N-30D 1 c21532_n30d.txt SEMI-ANNUAL REPORT LAZARDFunds SEMI-ANNUAL REPORT JUNE 30, 2001 ================================================================================ THE LAZARD FUNDS, INC. -------------------------------------------------------------------------------- BOARD OF DIRECTORS ================== JOHN J. BURKE RETIRED; FORMER VICE CHAIRMAN AND DIRECTOR, MONTANA POWER COMPANY KENNETH S. DAVIDSON PRESIDENT, DAVIDSON CAPITAL MANAGEMENT CORPORATION NORMAN EIG VICE CHAIRMAN AND MANAGING DIRECTOR, LAZARD FRERES & CO. LLC CARL FRISCHLING SENIOR PARTNER, KRAMER LEVIN NAFTALIS & FRANKEL LLP HERBERT W. GULLQUIST VICE CHAIRMAN AND MANAGING DIRECTOR, LAZARD FRERES & CO. LLC; CHIEF INVESTMENT OFFICER, LAZARD ASSET MANAGEMENT WILLIAM KATZ PRESIDENT AND CHIEF EXECUTIVE OFFICER, BBDO NEW YORK LESTER Z. LIEBERMAN PRIVATE INVESTOR RICHARD REISS, JR. MANAGING PARTNER, GEORGICA ADVISORS LLC JOHN RUTLEDGE PRESIDENT, RUTLEDGE CAPITAL OFFICERS ======== NORMAN EIG CHAIRMAN OF THE BOARD HERBERT W. GULLQUIST PRESIDENT DAVID M. GOLDENBERG VICE PRESIDENT AND SECRETARY BERNARD J. GRZELAK TREASURER NATHAN A. PAUL ASSISTANT SECRETARY STEPHEN ST. CLAIR ASSISTANT TREASURER ================================================================================ THE LAZARD FUNDS, INC. -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE Investment Overviews ................................... 2 Performance Table ...................................... 11 Portfolios of Investments Lazard Equity Portfolio .............................. 14 Lazard Mid Cap Portfolio ............................. 16 Lazard Small Cap Portfolio ........................... 18 Lazard Global Equity Portfolio ....................... 21 Lazard International Equity Portfolio ................ 23 Lazard International Small Cap Portfolio ............. 25 Lazard Emerging Markets Portfolio .................... 27 Lazard International Equity Select Portfolio ......... 29 Lazard Bond Portfolio ................................ 30 Lazard High Yield Portfolio .......................... 35 Lazard International Fixed-Income Portfolio .......... 39 Lazard Strategic Yield Portfolio ..................... 49 Lazard Mortgage Portfolio ............................ 61 Notes to Portfolios of Investments ..................... 62 Statements of Assets and Liabilities ............................... 66 Operations ........................................... 68 Changes in Net Assets ................................ 70 Financial Highlights ................................... 77 Notes to Financial Highlights .......................... 90 Notes to Financial Statements .......................... 91 THE VIEWS OF THE FUND'S MANAGEMENT AND THE PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF JUNE 30, 2001; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THIS DATE. INFORMATION PROVIDED IN THIS DOCUMENT SHOULD NOT BE CONSIDERED A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS -------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 1.50% and Open Shares returned 1.38%, each beating the (6.70)% return of the S&P 500(R) Index during the same period. The market began 2001 with a rally during January. However, negative economic news, a series of profit warnings and the California energy crisis soon combined to reverse this rally. As investors' hopes for a market rebound later in the year waned, even the Federal Reserve's interest rate cuts proved incapable of stemming the on-going volatility and sector rotation. Corporate earnings growth slowed for technology companies in particular, while sectors that are historically more insulated from the economy, such as pharmaceuticals and utilities, did manage to hold up through much of the first quarter before finally succumbing to the negative investment atmosphere. By the early part of the second quarter, U.S. stocks, particularly technology companies, managed a rally spurred by the Federal Reserve's on-going and unprecedented number of interest rate cuts. However, concern in the market remains that the current downturn is a result of a flood of investment during the earlier technology boom. If this proves true, the economy is unlikely to respond to the Federal Reserve's monetary stimulus. This concern caused stocks to reverse their second rally of the year and resume their downward drift during May and June. The Portfolio's strong stock selection enabled it to outperform the broader market as depicted by the S&P 500 through much of the first half of 2001. For example, while the technology sector proved itself quite volatile during the first half of the year, many of the Portfolio's holdings, including IBM and Compaq, actually managed gains in this environment. IBM rose because of its strong global services business, while Compaq rose due to its strong server and storage business. In the media sector, cyclical companies were more affected by the decline in advertising. Therefore, we initiated positions in more diversified global franchises such as Viacom and News Corp., as we believe that Viacom's efficient cross selling initiatives and News Corp.'s assets position them both as excellent long-term investments. Other media holdings, such as AOL Time Warner, generated strong gains as a benefit of diverse revenue sources, strong free cash flows and a stable subscription business. The Portfolio's healthcare holdings detracted from its performance as they corrected from an overly strong fourth quarter of 2000. In response, we restructured many of the Portfolio's healthcare holdings, taking profits in several names and reallocating to companies such as Elan and Pharmacia, which have demonstrated robust product pipelines. The return to economic recovery still appears far away, as corporate earnings remain cloudy and investors evaluate the impact of the global economic slowdown. Lazard, however, will adhere to its disciplined investment process of focusing on individual company fundamentals, as we believe that our relative value discipline will enable the Portfolio to best weather the market's fluctuations. LAZARD MID CAP PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 9.15% and Open Shares returned 9.03%, each beating the (1.96)% return of the Russell Midcap(R) Index during the same period. U.S. mid cap stocks rebounded in January because of investor euphoria over the first of six interest rate cuts implemented by the Federal Reserve in the first half of the year. However, the enthusiasm faded later in the month, as a series of companies reporting disappointing earnings dashed hopes for an economic rebound in the second half of the year. Technology stocks were particularly hard hit, as the earnings slowdown has been especially apparent in this sector. Companies in more traditional sectors, such as the consumer sector, actually managed gains for much of the first quarter, before succumbing to the negative investor sentiment in the final weeks. Mid cap stocks performed well in the down market because of their inexpensive valuations. Their good performance continued into the second quarter and mid cap stocks continued to outperform larger stocks. A surprise intra-meeting interest rate cut by the Federal Reserve, one of three during the second quarter, triggered an April rally in the technology sector. However, concern that the current economic downturn is a result of a flood of investment during the earlier technology boom, and that the market is unlikely to respond to the Federal 2 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- Reserve's monetary stimulus, caused mid cap stock performance to remain essentially flat during May and June. Consumer holdings have performed particularly well year-to-date, as consumer spending remains one of the bright spots in the U.S. economy. The Portfolio benefited from its retail and entertainment holdings, including Blockbuster and USA Networks. Early in the year, the Portfolio benefited from its biotechnology holdings such as Biogen, which maintains a strong and diverse product pipeline and higher returns on equity. Later performance continued to be driven by the healthcare sector, with specialty pharmaceutical manufacturer King Pharmaceuticals, for example, rallying on reports that its hypertension drug was displaying strong growth in sales and market share and MedImmune rising because of increased visibility of its new drug pipeline, which includes positive data from trials of its new drug to treat psoriasis. The energy sector also proved beneficial to the Portfolio's performance year-to-date. As energy stocks declined during the first quarter, we took the opportunity to initiate a position in Constellation Energy Group, as the stock traded on a discount to other electricity generators, based on earnings, book value and cash flow. Maxtor, the leader in hard disk storage, initially proved beneficial as it rose in tandem with the technology rallies, but was later impacted by the slowdown in PC sales, adversely affecting the Portfolio's year-to-date performance. We remain concerned about the continuing swings in market sentiment, but believe that the Portfolio is well positioned for the long term. Lazard's relative value style seeks investments in well-managed businesses with strong cash flow and modest debt levels. The Portfolio, therefore, seeks positions with more consistent earnings streams and lower valuations, which should help it to better weather these fluctuations. We will, therefore, continue to adhere to our disciplined investment process of maintaining focus on individual company fundamentals rather than on the dramatic market sentiment swings. LAZARD SMALL CAP PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 9.35% and Open Shares returned 9.26%, each beating the 6.94% return of the Russell 2000(R) Index during the same period. The year-to-date performance for the Portfolio was affected significantly by the market's continued volatility, which began last year. While the market initially rebounded in January because of investor enthusiasm about the first of the Federal Reserve's interest rate cuts, that enthusiasm ebbed quickly as a series of companies began to report disappointing earnings. The hardest hit sector was technology, as its earnings slowdown was particularly apparent. Many companies in other sectors actually held up quite well before finally succumbing to negative investor sentiment in the final weeks of the first quarter. In this environment, U.S. small caps still managed to outperform larger companies as their lower valuations provided additional support during the overall decline. By early in the second quarter, U.S. small caps had significantly recovered from their first quarter decline to generate fairly strong gains and continued to outperform the larger cap stocks. Investor sentiment finally began to turn positive in response to three more interest rate cuts implemented by the Federal Reserve during the second quarter. However, concern still exists that the current economic downturn is a result of a flood of investment during the earlier technology boom and that the market is unlikely to respond to the Federal Reserve's monetary stimulus. The Portfolio's strong stock selection in several sectors helped it to outperform its benchmark, the Russell 2000 Index. In healthcare, companies such as medical products supplier Invacare, proved attractive to investors who sought out defensive names with which to ride out the volatility. The consumer sector has also proven itself to be particularly resilient this year, as consumer spending remains one of the few strong areas of the economy. Several of the Portfolio's consumer discretionary holdings were opportunistically trimmed, to take advantage of this sector's upswing. Other consumer sector companies, such as Harman International, are positioning themselves to expand further once the economy recovers. The Portfolio's technology holdings have proved disappointing in the first half of the year. Market sentiment regarding technology companies has declined significantly. However, we believe that our technology holdings, such as hard drive producer Maxtor, are poised to benefit from an eventual upturn in PC demand. 3 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- We remain aware of and concerned about the extreme swings in market sentiment, but believe that the Portfolio has been composed of well-managed businesses with strong cash flows and modest debt levels. In addition, the Portfolio's holdings have generally demonstrated more consistent earnings streams and lower valuations than those in its benchmark. Therefore, we will continue to adhere to our investment process of maintaining focus on individual company fundamentals so that the Portfolio may continue to benefit from Lazard's disciplined investment process. LAZARD GLOBAL EQUITY PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of (8.14)% and Open Shares returned (8.29)%, each beating the (10.55)% return of the MSCI(R) World(R) Index during the same period. The year began with stocks in the United States falling, largely because of negative economic news and a series of profit warnings from American companies. European markets also dropped, primarily because of concerns that the U.S. economic slowdown would impact European companies. The Bank of Japan proactively cut interest rates and announced its intent to deal more aggressively with its much publicized bank problems. These measures appeared to help Japanese stocks, as they fell slightly less than their European counterparts for the first quarter. By April, central banks around the world followed suit, as the Bank of England, the European Central Bank and the Federal Reserve all cut interest rates. Investors were heartened, as stocks, which have historically generated robust returns after monetary easing, rebounded. The new Japanese Prime Minister's intent to accelerate financial reforms further drove Japanese stocks higher by early May. Many view the proposed reforms to be long-term positive initiatives, but concerns remain that these painful steps could push Japan's economy further into recession in the short-term. The Portfolio was buffered as many companies responded to the economic volatility by restructuring operations and cutting costs. In the financial sector, for example, France's largest bank, BNP Paribas, stopped lending to small businesses because the margins were no longer sufficient to cover the underlying risk. Many of these initiatives have already yielded favorable results. For example, increases in oil production and the implementation of cost-cutting measures enabled TotalFinaElf to raise its dividend by 40 percent and announce record profits for 2000. NTT DoCoMo, Japan's leading mobile phone company, also announced that it expected to beat earnings forecasts for the fiscal year. In the media sector, AOL Time Warner generated strong gains on the announcement of strong earnings from its diverse revenue sources, strong free cash flow and stable subscription business. The impact of recently announced German tax reforms also became apparent during the first half of 2001. Pan-European financial institutions, such as Allianz AG and Bayerische Hypo-und Vereinsbank, are exploring ways to swap latent shareholdings in an attempt to eliminate unproductive balance sheet assets and further strengthen their operations. Lazard believes that Germany's recent pension and tax reform is likely to have a far-reaching and long-lasting impact on European capital markets. The deregulation and tax reform in the United States that set the stage for the robust equity returns witnessed throughout the 1990s are now apparent in Europe and, to a lesser extent, in Japan. We will, therefore, adhere to our investment process of maintaining focus on individual company fundamentals, as global firms seek to evolve into stronger companies with better fundamentals. LAZARD INTERNATIONAL EQUITY PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of (13.82)% and Open Shares returned (13.94)%, each beating the (14.61)% return of the MSCI EAFE(R) Index during the same period. International equity markets fell during the first quarter of 2001 largely because of concerns that the U.S. economic slowdown would negatively impact international companies, and because of widespread perception that international central banks were not dealing with interest rates aggressively enough to buoy those economies. In response, the Bank of Japan, the Bank of England, the European Central Bank and the Federal Reserve all cut interest rates during the first half of 2001, thereby triggering rallies across the globe, particularly in the beaten down technology and telecommunications sectors. Japanese stocks, despite negative media coverage, 4 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- had initially fallen less than their European counterparts, and the new Japanese Prime Minister's announced intent to accelerate financial reforms further added to the optimism, driving Japanese stocks dramatically higher during the early May rally. The rally faded later in the second quarter, however, as corporate earnings continued to be weak and expectations for economic growth in Europe and Japan were revised down. On a more positive note, the impact of recently announced German tax reforms began to become apparent during the first half of 2001, as pan-European financial institutions such as Allianz AG and Bayerische Hypo-und Vereinsbank began to explore ways to swap latent shareholdings in an attempt to eliminate unproductive balance sheet assets and strengthen their operations. In response to the changing economic environment and new tax and retirement reforms, many companies in all sectors and markets have responded by implementing a number of restructuring and cost-cutting moves that are designed to return the companies to or to maintain current profitability. For example, BNP Paribas, France's largest bank, stopped lending to small businesses, as it deemed the margins no longer sufficient to cover the underlying risk. Similarly, ING Groep is enhancing its balance sheet through the disposal of assets and cost-cutting measures, such as selling its U.S. securities business to ABN AMRO and integrating its Barings unit into its European operations. ABN AMRO is not only buying businesses to bolster its competitive position, but it is also selling its non-core operations. The recent disposal of European American Bank, for example, added credibility to management's commitment to its strategy of restructuring the bank and has already yielded many positive results. Several other reorganization initiatives that were launched earlier have already yielded favorable results. For example, increases in oil production and cost savings allowed TotalFinaElf to raise its dividend by 40 percent and to announce record profits for 2000. Similarly, NTT DoCoMo, Japan's leading mobile phone company, announced that it expected to beat earnings forecasts for the fiscal year, with additional expansion planned into the i-mode mobile phone network in Europe and the United States within the year. We believe that Germany's recent pension and tax reform is likely to continue to have a far-reaching and long-lasting impact on European capital markets. The deregulation and tax reform in the United States that set the stage for the robust equity returns witnessed throughout the 1990s are now apparent in Europe and, to a lesser extent, in Japan. Lazard believes that these reforms should increase the return on capital that companies are able to generate. Therefore, we will continue to adhere to our relative value style of investing that focuses on selecting financially productive companies on the basis of their individual fundamentals, rather than on popular market sentiment. LAZARD INTERNATIONAL SMALL CAP PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of (2.86)% and Open Shares returned (3.11)%, each beating the (3.28)% return of the MSCI EAFE Small Cap(R) Index during the same period. International equity markets, in general, did not perform well during the first quarter of 2001. However, by April they had rallied to end four consecutive quarters of decline. The EAFE small cap asset class defended itself against the overall decline better than large cap stocks and managed to outperform the large cap asset class for the entire first half of the year. Lazard believes that a valuation gap still exists between large and small cap stocks and that small caps are likely to continue to outperform large cap stocks for some time. The Portfolio's positive performance during the second quarter was largely attributed to strong stock selection in the United Kingdom and Sweden, and was fueled by investors heartened by interest rate cuts by the Bank of England, the European Central Bank and the Federal Reserve, as well as by positive reaction to new tax legislation. By sector, strong contributions to the Portfolio's performance came from our consumer staples and consumer discretionary holdings. Singapore food manufacturer Want Want, for example, was the Portfolio's top performer for the first quarter, as it reported better-than-expected sales results for 2000. Swedish Match, maker of consumer products, announced both strong earnings for 2000 and a highly positive outlook for the future. Kidde, the U.K.-based supplier of fire and safety equipment, was another big contributor to the Portfolio's performance as it stated that its outlook for 2001 remained 5 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- encouraging despite the global economic downturn. Another U.K. holding, engineering company FKI, also performed well, reporting gains for May despite the economic downturn. While almost no sector remained unscathed by the markets' overall volatility, companies like Japanese mushroom grower, Hokuto, proved that exceptional stock selections could still be found in all sectors. Hokuto was among the Portfolio's top performers for the first half of the year because of its introduction of a new mushroom that was well received by the market, despite overall price pressure on consumer food products. The United States has already seen a sharp decline in economic growth; Japan continues to remain in its decade long slump; and, while Europe has remained relatively resilient to the downturn, concern is growing that the effects of the U.S. economic downturn will soon undermine European stability. However, we believe that our relative value style helps us to uncover financially productive companies that are more resilient to swings in market sentiment. We will, therefore, continue to adhere to our disciplined fundamental approach. LAZARD EMERGING MARKETS PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 0.40% and Open Shares returned 0.27%, each beating the (1.64)% return of the MSCI EMF(R) Index during the same period. The year began strongly for emerging markets equities, as they benefited from the aggressive easing of monetary policy by the Federal Reserve. However, increased fears of slowing growth, and global weakness in the technology and telecommunications sectors, led to a drop of about 5 percent for the MSCI EMF Index for the first quarter. The Asian markets performed the best, rising around 1.4 percent, while Latin American equities fell approximately 3 percent. By far, the weakest performing region was that of Europe and the Middle East, where shares finished down almost 22 percent. By the second quarter, emerging markets recovered sufficiently to rise approximately 4 percent, while international (developed) markets fell 1 percent. Eastern Europe was the strongest emerging markets region for the second quarter; however, Latin American markets also performed reasonably well. By region, Asia was the second quarter's laggard, as it was adversely affected by the continuing weakness in technology, which represents a large portion of the South Korean and Taiwanese markets. The slow movement towards much needed voluntary restructuring in Asia also contributed to its poor performance. The first half of the year was dominated by national crises from all regions. Latin American equity markets were unable to escape the reverberations of Argentina's serious economic concerns, government reshuffling and dramatic volatility. The appointment of former finance minister Domingo Cavallo as economy minister, in late March, helped to steady Argentina's stock market. However, the effect Cavallo's appointment had on Brazil's economy, coupled with the increasing competition within the Brazilian telecommunications industry, resulted in the Brazilian market falling by more than 10 percent during the first quarter alone. Conversely, Mexican equities rose by almost 4 percent during the first quarter and 20 percent during the second quarter. Mexico's performance was greatly helped by Citigroup's announcement of its $12.5 billion acquisition of Mexico's leading financial group, Banacci, in May, and the positive tone of the economy that is being demonstrated in the strength of the peso. Weak regional performance from Europe and the Middle East also resulted from internal crises. An argument between the Turkish President and Prime Minister contributed to huge capital outflows that led to a devaluation of the Turkish lira in February. Although a former World Bank executive was appointed to restore confidence with a new program, the lira fell further as investors were unimpressed by the government's lethargic enactment of important legislation. In Israel, equities finished more than 30 percent lower, as software shares were hammered and amid concerns over the election of the new Likud government. Subsequently, the aversion of the economic crisis in Turkey propelled Turkish stock prices to rise by more than 19 percent in the second quarter, thereby making Turkey one of the best performing markets year-to-date. Israel did not fare as well, as the on-going violence continues to badly affect the shekel, slow economic growth and swell Israel's budget deficits. In addition, foreign investment has plunged more than 50 percent this year as investors have pulled out of the Tel Aviv Stock Exchange. 6 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- We remain concerned about the continuing swings in market sentiment, but believe that the Portfolio is well positioned for the long term. We believe that our relative value style leads to investments in well-managed businesses with strong cash flow and modest debt levels, enabling the Portfolio to maintain positions with more consistent earnings streams and lower valuations, which should help it to better weather these fluctuations. As well, we believe the Portfolio will continue to benefit from our disciplined fundamental approach. LAZARD BOND PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 3.61% and Open Shares returned 3.51%, each trailing the 4.08% return of the Lehman Intermediate Government/Corporate Bond(R) Index ("LIGCB") during the same period. The Federal Reserve began an aggressive program of monetary policy easing in 2001, cutting interest rates a total of 6 times for a total reduction of 275 basis points. This significantly altered the U.S. government yield curve and reshaped investors' view of risk. As a result, non-government bonds, including corporate bonds, mortgages and asset-backed securities, enjoyed strong performance relative to government alternatives. The LIGCB Index rose by four percent during the first half of the year, with particular strength in the first quarter when it rose more than three percent. All sectors of the bond market participated, with returns on corporates, mortgages and asset-backed securities all exceeding Treasury returns. High yield bonds were strong during the first quarter, but suffered from underlying weakness in the telecommunications and technology sectors in the second quarter and fell off sharply. Overall, the first half of 2001 for high yield bonds was characterized by alternating optimism and pessimism, which resulted from a significant level of volatility in the market. Investment grade corporate bonds and mortgages also performed well during the first half of the year, although mortgage performance was dampened somewhat as falling interest rates caused prepayment risk to increase. In spite of this, mortgage bonds posted solid overall performance. While the Treasury bond market performance was unspectacular in the second quarter, investment grade non-government assets enjoyed a strong environment despite limited weakness in June. The Portfolio trailed its benchmark slightly for the first half of the year, as an allocation to the U.S. high yield corporate market suffered from weaknesses in the telecommunications sector and concern over earnings disappointments. This outlook reduced the high yield market's performance more than 2 percent behind that of Treasuries for the second quarter. In addition, the Portfolio was underweight in investment grade corporates; however, we increased the Portfolio's allocation significantly to capture the positive impact of tightening corporate yield spreads. Allocations to both asset-backed securities and commercial mortgages also added to the Portfolio's performance for the first half of the year. Lazard remains optimistic regarding the prospects for bonds, as we believe that economic news will remain weak and that the Federal Reserve will probably continue to ease interest rates. This should continue to provide benefits to credit markets. Yet, as interest rates reach absolute low levels, return opportunities diminish and risk increases for bond portfolios, we will look to moderate risk exposures as necessary. LAZARD HIGH YIELD PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 2.89% and Open Shares returned 2.89%, each trailing the 3.38% return of the Merrill Lynch High Yield Master II(R) Index during the same period. The first half of 2001 has alternated between extreme optimism and extreme pessimism, as investors focused on the promising nature of the Federal Reserve's interest rate cuts or on the bleak corporate profit outlook. These investor mood swings have led to heightened volatility in the U.S. high yield market. In spite of this volatility, the U.S. high yield market remains ahead almost 3.4 percent for the year. The U.S. high yield market began the year strongly because of the Federal Reserve's first 50-basis point interest rate cut in January. In response, high yield bonds rallied to post returns of more than six percent for the month, making it the strongest single month performance for the U.S. corporate high yield 7 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- bond market since February 1991. Investors returned to the high yield market en masse as mutual fund flows surged. Smaller issuers outperformed larger issuers, and investors looked with favor on B-rated issuers, with which the Portfolio maintains overweight positions. The market continued its strong performance through mid-March. The Federal Reserve cut interest rates twice more by 50-basis points each time, bringing interest rates to five percent. While these cuts prompted the yield curve, which had been inverted through most of 2000, to again become positively sloped, the cuts proved insufficient to sustain the market's initial positive performance. By the end of March, the market had again weakened as the B-rated segment returned much of its earlier gains and the flows from mutual fund receded. The U.S. high yield market then dropped by 2.3 percent during the second quarter because of disappointing corporate earnings announcements and persistent weakness in the telecommunications sector. Telecommunications was, in fact, one of the worst performing high yield sectors for the first half of the year; our cautious approach to this sector provided a positive influence on the Portfolio's performance. The Portfolio trailed the market slightly for the second quarter, as the negative impact of an overweight position to the weaker B-rated segment was largely offset by overweight positions in the cable and broadcasting sectors. Lazard believes that the Federal Reserve will continue to ease interest rates, thereby enhancing the immediate future of the bond markets by improving liquidity. We also believe that the earnings picture in the United States will eventually gain a more stable footing. This would lead to improved performance in the high yield market during the second half of 2001. Lazard seeks to construct the Portfolio with higher quality companies that are designed to perform well under volatile circumstances and we believe that the Portfolio will continue to benefit by maintaining our disciplined fundamental approach. LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of (6.69)% and Open Shares returned (6.74)%, each beating the (6.78)% return of the Salomon World Government Bond Index Ex-US(R) during the same period. Most developed market currencies weakened against the U.S. dollar during the first half of the year. Global government bond markets rallied on signs of slowing economic growth in the first quarter, but later gave ground in the second quarter. Euro government bond market performance was disappointing, despite some late hope that the European Central Bank would reduce interest rates. Meanwhile, the Bank of England continued to indicate the preference for tighter policies and the U.K. Gilt market posted a weak second quarter. While bond markets were disappointing overall, non-government assets, including corporates and mortgages, performed well relative to government bonds for the first half of the year. Non-government assets in Europe surged early in the year, with risk premiums declining in most asset classes, particularly in higher rated segments such as asset-backed securities and corporate issues. Despite a general global weakness in the telecommunications sector, investment grade corporate telecommunications in Europe performed well. The Portfolio's overweight of these issuers provided a boost to relative performance in the second quarter. The European high yield market began the year strongly, then succumbed to pressures from telecommunications and technology and faded in the second quarter, dropping more than 7 percent in June alone. Although an allocation to high yield negatively impacted performance, active management allowed the Portfolio's European high yield positions to significantly better the performance of the broader European high yield market. The primary drivers were the Portfolio's relatively defensive orientation, an underweight of the high yield telecommunications sector and an emphasis on higher quality industrial companies. Although the local currency emerging market asset class suffered a rather weak first quarter, it recovered some ground with solid performance during the balance of the first half of the year. Strong country selection and the Portfolio's higher level of diversification both more than offset the first quarter's weakness and provided a significant benefit to first half performance for the sector and the Portfolio. Overall, the Portfolio outperformed its benchmark Index; underperforming it in the first quarter and outperforming it in the second quarter. Although the 8 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONTINUED) -------------------------------------------------------------------------------- strong U.S. dollar caused overall performance in international bond strategies to be disappointing, impressive active management in the emerging market debt sector augmented a solid period for high-grade non-government assets, such as corporates and asset-backed securities. Yield spreads in the euro-zone, the United Kingdom and other European non-government markets generally declined and the Portfolio's overweight of these sectors provided a positive contribution to relative performance. LAZARD STRATEGIC YIELD PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 3.55% and Open Shares returned 3.27%, each beating the 2.32% return of the One Month LIBOR USD Fixed Index during the same period. Interest rate cuts by the Federal Reserve and strong showings by the technology and telecommunications sectors combined to spur a rally in global high yield bond markets for the beginning of 2001. Both U.S. and European high yield bonds rallied as investors returned with overwhelming force, mutual fund flows surged into the market and investors looked with favor on B-rated issuers, with which the Portfolio maintains overweight positions. As the year progressed, however, weakness in the telecommunications and technology sectors drained the strength from the global high yield market and mutual fund flows receded. In addition, U.S. and European high yield corporate bonds were hampered by continuing volatility in underlying equity markets and investors' general uneasiness with the corporate earnings outlook. While performance in global corporate high yield markets proved disappointing in the first half of 2001, the emerging markets local currency debt sector posted a strong second quarter subsequent to its weak start for the year. The Portfolio's emerging markets local currency debt allocation posted strong relative performance throughout the first half of the year, because of a high level of diversification and strong active management. Key performers included the Portfolio's overweight positions in Poland, which benefited from falling interest rates and a strong currency, and Hungary, where the currency also rallied. Active management of the Portfolio's position in Turkey also was a strong contributor. The position was limited to overnight exposure to minimize risks, and exposure was eliminated prior to the most difficult periods. These positive contributors more than offset the impact of negative factors, which included lack of exposure to the Philippines and Lebanon, which performed well, and an overweight position in Brazil, which suffered through a weak first quarter. Lazard's outlook is positive for emerging markets, as yields remain high and the Portfolio's current orientation is designed to minimize risks from individual crises. We also expect that the impact of easing monetary policy will continue to filter through the global economy, improving the environment for high yield corporate bonds. LAZARD MORTGAGE PORTFOLIO For the six months ended June 30, 2001, the Portfolio's Institutional Shares posted a total return of 3.21% trailing the 3.78% return of the Lehman Fixed-Rate MBS(R) Index during the same period. The U.S. mortgage sector underperformed Treasury bonds for the first quarter of 2001, thereby starting the year with a disappointing performance. Falling interest rates caused investors to become more concerned with mortgage prepayments, and this led to widening yield spreads. The market recovered in April, however, as lower interest rate volatility and a general rally in non-government sectors drove the mortgage sector to produce its best relative performance, versus Treasuries, during the first half of 2001. May also proved a strong month for mortgages, and the combined positive results of April and May were more than sufficient to offset the weak first quarter and the sector's less-than-stellar June finish. GNMA mortgage pass-throughs outperformed conventional pass-throughs during the first half of the year, and 30-year mortgage pass-throughs performed better than 15-year pass-throughs, although by a less impressive margin. Asset-backed securities and commercial mortgages also outperformed Treasuries during the first half of 2001. The Lehman Fixed-Rate MBS Index returned 3.78 percent during the first half of 2001, outpacing comparable Treasury returns by a solid margin. However, the Portfolio's underweight position in GNMA mortgages, which performed well, and its higher sensitivity to increasing yield spreads and interest rate fluctuations caused the Portfolio to under- 9 ================================================================================ THE LAZARD FUNDS, INC. INVESTMENT OVERVIEWS (CONCLUDED) -------------------------------------------------------------------------------- perform the index. On the positive side, the Portfolio's tactical positions in commercial mortgages and asset-backed securities outperformed mortgages in the first quarter, and the overall defensive orientation during the mortgage market's weak period of February and March helped mitigate the Portfolio's relative performance year-to-date. The relatively stable range of 10-year Treasury yields during 2001 has provided stability to the mortgage market, and Lazard believes that the prevailing low level of mortgage rates has resulted in an attractive level of risk compensation to mortgage investors. NOTES TO INVESTMENT OVERVIEWS: All returns are for the period ended June 30, 2001. The performance for the relevant indices are 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 have been waived and/or reimbursed by the Fund's Investment Manager and/or Administrator; without such waiver/reimbursement of expenses, the Portfolio's total return would have been lower. Past performance is not indicative, nor a guarantee, of future results. 10 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PERFORMANCE TABLE -------------------------------------------------------------------------------- THE PERFORMANCE DATA CONTAINED IN THE PERFORMANCE TABLE IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN A PORTFOLIO UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2001 -------------------------------------------------------------- INSTITUTIONAL SHARES -------------------------------------------------------------- ONE THREE FIVE TEN SINCE YEAR YEAR YEAR YEAR INCEPTION* -------------------------------------------------------------- Lazard Equity Portfolio 2.31% 2.20% 10.56% 14.07% 12.40% S&P 500(R) Index** (14.83)% 3.89% 14.47% 15.10% 13.59% S&P/BARRA Value(R) Index** 7.92% 6.07% 14.34% 15.18% 13.27% Russell 1000(R) Value Index** 10.33% 5.35% 14.94% 15.78% 13.63% Lazard Mid Cap Portfolio 27.28% 10.82% -- -- 11.44% Russell Midcap(R) Index** 0.96% 8.17% -- -- 10.16% Russell Midcap Value Index** 23.92% 6.43% -- -- 8.86% Lazard Small Cap Portfolio 21.74% 3.65% 9.99% -- 14.69% Russell 2000(R) Index** 0.65% 5.31% 9.62% -- 12.77% Russell 2000 Value Index** 30.87% 6.92% 13.45% -- 15.80% Lazard Global Equity Portfolio (14.71)% (1.41)% 7.51% -- 7.83% MSCI(R) World(R) Index** (20.30)% 1.13% 8.16% -- 8.63% Lazard International Equity Portfolio (19.27)% (2.21)% 5.79% -- 7.74% MSCI EAFE(R) Index** (23.60)% (1.24)% 2.89% -- 5.55% Lazard International Small Cap Portfolio (8.22)% 0.24% 5.99% -- 5.88% MSCI EAFE Small Cap(R) Index** (16.74)% (1.44)% (5.57)% -- (0.75)% Lazard Emerging Markets Portfolio (22.68)% (2.03)% (4.82)% -- (1.94)% MSCI EMF(R) Index** (25.82)% 1.48% (6.40)% -- (3.95)% Lazard Bond Portfolio 8.80% 4.39% 5.93% -- 6.05% Lehman Intermediate Gov't/Corp Bond(R) Index** 11.04% 6.43% 7.01% -- 6.94% Lazard High Yield Portfolio (9.68)% (5.29)% -- -- (2.23)% Merrill Lynch High Yield Master II(R) Index** (0.92)% (0.34)% -- -- 1.00% Lazard International Fixed-Income Portfolio (7.92)% (1.33)% (0.43)% -- 4.18% Salomon World Government Bond Index Ex-US(R)**+ (7.43)% (0.20)% 0.49% -- 5.40% Lazard Strategic Yield Portfolio 3.37% 2.26% 4.66% -- 6.45% One Month LIBOR USD Fixed Index** 5.67% 5.59% 5.60% -- 5.07%
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 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; Lazard Mortgage Portfolio from: December 29, 2000--Institutional. The performance for the relevant indices are for the comparable period. Portfolio returns are net of fees and assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolios have been waived and/or reimbursed by the Fund's Investment Manager and/or Administrator; without such waiver/reimbursement of expenses, the Portfolios' total returns would have been lower. Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of each Portfolio 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. + 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 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PERFORMANCE TABLE (CONTINUED) --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2001 -------------------------------------------------------------- INSTITUTIONAL SHARES -------------------------------------------------------------- ONE THREE FIVE TEN SINCE YEAR YEAR YEAR YEAR INCEPTION* -------------------------------------------------------------- Lazard Equity Portfolio 2.31% 6.75% 65.22% 273.16% 419.00% S&P 500(R) Index** (14.83)% 12.11% 96.56% 308.04% 501.85% S&P/BARRA Value(R) Index** 7.92% 19.35% 95.47% 310.86% 478.59% Russell 1000(R) Value Index** 10.33% 16.94% 100.65% 332.71% 504.65% Lazard Mid Cap Portfolio 27.28% 36.12% -- -- 48.58% Russell Midcap(R) Index** 0.96% 26.58% -- -- 42.42% Russell Midcap Value Index** 23.92% 20.54% -- -- 36.36% Lazard Small Cap Portfolio 21.74% 11.37% 60.96% -- 276.25% Russell 2000(R) Index** 0.65% 16.80% 58.29% -- 219.48% Russell 2000 Value Index** 30.87% 22.24% 87.93% -- 313.02% Lazard Global Equity Portfolio (14.71)% (4.16)% 43.61% -- 51.22% MSCI(R) World(R) Index** (20.30)% 3.43% 48.01% -- 57.54% Lazard International Equity Portfolio (19.27)% (6.48)% 32.48% -- 105.58% MSCI EAFE(R) Index** (23.60)% (3.67)% 15.32% -- 68.62% Lazard International Small Cap Portfolio ( 8.22)% 0.71% 33.73% -- 54.24% MSCI EAFE Small Cap(R) Index** (16.74)% (4.26)% (24.93)% -- (5.57)% Lazard Emerging Markets Portfolio (22.68)% (5.95)% (21.89)% -- (12.76)% MSCI EMF(R) Index** (25.82)% 4.51% (28.17)% -- (24.59)% Lazard Bond Portfolio 8.80% 13.77% 33.41% -- 76.40% Lehman Intermediate Gov't/Corp Bond(R) Index** 11.04% 20.57% 40.32% -- 91.34% Lazard High Yield Portfolio (9.68)% (15.03)% -- -- (7.57)% Merrill Lynch High Yield Master II(R) Index** (0.92)% (1.01)% -- -- 3.52% Lazard International Fixed-Income Portfolio (7.92)% (3.93)% (2.13)% -- 48.53% Salomon World Government Bond Index Ex-US(R)**+ (7.43)% (0.59)% 2.46% -- 66.33% Lazard Strategic Yield Portfolio 3.37% 6.93% 25.60% -- 83.91% One Month LIBOR USD Fixed Index** 5.67% 17.73% 31.30% -- 61.95% Lazard Mortgage Portfolio -- -- -- -- 3.25% Lehman Fixed-Rate MBS(R) Index** -- -- -- -- 3.90%
** 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, have no fees or costs and assume reinvestment of dividends and distributions, if any. The S&P 500 Index is a market capitalization-weighted index of 500 common stocks, designed to measure performance of the broad domestic economy through changes in the aggregate market value of these stocks, which represent all major industries. The S&P/BARRA Value Index is a capitalization-weighted index of all the stocks in the S&P 500 Index that have low price-to-book ratios. The Russell 1000 Value Index measures the performance of those companies in the Russell 1000 Index (consisting of the 1,000 largest U.S. companies by capitalization) with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. The Russell Midcap Value Index measures performance of those companies in the Russell Midcap Index with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index is comprised of the 2,000 smallest U.S. companies included in the Russell 3000(R) Index (consisting of the 3,000 largest U.S. companies by capitalization). The Russell 2000 Value Index measures the performance of those companies in the Russell 2000 Index with lower price-to-book ratios and lower forecasted growth values. The Morgan Stanley Capital International (MSCI) World Index represents market value-weighted average returns of selected securities listed on the stock exchanges of Europe, Australasia, the Far East ("EAFE"), New Zealand, Canada and the United States. The MSCI EAFE Index is a broadly diversified international index comprised of equity securities of approximately 1,000 companies located outside the United States. The MSCI EAFE Small Cap Index is an arithmetic, market value-weighted average of the performance of securities of small cap companies listed on the stock exchanges of EAFE Index countries. The MSCI Emerging Markets Free ("EMF") Index is comprised of emerging market securities in countries open to non-local investors. The Lehman Intermediate Gov't/Corp Bond Index is comprised of U.S. Government and corporate bonds in the intermediate maturity range 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 Salomon World Government Bond Index Ex-US is a market capitalization-weighted index of institutionally traded fixed rate non-U.S. dollar government bonds, fully hedged into U.S. dollars. The One Month London Interbank Offered Rate ("LIBOR") USD Fixed Index is an average derived from sixteen quotations of the rate that banks dealing in Eurodollars charge each other for large loans, as provided by banks determined by the British Bankers Association. The Lehman Fixed-Rate Mortgage-Backed Securities ("MBS") Index is an index of U.S. mortgage-backed securities in the intermediate maturity range calculated by Lehman Brothers. See additional footnotes on previous page. 12 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PERFORMANCE TABLE (CONCLUDED) -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2001 ---------------------------------------- OPEN SHARES ---------------------------------------- ONE THREE SINCE YEAR YEAR INCEPTION* ------------- ------------ ------------- Lazard Equity Portfolio 2.01% 1.93% 8.35% S&P 500(R) Index** (14.83)% 3.89% 13.04% S&P/BARRA Value(R) Index** 7.92% 6.07% 12.18% Russell 1000(R) Value Index** 10.33% 5.35% 12.55% Lazard Mid Cap Portfolio 26.98% 10.45% 11.09% Russell Midcap(R) Index** 0.96% 8.17% 10.16% Russell Midcap Value Index** 23.92% 6.43% 8.86% Lazard Small Cap Portfolio 21.45% 3.37% 7.97% Russell 2000(R) Index** 0.65% 5.31% 9.12% Russell 2000 Value Index** 30.87% 6.92% 12.12% Lazard Global Equity Portfolio (14.99)% (1.66)% 6.31% MSCI(R) World(R) Index** (20.30)% 1.13% 7.57% Lazard International Equity Portfolio (19.55)% (2.54)% 5.20% MSCI EAFE(R) Index** (23.60)% (1.24)% 3.72% Lazard International Small Cap Portfolio (8.65)% (0.17)% 4.27% MSCI EAFE Small Cap(R) Index** (16.74)% (1.44)% (3.83)% Lazard Emerging Markets Portfolio (22.86)% (2.18)% (6.57)% MSCI EMF(R) Index** (25.82)% 1.48% (6.48)% Lazard Bond Portfolio 8.56% 4.11% 5.21% Lehman Intermediate Gov't/Corp Bond(R) Index** 11.04% 6.43% 6.99% Lazard High Yield Portfolio (9.81)% (5.49)% (4.00)% Merrill Lynch High Yield Master II(R) Index** (0.92)% (0.34)% 0.41% Lazard International Fixed-Income Portfolio (8.17)% (1.58)% (1.79)% Salomon World Government Bond Index Ex-US(R)** (7.43)% (0.20)% (0.64)% Lazard Strategic Yield Portfolio 2.87% 1.83% 2.81% One Month LIBOR USD Fixed Index** 5.67% 5.59% 5.62% CUMULATIVE TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2001 ------------------------------------------ OPEN SHARES ------------------------------------------ ONE THREE SINCE YEAR YEAR INCEPTION* ------------- ------------ --------------- 2.01% 5.90% 42.25% (14.83)% 12.11% 71.51% 7.92% 19.35% 65.79% 10.33% 16.94% 68.22% 26.98% 34.73% 46.88% 0.96% 26.58% 42.41% 23.92% 20.54% 36.36% 21.45% 10.46% 40.26% 0.65% 16.80% 47.02% 30.87% 22.24% 65.69% (14.99)% (4.91)% 31.01% (20.30)% 3.43% 38.03% (19.55)% (7.43)% 25.21% (23.60)% (3.67)% 17.59% (8.65)% (0.51)% 20.07% (16.74)% (4.26)% (15.73)% (22.86)% (6.41)% (26.22)% (25.82)% 4.51% (25.92)% 8.56% 12.83% 24.54% 11.04% 20.57% 33.93% (9.81)% (15.59)% (12.76)% (0.92)% (1.01)% 1.38% (8.17)% (4.67)% (7.75)% (7.43)% (0.59)% (2.83)% 2.87% 5.60% 13.09% 5.67% 17.73% 27.46%
See footnotes on previous pages. 13 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO COMMON STOCKS--98.4% AEROSPACE & DEFENSE--2.1% Honeywell International, Inc. .............. 45,600 $1,595,544 United Technologies Corp. .................. 38,000 2,783,880 ---------- 4,379,424 ---------- ALUMINUM--1.0% Alcoa, Inc. ................................ 55,300 2,178,820 ---------- AUTOMOTIVE--1.2% Delphi Automotive Systems Corp. ............ 167,100 2,661,903 ---------- BANKING & FINANCIAL SERVICES--12.2% American Express Co. ....................... 49,200 1,908,960 Bank of America Corp. ...................... 51,950 3,118,559 Citigroup, Inc. ............................ 111,297 5,880,933 FleetBoston Financial Corp. ................ 133,000 5,246,850 J.P. Morgan Chase & Co. .................... 76,236 3,400,126 Merrill Lynch & Co., Inc. .................. 52,300 3,098,775 PNC Financial Services Group ............... 53,100 3,493,449 ---------- 26,147,652 ---------- BREWERY--2.7% Anheuser-Busch Cos., Inc. .................. 138,700 5,714,440 ---------- BROADCASTING--0.9% Charter Communications, Inc., Class A (a) ............................... 85,300 1,991,755 ---------- BUSINESS SERVICES & SUPPLIES--1.7% First Data Corp. ........................... 56,700 3,642,975 ---------- CHEMICALS & PLASTICS--1.2% Du Pont (E.I.) de Nemours & Co. ............ 53,100 2,561,544 ---------- COMPUTER SERVICES--0.6% Electronic Data Systems Corp. .............. 21,300 1,331,250 ---------- COMPUTER SOFTWARE--1.6% Microsoft Corp. (a) ........................ 47,100 3,438,300 ---------- COMPUTERS & BUSINESS EQUIPMENT--5.5% Compaq Computer Corp. ...................... 302,000 4,677,980 Hewlett-Packard Co. ........................ 118,900 3,400,540 International Business Machines Corp. ............................ 33,500 3,785,500 ---------- 11,864,020 ---------- CONGLOMERATES--0.5% Textron, Inc. .............................. 19,200 1,056,768 ---------- COSMETICS & TOILETRIES--1.7% The Gillette Co. ........................... 124,600 3,612,154 ---------- DIVERSIFIED--4.3% Minnesota Mining & Manufacturing Co. ......................... 29,000 $3,308,900 PPG Industries, Inc. ....................... 56,100 2,949,177 Tyco International, Ltd. ................... 52,700 2,872,150 ---------- 9,130,227 ---------- DRUGS & HEALTH CARE--9.5% American Home Products Corp. ............... 65,800 3,845,352 Bristol-Myers Squibb Co. ................... 39,200 2,050,160 Elan Corp. PLC ADR (a) ..................... 54,200 3,306,200 Eli Lilly & Co. ............................ 76,200 5,638,800 Pharmacia Corp. ............................ 58,800 2,701,860 Schering-Plough Corp. ...................... 78,200 2,833,968 ---------- 20,376,340 ---------- ELECTRONICS--2.0% Motorola, Inc. ............................. 134,900 2,233,944 Texas Instruments, Inc. .................... 63,800 2,009,700 ---------- 4,243,644 ---------- FOOD & BEVERAGES--5.6% H.J. Heinz Co. ............................. 66,900 2,735,541 Kraft Foods, Inc., Class A (a) ............. 45,600 1,413,600 PepsiCo, Inc. .............................. 97,900 4,327,180 The Kroger Co. (a) ......................... 133,900 3,347,500 The Quaker Oats Co. ........................ 2,800 255,500 ---------- 12,079,321 ---------- HOTELS & RESTAURANTS--1.6% McDonald's Corp. ........................... 128,300 3,471,798 ---------- INSURANCE--5.5% American General Corp. ..................... 20,500 952,225 American International Group, Inc. ......... 32,600 2,803,600 The Hartford Financial Services Group, Inc. ............................... 78,700 5,383,080 XL Capital, Ltd., Class A .................. 30,700 2,520,470 ---------- 11,659,375 ---------- MANUFACTURING--1.9% General Electric Co. ....................... 83,800 4,085,250 ---------- MULTIMEDIA--6.8% AOL Time Warner, Inc. (a) .................. 101,250 5,366,250 The News Corp. Ltd., ADR ................... 196,200 6,356,880 Viacom, Inc., Class B (a) .................. 55,200 2,856,600 ---------- 14,579,730 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 14 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO (CONCLUDED) OIL & GAS--7.2% Chevron Corp. ............................ 34,100 $ 3,086,050 Conoco, Inc., Class B .................... 108,474 3,134,899 El Paso Corp. ............................ 47,988 2,521,289 Exxon Mobil Corp. ........................ 36,664 3,202,600 Texaco, Inc. ............................. 51,500 3,429,900 ----------- 15,374,738 ----------- PAPER PRODUCTS--1.0% International Paper Co. .................. 57,500 2,052,750 ----------- PETROLEUM EQUIPMENT & SERVICES--0.6% Schlumberger, Ltd. ....................... 24,700 1,300,455 ----------- RETAIL--1.9% Target Corp. ............................. 116,600 4,034,360 ----------- SEMICONDUCTORS & COMPONENTS--2.2% Agere Systems, Inc., Class A (a) ......... 363,200 2,724,000 Intel Corp. .............................. 68,200 1,994,850 ----------- 4,718,850 ----------- TELECOMMUNICATIONS--8.0% AT&T Wireless Group (a) .................. 188,200 3,077,070 Qwest Communications International, Inc. ..................... 83,400 2,657,958 SBC Communications, Inc. ................. 137,779 5,519,427 Verizon Communications, Inc. ............. 73,100 3,910,850 WorldCom, Inc.-WorldCom Group (a) ............................... 140,100 1,989,420 ----------- 17,154,725 ----------- TOBACCO--2.2% Philip Morris Cos., Inc. ................. 93,500 4,745,125 ----------- UTILITIES--5.2% Constellation Energy Group, Inc. ......... 49,900 2,125,740 Entergy Corp. ............................ 43,500 1,669,965 FPL Group, Inc. .......................... 74,900 4,509,729 Public Service Enterprise Group, Inc. ............................. 55,400 2,709,060 ----------- 11,014,494 ----------- TOTAL COMMON STOCKS (Identified cost $207,753,349)............ 210,602,187 ----------- CONVERTIBLE PREFERRED STOCK--0.6% COMPUTER SERVICES--0.6% Electronic Data Systems Corp., 7.625%, 08/17/04 (Identified cost $1,305,000)............. 26,100 1,375,470 ----------- PRINCIPAL AMOUNT (000) --------- CONVERTIBLE BONDS--1.5% BROADCASTING--0.3% Charter Communications, Inc., Class A, 4.75%, 06/01/06 ..................... $ 673 717,351 ----------- COMPUTERS & BUSINESS EQUIPMENT--1.2% Hewlett-Packard Co., 0.00%, 10/14/17 (l) ................. 4,724 2,522,096 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $3,209,130).......... 3,239,447 ----------- REPURCHASE AGREEMENT--1.9% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $3,890,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $4,152,575) (Identified cost $4,070,000)......... 4,070 4,070,000 ----------- TOTAL INVESTMENTS (Identified cost $216,337,479) (b) ......... 102.4% $219,287,104 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ............................... ( 2.4) (5,175,128) ------ ----------- NET ASSETS .................................. 100.0% $214,111,976 ====== ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD MID CAP PORTFOLIO COMMON STOCKS--97.3% AUTOMOTIVE--2.3% Delphi Automotive Systems Corp. ......... 35,400 $ 563,922 --------- BANKING & FINANCIAL SERVICES--10.6% A.G. Edwards, Inc. ...................... 5,600 252,000 Allied Capital Corp. .................... 10,000 231,500 Capital One Financial Corp. ............. 2,000 120,000 Heller Financial, Inc., Class A ......... 5,000 200,000 Instinet Group, Inc. (a) ................ 25,700 479,048 Mercantile Bankshares Corp. ............. 9,900 387,387 North Fork Bancorporation, Inc. ......... 8,950 277,450 SouthTrust Corp. ........................ 7,400 192,400 TCF Financial Corp. ..................... 8,900 412,159 --------- 2,551,944 --------- BROADCASTING--2.7% Charter Communications, Inc., Class A (a) ............................ 19,900 464,665 USA Networks, Inc. (a) .................. 6,300 176,400 --------- 641,065 --------- BUSINESS SERVICES & SUPPLIES--8.6% Celestica, Inc. (a) ..................... 3,900 200,850 Gartner, Inc., Class A (a) .............. 70,100 771,100 Iron Mountain, Inc. (a) ................. 7,800 349,752 KPMG Consulting, Inc. (a) ............... 22,800 349,980 The Titan Corp. (a) ..................... 16,700 382,430 --------- 2,054,112 --------- COMPUTER SERVICES--1.3% Acxiom Corp. (a) ........................ 24,000 314,160 --------- COMPUTER SOFTWARE--1.1% Intuit, Inc. (a) ........................ 6,800 271,932 --------- COMPUTERS & BUSINESS EQUIPMENT--5.1% Diebold, Inc. ........................... 17,300 556,195 Maxtor Corp. (a) ........................ 83,928 440,622 NCR Corp. (a) ........................... 5,000 235,000 --------- 1,231,817 --------- CONGLOMERATES--2.0% Textron, Inc. ........................... 8,700 478,848 --------- DIVERSIFIED--11.1% Cooper Industries, Inc. ................. 6,200 245,458 Navistar International Corp. (a) ........ 17,300 486,649 Newell Rubbermaid, Inc. ................. 20,100 504,510 PPG Industries, Inc. .................... 10,500 551,985 SPX Corp. (a) ........................... 3,100 388,058 Viad Corp. .............................. 18,400 485,760 --------- 2,662,420 --------- DRUGS & HEALTH CARE--7.0% Biogen, Inc. (a) ........................ 7,900 429,444 Celgene Corp. (a) ....................... 16,000 461,600 King Pharmaceuticals, Inc. (a) .......... 10,200 548,250 MedImmune, Inc. (a) ..................... 5,300 250,160 --------- 1,689,454 --------- ELECTRONICS--0.7% Millipore Corp. ......................... 2,800 173,544 --------- FOOD & BEVERAGES--4.6% PepsiAmericas, Inc. ..................... 38,300 509,390 The Quaker Oats Co. ..................... 6,500 593,125 --------- 1,102,515 --------- INSURANCE--4.5% ACE, Ltd. ............................... 14,500 566,805 Ambac Financial Group, Inc. ............. 8,750 509,250 --------- 1,076,055 --------- OIL & GAS--7.5% Baker Hughes, Inc. ...................... 14,900 499,150 Cooper Cameron Corp. (a) ................ 5,800 323,640 Tidewater, Inc. ......................... 12,200 459,940 USX-Marathon Group ...................... 17,100 504,621 --------- 1,787,351 --------- PAPER PRODUCTS--1.7% Bowater, Inc. ........................... 9,200 411,608 --------- PUBLISHING--2.0% The New York Times Co., Class A ......... 5,600 235,200 Valassis Communications, Inc. (a) ....... 6,900 247,020 --------- 482,220 --------- REAL ESTATE--4.9% Archstone Communities Trust ............. 14,700 378,966 Equity Office Properties Trust .......... 16,700 528,221 Health Care Property Investors, Inc...... 7,600 261,440 --------- 1,168,627 --------- RETAIL--7.1% Blockbuster, Inc., Class A .............. 11,400 208,050 Ross Stores, Inc. ....................... 22,500 538,875 The Limited, Inc. ....................... 30,500 503,860 Venator Group, Inc. (a) ................. 28,800 440,640 --------- 1,691,425 --------- SEMICONDUCTORS & COMPONENTS--1.4% Agere Systems, Inc., Class A (a) ........ 43,700 327,750 --------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD MID CAP PORTFOLIO (CONCLUDED) TELECOMMUNICATIONS--2.8% Harris Corp. ............................. 24,500 $ 666,645 ---------- UTILITIES--8.3% Constellation Energy Group, Inc. ......... 13,000 553,800 Entergy Corp. ............................ 13,700 525,943 FirstEnergy Corp. ........................ 7,600 244,416 NiSource, Inc. ........................... 6,800 185,844 UtiliCorp United, Inc. ................... 16,000 488,800 ---------- 1,998,803 ---------- TOTAL COMMON STOCKS (Identified cost $21,188,373)............. 23,346,217 ---------- PRINCIPAL AMOUNT (000) ---------- REPURCHASE AGREEMENT--4.5% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $1,020,000 United States Treasury Note, 6.625%, 05/15/07, with a value of $1,104,126) (Identified cost $1,081,000)............. $1,081 $ 1,081,000 ----------- TOTAL INVESTMENTS (Identified cost $22,269,373) (b) ........ 101.8% $24,427,217 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ............................. (1.8) (441,532) ------ ----------- NET ASSETS ................................ 100.0% $23,985,685 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO COMMON STOCKS--96.6% AIRLINES--0.9% Alaska Air Group, Inc. (a) ................ 192,200 $5,554,580 Atlantic Coast Airlines Holdings, Inc. (a) ....................... 26,200 785,738 ---------- 6,340,318 ---------- AUTO PARTS--0.6% Pennzoil-Quaker State Co. ................. 366,700 4,107,040 ---------- BANKING & FINANCIAL SERVICES--9.6% Allied Capital Corp. ...................... 353,800 8,190,470 Chittenden Corp. .......................... 208,800 7,026,120 Cullen/Frost Bankers, Inc. ................ 151,100 5,114,735 East West Bancorp, Inc. ................... 101,800 2,748,600 Heller Financial, Inc., Class A ........... 306,900 12,276,000 Investment Technology Group, Inc. (a) .......................... 122,400 6,155,496 New York Community Bancorp, Inc............ 230,217 8,667,670 Richmond County Financial Corp. ........... 152,500 5,721,800 Southwest Bancorporation of Texas, Inc. (a) .......................... 80,300 2,425,863 Westamerica Bancorporation ................ 88,200 3,461,850 Wilmington Trust Corp. .................... 72,300 4,529,595 ---------- 66,318,199 ---------- BUSINESS SERVICES & SUPPLIES--11.0% American Management Systems, Inc. (a) ........................ 375,900 8,871,240 Answerthink, Inc. (a) ..................... 824,800 8,239,752 Dendrite International, Inc. (a) .......... 484,400 3,633,000 Gartner, Inc., Class A (a) ................ 777,300 8,550,300 Iron Mountain, Inc. (a) ................... 239,500 10,739,180 MAXIMUS, Inc. (a) ......................... 210,000 8,418,900 The Profit Recovery Group International, Inc. (a) .................. 487,300 5,584,458 The Titan Corp. (a) ....................... 433,400 9,924,860 United Stationers, Inc. (a) ............... 232,800 7,347,168 West Corp. (a) ............................ 223,200 4,912,632 ---------- 76,221,490 ---------- CHEMICALS & PLASTICS--0.7% Ferro Corp. ............................... 207,100 4,516,851 ---------- COMPUTER SERVICES--0.7% Acxiom Corp. (a) .......................... 359,300 4,703,237 ---------- COMPUTER SOFTWARE--2.0% Avant! Corp. (a) .......................... 483,300 $6,427,890 Mentor Graphics Corp. (a) ................. 439,600 7,693,000 ---------- 14,120,890 ---------- COMPUTERS & BUSINESS EQUIPMENT--4.3% Avocent Corp. (a) ......................... 333,600 7,589,400 Black Box Corp. (a) ....................... 94,000 6,331,840 Diebold, Inc. ............................. 188,700 6,066,705 Maxtor Corp. (a) .......................... 1,786,000 9,376,500 ---------- 29,364,445 ---------- CONSTRUCTION MATERIALS--0.8% Dal-Tile International, Inc. (a) .......... 297,900 5,526,045 ---------- CONTAINERS--1.1% Packaging Corp. of America (a) ............ 498,300 7,738,599 ---------- DIVERSIFIED--0.9% Navistar International Corp. (a) .......... 125,300 3,524,689 The Liberty Corp. ......................... 60,600 2,424,000 ---------- 5,948,689 ---------- DRUGS & HEALTH CARE--4.5% Celgene Corp. (a) ......................... 335,500 9,679,175 Manor Care, Inc. (a) ...................... 320,000 10,160,000 Owens & Minor, Inc. ....................... 368,400 6,999,600 Pharmacopeia, Inc. (a) .................... 185,100 4,442,400 ---------- 31,281,175 ---------- EDUCATION--0.5% ITT Educational Services, Inc. (a) ........ 8,100 364,500 Learning Tree International, Inc. (a) ..... 127,900 2,936,584 ---------- 3,301,084 ---------- ELECTRICAL EQUIPMENT--1.9% Axcelis Technologies, Inc. (a) ............ 111,500 1,650,200 Belden, Inc. .............................. 173,620 4,644,335 LTX Corp. (a) ............................. 264,800 6,768,288 ---------- 13,062,823 ---------- ELECTRONICS--1.4% Sensormatic Electronics Corp. (a) ......... 571,500 9,715,500 ---------- FOOD & BEVERAGES--1.4% PepsiAmericas, Inc. ....................... 713,700 9,492,210 ---------- GAS EXPLORATION--1.4% Louis Dreyfus Natural Gas Corp. (a)........ 284,200 9,904,370 ---------- HOMEBUILDERS--0.9% Toll Brothers, Inc. (a) ................... 158,800 6,242,428 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 18 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO (CONTINUED) HOTELS & RESTAURANTS--2.2% Jack in the Box, Inc. (a) .................. 393,900 $10,280,790 Prime Hospitality Corp. (a) ................ 421,700 4,997,145 ----------- 15,277,935 ----------- HOUSEHOLD APPLIANCES & HOME FURNISHINGS--2.3% Furniture Brands International, Inc. (a) ................... 211,700 5,927,600 Harman International Industries, Inc. .......................... 261,100 9,945,299 ----------- 15,872,899 ----------- INDUSTRIAL & MACHINERY--1.2% AMETEK, Inc. ............................... 87,700 2,679,235 Esterline Technologies Corp. (a) ........... 165,000 3,588,750 JLG Industries, Inc. ....................... 143,500 1,772,225 ----------- 8,040,210 ----------- INSURANCE--5.9% AmerUs Group Co. ........................... 198,800 7,051,436 Arthur J. Gallagher & Co. .................. 222,800 5,792,800 Everest Re Group, Ltd. ..................... 167,100 12,499,080 HCC Insurance Holdings, Inc. ............... 134,400 3,292,800 Radian Group, Inc. ......................... 214,642 8,682,269 W.R. Berkley Corp. ......................... 79,400 3,288,748 ----------- 40,607,133 ----------- LEISURE & ENTERTAINMENT--2.8% Bally Total Fitness Holding Corp. (a)....... 366,000 10,837,260 Brunswick Corp. ............................ 340,600 8,184,618 ----------- 19,021,878 ----------- MANUFACTURING--1.0% Crane Co. .................................. 102,510 3,177,810 Federal Signal Corp. ....................... 167,800 3,938,266 ----------- 7,116,076 ----------- MEDICAL PRODUCTS--4.9% American Medical Systems Holdings, Inc. (a) ........................ 331,400 5,086,990 INAMED Corp. (a) ........................... 256,700 7,267,177 Invacare Corp. ............................. 264,200 10,206,046 STERIS Corp. (a) ........................... 376,900 7,556,845 Varian, Inc. (a) ........................... 113,700 3,672,510 ----------- 33,789,568 ----------- MEDICAL SERVICES--1.9% Albany Molecular Research, Inc. (a)......... 104,700 $ 3,979,647 Gene Logic, Inc. (a) ....................... 268,600 5,855,480 Renal Care Group, Inc. (a) ................. 92,400 3,039,036 ----------- 12,874,163 ----------- MEDICAL SUPPLIES--1.5% DENTSPLY International, Inc. ............... 240,000 10,644,000 ----------- OIL & GAS--4.2% Chiles Offshore, Inc. (a) .................. 209,300 3,715,075 Helmerich & Payne, Inc. .................... 289,020 8,907,596 Horizon Offshore, Inc. (a) ................. 199,600 2,694,600 Hydril Co. (a) ............................. 122,600 2,791,602 Kinder Morgan Management, LLC (a)........... 157,500 10,788,750 ----------- 28,897,623 ----------- PUBLISHING--5.4% Banta Corp. ................................ 170,950 5,008,835 Houghton Mifflin Co. ....................... 148,200 8,881,626 Journal Register Co. (a) ................... 294,700 4,744,670 Pulitzer, Inc. ............................. 139,000 7,339,200 R. H. Donnelley Corp. (a) .................. 363,300 11,625,600 ----------- 37,599,931 ----------- REAL ESTATE--7.5% Alexandria Real Estate Equities, Inc........ 207,900 8,274,420 Annaly Mortgage Management, Inc............. 542,100 7,432,191 Catellus Development Corp. (a) ............. 197,200 3,441,140 Charles E. Smith Residential Realty, Inc. .............................. 55,500 2,783,325 Chelsea Property Group, Inc. ............... 109,900 5,154,310 Cousins Properties, Inc. ................... 125,800 3,377,730 FelCor Lodging Trust, Inc. ................. 216,925 5,076,045 Health Care Property Investors, Inc......... 200,800 6,907,520 Kilroy Realty Corp. ........................ 137,600 4,004,160 Reckson Associates Realty Corp. ............ 239,400 5,506,200 ----------- 51,957,041 ----------- RETAIL--6.6% AnnTaylor Stores Corp. (a) ................. 94,100 3,368,780 Blockbuster, Inc., Class A ................. 293,800 5,361,850 Pacific Sunwear of California, Inc. (a)..... 473,300 10,616,119 Ross Stores, Inc. .......................... 510,300 12,221,685 The Children's Place Retail Stores, Inc. (a) .......................... 184,100 4,933,880 Venator Group, Inc. (a) .................... 586,400 8,971,920 ----------- 45,474,234 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 19 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO (CONCLUDED) TELECOMMUNICATIONS EQUIPMENT--1.1% ANTEC Corp. (a) ........................ 260,700 $ 3,232,680 CommScope, Inc. (a) .................... 190,700 4,481,450 ----------- 7,714,130 ----------- TRANSPORTATION--0.7% CNF, Inc. .............................. 166,100 4,692,325 ----------- UTILITIES--2.8% Avista Corp. ........................... 153,300 3,062,934 Orion Power Holdings, Inc. (a) ......... 283,800 6,757,278 Sierra Pacific Resources ............... 580,292 9,278,869 ----------- 19,099,081 ----------- TOTAL COMMON STOCKS (Identified cost $576,884,906).......... 666,583,620 ----------- PRINCIPAL AMOUNT (000) ---------- REPURCHASE AGREEMENT--0.7% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $4,390,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $4,686,325) (Identified cost $4,591,000)............... $4,591 $ 4,591,000 ------------ TOTAL INVESTMENTS (Identified cost $581,475,906) (b) ......... 97.3% $671,174,620 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................. 2.7 18,485,909 ------ ------------ NET ASSETS .................................. 100.0% $689,660,529 ====== ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 20 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD GLOBAL EQUITY PORTFOLIO COMMON STOCKS--97.9% FINLAND--0.8% UPM-Kymmene Oyj .......................... 29,300 $ 829,083 ---------- FRANCE--8.2% Aventis SA ............................... 20,275 1,620,267 Axa ...................................... 45,880 1,308,345 BNP Paribas SA ........................... 16,140 1,406,082 Lagardere SCA ............................ 18,300 862,263 TotalFinaElf SA .......................... 12,407 1,739,067 Vivendi Universal SA ..................... 19,945 1,163,729 ---------- TOTAL FRANCE ............................. 8,099,753 ---------- GERMANY--4.4% Allianz AG ............................... 4,660 1,361,458 Bayerische Hypo-und Vereinsbank AG .......................... 29,200 1,445,139 E.On AG .................................. 20,700 1,086,564 ThyssenKrupp AG .......................... 32,400 425,589 ---------- TOTAL GERMANY ............................ 4,318,750 ---------- ITALY--1.1% San Paolo-IMI SpA ........................ 85,600 1,098,281 ---------- JAPAN--11.0% Canon, Inc. .............................. 28,000 1,131,585 Fujitsu, Ltd. ............................ 89,000 934,889 Kao Corp. ................................ 31,000 770,588 Mizuho Holdings, Inc. .................... 224 1,041,777 Nissan Motor Co., Ltd. ................... 163,000 1,125,355 NTT DoCoMo, Inc. ......................... 49 852,618 Sankyo Co., Ltd. ......................... 16,000 288,670 Sony Corp. ............................... 16,300 1,071,766 Sumitomo Mitsui Banking Corp. ............ 115,000 949,803 The Nikko Securities Co., Ltd. ........... 126,000 1,009,334 The Sumitomo Trust & Banking Co., Ltd. ............................... 157,000 988,253 Toyota Motor Corp. ....................... 20,400 718,114 ---------- TOTAL JAPAN .............................. 10,882,752 ---------- NETHERLANDS--7.0% ABN AMRO Holding NV ...................... 58,000 1,090,685 Akzo Nobel NV ............................ 26,700 1,131,345 Getronics NV ............................. 56,600 235,032 Heineken NV .............................. 35,827 1,446,122 ING Groep NV ............................. 21,900 1,432,766 Koninklijke (Royal) Philips Electronics NV .......................... 61,779 1,639,223 ---------- TOTAL NETHERLANDS ........................ 6,975,173 ---------- SINGAPORE--1.3% Oversea-Chinese Banking Corp., Ltd. ............................. 196,800 $1,285,357 ---------- SPAIN--2.5% Endesa SA ................................ 93,500 1,492,817 Telefonica SA (a) ........................ 75,951 937,149 ---------- TOTAL SPAIN .............................. 2,429,966 ---------- SWEDEN--1.6% Investor AB, B Shares .................... 123,100 1,568,045 ---------- SWITZERLAND--1.6% Roche Holding AG ......................... 12,100 872,224 Zurich Financial Services AG ............. 2,116 722,019 ---------- TOTAL SWITZERLAND ........................ 1,594,243 ---------- UNITED KINGDOM--9.3% BP PLC ................................... 193,700 1,594,444 Diageo PLC ............................... 134,748 1,480,172 GlaxoSmithKline PLC ...................... 46,157 1,300,058 HSBC Holdings PLC ........................ 144,578 1,715,407 National Grid Group PLC .................. 186,900 1,379,227 Tesco PLC ................................ 220,000 794,704 Vodafone Group PLC ....................... 425,500 943,790 ---------- TOTAL UNITED KINGDOM ..................... 9,207,802 ---------- UNITED STATES--49.1% Agere Systems, Inc., Class A (a) ......... 141,600 1,062,000 American Express Co. ..................... 19,400 752,720 American Home Products Corp. ............. 30,700 1,794,108 Anheuser-Busch Cos., Inc. ................ 35,500 1,462,600 AOL Time Warner, Inc. (a) ................ 37,050 1,963,650 AT&T Wireless Group (a) .................. 70,000 1,144,500 Bank of America Corp. .................... 18,930 1,136,368 Bristol-Myers Squibb Co. ................. 18,000 941,400 Chevron Corp. ............................ 16,500 1,493,250 Citigroup, Inc. .......................... 44,033 2,326,704 Compaq Computer Corp. .................... 77,300 1,197,377 Eli Lilly & Co. .......................... 27,300 2,020,200 Exxon Mobil Corp. ........................ 21,273 1,858,196 First Data Corp. ......................... 21,800 1,400,650 FleetBoston Financial Corp. .............. 40,300 1,589,835 H.J. Heinz Co. ........................... 23,900 977,271 Hewlett-Packard Co. ...................... 34,300 980,980 Intel Corp. .............................. 42,900 1,254,825 International Business Machines Corp. .......................... 15,220 1,719,860 J.P. Morgan Chase & Co. .................. 32,400 1,445,040 Kraft Foods, Inc., Class A (a) ........... 19,300 598,300 McDonald's Corp. ......................... 55,700 1,507,242 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 21 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD GLOBAL EQUITY PORTFOLIO (CONCLUDED) Microsoft Corp. (a) ................... 25,100 $ 1,832,300 Minnesota Mining & Manufacturing Co. .................... 13,700 1,563,170 Motorola, Inc. ........................ 28,900 478,584 PepsiCo, Inc. ......................... 34,700 1,533,740 PPG Industries, Inc. .................. 19,500 1,025,115 Qwest Communications International, Inc. .................. 32,900 1,048,523 Schering-Plough Corp. ................. 33,500 1,214,040 Target Corp. .......................... 29,400 1,017,240 Texas Instruments, Inc. ............... 20,500 645,750 The Gillette Co. ...................... 46,000 1,333,540 The Hartford Financial Services Group, Inc. .......................... 22,460 1,536,264 The Kroger Co. (a) .................... 44,100 1,102,500 Tyco International, Ltd. .............. 22,000 1,199,000 United Technologies Corp. ............. 18,800 1,377,288 Verizon Communications, Inc. .......... 21,000 1,123,500 ----------- TOTAL UNITED STATES ................... 48,657,630 ----------- TOTAL COMMON STOCKS (Identified cost $107,321,969)......... 96,946,835 ----------- PRINCIPAL AMOUNT (000) ---------- REPURCHASE AGREEMENT--2.3% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $2,180,000 United States Treasury Note, 6.625%, 05/15/07, with a value of $2,359,798) (Identified cost $2,310,000)............... $2,310 $ 2,310,000 ----------- TOTAL INVESTMENTS (Identified cost $109,631,969) (b) ......... 100.2% $99,256,835 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ............................... (0.2) (219,739) ------ ----------- NET ASSETS .................................. 100.0% $99,037,096 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY PORTFOLIO COMMON STOCKS--97.1% DENMARK--0.8% TDC A/S ................................ 595,230 $21,475,974 ----------- FINLAND--1.0% UPM-Kymmene Oyj ........................ 912,980 25,833,998 ----------- FRANCE--14.3% Alcatel SA ............................. 549,700 11,506,325 Alstom ................................. 997,639 27,781,451 Aventis SA ............................. 436,932 34,917,206 Axa .................................... 1,600,400 45,638,100 BNP Paribas SA ......................... 454,382 39,584,775 Compagnie de Saint-Gobain .............. 117,800 16,022,647 Lagardere SCA .......................... 797,230 37,564,046 Suez SA ................................ 1,856,550 59,786,646 TotalFinaElf SA ........................ 440,460 61,738,479 Vivendi Universal SA ................... 737,030 43,003,426 ----------- TOTAL FRANCE ........................... 377,543,101 ----------- GERMANY--6.4% Allianz AG ............................. 234,109 68,396,886 Bayerische Hypo-und Vereinsbank AG ........................ 1,133,955 56,120,640 E.On AG ................................ 564,210 29,615,968 ThyssenKrupp AG ........................ 1,107,600 14,548,847 ----------- TOTAL GERMANY .......................... 168,682,341 ----------- HONG KONG--0.6% Hutchison Whampoa, Ltd. ................ 1,489,000 15,033,559 ----------- IRELAND--1.3% Elan Corp. PLC ADR (a) ................. 540,650 32,979,650 ----------- ITALY--4.0% Alleanza Assicurazioni ................. 1,970,933 20,811,522 ENI SpA ................................ 4,414,800 53,875,023 San Paolo-IMI SpA ...................... 2,279,800 29,250,721 ----------- TOTAL ITALY ............................ 103,937,266 ----------- JAPAN--23.9% ACOM Co., Ltd. ......................... 207,200 18,292,615 Canon, Inc. ............................ 916,000 37,019,004 East Japan Railway Co. ................. 2,918 16,846,765 Fujitsu, Ltd. .......................... 4,609,000 48,414,642 Hitachi, Ltd. .......................... 5,199,000 51,068,680 Japan Tobacco, Inc. .................... 315 2,172,240 Kao Corp. .............................. 1,542,000 $38,330,527 Kyocera Corp. .......................... 146,900 12,957,261 Mizuho Holdings, Inc. .................. 6,904 32,109,053 Nissan Motor Co., Ltd. ................. 8,182,000 56,488,670 NTT DoCoMo, Inc. ....................... 2,143 37,288,991 Orix Corp. ............................. 331,460 32,239,675 Sony Corp. ............................. 827,800 54,429,958 Sumitomo Mitsui Banking Corp. .......... 5,919,000 48,885,976 The Nikko Securities Co., Ltd. ......... 6,417,000 51,403,921 The Sumitomo Trust & Banking Co., Ltd. ............................. 4,610,000 29,018,122 Toyota Motor Corp. ..................... 542,400 19,093,385 Yamanouchi Pharmaceutical Co., Ltd. ............................. 1,588,000 44,567,397 ----------- TOTAL JAPAN ............................ 630,626,882 ----------- NETHERLANDS--12.5% ABN AMRO Holding NV .................... 3,601,660 67,728,890 Akzo Nobel NV .......................... 1,353,900 57,368,109 Getronics NV ........................... 2,476,204 10,282,446 Heineken NV ............................ 1,013,618 40,913,708 ING Groep NV ........................... 905,400 59,234,092 Koninklijke (Royal) Philips Electronics NV ........................ 2,330,902 61,847,340 Wolters Kluwer NV ...................... 1,210,900 32,581,116 ----------- TOTAL NETHERLANDS ...................... 329,955,701 ----------- PORTUGAL--1.0% Portugal Telecom SGPS SA, Registered Shares (a) ................. 3,562,500 24,876,887 Portugal Telecom SGPS SA, Rights, 07/09/01 (a) .................. 3,562,500 483,046 ----------- TOTAL PORTUGAL ......................... 25,359,933 ----------- SINGAPORE--2.7% Oversea-Chinese Banking Corp., Ltd. 4,134,050 27,000,656 United Overseas Bank, Ltd. ............. 6,828,897 43,102,259 ----------- TOTAL SINGAPORE ........................ 70,102,915 ----------- SPAIN--3.1% Endesa SA .............................. 2,900,700 46,312,439 Telefonica SA (a) ...................... 2,780,975 34,314,084 ----------- TOTAL SPAIN ............................ 80,626,523 ----------- SWEDEN--2.9% Electrolux AB, Series B ................ 2,033,800 28,151,099 Investor AB, B Shares .................. 3,879,600 49,418,247 ----------- TOTAL SWEDEN ........................... 77,569,346 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 23 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY PORTFOLIO (CONCLUDED) SWITZERLAND--2.8% ABB, Ltd. ............................... 1,158,440 $ 17,539,420 Roche Holding AG ........................ 438,500 31,609,101 Zurich Financial Services AG ............ 74,904 25,558,671 ------------- TOTAL SWITZERLAND ....................... 74,707,192 ------------- UNITED KINGDOM--19.8% BAE Systems PLC ......................... 6,379,148 30,589,682 BP PLC .................................. 7,483,700 61,602,176 British Telecommunications PLC .......... 7,899,950 49,730,982 Cadbury Schweppes PLC ................... 5,341,626 36,070,923 Diageo PLC .............................. 4,904,394 53,873,491 GlaxoSmithKline PLC ..................... 1,469,360 41,385,993 HSBC Holdings PLC ....................... 6,035,384 71,609,391 Invensys PLC ............................ 21,246,200 40,393,380 National Grid Group PLC ................. 3,830,100 28,264,191 Tesco PLC ............................... 9,192,900 33,207,415 The Great Universal Stores PLC .......... 4,245,720 36,383,720 Vodafone Group PLC ...................... 17,571,200 38,974,194 ------------- TOTAL UNITED KINGDOM .................... 522,085,538 ------------- TOTAL COMMON STOCKS (Identified cost $2,856,692,055)......... 2,556,519,919 ------------- PRINCIPAL AMOUNT (000) ---------- REPURCHASE AGREEMENT--2.0% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $51,880,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $55,381,900) (Identified cost $54,290,000)......... $ 54,290 $ 54,290,000 -------------- TOTAL INVESTMENTS (Identified cost $2,910,982,055) (b) .................. 99.1% $2,610,809,919 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ................. 0.9 23,037,371 ------- -------------- NET ASSETS ............................. 100.0% $2,633,847,290 ======= ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 24 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO COMMON STOCKS--95.0% AUSTRALIA--1.9% Cochlear, Ltd. ......................... 322,500 $6,415,154 ---------- BELGIUM--1.7% Creyf's NV ............................. 289,103 5,512,506 Creyf's NV STRIP (a) ................... 15,381 130 ---------- TOTAL BELGIUM .......................... 5,512,636 ---------- FINLAND--3.3% Amer Group, Ltd. ....................... 271,800 6,219,095 Sampo Oyj, A Shares .................... 559,000 4,760,930 ---------- TOTAL FINLAND .......................... 10,980,025 ---------- FRANCE--6.8% Carbone-Lorraine SA .................... 160,800 5,750,591 CNP Assurances ......................... 86,674 2,926,322 Neopost SA (a), (c) .................... 113,800 2,917,303 SCOR ADR ............................... 72,700 3,249,690 Societe BIC SA ......................... 210,200 7,659,759 ---------- TOTAL FRANCE ........................... 22,503,665 ---------- GERMANY--4.1% Fielmann AG ............................ 176,300 6,499,134 Kamps AG ............................... 314,400 2,861,546 SCS Standard Computersysteme (a) ....... 16,070 0 Techem AG (a) .......................... 161,546 4,107,064 ---------- TOTAL GERMANY .......................... 13,467,744 ---------- HONG KONG--2.8% Esprit Holdings, Ltd. (a) .............. 6,607,500 7,243,022 Shaw Brothers (Hong Kong), Ltd. ........ 2,812,500 2,109,429 ---------- TOTAL HONG KONG ........................ 9,352,451 ---------- IRELAND--2.8% Waterford Wedgwood PLC ................. 10,136,352 9,277,253 ---------- ITALY--2.2% Industrie Natuzzi SpA ADR .............. 343,100 4,755,366 Interpump Group SpA .................... 719,700 2,457,936 ---------- TOTAL ITALY ............................ 7,213,302 ---------- JAPAN--11.9% ADERANS Co., Ltd. ...................... 64,800 2,213,519 Diamond Lease Co., Ltd. ................ 265,000 3,038,650 Hitachi Medical Corp. .................. 384,000 3,827,375 Hokuto Corp. ........................... 108,840 4,241,540 IMPACT 21 Co., Ltd. .................... 237,600 2,667,308 Japan Digital Laboratory Co., Ltd. ..... 379,900 4,057,628 Kawasumi Laboratories, Inc. ............ 75,000 846,163 Maruichi Steel Tube, Ltd. .............. 201,000 $2,282,223 Meitec Corp. ........................... 75,500 2,524,537 Ministop Co., Ltd. ..................... 175,100 2,514,667 Nippon Shinyaku Co., Ltd. .............. 824,000 4,995,141 Secom Techno Service Co., Ltd. ......... 99,000 2,302,141 Yoshinoya D&C Co., Ltd. ................ 2,330 3,736,669 ---------- TOTAL JAPAN ............................ 39,247,561 ---------- NETHERLANDS--13.7% CSM NV (a) ............................. 448,900 9,377,358 Fugro NV ............................... 139,531 7,780,554 Hunter Douglas NV ...................... 355,376 9,968,505 PinkRoccade NV (c) ..................... 129,333 4,712,938 Telegraaf Holdings MIJ NV .............. 367,300 6,536,634 Wolters Kluwer NV ...................... 265,100 7,132,921 ---------- TOTAL NETHERLANDS ...................... 45,508,910 ---------- NORWAY--1.1% Merkantildata ASA (a) .................. 917,500 1,524,299 P4 Radio Hele Norge ASA ................ 724,800 2,019,872 ---------- TOTAL NORWAY ........................... 3,544,171 ---------- SINGAPORE--2.6% Fraser & Neave, Ltd. ................... 1,309,000 5,711,608 Want Want Holdings, Ltd. ............... 1,760,000 2,780,800 Want Want Holdings, Ltd., Warrants 10/24/04 (a) ................. 155,200 66,736 ---------- TOTAL SINGAPORE ........................ 8,559,144 ---------- SPAIN--7.0% Abengoa SA ............................. 129,200 3,594,573 Aldeasa SA ............................. 217,500 4,510,318 Banco Pastor SA ........................ 106,100 4,181,020 Corporacion Mapfre, Compania Internacional de Reaseguros SA ........ 233,100 4,877,276 Prosegur, CIA de Seguridad SA .......... 477,800 6,174,900 ---------- TOTAL SPAIN ............................ 23,338,087 ---------- SWEDEN--7.8% Elanders AB, B Shares .................. 166,150 1,833,716 Nobel Biocare AB ....................... 305,300 10,304,893 Swedish Match AB ....................... 2,920,300 13,697,719 ---------- TOTAL SWEDEN ........................... 25,836,328 ---------- SWITZERLAND--4.4% Bank Sarasin & Cie, Registered B Shares ................................ 3,146 7,442,527 Edipresse SA ........................... 21,860 7,045,333 ---------- TOTAL SWITZERLAND ...................... 14,487,860 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 25 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO (CONCLUDED) UNITED KINGDOM--20.9% Ashtead Group PLC ........................ 4,219,000 $ 6,268,407 Euromoney Institutional Investor PLC (a) ........................ 244,676 1,240,478 FKI PLC .................................. 1,045,654 4,137,989 Kidde PLC (a) ............................ 6,751,700 7,749,361 Luminar PLC .............................. 535,100 6,608,908 Man Group PLC ............................ 713,527 9,621,535 Northgate PLC ............................ 843,400 5,261,778 Reckitt Benckiser PLC .................... 600,608 8,669,821 Signet Group PLC ADR ..................... 345,012 13,006,952 SSL International PLC .................... 942,023 6,633,255 ----------- TOTAL UNITED KINGDOM ..................... 69,198,484 ----------- TOTAL COMMON STOCKS (Identified cost $302,434,107)............ 314,442,775 ----------- PRINCIPAL AMOUNT (000) ---------- REPURCHASE AGREEMENT--4.3% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $13,460,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $14,368,550) (Identified cost $14,085,000).............. $14,085 $ 14,085,000 ------------ TOTAL INVESTMENTS (Identified cost $316,519,107) (b) ......... 99.3% $328,527,775 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................. 0.7 2,349,803 ------- ------------ NET ASSETS .................................. 100.0% $330,877,578 ======= ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 26 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO COMMON STOCKS--81.6% ARGENTINA--0.7% Grupo Financiero Galicia SA ADR .......... 171,400 $2,523,008 ---------- BRAZIL--1.2% Petroleo Brasileiro SA ADR ............... 168,400 4,378,400 ---------- CHILE--2.0% Administradora de Fondos de Pensiones Provida SA ADR ................ 296,000 7,104,000 ---------- EGYPT--1.0% Commercial International Bank ............ 405,200 3,566,550 ---------- GREECE--0.9% Cosmote Mobile Communications SA (a) .................................. 361,500 3,247,343 ---------- HONG KONG--5.6% China Mobile (Hong Kong), Ltd. ADR (a) ................................. 384,200 10,292,718 CNOOC, Ltd. ADR (a) ...................... 290,100 5,497,395 Yue Yuen Industrial (Holdings), Ltd. ..... 1,931,300 3,837,938 ---------- TOTAL HONG KONG .......................... 19,628,051 ---------- HUNGARY--2.2% Gedeon Richter Rt. ....................... 97,800 5,446,291 Magyar Tavkozlesi Rt. ADR ................ 145,300 2,172,235 ---------- TOTAL HUNGARY ............................ 7,618,526 ---------- INDIA--7.6% Hindalco Industries, Ltd. ................ 161,400 2,862,929 Hindustan Lever, Ltd. .................... 617,900 2,697,401 Infosys Technologies, Ltd. ............... 26,400 2,110,962 ITC, Ltd. ................................ 148,400 2,381,687 Larsen & Toubro, Ltd. .................... 881,100 4,116,108 Reliance Industries, Ltd. ................ 661,800 5,198,450 State Bank of India ...................... 1,583,500 7,415,924 ---------- TOTAL INDIA .............................. 26,783,461 ---------- INDONESIA--2.1% PT Hanjaya Mandala Sampoerna Tbk 3,870,500 5,454,041 PT Telekomunikasi Indonesia ADR .......... 338,300 1,880,948 ---------- TOTAL INDONESIA .......................... 7,334,989 ---------- ISRAEL--2.2% Bank Hapoalim, Ltd. ...................... 1,844,300 4,520,083 Check Point Software Technologies, Ltd. (a) ................................ 27,849 1,408,324 Teva Pharmaceutical Industries, Ltd. ADR ..................................... 28,900 1,800,470 ---------- TOTAL ISRAEL ............................. 7,728,877 ---------- MEXICO--16.5% Carso Global Telecom, Series A1 (a) ...... 2,959,100 $7,107,722 Cemex SA de CV ADR ....................... 216,185 5,728,902 Fomento Economico Mexicano SA de CV ADR ............................... 180,200 7,714,362 Grupo Financiero Banamex Accival SA de CV, Series O ...................... 4,399,700 11,394,033 Grupo Financiero Banorte SA de CV, Series O (a) ............................ 2,062,300 4,327,300 Grupo Iusacell SA de CV, Series V ADR (a) ................................. 340,200 2,350,782 Grupo Televisa SA ADR (a) ................ 123,900 4,957,239 Kimberly-Clark de Mexico SA de CV, Series A ................................ 801,100 2,371,893 Telefonos de Mexico SA de CV, Series L ADR ............................ 115,600 4,056,404 Tubos de Acero de Mexico SA ADR .......... 268,000 3,390,200 Wal-Mart de Mexico SA de CV, Series C ................................ 2,013,900 4,935,223 ---------- TOTAL MEXICO ............................. 58,334,060 ---------- PERU--0.7% Credicorp, Ltd. .......................... 293,300 2,449,055 ---------- PHILIPPINES--1.5% Philippine Long Distance Telephone Co. ADR ................................. 367,400 5,161,970 ---------- RUSSIA--3.9% LUKOIL ADR ............................... 146,200 7,012,512 Mobile Telesystems ADR (a) ............... 247,700 6,786,980 ---------- TOTAL RUSSIA ............................. 13,799,492 ---------- SOUTH AFRICA--10.9% ABSA Group, Ltd. ......................... 1,132,423 5,323,572 Anglo American Platinum Corp., Ltd. 54,000 2,407,780 Iscor, Ltd. (a) .......................... 1,692,700 6,096,865 Old Mutual PLC ........................... 2,178,300 5,000,351 Sanlam, Ltd. ............................. 4,065,500 5,554,376 Sappi, Ltd. .............................. 332,900 2,931,492 Sasol, Ltd. .............................. 476,900 4,359,470 South African Breweries PLC .............. 770,500 5,837,556 South African Breweries PLC (U.K.) ....... 130,600 998,707 ---------- TOTAL SOUTH AFRICA ....................... 38,510,169 ---------- SOUTH KOREA--12.7% Hynix Semiconductor, Inc. GDR (a), (c) ............................ 347,980 3,740,785 Kookmin Bank ............................. 499,853 6,706,986 Korea Electric Power Corp. ............... 254,900 4,743,237 Korea Telecom Corp. ...................... 9,100 363,860 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 27 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO (CONCLUDED) Korea Telecom Corp. ADR ..................... 245,236 $ 5,390,287 Pohang Iron & Steel Co., Ltd. ............... 37,900 3,030,834 Pohang Iron & Steel Co., Ltd. ADR ........... 120,800 2,382,176 Samsung Electronics Co., Ltd. ............... 64,681 9,549,213 Samsung Fire & Marine Insurance ............. 79,438 2,537,985 SK Telecom Co., Ltd. ........................ 44,430 6,542,365 ----------- TOTAL SOUTH KOREA ........................... 44,987,728 ----------- TAIWAN--7.5% China Steel Corp. GDR ....................... 314,244 3,142,440 Compal Electronics, Inc. GDR ................ 325,105 1,771,822 Far Eastern Textile, Ltd. ................... 520 290 Fubon Insurance Co. ......................... 8,770,000 7,259,512 Taiwan Cellular Corp. (a) ................... 2,649,095 3,454,672 Taiwan Semiconductor Manufacturing Co., Ltd. (a) ................ 2,875,600 5,345,292 United Microelectronics Corp. ADR (a) .................................... 479,800 4,270,220 Via Technologies, Inc. (a) .................. 194,000 1,341,040 ----------- TOTAL TAIWAN ................................ 26,585,288 ----------- TURKEY--1.8% Turkcell Iletisim Hizmetleri AS ADR (a) .................................... 618,641 1,732,195 Turkiye Garanti Bankasi AS (a), (c) ......... 352,400 1,744,380 Yapi ve Kredi Bankasi AS (a) ................ 913,979,367 2,847,060 ----------- TOTAL TURKEY ................................ 6,323,635 ----------- VENEZUELA--0.6% Compania Anonima Nacional Telefonos de Venezuela ADR ................. 94,200 2,208,048 ----------- TOTAL COMMON STOCKS (Identified cost $304,122,524)............... 288,272,650 ----------- PREFERRED STOCKS--13.2% BRAZIL--13.2% Banco Bradesco SA ........................... 829,571,208 $4,353,854 Banco Itau SA ............................... 89,750,400 7,863,622 Companhia Brasileira de Distri- buicao Grupo Pao de Acucar ADR ............. 213,600 4,957,656 Companhia de Bebidas das Americas 40,167,700 9,408,179 Companhia Paranaense de Energia-Copel .............................. 208,499,000 1,564,534 Companhia Paranaense de Energia-Copel ADR .......................... 858,100 6,444,331 Embratel Participacoes SA ADR ............... 491,400 3,675,672 Tele Norte Leste Participacoes SA ADR ........................................ 347,283 5,299,539 Telesp Celular Participacoes SA ADR 191,500 2,901,225 ---------- TOTAL BRAZIL ................................ 46,468,612 ---------- TOTAL PREFERRED STOCKS (Identified cost $51,501,159)................ 46,468,612 ---------- PRINCIPAL AMOUNT (000) --------- REPURCHASE AGREEMENT--4.0% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $13,475,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $14,384,563) (Identified cost $14,101,000)................... $14,101 14,101,000 ---------- TOTAL INVESTMENTS (Identified cost $369,724,683) (b) .............. 98.8% $348,842,262 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................................. 1.2 4,328,432 ------- ------------ NET ASSETS ....................................... 100.0% $353,170,694 ======= ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 28 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO COMMON STOCKS--88.0% DENMARK--2.2% Den Danske Bank ADR ..................... 410 $ 7,367 -------- FINLAND--1.9% Nokia Oyj ADR ........................... 295 6,502 -------- FRANCE--17.0% Alcatel SA ADR .......................... 455 9,437 Aventis SA ADR .......................... 130 10,385 Axa ADR ................................. 365 10,282 Societe Generale ADR .................... 775 9,179 TotalFinaElf SA ADR ..................... 130 9,126 Vivendi Universal SA ADR ................ 170 9,860 -------- TOTAL FRANCE ............................ 58,269 -------- GERMANY--5.4% Deutsche Bank AG ADR .................... 125 8,931 Siemens AG ADR .......................... 155 9,593 -------- TOTAL GERMANY ........................... 18,524 -------- ITALY--3.0% ENI SpA ADR ............................. 165 10,180 -------- JAPAN--8.3% Canon, Inc. ADR ......................... 165 6,798 Kao Corp. ADR ........................... 24 5,966 Nintendo Co., Ltd. ADR .................. 270 6,142 Sony Corp. ADR .......................... 145 9,541 -------- TOTAL JAPAN ............................. 28,447 -------- NETHERLANDS--12.8% ABN AMRO Holding NV ADR ................. 500 9,465 Aegon NV American Registered Shares ..... 340 9,656 Heineken NV ADR ......................... 160 6,452 ING Groep NV ADR ........................ 145 9,551 Royal Dutch Petroleum Co. NY Shares ..... 150 8,740 -------- TOTAL NETHERLANDS ....................... 43,864 -------- SPAIN--2.7% Endesa SA ADR ........................... 580 $ 9,210 -------- SWEDEN--2.1% Electrolux AB, Series B ADR ............. 260 7,205 -------- SWITZERLAND--8.6% Nestle SA ADR ........................... 180 9,564 Novartis AG ADR ......................... 275 9,942 Zurich Financial Services AG ADR ........ 295 10,061 -------- TOTAL SWITZERLAND ....................... 29,567 -------- UNITED KINGDOM--24.0% AstraZeneca PLC ADR ..................... 190 8,883 BP PLC ADR .............................. 180 8,973 British Telecommunications PLC ADR ...... 160 10,344 Cadbury Schweppes PLC ADR ............... 365 9,928 Diageo PLC ADR .......................... 220 9,669 GlaxoSmithKline PLC ADR ................. 175 9,835 HSBC Holdings PLC ADR ................... 100 5,990 Marconi PLC ADR ......................... 1,200 8,976 Unilever PLC ADR ........................ 275 9,487 -------- TOTAL UNITED KINGDOM .................... 82,085 -------- TOTAL COMMON STOCKS (Identified cost $311,724)............... 301,220 -------- TOTAL INVESTMENTS (Identified cost $311,724) (b) .......... 88.0% $301,220 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................. 12.0 41,215 ----- -------- NET ASSETS ............................... 100.0% $342,435 ===== ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 29 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE ------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO ASSET-BACKED SECURITIES--12.3% Associates Automobile Receivables Trust, Series 2000-1, Class M, 7.51%, 05/15/05 ......................... $ 400 $ 416,257 Chevy Chase Auto Receivables Trust, Series 2001-1, Class A4, 5.41%, 08/15/06 ......................... 390 387,941 CIT Equipment Collateral Trust, Series 2001-1, Class A3, 5.23%, 10/20/04 ......................... 680 686,018 Citibank Credit Card Master Trust I, Series 1999-1, Class B, 5.75%, 02/15/06 ......................... 1,145 1,150,725 Comed Transitional Funding Trust, Series 1998-1, Class A6, 5.63%, 06/25/09 ......................... 355 350,445 Connecticut RRB Special Purpose Trust, Series 2001-1, Class A3, 5.73%, 03/30/09 ......................... 380 377,172 First USA Credit Card Master Trust, Series 1998-1, Class C, 6.50%, 01/18/06 (c) ..................... 400 407,316 Ford Credit Auto Owner Trust, Series 2000-G, Class B, 6.92%, 04/15/05 ......................... 690 713,854 Illinois Power Special Purpose Trust, Series 1998-1, Class A7, 5.65%, 12/25/10 ......................... 335 324,424 MBNA Master Credit Card Trust, Series 1998-J, Class A, 5.25%, 02/15/06 ......................... 1,204 1,210,766 Sears Credit Account Master Trust, Series 2000-1, Class A, 7.25%, 11/15/07 ......................... 590 616,049 --------- TOTAL ASSET-BACKED SECURITIES (Identified cost $6,509,970).............. 6,640,967 --------- COLLATERALIZED MORTGAGE OBLIGATIONS--4.5% Asset Securitization Corp.: Series 1996-D2, Class ACS2, 1.4848%, 02/14/29 (d), (i) .............. 2,125 123,526 Series 1996-D3, Class A1A, 7.01%, 10/13/26 ......................... 22 23,214 Merrill Lynch Mortgage Investors, Inc.: Series 1996-C1, Class IO, 1.0624%, 04/25/28 (c), (d), (i) ......... 3,138 72,685 Series 1998-C3, Class A1, 5.65%, 12/15/30 ......................... 817 813,801 Morgan Stanley Capital I, Inc.: Series 1996-WF1, Class X, 1.3732%, 11/15/28 (c), (d), (i) ......... 2,384 109,680 Series 1999-Life, Class A1, 6.97%, 04/15/33 ......................... 1,214 1,250,084 Prudential Home Mortgage Securities, Series 1993-41, Class A5, 0.1148%, 10/25/10 (d), (i) .............. 152 0 Structured Asset Securities Corp.: Series 1996-CFL, Class X2, 1.0235%, 02/25/28 (d), (i) .............. 500 6,886 Series 1996-CFL, Class X1, 1.6002%, 02/25/28 (d), (i) .............. 982 58,947 --------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Identified cost $2,611,072).............. 2,458,823 --------- CORPORATE BONDS--51.9% AUTOMOTIVE & EQUIPMENT RENTAL--0.8% Dura Operating Corp., 9.00%, 05/01/09 (c) ..................... 95 89,300 Renters Choice, Inc., 11.00%, 08/15/08 ........................ 100 102,250 United Rentals, Inc., Series B, 9.25%, 01/15/09 ......................... 150 140,250 Williams Scotsman, Inc., 9.875%, 06/01/07 ........................ 80 76,000 --------- 407,800 --------- BANKING & FINANCIAL SERVICES--15.5% AT&T Capital Corp., 6.60%, 05/15/05 ......................... 902 916,838 Bank of America Corp., 5.875%, 02/15/09 ........................ 900 856,782 Bank One Corp., 6.50%, 02/01/06 ......................... 500 506,950 Countrywide Home Loan, Inc., 6.85%, 06/15/04 ......................... 550 567,166 FleetBoston Financial Corp., 7.25%, 09/15/05 ......................... 520 544,606 Ford Motor Credit Co., 7.50%, 03/15/05 ......................... 645 670,181 General Motors Acceptance Corp., 7.50%, 07/15/05 ......................... 600 627,352 Household Finance Corp., 8.00%, 07/15/10 ......................... 500 537,725 MBNA America Bank NA, 6.75%, 03/15/08 ......................... 429 413,093 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE ---------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONTINUED) Morgan Stanley Dean Witter & Co., 6.10%, 04/15/06 ...................... $ 560 $ 559,520 National Rural Utilities Cooperative Finance Corp., 7.30%, 09/15/06 ...................... 510 536,948 Paine Webber Group, Inc., 6.55%, 04/15/08 ...................... 520 526,245 Salomon Smith Barney Holdings, 6.25%, 01/15/05 ...................... 630 634,630 Washington Mutual, Inc., 7.50%, 08/15/06 ...................... 470 495,427 --------- 8,393,463 --------- BREWERY--1.5% Anheuser-Busch Cos. Inc., 7.10%, 06/15/07 ...................... 799 827,668 --------- BROADCASTING--0.3% Echostar Broadband Corp., 10.375%, 10/01/07 .................... 75 75,000 Sinclair Broadcast Group, Inc., 8.75%, 12/15/07 ...................... 75 71,438 --------- 146,438 --------- BUILDING & CONSTRUCTION--0.7% Atrium Cos. Inc., Series B, 10.50%, 05/01/09 ..................... 90 80,100 Beazer Homes USA, Inc., 8.625%, 05/15/11 ..................... 65 64,837 Building One Services Corp., 10.50%, 05/01/09 ..................... 135 129,600 Nortek, Inc., 9.875%, 06/15/11 (c) ................. 15 14,438 Penhall International Corp., 12.00%, 08/01/06 ..................... 90 88,200 --------- 377,175 --------- CABLE TELEVISION--0.6% Adelphia Communications Corp., 10.875%, 10/01/10 .................... 55 55,687 Charter Communications Holdings LLC: 0.00%, 01/15/10 (f) .................. 100 67,000 8.625%, 04/01/09 ..................... 50 47,000 International CableTel, Inc., Series B, 11.50%, 02/01/06 (f) ................. 55 37,125 LodgeNet Entertainment Corp., 10.25%, 12/15/06 ..................... 110 111,100 --------- 317,912 --------- CHEMICALS--0.3% ARCO Chemical Co., 9.80%, 02/01/20 ...................... 180 183,557 --------- COMMERCIAL SERVICES--1.4% Computer Sciences Corp., 6.75%, 06/15/06 ...................... 570 564,631 IT Group, Inc., Series B, 11.25%, 04/01/09 ..................... 145 136,300 Key3Media Group, Inc., 11.25%, 06/15/11 ..................... 55 53,900 --------- 754,831 --------- CONSUMER GOODS--0.0% Royster-Clark, Inc., 10.25%, 04/01/09 ..................... 30 23,850 --------- CONTAINERS--0.3% Silgan Holdings, Inc., 9.00%, 06/01/09 ...................... 85 84,150 U.S. Can Corp., Series B, 12.375%, 10/01/10 .................... 75 75,375 --------- 159,525 --------- ENERGY--2.3% Calpine Canada Energy Finance, 8.50%, 05/01/08 ...................... 25 24,374 Dynegy Holdings, Inc., 7.45%, 07/15/06 ...................... 682 704,100 Midamerican Energy Co., 6.375%, 06/15/06 ..................... 454 449,755 Orion Power Holdings, Inc., 12.00%, 05/01/10 (c) ................. 70 77,700 --------- 1,255,929 --------- FIBER OPTICS--0.0% Metromedia Fiber Network, Inc., Series B, 10.00%, 11/15/08 ..................... 25 9,625 --------- FOOD & BEVERAGES--2.0% Agrilink Foods, Inc., 11.875%, 11/01/08 .................... 45 41,400 ConAgra Foods, Inc., 7.875%, 09/15/10 ..................... 450 472,885 Michael Foods, Inc., 11.75%, 04/01/11 (c) ................. 80 82,000 Nabisco, Inc., 7.05%, 07/15/07 ...................... 500 508,665 --------- 1,104,950 --------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 31 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONTINUED) HEALTHCARE--0.7% Dynacare, Inc., 10.75%, 01/15/06 ............... $ 115 $ 116,725 Fresenius Medical Capital Trust: 7.875%, 02/01/08 ............... 87 86,347 9.00%, 12/01/06 ................ 75 77,250 HEALTHSOUTH Corp., 10.75%, 10/01/08 ............... 70 75,950 --------- 356,272 --------- INDUSTRIAL & MACHINERY--2.3% Unilever Capital Corp., 7.125%, 11/01/10 ............... 560 582,565 URS Corp., Series B, 12.25%, 05/01/09 ............... 85 86,912 USX Corp., 6.65%, 02/01/06 ................ 570 579,107 --------- 1,248,584 --------- INSURANCE--0.8% American Financial Group, 7.125%, 04/15/09 ............... 459 430,978 --------- LODGING & ENTERTAINMENT--0.8% Ameristar Casinos, Inc., 10.75%, 02/15/09 (c) ........... 120 125,400 John Q. Hammons Hotels, Inc., 8.875%, 02/15/04 ............... 95 94,050 Mandalay Resort Group, Series B, 10.25%, 08/01/07 ............... 75 78,563 MGM Grand, Inc., 9.75%, 06/01/07 ................ 125 133,437 --------- 431,450 --------- MANUFACTURING--1.1% Tyco International Group SA, 6.75%, 02/15/11 ................ 590 585,068 --------- MULTIMEDIA--1.4% AOL Time Warner, Inc., 6.125%, 04/15/06 ............... 630 628,230 Nextmedia Operating, Inc., 10.75%, 07/01/11 (c) ........... 25 25,000 PRIMEDIA, Inc., 7.625%, 04/01/08 ............... 90 81,000 --------- 734,230 --------- OIL & GAS--3.5% Chesapeake Energy Corp., 8.125%, 04/01/11 (c) ........... 90 84,150 Comstock Resources, Inc., 11.25%, 05/01/07 ............... 60 63,450 KeySpan Corp., 7.25%, 11/15/05 ................ 480 502,411 Lomak Petroleum Corp., 8.75%, 01/15/07 ................ 85 81,600 ONEOK, Inc., 7.75%, 08/15/06 ................ 436 459,858 Plains Resources, Inc., Series F, 10.25%, 03/15/06 ............... 40 41,500 Texaco Capital, Inc., 6.00%, 06/15/05 ................ 637 645,122 --------- 1,878,091 --------- PAPER PRODUCTS--0.1% Caraustar Industries, Inc., 9.875%, 04/01/11 (c) ........... 35 32,200 --------- PHOTOGRAPHY--1.0% Eastman Kodak Co., 6.375%, 06/15/06 ............... 550 543,400 --------- PRINTING--0.4% Phoenix Color Corp., 10.375%, 02/01/09 .............. 155 125,550 Quebecor Media, Inc., 11.125%, 07/15/11 (c) .......... 30 29,738 Transwestern Publishing Co., 9.625%, 11/15/07 (c) ........... 70 70,525 --------- 225,813 --------- RETAIL--0.1% Petro Stopping Centers, 10.50%, 02/01/07 ............... 80 62,000 --------- TELECOMMUNICATIONS--3.8% American Cellular Corp., 9.50%, 10/15/09 (c) ............ 90 84,600 American Tower Corp., 9.375%, 02/01/09 (c) ........... 60 55,950 Cox Communications, Inc., 6.15%, 08/01/03 (d) ............ 988 994,780 Global Crossing Holdings, Ltd., 9.50%, 11/15/09 ................ 35 27,387 Nextel Communications, Inc., 9.375%, 11/15/09 ............... 135 106,650 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 32 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONTINUED) Spectrasite Holdings, Inc.: 0.00%, 04/15/09 (f) ................. $ 35 $ 16,100 Series B, 0.00%, 03/15/10 (f) ................. 25 10,500 US West Communications, Inc., 5.625%, 11/15/08 .................... 836 766,071 ---------- 2,062,038 ---------- TELEPHONE--2.9% GTE Corp., 9.10%, 06/01/03 ..................... 395 424,593 Sprint Capital Corp., 7.125%, 01/30/06 .................... 500 503,435 WorldCom, Inc., 7.75%, 04/01/07 ..................... 600 613,584 XO Communications, Inc., 10.75%, 11/15/08 .................... 20 6,400 ---------- 1,548,012 ---------- TRANSPORTATION--1.4% CSX Corp., 6.75%, 03/15/11 ..................... 510 499,923 Interpool, Inc.: 6.625%, 03/01/03 .................... 70 68,014 7.35%, 08/01/07 ..................... 55 48,400 North American Van Lines, Inc., 13.375%, 12/01/09 (c) ............... 125 115,000 ---------- 731,337 ---------- UTILITIES--5.7% AES Corp., 9.375%, 09/15/10 .................... 135 136,350 American Electric Power, Inc., Series A, 6.125%, 05/15/06 .................... 430 423,408 Dominion Resources, Inc., Series B, 7.625%, 07/15/05 .................... 545 569,937 Progress Energy, Inc., 6.75%, 03/01/06 ..................... 485 493,725 Texas Utilities Co., Series B, 6.375%, 10/01/04 .................... 821 827,256 Wisconsin Energy Corp., 5.875%, 04/01/06 .................... 650 645,819 ---------- 3,096,495 ---------- WASTE MANAGEMENT--0.2% Allied Waste North America, Inc., Series B, 10.00%, 08/01/09 .................... 120 123,300 ---------- TOTAL CORPORATE BONDS (Identified cost $27,904,837)......... 28,051,991 ---------- MORTGAGE PASS-THROUGH SECURITIES--3.2% Federal Home Loan Mortgage Corp.: Pool#W10002, 6.775%, 11/01/03 .................... 719 742,582 Pool#410425, 8.309%, 09/01/26 (d) ................ 29 29,998 Federal National Mortgage Association: Pool#342042, 7.705%, 06/01/25 (d) ................ 51 51,639 Pool#303824, 7.999%, 07/01/25 (d) ................ 69 70,451 Government National Mortgage Association: Pool#80208, 7.375%, 06/20/28 (d) ................ 487 494,567 Pool#80120, 7.625%, 10/20/27 (d) ................ 260 266,490 Pool#80093, 7.75%, 07/20/27 (d) ................. 58 59,657 ---------- TOTAL MORTGAGE PASS-THROUGH SECURITIES (Identified cost $1,494,609).......... 1,715,384 ---------- U.S. GOVERNMENT SECURITIES--9.7% Federal Home Loan Mortgage Corp., 5.25%, 02/15/04 ..................... 500 503,985 Federal National Mortgage Association: 6.00%, 12/15/05 ..................... 750 764,880 6.625%, 09/15/09 .................... 1,150 1,190,066 6.625%, 11/15/10 .................... 570 588,878 7.125%, 02/15/05 .................... 2,055 2,177,334 Resolution Funding Corp. STRIP Principal, 0.00%, 01/15/21 (l) ................. 29 8,383 ---------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $5,164,242).......... 5,233,526 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONCLUDED) U.S. TREASURY SECURITIES--15.7% United States Treasury Notes: 5.75%, 04/30/03 ...................... $ 2,150 $ 2,205,427 5.75%, 11/15/05 ...................... 2,350 2,406,893 6.00%, 08/15/09 ...................... 2,955 3,100,888 7.50%, 02/15/05 ...................... 660 718,265 United States Treasury STRIP Principal, 0.00%, 11/15/09 (l) .................. 39 24,346 ----------- TOTAL U.S. TREASURY SECURITIES (Identified cost $8,530,870)........... 8,455,819 ----------- REPURCHASE AGREEMENT--1.4% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collaterized by $165,000 United States Treasury Note, 6.625%, 05/15/07, with a value of $178,609, and $590,000 United States Treasury Bill, 3.38%, 12/20/01, with a value of $579,970) (Identified cost $738,000)............ 738 738,000 ----------- TOTAL INVESTMENTS (Identified cost $52,953,600) (b)...... 98.7% $53,294,510 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................ 1.3 718,997 ----- ----------- NET ASSETS ............................. 100.0% $54,013,507 ===== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 34 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD HIGH YIELD PORTFOLIO CORPORATE BONDS--85.6% AEROSPACE & DEFENSE--1.6% Sabreliner Corp., 11.00%, 06/15/08 (c) ................. $ 1,465 $1,100,581 ---------- AUTOMOTIVE & EQUIPMENT RENTAL--6.4% LDM Technologies, Inc., Series B, 10.75%, 01/15/07 ..................... 840 520,800 National Equipment Services, Inc.: Series B, 10.00%, 11/30/04 ..................... 545 425,100 Series D, 10.00%, 11/30/04 ..................... 545 425,100 Renters Choice, Inc., 11.00%, 08/15/08 ..................... 440 449,900 United Rentals, Inc., Series B: 9.00%, 04/01/09 ...................... 690 638,250 9.25%, 01/15/09 ...................... 1,020 953,700 Williams Scotsman, Inc., 9.875%, 06/01/07 ..................... 925 878,750 ---------- 4,291,600 ---------- BROADCASTING--3.0% Echostar Broadband Corp., 10.375%, 10/01/07 .................... 425 425,000 Emmis Escrow Corp., 0.00%, 03/15/11 (c), (f) ............. 1,675 946,375 Sinclair Broadcast Group, Inc., 8.75%, 12/15/07 ...................... 300 285,750 United International Holding, Inc., Series B, 0.00%, 02/15/08 (f) .................. 1,075 360,125 ---------- 2,017,250 ---------- BUILDING & CONSTRUCTION--6.6% Ainsworth Lumber Co. Ltd., 12.50%, 07/15/07 ..................... 655 602,600 Atrium Cos. Inc., Series B, 10.50%, 05/01/09 ..................... 1,305 1,161,450 Building Materials Corp., Series B, 7.75%, 07/15/05 ...................... 920 561,200 Building One Services Corp., 10.50%, 05/01/09 ..................... 570 547,200 Nortek, Inc., 9.875%, 06/15/11 (c) ................. 690 664,125 Penhall International Corp., 12.00%, 08/01/06 ..................... 890 872,200 ---------- 4,408,775 ---------- CABLE TELEVISION--7.4% Charter Communications Holdings LLC, 0.00%, 01/15/10 (f) .................. 1,605 1,075,350 Diamond Cable Communications PLC, 11.75%, 12/15/05 (f) ................. 135 89,100 Golden Sky DBS, Inc., Series B, 0.00%, 03/01/07 (f) .................. 820 500,200 International CableTel, Inc., Series B, 11.50%, 02/01/06 (f) ................. 610 411,750 LodgeNet Entertainment Corp., 10.25%, 12/15/06 ..................... 985 994,850 Northland Cable Television, 10.25%, 11/15/07 ..................... 555 388,500 Ono Finance PLC: 13.00%, 05/01/09 ..................... 1,060 795,000 14.00%, 02/15/11 (c) ................. 470 399,500 United Pan-Europe Communications NV, Series B: 0.00%, 08/01/09 (f) .................. 1,060 233,200 0.00%, 02/01/10 (f) .................. 400 88,000 ---------- 4,975,450 ---------- CHEMICALS--3.8% ARCO Chemical Co., 9.80%, 02/01/20 ...................... 735 749,526 Huntsman Corp., 9.50%, 07/01/07 (c) .................. 1,640 902,000 Lyondell Chemical Co., 10.875%, 05/01/09 .................... 220 216,150 PMD Group, Inc., 11.00%, 02/28/11 (c) ................. 665 674,975 ---------- 2,542,651 ---------- COMMERCIAL SERVICES--4.4% Integrated Electrical Services, Inc., 9.375%, 02/01/09 (c) ................. 545 534,100 IT Group, Inc., Series B, 11.25%, 04/01/09 ..................... 1,700 1,598,000 Key3Media Group, Inc., 11.25%, 06/15/11 ..................... 840 823,200 ---------- 2,955,300 ---------- COMPUTER SERVICES--0.1% Concentric Network Corp., 12.75%, 12/15/07 ..................... 250 76,250 ---------- CONSUMER GOODS--0.5% Royster-Clark, Inc., 10.25%, 04/01/09 ..................... 390 310,050 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD HIGH YIELD PORTFOLIO (CONTINUED) CONTAINERS--1.0% U.S. Can Corp., Series B, 12.375%, 10/01/10 ............... $ 635 $ 638,175 --------- FIBER OPTICS--0.4% Metromedia Fiber Network, Inc., Series B, 10.00%, 11/15/08 ................ 670 257,950 --------- FOOD & BEVERAGES--2.5% Agrilink Foods, Inc., 11.875%, 11/01/08 ............... 705 648,600 Michael Foods, Inc., 11.75%, 04/01/11 (c) ............ 760 779,000 Travelcenters of America, Inc., 12.75%, 05/01/09 ................ 270 277,763 --------- 1,705,363 --------- FUNERAL SERVICES--2.9% Rose Hills Co., 9.50%, 11/15/04 ................. 1,350 1,064,812 Stewart Enterprises, Inc., 10.75%, 07/01/08 (c) ............ 820 844,600 --------- 1,909,412 --------- HEALTHCARE--5.9% Alliance Imaging, Inc., 10.375%, 04/15/11 (c) ........... 1,000 1,025,000 Dynacare, Inc., 10.75%, 01/15/06 ................ 995 1,009,925 Fresenius Medical Capital Trust, 7.875%, 02/01/08 ................ 655 650,087 Icon Health & Fitness, Inc., 12.00%, 09/27/05 (c) ............ 1,370 1,233,000 --------- 3,918,012 --------- INDUSTRIAL & MACHINERY--4.8% GSI Group, Inc., 10.25%, 11/01/07 ................ 995 756,200 Interpool Capital Trust, Series B, 9.875%, 02/15/27 ................ 1,600 1,168,000 URS Corp., Series B, 12.25%, 05/01/09 ................ 1,270 1,298,575 --------- 3,222,775 --------- LODGING & ENTERTAINMENT--2.1% Ameristar Casinos, Inc., 10.75%, 02/15/09 (c) ............ 565 590,425 John Q. Hammons Hotels, Inc., 8.875%, 02/15/04 ................ 545 539,550 Mandalay Resort Group, Series B, 10.25%, 08/01/07 ................ 255 267,113 --------- 1,397,088 --------- MANUFACTURING--2.2% Foamex L.P., 13.50%, 08/15/05 ................ 475 375,250 Venture Holdings Trust, Series B, 9.50%, 07/01/05 ................. 1,400 1,092,000 --------- 1,467,250 --------- METALS--0.6% Metals USA, Inc., 8.625%, 02/15/08 ................ 545 370,600 --------- MULTIMEDIA--1.5% Nextmedia Operating, Inc., 10.75%, 07/01/11 (c) ............ 1,015 1,015,000 --------- OIL & GAS--4.9% Chesapeake Energy Corp., 8.125%, 04/01/11 (c) ............ 440 411,400 Comstock Resources, Inc., 11.25%, 05/01/07 ................ 755 798,412 El Paso Energy Partners, 8.50%, 06/01/11 (c) ............. 555 555,000 Lomak Petroleum Corp., 8.75%, 01/15/07 ................. 1,270 1,219,200 Plains Resources, Inc., Series F, 10.25%, 03/15/06 ................ 300 311,250 --------- 3,295,262 --------- PAPER PRODUCTS--1.0% Caraustar Industries, Inc., 9.875%, 04/01/11 (c) ............ 750 690,000 --------- PRINTING--3.4% Phoenix Color Corp., 10.375%, 02/01/09 ............... 1,345 1,089,450 Quebecor Media, Inc., 11.125%, 07/15/11 (c) ........... 1,195 1,184,544 --------- 2,273,994 --------- PUBLISHING--1.2% Canwest Media, Inc., 10.625%, 05/15/11 (c) ........... 825 837,375 --------- REAL ESTATE--1.9% Blum CB Corp., 11.25%, 06/15/11 (c) ............ 1,290 1,267,425 --------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 36 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE ----------------------------------------------------------------------------- LAZARD HIGH YIELD PORTFOLIO (CONTINUED) RETAIL--0.2% Petro Stopping Centers, 10.50%, 02/01/07 ....................... $ 205 $ 158,875 ---------- TELECOMMUNICATIONS--10.1% American Tower Corp., 9.375%, 02/01/09 (c) ................... 1,040 969,800 COLT Telecom Group PLC, 0.00%, 12/15/06 (f) .................... 375 330,000 Global Crossing Holdings, Ltd., 9.50%, 11/15/09 ........................ 260 203,450 GT Group Telecom, Inc., 0.00%, 02/01/10 (f) .................... 1,160 365,400 Horizon PCS, Inc., 0.00%, 10/01/10 (f) .................... 1,730 674,700 Hyperion Telecommunications, Inc.: 12.00%, 11/01/07 ....................... 1,525 701,500 Series B, 12.25%, 09/01/04 ....................... 420 350,700 IPCS, Inc., 0.00%, 07/15/10 (f) .................... 2,150 881,500 McCaw International, Ltd., 0.00%, 04/15/07 (f) .................... 860 283,800 Nextel Communications, Inc., 12.00%, 11/01/08 ....................... 500 445,000 Nextel International, Inc.: 0.00%, 04/15/08 (f) .................... 260 54,600 12.75%, 08/01/10 ....................... 670 207,700 Spectrasite Holdings, Inc.: 0.00%, 04/15/09 (f) .................... 830 381,800 Series B, 0.00%, 03/15/10 (f) .................... 430 180,600 Ubiquitel Operating Co., 0.00%, 04/15/10 (f) .................... 1,759 694,805 ---------- 6,725,355 ---------- TELEPHONE--0.6% XO Communications, Inc., 10.75%, 11/15/08 ....................... 1,285 411,200 ---------- TRANSPORTATION--3.4% North American Van Lines, Inc., 13.375%, 12/01/09 (c) .................. 940 864,800 Railamerica Transportation Corp., 12.875%, 08/15/10 ...................... 1,360 1,404,200 ---------- 2,269,000 ---------- WASTE MANAGEMENT--1.2% Allied Waste North America, Inc., Series B, 10.00%, 08/01/09 ....................... 795 816,863 ---------- TOTAL CORPORATE BONDS (Identified cost $61,782,520)............ 57,324,881 ---------- CONVERTIBLE BOND--1.9% FINANCIAL SERVICES--1.9% Telewest Finance (Jersey) Ltd., 6.00%, 07/07/05 (c) (Identified cost $1,363,955)............ 1,780 1,246,000 ---------- SHARES ------ PREFERRED STOCKS--9.4% BROADCASTING--4.2% Granite Broadcasting Corp. (a) .......... 1,940 368,600 Paxson Communications Corp. (a) ......... 153 1,430,550 Sinclair Capital ........................ 10,700 1,003,125 ---------- 2,802,275 ---------- CABLE TELEVISION--2.3% Adelphia Communications Corp., Series B ............................... 15,550 1,523,900 ---------- MANUFACTURING--0.3% High Voltage Engineering Corp., Series A (a) ........................... 1,049 209,800 ---------- RESTAURANTS--0.0% American Restaurant Group, Inc., Series B (a) ........................... 5 500 ---------- TELECOMMUNICATIONS--2.5% Global Crossing Holdings, Ltd. .......... 10,400 800,800 Nextel Communications, Inc., Series E (a) ........................... 1,350 904,500 ---------- 1,705,300 ---------- TELEPHONE--0.1% XO Communications, Inc. (a) ............. 14,603 58,412 ---------- TOTAL PREFERRED STOCKS (Identified cost $8,608,454)............. 6,300,187 ---------- WARRANTS--0.3% CABLE TELEVISION--0.1% Ono Finance PLC, 05/31/09 (a), (c) ...................... 500 15,000 ---------- COMPUTER SERVICES--0.0% Verado Holdings, Inc., Series B, 04/15/08 (a), (c) ...................... 365 1,460 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD HIGH YIELD PORTFOLIO (CONCLUDED) FOOD & BEVERAGES--0.0% Travelcenters of America, Inc., 05/01/09 (a), (c) ........................ 810 $ 8,100 ----------- TELECOMMUNICATIONS--0.2% GT Group Telecom, Inc., 02/01/10 (a), (c) ........................ 1,160 34,621 Horizon PCS, Inc., 10/01/10 (a), (c) ........................ 1,730 34,600 IPCS, Inc., 07/15/10 (a), (c) ........................ 2,150 43,000 Motient Corp., 04/01/08 (a), (c) ........................ 1,345 673 Ubiquitel Operating Co., 04/15/10 (a), (c) ........................ 1,259 25,180 ----------- 138,074 ----------- TOTAL WARRANTS (Identified cost $398,933)................. 162,634 ----------- PRINCIPAL AMOUNT (000) --------- REPURCHASE AGREEMENT--3.9% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $2,485,000 United States Treasury Note, 6.625%, 05/15/07, with a value of $2,689,953) (Identified cost $2,637,000)..............$2,637 $ 2,637,000 ----------- TOTAL INVESTMENTS (Identified cost $74,790,862) (b) ......... 101.1% $67,670,702 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS .............................. (1.1) (709,874) ----- ----------- NET ASSETS ................................. 100.0% $66,960,828 ===== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 38 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO CURRENCY DENOMINATED BONDS--94.4% AUSTRALIA--0.4% Australia Government, 6.50%, 05/15/13 (e) ................ 520 $ 286,913 --------- AUSTRIA--4.4% Pfandbriefstelle Der Oesterr Landeshypobank, 1.60%, 02/15/11................. JPY 305,000 2,570,648 Republic of Austria, 4.50%, 09/28/05................. JPY 80,000 756,860 --------- TOTAL AUSTRIA ....................... 3,327,508 --------- BRAZIL--0.7% Deutsche Bank LTN Linked Notes: 15.20%, 02/08/02 (h) ............USD 226 196,066 17.18%, 08/01/01 (h) ............USD 75 67,230 17.40%, 08/01/01 (h) ............USD 70 62,993 Salomon, Inc. Linked Brazil Inflation Indexed Notes: LTN, 14.90%, 12/06/01 (c), (h) .......USD 112 101,024 NTN, 6.00%, 12/02/02 (c), (h) ........USD 95 81,892 --------- TOTAL BRAZIL ........................ 509,205 --------- CANADA--5.3% Argos Funding Trust, 5.9625%, 02/27/06 (c), (e) ......... 250 153,202 Government of Canada, 5.50%, 06/01/10 .................... 2,800 1,794,280 Molson Breweries Co., Ltd., Series A, 6.00%, 06/02/08 (e) ................ 800 509,642 North American Capital Corp., 8.25%, 11/17/03 (e) .............GBP 576 834,624 Province of Quebec, 5.125%, 01/04/09 (e) ............EUR 400 329,997 Quebec Housing Corp., Series N, 8.95%, 05/13/13 (e) ................ 391 306,344 --------- TOTAL CANADA ........................ 3,928,089 --------- CAYMAN ISLANDS--0.6% Toyo Trust Bank Finance Cayman, Ltd., 4.8275%, 03/18/07 (d) ...........USD 486 476,280 --------- COLOMBIA--0.1% Bank of America Corp. Linked Time Deposit, 11.85%, 07/09/01 (h) ............USD 59 59,277 --------- COSTA RICA--0.0% Salomon, Inc. CRC Linked Unsecured Note, 13.00%, 07/12/01 (c), (h)........USD 40 40,084 --------- DENMARK--6.6% Nykredit: 6.00%, 10/01/29 (e) ................ 11,258 1,222,420 7.00%, 10/01/32 (e) ................ 3,293 373,029 Totalkredit, 7.00%, 10/01/22 .................... 9,600 1,098,985 Unikredit Realkredit: 7.00%, 07/01/29 (e) ................ 14,718 1,680,192 7.00%, 10/01/32 (e) ................ 4,976 563,574 --------- TOTAL DENMARK ....................... 4,938,200 --------- FRANCE--4.4% Government of France: 0.00%, 04/25/23 (l) .............EUR 8,090 1,882,196 4.00%, 10/25/09 (e) .............EUR 1,820 1,422,672 --------- TOTAL FRANCE ........................ 3,304,868 --------- GERMANY--8.7% Bundesrepublik Deutschland, 0.00%, 01/04/24 (e), (l) ........EUR 8,115 1,834,977 Callahan Nordrhein Westfalen, 14.125%, 07/15/11 (c) ...........EUR 330 234,913 Core, Series 1998-1A, Class B3, 7.3377%, 01/16/06 (c), (d) ......EUR 400 175,565 DSL Bank AG, 7.25%, 08/07/07 (e) .............GBP 630 933,892 Frank Hypobank Center, 6.375%, 02/04/08 ................GBP 365 521,509 Land Hessen, 6.00%, 11/29/13 (e), (f) ........EUR 511 471,278 Landesbank Hessen-Thueringen Girozentrale, 9.00%, 09/06/04 .................GBP 230 348,411 Landesbank Schleswig-Holstein, 8.00%, 12/28/06 .................GBP 250 377,231 Landwirtschaftliche Rentenbank, 6.375%, 03/09/05 ................GBP 270 384,233 Messer Griesheim Holding AG, 10.375%, 06/01/11 (c) ...........EUR 125 109,109 Republic of Deutschland, 3.75%, 01/04/09 .................EUR 300 235,803 WestLB Finance Curacao NV: 8.125%, 01/24/07 ................GBP 310 471,211 8.50%, 06/02/03 .................GBP 250 366,845 --------- TOTAL GERMANY ....................... 6,464,977 --------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) GREECE--2.0% Republic of Hellenic: 5.75%, 03/31/08 (e) ........EUR 1,720 $1,480,935 8.90%, 04/01/03 ............EUR 0.1 88 ---------- TOTAL GREECE ................... 1,481,023 ---------- HUNGARY--0.9% Government of Hungary: 9.00%, 11/24/02 ............... 107,480 371,551 9.50%, 01/12/02 ............... 55,300 191,434 12.50%, 09/24/02 .............. 25,100 89,494 ---------- TOTAL HUNGARY .................. 652,479 ---------- ITALY--5.4% Films PLC, 5.5488%, 03/31/05 (d) ......... 1,280,000 280,111 Republic of Italy, 1.80%, 02/23/10.............JPY 432,000 3,739,428 ---------- TOTAL ITALY .................... 4,019,539 ---------- JAPAN--2.4% Export-Import Bank of Japan, 4.375%, 10/01/03 (e) .......... 94,000 825,996 Spires, Ltd., 2.48%, 01/23/02 ............... 117,989 950,837 ---------- TOTAL JAPAN .................... 1,776,833 ---------- LUXEMBOURG--0.6% Ispat Europe Group SA, 11.875%, 02/01/11 ..........EUR 30 24,661 PTC International Finance II SA, 11.25%, 12/01/09 ...........EUR 280 242,254 Scandinavian Broadcasting SA, 12.00%, 06/15/08 (c) .......EUR 185 153,642 ---------- TOTAL LUXEMBOURG ............... 420,557 ---------- MEXICO--0.4% Mexican Bonos: 14.00%, 01/22/04 .............. 459 52,490 16.00%, 01/23/03 .............. 545 63,101 United Mexican States, 9.875%, 01/15/07 ...........USD 165 180,477 ---------- TOTAL MEXICO ................... 296,068 ---------- NAMIBIA--0.1% Government of Namibia: 12.00%, 04/15/02 .............. 210 26,419 12.00%, 04/15/05 .............. 210 26,910 ---------- TOTAL NAMIBIA .................. 53,329 ---------- NETHERLANDS--2.6% Completel Europe NV, Series B, 14.00%, 04/15/10 ...........EUR 245 91,355 Jones Lang LaSalle Finance BV, 9.00%, 06/15/07 ............EUR 115 104,035 Kappa Beheer BV, 0.00%, 07/15/09 (f) ........EUR 15 9,693 KPN NV: 6.05%, 06/13/03 ............EUR 420 353,722 7.25%, 04/12/06 ............EUR 880 754,630 KPNQwest BV: 7.125%, 06/01/09 ...........EUR 50 25,360 8.875%, 02/01/08 (c) .......EUR 165 90,190 United Pan-Europe Communications NV, Series B: 0.00%, 11/01/09 (f) ........EUR 470 67,711 11.25%, 02/01/10 ...........EUR 220 68,982 Versatel Telecom NV, 11.875%, 07/15/09 ..........EUR 115 37,521 Wolters Kluwer NV, 5.50%, 09/22/06 ............EUR 420 357,777 ---------- TOTAL NETHERLANDS .............. 1,960,976 ---------- NEW ZEALAND--2.3% Government of New Zealand, 8.00%, 11/15/06 ............... 4,000 1,719,173 ---------- PANAMA--0.1% Republic of Panama, 6.4375%, 07/17/16 (d) ......USD 149 120,366 ---------- POLAND--0.2% Government of Poland, 0.00%, 04/21/03 (l) ........... 663 128,544 ---------- SOUTH AFRICA--0.4% Lesotho Highlands Water: 12.00%, 12/01/05 .............. 740 96,011 12.50%, 04/15/02 .............. 870 110,055 13.00%, 09/15/10 .............. 430 59,041 South African Roads Board, 11.50%, 09/30/05 .............. 270 34,123 ---------- TOTAL SOUTH AFRICA ............. 299,230 ---------- SPAIN--0.5% Generalitat de Catalunya, 9.30%, 11/24/03 ............EUR 402 375,277 ---------- SUPRANATIONAL--17.1% European Investment Bank, 3.00%, 09/20/06 ............JPY 510,000 4,647,703 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 40 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) Inter-American Development Bank, 1.90%, 07/08/09 ...............JPY 355,000 $3,098,321 International Bank for Reconstruction and Development: 2.00%, 02/18/08 (e) ...........JPY 174,000 1,529,249 4.75%, 12/20/04 ...............JPY 376,000 3,490,484 ---------- TOTAL SUPRANATIONAL ............... 12,765,757 ---------- SWEDEN--2.4% AB Spintab, 7.50%, 06/15/04 .................. 8,600 834,106 Preem Holdings AB, 10.625%, 03/31/11 (c) .........EUR 180 160,549 Stadshypotek AB, 3.50%, 09/15/04 .................. 9,000 780,806 ---------- TOTAL SWEDEN ...................... 1,775,461 ---------- UNITED KINGDOM--10.6% Avecia Group PLC, 11.00%, 07/01/09 ..............USD 190 189,050 BAE Systems PLC, 7.45%, 11/29/03 (e) .............. 240 342,109 Birmingham Midshires Building Society, 9.125%, 01/05/06 (e) ............ 300 464,760 British Sky Broadcasting Group PLC, 7.75%, 07/09/09 .................. 115 152,658 British Telecommunications PLC, 6.125%, 02/15/06 (e) ..........EUR 1,290 1,109,439 Coca-Cola Enterprises PLC, 6.75%, 03/12/08 .................. 158 224,981 Coral Group Holdings PLC, Series B, 13.50%, 09/30/09 ................. 69 91,855 Diamond Cable Communications PLC, 11.75%, 12/15/05 (f) ..........USD 30 19,800 Diamond Holdings PLC, 10.00%, 02/01/08 (e) ............. 60 54,290 Energis PLC, 9.50%, 06/15/09 .................. 250 315,987 Gala Group Holdings PLC, 12.00%, 06/01/10 ................. 55 85,086 Imperial Tobacco Finance PLC, 6.375%, 09/27/06 ..............EUR 410 354,925 IPC Magazines Group PLC: 0.00%, 03/15/08 (f) .............. 65 68,151 9.625%, 03/15/08 ................. 30 39,292 Jazztel PLC, 14.00%, 07/15/10 ..............EUR 65 20,381 Luxfer Holdings PLC, 10.125%, 05/01/09 ................ 110 159,560 Ono Finance PLC, 14.00%, 02/15/11 (c) ..........EUR 305 217,117 Premier International Foods PLC, 12.25%, 09/01/09 ................. 60 86,188 Regional Independent Media: 0.00%, 07/01/08 (f) .............. 120 133,507 10.50%, 07/01/08 ..............USD 170 171,912 Telewest Communications PLC: 0.00%, 04/15/09 (f) .............. 25 16,284 9.875%, 02/01/10 ................. 125 142,150 TM Group Holdings PLC, 11.00%, 05/15/08 ..............USD 235 234,412 United Kingdom Treasury, 7.50%, 12/07/06 (e) .............. 1,880 2,892,507 West Coast Train Finance, 6.00%, 03/31/15 .................. 230 303,325 ---------- TOTAL UNITED KINGDOM .............. 7,889,726 ---------- UNITED STATES--15.2% AES Corp., 8.375%, 03/01/11 ..............GBP 10 14,127 Airtouch Communications Corp., 5.50%, 07/24/08 (c), (e) ......DEM 600 251,423 Baxter International, Inc., 5.75%, 03/06/06 (e) ...........EUR 1,320 1,133,400 Citibank Credit Card Master Trust, 5.75%, 07/16/07 (e) ...........DEM 1,250 552,856 Citicorp, 6.25%, 09/19/09 (e) ...........DEM 1,020 448,231 Corning, Inc., 5.625%, 02/18/05 (c) ..........EUR 140 115,796 Countrywide Home Loan, Inc., 5.25%, 12/15/05 (e) ...........DEM 800 340,933 Fannie Mae, 2.125%, 10/09/07 ..............JPY 140,000 1,231,497 Ford Motor Credit Co.: 5.25%, 06/16/08 ...............DEM 572 237,459 5.625%, 02/02/04 (e) ..........EUR 880 754,817 Fresenius Medical Capital Trust, 7.375%, 06/15/11 (c) ..........EUR 205 170,687 General Motors Acceptance Corp. Swift Trust, Series 1999-1, 5.00%, 01/18/05 (c) ...........EUR 370 315,046 HCA-The Healthcare Co., 8.75%, 11/01/10 ...............GBP 55 82,491 Household Finance Corp., 6.25%, 04/30/07 ...............FRF 2,200 293,712 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) Huntsman Corp., 9.50%, 07/01/07 (c) ................. 120 $ 66,000 International Business Machines Corp., 0.90%, 04/14/03 ..................JPY 72,000 583,979 MBNA American Europe, 6.00%, 05/21/07 (e) ..............NLG 3,800 1,510,245 Merrill Lynch & Co., Inc.: 5.375%, 01/04/09 (e) .............DEM 830 347,047 7.375%, 12/17/07 .................GBP 231 341,355 NTL Communications Corp., 12.375%, 02/01/08 (c) ............EUR 90 54,533 Pfizer, Inc., 0.80%, 03/18/08 ..................JPY 193,000 1,557,650 Resolution Funding Corp. STRIP Principal, 0.00%, 01/15/21 (l) ................. 824 238,185 Sola International, Inc., 11.00%, 03/15/08 (c) .............EUR 190 167,626 The Manitowoc Co., Inc., 10.375%, 05/15/11 (c) ............EUR 285 243,938 WorldCom, Inc., 6.75%, 05/15/08 ..................EUR 300 253,015 ---------- TOTAL UNITED STATES .................. 11,306,048 ---------- TOTAL CURRENCY DENOMINATED BONDS (Identified cost $76,764,295)......... 70,375,787 ---------- SHARES ------ PREFERRED STOCK--0.0% UNITED KINGDOM--0.0% Avecia Group PLC (a) (Identified cost $10,208)............. 408 12,240 ---------- WARRANTS--0.0% MEXICO--0.0% United Mexican States, Rights, 06/30/03 (a) ........................ 1,000 9 ---------- NORWAY--0.0% Enitel ASA, 04/03/05 (a) ........................ 65 1 ---------- TOTAL WARRANTS (Identified cost $607)................ 10 ---------- PRINCIPAL AMOUNT (000) --------- DISCOUNT NOTES--7.5% Federal Farm Credit Bank, 4.45%, 07/10/01 ..................... $100 $ 99,889 Federal Home Loan Bank: 3.53%, 08/08/01 ..................... 157 156,415 3.53%, 08/22/01 ..................... 230 228,827 3.67%, 07/18/01 ..................... 400 399,307 3.67%, 07/27/01 ..................... 150 149,618 3.70%, 08/13/01 ..................... 165 164,271 3.70%, 12/07/01 ..................... 150 147,595 3.74%, 08/15/01 ..................... 318 316,513 3.80%, 08/21/01 ..................... 150 149,193 3.98%, 04/18/02 ..................... 183 177,113 4.05%, 07/30/01 ..................... 114 113,628 4.46%, 07/06/01 ..................... 197 196,878 4.47%, 07/17/01 ..................... 111 110,779 4.54%, 07/03/01 ..................... 100 99,975 4.56%, 02/27/02 ..................... 100 96,947 Federal Home Loan Mortgage Corp.: 3.785%, 08/16/01 .................... 185 184,105 3.79%, 07/31/01 ..................... 100 99,684 3.80%, 07/17/01 ..................... 150 149,747 4.45%, 12/12/01 ..................... 100 97,973 Federal National Mortgage Association: 3.48%, 09/20/01 ..................... 132 130,979 3.56%, 07/25/01 ..................... 207 206,509 3.61%, 08/28/01 ..................... 350 348,000 3.65%, 07/20/01 ..................... 124 123,761 3.67%, 09/13/01 ..................... 65 64,510 3.70%, 09/07/01 ..................... 117 116,182 3.71%, 08/07/01 ..................... 200 199,238 3.71%, 08/13/01 ..................... 140 139,369 3.81%, 07/17/01 ..................... 100 99,831 3.88%, 07/10/01 ..................... 280 279,728 4.41%, 03/08/02 ..................... 110 106,631 4.54%, 07/05/01 ..................... 142 141,928 5.45%, 12/14/01 ..................... 260 253,466 6.33%, 07/27/01 ..................... 117 116,465 6.42%, 07/11/01 ..................... 117 116,791 --------- TOTAL DISCOUNT NOTES (Identified cost $5,581,845)......... 5,581,845 --------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 42 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) --------------------------------------------------------------------------------
PRINCIPAL AMOUNT DESCRIPTION (000) VALUE --------------------------------------- ----------- -------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) REPURCHASE AGREEMENT--0.2% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $170,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $181,475) (e) (Identified cost $173,000)........... $173 $ 173,000 ----------- TOTAL INVESTMENTS (Identified cost $82,529,955) (b)......... 102.1% $76,142,882 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ............................. ( 2.1) (1,596,136) ----- ----------- NET ASSETS ................................ 100.0% $74,546,746 ====== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) Forward Foreign Currency Contracts open at June 30, 2001:
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ -------------- ---------------- ------------ -------------- ------------- ARS 7/5/01 239,263 $ 239,000 $ 238,167 $ -- $ 833 ARS 7/10/01 93,339 93,000 92,608 -- 392 ARS 7/10/01 26,156 26,000 25,951 -- 49 ARS 10/19/01 63,040 59,867 58,435 -- 1,432 AUD 7/26/01 537,158 271,802 273,750 1,948 -- AUD 7/26/01 26,123 13,819 13,313 -- 506 BRL 7/31/01 121,788 51,000 52,060 1,060 -- BRL 12/5/01 238,539 111,000 96,731 -- 14,269 CAD 7/26/01 1,600,373 1,036,625 1,054,027 17,402 -- CAD 7/26/01 42,537 27,523 28,016 493 -- CAD 7/26/01 1,539,821 995,713 1,014,146 18,433 -- CHF 7/26/01 1,060,352 623,949 590,491 -- 33,458 CLP 8/14/01 45,440,000 80,000 72,090 -- 7,910 CLP 9/28/01 78,071,000 133,000 123,374 -- 9,626 CLP 10/4/01 80,419,000 137,000 126,984 -- 10,016 CLP 12/12/01 32,312,500 55,000 50,245 -- 4,755 CLP 12/13/01 44,697,899 74,558 69,947 -- 4,611 CLP 2/27/02 82,220,400 138,000 128,649 -- 9,351 CNY 7/11/01 830,850 100,000 100,361 361 -- CNY 7/16/01 265,187 32,000 32,030 30 -- CNY 7/31/01 946,417 114,000 114,274 274 -- CNY 8/21/01 1,243,830 150,000 150,076 76 -- CNY 9/5/01 199,049 24,000 24,004 4 -- COP 8/14/01 96,452,500 41,000 41,297 297 -- COP 8/28/01 129,360,000 55,000 55,121 121 -- COP 8/29/01 185,571,000 79,000 79,046 46 -- COP 8/30/01 114,768,000 48,000 48,871 871 -- COP 8/31/01 306,716,850 131,000 130,568 -- 432 CRC 8/22/01 42,438,400 128,000 126,636 -- 1,364 CZK 7/9/01 2,143,620 55,039 53,639 -- 1,400 CZK 7/11/01 3,020,841 77,241 75,584 -- 1,657 CZK 7/17/01 4,395,000 116,919 109,943 -- 6,976 CZK 7/17/01 4,341,400 110,684 108,602 -- 2,082 CZK 8/7/01 1,903,059 47,569 47,570 1 -- CZK 8/13/01 6,719,079 167,709 167,919 210 -- CZK 8/13/01 1,480,000 36,933 36,987 54 -- DKK 7/26/01 5,470,860 657,137 622,144 -- 34,993 DKK 7/26/01 669,054 76,909 76,085 -- 824 EUR 7/26/01 470,659 419,357 398,659 -- 20,698 EUR 7/26/01 175,844 158,787 148,944 -- 9,843 EUR 7/26/01 60,728 54,777 51,438 -- 3,339 EUR 7/26/01 7,492,524 6,719,071 6,346,335 -- 372,736 EUR 7/26/01 7,870,623 7,050,661 6,666,592 -- 384,069 EUR 7/26/01 102,764 92,161 87,043 -- 5,118 EUR 7/26/01 30,383 27,127 25,735 -- 1,392 EUR 7/26/01 33,573 30,058 28,437 -- 1,621 EUR 7/26/01 223,245 198,684 189,093 -- 9,591 EUR 7/26/01 851,386 758,585 721,143 -- 37,442
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 44 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) ================================================================================ LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ -------------- ---------------- ------------ -------------- ------------- EUR 7/26/01 26,867 $ 24,000 $ 22,757 $ -- $ 1,243 EUR 7/26/01 46,984 41,158 39,797 -- 1,361 EUR 7/26/01 3,251 2,753 2,753 -- -- EUR 7/26/01 17,405 14,722 14,743 21 -- EUR 7/26/01 22,342 19,000 18,925 -- 75 EUR 7/26/01 22,125 18,842 18,741 -- 101 EUR 7/26/01 59,472 51,146 50,374 -- 772 EUR 7/26/01 223,665 191,233 189,449 -- 1,784 EUR 7/26/01 703,036 606,720 595,487 -- 11,233 EUR 7/26/01 147,741 127,205 125,140 -- 2,065 EUR 7/26/01 101,335 86,000 85,833 -- 167 EUR 6/10/02 2,080,000 1,772,056 1,760,201 -- 11,855 GBP 7/26/01 15,153 21,740 21,319 -- 421 GBP 7/26/01 25,622 36,838 36,049 -- 789 GBP 7/26/01 263,481 377,489 370,699 -- 6,790 HUF 8/6/01 33,656,220 117,000 116,277 -- 723 ILS 7/10/01 83,000 19,938 19,872 -- 66 ILS 7/20/01 418,350 100,000 100,072 72 -- ILS 8/28/01 192,516 45,815 45,894 79 -- INR 7/5/01 3,719,040 78,000 78,729 729 -- INR 7/10/01 3,051,520 64,000 64,562 562 -- INR 7/18/01 1,703,520 36,000 36,019 19 -- INR 7/20/01 5,387,640 114,000 113,898 -- 102 JPY 7/26/01 215,721,205 1,794,089 1,734,860 -- 59,229 JPY 7/26/01 26,559,799 220,560 213,598 -- 6,962 JPY 7/26/01 9,734,327 80,736 78,285 -- 2,451 JPY 7/26/01 3,021,125 25,000 24,296 -- 704 JPY 7/26/01 15,302,935 125,847 123,068 -- 2,779 JPY 7/26/01 56,864,640 480,000 457,313 -- 22,687 JPY 7/26/01 130,171,129 1,082,054 1,046,854 -- 35,200 JPY 7/26/01 1,682,800 14,070 13,533 -- 537 KES 7/18/01 5,063,552 64,000 63,502 -- 498 KES 7/25/01 2,842,430 36,000 35,592 -- 408 KES 8/13/01 2,062,645 26,000 25,712 -- 288 KRW 7/23/01 59,892,000 46,000 45,836 -- 164 KRW 7/23/01 162,130,000 124,000 124,080 80 -- KRW 8/14/01 49,799,000 38,000 38,051 51 -- MXN 8/27/01 227,524 22,000 24,721 2,721 -- MXN 11/16/01 837,000 86,422 89,211 2,789 -- MXN 12/19/01 1,868,850 180,000 197,720 17,720 -- MXN 3/12/02 1,166,766 108,222 121,019 12,797 -- MXN 4/18/02 1,900,000 183,309 195,415 12,106 -- MXN 6/11/02 370,000 37,091 37,590 499 -- NZD 7/26/01 159,560 65,000 65,000 -- -- PEN 9/7/01 423,189 117,000 118,660 1,660 -- PEN 9/13/01 154,456 43,000 43,241 241 -- PEN 9/28/01 472,626 132,000 131,798 -- 202 PHP 7/3/01 3,879,800 76,000 73,607 -- 2,393
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) ================================================================================ LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ -------------- ---------------- -------------- -------------- ------------- PHP 7/10/01 4,763,850 $ 91,000 $ 90,219 $ -- $ 781 PHP 7/10/01 5,029,450 97,000 95,249 -- 1,751 PHP 9/4/01 1,487,700 29,000 27,757 -- 1,243 PHP 12/11/01 2,217,600 42,000 40,482 -- 1,518 PLN 10/3/01 674,576 133,000 163,249 30,249 -- PLN 11/20/01 1,505,874 293,000 359,275 66,275 -- PLN 12/7/01 654,720 132,000 155,427 23,427 -- PLN 2/5/02 172,000 38,057 40,178 2,121 -- RUB 7/3/01 1,172,496 40,000 40,173 173 -- RUB 7/13/01 1,464,355 50,000 50,074 74 -- RUB 7/17/01 1,825,900 62,000 62,336 336 -- RUB 7/19/01 1,464,100 50,000 49,944 -- 56 RUB 7/23/01 879,591 30,000 29,957 -- 43 RUB 8/1/01 5,431,989 185,000 184,360 -- 640 SEK 7/26/01 5,754,100 563,575 529,041 -- 34,534 SKK 7/11/01 927,624 18,816 18,590 -- 226 SKK 7/23/01 1,907,138 38,449 38,171 -- 278 SKK 8/8/01 5,006,212 98,545 100,024 1,479 -- SKK 8/13/01 864,600 17,098 17,265 167 -- SKK 8/14/01 6,931,037 136,679 138,390 1,711 -- SKK 8/27/01 4,875,000 97,386 97,198 -- 188 SKK 12/18/01 3,920,375 79,000 77,267 -- 1,733 SKK 12/21/01 2,333,760 46,900 45,983 -- 917 SKK 12/27/01 3,590,000 72,876 70,693 -- 2,183 TWD 7/20/01 2,120,000 64,000 61,114 -- 2,886 TWD 8/21/01 2,848,578 86,000 81,766 -- 4,234 UYU 8/8/01 1,134,665 85,000 82,099 -- 2,901 VEB 7/6/01 11,568,000 16,000 16,054 54 -- VEB 7/9/01 77,922,000 108,000 108,025 25 -- VEB 7/16/01 28,314,000 39,000 39,154 154 -- VEB 7/25/01 35,476,000 49,000 48,901 -- 99 VEB 7/26/01 114,431,500 158,000 157,680 -- 320 VEB 8/8/01 114,037,100 157,184 156,389 -- 795 VEB 8/22/01 45,182,500 62,000 61,642 -- 358 VEB 8/29/01 28,551,900 39,000 38,852 -- 148 ZAR 12/7/01 1,246,500 150,000 150,735 735 -- ----------- ----------- -------- ---------- Total Forward Foreign Currency Purchase Contracts $34,550,884 $33,547,025 $220,807 $1,224,666 =========== =========== -------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 46 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) ================================================================================ LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Sale Contracts Date Currency Date Value Appreciation Depreciation ------------------ ------------ ------------ ---------------- ------------ -------------- ------------- ARS 10/19/01 63,040 $ 59,248 $ 58,435 $ 813 $ -- AUD 7/26/01 177,270 90,000 90,342 -- 342 BRL 7/31/01 105,336 42,000 45,027 -- 3,027 BRL 10/16/01 336,740 149,000 139,235 9,765 -- BRL 12/5/01 238,539 110,129 96,731 13,398 -- BRL 12/6/01 231,660 90,000 93,907 -- 3,907 BRL 12/26/01 100,230 39,000 40,337 -- 1,337 BRL 2/8/02 282,576 116,000 111,699 4,301 -- BRL 2/8/02 107,933 41,000 42,664 -- 1,664 CAD 7/26/01 138,204 90,000 91,023 -- 1,023 CAD 7/26/01 2,758,767 1,822,677 1,816,960 5,717 -- CHF 7/26/01 98,001 57,617 54,575 3,042 -- CHF 7/26/01 17,922 10,000 9,980 20 -- CLP 8/14/01 45,440,000 74,737 72,090 2,647 -- CLP 9/28/01 43,950,750 72,080 69,454 2,626 -- CLP 9/28/01 34,120,250 55,593 53,919 1,674 -- CLP 10/4/01 61,512,000 100,000 97,130 2,870 -- CLP 10/4/01 18,907,000 30,693 29,855 838 -- CLP 12/12/01 43,491,000 70,000 68,059 1,941 -- CLP 12/13/01 36,671,450 59,000 57,379 1,621 -- DKK 7/26/01 6,999,115 834,549 795,937 38,612 -- DKK 7/26/01 21,766,356 2,613,949 2,475,261 138,688 -- DKK 7/26/01 1,231,755 147,735 140,075 7,660 -- DKK 7/26/01 528,318 60,000 60,080 -- 80 DKK 7/26/01 9,842,068 1,139,267 1,119,236 20,031 -- EUR 7/9/01 61,902 55,039 52,449 2,590 -- EUR 7/11/01 21,352 18,816 18,090 726 -- EUR 7/11/01 87,707 77,241 74,310 2,931 -- EUR 7/17/01 125,000 110,684 105,896 4,788 -- EUR 7/23/01 43,848 38,449 37,143 1,306 -- EUR 7/26/01 73,102 65,280 61,919 3,361 -- EUR 7/26/01 5,540 4,963 4,692 271 -- EUR 7/26/01 368,262 330,349 311,926 18,423 -- EUR 7/26/01 2,011 1,802 1,703 99 -- EUR 7/26/01 1,409,291 1,253,283 1,193,701 59,582 -- EUR 7/26/01 27,029 24,000 22,894 1,106 -- EUR 7/26/01 304,238 271,806 257,696 14,110 -- EUR 7/26/01 75,000 67,005 63,527 3,478 -- EUR 7/26/01 299,757 263,786 253,901 9,885 -- EUR 7/26/01 31,988 28,000 27,095 905 -- EUR 7/26/01 187,503 165,753 158,819 6,934 -- EUR 7/26/01 130,974 115,257 110,937 4,320 -- EUR 7/26/01 26,400 23,232 22,361 871 -- EUR 7/26/01 45,096 39,639 38,197 1,442 -- EUR 7/26/01 55,125 47,187 46,692 495 -- EUR 7/26/01 85,317 73,219 72,266 953 -- EUR 7/26/01 16,466 14,113 13,947 166 -- EUR 7/26/01 315,000 266,396 266,812 -- 416 EUR 7/26/01 70,738 60,000 59,917 83 --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 -------------------------------------------------------------------------------- THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) ================================================================================ LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONCLUDED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Sale Contracts Date Currency Date Value Appreciation Depreciation ------------------ ------------ ------------ ---------------- -------------- -------------- ------------- EUR 7/26/01 77,090 $ 65,363 $ 65,297 $ 66 $ -- EUR 7/26/01 185,000 155,842 156,699 -- 857 EUR 7/26/01 439,326 370,000 372,119 -- 2,119 EUR 7/26/01 203,208 174,962 172,122 2,840 -- EUR 7/26/01 1,568 1,341 1,328 13 -- EUR 7/26/01 352,175 299,000 298,300 700 -- EUR 8/7/01 56,000 47,569 47,423 146 -- EUR 8/8/01 116,000 98,545 98,233 312 -- EUR 8/13/01 20,000 17,098 16,935 163 -- EUR 8/13/01 197,000 167,709 166,813 896 -- EUR 8/13/01 43,345 36,933 36,703 230 -- EUR 8/14/01 160,366 136,679 135,790 889 -- EUR 8/27/01 113,430 97,386 96,026 1,360 -- EUR 12/18/01 88,150 79,000 74,530 4,470 -- EUR 12/21/01 52,000 46,900 43,964 2,936 -- EUR 12/27/01 79,566 72,876 67,266 5,610 -- GBP 7/26/01 837,402 1,203,138 1,178,164 24,974 -- GBP 7/26/01 965,953 1,387,330 1,359,025 28,305 -- GBP 7/26/01 2,046,271 2,937,892 2,878,954 58,938 -- GBP 7/26/01 86,239 123,589 121,332 2,257 -- GBP 7/26/01 267,885 380,000 376,895 3,105 -- GBP 7/26/01 15,705 22,133 22,096 37 -- GBP 7/26/01 15,135 21,400 21,294 106 -- GBP 7/26/01 2,028 2,871 2,853 18 -- HUF 8/6/01 33,656,220 113,792 116,277 -- 2,485 JPY 7/26/01 70,710,734 588,153 568,665 19,488 -- JPY 7/26/01 2,046,450 17,103 16,458 645 -- JPY 7/26/01 54,527,934 438,000 438,521 -- 521 MXN 8/16/01 837,000 88,830 91,182 -- 2,352 MXN 8/27/01 227,524 23,465 24,721 -- 1,256 MXN 6/11/02 160,512 16,271 16,307 -- 36 NZD 6/10/02 4,295,000 1,748,065 1,712,045 36,020 -- PLN 10/3/01 199,005 46,147 48,160 -- 2,013 PLN 11/20/01 1,217,242 292,185 290,413 1,772 -- SEK 7/26/01 2,903,664 285,257 266,968 18,289 -- SEK 7/26/01 5,278,238 518,083 485,290 32,793 -- SEK 7/26/01 6,376,794 625,164 586,293 38,871 -- SEK 7/26/01 608,045 56,000 55,905 95 -- TWD 7/20/01 2,120,000 61,943 61,114 829 -- TWD 8/21/01 2,848,578 82,988 81,766 1,222 -- VEB 7/6/01 11,568,000 16,100 16,054 46 -- ----------- ----------- -------- ---------- Total Forward Foreign Currency Sale $24,352,675 $23,692,580 $683,530 $ 23,435 Contracts =========== =========== -------- ---------- Gross unrealized appreciation/depreciation from Forward Foreign Currency Contracts $904,337 $1,248,101 ======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 48 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO CURRENCY DENOMINATED BONDS--65.5% AUSTRALIA--0.4% Western Capital, Ltd., 9.44%, 01/07/03 (c), (d), (e) .......... ..USD 1,000 $ 995,000 ---------- BERMUDA--0.4% Gold Eagle Capital 2001, Ltd., Series A, 10.3374%, 04/08/02 (c), (d) ...............USD 870 870,000 ---------- BRAZIL--2.3% Deutsche Bank LTN Linked Notes: 15.20%, 02/08/02 (e), (h) .................USD 3,116 2,703,286 17.18%, 08/01/01 (h) ......................USD 940 842,616 17.40%, 08/01/01 (h) ......................USD 430 386,957 Salomon, Inc. Linked Brazil Inflation Index Notes: LTN, 14.90%, 12/06/01 (c), (h) .................USD 677 610,654 NTN, 6.00%, 12/02/02 (c), (e), (h) .............USD 895 767,910 ---------- TOTAL BRAZIL .................................. 5,311,423 ---------- CANADA--1.5% Ainsworth Lumber Co. Ltd., 12.50%, 07/15/07 ..........................USD 400 368,000 Argos Funding Trust, 5.9625%, 02/27/06 (c), (e) .................... 1,000 612,810 Calpine Canada Energy Finance, 8.50%, 05/01/08 .......................... USD 575 560,601 Dynacare, Inc., 10.75%, 01/15/06 (e) ......................USD 1,290 1,309,350 GT Group Telecom, Inc., 0.00%, 02/01/10 (f) .......................USD 775 244,125 Quebecor Media, Inc., 11.125%, 07/15/11 (c) .....................USD 340 337,025 ---------- TOTAL CANADA ................................... 3,431,911 ---------- COSTA RICA--0.5% Costa Rica Treasury Bill (B.E.M.), 0.00%, 07/10/01 (e), (h) ..................... 290,000 879,458 Salomon, Inc. CRC Linked Unsecured Notes: 13.00%, 07/12/01 (c), (h) .................USD 335 335,704 13.00%, 07/19/01 (c), (h) .................USD 63 63,428 ---------- TOTAL COSTA RICA ........................... 1,278,590 ---------- DENMARK--1.1% Nykredit, 6.00%, 10/01/29 (e) .......................... 12,363 $1,342,485 Unikredit Realkredit, 7.00%, 07/01/29 (e) .......................... 9,704 1,107,876 ---------- TOTAL DENMARK ................................. 2,450,361 ---------- GERMANY--1.2% Callahan Nordrhein Westfalen, 14.125%, 07/15/11 (c) .................... EUR 510 363,047 Core, Series 1998-1A, Class B3, 7.3377%, 01/16/06 (c), (d), (e) .......... EUR 2,400 1,053,394 European Credit Card Offerings, Series B, 5.50%, 06/18/08 (e) .......................... 2,570 1,102,486 Messer Griesheim Holding AG, 10.375%, 06/01/11 (c) .................... EUR 195 170,210 ---------- TOTAL GERMANY ................................. 2,689,137 ---------- GREECE--0.0% Republic of Hellenic, 7.72%, 08/14/03 (d) ...................... EUR 0.2 171 ---------- HUNGARY--2.7% Government of Hungary: 9.00%, 11/24/02 .............................. 115,910 400,693 9.50%, 01/12/02 (e) ........................... 1,186,920 4,108,816 9.50%, 06/12/02 .............................. 193,300 667,944 9.50%, 06/12/03 .............................. 14,220 49,863 10.00%, 04/12/03 ......................... .... 185,200 651,496 12.50%, 09/24/02 ......................... ... 84,940 302,853 ---------- TOTAL HUNGARY ................................. 6,181,665 ---------- INDONESIA--0.0% Polysindo, 0.00%, 04/26/03 (a), (j) ...................... 5,000,000 4,390 PT Polysindo Eka Perkasa, 0.00%, 03/16/02 (a), (j) ................. USD 194 1,942 ---------- TOTAL INDONESIA ................................ 6,332 ---------- ITALY--0.4% Films PLC, 5.5488%, 03/31/05 (d), (e) ................... 4,160,000 910,362 ---------- JAPAN--1.0% Spires, Ltd., 2.48%, 01/23/02 (e) .......................... 286,282 2,307,060 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (G) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) LUXEMBOURG--0.3% Ispat Europe Group SA, 11.875%, 02/01/11 ........................ EUR 50 $ 41,101 PTC International Finance II SA, 11.25%, 12/01/09 ......................... EUR 410 354,729 Scandinavian Broadcasting SA, 12.00%, 06/15/08 (c) ..................... EUR 280 232,540 ---------- TOTAL LUXEMBOURG .............................. 628,370 ---------- MEXICO--0.6% Mexico Bonos: 14.00%, 01/22/04 ............................. 4,795 548,340 16.00%, 01/23/03 ......................... ... 2,351 272,202 United Mexican States: 9.875%, 01/15/07 ......................... USD 160 175,008 Series D, 4.7875%, 12/31/19(d) ........... USD 450 445,500 ---------- TOTAL MEXICO .................................. 1,441,050 ---------- NAMIBIA--0.2% Government of Namibia: 12.00%, 04/15/02 ......................... .... 1,460 183,674 12.00%, 04/15/05 ......................... ... 1,460 187,089 ---------- TOTAL NAMIBIA ............................. ... 370,763 ---------- NETHERLANDS--0.4% Completel Europe NV, Series B, 14.00%, 04/15/10 ......................... EUR 240 89,491 Jones Lang LaSalle Finance BV, 9.00%, 06/15/07 .......................... EUR 170 153,791 Kappa Beheer BV, 0.00%, 07/15/09 (f) ...................... EUR 35 22,616 KPNQwest BV: 7.125%, 06/01/09 ......................... EUR 50 25,360 8.875%, 02/01/08 (c) ..................... EUR 255 139,384 United Pan Europe Communications NV, Series B: 0.00%, 08/01/09 (f) ...................... USD 1,190 261,800 0.00%, 11/01/09 (f) ...................... EUR 710 102,287 11.25%, 02/01/10 ......................... EUR 325 101,906 Versatel Telecom NV, 11.875%, 07/15/09 ........................ EUR 175 57,097 ---------- TOTAL NETHERLANDS .............................. 953,732 ---------- PANAMA--0.3% Republic of Panama, 6.4375%, 07/17/16 (d) .................... USD 814 656,179 ---------- POLAND--0.7% Government of Poland: 0.00%, 04/21/03 (e), (l) ...................... 3,520 $ 682,467 0.00%, 12/21/02 (l) ...................... .... 2,563 519,000 10.00%, 02/12/04 ............................. 1,709 384,898 ---------- TOTAL POLAND .................................. 1,586,365 ---------- RUSSIA--0.2% Salomon, Inc. RUB Linked Note, 12.00%, 07/27/01 (h) ......................USD 400 398,492 ---------- SOUTH AFRICA--1.8% Lesotho Highlands Water: 12.00%, 12/01/05 (e) ......................... 5,700 739,544 12.50%, 04/15/02 (e) ..................... .... 8,590 1,086,633 13.00%, 09/15/10 (e) ......................... 6,080 834,816 Republic of South Africa: 12.00%, 02/28/05 ............................. 1,710 222,131 12.50%, 12/21/06 (e) ......................... 9,000 1,196,065 South African Roads Board, 11.50%, 09/30/05 ......................... ... 415 52,449 ---------- TOTAL SOUTH AFRICA ........................ 4,131,638 ---------- SWEDEN--0.1% Preem Holdings AB, 10.625%, 03/31/11 (c) .....................EUR 285 254,203 ---------- THAILAND--0.0% Finance One PLC: 0.00%, 08/28/97 (a), (k) ................. ... 10,000 0 0.00%, 10/15/97 (a), (k) ................. ... 10,000 0 Morgan Guarantee Trust, 0.00%, 07/31/01 (a), (k) ................. ... 10,569 0 ---------- TOTAL THAILAND ............................ ... 0 ---------- UNITED KINGDOM--1.4% Avecia Group PLC, 11.00%, 07/01/09 (e) ..................... USD 290 288,550 British Sky Broadcasting Group PLC, 7.75%, 07/09/09 .......................... ... 170 225,669 Coral Group Holdings PLC, Series B, 13.50%, 09/30/09 (e) ......................... 69 91,855 Diamond Cable Communications PLC, 11.75%, 12/15/05 (f) ......................USD 85 56,100 Diamond Holdings PLC, 10.00%, 02/01/08 ............................. 65 58,814 Energis PLC, 9.50%, 06/15/09 .......................... .... 375 473,981 Gala Group Holdings PLC, 12.00%, 06/01/10 ......................... ... 57 88,180 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 50 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) IPC Magazines Group PLC: 0.00%, 03/15/08 (f) ........................... 190 $ 199,211 9.625%, 03/15/08 ............................. 45 58,937 Jazztel PLC, 14.00%, 07/15/10 ......................... EUR 80 25,085 Luxfer Holdings PLC, 10.125%, 05/01/09 ............................ 110 159,560 Ono Finance PLC, 14.00%, 02/15/11 (c) ..................... EUR 540 384,403 Premier International Foods PLC, 12.25%, 09/01/09 ......................... .... 100 143,647 Regional Independent Media: 0.00%, 07/01/08 (f) ...................... .... 150 166,884 10.50%, 07/01/08 ......................... USD 125 126,406 Telewest Communications PLC, 0.00%, 04/15/09 (f) .......................... 190 216,068 TM Group Holdings PLC, 11.00%, 05/15/08 ......................... USD 355 354,112 ---------- TOTAL UNITED KINGDOM .......................... 3,117,462 ---------- UNITED STATES--47.9% Adelphia Communications Corp., 9.375%, 11/15/09 ............................. 247 235,885 Advanta Business Card Master Trust, Series 2000-B, Class C, 5.1313%, 01/20/06 (d), (e) ................... 2,280 2,283,396 Advanta Credit Card Master Trust, Series 1996-E, Class B, 4.31%, 05/15/04 (d) .......................... 1,515 1,514,515 AES Corp.: 8.375%, 03/01/11 ......................... GBP 15 21,191 9.375%, 09/15/10 (e) ..................... ... 990 999,900 Agrilink Foods, Inc., 11.875%, 11/01/08 ............................ 545 501,400 Alamosa Delaware, Inc., 12.50%, 02/01/11 (c), (e) ..................... 325 292,500 Alliance Imaging, Inc., 10.375%, 04/15/11 (c) ........................ 540 553,500 Allied Waste North America, Inc., Series B, 10.00%, 08/01/09 (e) .......................... 990 1,017,225 American Cellular Corp., 9.50%, 10/15/09 (c) .......................... 995 935,300 American Tower Corp., 9.375%, 02/01/09 (c), (e) .................... 610 568,825 Ameristar Casinos, Inc., 10.75%, 02/15/09 (c), (e) .................... 1,160 1,212,200 ARCO Chemical Co., 9.80%, 02/01/20 (e) ........................... 535 $ 545,573 Asset Securitization Corp., Series 1996-D2, Class ACS2, 1.4848%, 02/14/29 (d), (e), (i) .............. 7,035 408,945 Atrium Cos. Inc., Series B, 10.50%, 05/01/09 (e) .......................... 880 783,200 Banc of America Large Loan, Series 2000-WSFA, Class A, 4.5763%, 05/12/11 (c), (d), (e) ............... 735 732,942 Beazer Homes USA, Inc., 8.625%, 05/15/11 (e) .......................... 715 713,212 Building One Services Corp., 10.50%, 05/01/09 (e) ......................... 1,545 1,483,200 Capital One Master Trust: Series 2001-4, Class C, 4.86%, 04/16/07 (c) ........................... 3,300 3,301,914 Series 1998-4, Class A, 5.43%, 01/15/07 .............................. 4,940 4,988,025 Caraustar Industries, Inc., 9.875%, 04/01/11 (c) ......................... 350 322,000 Carco Auto Loan Master Trust, Series 1999-2, Class A1, 4.05%, 05/17/04 (d), (e) ..................... 1,360 1,360,000 Charter Communications Holdings LLC: 0.00%, 01/15/10 (f) ........................... 850 569,500 8.625%, 04/01/09 ......................... .... 210 197,400 Chase Credit Card Master Trust, Series 2000-2, Class C, 4.66%, 07/15/05 (d), (e) ..................... 4,925 4,907,926 Chesapeake Energy Corp., 8.125%, 04/01/11 (c), (e) ..................... 610 570,350 Citibank Credit Card Issuance Trust, Series 2001-C1, Class C1, 6.1025%, 01/15/10 (d), (e) ................... 4,700 4,685,712 Citibank Credit Card Master Trust I, Series 1999-1, Class A, 5.50%, 02/15/06 .............................. 2,465 2,485,310 Comstock Resources, Inc., 11.25%, 05/01/07 (e) .......................... 399 421,943 Corning, Inc., 5.625%, 02/18/05 (c), (e) .................EUR 680 562,435 Discover Card Master Trust I, Series 1998-7, Class A, 5.60%, 05/16/06 .............................. 4,940 4,987,819 Dura Operating Corp., 9.00%, 05/01/09 (c) ...................... ... 805 756,700 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) Echostar Broadband Corp., 10.375%, 10/01/07 (e) ........................ 975 $ 975,000 Emmis Escrow Corp., 0.00%, 03/15/11 (c), (f) ..................... 1,065 601,725 Federal Home Loan Mortgage Corp., Series 30, Class J, 7.50%, 02/25/23 (i) .......................... 1,975 202,449 First USA Credit Card Master Trust: Series 1994-6, Class B, 4.58%, 10/15/03 (d) .......................... 3,295 3,303,384 Series 1998-1, Class C, 6.50%, 01/18/06 (c), (e) ..................... 1,600 1,629,264 Foamex L.P., 13.50%, 08/15/05 (e) ......................... 260 205,400 Ford Credit Auto Owner Trust, Series 2000-F, Class A4, 4.86%, 05/15/05 (d) .......................... 2,475 2,475,840 Fresenius Medical Capital Trust: 7.375%, 06/15/11 (c)...................... EUR 315 262,275 9.00%, 12/01/06 (e) .......................... 1,630 1,678,900 Golden Sky DBS, Inc., Series B, 0.00%, 03/01/07 (f) .......................... 440 268,400 GSI Group, Inc., 10.25%, 11/01/07 (e) ......................... 795 604,200 Halyard Re BV, 9.29%, 04/05/02 (c), (d) ..................... 250 250,373 HCA-The Healthcare Co., 8.75%, 11/01/10............................GBP 55 82,491 HEALTHSOUTH Corp., 10.75%, 10/01/08 (e) ......................... 605 656,425 Huntsman Corp., 9.50%, 07/01/07 (c) .......................... 185 101,750 Hyperion Telecommunications, Inc., 12.00%, 11/01/07 (e) ......................... 615 282,900 Icon Health & Fitness, Inc., 12.00%, 09/27/05 (c) ......................... 225 202,500 International CableTel, Inc., Series B, 11.50%, 02/01/06 (f) ......................... 250 168,750 Interpool Capital Trust, Series B, 9.875%, 02/15/27 (e) ......................... 1,915 1,397,950 IT Group, Inc., Series B, 11.25%, 04/01/09 (e) ......................... 1,225 1,151,500 John Q. Hammons Hotels, Inc., 8.875%, 02/15/04 (e) ......................... 1,000 990,000 Kelvin 2nd Event, 8.70%, 02/14/03 (c), (e) ..................... 600 570,000 LDM Technologies, Inc., Series B, 10.75%, 01/15/07 ............................. 150 93,000 LodgeNet Entertainment Corp., 10.25%, 12/15/06 (e) ......................... 810 818,100 Lomak Petroleum Corp., 8.75%, 01/15/07 (e) .......................... 540 518,400 Lyondell Chemical Co., 10.875%, 05/01/09 (e) ........................ 275 270,188 Mandalay Resort Group, Series B, 10.25%, 08/01/07 ............................. 520 544,700 MBNA Master Credit Card Trust: Series 1994-C, Class B, 4.45%, 03/15/04 (d), (e) ..................... 2,845 2,848,200 Series 1999-E, Class C, 4.68%, 06/15/04 (c), (d), (e) ................ 8,595 8,595,000 McCaw International, Ltd., 0.00%, 04/15/07 (f) .......................... 615 202,950 Merrill Lynch Mortgage Investors, Inc., Series 1996-C1, Class IO, 1.0624%, 04/25/28 (c), (d), (e), (i) ......... 12,552 290,711 Metromedia Fiber Network, Inc., Series B, 10.00%, 11/15/08 (e) ......................... 301 115,885 MGM Grand, Inc., 9.75%, 06/01/07 (e) .......................... 875 934,062 Michael Foods, Inc., 11.75%, 04/01/11 (c) ......................... 710 727,750 Morgan Stanley Capital I, Inc., Series 1996-WF1, Class X, 1.3732%, 11/15/28 (c), (d), (e), (i) ......... 5,584 256,905 Namazu Re, Ltd., 8.49%, 12/02/04 (c), (d), (e) ................ 1,000 980,230 National Equipment Services, Inc., Series B, 10.00%, 11/30/04 ............................. 340 265,200 Nextel International, Inc., 12.75%, 08/01/10 ............................. 480 148,800 Nextmedia Operating, Inc., 10.75%, 07/01/11 (c) ......................... 265 265,000 Nortek, Inc., 9.875%, 06/15/11 (c) ......................... 170 163,625 North American Van Lines, Inc., 13.375%, 12/01/09 (c), (e) ................... 1,285 1,182,200 NTL Communications Corp., 12.375%, 02/01/08 (c)..................... EUR 135 81,800 Orion Power Holdings, Inc., 12.00%, 05/01/10 (c), (e) .................... 480 532,800 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 52 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) (g) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) Pacific Reinsurance Ltd., 7.70%, 05/31/03 (c), (d), (e) ........... 1,340 $ 1,335,310 Penhall International Corp., 12.00%, 08/01/06 (e) .................... 750 735,000 Penn National Gaming, Inc., 11.125%, 03/01/08 (c) ................... 685 712,400 Petro Stopping Centers, 10.50%, 02/01/07 (e) .................... 640 496,000 Phoenix Color Corp., 10.375%, 02/01/09 (e) ................... 870 704,700 Plains Resources, Inc., Series F, 10.25%, 03/15/06 ........................ 350 363,125 PMD Group, Inc., 11.00%, 02/28/11 (c) .................... 920 933,800 Prime Capital Calquake and Euro Wind, Ltd., 11.32%, 01/17/04 (c), (d), (e) .......... 840 831,600 Prime Capital Hurricane Hydrocarbons, 10.32%, 01/17/04 (c), (d), (e) .......... 875 861,875 Prudential Home Mortgage Securities: Series 1993-41, Class A5, 0.1148%, 10/25/10 (d), (i) .............. 152 0 Series 1993-5, Class A9, 0.9058%, 03/25/10 (d), (i) .............. 360 0 Railamerica Transportation Corp., 12.875%, 08/15/10 ....................... 650 671,125 Renters Choice, Inc., 11.00%, 08/15/08 (e) .................... 1,005 1,027,612 Rose Hills Co., 9.50%, 11/15/04 ......................... 590 465,362 Royster-Clark, Inc., 10.25%, 04/01/09 ........................ 235 186,825 Sabreliner Corp., 11.00%, 06/15/08 (c), (e) ............... 935 702,419 Sears Credit Account Master Trust, Series 2000-4, Class A, 4.23%, 10/18/11 (d), (e) ................ 2,525 2,527,857 Sinclair Broadcast Group, Inc., 8.75%, 12/15/07 ......................... 245 233,363 Sola International, Inc., 11.00%, 03/15/08 (c)...................EUR 290 255,824 Spectrasite Holdings, Inc.: 0.00%, 04/15/09 (f) ..................... 380 174,800 Series B, 0.00%, 03/15/10 (f) ..................... 325 136,500 Structured Asset Securities Corp.: Series 1996-CFL, Class X2, 1.0235%, 02/25/28 (d), (i) .............. 1,049 14,427 Series 1996-CFL, Class X1, 1.6002%, 02/25/28 (d), (e), (i) ......... 2,693 161,599 Superior Wholesale Inventory Financing Trust, Series 1999-A, Class A1, 4.105%, 05/15/06 (d), (e) ............... 2,520 2,522,066 Telewest Finance (Jersey), Ltd., 6.00%, 07/07/05 (c) ..................... 350 245,000 The Manitowoc Co., Inc., 10.375%, 05/15/11 (c)..................EUR 450 385,166 Transwestern Publishing Co., 9.625%, 11/15/07 (c) .................... 780 785,850 Travelcenters of America, Inc., 12.75%, 05/01/09 ........................ 320 329,200 Ubiquitel Operating Co., 0.00%, 04/15/10 (f) ..................... 1,047 413,565 United International Holding, Inc., Series B, 0.00%, 02/15/08 (f) ..................... 410 137,350 United Rentals, Inc., Series B: 9.00%, 04/01/09 ......................... 25 23,125 9.25%, 01/15/09 (e) ..................... 1,760 1,645,600 URS Corp., Series B, 12.25%, 05/01/09 (e) .................... 1,070 1,094,075 Venture Holdings Trust, Series B, 9.50%, 07/01/05 ......................... 190 148,200 Volkswagen Credit Auto Master Trust, Series 2000-1, Class A, 4.0363%, 08/20/07 (d), (e) .............. 2,200 2,203,866 Williams Scotsman, Inc., 9.875%, 06/01/07 (e) .................... 940 893,000 XO Communications, Inc., 10.75%, 11/15/08 ........................ 220 70,400 Yamaha Motor Master Trust, Series 2000-1, Class B, 4.68%, 05/15/08 (d), (e) ................ 2,575 2,571,472 ----------- TOTAL UNITED STATES ...................... 109,816,383 ----------- VENEZUELA--0.1% Citibank NDF Linked Note, 17.00%, 07/06/01 (h).................. USD 259 260,606 ----------- TOTAL CURRENCY DENOMINATED BONDS (Identified cost $158,457,920)............ 150,047,255 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 53 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) PREFERRED STOCKS--1.9% BERMUDA--0.4% Global Crossing Holdings, Ltd. ......... 10,150 $ 781,550 ---------- UNITED KINGDOM--0.0% Avecia Group PLC (a) ................... 1,283 38,490 ---------- UNITED STATES--1.5% Adelphia Communications Corp., Series B .............................. 11,800 1,156,400 American Restaurant Group, Inc., Series B (a) .......................... 4 400 Granite Broadcasting Corp. (a) ......... 955 181,450 High Voltage Engineering Corp., Series A (a) .......................... 1,977 395,400 Nextel Communications, Inc., Series E (a) .......................... 669 448,230 Paxson Communications Corp. (a), (e) .............................. 94 878,900 Sinclair Capital ....................... 3,950 370,313 XO Communications, Inc. (a) ............ 2,716 10,864 ---------- TOTAL UNITED STATES .................... 3,441,957 ---------- TOTAL PREFERRED STOCKS (Identified cost $6,922,967)............ 4,261,997 ---------- WARRANTS--0.0% CANADA--0.0% GT Group Telecom, Inc., 02/01/10 (a), (c) ..................... 775 23,131 ---------- MEXICO--0.0% United Mexican States, Rights, 06/30/03 (a) .......................... 698,000 6,631 ---------- NORWAY--0.0% Enitel ASA, 04/03/05 (a) .......................... 100 1 ---------- UNITED KINGDOM--0.0% Ono Finance PLC, 05/31/09 (a) .......................... 350 8,898 05/31/09 (a), (c) ..................... 90 2,288 ---------- TOTAL UNITED KINGDOM ................... 11,186 ---------- UNITED STATES--0.0% Motient Corp., 04/01/08 (a), (c) ..................... 1,385 692 Ubiquitel Operating Co., 04/15/10 (a), (c) ..................... 922 $ 18,440 ---------- TOTAL UNITED STATES .................... 19,132 ---------- TOTAL WARRANTS (Identified cost $46,658)............... 60,081 ---------- PRINCIPAL AMOUNT (000) --------- U.S. GOVERNMENT SECURITIES--4.5% Federal Home Loan Mortgage Corp., 5.25%, 02/15/04 ....................... $ 9,800 9,878,106 Federal National Mortgage Association, 6.00%, 12/15/05 ....................... 300 305,952 ---------- TOTAL U.S. GOVERNMENT SECURITIES (Identified cost $10,193,882)........... 10,184,058 ---------- DISCOUNT NOTES--24.1% Federal Farm Credit Bank, 4.45%, 07/10/01 ....................... 950 948,943 Federal Home Loan Bank: 3.53%, 08/08/01 ....................... 103 102,616 3.53%, 08/22/01 ....................... 400 397,961 3.67%, 07/18/01 ....................... 1,261 1,258,815 3.67%, 07/27/01 ....................... 300 299,235 3.69%, 06/04/02 ....................... 67 64,679 3.70%, 08/13/01 ....................... 1,635 1,627,774 3.70%, 09/04/01 ....................... 430 427,127 3.70%, 12/07/01 ....................... 560 551,022 3.74%, 08/15/01 ....................... 2,687 2,674,438 3.80%, 07/17/01 ....................... 1,580 1,577,331 3.80%, 08/21/01 ....................... 1,237 1,230,341 3.83%, 08/14/01 ....................... 100 99,532 3.85%, 07/23/01 ....................... 175 174,588 3.90%, 07/13/01 ....................... 2,129 2,126,232 3.98%, 04/18/02 ....................... 1,963 1,899,847 4.05%, 07/30/01 ....................... 1,165 1,161,199 4.10%, 07/20/01 ....................... 272 271,412 4.46%, 07/06/01 ....................... 2,328 2,326,558 4.54%, 07/03/01 ....................... 699 698,824 4.56%, 02/27/02 ....................... 342 331,560 4.86%, 11/15/01 ....................... 600 588,903 5.36%, 12/21/01 ....................... 550 535,833 5.38%, 12/21/01 ....................... 796 775,420 5.55%, 12/10/01 ....................... 300 292,508 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 54 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) Federal Home Loan Mortgage Corp.: 3.46%, 09/27/01 .......................... $1,539 $1,525,983 3.785%, 08/16/01 ......................... 1,500 1,492,745 3.79%, 07/31/01 .......................... 1,195 1,191,226 4.45%, 12/12/01 .......................... 1,000 979,728 4.75%, 01/31/02 .......................... 750 728,823 Federal National Mortgage Association: 3.56%, 07/25/01 .......................... 1,964 1,959,339 3.61%, 08/28/01 .......................... 2,395 2,381,310 3.61%, 12/06/01 .......................... 454 446,807 3.65%, 07/20/01 .......................... 3,690 3,682,892 3.67%, 09/13/01 .......................... 930 922,984 3.70%, 09/07/01 .......................... 1,718 1,705,993 3.71%, 08/07/01 .......................... 816 812,889 3.71%, 08/13/01 .......................... 4,110 4,091,787 3.76%, 08/03/01 .......................... 154 153,469 3.81%, 07/17/01 .......................... 630 628,933 3.82%, 08/30/01 .......................... 499 495,823 3.88%, 07/03/01 .......................... 1,838 1,837,604 3.88%, 07/10/01 .......................... 2,157 2,154,908 4.41%, 03/08/02 .......................... 1,038 1,006,211 4.54%, 07/05/01 .......................... 1,784 1,783,100 5.45%, 12/14/01 .......................... 1,727 1,683,600 6.31%, 08/10/01 .......................... 907 900,641 6.42%, 07/11/01 .......................... 264 263,529 ---------- TOTAL DISCOUNT NOTES (Identified cost $55,273,022)......... 55,273,022 ---------- REPURCHASE AGREEMENT--2.3% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $4,990,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $5,326,825) (e) (Identified cost $5,219,000).............. $5,219 5,219,000 ----------- TOTAL INVESTMENTS (Identified cost $236,113,449) (b)......... 98.3% $225,045,413 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................ 1.7 3,969,570 ------- ------------ NET ASSETS ................................. 100.0% $229,014,983 ======= ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 55 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) Forward Foreign Currency Contracts open at June 30, 2001:
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ ---------------- ---------------- ------------ -------------- ------------- ARS 7/5/01 774,851 $ 774,000 $ 771,303 $ -- $ 2,697 ARS 7/5/01 1,745,266 1,743,000 1,737,274 -- 5,726 ARS 7/6/01 1,122,080 1,120,000 1,116,497 -- 3,503 ARS 7/10/01 802,000 800,000 795,714 -- 4,286 ARS 7/10/01 1,575,731 1,570,000 1,563,380 -- 6,620 ARS 7/10/01 476,844 474,000 473,107 -- 893 BRL 7/31/01 1,325,340 555,000 566,530 11,530 -- BRL 12/5/01 1,646,134 766,000 667,532 -- 98,468 CLP 8/14/01 741,240,000 1,305,000 1,175,965 -- 129,035 CLP 9/28/01 852,911,000 1,453,000 1,347,837 -- 105,163 CLP 10/4/01 409,726,000 698,000 646,972 -- 51,028 CLP 10/10/01 39,174,800 68,000 61,810 -- 6,190 CLP 12/12/01 734,363,544 1,224,960 1,149,197 -- 75,763 CLP 12/13/01 909,786,600 1,527,000 1,423,529 -- 103,471 CLP 2/27/02 200,925,000 342,000 312,434 -- 29,566 CNY 7/11/01 10,468,710 1,260,000 1,264,551 4,551 -- CNY 7/16/01 5,676,664 685,000 685,637 637 -- CNY 7/31/01 9,671,714 1,165,000 1,167,799 2,799 -- CNY 8/21/01 9,950,640 1,200,000 1,200,608 608 -- CNY 9/5/01 497,622 60,000 60,010 10 -- COP 7/3/01 3,196,732,000 1,358,000 1,387,570 29,570 -- COP 8/2/01 3,196,732,000 1,374,743 1,374,743 -- -- COP 8/14/01 1,035,100,000 440,000 443,190 3,190 -- COP 8/28/01 1,265,376,000 538,000 539,186 1,186 -- COP 8/29/01 1,949,670,000 830,000 830,484 484 -- COP 8/30/01 1,193,109,000 499,000 508,061 9,061 -- COP 8/31/01 86,629,950 37,000 36,878 -- 122 COP 9/7/01 1,467,165,000 623,000 623,214 214 -- CRC 8/22/01 164,780,350 497,000 491,704 -- 5,296 CZK 7/9/01 26,067,954 669,310 652,286 -- 17,024 CZK 7/11/01 29,481,891 753,829 737,660 -- 16,169 CZK 7/17/01 9,915,000 263,767 248,029 -- 15,738 CZK 7/17/01 1,562,904 39,846 39,097 -- 749 CZK 7/17/01 4,719,924 120,197 118,071 -- 2,126 CZK 8/7/01 61,407,642 1,534,961 1,534,997 36 -- CZK 8/13/01 65,826,510 1,643,034 1,645,096 2,062 -- CZK 8/13/01 51,398,840 1,282,630 1,284,529 1,899 -- DKK 7/26/01 41,560,622 4,984,722 4,726,257 -- 258,465 DKK 7/26/01 426,966 49,081 48,554 -- 527 EUR 7/26/01 232,993 210,393 197,350 -- 13,043 EUR 7/26/01 96,153 86,730 81,444 -- 5,286 EUR 7/26/01 102,764 92,161 87,043 -- 5,118 EUR 7/26/01 28,321 25,376 23,988 -- 1,388 EUR 7/26/01 40,510 36,170 34,313 -- 1,857 EUR 7/26/01 33,573 30,058 28,437 -- 1,621 EUR 7/26/01 243,590 216,790 206,326 -- 10,464
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 56 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ ---------------- ---------------- ------------ -------------- ------------- EUR 7/26/01 81,720 $ 73,000 $ 69,219 $ -- $ 3,781 EUR 7/26/01 234,090 209,000 198,279 -- 10,721 EUR 7/26/01 286,642 251,098 242,792 -- 8,306 EUR 7/26/01 250,461 213,000 212,146 -- 854 EUR 7/26/01 116,946 99,053 99,056 3 -- EUR 7/26/01 34,259 28,979 29,019 40 -- EUR 7/26/01 82,486 70,000 69,867 -- 133 EUR 7/26/01 26,083 22,128 22,093 -- 35 EUR 7/26/01 36,544 31,000 30,953 -- 47 EUR 7/26/01 87,200 74,183 73,860 -- 323 EUR 7/26/01 211,665 180,000 179,285 -- 715 EUR 7/26/01 129,420 109,013 109,621 608 -- EUR 7/26/01 131,534 112,015 111,412 -- 603 EUR 7/26/01 21,449 18,264 18,168 -- 96 EUR 7/26/01 29,345 25,237 24,856 -- 381 EUR 7/26/01 305,794 263,900 259,014 -- 4,886 EUR 7/26/01 227,601 195,965 192,783 -- 3,182 EUR 7/26/01 688,136 584,000 582,866 -- 1,134 GBP 7/26/01 40,996 58,941 57,678 -- 1,263 GBP 7/26/01 748,696 1,075,690 1,053,362 -- 22,328 GBP 7/26/01 2,498,467 3,588,374 3,515,162 -- 73,212 GBP 7/26/01 39,419 56,554 55,459 -- 1,095 GBP 7/26/01 71,009 100,400 99,905 -- 495 GBP 7/26/01 46,080 65,250 64,831 -- 419 HUF 10/15/01 233,100,000 745,586 794,575 48,989 -- ILS 7/23/01 4,933,108 1,180,000 1,179,718 -- 282 ILS 8/28/01 2,393,895 569,704 570,682 978 -- INR 7/5/01 38,144,000 800,000 807,475 7,475 -- INR 7/10/01 50,779,200 1,065,000 1,074,351 9,351 -- INR 7/18/01 14,858,480 314,000 314,166 166 -- INR 7/20/01 38,989,500 825,000 824,259 -- 741 INR 8/14/01 4,107,360 86,000 86,531 531 -- JPY 7/26/01 160,111,108 1,331,596 1,287,636 -- 43,960 JPY 7/26/01 178,664,828 1,481,835 1,436,847 -- 44,988 JPY 7/26/01 35,286,740 292,000 283,781 -- 8,219 JPY 7/26/01 2,884,680 24,000 23,199 -- 801 JPY 7/26/01 11,261,091 93,000 90,563 -- 2,437 JPY 7/26/01 8,494,795 71,000 68,316 -- 2,684 JPY 7/26/01 2,743,256 23,000 22,062 -- 938 JPY 7/26/01 26,294,400 220,000 211,463 -- 8,537 JPY 7/26/01 7,198,200 60,000 57,889 -- 2,111 JPY 7/26/01 19,953,200 166,826 160,466 -- 6,360 KES 7/18/01 55,857,308 706,000 700,504 -- 5,496 KES 7/25/01 41,610,023 527,000 521,025 -- 5,975 KES 8/13/01 7,853,918 99,000 97,905 -- 1,095 KRW 7/23/01 332,010,000 255,000 254,092 -- 908 KRW 7/23/01 241,887,500 185,000 185,120 120 -- KRW 8/13/01 1,679,600,000 1,300,000 1,283,444 -- 16,556 KRW 9/11/01 617,571,900 477,000 471,039 -- 5,961
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 57 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Purchase Contracts Date Currency Date Value Appreciation Depreciation -------------------- ------------ ---------------- ---------------- -------------- -------------- ------------- MXN 11/16/01 8,822,000 $ 910,893 $ 940,281 $ 29,388 $ -- MXN 12/19/01 17,930,578 1,727,000 1,897,014 170,014 -- MXN 2/4/02 7,153,500 600,000 748,086 148,086 -- MXN 3/12/02 11,187,227 1,037,661 1,160,356 122,695 -- MXN 4/18/02 20,340,000 1,962,373 2,091,968 129,595 -- MXN 6/11/02 1,667,000 167,109 169,357 2,248 -- PEN 9/7/01 3,960,615 1,095,000 1,110,536 15,536 -- PEN 9/13/01 1,616,400 450,000 452,520 2,520 -- PEN 9/27/01 5,509,620 1,539,000 1,536,811 -- 2,189 PHP 7/3/01 35,683,950 699,000 676,986 -- 22,014 PHP 7/10/01 49,732,500 950,000 941,845 -- 8,155 PHP 7/10/01 55,375,800 1,068,000 1,048,719 -- 19,281 PHP 9/4/01 16,929,000 330,000 315,859 -- 14,141 PHP 12/11/01 23,971,200 454,000 437,591 -- 16,409 PLN 9/4/01 2,905,637 717,707 709,314 -- 8,393 PLN 10/2/01 11,671,073 2,315,000 2,825,274 510,274 -- PLN 11/16/01 12,351,436 2,404,500 2,950,312 545,812 -- PLN 11/20/01 2,102,056 409,000 501,514 92,514 -- PLN 2/5/02 9,269,110 2,050,915 2,165,224 114,309 -- RUB 7/3/01 14,069,952 480,000 482,079 2,079 -- RUB 7/13/01 16,488,637 563,000 563,830 830 -- RUB 7/17/01 18,524,050 629,000 632,412 3,412 -- RUB 7/19/01 14,318,898 489,000 488,456 -- 544 RUB 7/23/01 10,115,297 345,000 344,508 -- 492 RUB 7/24/01 22,179,080 758,000 755,074 -- 2,926 RUB 8/1/01 22,873,076 779,000 776,306 -- 2,694 SKK 7/23/01 8,557,666 172,527 171,281 -- 1,246 SKK 8/7/01 7,779,838 153,752 155,458 1,706 -- SKK 8/8/01 41,517,034 817,240 829,511 12,271 -- SKK 8/13/01 87,713,670 1,734,586 1,751,548 16,962 -- SKK 8/14/01 49,842,309 982,879 995,188 12,309 -- SKK 8/15/01 34,909,686 692,357 696,955 4,598 -- SKK 8/27/01 23,870,000 476,842 475,919 -- 923 SKK 12/21/01 27,287,040 548,373 537,644 -- 10,729 SKK 12/27/01 39,203,000 795,806 771,971 -- 23,835 TWD 7/20/01 17,953,750 542,000 517,560 -- 24,440 TWD 8/21/01 34,514,166 1,042,000 990,696 -- 51,304 UYU 7/16/01 12,462,268 938,000 908,872 -- 29,128 VEB 7/9/01 529,475,000 734,107 734,025 -- 82 VEB 7/16/01 367,356,000 506,000 508,003 2,003 -- VEB 7/19/01 117,207,000 162,000 161,908 -- 92 VEB 7/23/01 1,050,500,000 1,452,974 1,449,078 -- 3,896 VEB 7/25/01 873,144,000 1,206,000 1,203,573 -- 2,427 VEB 7/31/01 467,390,000 639,822 642,884 3,062 -- VEB 8/8/01 75,088,000 103,498 102,975 -- 523 VEB 8/22/01 830,775,000 1,140,000 1,133,415 -- 6,585 VEB 8/29/01 306,749,900 419,000 417,414 -- 1,586 ZAR 12/7/01 4,653,600 560,000 562,743 2,743 -- ----------- ----------- ---------- ---------- Total Forward Foreign Currency Purchase Contracts $98,178,270 $98,735,840 $2,081,064 $1,523,494 =========== =========== ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 58 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Sale Contracts Date Currency Date Value Appreciation Depreciation ------------------ ------------ ---------------- ---------------- ------------ -------------- ------------- BRL 7/31/01 1,113,552 $ 444,000 $ 475,999 $ -- $31,999 BRL 10/16/01 3,417,120 1,512,000 1,412,909 99,091 -- BRL 12/5/01 1,646,134 759,988 667,532 92,456 -- BRL 12/6/01 2,277,990 885,000 923,422 -- 38,422 BRL 12/26/01 1,053,700 410,000 424,058 -- 14,058 BRL 2/8/02 3,166,800 1,300,000 1,251,799 48,201 -- BRL 2/8/02 1,158,300 440,000 457,862 -- 17,862 CAD 7/26/01 835,936 541,469 550,558 -- 9,089 CLP 8/14/01 233,021,600 383,259 369,685 13,574 -- CLP 8/27/01 774,073,750 1,241,000 1,226,664 14,336 -- CLP 9/28/01 28,763,000 47,172 45,454 1,718 -- CLP 9/28/01 824,148,000 1,342,807 1,302,383 40,424 -- CLP 10/4/01 121,793,760 198,000 192,317 5,683 -- CLP 10/4/01 287,932,240 467,423 454,655 12,768 -- CLP 10/10/01 39,174,800 63,803 61,810 1,993 -- CLP 12/12/01 733,134,000 1,180,000 1,147,273 32,727 -- CLP 12/13/01 11,809,450 19,000 18,478 522 -- COP 7/3/01 3,196,732,000 1,386,670 1,387,570 -- 900 DKK 7/26/01 63,207,063 7,590,616 7,187,881 402,735 -- EUR 7/9/01 752,767 669,310 637,813 31,497 -- EUR 7/11/01 855,974 753,829 725,232 28,597 -- EUR 7/17/01 45,000 39,846 38,122 1,724 -- EUR 7/17/01 137,000 120,198 116,062 4,136 -- EUR 7/23/01 196,755 172,527 166,665 5,862 -- EUR 7/26/01 210,169 187,681 178,018 9,663 -- EUR 7/26/01 9,442,374 8,470,282 7,997,901 472,381 -- EUR 7/26/01 6,484,795 5,815,369 5,492,765 322,604 -- EUR 7/26/01 6,759,360 6,055,170 5,725,328 329,842 -- EUR 7/26/01 76,794 68,293 65,046 3,247 -- EUR 7/26/01 82,213 73,000 69,636 3,364 -- EUR 7/26/01 445,491 398,001 377,340 20,661 -- EUR 7/26/01 110,000 98,274 93,172 5,102 -- EUR 7/26/01 279,475 247,000 236,722 10,278 -- EUR 7/26/01 325,595 285,000 275,786 9,214 -- EUR 7/26/01 307,194 271,394 260,200 11,194 -- EUR 7/26/01 204,319 179,800 173,062 6,738 -- EUR 7/26/01 39,600 34,848 33,542 1,306 -- EUR 7/26/01 81,900 70,106 69,371 735 -- EUR 7/26/01 127,976 109,829 108,398 1,431 -- EUR 7/26/01 19,211 16,466 16,272 194 -- EUR 7/26/01 480,000 405,936 406,571 -- 635 EUR 7/26/01 452,599 382,700 383,362 -- 662 EUR 7/26/01 882,379 748,160 747,394 766 -- EUR 7/26/01 17,642 15,000 14,944 56 -- EUR 7/26/01 280,000 235,869 237,166 -- 1,297 EUR 7/26/01 182,826 156,000 154,858 1,142 -- EUR 7/26/01 312,247 268,845 264,480 4,365 -- EUR 7/26/01 14,434 12,341 12,226 115 -- EUR 7/26/01 327,440 278,000 277,349 651 --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 59 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONCLUDED)
Forward U.S. $ Cost U.S. $ Foreign Currency Expiration Foreign on Origination Current Unrealized Unrealized Sale Contracts Date Currency Date Value Appreciation Depreciation ------------------ ------------ -------------- ---------------- -------------- -------------- ------------- EUR 8/7/01 180,645 $ 153,752 $ 152,979 $ 773 $ -- EUR 8/7/01 1,807,000 1,534,961 1,530,255 4,706 -- EUR 8/8/01 962,000 817,240 814,655 2,585 -- EUR 8/13/01 2,029,000 1,734,586 1,718,085 16,501 -- EUR 8/13/01 1,930,000 1,643,034 1,634,255 8,779 -- EUR 8/13/01 1,505,311 1,282,630 1,274,643 7,987 -- EUR 8/14/01 1,153,223 982,879 976,492 6,387 -- EUR 8/15/01 806,098 692,357 682,552 9,805 -- EUR 8/27/01 555,400 476,842 470,184 6,658 -- EUR 10/15/01 840,485 745,586 711,068 34,518 -- EUR 12/21/01 608,000 548,373 514,043 34,330 -- EUR 12/27/01 868,861 795,806 734,549 61,257 -- GBP 7/26/01 4,992,426 7,167,776 7,023,980 143,796 -- GBP 7/26/01 116,704 167,248 164,194 3,054 -- GBP 7/26/01 117,013 166,000 164,628 1,372 -- GBP 7/26/01 182,753 257,544 257,120 424 -- HUF 10/15/01 233,100,000 779,599 794,575 -- 14,976 JPY 7/26/01 191,372,874 1,591,789 1,539,047 52,742 -- JPY 7/26/01 8,231,260 68,411 66,197 2,214 -- JPY 7/26/01 851,500,617 7,071,090 6,847,885 223,205 -- JPY 7/26/01 2,882,520 24,000 23,182 818 -- JPY 7/26/01 15,509,760 128,000 124,732 3,268 -- JPY 7/26/01 11,544,162 95,000 92,840 2,160 -- JPY 7/26/01 13,026,540 109,100 104,761 4,339 -- JPY 7/26/01 24,075,882 201,218 193,622 7,596 -- JPY 7/26/01 3,755,677 30,400 30,204 196 -- MXN 8/16/01 8,822,000 936,270 961,065 -- 24,795 MXN 6/11/02 723,985 73,389 73,553 -- 164 PLN 10/2/01 4,049,570 919,312 980,299 -- 60,987 PLN 11/16/01 1,109,382 254,096 264,991 -- 10,895 PLN 11/16/01 1,606,501 382,000 383,735 -- 1,735 PLN 11/16/01 9,635,553 2,318,189 2,301,585 16,604 -- TWD 7/20/01 17,953,750 524,580 517,560 7,020 -- TWD 7/21/01 34,514,166 1,005,511 990,696 14,815 -- ----------- ----------- ---------- ---------- Total Forward Foreign Currency Sale Contracts $82,529,849 $80,027,323 $2,731,002 $ 228,476 =========== =========== ---------- ---------- Gross unrealized appreciation/depreciation from Forward Foreign Currency Contracts $4,812,066 $1,751,970 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 60 ================================================================================ THE LAZARD FUNDS, INC. PORTFOLIOS OF INVESTMENTS (CONCLUDED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL AMOUNT DESCRIPTION (000) VALUE -------------------------------------------------------------------------------- LAZARD MORTGAGE PORTFOLIO ASSET-BACKED SECURITIES--9.3% American Express Master Trust, Series 1996-2, Class A, 4.10%, 08/15/02 (d) ..................... $ 170 $ 170,000 BA Master Credit Card Trust, Series 1996-A, Class A, 4.11%, 08/15/03 (d) ..................... 365 365,000 ---------- TOTAL ASSET-BACKED SECURITIES (Identified cost $535,053)................ 535,000 ---------- MORTGAGE PASS-THROUGH SECURITIES--96.6% Federal Home Loan Mortgage Corp.: Pool#C00610, 6.50%, 05/01/28 ......................... 155 153,437 6.00%, TBA .............................. 660 641,912 6.50%, TBA .............................. 894 880,313 7.00%, TBA .............................. 292 297,475 7.50%, TBA .............................. 951 974,283 8.00%, TBA .............................. 329 339,590 Federal National Mortgage Association: Pool#540449, 7.00%, 10/01/30 (e) ..................... 591 594,561 Pool#568949, 7.00%, 01/01/31 ......................... 48 48,804 6.50%, TBA .............................. 435 433,045 7.00%, TBA .............................. 470 472,059 Government National Mortgage Association: Pool#486598, 6.50%, 10/15/28 (e) ..................... 437 434,011 Pool#529740, 7.00%, 02/15/31 (e) ..................... 309 312,380 ---------- TOTAL MORTGAGE PASS-THROUGH SECURITIES (Identified cost $5,605,455)............. 5,581,870 ---------- DISCOUNT NOTES--62.7% Federal Farm Credit Bank, 3.72%, 07/16/01 (e) ..................... $ 550 $ 549,148 Federal Home Loan Bank: 3.72%, 07/19/01 (e) ..................... 1,200 1,197,768 3.80%, 07/16/01 (e) ..................... 1,875 1,872,031 ---------- TOTAL DISCOUNT NOTES (Identified cost $3,618,947).............. 3,618,947 ---------- REPURCHASE AGREEMENT--2.2% State Street Corp., 3.88%, 07/02/01, (Dated 06/29/01, collateralized by $125,000 United States Treasury Note, 6.00%, 08/15/09, with a value of $133,438) (e) (Identified cost $129,000)............... 129 129,000 ---------- TOTAL INVESTMENTS (Identified cost $9,888,455) (b) ......... 170.8% $9,864,817 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ............................. (70.8) (4,087,877) --------- ---------- NET ASSETS ................................ 100.0% $5,776,940 ========== ========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 61 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO PORTFOLIOS OF INVESTMENTS JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- (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:
AGGREGATE AGGREGATE NET GROSS GROSS UNREALIZED AGGREGATE UNREALIZED UNREALIZED APPRECIATION PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION) ------------------------------- ---------------- -------------- -------------- ----------------- Equity $ 216,337,479 $ 17,942,072 $ 14,992,447 $ 2,949,625 Mid Cap 22,269,373 2,726,365 568,521 2,157,844 Small Cap 581,475,906 124,689,635 34,990,921 89,698,714 Global Equity 109,631,969 4,677,298 15,052,432 (10,375,134) International Equity 2,910,982,055 137,548,968 437,721,104 (300,172,136) International Small Cap 316,519,107 46,677,288 34,668,620 12,008,668 Emerging Markets 369,724,683 41,098,524 61,980,945 (20,882,421) International Equity Select 311,724 4,575 15,079 (10,504) Bond 52,953,600 1,036,189 695,279 340,910 High Yield 74,790,862 1,418,572 8,538,732 (7,120,160) International Fixed-Income 82,529,955 689,003 7,076,076 (6,387,073) Strategic Yield 236,113,449 1,181,297 12,249,333 (11,068,036) Mortgage 9,888,455 -- 23,638 (23,638)
(c) Pursuant to Rule 144A of the Securities Act of 1933, these securities may only be traded among "qualified institutional buyers". (d) Variable rate security. Interest rate shown is the rate in effect at June 30, 2001. (e) Segregated security for forward foreign currency contracts and/or forward roll transactions. (f) Step-up bond. The interest payment rate increases at specified intervals. Rate shown reflects rate in effect at June 30, 2001, which may step up at a future date. (g) Principal amount denominated in respective country's currency unless otherwise noted. (h) Structured note. (i) Interest-only security. The principal amount shown represents the face value of the underlying security. (j) Issue in default. (k) Bankrupt security fair valued at zero. (l) Zero coupon security. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 62 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- ABBREVIATIONS: ADR-- American Depositary Receipt GDR-- Global Depositary Receipt LTN-- Letras do Tesouro Nacional (Brazilian sovereign debt) NDF--Non Deliverable Forwards NTN--Nota do Tesouro Nacional (Brazilian sovereign debt) TBA-- To Be Announced CURRENCY TERMS: ------------------------------ ARS-- Argentine Peso JPY-- Japanese Yen AUD-- Australian Dollar KES-- Kenyan Shilling BRL-- Brazilian Real KRW-- South Korean Won CAD-- Canadian Dollar MXN-- Mexican Peso CHF-- Swiss Franc NLG-- Netherlands Guilder CLP-- Chilean Peso NZD--New Zealand Dollar CNY-- Chinese Renminbi PEN-- Peruvian Nouveau Sol COP-- Colombian Peso PHP-- Philippines Peso CRC-- Costa Rican Colon PLN-- Polish Zloty CZK-- Czech Koruna RUB-- Russian Ruble DEM-- German Deutsche Mark SEK-- Swedish Krona DKK-- Danish Krone SKK-- Slovakian Koruna EUR-- Euro TWD-- Taiwan Dollar FRF-- French Franc USD-- United States Dollar GBP-- British Pound Sterling UYU-- Uruguayan Peso HUF-- Hungarian Forint VEB-- Venezuelan Bolivar ILS-- Israeli Shekel ZAR--South African Rand INR-- Indian Rupee THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 63 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY INDUSTRY, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY COUNTRY:
LAZARD LAZARD LAZARD LAZARD LAZARD GLOBAL INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL EQUITY EQUITY SMALL CAP MARKETS EQUITY SELECT PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------- --------------- --------------- ----------- -------------- INDUSTRY Aerospace & Defense ....................... 1.4% 1.2% --% --% --% Apparel & Textiles ........................ -- -- 3.0 -- -- Automotive ................................ 1.9 2.9 1.6 -- -- Banking & Financial Services .............. 22.5 24.9 7.9 20.4 14.7 Brewery ................................... 2.9 1.6 -- 6.8 1.9 Broadcasting .............................. -- -- -- 1.4 -- Business Services & Supplies .............. 1.4 -- 13.1 -- -- Chemicals & Plastics ...................... 1.1 2.2 -- -- -- Commercial Services ....................... 0.2 0.4 -- -- -- Computer Software ......................... 1.9 -- 1.2 1.0 -- Computers & Business Equipment ............ 3.9 -- 1.2 0.5 -- Conglomerates ............................. -- -- -- 1.2 -- Construction Materials .................... -- 0.6 -- 1.6 -- Construction & Mining Equipment ........... -- -- 1.1 -- -- Cosmetics & Toiletries .................... 2.1 1.5 -- -- 1.7 Diversified ............................... 4.7 4.3 -- -- -- Drugs & Health Care ....................... 10.2 7.0 5.5 2.0 11.4 Electrical Equipment ...................... -- -- -- 2.7 -- Electronics ............................... 6.0 10.1 3.0 1.6 8.7 Food & Beverages .......................... 5.8 3.4 8.7 -- 11.3 Forest Products ........................... 0.8 1.0 -- -- -- Holding Company-Diversified ............... -- -- 1.9 -- -- Hotels & Restaurants ...................... 1.5 -- 2.0 -- -- Household Products & Home Furnishings ..... -- 1.1 7.0 0.8 -- Industrial & Machinery .................... -- 1.0 4.0 -- -- Insurance ................................. 5.0 6.1 3.3 5.8 8.8 Leisure & Entertainment ................... -- -- 1.2 -- -- Manufacturing ............................. 0.4 2.7 1.2 -- 2.8 Medical Products .......................... -- -- 3.4 -- -- Medical Supplies .......................... -- -- 1.2 -- -- Metals .................................... -- -- -- 3.2 -- Multimedia ................................ 3.2 1.6 -- -- 2.9 Oil & Gas ................................. 6.8 6.7 -- 6.0 10.8 Paper Products ............................ -- -- -- 1.5 -- Petrochemicals ............................ -- -- -- 1.5 -- Printing .................................. -- -- 0.6 -- -- Publishing ................................ -- 1.2 6.6 -- -- Repurchase Agreements ..................... 2.3 2.0 4.3 4.0 -- Retail .................................... 1.8 2.6 11.5 3.9 -- Semiconductor & Components ................ 2.3 -- -- -- -- Semiconductor Manufacturers ............... -- -- -- 2.6 -- Steel ..................................... -- -- 0.7 3.4 -- Telecommunications ........................ 6.1 8.3 -- 21.1 10.3 Tobacco ................................... -- 0.1 4.1 2.2 -- Transportation ............................ -- 0.6 -- -- -- Utilities ................................. 4.0 4.0 -- 3.6 2.7 ----- ------ ---- ------ ---- Total Investments ......................... 100.2% 99.1% 99.3% 98.8% 88.0% ===== ====== ==== ====== ====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 64 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO PORTFOLIOS OF INVESTMENTS (CONCLUDED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY ASSET TYPE, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY COUNTRY:
LAZARD LAZARD INTERNATIONAL STRATEGIC FIXED-INCOME YIELD PORTFOLIO PORTFOLIO --------------- ------------ ASSET TYPE Asset-Backed Securities ........................ 1.0% 27.2% Collateralized Mortgage Obligations ............ -- 0.5 Convertible Bonds .............................. -- 0.1 Corporate Bonds ................................ 64.0 28.2 Discount Notes ................................. 7.5 24.1 Foreign Government Obligations ................. 28.3 6.3 Mortgage Pass-Through Securities ............... -- 0.1 Preferred Stocks ............................... -- 1.9 Repurchase Agreements .......................... 0.2 2.3 Structured Notes ............................... 0.8 3.2 U.S. Government and Agency Obligations ......... 0.3 4.4 ----- ------ Total Investments .............................. 102.1% 98.3% ===== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 65 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2001 (UNAUDITED) ================================================================================
LAZARD LAZARD EQUITY MID CAP PORTFOLIO PORTFOLIO ------------------ ----------------- ASSETS Investments in securities, at value (cost $216,337,479, $22,269,373, $581,475,906, $109,631,969, $2,910,982,055, $316,519,107, $369,724,683, $311,724, $52,953,600, $74,790,862, $82,529,955, $236,113,449, and $9,888,455, respectively).................. $ 219,287,104 $ 24,427,217 Cash ......................................................... 318 333 Foreign currency (cost $0, $0, $0, $25,975, $1,913,696, $429,376, $95,994, $0, $0, $0, $350,823, $121,954, and $0, respectively)........................................ -- -- Receivables for: Investments sold ............................................ 726,925 72,518 Dividends and interest ...................................... 214,125 21,356 Capital stock sold .......................................... 48,927 10,827 Gross appreciation on foreign currency contracts ............ -- -- Collateral for securities on loan, at value .................. -- 6,035,661 Due from Investment Manager .................................. -- -- Deferred organizational and offering expenses ................ -- 6,489 -------------- ------------- Total assets ................................................. 220,277,399 30,574,401 -------------- ------------- LIABILITIES Payables for: Investments purchased ....................................... 1,626,268 372,686 Capital stock repurchased ................................... 4,309,837 121,653 Dividends payable ........................................... -- -- Gross depreciation on foreign currency contracts ............ -- -- Payable upon return of securities on loan .................... -- 6,035,661 Investment management fees payable ........................... 138,285 10,277 Accrued directors' fees payable .............................. 1,067 49 Accrued distribution fees payable ............................ 9,918 1,657 Other accrued expenses and payables .......................... 80,048 46,733 -------------- ------------- Total liabilities ............................................ 6,165,423 6,588,716 -------------- ------------- Net assets ................................................... $ 214,111,976 $ 23,985,685 ============== ============= NET ASSETS Paid in capital .............................................. $ 190,503,828 $ 17,931,491 Undistributed (distributions in excess of) investment income--net ...................................... 826,522 39,493 Unrealized appreciation (depreciation) on: Investments--net ............................................ 2,949,625 2,157,844 Foreign currency--net ....................................... -- -- Accumulated realized gain (loss)--net ........................ 19,832,001 3,856,857 -------------- ------------- Net assets ................................................... $ 214,111,976 $ 23,985,685 ============== ============= INSTITUTIONAL SHARES Net assets ................................................... $ 167,676,241 $ 16,683,556 Shares of capital stock outstanding* ......................... 9,877,613 1,345,686 NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 16.98 $ 12.40 OPEN SHARES Net assets ................................................... $ 46,435,735 $ 7,302,129 Shares of capital stock outstanding* ......................... 2,742,639 592,822 NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 16.93 $ 12.32 LAZARD LAZARD LAZARD GLOBAL INTERNATIONAL SMALL CAP EQUITY EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ----------------- ----------------- ------------------- $ 671,174,620 $ 99,256,835 $ 2,610,809,919 135 283 746 -- 25,975 1,913,696 25,649,570 527,636 26,312,638 308,078 117,305 5,045,760 582,487 366 21,428,722 -- -- -- -- 9,249,665 -- -- -- -- -- -- -- ------------- -------------- --------------- 697,714,890 109,178,065 2,665,511,481 ------------- -------------- --------------- 7,324,462 584,601 23,700,834 147,611 -- 5,345,893 -- -- -- -- -- -- -- 9,249,665 -- 428,949 235,077 1,637,925 3,082 398 11,984 14,590 939 30,101 135,667 70,289 937,454 ------------- -------------- --------------- 8,054,361 10,140,969 31,664,191 ------------- -------------- --------------- $ 689,660,529 $ 99,037,096 $ 2,633,847,290 ============= ============== =============== $ 549,547,351 $ 113,370,218 $ 2,920,498,753 1,234,039 507,626 6,154,110 89,698,714 (10,375,134) (300,172,136) -- (5,343) (575,650) 49,180,425 (4,460,271) 7,942,213 ------------- -------------- --------------- $ 689,660,529 $ 99,037,096 $ 2,633,847,290 ============= ============== =============== $ 616,144,682 $ 95,286,504 $ 2,485,074,411 31,180,669 8,359,467 214,299,689 $ 19.76 $ 11.40 $ 11.60 $ 73,515,847 $ 3,750,592 $ 148,772,879 3,731,292 329,232 12,888,414 $ 19.70 $ 11.39 $ 11.54
*$0.001 par value, 1,750,000,000 shares authorized for the Portfolios in total. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 66 ================================================================================ --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD INTERNATIONAL EMERGING INTERNATIONAL LAZARD SMALL CAP MARKETS EQUITY SELECT BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- --------------- --------------- --------------- $ 328,527,775 $ 348,842,262 $ 301,220 $ 53,294,510 2,362 882 30,386 946 428,860 95,994 -- -- 201,794 4,368,058 -- -- 910,195 1,141,425 535 831,840 1,681,048 3,426,152 -- 51,039 -- -- -- -- 26,369,186 79,428,364 -- -- -- -- 14,167 -- -- -- 1,258 -- -------------- ------------- ----------- ------------ 358,121,220 437,303,137 347,566 54,178,335 -------------- ------------- ----------- ------------ 498,650 3,370,913 -- 53,966 11,675 800,007 -- -- -- -- -- 21,271 -- -- -- -- 26,369,186 79,428,364 -- -- 202,815 294,953 -- 31,717 1,050 1,248 2 296 439 1,187 2 1,939 159,827 235,771 5,127 55,639 -------------- ------------- ----------- ------------ 27,243,642 84,132,443 5,131 164,828 -------------- ------------- ----------- ------------ $ 330,877,578 $ 353,170,694 $ 342,435 $ 54,013,507 ============== ============= =========== ============ $ 331,632,061 $ 440,244,900 $ 352,435 $ 60,622,939 3,797,741 2,459,645 504 (160,907) 12,008,668 (20,882,421) (10,504) 340,910 (11,373) (32,729) -- -- (16,549,519) (68,618,701) -- (6,789,435) -------------- ------------- ----------- ------------ $ 330,877,578 $ 353,170,694 $ 342,435 $ 54,013,507 ============== ============= =========== ============ $ 327,615,004 $ 345,399,359 $ 332,733 $ 44,823,206 26,829,942 45,737,441 34,295 4,745,846 $ 12.21 $ 7.55 $ 9.70 $ 9.44 $ 3,262,574 $ 7,771,335 $ 9,702 $ 9,190,301 268,852 1,028,533 1,000 973,374 $ 12.14 $ 7.56 $ 9.70 $ 9.44 LAZARD LAZARD LAZARD INTERNATIONAL STRATEGIC LAZARD HIGH YIELD FIXED-INCOME YIELD MORTGAGE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------- --------------- ---------------- ------------- $ 67,670,702 $ 76,142,882 $ 225,045,413 $ 9,864,817 603 38 241 154 -- 350,823 120,021 -- 1,147,745 662,054 18,465,786 407,278 1,619,460 1,144,165 2,607,138 22,010 583 9,684 15,731 -- -- 904,337 4,812,066 -- -- -- -- -- -- -- -- 2,596 7,270 -- -- 682 -------------- ------------ -------------- ----------- 70,446,363 79,213,983 251,066,396 10,297,537 -------------- ------------ -------------- ----------- 3,286,043 3,098,723 19,962,791 4,476,755 -- 43,148 752 -- 38,881 235 88,248 19,013 -- 1,248,101 1,751,970 -- -- -- -- -- 100,255 194,057 142,728 -- 411 332 960 144 2,318 4,319 1,683 -- 57,627 78,322 102,281 24,685 -------------- ------------ -------------- ----------- 3,485,535 4,667,237 22,051,413 4,520,597 -------------- ------------ -------------- ----------- $ 66,960,828 $ 74,546,746 $ 229,014,983 $ 5,776,940 ============== ============ ============== =========== $ 105,177,552 $ 82,831,108 $ 297,095,807 $ 5,760,214 23,009 562,103 (3,823,972) 11 (7,120,160) (6,387,073) (11,068,036) (23,638) -- (395,106) 3,057,556 -- (31,119,573) (2,064,286) (56,246,372) 40,353 -------------- ------------ -------------- ----------- $ 66,960,828 $ 74,546,746 $ 229,014,983 $ 5,776,940 ============== ============ ============== =========== $ 55,559,554 $ 52,711,401 $ 221,556,280 $ 5,776,940 8,718,651 5,929,058 27,777,179 573,674 $ 6.37 $ 8.89 $ 7.98 $ 10.07 $ 11,401,274 $ 21,835,345 $ 7,458,703 N/A 1,788,255 2,475,496 934,977 N/A $ 6.38 $ 8.82 $ 7.98 N/A
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 67 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 2001 (UNAUDITED) --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD GLOBAL EQUITY MID CAP SMALL CAP EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------- -------------- ---------- ----------- INVESTMENT INCOME INCOME: Interest .................................................... $ 148,745 $ 28,390 $ 788,949 $ 87,789 Dividends ................................................... 1,799,084 140,841 3,333,242 985,640 ------------- ------------ ----------- -------------- Total investment income* ..................................... 1,947,829 169,231 4,122,191 1,073,429 ------------- ------------ ----------- -------------- EXPENSES: Management fees ............................................. 874,213 85,439 2,728,087 385,237 Administration fees ......................................... 45,625 24,592 95,058 32,585 Distribution fees (Open Shares) ............................. 68,729 8,439 86,085 5,120 Custodian fees .............................................. 48,359 29,534 89,347 66,304 Professional services ....................................... 19,402 16,966 25,085 17,876 Registration fees ........................................... 14,194 10,383 20,693 10,379 Shareholders' services ...................................... 33,321 24,604 46,964 24,527 Directors' fees and expenses ................................ 6,637 585 20,584 2,868 Shareholders' reports ....................................... 5,789 1,890 11,853 1,228 Amortization of organizational and offering expenses ........ -- 2,395 -- -- Other ....................................................... 5,084 1,106 14,397 2,639 ------------- ------------ ----------- -------------- Total expenses before fees waived and expenses reimbursed .... 1,121,353 205,933 3,138,153 548,763 Management fees waived and expenses reimbursed .............. -- (76,135) -- (10,160) Administration fees waived .................................. -- -- -- -- Expense reductions .......................................... (46) (60) (12,488) (130) ------------- ------------ ----------- -------------- Expenses--net ................................................ 1,121,307 129,738 3,125,665 538,473 ------------- ------------ ----------- -------------- INVESTMENT INCOME (LOSS)--NET ................................ 826,522 39,493 996,526 534,956 ------------- ------------ ----------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY--NET Realized gain (loss) on: Investments--net** ......................................... 5,724,418 2,333,160 52,748,116 (3,042,373) Foreign currency--net ...................................... -- -- -- (47,312) Change in net unrealized appreciation (depreciation) on: Investments--net ........................................... (2,732,932) (284,270) 9,504,901 (6,230,073) Foreign currency--net ...................................... -- -- -- (4,321) ------------- ------------ ----------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY--NET ....................................... 2,991,486 2,048,890 62,253,017 (9,324,079) ------------- ------------ ----------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................................. $ 3,818,008 $ 2,088,383 $63,249,543 $ (8,789,123) ============= ============ =========== ============== *Net of foreign withholding taxes of ......................... $ -- $ -- $ -- $ 99,927 ============= ============ =========== ============== **Net of foreign capital gains taxes of ...................... $ -- $ -- $ -- $ -- ============= ============ =========== ==============
***Portfolio commenced operations on May 31, 2001. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 68 ================================================================================ --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL EQUITY SMALL CAP MARKETS EQUITY SELECT PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*** ----------------- ----------------- ---------------- --------------- $ 2,061,143 $ 371,519 $ 490,383 $ 260 31,967,546 5,022,511 3,676,338 535 -------------- --------------- -------------- ----------- 34,028,689 5,394,030 4,166,721 795 -------------- --------------- -------------- ----------- 10,679,289 1,218,430 1,649,356 213 214,282 54,803 55,299 3,755 185,670 2,429 6,787 2 1,545,332 236,334 359,426 3,055 48,570 20,306 20,303 2,842 27,795 13,410 15,815 1,198 68,537 27,876 29,950 6,313 81,025 8,743 9,036 2 22,161 3,109 3,734 36 -- -- -- 117 54,076 6,567 6,520 888 -------------- --------------- -------------- ----------- 12,926,737 1,592,007 2,156,226 18,421 -- (10,078) (11,832) (14,380) -- -- -- (3,750) (1,857) -- (224) -- -------------- --------------- -------------- ----------- 12,924,880 1,581,929 2,144,170 291 -------------- --------------- -------------- ----------- 21,103,809 3,812,101 2,022,551 504 -------------- --------------- -------------- ----------- (2,103,256) (8,156,250) (20,386,258) -- (5,662,625) (164,343) (428,887) -- (440,216,897) (4,758,174) 19,928,344 (10,504) (175,319) 62,250 (22,028) -- -------------- --------------- -------------- ----------- (448,158,097) (13,016,517) (908,829) (10,504) -------------- --------------- -------------- ----------- $ (427,054,288) $ (9,204,416) $ 1,113,722 $ (10,000) ============== =============== ============== =========== $ 5,099,666 $ 674,854 $ 469,286 $ 87 ============== =============== ============== =========== $ -- $ -- $ -- $ -- ============== =============== ============== =========== LAZARD LAZARD LAZARD LAZARD INTERNATIONAL STRATEGIC LAZARD BOND HIGH YIELD FIXED-INCOME YIELD MORTGAGE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------- ---------------- --------------- ---------------- ------------ $2,020,235 $ 4,438,277 $ 1,904,762 $ 8,721,971 $ 188,028 -- 293,104 786 208,178 -- ---------- --------------- ------------ --------------- --------- 2,020,235 4,731,381 1,905,548 8,930,149 188,028 ---------- --------------- ------------ --------------- --------- 153,583 278,180 297,582 898,978 13,185 28,461 29,732 30,249 46,388 19,409 12,908 16,265 28,296 10,185 -- 43,600 37,635 74,189 100,191 8,861 17,519 17,603 17,678 19,730 16,848 14,319 11,401 12,351 15,673 3,404 26,147 23,374 25,474 29,154 9,884 1,770 2,182 2,226 6,632 301 2,250 712 1,278 3,976 53 -- 2,395 -- -- 683 1,941 2,153 2,117 5,230 668 ---------- --------------- ------------ --------------- --------- 302,498 421,632 491,440 1,136,137 73,296 (12,718) (123,924) (29,525) -- (32,602) -- -- -- -- (18,750) -- -- -- (7,630) (518) ---------- --------------- ------------ --------------- --------- 289,780 297,708 461,915 1,128,507 21,426 ---------- --------------- ------------ --------------- --------- 1,730,455 4,433,673 1,443,633 7,801,642 166,602 ---------- --------------- ------------ --------------- --------- 491,212 (8,152,518) (87,368) (7,996,320) 40,353 -- -- (299,959) 1,512,466 -- (42,271) 6,786,901 (5,838,251) 3,507,618 (23,683) -- -- (775,564) 3,439,449 -- ---------- --------------- ------------ --------------- --------- 448,941 (1,365,617) (7,001,142) 463,213 16,670 ---------- --------------- ------------ --------------- --------- $2,179,396 $ 3,068,056 $ (5,557,509) $ 8,264,855 $ 183,272 ========== =============== ============ =============== ========= $ -- $ -- $ -- $ 9,651 $ -- ========== =============== ============ =============== ========= $ -- $ -- $ 2,984 $ 64,693 $ -- ========== =============== ============ =============== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 69 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 ------------------ ---------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income (loss)--net .................................................. $ 826,522 $ 2,673,847 Realized gain (loss) on investments and foreign currency--net .................. 5,724,418 57,395,103 Change in unrealized appreciation (depreciation)--net .......................... (2,732,932) (72,695,600) ------------- -------------- Net increase (decrease) in net assets resulting from operations ................. 3,818,008 (12,626,650) ------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS: From investment income--net Institutional Shares .......................................................... -- (2,231,410) Open Shares ................................................................... -- (534,416) From realized gains--net Institutional Shares .......................................................... -- (34,523,152) Open Shares ................................................................... -- (11,843,078) In excess of investment income--net Institutional Shares .......................................................... -- (16,449) Open Shares ................................................................... -- (3,939) In excess of realized gains--net Institutional Shares .......................................................... -- -- Open Shares ................................................................... -- -- ------------- -------------- Net decrease in net assets resulting from distributions ......................... -- (49,152,444) ------------- -------------- CAPITAL STOCK TRANSACTIONS: Net proceeds from sales Institutional Shares .......................................................... 10,610,989 61,385,178 Open Shares ................................................................... 6,429,144 27,266,542 Net proceeds from reinvestment of distributions Institutional Shares .......................................................... -- 35,428,274 Open Shares ................................................................... -- 12,240,399 Cost of shares redeemed Institutional Shares .......................................................... (33,145,862) (240,500,025) Open Shares ................................................................... (23,283,888) (84,011,522) ------------- -------------- Net increase (decrease) in net assets from capital stock transactions ........... (39,389,617) (188,191,154) ------------- -------------- Total increase (decrease) in net assets ......................................... (35,571,609) (249,970,248) Net assets at beginning of period ............................................... 249,683,585 499,653,833 ------------- -------------- Net assets at end of period* .................................................... $ 214,111,976 $ 249,683,585 ============= ============== SHARES ISSUED AND REPURCHASED: INSTITUTIONAL SHARES: Shares outstanding at beginning of period ...................................... 11,217,212 17,915,506 ------------- -------------- Shares sold .................................................................... 620,088 3,066,282 Shares issued to shareholders from reinvestment of distributions ............... -- 2,103,844 Shares repurchased ............................................................. (1,959,687) (11,868,420) ------------- -------------- Net increase (decrease) ........................................................ (1,339,599) (6,698,294) ------------- -------------- Shares outstanding at end of period ............................................ 9,877,613 11,217,212 ============= ============== OPEN SHARES: Shares outstanding at beginning of period ...................................... 3,722,698 5,796,320 ------------- -------------- Shares sold .................................................................... 381,808 1,349,595 Shares issued to shareholders from reinvestment of distributions ............... -- 723,431 Shares repurchased ............................................................. (1,361,867) (4,146,648) ------------- -------------- Net increase (decrease) ........................................................ (980,059) (2,073,622) ------------- -------------- Shares outstanding at end of period ............................................ 2,742,639 3,722,698 ============= ============== *Includes undistributed (distributions in excess of) investment income--net ..... $ 826,522 $ -- ============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 70 ================================================================================ --------------------------------------------------------------------------------
LAZARD MID CAP PORTFOLIO LAZARD SMALL CAP PORTFOLIO LAZARD GLOBAL EQUITY PORTFOLIO ---------------------------------------- ---------------------------------------- -------------------------------------- SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2001 YEAR ENDED JUNE 30, 2001 YEAR ENDED JUNE 30, 2001 YEAR ENDED (UNAUDITED) DECEMBER 31, 2000 (UNAUDITED) DECEMBER 31, 2000 (UNAUDITED) DECEMBER 31, 2000 ------------------ ------------------- ------------------ ------------------- ----------------- ------------------ $ 39,493 $ 33,746 $ 996,526 $ 4,373,558 $ 534,956 $ 621,601 2,333,160 1,926,999 52,748,116 (2,188,363) (3,089,685) 3,772,209 (284,270) 3,016,366 9,504,901 123,418,898 (6,234,394) (13,498,718) ------------- --------------- -------------- -------------- --------------- --------------- 2,088,383 4,977,111 63,249,543 125,604,093 (8,789,123) (9,104,908) ------------- --------------- -------------- -------------- --------------- --------------- -- (33,230) -- (10,388,013) -- (575,574) -- (516) -- (532,442) -- (11,974) -- (2,769,172) -- (38,162,495) -- (3,980,195) -- (836,056) -- (2,720,892) -- (187,255) -- (12,330) -- -- -- -- -- (192) -- -- -- -- -- -- -- (110) -- (1,364,417) -- -- -- (8) -- (64,191) ------------- --------------- -------------- -------------- --------------- --------------- -- (3,651,496) -- (51,803,960) -- (6,183,606) ------------- --------------- -------------- -------------- --------------- --------------- 1,333,221 4,440,827 120,973,541 461,592,135 71,305 58,276,470 1,987,750 3,970,363 37,074,829 89,818,313 25,000 1,044,736 -- 2,330,690 -- 42,677,429 -- 5,856,440 -- 705,002 -- 3,220,070 -- 211,837 (1,441,936) (19,643,155) (292,324,902) (748,772,609) (1,137,577) (8,488,632) (1,667,629) (12,988,297) (37,208,168) (117,797,644) (507,156) (2,056,550) ------------- --------------- -------------- -------------- --------------- --------------- 211,406 (21,184,570) (171,484,700) (269,262,306) (1,548,428) 54,844,301 ------------- --------------- -------------- -------------- --------------- --------------- 2,299,789 (19,858,955) (108,235,157) (195,462,173) (10,337,551) 39,555,787 21,685,896 41,544,851 797,895,686 993,357,859 109,374,647 69,818,860 ------------- --------------- -------------- -------------- --------------- --------------- $ 23,985,685 $ 21,685,896 $ 689,660,529 $ 797,895,686 $ 99,037,096 $ 109,374,647 ============== =============== ============== ============== =============== =============== 1,350,976 2,553,780 40,414,908 54,749,412 8,445,174 4,366,106 -------------- --------------- -------------- -------------- --------------- --------------- 117,338 392,767 6,605,511 27,339,672 6,034 4,239,184 -- 229,218 -- 2,550,600 -- 478,921 (122,628) (1,824,789) (15,839,750) (44,224,776) (91,741) (639,037) -------------- --------------- -------------- -------------- --------------- --------------- (5,290) (1,202,804) (9,234,239) (14,334,504) (85,707) 4,079,068 -------------- --------------- -------------- -------------- --------------- --------------- 1,345,686 1,350,976 31,180,669 40,414,908 8,359,467 8,445,174 ============== =============== ============== ============== =============== =============== 561,206 1,306,121 3,753,674 5,233,657 369,340 430,069 -------------- --------------- -------------- -------------- --------------- --------------- 174,970 372,166 2,013,203 5,305,280 2,040 75,852 -- 69,868 -- 193,580 -- 17,215 (143,354) (1,186,949) (2,035,585) (6,978,843) (42,148) (153,796) -------------- --------------- -------------- -------------- --------------- --------------- 31,616 (744,915) (22,382) (1,479,983) (40,108) (60,729) -------------- --------------- -------------- -------------- --------------- --------------- 592,822 561,206 3,731,292 3,753,674 329,232 369,340 ============== =============== ============== ============== =============== =============== $ 39,493 $ -- $ 1,234,039 $ 237,513 $ 507,626 $ (27,330) ============== =============== ============== ============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 71 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) --------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2001 DECEMBER 31, (UNAUDITED) 2000 ------------------ ------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income (loss)--net ................................................... $ 21,103,809 $ 32,069,212 Realized gain (loss) on investments and foreign currency--net ................... (7,765,881) 351,826,328 Change in unrealized appreciation (depreciation)--net ........................... (440,392,216) (756,978,908) ---------------- ---------------- Net increase (decrease) in net assets resulting from operations .................. (427,054,288) (373,083,368) ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS: From investment income--net Institutional Shares ........................................................... -- (34,532,302) Open Shares .................................................................... -- (1,430,879) From realized gains--net Institutional Shares ........................................................... -- (352,683,226) Open Shares .................................................................... -- (17,721,930) In excess of realized gains--net Institutional Shares ........................................................... -- -- Open Shares .................................................................... -- -- ---------------- ---------------- Net decrease in net assets resulting from distributions .......................... -- (406,368,337) ---------------- ---------------- CAPITAL STOCK TRANSACTIONS: Net proceeds from sales Institutional Shares ........................................................... 1,169,074,924 2,499,587,908 Open Shares .................................................................... 360,290,339 425,016,149 Net proceeds from reinvestment of distributions Institutional Shares ........................................................... -- 365,319,055 Open Shares .................................................................... -- 16,449,785 Cost of shares redeemed Institutional Shares ........................................................... (1,280,023,858) (2,701,895,463) Open Shares .................................................................... (337,599,327) (398,090,043) ---------------- ---------------- Net increase (decrease) in net assets from capital stock transactions ............ (88,257,922) 206,387,391 ---------------- ---------------- Total increase (decrease) in net assets .......................................... (515,312,210) (573,064,314) Net assets at beginning of period ................................................ 3,149,159,500 3,722,223,814 ---------------- ---------------- Net assets at end of period* ..................................................... $ 2,633,847,290 $ 3,149,159,500 ================ ================ SHARES ISSUED AND REPURCHASED: INSTITUTIONAL SHARES: Shares outstanding at beginning of period ....................................... 223,097,242 207,337,268 ---------------- ---------------- Shares sold ..................................................................... 94,311,158 161,834,339 Shares issued to shareholders from reinvestment of distributions ................ -- 26,927,629 Shares repurchased .............................................................. (103,108,711) (173,001,994) ---------------- ---------------- Net increase (decrease) ......................................................... (8,797,553) 15,759,974 ---------------- ---------------- Shares outstanding at end of period ............................................. 214,299,689 223,097,242 ================ ================ OPEN SHARES: Shares outstanding at beginning of period ....................................... 10,976,004 7,994,053 ---------------- ---------------- Shares sold ..................................................................... 29,229,560 27,888,419 Shares issued to shareholders from reinvestment of distributions ................ -- 1,217,140 Shares repurchased .............................................................. (27,317,150) (26,123,608) ---------------- ---------------- Net increase (decrease) ......................................................... 1,912,410 2,981,951 ---------------- ---------------- Shares outstanding at end of period ............................................. 12,888,414 10,976,004 ================ ================ *Includes undistributed (distributions in excess of) investment income--net ..... $ 6,154,110 $ (14,949,699) ================ ================
** Portfolio commenced operations on May 31, 2001. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 72 ================================================================================ --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO LAZARD EMERGING MARKETS PORTFOLIO LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO** ------------------------------------- ------------------------------------ ----------------------------------------------- SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED PERIOD ENDED JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 DECEMBER 31, JUNE 30, 2001 (UNAUDITED) 2000 (UNAUDITED) 2000 (UNAUDITED) ------------------ ------------------ ------------------ ----------------- ----------------------------------------------- $ 3,812,101 $ 3,311,114 $ 2,022,551 $ 2,325,246 $ 504 (8,320,593) 9,285,874 (20,815,145) 6,299,970 -- (4,695,924) (24,600,800) 19,906,316 (134,788,589) (10,504) ---------------- ---------------- -------------- -------------- --------------- (9,204,416) (12,003,812) 1,113,722 (126,163,373) (10,000) ---------------- ---------------- -------------- -------------- --------------- -- (2,695,984) -- (821,557) -- -- (5,161) -- -- -- -- (11,427,142) -- -- -- -- (62,848) -- -- -- -- (7,416,389) -- -- -- -- (40,790) -- -- -- ---------------- ---------------- -------------- -------------- --------------- -- (21,648,314) -- (821,557) -- ---------------- ---------------- -------------- -------------- --------------- 93,093,203 315,369,343 209,603,273 391,151,848 342,541 40,957,391 9,859,578 14,365,424 1,805,250 10,000 -- 20,585,318 -- 750,606 -- -- 106,983 -- -- -- (98,051,244) (178,275,031) (182,895,597) (415,547,373) (106) (39,374,452) (10,662,003) (12,165,873) (3,794,685) -- ---------------- ---------------- -------------- -------------- --------------- (3,375,102) 156,984,188 28,907,227 (25,634,354) 352,435 ---------------- ---------------- -------------- -------------- --------------- (12,579,518) 123,332,062 30,020,949 (152,619,284) 342,435 343,457,096 220,125,034 323,149,745 475,769,029 -- ---------------- ---------------- -------------- -------------- --------------- $ 330,877,578 $ 343,457,096 $ 353,170,694 $ 323,149,745 $ 342,435 ================ ================ ============== ============== =============== 27,193,777 15,418,580 42,246,142 43,466,805 -- ---------------- ---------------- -------------- -------------- --------------- 7,580,589 22,800,776 27,409,107 42,815,951 34,305 -- 1,661,402 -- 98,259 -- (7,944,424) (12,686,981) (23,917,808) (44,134,873) (10) ---------------- ---------------- -------------- -------------- --------------- (363,835) 11,775,197 3,491,299 (1,220,663) 34,295 ---------------- ---------------- -------------- -------------- --------------- 26,829,942 27,193,777 45,737,441 42,246,142 34,295 ================ ================ ============== ============== =============== 131,623 173,602 724,435 977,024 -- ---------------- ---------------- -------------- -------------- --------------- 3,320,654 755,609 1,898,296 185,304 1,000 -- 8,621 -- -- -- (3,183,425) (806,209) (1,594,198) (437,893) -- ---------------- ---------------- -------------- -------------- --------------- 137,229 (41,979) 304,098 (252,589) 1,000 ---------------- ---------------- -------------- -------------- --------------- 268,852 131,623 1,028,533 724,435 1,000 ================ ================ ============== ============== =============== $ 3,797,741 $ (14,360) $ 2,459,645 $ 437,094 $ 504 ================ ================ ============== ============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 73 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO ------------------------------------ SIX MONTHS ENDED JUNE 30, 2001 YEAR ENDED (UNAUDITED) DECEMBER 31, 2000 ----------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income (loss)--net .................................................. $ 1,730,455 $ 5,125,720 Realized gain (loss) on investments and foreign currency--net .................. 491,212 (2,622,044) Change in unrealized appreciation (depreciation)--net .......................... (42,271) 2,696,711 ------------- -------------- Net increase (decrease) in net assets resulting from operations ................. 2,179,396 5,200,387 ------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS: From investment income--net Institutional Shares .......................................................... (1,447,964) (4,464,115) Open Shares ................................................................... (282,414) (645,952) In excess of investment income--net Institutional Shares .......................................................... -- (7,849) Open Shares ................................................................... -- (1,136) From capital--net Institutional Shares .......................................................... -- -- Open Shares ................................................................... -- -- ------------- -------------- Net decrease in net assets resulting from distributions ......................... (1,730,378) (5,119,052) ------------- -------------- CAPITAL STOCK TRANSACTIONS: Net proceeds from sales Institutional Shares .......................................................... 26,896,094 67,422,399 Open Shares ................................................................... 71,587,591 19,635,208 Net proceeds from reinvestment of distributions Institutional Shares .......................................................... 1,269,966 3,918,798 Open Shares ................................................................... 202,332 581,833 Cost of shares redeemed Institutional Shares .......................................................... (38,616,749) (108,057,252) Open Shares ................................................................... (74,079,157) (20,439,987) ------------- -------------- Net increase (decrease) in net assets from capital stock transactions ........... (12,739,923) (36,939,001) ------------- -------------- Total increase (decrease) in net assets ......................................... (12,290,905) (36,857,666) Net assets at beginning of period ............................................... 66,304,412 103,162,078 ------------- -------------- Net assets at end of period* .................................................... $ 54,013,507 $ 66,304,412 ============= ============== SHARES ISSUED AND REPURCHASED: INSTITUTIONAL SHARES: Shares outstanding at beginning of period ...................................... 5,852,741 9,853,933 ------------- -------------- Shares sold .................................................................... 2,831,124 7,296,990 Shares issued to shareholders from reinvestment of distributions ............... 134,007 425,174 Shares repurchased ............................................................. (4,072,026) (11,723,356) ------------- -------------- Net increase (decrease) ........................................................ (1,106,895) (4,001,192) ------------- -------------- Shares outstanding at end of period ............................................ 4,745,846 5,852,741 ============= ============== OPEN SHARES: Shares outstanding at beginning of period ...................................... 1,222,954 1,248,705 ------------- -------------- Shares sold .................................................................... 7,562,295 2,118,772 Shares issued to shareholders from reinvestment of distributions ............... 21,358 63,104 Shares repurchased ............................................................. (7,833,233) (2,207,627) ------------- -------------- Net increase (decrease) ........................................................ (249,580) (25,751) ------------- -------------- Shares outstanding at end of period ............................................ 973,374 1,222,954 ============= ============== *Includes undistributed (distributions in excess of) investment income--net ..... $ (160,907) $ (160,984) ============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 74 ================================================================================ --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME LAZARD HIGH YIELD PORTFOLIO PORTFOLIO LAZARD STRATEGIC YIELD PORTFOLIO -------------------------------------- -------------------------------------- ------------------------------------- SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2001 YEAR ENDED JUNE 30, 2001 YEAR ENDED JUNE 30, 2001 YEAR ENDED (UNAUDITED) DECEMBER 31, 2000 (UNAUDITED) DECEMBER 31, 2000 (UNAUDITED) DECEMBER 31, 2000 ------------------ ------------------- ------------------ ------------------- ------------------ ------------------ $ 4,433,673 $ 11,441,269 $ 1,443,633 $ 2,850,344 $ 7,801,642 $ 20,396,733 (8,152,518) (15,237,238) (387,327) (5,092,537) (6,483,854) (11,091,601) 6,786,901 (11,917,431) (6,613,815) (1,201,237) 6,947,067 (5,130,833) ------------- --------------- ------------- ------------- --------------- ---------------- 3,068,056 (15,713,400) (5,557,509) (3,443,430) 8,264,855 4,174,299 ------------- --------------- ------------- ------------- --------------- ---------------- (3,655,854) (9,618,423) (365,552) -- (7,569,729) (24,763,188) (754,810) (1,823,113) (147,289) -- (243,553) (1,105,033) -- -- -- -- -- (5,394,953) -- -- -- -- -- (240,745) -- -- -- (812,428) -- -- -- -- -- (143,218) -- -- ------------- --------------- ------------- ------------- --------------- ---------------- (4,410,664) (11,441,536) (512,841) (955,646) (7,813,282) (31,503,919) ------------- --------------- ------------- ------------- --------------- ---------------- 11,427,506 25,318,514 4,646,172 10,333,776 50,545,349 72,949,621 2,027,608 18,463,169 494,239 22,829,224 4,056,190 26,149,984 3,426,658 9,384,119 362,960 801,686 7,104,236 27,375,427 735,778 1,532,612 147,150 143,376 192,839 1,089,388 (23,989,936) (30,149,120) (11,401,033) (17,371,090) (76,681,978) (140,214,583) (4,628,021) (3,060,285) (351,434) (3,272,741) (6,448,032) (32,376,702) -------------- --------------- ------------- ------------- --------------- ---------------- (11,000,407) 21,489,009 (6,101,946) 13,464,231 (21,231,396) (45,026,865) -------------- --------------- ------------- ------------- --------------- ---------------- (12,343,015) (5,665,927) (12,172,296) 9,065,155 (20,779,823) (72,356,485) 79,303,843 84,969,770 86,719,042 77,653,887 249,794,806 322,151,291 -------------- --------------- ------------- ------------- --------------- ---------------- $ 66,960,828 $ 79,303,843 $ 74,546,746 $ 86,719,042 $ 229,014,983 $ 249,794,806 ============== =============== ============= ============= =============== ================ 10,008,954 9,535,605 6,606,781 7,252,221 30,161,493 34,670,734 -------------- --------------- ------------- ------------- --------------- ---------------- 1,678,018 3,514,904 494,642 1,072,625 6,278,766 8,430,468 507,740 1,219,224 39,367 84,099 885,459 3,278,451 (3,476,061) (4,260,779) (1,211,732) (1,802,164) (9,548,539) (16,218,160) -------------- --------------- ------------- ------------- --------------- ---------------- (1,290,303) 473,349 (677,723) (645,440) (2,384,314) (4,509,241) -------------- --------------- ------------- ------------- --------------- ---------------- 8,718,651 10,008,954 5,929,058 6,606,781 27,777,179 30,161,493 ============== =============== ============= ============= =============== ================ 2,061,919 148,700 2,444,698 372,893 1,209,528 1,816,497 -------------- --------------- ------------- ------------- --------------- ---------------- 292,192 2,162,719 52,863 2,395,420 503,806 3,087,124 108,972 205,098 16,085 15,312 24,023 129,992 (674,828) (454,598) (38,150) (338,927) (802,380) (3,824,085) -------------- --------------- ------------- ------------- --------------- ---------------- (273,664) 1,913,219 30,798 2,071,805 (274,551) (606,969) -------------- --------------- ------------- ------------- --------------- ---------------- 1,788,255 2,061,919 2,475,496 2,444,698 934,977 1,209,528 ============== =============== ============= ============= =============== ================ $ 23,009 $ -- $ 562,103 $ (368,689) $ (3,823,972) $ (3,812,332) ============== =============== ============= ============= =============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 75 ================================================================================ THE LAZARD FUNDS, INC. STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED) --------------------------------------------------------------------------------
LAZARD MORTGAGE PORTFOLIO -------------------------------------- SIX MONTHS ENDED JUNE 30, 2001 PERIOD ENDED (UNAUDITED) DECEMBER 31, 2000** ----------------- -------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Investment income (loss)--net .................................................. $ 166,602 $ 36 Realized gain (loss) on investments and foreign currency--net .................. 40,353 -- Change in unrealized appreciation (depreciation)--net .......................... (23,683) 45 ------------ -------- Net increase (decrease) in net assets resulting from operations ................. 183,272 81 ------------ -------- DISTRIBUTIONS TO SHAREHOLDERS: INSTITUTIONAL SHARES: From investment income--net .................................................... (166,602) (36) ------------ -------- Net decrease in net assets resulting from distributions ......................... (166,602) (36) ------------ -------- CAPITAL STOCK TRANSACTIONS: INSTITUTIONAL SHARES: Net proceeds from sales ........................................................ 7,125,224 100,000 Net proceeds from reinvestment of distributions ................................ 147,588 -- Cost of shares redeemed ........................................................ (1,612,587) -- ------------ -------- Net increase (decrease) in net assets from capital stock transactions ........... 5,660,225 100,000 ------------ -------- Total increase (decrease) in net assets ......................................... 5,676,895 100,045 Net assets at beginning of period ............................................... 100,045 -- ------------ -------- Net assets at end of period* .................................................... $ 5,776,940 $100,045 ============ ======== SHARES ISSUED AND REPURCHASED: INSTITUTIONAL SHARES: Shares outstanding at beginning of period ...................................... 10,000 -- ------------ -------- Shares sold .................................................................... 708,262 10,000 Shares issued to shareholders from reinvestment of distributions ............... 14,606 -- Shares repurchased ............................................................. (159,194) -- ------------ -------- Net increase (decrease) ........................................................ 563,674 10,000 ------------ -------- Shares outstanding at end of period ............................................ 573,674 10,000 ============ ======== *Includes undistributed (distributions in excess of) investment income--net ..... $ 11 $ 11 ============ ========
**Portfolio commenced operations on December 29, 2000. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 76 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ------------------------------------------------------------------- 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ------------- -------------- ------------ ------------ ------------ ------------- Net asset value, beginning of period ........ $ 16.72 $ 21.08 $21.75 $19.98 $19.24 $17.41 ------- ------- ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss) (c) ........... 0.07 0.17 0.26 0.28 0.22 0.33 Net realized and unrealized gain (loss) .... 0.19 (0.79) 0.66 3.10 4.54 3.06 ------- ------- ------ ------ ------ ------ Total from investment operations ........... 0.26 (0.62) 0.92 3.38 4.76 3.39 ------- ------- ------ ------ ------ ------ Less distributions from and in excess of: Net investment income ...................... -- (0.23) ( 0.26) (0.26) (0.22) (0.33) Net realized gains ......................... -- (3.51) ( 1.33) (1.35) (3.80) (1.23) ------- ------- ------ ------ ------ ------ Total distributions ........................ -- (3.74) ( 1.59) (1.61) (4.02) (1.56) ------- ------- ------ ------ ------ ------ Net asset value, end of period .............. $ 16.98 $ 16.72 $21.08 $21.75 $19.98 $19.24 ======= ======= ====== ====== ====== ====== TOTAL RETURN (a) ............................ 1.5% (2.6)% 4.2% 17.3% 25.1% 19.9% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) .... $167,676 $187,517 $377,660 $361,126 $333,575 $278,605 Ratios to average net assets: Net expenses (b) ........................... 0.90% 0.86% 0.84% 0.85% 0.86% 0.89% Gross expenses (b) ......................... 0.90% 0.86% 0.84% 0.85% 0.87% 0.89% Net investment income (b) .................. 0.77% 0.85% 1.14% 1.28% 1.00% 1.87% Portfolio turnover rate ..................... 48% 36% 62% 76% 78% 66%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------- 2/5/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------- ------------ ------------ ----------- Net asset value, beginning of period ............. $ 16.70 $ 21.05 $ 21.76 $ 19.99 $ 20.19 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.04 0.12 0.20 0.20 0.13 Net realized and unrealized gain (loss) ......... 0.19 (0.79) 0.65 3.12 3.62 ------- ------- ------- ------- ------- Total from investment operations ................ 0.23 (0.67) 0.85 3.32 3.75 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- (0.17) (0.23) (0.20) (0.15) Net realized gains .............................. -- (3.51) (1.33) (1.35) (3.80) ------- ------- ------- ------- ------- Total distributions ............................. -- (3.68) (1.56) (1.55) (3.95) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 16.93 $ 16.70 $ 21.05 $ 21.76 $ 19.99 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 1.4% (2.9)% 3.9% 17.0% 18.9% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $46,436 $62,167 $121,994 $117,624 $22,811 Ratios to average net assets: Net expenses (b) ................................ 1.17% 1.13% 1.10% 1.12% 1.22% Gross expenses (b) .............................. 1.17% 1.13% 1.10% 1.12% 1.35% Net investment income (b) ....................... 0.50% 0.57% 0.89% 0.96% 0.60% Portfolio turnover rate .......................... 48% 36% 62% 76% 78%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 77 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD MID CAP PORTFOLIO
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 11/4/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 INSTITUTIONAL SHARES ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 11.36 $ 10.78 $ 10.46 $ 10.26 $ 10.00 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.03 0.02 0.02 0.05 0.02 Net realized and unrealized gain (loss) ......... 1.01 2.20 0.43 0.31 0.26 ------- ------- ------- ------- ------- Total from investment operations ................ 1.04 2.22 0.45 0.36 0.28 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- 0.03) (0.03) (0.05) (0.02) Net realized gains .............................. -- (1.61) (0.10) (0.11) -- ------- ------- ------- ------- ------- Total distributions ............................. -- (1.64) (0.13) (0.16) (0.02) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 12.40 $ 11.36 $ 10.78 $ 10.46 $ 10.26 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 9.2% 22.4% 4.4% 3.7% 2.8% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $16,684 $15,344 $27,521 $55,731 $49,779 Ratios to average net assets: Net expenses (b) ................................ 1.05% 1.05% 1.05% 1.05% 1.05% Gross expenses (b) .............................. 1.68% 1.50% 1.17% 1.23% 1.44% Net investment income (b) ....................... 0.44% 0.20% 0.23% 0.48% 1.02% Portfolio turnover rate .......................... 79% 152% 113% 86% 1%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 11/4/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 11.30 $ 10.74 $ 10.45 $ 10.26 $ 10.00 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.01 (0.01) (0.01) 0.02 0.01 Net realized and unrealized gain (loss) ......... 1.01 2.18 0.42 0.32 0.26 ------- ------- ------- ------- ------- Total from investment operations ................ 1.02 2.17 0.41 0.34 0.27 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- -- (0.02) (0.04) (0.01) Net realized gains .............................. -- (1.61) (0.10) (0.11) -- ------- ------- ------- ------- ------- Total distributions ............................. -- (1.61) (0.12) (0.15) (0.01) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 12.32 $ 11.30 $ 10.74 $ 10.45 $ 10.26 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 9.0% 22.0% 4.0% 3.4% 2.7% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 7,302 $ 6,342 $14,024 $16,345 $1,806 Ratios to average net assets: Net expenses (b) ................................ 1.35% 1.35% 1.35% 1.35% 1.35% Gross expenses (b) .............................. 2.10% 1.91% 1.55% 1.66% 4.97% Net investment income (loss) (b) ................ 0.13% (0.09)% (0.08)% 0.29% 0.72% Portfolio turnover rate .......................... 79% 152% 113% 86% 1%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 78 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ----------------------------------------------------------------------- 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ------------ ------------ ------------ --------------- --------------- ------------- Net asset value, beginning of period ...... $ 18.07 $ 16.57 $ 17.39 $ 20.02 $ 18.44 $ 15.95 ------- ------- ------- --------- --------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ......... 0.03 0.09 0.10 0.08 0.07 0.11 Net realized and unrealized gain (loss) .. 1.66 2.45 0.17 (2.60) 4.92 3.68 ------- ------- ------- --------- --------- ------- Total from investment operations ......... 1.69 2.54 0.27 (2.52) 4.99 3.79 ------- ------- ------- --------- --------- ------- Less distributions from and in excess of: Net investment income .................... -- (0.23) (0.11) (0.01) (0.06) (0.11) Net realized gains ....................... -- (0.81) (0.98) (0.10) (3.35) (1.19) ------- ------- ------- --------- --------- ------- Total distributions ...................... -- (1.04) (1.09) (0.11) (3.41) (1.30) ------- ------- ------- --------- --------- ------- Net asset value, end of period ............ $19.76 $18.07 $16.57 $ 17.39 $ 20.02 $ 18.44 ======= ======= ======= ========= ========= ======= TOTAL RETURN (a) .......................... 9.4% 15.9% 1.8% (12.6)% 28.1% 23.9% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) .. $616,145 $730,179 $906,945 $1,411,503 $1,445,075 $981,405 Ratios to average net assets: Net expenses (b) ......................... 0.83% 0.83% 0.81% 0.81% 0.82% 0.84% Gross expenses (b) ....................... 0.83% 0.83% 0.81% 0.81% 0.82% 0.84% Net investment income (b) ................ 0.30% 0.52% 0.60% 0.50% 0.35% 0.60% Portfolio turnover rate ................... 41% 67% 50% 46% 56% 51%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 1/30/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 18.04 $ 16.51 $ 17.35 $ 20.02 $ 18.75 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ -- 0.04 0.06 0.03 0.01 Net realized and unrealized gain (loss) ......... 1.66 2.45 0.16 (2.60) 4.61 ------- ------- ------- ------- ------- Total from investment operations ................ 1.66 2.49 0.22 2.57) 4.62 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- (0.15) (0.08) -- -- Net realized gains .............................. -- (0.81) (0.98) (0.10) (3.35) ------- ------- ------- ------- ------- Total distributions ............................. -- (0.96) (1.06) (0.10) (3.35) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 19.70 $ 18.04 $16.51 $17.35 $20.02 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 9.3% 15.6% 1.5% (12.9)% 25.6% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $73,516 $67,717 $86,413 $93,547 $46,097 Ratios to average net assets: Net expenses (b) ................................ 1.13% 1.12% 1.09% 1.09% 1.14% Gross expenses (b) .............................. 1.13% 1.12% 1.09% 1.09% 1.23% Net investment income (b) ....................... 0.01% 0.24% 0.33% 0.21% 0.12% Portfolio turnover rate .......................... 41% 67% 50% 46% 56%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 79 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD GLOBAL EQUITY PORTFOLIO
YEAR ENDED ----------------------------------------------------- FOR THE SIX MONTHS PERIOD ENDED 1/4/96* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES -------------- -------------- ------------ ------------ ------------ ----------- Net asset value, beginning of period ....... $ 12.41 $ 14.56 $ 13.14 $ 11.91 $ 11.48 $ 10.00 -------- ------- ------- ------- ------- -------- Income (loss) from investment operations: Net investment income (loss) (c) .......... 0.06 0.09 0.19 0.10 0.14 0.09 Net realized and unrealized gain (loss) ... (1.07) (1.49) 1.95 1.90 1.58 1.49 --------- -------- ------- ------- ------- -------- Total from investment operations .......... (1.01) (1.40) 2.14 2.00 1.72 1.58 --------- -------- ------- ------- ------- -------- Less distributions from and in excess of: Net investment income ..................... -- (0.07) (0.21) (0.08) (0.15) (0.10) Net realized gains ........................ -- (0.68) (0.51) (0.69) (1.14) -- --------- -------- ------- ------- ------- -------- Total distributions ....................... -- (0.75) (0.72) (0.77) (1.29) (0.10) --------- -------- ------- ------- ------- -------- Net asset value, end of period ............. $ 11.40 $12.41 $14.56 $ 13.14 $ 11.91 $ 11.48 ========= ======== ======= ======= ======= ======== TOTAL RETURN (a) ........................... (8.1)% (9.5)% 16.4% 17.1% 15.3% 15.8% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ... $ 95,287 $104,787 $63,557 $17,710 $10,359 $ 9,784 Ratios to average net assets: Net expenses (b) .......................... 1.04% 1.05% 1.05% 1.05% 1.05% 1.05% Gross expenses (b) ........................ 1.04% 1.06% 1.21% 2.18% 2.55% 5.06% Net investment income (b) ................. 1.06% 0.69% 1.35% 1.07% 1.02% 1.70% Portfolio turnover rate .................... 21% 47% 43% 48% 64% 74%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------- 1/30/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES -------------- ------------- ------------ ------------ ------------ Net asset value, beginning of period ............. $ 12.42 $14.56 $ 13.16 $ 11.92 $ 11.31 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.04 0.06 0.13 0.09 0.08 Net realized and unrealized gain (loss) ......... (1.07) (1.49) 1.97 1.88 1.78 ------- ------- ------- ------- ------- Total from investment operations ................ (1.03) (1.43) 2.10 1.97 1.86 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- (0.03) (0.19) (0.04) ( 0.11) Net realized gains .............................. -- (0.68) (0.51) (0.69) ( 1.14) ------- ------- ------- ------- ------- Total distributions ............................. -- (0.71) (0.70) (0.73) ( 1.25) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 11.39 $ 12.42 $ 14.56 $ 13.16 $ 11.92 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. (8.3)% (9.7)% 16.1% 16.8% 16.7% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 3,751 $ 4,588 $ 6,262 $ 4,824 $ 2,290 Ratios to average net assets: Net expenses (b) ................................ 1.35% 1.35% 1.35% 1.35% 1.35% Gross expenses (b) .............................. 1.85% 1.66% 1.80% 2.85% 4.23% Net investment income (b) ....................... 0.70% 0.42% 0.95% 0.77% 0.67% Portfolio turnover rate .......................... 21% 47% 43% 48% 64%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 80 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY PORTFOLIO
SIX MONTHS YEAR ENDED ENDED --------------------------------------------------------------------------- 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ----------------------------- -------------- -------------- --------------- ------------- Net asset value, beginning of period .... $ 13.46 $ 17.29 $ 15.23 $ 13.97 $ 13.62 $ 12.50 --------- --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income (loss) (c) ....... 0.09 0.15 0.34 0.18 0.22 0.17 Net realized and unrealized gain (loss) (1.95) (2.01) 3.25 2.03 1.40 1.76 --------- --------- --------- --------- --------- --------- Total from investment operations ....... (1.86) (1.86) 3.59 2.21 1.62 1.93 --------- --------- --------- --------- --------- --------- Less distributions from and in excess of: Net investment income .................. -- (0.17) (0.54) (0.14) (0.34) (0.19) Net realized gains ..................... -- (1.80) (0.99) (0.81) (0.93) (0.62) --------- --------- --------- --------- --------- --------- Total distributions .................... -- (1.97) (1.53) (0.95) (1.27) (0.81) --------- --------- --------- --------- --------- --------- Net asset value, end of period .......... $ 11.60 $ 13.46 $ 17.29 $ 15.23 $ 13.97 $ 13.62 ========= ========= ========= ========= ========= ========= TOTAL RETURN (a) ........................ (13.8)% (10.6)% 24.1% 16.0% 11.8% 15.6% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $2,485,074 $3,001,933 $3,584,093 $2,879,289 $2,099,724 $1,816,173 Ratios to average net assets: Net expenses (b) ....................... 0.89% 0.88% 0.88% 0.90% 0.89% 0.91% Gross expenses (b) ..................... 0.89% 0.88% 0.88% 0.90% 0.89% 0.91% Net investment income (b) .............. 1.49% 0.97% 2.09% 1.37% 1.18% 1.93% Portfolio turnover rate ................. 29% 51% 35% 41% 37% 39%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 1/23/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 13.41 $ 17.28 $ 15.23 $ 13.95 $ 13.29 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.08 0.10 0.31 0.18 0.16 Net realized and unrealized gain (loss) ......... (1.95) (2.02) 3.22 2.00 1.71 ------- ------- ------- ------- ------- Total from investment operations ................ (1.87) (1.92) 3.53 2.18 1.87 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... -- (0.15) (0.49) (0.09) (0.28) Net realized gains .............................. -- (1.80) (0.99) (0.81) (0.93) ------- ------- ------- ------- ------- Total distributions ............................. -- (1.95) (1.48) (0.90) (1.21) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 11.54 $ 13.41 $ 17.28 $ 15.23 $ 13.95 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. (13.9)% (11.0)% 23.7% 15.8% 14.1% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $148,773 $147,226 $138,131 $47,303 $10,794 Ratios to average net assets: Net expenses (b) ................................ 1.17% 1.15% 1.16% 1.24% 1.25% Gross expenses (b) .............................. 1.17% 1.15% 1.16% 1.24% 1.61% Net investment income (b) ....................... 1.27% 0.66% 1.87% 1.02% 0.37% Portfolio turnover rate .......................... 29% 51% 35% 41% 37%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 81 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ------------------------------------------------------------------ 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES -------------- ------------- ------------ ------------ ------------ ------------- Net asset value, beginning of period ...... $12.57 $ 14.12 $11.40 $11.69 $ 11.93 $ 10.52 -------- -------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ......... 0.14 0.16 0.14 0.05 0.07 0.08 Net realized and unrealized gain (loss) .. (0.50) (0.81) 2.81 0.83 (0.03) 1.55 -------- -------- ------- ------- ------- ------- Total from investment operations ......... (0.36) (0.65) 2.95 0.88 0.04 1.63 -------- -------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income .................... -- (0.11) (0.12) (0.05) (0.07) (0.08) Net realized gains ....................... -- (0.79) (0.11) (1.12) (0.21) (0.14) -------- -------- ------- ------- ------- ------- Total distributions ...................... -- (0.90) (0.23) (1.17) (0.28) s(0.22) -------- -------- ------- ------- ------- ------- Net asset value, end of period ............ $ 12.21 $12.57 $14.12 $11.40 $11.69 $ 11.93 ======== ======== ======= ======= ======= ======= TOTAL RETURN (a) .......................... (2.9)% (4.4)% 26.1% 7.6% 0.3% 15.6% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) .. $327,615 $341,808 $217,684 $177,779 $141,695 $126,973 Ratios to average net assets: Net expenses (b) ......................... 0.97% 0.98% 1.01% 1.04% 1.09% 1.12% Gross expenses (b) ....................... 0.97% 0.98% 1.01% 1.04% 1.09% 1.12% Net investment income (b) ................ 2.35% 1.13% 1.17% 0.81% 0.73% 1.67% Portfolio turnover rate ................... 5% 43% 50% 56% 63% 101%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED --------------------------------------- 2/13/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES -------------- ------------- ------------ ------------ -------------- Net asset value, beginning of period ............. $ 12.53 $ 14.06 $ 11.38 $ 11.69 $12.32 ------- ------- ------- ------- ------ Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.14 0.10 0.09 0.01 (0.02 Net realized and unrealized gain (loss) ......... (0.53) (0.80) 2.80 0.83 (0.42) ------- ------- ------- ------- ------ Total from investment operations ................ (0.39) (0.70) 2.89 0.84 (0.40) ------- ------- ------- ------- ------ Less distributions from and in excess of: Net investment income ........................... -- (0.04) (0.10) (0.03) (0.02) Net realized gains .............................. -- (0.79) (0.11) (1.12) (0.21) ------- ------- ------- ------- ------ Total distributions ............................. -- (0.83) (0.21) (1.15) (0.23) ------- ------- ------- ------- ------ Net asset value, end of period ................... $12.14 $12.53 $14.06 $ 11.38 $11.69 ======= ======= ======= ======= ====== TOTAL RETURN (a) ................................. (3.1)% (4.9)% 25.6% 7.2% (3.2)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $3,263 $1,649 $2,441 $2,646 $ 1,873 Ratios to average net assets: Net expenses (b) ................................ 1.43% 1.43% 1.43% 1.43% 1.43% Gross expenses (b) .............................. 2.47% 2.27% 2.12% 1.93% 3.39% Net investment income (b) ....................... 2.29% 0.68% 0.77% 0.43% 0.34% Portfolio turnover rate .......................... 5% 43% 50% 56% 63%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 82 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ------------------------------------------------------------------ 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ------------- ------------ ------------ ------------ -------------- ------------ Net asset value, beginning of period ........ $ 7.52 $ 10.70 $ 6.94 $ 9.20 $ 11.21 $ 9.24 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ........... 0.05 0.06 0.09 0.10 0.10 0.07 Net realized and unrealized gain (loss) .... (0.02) (3.22) 3.77 (2.26) (1.18) 2.11 ------- ------- ------- ------- ------- ------- Total from investment operations ........... 0.03 (3.16) 3.86 (2.16) (1.08) 2.18 ------- ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ...................... -- (0.02) (0.10) (0.10) (0.09) (0.08) Net realized gains ......................... -- -- -- -- (0.84) (0.13) ------- ------- ------- ------- ------- ------- Total distributions ........................ -- (0.02) (0.10) (0.10) (0.93) (0.21) ------- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 7.55 $7.52 $10.70 $ 6.94 $9.20 $11.21 ======= ======= ======= ======= ======= ======= TOTAL RETURN (a) ............................ 0.4% (29.5)% 55.8% (23.5)% (9.8)% 23.6% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) .... $345,399 $317,691 $465,278 $298,033 $236,340 $145,328 Ratios to average net assets: Net expenses (b) ........................... 1.29% 1.26% 1.24% 1.28% 1.32% 1.38% Gross expenses (b) ......................... 1.30% 1.27% 1.25% 1.29% 1.33% 1.48% Net investment income (b) .................. 1.23% 0.62% 1.05% 1.84% 1.26% 1.40% Portfolio turnover rate ..................... 20% 72% 46% 36% 40% 51%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 3/5/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------ ------------ ----------- Net asset value, beginning of period ............. $ 7.54 $ 10.74 $ 6.97 $ 9.20 $11.45 ------- ------- ------- ------- ------ Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.04 0.03 0.06 0.11 0.07 Net realized and unrealized gain (loss) ......... (0.02) (3.23) 3.79 (2.26) (1.42) ------- ------- ------- ------- ------ Total from investment operations ................ 0.02 (3.20) 3.85 (2.15) (1.35) ------- ------- ------- ------- ------ Less distributions from and in excess of: Net investment income ........................... -- -- (0.08) (0.08) (0.07) Net realized gains .............................. -- -- -- -- (0.83) ------- ------- ------- ------- ------ Total distributions ............................. -- -- (0.08) (0.08) (0.90) ------- ------- ------- ------- ------ Net asset value, end of period ................... $ 7.56 $ 7.54 $10.74 $ 6.97 $9.20 ======= ======= ======= ======= ====== TOTAL RETURN (a) ................................. 0.3% (29.8)% 55.3% (23.3)% (12.0)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 7,771 $ 5,459 $10,491 $ 8,191 $ 7,769 Ratios to average net assets: Net expenses (b) ................................ 1.60% 1.60% 1.60% 1.60% 1.60% Gross expenses (b) .............................. 2.04% 1.80% 1.75% 1.76% 1.93% Net investment income (b) ....................... 0.98% 0.30% 0.73% 1.54% 1.01% Portfolio turnover rate .......................... 20% 72% 46% 36% 40%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 83 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD: -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO
FOR THE PERIOD 5/31/01* TO 6/30/01+ INSTITUTIONAL SHARES -------------- Net asset value, beginning of period ............. $ 10.00 ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.02 Net realized and unrealized gain (loss) ......... (0.32) ------- Total from investment operations ................ (0.30) ------- Less distributions from and in excess of: Net investment income ........................... -- Net realized gains .............................. -- ------- Total distributions ............................. -- ------- Net asset value, end of period ................... $ 9.70 ======= TOTAL RETURN (a) ................................. (3.0)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 333 Ratios to average net assets: Net expenses (b) ................................ 1.15% Gross expenses (b) .............................. 71.09% Net investment income (b) ....................... 2.02% Portfolio turnover rate .......................... 0%
FOR THE PERIOD 5/31/01* TO 6/30/01+ OPEN SHARES -------------- Net asset value, beginning of period ............. $ 10.00 ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.01 Net realized and unrealized gain (loss) ......... (0.31) ------- Total from investment operations ................ (0.30) ------- Less distributions from and in excess of: Net investment income ........................... -- Net realized gains .............................. -- ------- Total distributions ............................. -- ------- Net asset value, end of period ................... $ 9.70 ======= TOTAL RETURN (a) ................................. (3.0)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 10 Ratios to average net assets: Net expenses (b) ................................ 1.45% Gross expenses (b) .............................. 140.58% Net investment income (b) ....................... 1.66% Portfolio turnover rate .......................... 0%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 84 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ---------------------------------------------------------------- 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ----------- ------------ ------------- ------------ ------------ ----------- Net asset value, beginning of period ............. $ 9.37 $ 9.29 $ 9.89 $ 10.03 $ 9.88 $ 10.10 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.27 0.59 0.55 0.55 0.59 0.56 Net realized and unrealized gain (loss) ......... 0.07 0.08 (0.60) 0.01 0.23 (0.14) ------- ------- ------- ------- ------- ------- Total from investment operations ................ 0.34 0.67 (0.05) 0.56 0.82 0.42 ------- ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.27) (0.59) (0.55) (0.55) (0.60) (0.57) Net realized gains .............................. -- -- -- (0.15) (0.07) (0.07) ------- ------- ------- ------- ------- ------- Total distributions ............................. (0.27) (0.59) (0.55) (0.70) (0.67) (0.64) ------- ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 9.44 $ 9.37 $ 9.29 $ 9.89 $ 10.03 $ 9.88 ======= ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 3.6% 7.5% (0.5)% 5.8% 8.6% 4.4% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $44,823 $54,847 $91,557 $100,397 $92,428 $69,906 Ratios to average net assets: Net expenses (b) ................................ 0.91% 0.82% 0.76% 0.78% 0.80% 0.80% Gross expenses (b) .............................. 0.91% 0.82% 0.76% 0.79% 0.81% 0.88% Net investment income (b) ....................... 5.67% 6.38% 5.74% 5.45% 5.81% 5.77% Portfolio turnover rate .......................... 143% 355% 549% 335% 447% 460%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------- 3/5/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------- ------------ ----------- Net asset value, beginning of period ............. $ 9.37 $ 9.29 $ 9.88 $ 10.02 $ 9.86 ------- ------- -------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.26 0.57 0.51 0.52 0.46 Net realized and unrealized gain (loss) ......... 0.07 0.08 (0.58) 0.01 0.24 ------- ------- -------- ------- ------- Total from investment operations ................ 0.33 0.65 (0.07) 0.53 0.70 ------- ------- -------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.26) (0.57) (0.52) (0.52) (0.47) Net realized gains .............................. -- -- -- (0.15) (0.07) ------- ------- -------- ------- ------- Total distributions ............................. (0.26) (0.57) (0.52) (0.67) (0.54) ------- ------- -------- ------- ------- Net asset value, end of period ................... $ 9.44 $ 9.37 $ 9.29 $ 9.88 $10.02 ======= ======= ======== ======= ======= TOTAL RETURN (a) ................................. 3.5% 7.3% (0.8)% 5.4% 7.2% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 9,190 $11,457 $11,605 $15,226 $ 7,283 Ratios to average net assets: Net expenses (b) ................................ 1.10% 1.10% 1.10% 1.10% 1.10% Gross expenses (b) .............................. 1.35% 1.27% 1.15% 1.21% 1.49% Net investment income (b) ....................... 5.47% 6.13% 5.37% 5.11% 5.46% Portfolio turnover rate .......................... 143% 335% 549% 335% 447%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 85 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD HIGH YIELD PORTFOLIO
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED --------------------------- 1/2/98* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 INSTITUTIONAL SHARES ------------ ------------ ------------ ----------- Net asset value, beginning of period ............. $ 6.57 $ 8.77 $ 9.42 $ 10.00 ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.40 0.96 0.92 0.88 Net realized and unrealized gain (loss) ......... (0.20) (2.20) (0.65) (0.57) ------- ------- ------- ------- Total from investment operations ................ 0.20 (1.24) 0.27 0.31 ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.40) (0.96) (0.92) (0.89) Net realized gains .............................. -- -- -- -- ------- ------- ------- ------- Total distributions ............................. (0.40) (0.96) (0.92) (0.89) ------- ------- ------- ------- Net asset value, end of period ................... $ 6.37 $ 6.57 $ 8.77 $ 9.42 ======= ======= ======= ======= TOTAL RETURN (a) ................................. 2.9% (15.2)% 2.9% 2.9% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $55,560 $65,752 $83,664 $41,935 Ratios to average net assets: Net expenses (b) ................................ 0.75% 0.75% 0.94% 1.05% Gross expenses (b) .............................. 1.07% 1.00% 1.06% 1.55% Net investment income (b) ....................... 12.02% 12.24% 10.08% 8.87% Portfolio turnover rate .......................... 117% 148% 190% 418%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED --------------------------- 2/24/98* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 OPEN SHARES ------------ ------------ ------------ -------------- Net asset value, beginning of period ............. $ 6.57 $ 8.78 $ 9.42 $ 10.37 ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.39 0.94 0.90 0.72 Net realized and unrealized gain (loss) ......... (0.19) (2.21) (0.65) (0.94) ------- ------- ------- ------- Total from investment operations ................ 0.20 (1.27) 0.25 (0.22) ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.39) (0.94) (0.89) (0.73) Net realized gains .............................. -- -- -- -- ------- ------- ------- ------- Total distributions ............................. (0.39) (0.94) (0.89) (0.73) ------- ------- ------- ------- Net asset value, end of period ................... $ 6.38 $ 6.57 $ 8.78 $ 9.42 ======= ======= ======= ======= TOTAL RETURN (a) ................................. 2.9% (15.5)% 2.7% ( 2.2)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $11,401 $13,552 $ 1,305 $ 949 Ratios to average net assets: Net expenses (b) ................................ 1.05% 1.05% 1.22% 1.35% Gross expenses (b) .............................. 1.46% 1.38% 2.92% 9.77% Net investment income (b) ....................... 11.66% 12.10% 9.89% 8.59% Portoflio turnover rate .......................... 117% 148% 190% 418%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 86 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ------------------------------------------------------------------ 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ------------- ------------- ------------- ------------ -------------- ---------- Net asset value, beginning of period ...... $ 9.60 $ 10.19 $ 10.71 $ 9.63 $ 10.78 $ 10.85 -------- ------- -------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ......... 0.17 0.36 0.36 0.32 0.40 0.54 Net realized and unrealized gain (loss) .. (0.82) (0.83) (0.68) 0.98 (1.05) 0.03 -------- ------- ------- ------- -------- ------- Total from investment operations ......... (0.65) (0.47) (0.32) 1.30 (0.65) 0.57 -------- ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income .................... (0.06) -- -- (0.22) (0.13) (0.59) Net realized gains ....................... -- -- (0.08) -- (0.12) (0.05) Capital .................................. -- (0.12) (0.12) -- (0.25) -- -------- ------- ------- ------- ------- ------- Total distributions ...................... (0.06) (0.12) (0.20) (0.22) (0.50) (0.64) -------- ------- ------- ------- ------- ------- Net asset value, end of period ............ $ 8.89 $ 9.60 $ 10.19 $10.71 $ 9.63 $10.78 ======== ======= ======= ======= ======= ======= TOTAL RETURN (a) .......................... (6.7)% (4.7)% (2.9)% 13.2% (5.6)% 5.5% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) .. $52,711 $ 63,409 $73,871 $115,500 $110,185 $88,430 Ratios to average net assets: Net expenses (b) ......................... 1.09% 1.09% 1.09% 1.09% 1.06% 1.05% Gross expenses (b) ....................... 1.15% 1.19% 1.13% 1.10% 1.10% 1.21% Net investment income (b) ................ 3.71% 3.79% 3.55% 4.27% 5.13% 5.54% Portfolio turnover rate ................... 44% 103% 139% 187% 166% 242%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ---------------------------------------- 1/8/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES -------------- ------------- ------------- ------------ ------------- Net asset value, beginning of period ............. $ 9.53 $ 10.14 $ 10.69 $ 9.63 $ 10.64 -------- -------- ------- ------- -------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.16 0.33 0.34 0.31 0.43 Net realized and unrealized gain (loss) ......... (0.81) (0.82) (0.69) 0.96 (0.98) -------- -------- -------- ------- -------- Total from investment operations ................ (0.65) (0.49) (0.35) 1.27 (0.55) -------- -------- -------- ------- -------- Less distributions from and in excess of: Net investment income ........................... (0.06) -- -- (0.21) (0.08) Net realized gains .............................. -- -- (0.08) -- (0.12) Capital ......................................... -- (0.12) (0.12) -- (0.26) -------- -------- -------- ------- -------- Total distributions ............................. (0.06) (0.12) (0.20) (0.21) (0.46) -------- -------- -------- ------- -------- Net asset value, end of period ................... $ 8.82 $ 9.53 $ 10.14 $10.69 $ 9.63 ======== ======== ======== ======= ======== TOTAL RETURN (a) ................................. (6.7)% (4.9)% (3.2)% 12.9% (4.8)% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $21,835 $23,310 $ 3,783 $4,751 $ 2,772 Ratios to average net assets: Net expenses (b) ................................ 1.35% 1.35% 1.35% 1.35% 1.35% Gross expenses (b) .............................. 1.45% 1.55% 1.91% 1.92% 2.71% Net investment income (b) ....................... 3.46% 3.54% 3.30% 4.01% 4.68% Portfolio turnover rate .......................... 44% 103% 139% 187% 166%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 87 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO
SIX MONTHS YEAR ENDED ENDED ---------------------------------------------------------------- 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 INSTITUTIONAL SHARES ------------- ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 7.96 $ 8.83 $ 9.01 $ 9.66 $ 10.01 $ 9.52 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.26 0.59 0.61 0.76 0.81 0.76 Net realized and unrealized gain (loss) ......... 0.02 (0.49) (0.18) (0.69) (0.28) 0.50 ------- ------- ------- ------- ------- ------- Total from investment operations ................ 0.28 0.10 0.43 0.07 0.53 1.26 ------- ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.26) (0.97) (0.61) (0.44) (0.82) (0.77) Net realized gains .............................. -- -- -- -- (0.06) -- Capital ......................................... -- -- -- (0.28) -- -- ------- ------- ------- ------- ------- ------- Total distributions ............................. (0.26) (0.97) (0.61) (0.72) (0.88) (0.77) ------- ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 7.98 $ 7.96 $ 8.83 $ 9.01 $ 9.66 $ 10.01 ======= ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 3.6% 1.1% 4.9% 0.8% 5.3% 13.7% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $221,556 $240,162 $306,116 $397,599 $399,452 $199,083 Ratios to average net assets: Net expenses (b) ................................ 0.92% 0.93% 0.91% 0.90% 0.94% 1.08% Gross expenses (b) .............................. 0.93% 0.93% 0.91% 0.90% 0.95% 1.08% Net investment income (b) ....................... 6.53% 6.82% 6.82% 6.94% 7.42% 7.88% Portfolio turnover rate .......................... 131% 207% 257% 276% 161% 189%
FOR THE SIX MONTHS YEAR ENDED PERIOD ENDED ------------------------------------------ 1/23/97* TO 6/30/01+ 12/31/00 12/31/99 12/31/98 12/31/97 OPEN SHARES ------------ ------------ ------------ ------------ ------------ Net asset value, beginning of period ............. $ 7.96 $ 8.83 $ 9.02 $ 9.66 $ 10.08 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.24 0.55 0.58 0.73 0.72 Net realized and unrealized gain (loss) ......... 0.02 (0.49) (0.19) (0.69) (0.35) ------- ------- ------- ------- ------- Total from investment operations ................ 0.26 0.06 0.39 0.04 0.37 ------- ------- ------- ------- ------- Less distributions from and in excess of: Net investment income ........................... (0.24) (0.93) (0.58) (0.40) (0.73) Net realized gains .............................. -- -- -- -- (0.06) Capital ......................................... -- -- -- (0.28) -- ------- ------- ------- ------- ------- Total distributions ............................. (0.24) (0.93) (0.58) (0.68) (0.79) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 7.98 $ 7.96 $ 8.83 $ 9.02 $ 9.66 ======= ======= ======= ======= ======= TOTAL RETURN (a) ................................. 3.3% 0.7% 4.4% 0.4% 3.8% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 7,459 $ 9,633 $16,035 $22,460 $15,300 Ratios to average net assets: Net expenses (b) ................................ 1.48% 1.34% 1.27% 1.28% 1.39% Gross expenses (b) .............................. 1.48% 1.34% 1.27% 1.28% 1.44% Net investment income (b) ....................... 5.96% 6.40% 6.49% 6.60% 6.92% Portfolio turnover rate .......................... 131% 207% 257% 276% 161%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 88 ================================================================================ THE LAZARD FUNDS, INC. FINANCIAL HIGHLIGHTS (CONCLUDED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: -------------------------------------------------------------------------------- LAZARD MORTGAGE PORTFOLIO
FOR THE SIX MONTHS PERIOD ENDED 12/29/00* TO 6/30/01+ 12/31/00 INSTITUTIONAL SHARES ------------ ------------------- Net asset value, beginning of period ............. $ 10.00 $ 10.00 ------- -------- Income (loss) from investment operations: Net investment income (loss) (c) ................ 0.25 --(d) Net realized and unrealized gain (loss) ......... 0.07 -- ------- -------- Total from investment operations ................ 0.32 -- ------- -------- Less distributions from and in excess of: Net investment income ........................... (0.25) --(d) Net realized gains .............................. -- -- ------- -------- Total distributions ............................. (0.25) -- ------- -------- Net asset value, end of period ................... $ 10.07 $ 10.00 ======= ======== TOTAL RETURN (a) ................................. 3.2% 0.04% RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......... $ 5,777 $ 100 Ratios to average net assets: Net expenses (b) ................................ 0.65% 0.65% Gross expenses (b) .............................. 2.22% 570.50%(e) Net investment income (b) ....................... 5.05% 4.38% Portfolio turnover rate .......................... 359% 0%
SEE NOTES TO FINANCIAL HIGHLIGHTS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 89 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- * Commencement of operations. + Unaudited. (a) Total returns are historical and assume changes in share price, reinvestment of all dividends and distributions, and no sales load. Periods of less than one year are not annualized. (b) Annualized for periods of less than one year. (c) For periods after and including 12/31/99, net investment income has been computed using the average shares method. (d) Amount is less than $0.01 per share. (e) Gross expense ratio is the result of the Portfolio being in existence for three days during the period ended 12/31/00. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 90 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- 1. ORGANIZATION The Lazard Funds, Inc. (the "Fund") was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of thirteen no-load portfolios (each referred to as a "Portfolio"), as follows: Lazard Equity Portfolio, Lazard Mid Cap Portfolio, Lazard Small Cap Portfolio, Lazard Global Equity Portfolio, Lazard International Equity Portfolio, Lazard International Small Cap Portfolio, Lazard Emerging Markets Portfolio, Lazard International Equity Select Portfolio (which commenced operations on May 31, 2001), Lazard Bond Portfolio, Lazard High Yield Portfolio, Lazard International Fixed-Income Portfolio, Lazard Strategic Yield Portfolio and Lazard Mortgage Portfolio. The Fund offers two different classes of shares of the Portfolios--Institutional Shares and 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. As of June 30, 2001 only Institutional Shares have been offered for Mortgage Portfolio. All Portfolios are operated as "diversified" funds as defined in the Act. 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"), NASDAQ or other U.S. exchanges are based on the last quoted sales price on the principal exchange on which the security is traded, generally 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 pricing services which are based primarily on institutional-size trading in similar groups of securities, or by 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 under the supervision of the Board of Directors. 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 SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Portfolio securities transactions are accounted for on trade date. Realized gains and losses on sales of investments are recorded on a specific identification basis. Dividend income is recorded on the ex-dividend date and interest income is accrued daily. The Portfolios amortize premiums and accrete discounts on fixed-income securities using the effective yield method. (C) REPURCHASE AGREEMENTS--In connection with transactions in repurchase agreements, the Fund's custodian takes possession of the underlying collateral securities, the value or market price of which is at least equal to the principal amount, plus interest, of the repurchase transaction. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market daily to ensure the adequacy of the collateral. In the event of default of the obligation to repurchase, a Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Under certain circumstances, such as the default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to delay due to legal proceedings and the Portfolio may suffer a loss. (D) SECURITIES LENDING--The Portfolios may lend portfolio securities to qualified borrowers in order to earn additional income. The terms of the lending agreements require that loans are secured at all times by cash, U.S. Government securities, or irrevocable letters of credit in an amount at least equal to 102% of the market value of domestic securities loaned (105% in the case of foreign securities), plus accrued interest and dividends, determined on a daily basis. Cash collateral received is invested in Navigator Securities Lending Prime Portfolio, a regulated investment company offered by State Street Corporation ("State Street"). If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Portfolios could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. At June 30, 2001, the value of the securities on loan and corresponding collateral received were as follows: 91 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) --------------------------------------------------------------------------------
SECURITIES PORTFOLIO LOANED COLLATERAL ---------------------------- -------------- -------------- Mid Cap(2) $ 5,796,806 $ 6,035,661 Small Cap(1) 268,000 280,000 Global Equity(2) 8,794,512 9,249,665 International Equity(1) 150,735,202 158,524,627 International Small Cap(2) 25,089,518 26,369,186 Emerging Markets(2) 75,640,209 79,428,364
(1) COLLATERAL IS U.S. TREASURY OBLIGATIONS. (2) COLLATERAL IS CASH. In accordance with generally accepted accounting principles, the cash collateral received and the amount payable upon return of the securities on loan are shown on the accompanying Statement of Assets and Liabilities of the respective Portfolios. During the period ended June 30, 2001, the income earned from securities lending, which is included in interest income on the Statement of Operations of the respective Portfolio, was as follows:
SECURITIES LENDING PORTFOLIO INCOME ------------------------- ------------------- Mid Cap $ 4,628 Small Cap 26,233 Global Equity 36,318 International Equity 954,192 International Small Cap 156,611 Emerging Markets 206,777
(E) 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 daily into U.S. dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rates on the respective transaction dates. 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 gains (losses) from foreign currency transactions represent net foreign currency 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 currency 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 has been 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 quotation services. 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 Statement of Operations of the respective Portfolios. (F) 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, 2000, the following Portfolios had available for federal income tax purposes unused realized capital losses which can be used to offset future realized capital gains as follows:
PORTFOLIO EXPIRING 2006 EXPIRING 2007 EXPIRING 2008 ------------------ --------------- --------------- -------------- Emerging Markets $31,081,131 $3,337,906 $ -- Bond -- 4,509,552 2,509,149 High Yield 1,150,441 6,288,085 9,656,682 International Fixed-Income -- 513,432 733,222 Strategic Yield 14,900,897 22,094,886 9,399,400
Under current tax law, certain capital and net foreign currency losses realized after October 31 within the taxable year may be deferred and treated as occurring on the first day of the following tax year. For the tax year ended December 31, 2000, the following Portfolios elected to defer net capital and currency losses arising between November 1, 2000 and December 31, 2000, as follows: 92 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) --------------------------------------------------------------------------------
PORTFOLIO AMOUNT ---------------------------- ------------- Small Cap $1,689,180 Global Equity 1,056,558 International Equity 1,395,138 International Small Cap 8,036,776 Emerging Markets 10,660,849 Bond 252,138 High Yield 5,070,450 International Fixed-Income 74,020 Strategic Yield 7,262,712
(G) 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, Strategic Yield Portfolio and Mortgage Portfolio and to pay such dividends monthly. Dividends from net investment income on shares of Equity Portfolio, Mid Cap Portfolio, Small Cap Portfolio, Global Equity Portfolio, International Equity Portfolio, International Small Cap Portfolio, Emerging Markets Portfolio and International Equity Select Portfolio will be declared and paid annually. During any particular year, net realized gains from investment transactions in excess of available capital loss carryforwards would be taxable to the Portfolio if not distributed. The Portfolios intend to declare and distribute these amounts annually to shareholders; however, to avoid taxation, a second distribution may be required. Income dividends and capital gains distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments of foreign currency transactions. Book and tax differences relating to shareholder distributions will result in reclassifications 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, 2000:
INCREASE (DECREASE) --------------------------------------------------------------------- UNDISTRIBUTED ACCUMULATED INVESTMENT REALIZED INCOME GAIN PORTFOLIO PAID IN CAPITAL (LOSS)-NET (LOSS)-NET ---------------------- ------------------- ----------------------- --------------------- Equity $3,822,883 $ 20,388 $(3,843,271) Mid Cap -- 12,522 (12,522) Small Cap 129,738 (38,740) (90,998) Global Equity (31,048) (49,900) 80,948 International Equity (3,838,230) 36,972,710 (33,134,480) International Small Cap -- (770,406) 770,406 Emerging Markets (2,775) (540,812) 543,587
INCREASE (DECREASE) --------------------------------------------------------------------- UNDISTRIBUTED ACCUMULATED INVESTMENT REALIZED INCOME GAIN PORTFOLIO PAID IN CAPITAL (LOSS)-NET (LOSS)-NET ---------------------- ------------------- ----------------------- --------------------- Bond $ (471,061) $ 383,409 $ 87,652 High Yield -- -- -- International Fixed-Income (1,162,835) (3,053,438) 4,216,273 Strategic Yield -- 1,251,937 (1,251,937) Mortgage (11) 11 --
(H) ORGANIZATIONAL AND OFFERING EXPENSES--Costs incurred by the Fund in connection with its organization and initial offering 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, except in the case of offering and initial registration expenses incurred by International Equity Select Portfolio and Mortgage Portfolio. Those fees are being amortized over a one-year period starting from the date the Portfolios commenced operations. All organizational costs associated with International Equity Select Portfolio and Mortgage Portfolio have been borne by Lazard Asset Management (the "Investment Manager"). In the event that any of the initial shares of any of the Portfolios are redeemed during such amortization period, the appropriate Portfolio will be reimbursed by the initial shareholder 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. (I) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific Portfolio are allocated among the Portfolios primarily on the basis of relative net assets. The Portfolios will accrue distribution fees to its Open Share 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. (J) 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. (K) 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 investments 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 93 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- investments may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment. (L) FORWARD COMMITMENTS--Each Portfolio may purchase or sell securities on a forward commitment, when-issued or delayed delivery basis. Payment and delivery may take place a month or more after the date of the transaction. The price and yield 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 cash or liquid securities is segregated in an amount at least equal to these commitments. (M) FORWARD ROLL TRANSACTIONS--Mortgage Portfolio may engage in forward roll transactions with respect to mortgage-related securities. In a forward roll transaction, the Portfolio sells a mortgage-related security to a financial institution and, simultaneously, agrees to purchase a similar security from that institution at a later date and agreed upon price. At all times during the transaction the Portfolio will segregate cash or liquid securities at least equal to the amount of the repurchase price (including accrued interest). (N) 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, a division of Lazard Fr-res & Co. LLC, on behalf of each Portfolio. Pursuant to the Management Agreements, the Investment 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 Portfolio pays the Investment 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:
PORTFOLIO ANNUAL RATE ----------------------------- ------------ Equity 0.75% Mid Cap 0.75 Small Cap 0.75 Global Equity 0.75 International Equity 0.75 International Small Cap 0.75 Emerging Markets 1.00 International Equity Select 0.85 Bond 0.50 High Yield 0.75 International Fixed-Income 0.75 Strategic Yield 0.75 Mortgage 0.40
The investment management fees are accrued daily and paid monthly. The Investment Manager has voluntarily agreed to reduce its fees and, if necessary, reimburse the following Portfolios if annualized operating expenses exceed the following per-centages of average daily net assets for the respective Shares:
INSTITUTIONAL SHARES OPEN SHARES ANNUAL ANNUAL PORTFOLIO OPERATING EXPENSES OPERATING EXPENSES ----------------------------- ---------------------- -------------------- Mid Cap 1.05% 1.35% Global Equity 1.05 1.35 International Small Cap N/A 1.43 Emerging Markets N/A 1.60 International Equity Select 1.15 1.45 Bond N/A 1.10 High Yield 0.75 1.05 International Fixed-Income 1.09 1.35 Mortgage 0.65 N/A
For the period ended June 30, 2001, the Investment Manager waived its management fee/reimbursed the indicated Portfolios for other expenses as follows:
INSTITUTIONAL SHARES OPEN SHARES AMOUNT WAIVED/ AMOUNT WAIVED/ PORTFOLIO REIMBURSED REIMBURSED ----------------------------- ---------------------- ------------------- Mid Cap $50,663 $25,472 Global Equity -- 10,160 International Small Cap -- 10,078 Emerging Markets -- 11,832 International Equity Select 13,341 1,039 Bond -- 12,718 High Yield 97,558 26,366 International Fixed-Income 17,692 11,833 Mortgage 32,602 N/A
94 ================================================================================ THE LAZARD FUNDS, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) JUNE 30, 2001 (UNAUDITED) -------------------------------------------------------------------------------- The Fund has entered into an administrative agreement with State Street to provide certain administrative services. Each Portfolio bears the cost of such services at the annual rate of $37,500, plus $7,500 per additional class, and 0.02% of average daily net assets up to $1 billion plus 0.01% of average daily net assets over $1 billion. State Street has agreed to waive the $37,500 base fee and the $7,500 additional class fee, if applicable, for the first six months of International Equity Select and Mortgage Portfolios' operations. Thereafter, the monthly base fee and additional class fee, if applicable, will be increased by 1/6 per month through the twelfth month of operations after which the full monthly base fee will be in effect. These waivers will be in effect during the first 12 months of operations or until the respective Portfolio reaches $25 million in net assets, whichever comes first. The Fund has a distribution agreement with Lazard Fr-res & 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 Distribution and Servicing Plan (the "Plan") in accordance with Rule 12b-1 under the Act. Under the Plan, each Portfolio pays a monthly fee to the Distributor at an annual rate of 0.25% of the average daily net assets of the Portfolio's Open Shares for distribution and servicing of accounts. The Distributor may make payments to certain financial institutions, securities dealers and other industry professionals for providing these services. Certain Directors of the Fund are Managing Directors of the Investment Manager. The Fund pays each Director who is not an employee or an affiliated person of the Investment Manager its allocated portion of a fixed fee of $30,000 per year, plus $2,500 per meeting attended for the Fund and Lazard Retirement Series, Inc., another multi-portfolio fund advised by the Investment Manager, and reimburses such Directors for travel and other out of pocket expenses. In addition, the Chairman of the Audit Committee for the Fund and Lazard Retirement Series, Inc. also receives an annual fee of $5,000. 4. SECURITIES TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES Purchases and sales of portfolio securities (excluding short-term securities), for the period ended June 30, 2001 were as follows:
PORTFOLIO PURCHASES SALES ------------------------------- --------------- --------------- Equity $111,282,139 $146,896,387 Mid Cap 17,811,685 17,755,798 Small Cap 288,321,330 451,299,326 Global Equity 21,628,649 22,709,096 International Equity 813,088,788 882,911,925 International Small Cap 16,809,249 23,805,238 Emerging Markets 91,198,650 64,827,532 International Equity Select 311,724 -- Bond(1) 84,823,042 94,216,738 High Yield 84,710,676 94,506,501 International Fixed-Income(2) 32,164,139 33,631,991 Strategic Yield(3) 224,711,710 217,593,520 Mortgage(4) 10,679,323 8,571,092
(1) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $68,411,568 AND $83,640,278 RESPECTIVELY. (2) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $0 AND $3,586,842 RESPECTIVELY. (3) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $69,920,307 AND $60,317,465, RESPECTIVELY. (4) INCLUDES PURCHASES AND SALES OF U.S. GOVERNMENT SECURITIES OF $8,868,623 AND $7,292,443, RESPECTIVELY. For the period ended June 30, 2001 brokerage commissions were paid to Lazard Fr-res & Co. LLC for portfolio transactions executed on behalf of certain of the Portfolios as follows:
COMMISSIONS PORTFOLIO PAID --------------- ------------ Mid Cap $1,675 Global Equity 665
5. LINE OF CREDIT The Fund has entered into a $50 million Line of Credit Agreement (the "Agreement") with State Street 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 State Street's Cost of Funds plus 0.50%, on an annualized basis. Under this Agreement, the Fund has agreed to pay a 0.09% per annum fee on the unused portion of the commitment, payable quarterly in arrears. During the period ended June 30, 2001, the Fund had no borrowings under this Agreement. 6. SUBSEQUENT EVENT Effective July 1, 2001, each Portfolio may impose a 1.00% redemption fee (short-term trading fee) on Portfolio shares acquired by purchase or exchange on or after July 1, 2001 and redeemed or exchanged less than 30 days after such shares were acquired. The fees retained by the affected Portfolio will be included as paid in capital on its Statement of Assets and Liabilities. 95 [THIS PAGE LEFT BLANK INTENTIONALLY] [THIS PAGE LEFT BLANK INTENTIONALLY] [THIS PAGE LEFT BLANK INTENTIONALLY] THE LAZARD FUNDS, INC. 30 Rockefeller Plaza New York, New York 10112 Telephone: (800) 823-6300 http://www.lazardnet.com INVESTMENT MANAGER Lazard Asset Management, a division of Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, New York 10112 Telephone: (800) 823-6300 DISTRIBUTOR Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, New York 10112 CUSTODIAN State Street Corporation 225 Franklin Street Boston, Massachusetts 02110 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Boston Financial Data Services, Inc. P.O. Box 9363 Boston, Massachusetts 02205-9363 Telephone: (800) 986-3455 INDEPENDENT PUBLIC ACCOUNTANTS Anchin, Block & Anchin LLP 1375 Broadway New York, New York 10018 http://www.anchin.com LEGAL COUNSEL Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038-4982 http://www.stroock.com LAZARDFunds 30 Rockefeller Plaza New York, New York 10112 Telephone (800) 823-6300 http://www.lazardnet.com This report is for the information of the shareholders 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. MF03101