC Information Systems, Inc.,
1.00%, 05/01/08 (e) ................ 500 315,000
Iridium LLC/CAP,
10.875%, 07/15/05 .................. 600 510,000
J.H. Heafner, Inc.:
10.00%, 05/15/08 ................... 550 550,000
10.00%, 05/15/08 (c) ............... 425 425,000
Jitney-Jungle Stores of America, Inc.,
10.375%, 09/15/07 .................. 1,635 1,675,875
LB Commercial Conduit
Mortgage Trust,
Series 1996-C2, Class A
7.434%, 10/25/26 .................. 3,076 3,244,694
Lodgenet Entertainment Corp.,
10.25%, 12/15/06 ................... 585 579,150
Long Distance International,
Inc.,
12.25%, 04/15/08 (c) .............. 1,497 1,249,995
Loomis Fargo & Co.,
10.00%, 01/15/04 ................... 725 717,750
Mediq, Inc.,
11.00%, 06/01/08 ................... 1,350 1,296,000
Merrill Lynch & Company, Inc.:
5.375%, 01/04/09 ................... 3,590 2,199,322
7.375%, 12/17/07 ................... 575 1,033,524
Merrill Lynch Mortgage
Investments, Inc.,
Series 1996-C1, Class IO
0.736%, 04/25/28 (c), (e) ......... 17,954 460,791
Morgan Stanley Capital One,
Inc.:
Series 1998 HF1, Class X
1.046%, 02/15/18 .................. 19,644 1,160,228
Series 1996-WF1, Class X
1.405%, 11/15/28 (c), (e) ......... 6,315 370,020
Series 1997-C1, Class IO
2.562%, 02/15/20 (e) .............. 2,786 39,186
Series 1998-HF2 Class A1
6.01%, 11/15/30 (g) ............... 5,906 5,967,472
Mortgage Capital Funding, Inc.,
Series 1997-MC2, Class X
1.367%, 11/20/12 .................. 15,136 1,161,238
Mosaic Re, Ltd.,
14.02%, 07/09/99 (c) ............... 750 770,625
Mrs. Field's Original,
1.00%, 12/01/05 .................... 820 469,450
Nationslink Funding Corp.,
Series 1998-2, Class A1
6.001%, 11/20/07 .................. 3,292 3,320,505
NationsRent, Inc.,
10.375%, 12/15/08 (c) .............. 1,500 1,496,250
Pacific Reinsurance,
1.00%, 05/31/03 .................... 1,340 1,336,650
Paxson Communications Corp.,
11.625%, 10/01/02 (g) .............. 1,865 1,892,975
Pen Holdings, Inc.,
9.875%, 06/15/08 ................... 750 750,000
Penhall Acquisition Corp.,
12.00%, 08/01/06 (c), (g) .......... 3,000 2,820,000
Penn National Gaming, Inc.,
10.625%, 12/15/04 .................. 1,150 1,207,500
Petro Stopping Centers,
10.50%, 02/01/07 (g) ............... 1,570 1,640,650
Poindexter (J.B.) & Co.,
12.50%, 05/15/04 ................... 1,472 1,383,680
Primark Corp.,
9.25%, 12/15/08 (c) ................ 1,250 1,250,000
Production Resource Group,
11.50%, 01/15/08 ................... 67 65,660
Prudential Home Mortgage
Security:
Series 1993-5, Class A9
0.439%, 03/25/00 (e) ............... 52,391 127,312
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
59
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Series 1993-24, Class A7
0.509%, 07/25/00 ...................................................... $ 51,556 $ 181,995
Series 1993-41, Class A5
0.914%, 10/25/00 (e) ................................................. 15,433 111,427
PSINet, Inc.:
10.00%, 02/15/05 (g) .................................................. 1,770 1,752,300
11.50%, 11/01/08 (c) .................................................. 450 471,375
Quest Diagnostics, Inc.,
10.75%, 12/15/06 ...................................................... 1,248 1,385,280
Qwest Communications
International, Inc.,
10.875%, 04/01/07 ..................................................... 50 58,250
Radio Unica Corp.,
1.00%, 08/01/06 (c) ................................................... 600 324,000
Rao Gazprom,
12.75%, 03/13/00 ...................................................... 702 237,838
Renters Choice Inc.,
11.00%, 08/15/08 (c) .................................................. 400 406,000
Republic of Panama,
4.00%, 07/17/14 (e) ................................................... 2,020 1,504,900
Republic of Peru:
0.00%, 09/05/04 ....................................................... 1,900 1,264,830
4.00%, 03/07/17 ....................................................... 250 156,875
Residential Mortgage Funding,
2.011%, 01/03/20 ...................................................... 11,659 705,415
Residential Reinsurance,
9.848%, 06/01/99 ...................................................... 750 759,600
Rifkin Acquisitions Partners LP,
11.125%, 01/15/06 ..................................................... 1,304 1,434,400
RMOF:
2.16%, 01/31/22 ....................................................... 17,618 1,277,344
2.185%, 07/15/22 (g) .................................................. 27,073 1,996,636
Sabreliner Corp.,
11.00%, 06/15/08 (c) .................................................. 600 528,000
Salomon Brothers Structured
Note:
0.00%, 01/07/99 ...................................................... 500 506,845
0.00%, 01/14/99 ...................................................... 814 825,144
Silgan Holdings, Inc.,
13.25%, 07/15/06 (g) .................................................. 1,446 1,619,520
Sino Properties,
6.10%, 03/27/03 ....................................................... 2,200 1,320,000
SK Telecom Company, Ltd.,
7.75%, 04/29/04 (g) ................................................... 2,225 1,995,845
Spanish Broadcasting Systems, Inc.,
11.00%, 03/15/04 (g) .................................................. 2,006 2,126,360
Station Casinos, Inc.,
10.125%, 03/15/06 ..................................................... 900 942,750
Structured Asset Securitization
Corp.:
Series 1996-CFL, Class X1
1.461%, 02/25/28 (e) ................................................. 5,579 302,638
Series 1996-CFL, Class X2
1.153%, 02/25/28 (e) ................................................. 2,573 57,223
Subic Power Corp.,
9.50%, 12/28/08 ....................................................... 379 284,483
Swiss Re Earthquake Fund,
10.493%, 07/16/00 ..................................................... 1,000 1,005,000
T/SF Communications Corp.,
10.375%, 11/01/07 ..................................................... 1,360 1,370,200
Talton Holdings, Inc.,
11.00%, 06/30/07 ...................................................... 551 523,450
Transdigm, Inc.,
10.375%, 12/01/08 (c) ................................................. 875 879,375
Trinity Re Florida Huricane
Fund 99,
10.00%, 12/31/99 (e) ................................................. 1,550 1,550,000
TTB Finance Cayman, Ltd.,
6.176%, 03/18/07 (e) .................................................. 1,926 1,598,580
TVN Entertainment Corp.,
14.00%, 08/01/08 (g) .................................................. 2,025 1,802,250
UCFC Loan Trust,
8.00%, 09/15/00 ....................................................... 2,304 287,640
United Rentals, Inc.,
9.25%, 01/15/09 (c) ................................................... 1,000 1,007,500
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
United States Department of
Veteran Affairs REMIC, Series
1997-1, Class IO
0.368%, 02/15/27 (e) ........... $ 34,343 $ 338,066
U.S. Can Corp.,
10.125%, 10/15/06 .............. 1,761 1,805,025
W.R. Carpenter North America,
Inc.,
10.625%, 06/15/07 (g) .......... 1,917 1,940,962
-----------
TOTAL UNITED STATES DOLLAR ...... 227,137,040
-----------
TOTAL CURRENCY DENOMINATED
BONDS
(Identified cost
$373,108,172).................. 359,479,086
-----------
SHARES
-------
PREFERRED STOCKS--2.3%
Adelphia Communications
Corp. .......................... 18,220 2,149,960
American Mobile Satellite
Corp. 4/1/08 warrants (c) ...... 1,300 5,044
Dobson Communications
Corp. .......................... 1,092 1,048,320
Echostar Communications
Corp. .......................... 47 48,880
Forman Petroleum Corp. .......... 161 16
Forman Petroleum Corp.
6/1/04 warrants ................ 1,144 1
Georgetown Re, Ltd. ............. 2 1,000,000
Harborside Healthcare Corp. ..... 1,034 961,620
High Voltage Engineering Corp. 1,459 1,429,820
Hyperion Telecommunications,
Inc. ........................... 989 786,255
ICG Holdings, Inc. .............. 786 825,300
Long Distance International, Inc.
4/13/08 warrants ............... 1,497 187
Nextel Communications, Inc.,
Class A ........................ 3,598 85,003
Nextel Communications, Inc. ....... 9 9,000
Nextel Communications, Inc. ....... 52 42,900
Paxson Communications Corp. 54 48,870
Paxson Communications Corp. 105 918,750
Spanish Broadcasting Systems,
Inc. 6/30/99 warrants (c) ........ 800 164,000
United Mexican States, rights ..... 8,530,200 0
XCL, Ltd. (c) ..................... 190 15,200
XCL, Ltd. (c) ..................... 1,960 156,800
---------
TOTAL PREFERRED STOCKS
(Identified cost $10,218,572)..... 9,695,926
---------
PRINCIPAL
AMOUNT
(000)
---------
COMMERCIAL PAPER--6.2%
American Express Credit Corp.:
4.50%, 05/27/99 ................. $ 654 642,065
4.70%, 07/06/99 .................. 465 453,708
4.90%, 03/10/99 .................. 496 491,409
5.00%, 02/19/99 .................. 427 424,094
General Electric Capital Corp.:
4.86%, 07/26/99 .................. 1,470 1,429,119
4.90%, 03/31/99 .................. 967 955,286
4.90%, 05/25/99 .................. 520 509,808
4.90%, 06/07/99 .................. 214 209,427
5.06%, 03/29/99 .................. 814 804,046
5.11%, 03/02/99 .................. 420 416,423
5.12%, 01/08/99 .................. 772 771,232
5.23%, 02/09/99 .................. 170 169,037
5.24%, 01/27/99 .................. 489 487,149
5.32%, 01/11/99 .................. 226 225,666
5.33%, 01/07/99 .................. 1,033 1,032,082
5.42%, 02/25/99 .................. 1,100 1,090,891
5.47%, 01/25/99 .................. 610 607,776
General Motors Acceptance
Corp.:
5.05%, 02/24/99 ................. 540 535,910
5.07%, 01/28/99 .................. 635 632,586
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
61
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- ----------------------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
5.08%, 01/14/99 ..................................................... $ 4,660 $ 658,789
5.09%, 01/04/99 ..................................................... 1,113 1,112,528
5.15%, 01/20/99 ..................................................... 940 937,445
5.15%, 02/16/99 ..................................................... 1,688 1,676,892
5.16%, 01/12/99 ..................................................... 865 863,636
5.19%, 01/11/99 ..................................................... 1,582 1,579,658
5.19%, 02/05/99 ..................................................... 450 447,707
5.24%, 02/12/99 ..................................................... 380 377,677
5.24%, 02/16/99 ..................................................... 375 372,489
5.25%, 01/04/99 ..................................................... 532 531,767
5.30%, 02/25/99 ..................................................... 1,100 1,091,093
5.32%, 01/13/99 ..................................................... 521 520,076
6.50%, 03/23/04 ..................................................... 256 437,229
Prudential Funding Corp.:
4.00%, 09/24/99 ..................................................... 770 747,242
4.65%, 04/06/99 ..................................................... 400 395,092
4.75%, 03/23/99 ..................................................... 305 301,740
5.03%, 02/18/99 ..................................................... 685 680,406
5.05%, 02/01/99 ..................................................... 425 423,170
5.10%, 01/11/99 ..................................................... 372 371,473
5.25%, 01/07/99 ..................................................... 795 794,305
------------
TOTAL COMMERCIAL PAPER
(Identified cost $26,215,770)........................................ 26,208,128
------------
DISCOUNT NOTES--0.7%
Federal Farm Credit Banks:
0.00%, 11/03/99 ..................................................... 344 330,754
0.00%, 12/21/99 ..................................................... 1,772 1,691,150
Federal National Mortgage
Association:
0.00%, 01/07/99 .................................................... 947 946,200
0.00%, 03/11/99 ..................................................... 90 89,104
------------
TOTAL DISCOUNT NOTES
(Identified cost $3,049,266)......................................... 3,057,208
------------
U.S. GOVERNMENT OBLIGATIONS--2.7%
United States Treasury Bills,
5.16%, 05/27/99 ..................................................... 1,210 1,184,679
United States Treasury Notes:
4.75%, 11/15/08 (g) ................................................. 4,010 4,041,318
5.75%, 11/15/00 ..................................................... 6,000 6,116,220
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Identified cost $11,305,090)........................................ 11,342,217
------------
REPURCHASE AGREEMENT--2.9%
State Street Bank and Trust Co.,
4.75%, 01/04/99, (Dated
12/31/98, collateralized by
$11,545,000 United States
Treasury Note, 0.000%,
07/01/99 with a value of
$11,285,238, and
$1,065,000 United States
Treasury Note, 6.000%,
06/30/99, with a value of
$1,072,322) (g) (Identified
cost $12,113,000).................................................... 12,113 12,113,000
------------
TOTAL INVESTMENTS
(Identified cost
$436,009,870) (b)................................................... 100.4% $421,895,565
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .................................................... (0.4) (1,836,204)
---------- ------------
NET ASSETS ........................................................... 100.0% $420,059,361
========== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Forward Foreign Currency Contracts open at December 31, 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 1/5/99 1,237,030 $ 1,201,000 $ 1,237,773 $ 36,773
ARS 7/1/99 929,160 890,000 908,181 18,181
BRL 1/6/99 1,611,960 1,330,000 1,329,013 (987)
CLP 1/12/99 560,836,000 1,192,000 1,180,429 (11,571)
CLP 1/20/99 441,330,000 940,000 926,476 (13,524)
CLP 2/24/99 255,204,000 540,000 530,864 (9,136)
CNY 1/7/99 6,616,547 795,000 798,618 3,618
CNY 1/28/99 5,324,475 635,000 640,955 5,955
COP 1/4/99 236,355,000 150,000 151,528 1,528
COP 1/7/99 1,631,313,600 1,033,000 1,042,932 9,932
CRC 2/1/99 117,431,750 425,000 428,328 3,328
CRC 2/12/99 105,399,232 380,000 382,901 2,901
CZK 6/28/99 118,257,550 3,295,000 3,866,346 571,346
CZK 7/16/99 6,960,000 202,102 227,190 25,088
CZK 11/18/99 1,243,200 40,000 40,139 139
DEM 3/11/99 30,558,498 18,397,667 18,399,700 2,033
DKK 3/11/99 20,396,089 3,177,951 3,210,787 32,836
EEK 1/11/99 5,395,455 390,000 403,257 13,257
EEK 1/13/99 7,141,577 521,420 533,439 12,019
EEK 1/27/99 6,764,744 488,715 502,884 14,169
EEK 3/31/99 13,268,010 967,945 966,633 (1,312)
EGP 1/12/99 2,982,866 865,000 869,184 4,184
EGP 2/9/99 586,466 170,000 170,365 365
EGP 2/18/99 2,366,470 685,000 686,809 1,809
ESP 3/11/99 2,224,885,870 16,018,714 15,710,889 (307,825)
FRF 3/11/99 1,170,066 205,715 210,006 4,291
GBP 3/11/99 1,359,765 2,243,705 2,254,305 10,600
GRD 3/18/99 30,000,000 90,498 105,850 15,352
GRD 4/14/99 300,000,000 903,615 1,054,154 150,539
GRD 12/28/99 476,335,860 1,617,000 1,621,586 4,586
GRD 12/29/99 45,694,000 155,000 155,538 538
GTQ 1/21/99 6,275,431 925,375 929,047 3,672
HUF 3/23/99 66,825,500 305,000 302,169 (2,831)
IDR 1/8/99 8,700,000,000 771,619 1,079,318 307,699
IDR 1/11/99 4,000,000,000 372,266 494,842 122,576
IDR 1/28/99 4,200,000,000 516,923 511,431 (5,492)
IDR 3/10/99 4,000,000,000 495,663 470,312 (25,351)
IDR 6/7/99 1,839,500,000 214,269 202,942 (11,327)
ILS 2/16/99 5,948,270 1,370,000 1,412,656 42,656
ILS 6/11/99 4,622,200 1,210,000 1,070,325 (139,675)
INR 1/14/99 28,446,000 660,000 666,990 6,990
INR 2/9/99 12,993,000 300,000 303,339 3,339
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
63
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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>
INR 2/25/99 50,545,000 $ 1,100,000 $ 1,174,919 $ 74,919
INR 4/6/99 20,227,500 450,000 465,198 15,198
INR 5/25/99 23,270,000 520,000 527,460 7,460
JPY 3/11/99 132,631,800 1,117,276 1,184,216 66,940
KES 1/4/99 32,445,521 531,893 524,845 (7,048)
KES 1/11/99 13,763,792 226,378 222,165 (4,213)
KES 2/12/99 27,630,000 450,000 438,014 (11,986)
KRW 2/8/99 466,550,000 350,000 385,920 35,920
KRW 4/20/99 3,466,200,000 2,180,000 2,844,705 664,705
KRW 4/27/99 1,160,700,000 730,000 951,772 221,772
KRW 7/26/99 1,817,655,000 1,470,000 1,474,809 4,809
KRW 9/29/99 962,500,000 770,000 776,316 6,316
MXN 3/29/99 8,590,142 814,000 812,775 (1,225)
NZD 3/11/99 1,228,549 656,598 646,982 (9,616)
PEN 3/2/99 1,331,400 420,000 413,954 (6,046)
PHP 1/7/99 28,768,000 640,000 740,489 100,489
PLN 1/4/99 4,097,843 1,113,000 1,166,178 53,178
PLN 1/25/99 2,214,056 610,000 626,424 16,424
PLN 2/23/99 1,640,989 465,001 461,248 (3,753)
PLN 7/6/99 1,694,786 465,000 463,894 (1,106)
PLN 7/13/99 114,549 30,000 31,316 1,316
SKK 2/16/99 14,167,500 375,000 377,453 2,453
SKK 2/19/99 15,953,700 426,927 424,564 (2,363)
SVC 2/16/99 2,801,866 318,000 317,488 (512)
THB 1/8/99 34,000,000 944,444 934,853 (9,591)
THB 5/27/99 24,000,000 654,129 653,243 (886)
THB 12/21/99 34,997,000 926,092 935,314 9,222
XEU 3/11/99 27,481 32,611 32,357 (254)
ZAR 11/26/99 2,177,520 344,000 336,091 (7,909)
----------- ----------- ----------
$86,217,511 $88,335,392 $2,117,881
----------- ----------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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>
ARS 1/5/99 1,237,030 $ 1,232,961 $ 1,237,772 $ (4,811)
ARS 7/1/99 929,160 911,120 908,181 2,939
AUD 3/11/99 6,950,946 4,481,970 4,262,007 219,963
CAD 3/11/99 3,433,392 2,210,642 2,246,599 (35,957)
COP 1/4/99 236,355,000 153,267 151,529 1,738
DEM 1/11/99 659,100 390,000 395,685 (5,685)
DEM 1/13/99 873,000 521,420 524,149 (2,729)
DEM 1/27/99 828,001 488,715 497,466 (8,751)
DEM 2/19/99 710,000 426,926 427,071 (145)
DEM 3/11/99 84,720,151 50,913,628 51,011,192 (97,564)
DEM 3/31/99 1,610,000 967,945 970,359 (2,414)
DKK 3/11/99 144,372,158 22,741,029 22,727,312 13,717
ESP 3/11/99 2,271,146,847 16,042,453 16,037,558 4,895
FRF 3/11/99 63,813,320 11,407,458 11,453,355 (45,897)
GBP 3/11/99 14,921,257 24,809,620 24,737,405 72,215
GRD 4/14/99 15,000,000 52,699 52,708 (9)
INR 2/9/99 12,993,000 298,210 303,339 (5,129)
ITL 3/11/99 7,140,509,223 4,319,466 4,333,571 (14,105)
JPY 3/11/99 1,959,397,625 16,358,451 17,494,673 (1,136,222)
KES 1/4/99 32,445,521 519,960 524,845 (4,885)
KRW 2/8/99 466,550,000 329,252 385,920 (56,668)
KRW 4/20/99 3,466,200,000 2,204,290 2,844,705 (640,415)
KRW 4/27/99 1,160,700,000 804,959 951,771 (146,812)
NZD 3/11/99 1,219,460 657,899 642,196 15,703
PHP 1/7/99 25,000,000 608,273 643,501 (35,228)
PLN 1/4/99 4,097,843 1,171,817 1,166,178 5,639
THB 1/8/99 34,000,000 925,170 934,853 (9,683)
XEU 3/11/99 5,155,627 6,076,156 6,070,607 5,549
------------ ------------ -----------
$172,025,756 $173,936,507 $(1,910,751)
------------ ------------ -----------
Gross unrealized appreciation on Forward Foreign Currency Contracts $ 3,055,778
===========
Gross unrealized depreciation on Forward Foreign Currency Contracts $ 2,848,648
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
65
<PAGE>
===============================================================================-
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) 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 $ 396,057,275 $ 93,163,852 $ 7,166,029 $ 85,997,823
Mid Cap 70,950,524 8,474,504 6,637,319 1,837,185
Small Cap 1,411,268,006 235,760,470 147,526,998 88,233,472
Bantam Value 71,845,466 7,934,561 13,211,111 (5,276,550)
Global Equity 19,471,020 3,607,411 734,993 2,872,418
International Equity 2,453,528,690 637,325,686 171,556,644 465,769,042
International Small Cap 181,782,228 29,916,347 31,234,015 (1,317,668)
Emerging Markets 382,075,916 14,815,304 92,823,388 (78,008,084)
Bond 116,880,591 1,190,577 1,543,556 (352,979)
High Yield 43,329,180 463,679 1,793,174 (1,329,495)
International Fixed-Income 113,120,321 5,224,245 1,445,936 3,778,309
Strategic Yield 433,907,627 6,076,730 18,088,792 (12,012,062)
</TABLE>
(c) 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 December 31, 1998, these securities
amounted to $1,846,614, $18,049,373, $5,691,131, $11,562,725, $5,254,072
and $42,137,646 or 1.0%, 5.9%, 4.9%, 27.0%, 4.4% and 10.0% of net assets
for International Small Cap Portfolio, Emerging Markets Portfolio, Bond
Portfolio, High Yield Portfolio, International Fixed-Income Portfolio and
Strategic Yield Portfolio, respectively.
(d) Bankrupt security valued at zero
(e) Variable rate security. Interest rate shown is the current rate.
(f) Front Loaded Interest Reduction Bond.
(g) Segregated securities for when-issued purchases and/or forward foreign
currency contracts.
(h) At December 31, 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%, 1/25/99 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%, 12/31/95 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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
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 IEP--Irish Pound
ATS--Austrian Schilling ILS--Israeli Shekel
AUD-- Australian Dollar INR--Indian Rupee
BEL-- Belgian Franc ITL--Italian Lira
BRL--Brazilian Real JPY--Japanese Yen
CAD-- Canadian Dollar KES--Kenyan Shilling
CHF-- Swiss Franc KRW--South Korean Won
CLP-- Chilean Peso MXN--Mexican Peso
CNY--Chinese Yuan Renminbi NLG--Netherlands Guilder
COP-- Colombian Peso NOK--Norwegian Krone
CRC--Costa Rican Colon NZD--New Zealand Dollar
CZK-- Czech Koruna PEN--Peruvian Nouveau Sol
DEM--Deutsche Mark PHP--Philippine Peso
DKK--Danish Krone PLN--Polish Zloty
EEK--Estonian Krune SEK--Swedish Krona
EGP--Eqyptian Pound SKK--Slovakian Koruna
ESP--Spanish Peseta SVC--El Salvador Colon
FIM--Finnish Markka THB--Thailand Baht
FRF-- French Franc TRL--Turkish Lira
GBP-- Pound Sterling USD--United States Dollar
GRD--Greek Drachma UYU--Uruguayan Peso
GTQ--Guatemalan Quetzal VEB--Venezuelan Bolivar
HUF--Hungarian Forint XEU--European Currency Unit (ECU)
IDR--Indonesian Rupiah ZAR--South African Rand
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
67
<PAGE>
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS BY INDUSTRY, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY
COUNTRY:
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD
GLOBAL INTERNATIONAL INTERNATIONAL EMERGING
EQUITY EQUITY SMALL CAP MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
INDUSTRY
Advertising ............................. --% --% 2.0% --%
Apparel & Textiles ...................... -- -- 2.4 --
Aerospace & Defense ..................... 5.0 2.7 -- --
Automotive .............................. 3.2 3.4 2.0 --
Banks and Financial Services ............ 16.7 19.7 10.9 13.8
Brewery ................................. -- -- 2.5 5.9
Broadcasting ............................ -- -- 1.4 1.7
Business Services & Supplies ............ -- -- 1.7 --
Chemicals & Plastics .................... 0.8 3.0 2.7 --
Communication Services .................. 1.1 1.5 -- --
Computer Software ....................... -- -- 5.0 --
Computer Services ....................... -- -- 1.5 --
Computers & Business Equipment .......... 3.2 -- -- --
Conglomerates ........................... 3.3 3.0 -- 8.0
Construction & Materials ................ 0.5 1.5 -- 7.0
Construction & Mining Equipment ......... -- -- 0.7 --
Consumer Goods .......................... 0.9 3.5 -- --
Diversified Holding Company ............. 0.8 -- 2.2 --
Drugs & Health Care ..................... 8.0 3.1 5.7 --
Electrical Equipment .................... 3.6 4.9 -- 3.3
Electronics ............................. 5.5 1.7 5.4 --
Energy .................................. 1.9 -- -- --
Food & Beverages ........................ 6.3 6.3 5.3 9.2
Hospitals & Long-Term Care .............. -- -- 3.5 --
Hotels & Restaurants .................... 1.7 -- 1.3 --
Household Products ...................... -- 1.4 2.8 --
Industrial & Machinery .................. -- -- 3.9 --
Insurance ............................... 8.3 10.6 6.5 1.1
Leisure/Entertainment ................... 1.6 2.3 1.5 --
Manufacturing ........................... 2.4 5.0 1.8 --
Medical Supplies ........................ -- -- 3.1 --
Metals .................................. -- -- -- 1.0
Newspaper ............................... -- -- 1.7 --
Office Equipment ........................ 1.3 1.4 -- --
Oil & Gas ............................... 3.9 5.0 -- 3.9
Paper Products .......................... -- 0.5 -- 2.2
Petroleum Equipment & Services .......... 1.7 1.8 -- --
Plastics ................................ -- -- 1.4 --
Printing ................................ -- -- 2.8 1.1
Publishing .............................. -- 0.3 2.3 --
Railroad ................................ -- -- -- 0.9
Repurchase Agreement .................... 2.4 2.2 5.5 3.5
Retail .................................. 3.1 3.6 8.3 6.8
Services ................................ 1.3 -- 1.4 --
Steel ................................... -- -- -- 0.9
Telecommunications ...................... 7.7 5.7 -- 21.8
Tobacco ................................. 1.0 3.2 -- 1.8
Toys & Amusement ........................ -- 1.1 0.8 --
Utilities ............................... 2.0 1.4 -- 5.4
---- ------- ----- -------
Total Investments ....................... 99.2% 99.8% 100.0% 99.3%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS BY ASSET TYPE, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY
CURRENCY:
LAZARD LAZARD
INTERNATIONAL STRATEGIC
FIXED-INCOME YIELD
PORTFOLIO PORTFOLIO
--------------- ------------
ASSET TYPE
Asset-Backed Securities ...................... 1.1% 1.2%
Collateralized Mortgage Obligations .......... 0.2 4.2
Commercial Paper ............................. 6.2 6.2
Corporate Bonds .............................. 38.8 40.4
Discount Notes ............................... 0.6 --
Foreign Government Obligations ............... 40.8 16.3
Preferred Stocks ............................. -- 2.3
REMICs ....................................... -- 0.1
Repurchase Agreement ......................... 1.3 2.9
Step-up Bonds ................................ 0.2 0.3
Structured Notes ............................. 0.9 3.0
United States Government Obligations ......... 7.1 23.5
---- -------
Total Investments ............................ 97.2% 100.4%
69
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
LAZARD
EQUITY
PORTFOLIO
-----------------
ASSETS
Investments in securities, at value (cost $396,057,275,
$70,950,524, $1,409,642,345, $71,710,100,
$19,389,067, $2,428,029,380, $181,782,228,
$381,056,579, $116,606,674, $43,145,346,
$112,517,182 and $436,009,870, respectively) ................ $ 482,055,098
Cash ......................................................... 3,622
Foreign currency (cost $0, $0, $0, $0, $69, $1,377,617,
$21,323, $253,343, $0, $0, $9,598 and $30,350,
respectively) ............................................... --
Receivables for:
Investments sold ............................................ 3,447,007
Dividends and interest ...................................... 621,752
Capital stock sold .......................................... 3,594,093
Gross appreciation on foreign currency contracts ............ --
Due from Manager ............................................. --
Deferred organizational expenses ............................. --
-------------
Total assets ................................................. 489,721,572
-------------
LIABILITIES
Payables for:
Investments purchased ....................................... 9,353,643
Capital stock repurchased ................................... 1,191,528
Dividends payable ........................................... --
Gross depreciation on foreign currency contracts ............ --
Investment management fees payable ........................... 296,743
Accrued directors' fees payable .............................. 2,688
Accrued distribution fees payable ............................ 24,578
Accrued expenses and other payables .......................... 102,572
-------------
Total liabilities ............................................ 10,971,752
-------------
Net assets ................................................... 478,749,820
=============
NET ASSETS
Paid in capital .............................................. 378,079,574
Undistributed (distributions in excess of) investment
income--net ................................................. 119,713
Unrealized appreciation (depreciation) on:
Investments--net ............................................ 85,997,823
Foreign currency-- net ...................................... --
Accumulated realized gain (loss)--net ........................ 14,552,710
-------------
Net assets ................................................... $ 478,749,820
=============
INSTITUTIONAL SHARES
Net assets ................................................... $ 361,126,116
Shares of capital stock outstanding* ......................... 16,605,093
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 21.75
OPEN SHARES
Net assets ................................................... $ 117,623,704
Shares of capital stock outstanding* ......................... 5,406,563
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 21.76
<TABLE>
<CAPTION>
LAZARD
LAZARD LAZARD BANTAM
MID CAP SMALL CAP VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $396,057,275,
$70,950,524, $1,409,642,345, $71,710,100,
$19,389,067, $2,428,029,380, $181,782,228,
$381,056,579, $116,606,674, $43,145,346,
$112,517,182 and $436,009,870, respectively) ................ $ 72,787,709 $1,499,501,478 $ 66,568,916
Cash ......................................................... 446 208 22
Foreign currency (cost $0, $0, $0, $0, $69, $1,377,617,
$21,323, $253,343, $0, $0, $9,598 and $30,350,
respectively) ............................................... -- -- --
Receivables for:
Investments sold ............................................ -- 7,935,045 617,904
Dividends and interest ...................................... 63,811 1,962,147 28,243
Capital stock sold .......................................... 30,459 6,750,247 93,000
Gross appreciation on foreign currency contracts ............ -- -- --
Due from Manager ............................................. -- -- --
Deferred organizational expenses ............................. 18,555 -- 505
-------------- -------------- --------------
Total assets ................................................. 72,900,980 1,516,149,125 67,308,590
-------------- -------------- --------------
LIABILITIES
Payables for:
Investments purchased ....................................... 614,859 6,527,195 25,938
Capital stock repurchased ................................... 100,329 3,423,577 386,342
Dividends payable ........................................... -- -- --
Gross depreciation on foreign currency contracts ............ -- -- --
Investment management fees payable ........................... 42,498 921,426 40,574
Accrued directors' fees payable .............................. 2,688 2,688 2,688
Accrued distribution fees payable ............................ 3,342 19,893 1,526
Accrued expenses and other payables .......................... 61,185 204,077 57,280
-------------- -------------- --------------
Total liabilities ............................................ 824,901 11,098,856 514,348
-------------- -------------- --------------
Net assets ................................................... 72,076,079 1,505,050,269 66,794,242
============== ============== ==============
NET ASSETS
Paid in capital .............................................. 69,945,063 1,416,125,856 71,862,799
Undistributed (distributions in excess of) investment
income--net ................................................. 13,218 7,069,548 --
Unrealized appreciation (depreciation) on:
Investments--net ............................................ 1,837,185 89,859,133 (5,141,184)
Foreign currency-- net ...................................... -- -- --
Accumulated realized gain (loss)--net ........................ 280,613 (8,004,268) 72,627
-------------- -------------- --------------
Net assets ................................................... $ 72,076,079 $1,505,050,269 $ 66,794,242
============== ============== ==============
INSTITUTIONAL SHARES
Net assets ................................................... $ 55,730,688 $1,411,502,906 $ 59,737,554
Shares of capital stock outstanding* ......................... 5,327,538 81,187,480 4,899,918
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 10.46 $ 17.39 $ 12.19
OPEN SHARES
Net assets ................................................... $ 16,345,391 $ 93,547,363 $ 7,056,688
Shares of capital stock outstanding* ......................... 1,564,634 5,391,454 582,897
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 10.45 $ 17.35 $ 12.11
</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.
70
<PAGE>
===============================================================================-
- --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD
GLOBAL INTERNATIONAL INTERNATIONAL EMERGING
EQUITY EQUITY SMALL CAP MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
===============================================================================
$ 22,343,438 $ 2,919,297,732 $180,464,560 $ 304,067,832
736 398 954 912,890
69 1,363,292 21,260 253,579
150,981 -- -- --
36,774 5,370,220 400,545 1,087,369
53,500 6,889,925 141,099 1,861,740
-- -- -- --
74,593 -- -- --
361 -- -- --
------------ --------------- ------------ --------------
22,660,452 2,932,921,567 181,028,418 308,183,410
------------ --------------- ------------ --------------
64,801 -- 227,185 914,612
-- 3,737,157 143,041 621,583
-- -- -- --
-- -- -- --
-- 1,801,595 118,332 254,749
2,688 2,688 2,688 2,688
972 9,650 613 2,133
57,695 778,041 111,228 163,747
------------ --------------- ------------ --------------
126,156 6,329,131 603,087 1,959,512
------------ --------------- ------------ --------------
22,534,296 2,926,592,436 180,425,331 306,223,898
============ =============== ============ ==============
19,604,527 2,444,989,945 180,796,031 436,700,968
(9,939) (20,141,111) (35,422) 220,015
2,954,371 491,268,352 (1,317,668) (76,988,747)
551 225,120 1,189 (1,081)
(15,214) 10,250,130 981,201 (53,707,257)
------------ --------------- ------------ --------------
$ 22,534,296 $ 2,926,592,436 $180,425,331 $ 306,223,898
============ =============== ============ ==============
$ 17,710,122 $ 2,879,288,851 $177,779,327 $ 298,032,599
1,347,859 189,079,168 15,590,528 42,950,229
$ 13.14 $ 15.23 $ 11.40 $ 6.94
$ 4,824,174 $ 47,303,585 $ 2,646,004 $ 8,191,299
366,528 3,106,682 232,449 1,176,048
$ 13.16 $ 15.23 $ 11.38 $ 6.97
LAZARD LAZARD
LAZARD LAZARD INTERNATIONAL STRATEGIC
BOND HIGH YIELD FIXED-INCOME YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------- --------------- --------------- ----------------
$116,527,612 $ 41,999,685 $116,898,630 $ 421,895,565
354 178 833 938
-- -- 9,532 30,367
1,679,503 232,838 658,694 5,573,624
1,017,297 1,026,997 2,142,915 7,640,647
2,761,514 -- 348,810 4,564,751
-- -- 911,677 3,055,778
-- -- -- --
-- 19,446 -- --
------------ ------------- ------------ --------------
121,986,280 43,279,144 120,971,091 442,761,670
------------ ------------- ------------ --------------
6,078,715 320,865 225,938 18,003,195
117,000 -- 47,062 625,201
48,847 5,107 5,692 829,815
-- -- 278,656 2,848,648
46,473 7,271 80,936 255,874
2,688 2,688 2,688 2,688
3,098 182 866 3,633
66,356 59,468 78,479 133,255
------------ ------------- ------------ --------------
6,363,177 395,581 720,317 22,702,309
------------ ------------- ------------ --------------
115,623,103 42,883,563 120,250,774 420,059,361
============ ============= ============ ==============
116,074,933 46,280,385 115,109,368 454,082,459
(180,455) (21,463) (282,389) 1,046,593
(79,062) (1,145,661) 4,381,448 (14,114,305)
-- -- 652,735 245,832
(192,313) (2,229,698) 389,612 (21,201,218)
------------ ------------- ------------ --------------
$115,623,103 $ 42,883,563 $120,250,774 $ 420,059,361
============ ============= ============ ==============
$100,396,638 $ 41,934,583 $115,500,090 $ 397,599,151
10,154,742 4,453,235 10,782,322 44,107,303
$ 9.89 $ 9.42 $ 10.71 $ 9.01
$ 15,226,465 $ 948,980 $ 4,750,684 $ 22,460,210
1,540,500 100,729 444,293 2,489,504
$ 9.88 $ 9.42 $ 10.69 $ 9.02
71
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
EQUITY MID CAP
PORTFOLIO PORTFOLIO
--------------- --------------
<S> <C> <C>
INVESTMENT INCOME
INCOME:
Interest ......................................................... $ 881,152 $ 239,771
Dividends ........................................................ 8,478,127 708,363
----------- ------------
Total investment income* .......................................... 9,359,279 948,134
----------- ------------
EXPENSES:
Management fees .................................................. 3,316,469 459,760
Administration fees .............................................. 133,439 57,261
Distribution fees (Open Shares) .................................. 219,862 22,660
Custodian fees ................................................... 105,896 57,369
Professional services ............................................ 40,466 47,058
Registration fees ................................................ 51,450 24,653
Shareholders' services ........................................... 69,307 56,271
Directors' fees and expenses ..................................... 13,838 13,902
Shareholders' reports ............................................ 14,740 11,537
Amortization of organizational expenses .......................... -- 38,639
Other ............................................................ 28,525 5,178
----------- ------------
Total expenses before fees waived and expenses reimbursed ......... 3,993,992 794,288
Management fees waived and expenses reimbursed ................... -- (119,681)
Administration fees waived ....................................... -- (3,750)
Expense reductions ............................................... (2,457) --
----------- ------------
Expenses--net ..................................................... 3,991,535 670,857
----------- ------------
INVESTMENT INCOME (LOSS)--NET ..................................... 5,367,744 277,277
----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net ................................................ 36,224,831 1,047,283
Foreign currency--net ........................................... -- --
Net change in unrealized appreciation (depreciation) on:
Investments--net ................................................ 24,446,325 551,315
Foreign currency--net ........................................... -- --
----------- ------------
Realized and unrealized gain (loss) on investments and
foreign currency--net ........................................... 60,671,156 1,598,598
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ...................................................... $66,038,900 $ 1,875,875
=========== ============
* Net of foreign withholding taxes of: ........................... $ 59,398 $ 1,416
=========== ============
<CAPTION>
LAZARD LAZARD
SMALL CAP BANTAM VALUE
PORTFOLIO PORTFOLIO
----------------- -----------------
<S> <C> <C>
INVESTMENT INCOME
INCOME:
Interest ......................................................... $ 6,014,341 $ 261,509
Dividends ........................................................ 14,048,859 238,085
-------------- ---------------
Total investment income* .......................................... 20,063,200 499,594
-------------- ---------------
EXPENSES:
Management fees .................................................. 11,726,934 575,206
Administration fees .............................................. 301,361 60,339
Distribution fees (Open Shares) .................................. 245,099 21,161
Custodian fees ................................................... 259,546 62,640
Professional services ............................................ 63,132 41,464
Registration fees ................................................ 112,104 27,724
Shareholders' services ........................................... 137,718 57,800
Directors' fees and expenses ..................................... 13,837 13,837
Shareholders' reports ............................................ 25,426 9,548
Amortization of organizational expenses .......................... -- 182
Other ............................................................ 115,438 6,243
-------------- ---------------
Total expenses before fees waived and expenses reimbursed ......... 13,000,595 876,144
Management fees waived and expenses reimbursed ................... -- (40,732)
Administration fees waived ....................................... -- --
Expense reductions ............................................... (19,180) (4,732)
-------------- ---------------
Expenses--net ..................................................... 12,981,415 830,680
-------------- ---------------
INVESTMENT INCOME (LOSS)--NET ..................................... 7,081,785 (331,086)
-------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net ................................................ (8,015,535) 72,685
Foreign currency--net ........................................... -- --
Net change in unrealized appreciation (depreciation) on:
Investments--net ................................................ (200,026,407) (12,144,931)
Foreign currency--net ........................................... -- --
-------------- ---------------
Realized and unrealized gain (loss) on investments and
foreign currency--net ........................................... (208,041,942) (12,072,246)
-------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ...................................................... $ (200,960,157) $ (12,403,332)
============== ===============
* Net of foreign withholding taxes of: ........................... $ 24,052 $ --
============== ===============
</TABLE>
** Commenced operations on January 2, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
72
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD
GLOBAL INTERNATIONAL INTERNATIONAL EMERGING
EQUITY EQUITY SMALL CAP MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------- ---------------- --------------- -----------------
$ 39,546 $ 6,005,981 $ 509,630 $ 1,418,920
300,096 52,760,910 2,742,017 7,311,312
---------- -------------- ------------- ---------------
339,642 58,766,891 3,251,647 8,730,232
---------- -------------- ------------- ---------------
119,985 19,452,067 1,354,903 2,794,119
48,200 404,362 81,137 100,882
9,246 76,823 8,134 29,160
82,696 2,949,209 279,094 508,629
32,758 56,198 34,824 40,873
19,953 218,590 42,231 78,815
46,211 109,072 53,020 66,953
11,137 13,838 13,904 13,837
1,210 19,566 10,967 13,517
182 -- 3,214 4,678
2,076 147,548 19,552 6,804
---------- -------------- ------------- ---------------
373,654 23,447,273 1,900,980 3,658,267
(194,578) -- (16,356) (17,870)
-- -- -- --
-- (4,500) (1,365) (18,365)
---------- -------------- ------------- ---------------
179,076 23,442,773 1,883,259 3,622,032
---------- -------------- ------------- ---------------
160,566 35,324,118 1,368,388 5,108,200
---------- -------------- ------------- ---------------
878,761 145,444,421 13,308,772 (48,041,891)
(16,203) (9,178,019) (626,958) (757,497)
1,695,964 177,729,923 (4,961,310) (28,054,440)
(155) 440,345 7,701 44,820
---------- -------------- ------------- ---------------
2,558,367 314,436,670 7,728,205 (76,809,008)
---------- -------------- ------------- ---------------
$2,718,933 $ 349,760,788 $ 9,096,593 $ (71,700,808)
========== ============== ============= ===============
$ 18,473 $ 6,250,498 $ 433,482 $ 683,973
========== ============== ============= ===============
LAZARD LAZARD LAZARD
LAZARD HIGH INTERNATIONAL STRATEGIC
BOND YIELD FIXED-INCOME YIELD
PORTFOLIO PORTFOLIO** PORTFOLIO PORTFOLIO
--------------- ---------------- --------------- ----------------
$ 6,520,653 $ 2,800,635 $ 6,107,211 $ 34,318,958
-- 182,639 27,582 1,472,366
------------- --------------- ------------ -------------
6,520,653 2,983,274 6,134,793 35,791,324
------------- --------------- ------------ -------------
523,656 225,562 857,644 3,422,135
65,947 49,968 67,871 136,257
28,672 573 9,533 48,934
117,717 50,586 207,503 368,520
35,347 31,193 35,990 48,036
28,778 27,756 23,582 42,931
50,280 41,432 54,165 64,419
13,837 11,175 13,837 13,846
1,328 638 10,409 8,819
-- 44,902 -- --
7,839 1,733 8,517 27,752
------------- --------------- ------------ -------------
873,401 485,518 1,289,051 4,181,649
(11,309) (125,291) (21,538) --
-- (43,750) -- --
(10,339) -- (7,942) (11,525)
------------- --------------- ------------ -------------
851,753 316,477 1,259,571 4,170,124
------------- --------------- ------------ -------------
5,668,900 2,666,797 4,875,222 31,621,200
------------- --------------- ------------ -------------
1,363,055 (2,212,117) 1,433,652 (23,125,302)
-- -- (1,573,161) (6,897,177)
(1,212,836) (1,145,661) 8,149,616 (1,923,204)
-- -- 1,455,856 (1,117,869)
------------- --------------- ------------ -------------
150,219 (3,357,778) 9,465,963 (33,063,552)
------------- --------------- ------------ -------------
$ 5,819,119 $ (690,981) $ 14,341,185 $ (1,442,352)
============= =============== ============ =============
$ -- $ -- $ 31,059 $ --
============= =============== ============ =============
73
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD EQUITY
PORTFOLIO
------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 5,367,744 $ 3,266,345
Realized gain (loss) on investments and foreign currency--net .................... 36,224,831 58,942,717
Change in unrealized appreciation (depreciation)--net ............................ 24,446,325 9,469,216
-------------- --------------
Net increase (decrease) in net assets resulting from operations ................... 66,038,900 71,678,278
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net
Institutional Shares ............................................................ (4,333,091) (3,202,517)
Open Shares ..................................................................... (934,432) (70,473)
From realized gains--net
Institutional Shares ............................................................ (21,315,461) (53,939,994)
Open Shares ..................................................................... (6,695,483) (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 ........................... (33,278,467) (59,480,854)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ............................................................ 87,372,723 90,619,277
Open Shares ..................................................................... 120,385,150 30,083,744
Net proceeds from reinvestment of distributions
Institutional Shares ............................................................ 24,696,654 54,569,340
Open Shares ..................................................................... 7,533,249 2,261,137
Cost of shares redeemed
Institutional Shares ............................................................ (111,996,715) (103,551,489)
Open Shares ..................................................................... (38,387,846) (8,398,580)
-------------- --------------
Net increase (decrease) in net assets from capital stock transactions ............. 89,603,215 65,583,429
-------------- --------------
Total increase (decrease) in net assets ........................................... 122,363,648 77,780,853
Net assets at beginning of period ................................................. 356,386,172 278,605,319
-------------- --------------
Net assets at end of period* ...................................................... $ 478,749,820 $ 356,386,172
============== ==============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of period ........................................ 16,695,862 14,480,367
-------------- --------------
Shares sold ...................................................................... 4,095,584 4,234,980
Shares issued to shareholders from reinvestment of distributions ................. 1,165,225 2,733,379
Shares repurchased ............................................................... (5,351,578) (4,752,864)
-------------- --------------
Net increase (decrease) .......................................................... (90,769) 2,215,495
-------------- --------------
Shares outstanding at end of period .............................................. 16,605,093 16,695,862
============== ==============
OPEN SHARES:
Shares outstanding at beginning of period ........................................ 1,141,207 --
-------------- --------------
Shares sold ...................................................................... 5,735,707 1,390,648
Shares issued to shareholders from reinvestment of distributions ................. 355,884 113,384
Shares repurchased ............................................................... (1,826,235) (362,825)
-------------- --------------
Net increase (decrease) .......................................................... 4,265,356 1,141,207
-------------- --------------
Shares outstanding at end of period .............................................. 5,406,563 1,141,207
============== ==============
* Includes undistributed (distributions in excess of) investment income--net ..... $ 119,713 $ 19,492
============== ==============
</TABLE>
** Commenced operations on November 4, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
74
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD MID CAP LAZARD SMALL CAP LAZARD BANTAM VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997** 1998 1997 1998 1997
- ----------------- ----------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
$277,277 $ 76,325 $ 7,081,785 $ 4,109,963 $ (331,086) $ (242,145)
1,047,283 (1,143) (8,015,535) 180,850,768 72,685 10,157,779
551,315 1,285,870 (200,026,407) 111,151,369 (12,144,931) 3,977,235
- -------------- ------------- -------------- -------------- --------------- ---------------
1,875,875 1,361,052 (200,960,157) 296,112,100 (12,403,332) 13,892,869
- -------------- ------------- -------------- -------------- --------------- ---------------
(238,083) (69,578) (682,951) (3,427,982) -- --
(51,279) (1,235) -- -- -- --
{593,806) -- (7,744,125) (188,272,138) (805,472) (9,019,744)
(171,721) -- (533,570) (5,550,731) (91,260) (964,614)
(18,334) -- -- -- -- --
(3,181) -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
- -------------- ------------- -------------- -------------- --------------- ---------------
(1,076,404) (70,813) (8,960,646) (197,250,851) (896,732) (9,984,358)
- -------------- ------------- -------------- -------------- --------------- ---------------
20,622,564 48,808,885 726,841,164 580,429,963 15,742,416 31,919,201
20,111,962 2,003,215 131,639,336 52,536,821 6,621,216 10,151,848
781,532 64,808 10,219,065 179,673,475 802,893 8,989,030
211,355 809 521,384 5,399,865 74,738 900,973
(16,067,323) (346,699) (577,391,571) (399,682,887) (15,048,400) (10,133,057)
(5,968,971) (235,768) (68,030,676) (7,451,540) (6,418,518) (1,965,892)
- -------------- ------------- -------------- -------------- --------------- ---------------
19,691,119 50,295,250 223,798,702 410,905,697 1,774,345 39,862,103
- -------------- ------------- -------------- -------------- --------------- ---------------
20,490,590 51,585,489 13,877,899 509,766,946 (11,525,719) 43,770,614
51,585,489 -- 1,491,172,370 981,405,424 78,319,961 34,549,347
- -------------- ------------- -------------- -------------- --------------- ---------------
$ 72,076,079 $ 51,585,489 $1,505,050,269 $1,491,172,370 $ 66,794,242 $ 78,319,961
============== ============= ============== ============== =============== ===============
4,851,388 -- 72,186,366 53,230,190 4,887,256 2,746,889
- -------------- ------------- -------------- -------------- --------------- ---------------
1,986,263 4,879,588 39,866,121 28,061,127 1,165,000 2,177,512
79,580 6,442 544,378 9,286,832 64,129 647,359
(1,589,693) (34,642) (31,409,385) (18,391,783) (1,216,467) (684,504)
- -------------- ------------- -------------- -------------- --------------- ---------------
476,150 4,851,388 9,001,114 18,956,176 12,662 2,140,367
- -------------- ------------- -------------- -------------- --------------- ---------------
5,327,538 4,851,388 81,187,480 72,186,366 4,899,918 4,887,256
============== ============= ============== ============== =============== ===============
176,048 -- 2,302,364 -- 585,520 --
- -------------- ------------- -------------- -------------- --------------- ---------------
1,988,746 199,579 6,772,629 2,362,406 484,655 642,453
21,545 80 28,259 277,559 6,106 64,441
(621,705) (23,611) (3,711,798) (337,601) (493,384) (121,374)
- -------------- ------------- -------------- -------------- --------------- ---------------
1,388,586 176,048 3,089,090 2,302,364 (2,623) 585,520
- -------------- ------------- -------------- -------------- --------------- ---------------
1,564,634 176,048 5,391,454 2,302,364 582,897 585,520
============== ============= ============== ============== =============== ===============
$ 13,218 $ 12,085 $ 7,069,548 $ 681,981 $ -- $ --
============== ============= ============== ============== =============== ===============
</TABLE>
75
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD GLOBAL EQUITY
PORTFOLIO
---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 160,566 $ 115,429
Realized gain (loss) on investments and foreign currency--net .................... 862,558 856,254
Change in unrealized appreciation (depreciation)--net ............................ 1,695,809 652,357
------------ ------------
Net increase (decrease) in net assets resulting from operations ...................
2,718,933 1,624,040
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net
Institutional Shares ............................................................ (109,536) (105,741)
Open Shares ..................................................................... (14,500) (13,063)
From realized gains--net
Institutional Shares ............................................................ (821,122) (947,173)
Open Shares ..................................................................... (225,207) (128,664)
In excess of investment income--net
Institutional Shares ............................................................ -- (6,344)
Open Shares ..................................................................... -- (830)
In excess of realized gains--net
Institutional Shares ............................................................ (10,308) --
Open Shares ..................................................................... (3,101) --
------------ ------------
Net decrease in net assets resulting from distributions ........................... (1,183,774) (1,201,815)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ............................................................ 6,063,563 2,036,594
Open Shares ..................................................................... 3,126,095 2,834,230
Net proceeds from reinvestment of distributions
Institutional Shares ............................................................ 933,169 1,020,486
Open Shares ..................................................................... 204,554 141,752
Cost of shares redeemed
Institutional Shares ............................................................ (1,037,949) (2,916,057)
Open Shares ..................................................................... (939,052) (674,496)
------------ ------------
Net increase (decrease) in net assets from capital stock transactions ............. 8,350,380 2,442,509
------------ ------------
Total increase in net assets ...................................................... 9,885,539 2,864,734
Net assets at beginning of year ................................................... 12,648,757 9,784,023
------------ ------------
Net assets at end of year* ........................................................ $ 22,534,296 $ 12,648,757
============ ============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of year .......................................... 870,086 852,071
------------ ------------
Shares sold ...................................................................... 487,546 173,237
Shares issued to shareholders from reinvestment of distributions ................. 72,432 86,767
Shares repurchased ............................................................... (82,205) (241,989)
------------ ------------
Net increase (decrease) .......................................................... 477,773 18,015
------------ ------------
Shares outstanding at end of year ................................................ 1,347,859 870,086
============ ============
OPEN SHARES:
Shares outstanding at beginning of period ........................................ 192,168 --
------------ ------------
Shares sold ...................................................................... 233,011 233,628
Shares issued to shareholders from reinvestment of distributions ................. 15,814 11,953
Shares repurchased ............................................................... (74,465) (53,413)
------------ ------------
Net increase (decrease) .......................................................... 174,360 192,168
------------ ------------
Shares outstanding at end of period year ......................................... 366,528 192,168
============ ============
* Includes undistributed (distributions in excess of) investment Income--net ..... $ (9,939) $ (30,476)
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
76
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL EQUITY LAZARD INTERNATIONAL SMALL CAP LAZARD EMERGING MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------- ----------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997
- ------------------- ------------------- ---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 35,324,118 $ 23,690,976 $ 1,368,388 $ 1,030,350 $ 5,108,200 $ 3,029,620
136,266,402 135,333,682 12,681,814 4,797,715 (48,799,388) 9,698,759
178,170,268 57,416,855 (4,953,609) (6,500,094) (28,009,620) (56,098,361)
--------------- --------------- ------------- ------------- -------------- --------------
349,760,788 216,441,513 9,096,593 (672,029) (71,700,808) (43,369,982)
--------------- --------------- ------------- ------------- -------------- --------------
(25,534,748) (23,615,628) (752,862) (779,553) (4,058,419) (2,195,662)
(250,536) (75,348) (5,976) (2,605) (121,120) (50,943)
(144,495,716) (132,849,456) (15,715,143) (2,420,014) -- (12,058,986)
(2,219,617) (407,971) (221,751) (20,012) -- (403,361)
-- (19,997,743) -- -- -- --
-- (49,197) -- -- -- --
-- -- -- -- -- (6,127,590)
-- -- -- -- -- (163,296)
--------------- --------------- ------------- ------------- -------------- --------------
(172,500,617) (176,995,343) (16,695,732) (3,222,184) (4,179,539) (20,999,838)
--------------- --------------- ------------- ------------- -------------- --------------
1,265,219,569 540,108,125 105,522,613 33,547,354 223,793,607 224,014,461
140,707,664 14,105,912 7,946,853 3,051,529 42,143,524 17,560,383
168,928,556 165,563,968 15,939,095 2,967,819 6,418,310 16,809,709
2,243,315 496,902 221,922 21,902 39,672 582,273
(829,574,309) (461,972,317) (77,988,431) (17,963,195) (95,979,356) (88,595,351)
(108,710,913) (3,403,545) (7,184,846) (1,136,469) (38,420,599) (7,220,528)
--------------- --------------- ------------- ------------- -------------- --------------
638,813,882 254,899,045 44,457,206 20,488,940 137,995,158 163,150,947
--------------- --------------- ------------- ------------- -------------- --------------
816,074,053 294,345,215 36,858,067 16,594,727 62,114,811 98,781,127
2,110,518,383 1,816,173,168 143,567,264 126,972,537 244,109,087 145,327,960
--------------- --------------- ------------- ------------- -------------- --------------
$ 2,926,592,436 $ 2,110,518,383 $ 180,425,331 $ 143,567,264 $ 306,223,898 $ 244,109,087
=============== =============== ============= ============= ============== ==============
150,349,803 133,302,794 12,122,940 10,640,540 25,697,597 12,969,409
--------------- --------------- ------------- ------------- -------------- --------------
81,842,532 36,635,849 7,901,725 2,689,836 28,909,650 18,858,547
11,354,528 11,731,335 1,379,036 253,037 845,770 1,776,539
(54,467,695) (31,320,175) (5,813,173) (1,460,473) (12,502,788) (7,906,898)
--------------- --------------- ------------- ------------- -------------- --------------
38,729,365 17,047,009 3,467,588 1,482,400 17,252,632 12,728,188
--------------- --------------- ------------- ------------- -------------- --------------
189,079,168 150,349,803 15,590,528 12,122,940 42,950,229 25,697,597
=============== =============== ============= ============= ============== ==============
773,878 -- 160,229 -- 844,049 --
--------------- --------------- ------------- ------------- -------------- --------------
9,132,813 967,597 571,256 251,402 5,261,508 1,447,155
150,724 35,205 19,069 1,866 7,814 62,861
(6,950,733) (228,924) (518,105) (93,039) (4,937,323) (665,967)
--------------- --------------- ------------- ------------- -------------- --------------
2,332,804 773,878 72,220 160,229 331,999 844,049
--------------- --------------- ------------- ------------- -------------- --------------
3,106,682 773,878 232,449 160,229 1,176,048 844,049
=============== =============== ============= ============= ============== ==============
$ (20,141,111) $ (21,193,548) $ (35,422) $ (18,014) $ 220,015 $ 48,851
=============== =============== ============= ============= ============== ==============
</TABLE>
77
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD BOND
PORTFOLIO
------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31
1998 1997
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net .......................................................... $ 5,668,900 $ 4,977,490
Realized gain (loss) on investments and foreign currency--net ................... 1,363,055 1,191,253
Change in unrealized appreciation (depreciation)--net ........................... (1,212,836) 976,970
------------- -------------
Net increase (decrease) in net assets resulting from operations .................. 5,819,119 7,145,713
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net
Institutional Shares ........................................................... (5,116,501) (4,784,961)
Open Shares .................................................................... (589,199) (218,630)
From realized gains--net
Institutional Shares ........................................................... (1,325,439) (622,871)
Open Shares .................................................................... (200,980) (47,549)
In excess of investment income--net
Institutional Shares ........................................................... (70) (103,346)
Open Shares .................................................................... (9) (6,061)
In excess of realized gains--net
Institutional Shares ........................................................... (150,643) --
Open Shares .................................................................... (18,525) --
From Capital--Net
Institutional Shares ........................................................... -- --
Open Shares .................................................................... -- --
-------------- -------------
Net decrease in net assets resulting from distributions .......................... (7,401,366) (5,783,418)
-------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales
Institutional Shares ........................................................... 30,642,538 30,149,655
Open Shares .................................................................... 10,295,197 7,728,016
Net proceeds from reinvestment of distributions
Institutional Shares ........................................................... 6,003,999 5,018,654
Open Shares .................................................................... 714,757 248,171
Cost of shares redeemed
Institutional Shares ........................................................... (27,312,623) (13,915,433)
Open Shares .................................................................... (2,849,142) (786,886)
-------------- -------------
Net increase (decrease) in net assets from capital stock transactions ............ 17,494,726 28,442,177
-------------- -------------
Total increase in net assets ..................................................... 15,912,479 29,804,472
Net assets at beginning of year .................................................. 99,710,624 69,906,152
-------------- -------------
Net assets at end of year* ....................................................... $115,623,103 $ 99,710,624
============== =============
SHARES ISSUED AND REPURCHASED:
INSTITUTIONAL SHARES:
Shares outstanding at beginning of year ......................................... 9,217,915 7,073,035
-------------- -------------
Shares sold ..................................................................... 3,060,161 3,039,325
Shares issued to shareholders from reinvestment of distributions ................ 599,942 503,472
Shares repurchased .............................................................. (2,723,276) (1,397,917)
-------------- -------------
Net increase .................................................................... 936,827 2,144,880
-------------- -------------
Shares outstanding at end of year ............................................... 10,154,742 9,217,915
============== =============
OPEN SHARES:
Shares outstanding at beginning of period ....................................... 726,613 --
-------------- -------------
Shares sold ..................................................................... 1,025,899 779,924
Shares issued to shareholders from reinvestment of distributions ................ 71,508 24,775
Shares repurchased .............................................................. (283,520) (78,086)
-------------- -------------
Net increase .................................................................... 813,887 726,613
-------------- -------------
Shares outstanding at end of period ............................................. 1,540,500 726,613
============== =============
* Includes undistributed (distributions in excess of) investment Income--net ..... $ (180,445) $ (136,318)
============== =============
</TABLE>
** Commenced operations on January 2, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
78
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL
LAZARD HIGH YIELD FIXED-INCOME LAZARD STRATEGIC YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------- ------------------------------- -------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998** 1998 1997 1998 1997
- ------------------- ---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
$ 2,666,797 $ 4,875,222 $ 5,281,736 $ 31,621,200 $ 24,177,268
(2,212,117) (139,509) (4,062,403) (30,022,479) 4,985,365
(1,145,661) 9,605,472 (6,930,080) (3,041,073) (15,784,090)
------------- ------------- ------------- --------------- ---------------
(690,981) 14,341,185 (5,710,747) (1,442,352) 13,378,543
------------- ------------- ------------- --------------- ---------------
(2,646,121) (1,954,550) (856,065) (19,465,202) (24,262,314)
(20,676) (62,023) (4,392) (791,250) (625,698)
-- -- (162,035) -- (1,819,161)
-- -- -- -- (77,090)
(78,525) -- (561,048) (794,218) (2,563,969)
(705) -- (8,622) (35,597) (73,087)
-- -- (1,193,276) -- --
-- -- (18,323) -- --
-- -- (2,677,113) (13,228,346) --
-- -- (41,142) (592,897) --
------------- ------------- ------------- --------------- ---------------
(2,746,027) (2,016,573) (5,522,016) (34,907,510) (29,421,319)
------------- ------------- ------------- --------------- ---------------
52,193,575 30,541,436 62,994,956 476,144,319 420,086,629
984,032 2,380,537 2,930,820 154,324,729 18,214,057
2,664,900 2,276,718 4,103,522 21,895,133 22,349,566
21,381 72,083 57,737 1,174,776 692,322
(9,518,672) (39,431,530) (34,229,843) (465,223,430) (226,654,290)
(24,645) (870,320) (97,029) (146,658,525) (2,976,085)
------------- ------------- ------------- --------------- ---------------
46,320,571 (5,031,076) 35,760,163 41,657,002 231,712,199
------------- ------------- ------------- --------------- ---------------
42,883,563 7,293,536 24,527,400 5,307,140 215,669,423
-- 112,957,238 88,429,838 414,752,221 199,082,798
------------- ------------- ------------- --------------- ---------------
$ 42,883,563 $ 120,250,774 $ 112,957,238 $ 420,059,361 $ 414,752,221
============== ============= ============= =============== ===============
-- 11,439,832 8,201,037 41,370,616 19,892,579
-------------- ------------- ------------- --------------- ---------------
5,125,438 3,069,726 6,263,605 50,232,451 41,987,849
270,082 232,609 410,505 2,318,882 2,253,081
(942,285) (3,959,845) (3,435,315) (49,814,646) (22,762,893)
-------------- ------------- ------------- --------------- ---------------
4,453,235 (657,510) 3,238,795 2,736,687 21,478,037
-------------- ------------- ------------- --------------- ---------------
4,453,235 10,782,322 11,439,832 44,107,303 41,370,616
============== ============= ============= =============== ===============
-- 287,789 -- 1,584,672 --
-------------- ------------- ------------- --------------- ---------------
101,097 239,066 291,721 16,328,778 1,813,716
1,997 7,344 5,813 124,369 70,193
(2,365) (89,906) (9,745) (15,548,315) (299,237)
-------------- ------------- ------------- --------------- ---------------
100,729 156,504 287,789 904,832 1,584,672
-------------- ------------- ------------- --------------- ---------------
100,729 444,293 287,789 2,489,504 1,584,672
============== ============= ============= =============== ===============
$ (21,463) $ (282,389) $ (1,450,070) $ 1,046,593 $ (574,424)
============== ============= ============= =============== ===============
</TABLE>
79
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------
12/31/98 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 ............. $ 19.98 $ 19.24 $ 17.41 $ 13.75 $ 13.89
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.28 0.22 0.33 0.23 0.14
Net realized and unrealized gain (loss) ......... 3.10 4.54 3.06 4.93 0.44
------- ------- ------- ------- -------
Total from investment operations ................ 3.38 4.76 3.39 5.16 0.58
------- ------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.26) (0.22) (0.33) (0.18) (0.15)
Net realized gain ............................... (1.35) (3.80) (1.23) (1.32) (0.57)
------- ------- ------- ------- -------
Total distributions ............................. (1.61) (4.02) (1.56) (1.50) (0.72)
------- ------- ------- ------- -------
Net asset value, end of period ................... $ 21.75 $ 19.98 $ 19.24 $ 17.41 $ 13.75
======= ======= ======= ======= =======
TOTAL RETURN (A) ................................. 17.3% 25.1% 19.9% 37.7% 4.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $361,126 $333,575 $278,605 $163,787 $89,105
Ratios to average net assets:
Net expenses (b) ................................ 0.85% 0.86% 0.89% 0.92% 1.05%
Gross expenses (b) .............................. 0.85% 0.87% 0.89% 0.92% 1.05%
Net investment income (b) ....................... 1.28% 1.00% 1.87% 1.45% 1.15%
Portfolio turnover rate .......................... 76% 78% 66% 81% 67%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 2/5/97* TO
12/31/98 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 ........................... 0.20 0.13
Net realized and unrealized gain (loss) ......... 3.12 3.62
-------- -------
Total from investment operations ................ 3.32 3.75
-------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.20) (0.15)
Net realized gain ............................... (1.35) (3.80)
-------- -------
Total distributions ............................. (1.55) (3.95)
-------- -------
Net asset value, end of period ................... $ 21.76 $ 19.99
======== =======
TOTAL RETURN (A) ................................. 17.0% 18.9%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $117,624 $22,811
Ratios to average net assets:
Net expenses (b) ................................ 1.12% 1.22%
Gross expenses (b) .............................. 1.12% 1.35%
Net investment income (b) ....................... 0.96% 0.60%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
80
<PAGE>
================================================================================
THE LAZARD FUNDS, INC
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD MID CAP PORTFOLIO
YEAR FOR THE PERIOD
ENDED 11/4/97* TO
12/31/98 12/31/97
INSTITUTIONAL SHARES ------------ ---------------
Net asset value, beginning of period ............. $ 10.26 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.05 0.02
Net realized and unrealized gain (loss) ......... 0.31 0.26
------- -------
Total from investment operations ................ 0.36 0.28
------- -------
Less distributions from and in excess of:
Net investment income ........................... ( 0.05) ( 0.02)
Net realized gain ............................... ( 0.11) --
------- -------
Total distributions ............................. ( 0.16) ( 0.02)
------- -------
Net asset value, end of period ................... $ 10.46 $ 10.26
======= =======
TOTAL RETURN (A) ................................. 3.7% 2.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $55,731 $49,779
Ratios to average net assets:
Net expenses (b) ................................ 1.05% 1.05%
Gross expenses (b) .............................. 1.23% 1.44%
Net investment income (b) ....................... 0.48% 1.02%
Portfolio turnover rate .......................... 86% 1%
YEAR FOR THE PERIOD
ENDED 11/4/97* TO
12/31/98 12/31/97
OPEN SHARES ------------ ---------------
Net asset value, beginning of period ............. $ 10.26 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.02 0.01
Net realized and unrealized gain (loss) ......... 0.32 0.26
------- -------
Total from investment operations ................ 0.34 0.27
------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.04) (0.01)
Net realized gain ............................... (0.11) --
------- -------
Total distributions ............................. (0.15) (0.01)
------- -------
Net asset value, end of period ................... $ 10.45 $ 10.26
======= =======
TOTAL RETURN (A) ................................. 3.4% 2.7%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $16,345 $ 1,806
Ratios to average net assets:
Net expenses (b) ................................ 1.35% 1.35%
Gross expenses (b) .............................. 1.66% 4.97%
Net investment income (b) ....................... 0.29% 0.72%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
81
<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>
YEAR ENDED
-----------------------------------------------------------------------
12/31/98 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 ............. $ 20.02 $ 18.44 $ 15.95 $ 14.35 $ 15.26
--------- --------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.08 0.07 0.11 0.13 0.07
Net realized and unrealized gain (loss) ......... (2.60) 4.92 3.68 2.95 0.22
--------- --------- ------- ------- -------
Total from investment operations ................ (2.52) 4.99 3.79 3.08 0.29
--------- --------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.01) (0.06) (0.11) (0.16) (0.04)
Net realized gain ............................... (0.10) (3.35) (1.19) (1.32) (1.16)
--------- --------- ------- ------- -------
Total distributions ............................. (0.11) (3.41) (1.30) (1.48) (1.20)
--------- --------- ------- ------- -------
Net asset value, end of period ................... $ 17.39 $ 20.02 $ 18.44 $ 15.95 $ 14.35
========= ========= ======= ======= =======
TOTAL RETURN (A) ................................. (12.6)% 28.1% 23.9% 21.5% 2.0%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $1,411,503 $1,445,075 $981,405 $646,371 $429,673
Ratios to average net assets:
Net expenses (b) ................................ 0.81% 0.82% 0.84% 0.84% 0.85%
Gross expenses (b) .............................. 0.81% 0.82% 0.84% 0.84% 0.85%
Net investment income (b) ....................... 0.50% 0.35% 0.60% 0.90% 0.51%
Portfolio turnover rate .......................... 46% 56% 51% 70% 70%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/30/97* TO
12/31/98 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 ........................... 0.03 0.01
Net realized and unrealized gain (loss) ......... (2.60) 4.61
------- -------
Total from investment operations ................ (2.57) 4.62
------- -------
Less distributions from and in excess of:
Net investment income ........................... -- --
Net realized gain ............................... (0.10) (3.35)
------- -------
Total distributions ............................. (0.10) (3.35)
------- -------
Net asset value, end of period ................... $ 17.35 $ 20.02
======= =======
TOTAL RETURN (A) ................................. (12.9)% 25.6%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $93,547 $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) ....................... 0.21% 0.12%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
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 BANTAM VALUE PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
--------------------------- 3/1/96* TO
12/31/98 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 ........................... -- -- 0.22
Net realized and unrealized gain (loss) ......... (1.98) 4.12 3.11
-------- -------- -------
Total from investment operations ................ (1.98) 4.12 3.33
-------- -------- -------
Less distributions from and in excess of:
Net investment income ........................... -- -- ( 0.22)
Net realized gain ............................... (0.15) ( 2.38) ( 0.53)
-------- -------- -------
Total distributions ............................. (0.15) ( 2.38) ( 0.75)
-------- -------- -------
Net asset value, end of period ................... $ 12.19 $ 14.32 $ 12.58
======= ======== =======
TOTAL RETURN (A) ................................. (13.8)% 33.9% 33.3%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $59,737 $ 69,972 $34,549
Ratios to average net assets:
Net expenses (b) ................................ 1.05% 1.05% 1.05%
Gross expenses (b) .............................. 1.09% 1.14% 1.91%
Net investment income (b) ....................... (0.40)% (0.42)% 2.80%
Portfolio turnover rate .......................... 95% 110% 262%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/23/97* TO
12/31/98 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) .................... (0.04) --
Net realized and unrealized gain (loss) ......... (1.96) 3.51
--------- ---------
Total from investment operations ................ (2.00) 3.51
--------- ---------
Less distributions from and in excess of:
Net investment income ........................... -- --
Net realized gain ............................... (0.15) (2.38)
--------- ---------
Total distributions ............................. (0.15) (2.38)
--------- ---------
Net asset value, end of period ................... $ 12.11 $ 14.26
========= =========
TOTAL RETURN (A) ................................. (14.0)% 27.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 7,057 $ 8,348
Ratios to average net assets:
Net expenses (b) ................................ 1.35% 1.35%
Gross expenses (b) .............................. 1.60% 1.88%
Net investment income (b) ....................... (0.70)% (0.69)%
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 GLOBAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
--------------------------- 1/4/96* TO
12/31/98 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) ......... 1.90 1.58 1.49
------- ------- -------
Total from investment operations ................ 2.00 1.72 1.58
------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.08) (0.15) (0.10)
Net realized gain ............................... (0.69) (1.14) --
------- ------- -------
Total distributions ............................. (0.77) (1.29) (0.10)
------- ------- -------
Net asset value, end of period ................... $ 13.14 $ 11.91 $ 11.48
======= ======= =======
TOTAL RETURN (A) ................................. 17.1% 15.3% 15.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $17,710 $10,359 $ 9,784
Ratios to average net assets:
Net expenses (b) ................................ 1.05% 1.05% 1.05%
Gross expenses (b) .............................. 2.18% 2.55% 5.06%
Net investment income (b) ....................... 1.07% 1.02% 1.70%
Portfolio turnover rate .......................... 48% 64% 74%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/30/97* TO
12/31/98 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 ........................... 0.09 0.08
Net realized and unrealized gain (loss) ......... 1.88 1.78
------- -------
Total from investment operations ................ 1.97 1.86
------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.04) (0.11)
Net realized gain ............................... (0.69) (1.14)
------- -------
Total distributions ............................. (0.73) (1.25)
------- -------
Net asset value, end of period ................... $ 13.16 $ 11.92
======= =======
TOTAL RETURN (A) ................................. 16.8% 16.7%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 4,824 $ 2,290
Ratios to average net assets:
Net expenses (b) ................................ 1.35% 1.35%
Gross expenses (b) .............................. 2.85% 4.23%
Net investment income (b) ....................... 0.77% 0.67%
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 INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------------
12/31/98 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 ............. $ 13.97 $ 13.62 $ 12.50 $ 11.23 $ 12.32
---------- ---------- --------- --------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.18 0.22 0.17 0.19 0.08
Net realized and unrealized gain (loss) ......... 2.03 1.40 1.76 1.29 (0.05)
---------- ---------- --------- --------- -------
Total from investment operations ................ 2.21 1.62 1.93 1.48 0.03
---------- ---------- --------- --------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.14) (0.34) (0.19) (0.09) --
Net realized gain ............................... (0.81) (0.93) (0.62) (0.12) (1.12)
---------- ---------- --------- --------- -------
Total distributions .............................. (0.95) (1.27) (0.81) (0.21) (1.12)
---------- ---------- --------- --------- -------
Net asset value, end of period ................... $ 15.23 $ 13.97 $ 13.62 $ 12.50 $ 11.23
========== ========== ========= ========= =======
TOTAL RETURN (A) ................................. 16.0% 11.8% 15.6% 13.1% 0.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $2,879,289 $2,099,724 $1,816,173 $1,299,549 $831,877
Ratios to average net assets:
Net expenses (b) ................................ 0.90% 0.89% 0.91% 0.95% 0.94%
Gross expenses (b) .............................. 0.90% 0.89% 0.91% 0.95% 0.94%
Net investment income (b) ....................... 1.37% 1.18% 1.93% 1.82% 0.75%
Portfolio turnover rate .......................... 41% 37% 39% 63% 106%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/23/97* TO
12/31/98 12/31/97
OPEN SHARES ------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ............. $ 13.95 $ 13.29
------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.18 0.16
Net realized and unrealized gain (loss) ......... 2.00 1.71
------- -------
Total from investment operations ................ 2.18 1.87
------- -------
Less distributions from and in excess of:
Net investment income .......................... (0.09) (0.28)
Net realized gain .............................. (0.81) (0.93)
------- -------
Total distributions ............................. (0.90) (1.21)
------- -------
Net asset value, end of period ................... $ 15.23 $ 13.95
======= =======
TOTAL RETURN (A) ................................. 15.8% 14.1%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $47,303 $10,794
Ratios to average net assets:
Net expenses (b) ................................ 1.24% 1.25%
Gross expenses (b) .............................. 1.24% 1.61%
Net investment income (b) ....................... 1.02% 0.37%
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 INTERNATIONAL SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------
12/31/98 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 ............. $ 11.69 $ 11.93 $ 10.52 $ 10.38 $ 10.86
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.05 0.07 0.08 0.14 0.07
Net realized and unrealized gain (loss) ......... 0.83 (0.03) 1.55 0.06 (0.55)
------- ------- ------- ------- -------
Total from investment operations ................ 0.88 0.04 1.63 0.20 (0.48)
------- ------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.05) (0.07) (0.08) -- --
Net realized gain ............................... (1.12) (0.21) (0.14) (0.06) --
------- ------- ------- ------- -------
Total distributions ............................. (1.17) (0.28) (0.22) (0.06) --
------- ------- ------- ------- -------
Net asset value, end of period ................... $ 11.40 $ 11.69 $ 11.93 $ 10.52 $ 10.38
======= ======= ======= ======= ========
TOTAL RETURN (A) ................................. 7.6% 0.3% 15.6% 1.9% (4.5)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $177,779 $141,695 $126,973 $115,534 $83,432
Ratios to average net assets:
Net expenses (b) ................................ 1.04% 1.09% 1.12% 1.13% 1.05%
Gross expenses (b) .............................. 1.04% 1.09% 1.12% 1.13% 1.26%
Net investment income (b) ....................... 0.81% 0.73% 1.67% 1.56% 0.95%
Portfolio turnover rate .......................... 56% 63% 101% 118% 113%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 2/13/97* TO
12/31/98 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 ........................... 0.01 0.02
Net realized and unrealized gain (loss) ......... 0.83 (0.42)
------- --------
Total from investment operations ................ 0.84 (0.40)
------- --------
Less distributions from and in excess of:
Net investment income ........................... (0.03) (0.02)
Net realized gain ............................... (1.12) (0.21)
------- --------
Total distributions ............................. (1.15) (0.23)
------- --------
Net asset value, end of period ................... $ 11.38 $ 11.69
======= ========
TOTAL RETURN (A) ................................. 7.2% (3.2)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 2,646 $ 1,873
Ratios to average net assets:
Net expenses (b) ................................ 1.43% 1.43%
Gross expenses (b) .............................. 1.93% 3.39%
Net investment income (b) ....................... 0.43% 0.34%
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 EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------------------------------------------ 7/15/94* TO
12/31/98 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 ....................... 0.10 0.10 0.07 0.08 0.01
Net realized and unrealized gain (loss) ..... (2.26) (1.18) 2.11 (0.66) (0.15)
------- -------- ------- -------- --------
Total from investment operations ............ (2.16) (1.08) 2.18 (0.58) (0.14)
------- -------- ------- -------- --------
Less distributions from and in excess of:
Net investment income ....................... (0.10) (0.09) (0.08) (0.04) --
Net realized gain ........................... -- (0.84) (0.13) -- --
------- -------- ------- -------- --------
Total distributions ......................... (0.10) (0.93) (0.21) (0.04) --
------- -------- ------- ------- --------
Net asset value, end of period ............... $ 6.94 $ 9.20 $ 11.21 $ 9.24 $ 9.86
======= ======== ======= ======= ========
TOTAL RETURN (A) ............................. (23.5)% (9.8)% 23.6% (5.9)% (1.4)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..... $298,033 $236,340 $145,328 $35,216 $ 17,025
Ratios to average net assets:
Net expenses (b) ............................ 1.28% 1.32% 1.38% 1.30% 1.30%
Gross expenses (b) .......................... 1.29% 1.33% 1.48% 2.00% 2.31%
Net investment income (b) ................... 1.84% 1.26% 1.40% 1.22% 0.31%
Portfolio turnover rate ...................... 36% 40% 51% 102% 31%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/8/97* TO
12/31/98 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 ........................... 0.11 0.07
Net realized and unrealized gain (loss) ......... (2.26) (1.42)
-------- ---------
Total from investment operations ................ (2.15) (1.35)
-------- ---------
Less distributions from and in excess of:
Net investment income ........................... (0.08) (0.07)
Net realized gain ............................... -- (0.83)
-------- ---------
Total distributions ............................. (0.08) (0.90)
-------- ---------
Net asset value, end of period ................... $ 6.97 $ 9.20
======== =========
TOTAL RETURN (A) ................................. (23.3)% (12.0)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 8,191 $ 7,769
Ratios to average net assets:
Net expenses (b) ................................ 1.60% 1.60%
Gross expenses (b) .............................. 1.76% 1.93%
Net investment income (b) ....................... 1.54% 1.01%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
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 BOND PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------
12/31/98 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 ............. $ 10.03 $ 9.88 $ 10.10 $ 9.24 $ 10.28
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.55 0.59 0.56 0.60 0.58
Net realized and unrealized gain (loss) ......... 0.01 0.23 (0.14) 0.86 (1.01)
------- ------- ------- ------- -------
Total from investment operations ................ 0.56 0.82 0.42 1.46 (0.43)
------- ------- ------- ------- --------
Less distributions from and in excess of:
Net investment income ........................... (0.55) (0.60) (0.57) (0.60) (0.58)
Net realized gain ............................... (0.15) (0.07) (0.07) -- (0.03)
------- ------- ------- ------- -------
Total distributions ............................. (0.70) (0.67) (0.64) (0.60) (0.61)
------- ------- ------- ------- -------
Net asset value, end of period ................... $ 9.89 $ 10.03 $ 9.88 $ 10.10 $ 9.24
======= ======= ======= ======= =======
TOTAL RETURN (A) ................................. 5.8% 8.6% 4.4% 16.2% (4.2)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $100,397 $92,428 $69,906 $46,083 $24,494
Ratios to average net assets:
Net expenses (b) ................................ 0.78% 0.80% 0.80% 0.80% 0.80%
Gross expenses (b) .............................. 0.79% 0.81% 0.88% 0.97% 1.23%
Net investment income (b) ....................... 5.45% 5.81% 5.77% 6.07% 6.11%
Portfolio turnover rate .......................... 335% 447% 460% 244% 121%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 3/5/97* TO
12/31/98 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 ........................... 0.52 0.46
Net realized and unrealized gain (loss) ......... 0.01 0.24
------- -------
Total from investment operations ................ 0.53 0.70
------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.52) (0.47)
Net realized gain ............................... (0.15) (0.07)
------- -------
Total distributions ............................. (0.67) (0.54)
------- -------
Net asset value, end of period ................... $ 9.88 $ 10.02
======= =======
TOTAL RETURN (A) ................................. 5.4% 7.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $15,226 $ 7,283
Ratios to average net assets:
Net expenses (b) ................................ 1.10% 1.10%
Gross expenses (b) .............................. 1.21% 1.49%
Net investment income (b) ....................... 5.11% 5.46%
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 HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
1/2/98* TO
12/31/98
INSTITUTIONAL SHARES ---------------
<S> <C>
Net asset value, beginning of period ............. $ 10.00
-------
Income (loss) from investment operations:
Net investment income ........................... 0.88
Net realized and unrealized gain (loss) ......... (0.57)
-------
Total from investment operations ................ 0.31
-------
Less distributions from and in excess of:
Net investment income ........................... (0.89)
Net realized gain ............................... --
-------
Total distributions ............................. (0.89)
-------
Net asset value, end of period ................... $ 9.42
=======
TOTAL RETURN (A) ................................. 2.9%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $41,935
Ratios to average net assets:
Net expenses (b) ................................ 1.05%
Gross expenses (b) .............................. 1.55%
Net investment income (b) ....................... 8.87%
Portfolio turnover rate .......................... 418%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
2/24/98* TO
12/31/98
OPEN SHARES ---------------
<S> <C>
Net asset value, beginning of period ............. $ 10.37
-------
Income (loss) from investment operations:
Net investment income ........................... 0.72
Net realized and unrealized gain (loss) ......... (0.94)
-------
Total from investment operations ................ (0.22)
-------
Less distributions from and in excess of:
Net investment income ........................... (0.73)
Net realized gain ............................... --
-------
Total distributions ............................. (0.73)
-------
Net asset value, end of period ................... $ 9.42
=======
TOTAL RETURN (A) (2.2)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 949
Ratios to average net assets:
Net expenses (b) ................................ 1.35%
Gross expenses (b) .............................. 9.77%
Net investment income (b) ....................... 8.59%
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 INTERNATIONAL FIXED-INCOME PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------
12/31/98 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 ............. $ 9.63 $ 10.78 $ 10.85 $ 10.23 $ 10.51
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.32 0.40 0.54 0.70 0.59
Net realized and unrealized gain (loss) ......... 0.98 (1.05) 0.03 1.25 (0.16)
------- ------- ------- ------- -------
Total from investment operations ................ 1.30 (0.65) 0.57 1.95 0.43
------- ------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.22) (0.13) (0.59) (1.13) (0.59)
Net realized gain ............................... -- (0.12) (0.05) (0.20) (0.12)
Capital ......................................... -- (0.25) -- --
------- ------- ------- -------
Total distributions ............................. (0.22) (0.50) (0.64) (1.33) (0.71)
------- ------- ------- ------- -------
Net asset value, end of period ................... $ 10.71 $ 9.63 $ 10.78 $ 10.85 $ 10.23
======= ======= ======= ======= =======
TOTAL RETURN (A) ................................. 13.2% (5.6)% 5.5% 19.4% 4.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $115,500 $110,185 $88,430 $45,624 $35,803
Ratios to average net assets:
Net expenses (b) ................................ 1.09% 1.06% 1.05% 1.05% 1.05%
Gross expenses (b) .............................. 1.10% 1.10% 1.21% 1.25% 1.51%
Net investment income (b) ....................... 4.27% 5.13% 5.54% 5.99% 5.68%
Portfolio turnover rate .......................... 187% 166% 242% 190% 66%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/8/97* TO
12/31/98 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 ........................... 0.31 0.43
Net realized and unrealized gain (loss) ......... 0.96 (0.98)
------- --------
Total from investment operations ................ 1.27 (0.55)
------- --------
Less distributions from and in excess of:
Net investment income ........................... (0.21) (0.08)
Net realized gain ............................... -- (0.12)
Capital ......................................... -- (0.26)
------- --------
Total distributions ............................. (0.21) (0.46)
------- --------
Net asset value, end of period ................... $ 10.69 $ 9.63
======= ========
TOTAL RETURN (A) ................................. 12.9% (4.8)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $ 4,751 $ 2,772
Ratios to average net assets:
Net expenses (b) ................................ 1.35% 1.35%
Gross expenses (b) .............................. 1.92% 2.71%
Net investment income (b) ....................... 4.01% 4.68%
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 STRATEGIC YIELD PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------
12/31/98 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 ............. $ 9.66 $ 10.01 $ 9.52 $ 9.10 $ 10.13
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................... 0.76 0.81 0.76 0.75 0.76
Net realized and unrealized gain (loss) ......... (0.69) (0.28) 0.50 0.43 (0.99)
------- ------- ------- ------- -------
Total from investment operations ................ 0.07 0.53 1.26 1.18 (0.23)
------- ------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.44) (0.82) (0.77) (0.76) (0.76)
Net realized gain ............................... -- (0.06) -- -- (0.04)
Capital ......................................... (0.28) -- -- -- --
------- ------- ------- ------- -------
Total distributions ............................. (0.72) (0.88) (0.77) (0.76) (0.80)
------- ------- ------- ------- -------
Net asset value, end of period ................... $ 9.01 $ 9.66 $ 10.01 $ 9.52 $ 9.10
======= ======= ======= ======= =======
TOTAL RETURN (A) ................................. 0.8% 5.3% 13.7% 13.6% (2.3)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $397,599 $399,452 $199,083 $78,474 $62,328
Ratios to average net assets:
Net expenses (b) ................................ 0.90% 0.94% 1.08% 1.09% 1.05%
Gross expenses (b) .............................. 0.90% 0.95% 1.08% 1.09% 1.15%
Net investment income (b) ....................... 6.94% 7.42% 7.88% 8.02% 8.03%
Portfolio turnover rate .......................... 276% 161% 189% 205% 195%
</TABLE>
<TABLE>
<CAPTION>
YEAR FOR THE PERIOD
ENDED 1/23/97* TO
12/31/98 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 ........................... 0.73 0.72
Net realized and unrealized gain (loss) ......... (0.69) (0.35)
------- -------
Total from investment operations ................ 0.04 0.37
------- -------
Less distributions from and in excess of:
Net investment income ........................... (0.40) (0.73)
Net realized gain ............................... -- (0.06)
Capital ......................................... (0.28) --
------- -------
Total distributions ............................. (0.68) (0.79)
------- -------
Net asset value, end of period ................... $ 9.02 $ 9.66
======= =======
TOTAL RETURN (A) ................................. 0.4% 3.8%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $22,460 $15,300
Ratios to average net assets:
Net expenses (b) ................................ 1.28% 1.39%
Gross expenses (b) .............................. 1.28% 1.44%
Net investment income (b) ....................... 6.60% 6.92%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
91
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
* Commencement of operations
(a) Total Returns are historical and assume changes in share price,
reinvestments of 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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
92
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================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Lazard Funds, Inc. (the "Fund") was incorporated in Maryland on May 17,
1991 and is registered under the Investment Company Act of 1940 (the "Act"), as
amended, as a no-load, open-end management investment company. The Fund is
comprised of 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.
(B) PORTFOLIO SECURITY TRANSACTIONS AND INVESTMENT INCOME--Portfolio 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.
93
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(C) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS--The
accounting records of the Portfolios are maintained in U.S. dollars. Portfolio
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the prevailing rates 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 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 Portfolio's 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. Upon
entering into these contracts risks may arise from the potential inability of
counterparties to meet the terms of their contracts and 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.
At December 31, 1998, the following Portfolios had available for federal income
tax purposes unused realized capital losses which can be used to offset future
realized capital gains. The capital loss carryforwards will expire on December
31, 2006, as follows:
PORTFOLIO AMOUNT
- ------------------ -------------
Small Cap $6,880,893
Emerging Markets 50,767,177
High Yield 1,150,441
Strategic Yield 14,900,897
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
94
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
day of the following tax year. For the tax year ended December 31, 1998, the
following Portfolios elected to defer net capital and currency losses arising
between November 1, 1998 and December 31, 1998 as follows:
PORTFOLIO AMOUNT
- ------------------------- ------------
Global Equity $ 9,036
International Equity 2,186,212
International Small Cap 77,804
Emerging Markets 2,332,238
Bond 147,945
High Yield 916,890
Strategic Yield 6,526,143
(E) DIVIDENDS AND DISTRIBUTIONS--The Fund intends to declare dividends from net
investment income daily on shares of Bond Portfolio, High Yield Portfolio,
International Fixed-Income Portfolio, and Strategic Yield Portfolio and to pay
such dividends monthly. Dividends from net investment income on shares of
Equity Portfolio will, beginning in 1999, be declared and paid annually, as is
already the policy 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. 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 gain 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 differ-ences relating to shareholder
distributions will result in reclassifications and may affect the allocation
between investment income--net, realized gains--net, and paid in capital.
As a result of these book-tax differences, the Portfolios made the following
reclassifications to the capital accounts for the period ended December 31,
1998:
INCREASE (DECREASE)
------------------------------------------------
UNDISTRIBUTED ACCUMULATED
INVESTMENT REALIZED
PAID IN INCOME GAIN
PORTFOLIO CAPITAL (LOSS)-NET (LOSS)-NET
- ---------------------- ---------------- --------------- ------------
Equity $ (3,896) $ -- $ 3,896
Mid Cap (34,733) 34,733 --
Small Cap -- (11,267) 11,267
Bantam Value (331,086) 331,086 --
Global Equity -- (15,993) 15,993
International Equity -- (8,486,397) 8,486,397
International
Small Cap -- (626,958) 626,958
Emerging Markets -- (757,497) 757,497
Bond -- (7,258) 7,258
High Yield (40,186) 57,767 (17,581)
International Fixed-
Income 862,859 (1,690,968) 828,109
Strategic Yield (13,821,243) 4,907,327 8,913,916
(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 are
redeemed during such period, 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.
95
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(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 report the
amount of such credits separately 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.
(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, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS
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:
96
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
INSTITUTIONAL OPEN
SHARES SHARES
ANNUAL ANNUAL
OPERATING OPERATING
PORTFOLIO EXPENSES EXPENSES
- ---------------------------- -------------- ----------
Mid Cap 1.05% 1.35%
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
For the period ended December 31, 1998, the Manager did not impose all or part
of its management fee, resulting in waivers of: $92,050 for the Mid Cap
Portfolio-- Institutional, $27,631 for the Mid Cap Portfolio--Open, $19,868 for
Bantam Value Portfolio--Institutional, $20,864 for Bantam Value Portfolio--Open,
$92,237 for Global Equity Portfolio--Institutional, $27,748 for Global Equity
Portfolio--Open, $16,356 for International Small Cap Portfolio--Open, $17,870
for Emerging Markets Portfolio--Open, $11,309 for Bond Portfolio--Open,
$106,214 for High Yield Portfolio--Institutional, $1,725 for High Yield
Portfolio--Open and $21,538 for International Fixed-Income Portfolio--Open. For
the same period, the Manager has agreed to reimburse expenses amounting to
$46,680 for Global Equity Portfolio--Institutional, $27,913 for Global Equity
Portfolio--Open, and $17,352 for High Yield Portfolio--Open.
The Fund has 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 Mid Cap
Portfolio and the High Yield Portfolio for one year or until each 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.
97
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. SECURITIES TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales of portfolio securities (excluding short-term securities),
for the period ended December 31, 1998 were as follows:
PORTFOLIO PURCHASES SALES
- --------- --------- -----
Equity $ 376,717,969 $ 322,976,016
Mid Cap 71,077,865 49,548,865
Small Cap 920,425,918 666,023,146
Bantam Value 68,145,410 70,382,975
Global Equity 14,478,497 7,475,625
International
Equity 1,476,601,503 1,016,242,686
International
Small Cap 118,808,775 95,428,959
Emerging Markets 225,355,228 91,141,160
Bond (1) 359,513,537 347,301,971
High Yield 155,743,204 111,954,902
International
Fixed-Income (2) 196,053,754 206,224,048
Strategic Yield (3) 1,174,069,468 1,103,003,518
(1) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $297,283,221
AND $290,790,971, RESPECTIVELY.
(2) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $18,533,747
AND $19,557,196, RESPECTIVELY.
(3) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $479,341,480
AND $412,931,475, RESPECTIVELY.
For the year ended December 31, 1998, Equity Portfolio, Mid Cap Portfolio,
Bantam Value Portfolio, Small Cap Portfolio, Global Equity Portfolio, and
Emerging Markets Portfolio paid brokerage commissions of $51,625, $5,270,
$3,635, $61,090, $2,734 and $812, respectively, to Lazard Freres & Co. LLC for
portfolio transactions executed on behalf of the Portfolios.
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
0.50%, on an annualized basis. Under this Agreement, the Fund has agreed to pay
a 0.08% per annum fee on the unused portion of the commitment, payable
quarterly in arrears. During the year ended December 31, 1998, the Fund had no
borrowings under this Agreement.
98
<PAGE>
================================================================================
THE LAZARD FUNDS, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
The Lazard Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of portfolio investments, of The Lazard Funds, Inc.
(comprised of Lazard Equity Portfolio, Lazard 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) as of December 31, 1998 and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights as stated
above, present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Lazard Funds, Inc. as of December
31, 1998, the results of their operations for the year then ended and changes
in their net assets for each of the two years in the period then ended and the
financial highlights for the periods presented in conformity with generally
accepted accounting principles.
ANCHIN, BLOCK & ANCHIN LLP
New York, New York
February 4, 1999
99
<PAGE>
TAX INFORMATION (UNAUDITED)
THE LAZARD FUNDS, INC.
YEAR ENDED DECEMBER 31, 1998
The following tax information represents year end disclosures of various tax
benefits passed through to shareholders for 1998.
The amount of long-term capital gain paid was as follows:
PORTFOLIO AMOUNT
-------- ------
Equity $27,923,199
Mid Cap --
Small Cap 5,615,464
Bantam Value 329,477
Global Equity 818,097
International Equity 122,836,110
International Small Cap 13,581,815
Emerging Markets --
Bond 114,254
High Yield --
International Fixed-Income --
Strategic Yield --
Of the distributions made by the following Portfolios, the corresponding
percentage representing the amount of each distribution which qualifies for the
dividends received deduction available to corporate shareholders, is as
follows:
PORTFOLIO PERCENTAGE
-------- -----------
Equity 100.00%
Mid Cap 42.12
Small Cap 100.00
Bantam Value --
Global Equity 37.94
International Equity 0.30
International Small Cap --
Emerging Markets 1.10
Bond --
High Yield --
International Fixed-Income --
Strategic Yield 2.60
The above figures may differ from those cited elsewhere in this report due to
differences in the calculations of income and capital gains for Securities and
Exchange Commission (book) purposes and Internal Revenue Service (tax)
purposes.
100
<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: (800) 986-3455
INDEPENDENT PUBLIC ACCOUNTANTS
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
LEGAL COUNSEL
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
<PAGE>
LAZARDFunds
30 Rockefeller Plaza
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.
