-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, US3L0logiiTSTkyCMKbfbgu2VcRjFwuEOVyihsburGCF/hbAaweeop/vKp5NChBG RkydHfRnVcVwfKOa7BwLgg== 0000950123-96-001062.txt : 19960311 0000950123-96-001062.hdr.sgml : 19960311 ACCESSION NUMBER: 0000950123-96-001062 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960308 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAZARD FUNDS INC CENTRAL INDEX KEY: 0000874964 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06312 FILM NUMBER: 96532850 BUSINESS ADDRESS: STREET 1: STATE STREET BANK & TRUST CO STREET 2: PO BOX 9110 CITY: BOSTON STATE: MA ZIP: 02109 MAIL ADDRESS: STREET 1: STATE STREET BANK & TRUST CO STREET 2: PO BOX 9110 CITY: BOSTON STATE: MA ZIP: 02109 N-30D 1 THE LAZARD FUNDS, INC. -- ANNUAL REPORT 1 THE LAZARD FUNDS, INC. -------------------------------- Annual Report December 31, 1995 LAZARD FRERES & CO. LLC 30 Rockefeller Plaza, New York, New York 10020 (800) 823-6300 2 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. - -------------------------------------------------------------------------------- BOARD OF DIRECTORS - ------------------ JOHN J. BURKE(1) Retired Vice Chairman, Montana Power Company KENNETH S. DAVIDSON(1) Private Investor NORMAN EIG(2) Managing Director, Lazard Freres & Co. LLC HERBERT W. GULLQUIST(2) Managing Director, Lazard Freres & Co. LLC LESTER Z. LIEBERMAN(1) Private Investor RICHARD REISS(1) Managing Partner, Cumberland Associates JOHN RUTLEDGE(1) President, Rutledge and Company OFFICERS - -------- NORMAN EIG Chairman of the Board HERBERT W. GULLQUIST President WILLIAM G. BUTTERLY, III Vice President and Secretary GUS COUTSOUROS Treasurer Member of (1) Audit Committee (2) Executive Committee
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TABLE OF CONTENTS Overview........................................................................ 2 Growth Charts................................................................... 3 Performance Table............................................................... 6 Portfolio of Investments Lazard Equity Portfolio.................................................... 7 Lazard International Equity Portfolio...................................... 8 Lazard International Fixed-Income Portfolio................................ 10 Lazard Bond Portfolio...................................................... 12 Lazard Strategic Yield Portfolio........................................... 14 Lazard Small Cap Portfolio................................................. 17 Lazard International Small Cap Portfolio................................... 19 Lazard Special Equity Portfolio............................................ 20 Lazard Emerging Markets Portfolio.......................................... 21 Statements of Assets and Liabilities..................................................... 24 Operations................................................................. 26 Changes in Net Assets...................................................... 28 Financial Highlights............................................................ 30 Notes to Financial Statements................................................... 32 Report of Independent Auditors.................................................. 36
1 4 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. OVERVIEW - -------------------------------------------------------------------------------- DEAR SHAREHOLDERS, 1995 was a very impressive year for investors. Equity and fixed income returns were strong as interest rates fell and capital structures changed, and corporate activity increased. Most major equity markets around the world had positive returns, with the U.S. market clearly leading the way. The S&P 500 rose by 37.6%, reversing a disappointing 1994. The surprise was the magnitude of these gains that were powered by the unexpected strength of corporate profits. Operating earnings increased an estimated 18% to 20% in 1995 and profit margins expanded to 30-year highs due to the continued pace of cost-cutting and financial re-engineering by U.S. companies. Interest rates worldwide fell as inflation continued to decelerate. In the U.S., the Federal Reserve Bank successfully orchestrated a "soft landing," resulting in moderating economic activity and low inflation. This fueled a rise in the U.S. bond market that was paralleled by most major bond markets around the world. The yield on the U.S. Treasury 30-year bond declined by 200 basis points and again touched under 6%. For the year, the Lehman Aggregate Bond Index returned 18.5% and the Salomon Brothers World Government Bond Index Ex-U.S. was up 19.6%. The "old capital structure" is breaking down. European monetary union (EMU) and the prospect of a "converging Europe" have become increasingly effective as a disciplinary force. Governments around the world, both local and federal, are downsizing as state-owned monopolies are being dismantled and privatized. In the business world, performance incentives and entrepreneurship are replacing seniority and lifetime employment as the competition for global capital accelerates. Global corporate finance activity increased in 1995. Worldwide, companies consolidated, repurchased shares and "de-merged" through asset sales and spin-offs at an unprecedented pace. Growing corporate cash flows are allowing companies to re-invest and shrink their capital base further enhancing shareholder value. The Fund's holdings in defense and aerospace, media, telecommunications, paper and bank stocks all benefited from this trend. In Japan, government and business leaders finally began to actively address their problems. Stimulative fiscal and monetary programs, along with an initiative to restructure the banking system have all been introduced. Japanese company managements are also beginning to rationalize costs using Western style tactics: performance-oriented compensation, outsourcing to low-cost sites, asset sales and share repurchases. Looking ahead, the challenge is to find companies that can productively re-deploy assets. This is most likely found in industries undergoing significant consolidation including insurance, electric utility/power generation, defense, and banks. Many companies are embracing the concept of "shareholder value" by making their businesses better and being responsive to the real owners of their capital. Corporate governance and investor relations are beginning to unveil much of the value that has been hidden away in companies for years. THE LAZARD FUNDS, INC. 2 5 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. GROWTH CHARTS - -------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO The Lazard Equity Portfolio seeks capital appreciation through investing primarily in equity securities of companies with relatively large capitalizations that appear to the Investment Manager to be inexpensively priced relative to the return on total capital or equity. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EQUITY PORTFOLIO AND THE STANDARD & POOR'S 500 STOCK INDEX
MEASUREMENT PERIOD LAZARD EQUITY (FISCAL YEAR COVERED) PORTFOLIO S&P 500 MAY-87 50000.00 50000.00 JUN-87 51550.00 52515.00 JUL-87 54230.60 55172.26 AUG-87 55586.37 57224.67 SEP-87 53863.19 55971.45 OCT-87 44544.86 43954.38 NOV-87 42273.07 40336.93 DEC-87 44133.08 43398.51 JAN-88 45986.67 45290.68 FEB-88 47872.13 47319.70 MAR-88 47489.15 45876.45 APR-88 48343.95 46449.91 MAY-88 48053.89 46747.19 JUN-88 50120.21 48906.91 JUL-88 49468.65 48789.53 AUG-88 48429.80 47062.38 SEP-88 50657.57 49076.65 OCT-88 52886.51 50494.97 NOV-88 51881.66 49697.15 DEC-88 53126.82 50581.75 JAN-89 56473.81 54329.86 FEB-89 56247.92 52922.72 MAR-89 56979.14 54187.57 APR-89 59600.18 57059.51 MAY-89 62341.79 59227.77 JUN-89 61406.66 58925.71 JUL-89 65827.94 64293.85 AUG-89 67144.50 65463.99 SEP-89 66808.78 65215.23 OCT-89 64604.09 63760.93 NOV-89 65120.92 64997.89 DEC-89 65641.89 66570.84 JAN-90 61637.74 62190.48 FEB-90 62870.49 62911.89 MAR-90 64442.25 64623.09 APR-90 62122.33 63078.60 MAY-90 66595.14 69058.45 JUN-90 66328.76 68644.10 JUL-90 66262.43 68479.36 AUG-90 60298.81 62240.89 SEP-90 57102.97 59259.55 OCT-90 57217.18 59058.07 NOV-90 60993.51 62790.54 DEC-90 62579.35 64542.39 JAN-91 65082.52 67349.99 FEB-91 69898.63 72165.51 MAR-91 70667.51 73911.92 APR-91 70526.18 74089.30 MAY-91 72783.01 77282.55 JUN-91 69434.99 73743.01 JUL-91 72698.44 77179.44 AUG-91 75751.77 79008.59 SEP-91 74691.25 77689.15 OCT-91 75587.54 78730.18 NOV-91 71581.40 75557.35 DEC-91 79741.68 84201.11 JAN-92 80618.84 82634.97 FEB-92 82714.93 83709.23 MAR-92 80233.48 82076.90 APR-92 79832.32 84489.96 MAY-92 79672.65 84903.96 JUN-92 76485.75 83638.89 JUL-92 78703.83 87059.72 AUG-92 76500.13 85275.00 SEP-92 77647.63 86281.24 OCT-92 78967.64 86574.60 NOV-92 82758.08 89526.79 DEC-92 83916.70 90627.97 JAN-93 85511.11 91389.25 FEB-93 86537.25 92632.14 MAR-93 90258.35 94586.68 APR-93 88453.18 92297.68 MAY-93 90752.96 94762.03 JUN-93 91297.48 95036.84 JUL-93 91480.08 94656.69 AUG-93 94864.84 98244.18 SEP-93 94769.98 97487.70 OCT-93 98655.54 99505.70 NOV-93 97866.30 98560.39 DEC-93 99627.89 99752.97 JAN-94 104609.29 103144.57 FEB-94 103249.37 100349.36 MAR-94 98706.40 95974.12 APR-94 100384.40 97202.59 MAY-94 101589.02 98796.72 JUN-94 99252.47 96376.20 JUL-94 102726.31 99537.33 AUG-94 107348.99 103618.37 SEP-94 105631.41 101090.08 OCT-94 107110.25 103617.33 NOV-94 103254.28 99845.66 DEC-94 103873.80 101323.37 JAN-95 105639.66 103947.65 FEB-95 110287.80 108001.61 MAR-95 113375.86 111187.66 APR-95 116550.38 114456.57 MAY-95 121445.50 119034.84 JUN-95 125210.31 121796.44 JUL-95 129968.30 125840.09 AUG-95 131917.83 126154.69 SEP-95 136534.95 131478.41 OCT-95 135579.21 131005.09 NOV-95 141815.85 136756.21 DEC-95 143092.19 139395.61
LAZARD INTERNATIONAL EQUITY PORTFOLIO The Lazard International Equity Portfolio seeks capital appreciation through investing primarily in the equity securities of non-United States companies. The companies selected are those that the Investment Manager believes are inexpensively priced relative to the return on total capital or equity. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL EQUITY PORTFOLIO AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX
LAZARD INTERNATIONAL MEASUREMENT PERIOD EQUITY (FISCAL YEAR COVERED) PORTFOLIO EAFE 10/31/91 50000.00 50000.00 NOV-91 49950.00 47665.00 DEC-91 51598.35 50129.28 JAN-92 52320.73 49061.53 FEB-92 52896.25 47300.22 MAR-92 51626.74 44178.40 APR-92 52710.91 44386.04 MAY-92 55188.32 47359.91 JUN-92 54139.74 45115.05 JUL-92 51053.78 43960.10 AUG-92 50441.13 46716.40 SEP-92 48171.28 45791.42 OCT-92 47304.20 43387.37 NOV-92 47114.98 43795.21 DEC-92 48198.62 44022.94 JAN-93 47813.04 44014.14 FEB-93 48864.92 45343.37 MAR-93 50233.14 49297.31 APR-93 51338.27 53975.62 MAY-93 52775.74 55114.51 JUN-93 52142.43 54254.72 JUL-93 53706.70 56153.64 AUG-93 57681.00 59180.32 SEP-93 56008.25 57848.76 OCT-93 58976.69 59630.50 NOV-93 57856.13 54418.80 DEC-93 63121.04 58347.83 JAN-94 69117.54 63278.22 FEB-94 66974.89 63101.05 MAR-94 64228.92 60381.39 APR-94 66669.62 62941.56 MAY-94 66269.61 62582.79 JUN-94 64811.67 63465.21 JUL-94 68052.26 64080.82 AUG-94 71114.61 65599.54 SEP-94 67629.99 63533.15 OCT-94 68847.33 65648.81 NOV-94 64716.49 62491.10 DEC-94 63292.73 62884.79 JAN-95 60254.68 60470.02 FEB-95 60676.46 60300.70 MAR-95 61465.26 64057.44 APR-95 64108.26 66466.00 MAY-95 64685.24 65675.05 JUN-95 65784.89 64519.17 JUL-95 69929.33 68538.71 AUG-95 68670.61 65934.24 SEP-95 70181.36 67219.96 OCT-95 69058.46 65472.24 NOV-95 69749.04 67292.37 DEC-95 71632.27 70004.25
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO The Lazard International Fixed-Income Portfolio seeks high total return from a combination of current income and capital appreciation, consistent with what the Investment Manager considers to be prudent investment risk, through investing primarily in foreign fixed-income securities of varying maturities. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO AND THE SALOMON WORLD GOVERNMENT BOND NON-U.S.
LAZARD INTERNATIONAL MEASUREMENT PERIOD FIXED-INCOME (FISCAL YEAR COVERED) PORTFOLIO SWGBI NON-U.S. 10/31/91 50000.0 50000.0 NOV-91 50200.0 50780.0 DEC-91 52007.2 53420.6 JAN-92 50499.0 52469.7 FEB-92 50549.5 52175.8 MAR-92 49841.8 51622.8 APR-92 50140.8 51994.5 MAY-92 51544.8 53590.7 JUN-92 52524.1 55091.2 JUL-92 53312.0 56374.9 AUG-92 54858.1 57953.4 SEP-92 54803.2 58532.9 OCT-92 53597.5 56940.8 NOV-92 52740.0 56035.4 DEC-92 53109.1 56371.6 JAN-93 53958.9 57143.9 FEB-93 54984.1 58281.1 MAR-93 55973.8 59726.5 APR-93 57821.0 61518.3 MAY-93 58803.9 62637.9 JUN-93 58215.9 61466.6 JUL-93 58390.5 61509.6 AUG-93 60317.4 63699.3 SEP-93 61222.2 64775.9 OCT-93 61161.0 64477.9 NOV-93 60732.8 64181.3 DEC-93 61400.9 64893.7 JAN-94 61830.7 65172.7 FEB-94 61707.0 65355.2 MAR-94 62139.0 66152.6 APR-94 62014.7 66582.6 MAY-94 61642.6 65690.4 JUN-94 63183.7 67280.1 JUL-94 63120.5 67455.0 AUG-94 62615.5 67063.7 SEP-94 63867.8 68391.6 OCT-94 65464.5 70156.1 NOV-94 64286.2 68746.0 DEC-94 63964.7 68780.3 JAN-95 64924.2 70279.1 FEB-95 66936.9 72270.8 MAR-95 72425.7 78711.6 APR-95 74453.6 80395.2 MAY-95 76240.5 82150.2 JUN-95 76697.9 82559.3 JUL-95 76697.94 82996.86 AUG-95 72632.95 78249.44 SEP-95 74594.04 80557.80 OCT-95 75116.20 80815.59 NOV-95 75642.01 81518.68 DEC-95 76322.79 82227.90
3 6 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. GROWTH CHARTS (CONTINUED) - -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO The Lazard Bond Portfolio seeks to build and preserve capital through investing in a range of bonds including obligations issued or guaranteed by the U.S. Government and its agencies or instrumentalities, mortgage-backed securities, asset-backed securities, municipal securities and corporate fixed-income securities. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD BOND PORTFOLIO AND THE LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX
MEASUREMENT PERIOD LAZARD BOND (FISCAL YEAR COVERED) PORTFOLIO LEHMAN G/C 10/31/91 50000.0 50000.0 NOV-91 50500.0 50575.0 DEC-91 51964.5 51809.0 JAN-92 51392.9 51337.6 FEB-92 51547.1 51537.8 MAR-92 51237.8 51336.8 APR-92 51647.7 51788.6 MAY-92 52370.8 52591.3 JUN-92 53051.6 53369.6 JUL-92 54112.6 54431.7 AUG-92 54599.6 54976.0 SEP-92 55200.2 55723.7 OCT-92 54482.6 54999.3 NOV-92 54264.7 54790.3 DEC-92 54970.1 55524.5 JAN-93 55959.6 56607.2 FEB-93 56854.9 57501.6 MAR-93 56968.7 57731.6 APR-93 57367.4 58193.4 MAY-93 57080.6 58065.4 JUN-93 58165.1 58977.0 JUL-93 58572.3 59118.6 AUG-93 59568.0 60058.6 SEP-93 59508.4 60310.8 OCT-93 59687.0 60473.7 NOV-93 59507.9 60135.0 DEC-93 59626.9 60411.6 JAN-94 60581.0 61082.2 FEB-94 59551.1 61760.2 MAR-94 58181.4 60846.1 APR-94 57425.0 59842.2 MAY-94 57137.9 59435.3 JUN-94 57080.8 59476.9 JUL-94 58108.2 59482.8 AUG-94 58166.3 59667.2 SEP-94 56886.7 59118.3 OCT-94 56943.6 59112.4 NOV-94 56772.7 58846.4 DEC-94 57056.6 59052.3 JAN-95 57969.5 60050.3 FEB-95 59128.9 61293.3 MAR-95 59483.7 61642.7 APR-95 60257.0 62400.9 MAY-95 62667.2 64285.4 JUN-95 63105.9 64716.1 JUL-95 62727.3 64722.6 AUG-95 63354.5 65311.6 SEP-95 64051.4 65781.8 OCT-95 64948.2 66512.0 NOV-95 65662.6 67383.3 DEC-95 66187.9 68090.8
LAZARD STRATEGIC YIELD PORTFOLIO The Lazard Strategic Yield Portfolio seeks to obtain a total return on its assets by placing approximately equal emphasis on capital appreciation and current income through investing principally in high-yielding fixed-income securities. The Strategic Yield Portfolio may invest up to 50% of its total assets in non dollar denominated fixed-income securities of foreign issuers. Many of the high-yielding securities in which the Lazard Strategic Yield Portfolio invests are rated in the lower rating categories (i.e., below investment grade) by the nationally recognized securities rating services. These securities, which are often referred to as "junk bonds," are subject to greater risk of loss of principal and interest than higher-rated securities and are considered to be predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD STRATEGIC YIELD PORTFOLIO AND THE LIBOR USD FIX
MEASUREMENT PERIOD LAZARD STRATEGIC (FISCAL YEAR COVERED) YIELD PORTFOLIO 30 DAY LIBOR 10/1/91 50000.0 50000.0 OCT-91 51800.0 50210.0 NOV-91 52473.4 50420.9 DEC-91 51056.6 50597.4 JAN-92 50648.2 50769.4 FEB-92 51458.5 50947.1 MAR-92 52076.0 51125.4 APR-92 52076.0 51289.0 MAY-92 52648.9 51458.2 JUN-92 53175.4 51622.9 JUL-92 54185.7 51767.5 AUG-92 54781.7 51917.6 SEP-92 55384.3 52052.6 OCT-92 53002.8 52193.1 NOV-92 53002.8 52375.8 DEC-92 54115.9 52517.2 JAN-93 55522.9 52653.7 FEB-93 56577.8 52790.6 MAR-93 57483.1 52927.9 APR-93 57540.5 53065.5 MAY-93 58058.4 53208.8 JUN-93 59626.0 53347.1 JUL-93 60401.1 53485.8 AUG-93 60884.3 53624.9 SEP-93 60823.4 53764.3 OCT-93 61735.8 53904.1 NOV-93 61921.0 54060.4 DEC-93 62478.3 54206.4 JAN-94 63727.9 54347.3 FEB-94 62771.9 54504.9 MAR-94 61516.5 54668.5 APR-94 60655.3 54848.9 MAY-94 60655.3 55046.3 JUN-94 60230.7 55250.0 JUL-94 60893.2 55454.4 AUG-94 61745.7 55676.2 SEP-94 61375.3 55904.5 OCT-94 61252.5 56133.7 NOV-94 61497.5 56408.8 DEC-94 61005.5 56685.2 JAN-95 60944.5 56962.9 FEB-95 61249.3 57247.7 MAR-95 61555.5 57534.0 APR-95 62971.3 57815.9 MAY-95 64671.5 58099.2 JUN-95 65059.5 58389.7 JUL-95 65580.0 58670.0 AUG-95 66301.4 58951.6 SEP-95 66898.1 59234.5 OCT-95 67366.4 59504.7 NOV-95 68242.1 59788.5 DEC-95 69265.8 60076.7
LAZARD SMALL CAP PORTFOLIO The Lazard Small Cap Portfolio seeks capital appreciation through investing primarily in equity securities of companies with market capitalizations under $1 billion that are believed by the Investment Manager to be inexpensively priced relative to the productivity of their equity or assets employed. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD SMALL CAP PORTFOLIO AND THE RUSSELL 2000 STOCK INDEX
MEASUREMENT PERIOD LAZARD SMALL CAP (FISCAL YEAR COVERED) PORTFOLIO RUSSELL 2000 10/31/91 50000.00 50000.00 NOV-91 48600.00 47685.00 DEC-91 52245.00 51528.41 JAN-92 56581.34 55702.21 FEB-92 59127.50 57328.72 MAR-92 59127.50 55391.01 APR-92 57708.44 53452.32 MAY-92 57766.14 54163.24 JUN-92 54762.30 51601.32 JUL-92 56240.89 53397.04 AUG-92 54609.90 51891.25 SEP-92 54992.17 53089.93 OCT-92 57631.79 54778.19 NOV-92 62703.39 58968.72 DEC-92 65086.12 61020.84 JAN-93 67103.79 63083.34 FEB-93 67707.72 61626.12 MAR-93 70957.70 63622.80 APR-93 69325.67 61879.54 MAY-93 72514.65 64614.61 JUN-93 74472.54 65015.22 JUL-93 75068.33 65912.43 AUG-93 79497.36 68759.85 SEP-93 81007.81 70698.88 OCT-93 81736.88 72515.84 NOV-93 80674.30 70130.07 DEC-93 84627.34 72528.52 JAN-94 87758.55 74805.91 FEB-94 87846.31 74536.61 MAR-94 83717.53 70601.08 APR-94 83633.81 71017.62 MAY-94 83884.72 70222.23 JUN-94 82961.98 67834.67 JUL-94 84704.18 68947.16 AUG-94 89617.03 72787.52 SEP-94 89617.03 72547.32 OCT-94 88183.16 72264.38 NOV-94 83774.00 69344.90 DEC-94 86538.54 71210.28 JAN-95 86192.39 70313.03 FEB-95 89898.66 73238.05 MAR-95 92056.23 74497.75 APR-95 93989.41 76151.60 MAY-95 96809.09 77461.40 JUN-95 101165.50 81481.65 7/1/95 105819.11 86174.99 AUG-95 106348.21 87958.82 SEP-95 106454.55 89533.28 OCT-95 100386.64 85531.14 NOV-95 104602.88 89123.45 DEC-95 105335.10 91476.31
4 7 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. GROWTH CHARTS (CONTINUED) - -------------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO The Lazard International Small Cap Portfolio seeks capital appreciation through investing primarily in equity securities of non-United States companies with market capitalizations under $1 billion that are believed by the Investment Manager to be inexpensively priced relative to the return on total capital or equity. The Lazard International Small Cap Portfolio operates similarly to the Lazard Small Cap Portfolio, except that this Portfolio will invest primarily in the equity securities of non-United States issuers and, therefore, investment determinations include, among other items, the effect of currency fluctuations and the political and economic factors of other jurisdictions. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL SMALL CAP PORTFOLIO AND THE SALOMON EMI EX-U.S. INDEX
LAZARD INTERNA- MEASUREMENT PERIOD TIONAL SMALL CAP (FISCAL YEAR COVERED) PORTFOLIO EMI EX-U.S. 12/1/94 50000.0 50000.0 DEC-93 54350.0 53550.0 JAN-94 60382.9 58899.6 FEB-94 59356.3 59311.9 MAR-94 55735.6 58339.2 APR-94 55122.5 60089.4 MAY-94 54846.9 59230.1 JUN-94 53475.7 60474.0 JUL-94 54491.8 61163.4 AUG-94 56671.4 61811.7 SEP-94 54914.6 60043.9 OCT-94 55353.9 61130.7 NOV-94 52973.7 57316.1 DEC-94 51808.3 58084.2 JAN-95 50254.0 56196.4 FEB-95 49952.5 55376.0 MAR-95 48803.6 57729.4 APR-95 49877.3 59461.3 MAY-95 51224.0 58420.7 JUN-95 51685.0 57702.2 JUL-95 53649.0 56992.4 AUG-95 53166.2 60315.1 SEP-95 54708.0 58789.1 OCT-95 52574.4 59247.7 NOV-95 52416.7 59875.7 DEC-95 52731.2 62168.9
LAZARD SPECIAL EQUITY PORTFOLIO The Lazard Special Equity Portfolio seeks capital appreciation through investing primarily in equity securities of companies that are believed by the Investment Manager to be undervalued in the marketplace in relation to factors such as the respective companies' assets, earnings, earnings power or growth potential. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD SPECIAL EQUITY PORTFOLIO AND THE RUSSELL 2000 STOCK INDEX
MEASUREMENT PERIOD LAZARD SPECIAL (FISCAL YEAR COVERED) EQUITY PORTFOLIO RUSSELL 2000 1/16/86 50000.0 50000.0 JAN-86 49600.0 50790.0 FEB-86 52526.4 54436.7 MAR-86 55520.4 57049.7 APR-86 56075.6 57848.4 MAY-86 58262.6 59815.2 JUN-86 60010.4 59755.4 JUL-86 57550.0 54168.3 AUG-86 58470.8 55890.8 SEP-86 56365.9 52442.4 OCT-86 58789.6 54524.3 NOV-86 59318.7 54338.9 DEC-86 58191.6 52768.5 JAN-87 63428.9 58873.9 FEB-87 68249.5 63825.2 MAR-87 69000.2 65542.1 APR-87 67206.2 63647.9 MAY-87 67071.8 63444.2 JUN-87 68614.5 65074.7 JUL-87 71221.8 67105.1 AUG-87 73572.1 69091.4 SEP-87 73057.1 67833.9 OCT-87 55450.4 47056.4 NOV-87 54008.6 44538.9 DEC-87 56979.1 48124.3 JAN-88 58574.5 50222.5 FEB-88 62381.9 54747.5 MAR-88 65750.5 57309.7 APR-88 68051.8 58610.6 MAY-88 67507.4 57034.0 JUN-88 71422.8 61100.5 JUL-88 71137.1 60520.1 AUG-88 69500.9 58976.8 SEP-88 71099.5 60539.7 OCT-88 72521.5 59867.7 NOV-88 71288.6 57886.1 DEC-88 72999.5 60161.0 JAN-89 75627.5 62850.2 FEB-89 76308.1 63309.0 MAR-89 78368.5 64803.1 APR-89 79779.1 67628.5 MAY-89 82252.3 70543.3 JUN-89 83157.0 68927.9 JUL-89 84321.2 71588.5 AUG-89 86513.6 73335.2 SEP-89 87292.2 73569.9 OCT-89 84237.0 69214.6 NOV-89 83647.3 69678.3 DEC-89 84734.7 69943.1 JAN-90 80074.3 63837.1 FEB-90 81836.0 65816.0 MAR-90 83963.7 68396.0 APR-90 83124.0 66159.4 MAY-90 85700.9 70843.5 JUN-90 85358.1 71027.7 JUL-90 84248.4 67916.7 AUG-90 75318.1 58829.5 SEP-90 71853.5 53599.5 OCT-90 69338.6 50324.6 NOV-90 72736.2 54164.4 DEC-90 75791.1 56293.0 JAN-91 80262.8 61365.0 FEB-91 85961.4 68250.2 MAR-91 89056.1 73034.5 APR-91 90570.0 72844.6 MAY-91 92200.3 76312.0 JUN-91 90540.7 71901.2 JUL-91 95882.6 74417.7 AUG-91 95786.7 77163.7 SEP-91 98756.1 77757.9 OCT-91 99941.1 79810.7 NOV-91 99441.4 76115.5 DEC-91 104612.4 82250.4 JAN-92 107123.1 88912.7 FEB-92 111193.8 91508.9 MAR-92 113306.4 88415.9 APR-92 112739.9 85321.3 MAY-92 112627.2 86456.1 JUN-92 109361.0 82366.7 JUL-92 110345.2 85233.1 AUG-92 108579.7 82829.5 SEP-92 109774.1 84742.9 OCT-92 109883.9 87437.7 NOV-92 117465.8 94126.7 DEC-92 120872.4 97402.3 JAN-93 123048.1 100694.5 FEB-93 122063.7 98368.5 MAR-93 124382.9 101555.6 APR-93 121895.2 98773.0 MAY-93 124455.0 103138.8 JUN-93 125699.6 103778.2 JUL-93 127082.3 105210.4 AUG-93 127717.7 109755.4 SEP-93 129505.7 112850.5 OCT-93 131836.8 115750.8 NOV-93 130254.8 111942.6 DEC-93 133120.4 115771.0 JAN-94 133120.4 119406.2 FEB-94 133919.1 118976.4 MAR-94 134187.0 112694.4 APR-94 133381.8 113359.3 MAY-94 131647.9 112089.7 JUN-94 130068.1 108278.7 JUL-94 132019.1 110054.4 AUG-94 134659.5 116184.5 SEP-94 132639.6 115801.0 OCT-94 133170.2 115349.4 NOV-94 130906.3 110689.3 DEC-94 129466.3 113666.9 JAN-95 129466.3 112234.6 FEB-95 133220.8 116903.6 MAR-95 134419.8 118914.4 APR-95 137377.1 121554.3 MAY-95 138476.1 123645.0 JUN-95 141245.6 130062.2 JUL-95 143505.5 137553.7 AUG-95 146949.7 140401.1 SEP-95 149594.7 142914.3 OCT-95 147051.6 136526.0 NOV-95 148816.3 142260.1 DEC-95 150453.2 146015.8
LAZARD EMERGING MARKETS PORTFOLIO The Lazard Emerging Markets Portfolio seeks capital appreciation through investing primarily in equity securities of non-United States issuers who are located, or doing significant business, in emerging market countries. Emerging market countries include countries where political and economic trends have produced recently, or are producing, a more stable economy, or countries that have developed recently, or are developing, financial markets and investment liquidity. The Lazard Emerging Markets Portfolio seeks securities of issuers whose potential is significantly enhanced by their relationship to the emerging markets country and are believed to be inexpensively priced relative to the productivity of their equity or assets. COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EMERGING MARKETS PORTFOLIO AND THE INTERNATIONAL FINANCE CORP. INVESTABLE TOTAL RETURN INDEX
LAZARD EMERGING MEASUREMENT PERIOD MARKETS (FISCAL YEAR COVERED) PORTFOLIO IFC INVESTABLE 7/1/94 50000.00 50000.00 JUL-94 51050.00 50000.00 AUG-94 56512.35 56450.00 SEP-94 58320.75 57844.32 OCT-94 57912.50 55947.02 NOV-94 56638.42 53821.03 DEC-94 49332.07 48116.00 JAN-95 43214.89 41673.27 FEB-95 42134.52 41135.69 MAR-95 42050.25 41053.42 APR-95 43311.76 42765.34 MAY-95 45867.15 44360.49 JUN-95 45775.42 44622.22 JUL-95 47514.88 46018.89 AUG-95 46897.19 44822.40 SEP-95 47366.16 44463.82 OCT-95 45282.05 42774.20 NOV-95 44693.38 42560.33 DEC-95 46481.12 44007.38
Past performance is not indicative, nor a guarantee, of future results. 5 8 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PERFORMANCE TABLE - --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS PERIOD ENDED DECEMBER 31, AVERAGE ANNUAL RETURNS 1995 PERIOD ENDED DECEMBER 31, 1995 ----------------------------- ------------------------------------ ONE FIVE SINCE ONE FIVE SINCE YEAR YEAR INCEPTION* YEAR YEAR INCEPTION* ----------------------------- ------------------------------------ Lazard Equity Portfolio 37.7% 128.5% 186.3% 37.7% 18.0% 13.0% Standard & Poor's 500 Index 37.6% 115.5% 178.2% 37.6% 16.6% 12.6% Lazard International Equity Portfolio 13.1% -- 43.2% 13.1% -- 9.0% EAFE 11.2% -- 39.8% 11.2% -- 8.4% Lazard International Fixed-Income Portfolio+ 19.4% -- 52.6% 19.4% -- 10.7% Salomon World Government Bond Index Ex-US+ 19.6% -- 69.8% 19.6% -- 13.5% Lazard Bond Portfolio:++ 16.2% -- 32.7% 16.2% -- 7.0% Lehman Intermediate Gov't/Corp Index:++ 15.3% -- 36.6% 15.3% -- 7.8% Lazard Strategic Yield Portfolio:+++ 13.6% -- 38.7% 13.6% -- 8.0% LIBOR USD Fix:+++ 6.1% -- 20.6% 6.1% -- 4.5% Lazard Small Cap Portfolio 21.5% -- 110.4% 21.5% -- 19.5% Russell 2000 28.5% -- 83.0% 28.5% -- 15.6% Lazard International Small Cap Portfolio 1.9% -- 5.8% 1.9% -- 2.7% Salomon EMI Ex-US 5.2% -- 21.5% 5.2% -- 9.8% Lazard Special Equity Portfolio 16.3% 99.3% 203.1% 16.3% 14.8% 11.8% Russell 2000 28.5% 159.4% 190.6% 28.5% 21.0% 11.3% Lazard Emerging Markets Portfolio (5.9%) -- (7.2%) (5.9%) -- (5.0%) IFC Investable Total Return Index (8.5%) -- (9.1%) (8.5%) -- (6.3%)
* Performance is measured from June 1, 1987 for Lazard Equity Portfolio; from January 16, 1986 for Lazard Special Equity Portfolio; from October 31, 1991 for Lazard International Equity Portfolio, Lazard International Fixed-Income Portfolio, Lazard Bond Portfolio and Lazard Small Cap Portfolio; from October 1, 1991 for Lazard Strategic Yield Portfolio; from December 1, 1993 for Lazard International Small Cap Portfolio; from July 15,1994 for the Lazard Emerging Markets Portfolio. The performance for the relevant index is for the comparable period. Portfolio returns are net of fees and assume reinvestment of dividends and capital gain distributions, if any. +Effective January 1, 1993, the Portfolio, formerly Lazard Global Fixed-Income Portfolio, has been renamed to reflect the Board of Directors approval of changes in certain non-fundamental investment policies of the Portfolio. The performance of the Portfolio is now measured by the index "excluding U.S." Performance of the index "Since Inception" shown above is a blended return of the index "including U.S." and the index "excluding U.S." for the applicable periods. ++Effective May 1, 1993, the Portfolio, formerly Lazard High Quality Bond Portfolio, has been renamed to reflect the Board of Directors approval of changes in certain non-fundamental investment policies of the Portfolio. The performance of the Portfolio is now measured by the "Intermediate" index rather than the "Bond" index. Performance of the index shown "One Year", and "Since Inception" above now includes only the "Intermediate" index. +++Effective May 1, 1993, the Portfolio, formerly Lazard High-Yield Portfolio, has been renamed to reflect the Board of Directors approval of changes in certain non-fundamental investment policies of the Portfolio. The performance of the index is now measured by the "LIBOR USD Fix" index rather than the "Merrill" or "Lehman" indices. Performance of the index shown "One Year", & "Since Inception" above now includes only the "LIBOR USD Fix" index. Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of each portfolio of The Lazard Funds, Inc. will fluctuate so that an investor's shares in a portfolio may be more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The performance data of the indices have been prepared from sources and data that the investment manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged and have no fees or costs. The S&P 500 Index is an index of common stocks and is a registered trademark of Standard & Poor's Corporation. The Morgan Stanley-Europe, Australia and Far East Index (EAFE) is comprised of international equities that are compiled by Morgan Stanley Capital International. The Salomon World Government Bond Index Ex-US is an index compiled by Salomon Brothers. The Lehman Intermediate Government/Corporate Index is an index calculated by Lehman Brothers. The London Interbank Offered Rates--U.S. dollar Fix rates--is an average derived from sixteen quotations provided by banks determined by the British Bankers Association. The Russell 2000 Index is an index of common stocks and is a registered trademark of the Frank Russell Company. The Salomon Extended Market Index (EMI) Ex-US is an index compiled by Salomon Brothers. The IFC Investable Total Return Index is an index of emerging markets securities that represent 65% of market capital compiled by the International Finance Corporation. This performance data is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus. 6 9 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------- LAZARD EQUITY PORTFOLIO COMMON STOCKS--95.0% AEROSPACE & DEFENSE--3.2% Lockheed Martin Corp. ................... 32,000 $ 2,528,000 McDonnell Douglas Corp. ................. 29,800 2,741,600 ------------- 5,269,600 ------------- AIRLINE--0.9% AMR Corp. (a)............................ 20,000 1,485,000 ------------- AUTOMOTIVE--3.1% Chrysler Corp. .......................... 32,200 1,783,075 General Motors Corp. .................... 31,600 1,670,850 Varity Corp. (a)......................... 42,000 1,559,250 ------------- 5,013,175 ------------- BANKS--5.2% BankAmerica Corp. ....................... 31,000 2,007,250 Chase Manhattan Corp. ................... 27,000 1,636,875 Chemical Banking Corp. .................. 39,500 2,320,625 UJB Financial Corp. ..................... 69,400 2,481,050 ------------- 8,445,800 ------------- BEVERAGES--1.3% Cadbury Schweppes PLC (b)................ 64,400 2,141,300 ------------- BROADCASTING--2.9% U S West, Inc. (a)....................... 132,100 2,509,900 Viacom, Inc. Class B (a)................. 45,900 2,174,513 ------------- 4,684,413 ------------- CHEMICALS & PLASTICS--6.5% E I du Pont de Nemours & Co. ............ 66,100 4,618,737 FMC Corp. (New) (a)...................... 20,000 1,352,500 Hercules, Inc. .......................... 49,200 2,773,650 W R Grace & Co. ......................... 32,400 1,915,650 ------------- 10,660,537 ------------- COMMUNICATION SERVICES--8.2% Airtouch Communications (a).............. 44,500 1,257,125 AT&T Corp. .............................. 78,900 5,108,775 NYNEX Corp. ............................. 63,900 3,450,600 TeleCommunications, Inc. (New) Liberty Media Group Series A (a)............... 21,225 570,422 TeleCommunications, Inc. (New) TCI Group Series A (a)........................... 155,900 3,098,512 ------------- 13,485,434 ------------- COMPUTERS & BUSINESS EQUIPMENT--3.0% Digital Equipment Corp. (a).............. 45,000 2,885,625 Gateway 2000, Inc. (a)................... 80,400 1,969,800 ------------- 4,855,425 ------------- DRUGS & HEALTH CARE--5.9% American Home Products Corp. ............ 25,900 2,512,300 Astra AB (b)............................. 56,100 2,222,962 Columbia/HCA Healthcare Corp. ........... 60,225 3,056,419 Pharmacia & Upjohn, Inc. ................ 47,500 1,840,625 ------------- 9,632,306 ------------- ENERGY--8.8% Amoco Corp. ............................. 31,500 2,264,062 Kerr-McGee Corp. ........................ 40,000 2,540,000 Mobil Corp. ............................. 38,100 4,267,200 NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------- Noble Affiliates, Inc. .................. 64,900 $ 1,938,888 Royal Dutch Petroleum Co. (b)............ 23,500 3,316,437 ------------- 14,326,587 ------------- ENTERTAINMENT--2.4% Carnival Corp. Class A................... 81,800 1,993,875 ITT Corp. (New) (a)...................... 36,200 1,918,600 ------------- 3,912,475 ------------- FINANCIAL SERVICES--2.8% Travelers Group, Inc. ................... 74,000 4,652,750 ------------- FOOD PROCESSING--1.6% Archer Daniels Midland Co. .............. 146,900 2,644,200 ------------- INDUSTRIAL & MACHINERY--3.3% Allied Signal, Inc. ..................... 63,000 2,992,500 ITT Industries, Inc. (a)................. 36,200 868,800 Sundstrand Corp. ........................ 22,400 1,576,400 ------------- 5,437,700 ------------- INSURANCE--4.8% Allstate Corp. .......................... 52,099 2,142,571 Cigna Corp. ............................. 22,900 2,364,425 Exel Ltd. ............................... 27,500 1,677,500 ITT Hartford Group, Inc. (a)............. 36,200 1,751,175 ------------- 7,935,671 ------------- LEISURE TIME--1.5% Brunswick Corp. ......................... 100,300 2,407,200 ------------- OFFICE EQUIPMENT--1.4% Xerox Corp. ............................. 17,300 2,370,100 ------------- PAPER PRODUCTS--5.3% Champion International Corp. ............ 59,900 2,515,800 James River Corp. of Virginia............ 76,800 1,852,800 Kimberly-Clark Corp. .................... 52,806 4,369,697 ------------- 8,738,297 ------------- RETAIL--6.9% Gap, Inc. ............................... 49,700 2,087,400 Nordstrom, Inc. ......................... 52,400 2,122,200 Sears Roebuck & Co. ..................... 80,700 3,147,300 Toys "R" Us, Inc. (a).................... 67,700 1,472,475 Woolworth Corp. ......................... 195,700 2,544,100 ------------- 11,373,475 ------------- SAVINGS & LOAN--1.0% Great Western Financial Corp. ........... 64,600 1,647,300 ------------- TECHNOLOGY--7.6% Advanced Micro Devices, Inc. ............ 89,300 1,473,450 General Instrument Corp. (a)............. 93,200 2,178,550 Intel Corp. ............................. 34,000 1,929,500 International Business Machines.......... 48,200 4,422,350 SGS-Thomson Microelectronics NV (a)...... 58,900 2,370,725 ------------- 12,374,575 ------------- TOBACCO--4.6% Philip Morris Companies, Inc. ........... 54,200 4,905,100 UST, Inc. ............................... 78,100 2,606,588 ------------- 7,511,688 ------------- TRANSPORTATION--1.4% Kansas City Southern Industries, Inc. ... 50,400 2,305,800 -------------
The accompanying notes are an integral part of these financial statements. 7 10 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO (CONTINUED) UTILITIES--1.4% National Power PLC (b)................... 142,500 $ 1,353,750 Southern Electric PLC (b)................ 35,500 1,007,313 ------------- 2,361,063 ------------- TOTAL COMMON STOCKS (Identified cost $130,480,451)............. 155,671,871 ------------- PREFERRED STOCKS--1.3% (Identified cost $2,175,536) FINANCIAL SERVICES--1.3% Time Warner Financing Trust.............. 68,500 2,140,625 ------------- PRINCIPAL AMOUNT ----------- SHORT TERM INVESTMENT--3.5% REPURCHASE AGREEMENT--3.5% (Identified cost $5,694,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $6,100,000; valued at $5,810,823)...... $ 5,694,000 5,694,000 ------------- DESCRIPTION VALUE - --------------------------------------------------------------------------- TOTAL INVESTMENTS (Identified cost $138,349,987) (c)......... 99.8% $ 163,506,496 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES................................ 0.2 280,492 ---- ---------- NET ASSETS.................................. 100.0% $ 163,786,988 ===== =============
(a) Non-income producing security. (b) American Depository Receipts. (c) The aggregate cost for federal income tax purposes is $138,349,987; aggregate gross unrealized appreciation is $31,359,389 and the aggregate gross unrealized depreciation is $6,202,880, resulting in net unrealized appreciation of $25,156,509. - --------------------------------------------------------------------------------
NUMBER OF SHARES ------------ LAZARD INTERNATIONAL EQUITY PORTFOLIO COMMON STOCKS--92.7% AUSTRALIA--1.9% Westpac Bank Corp. ................... 5,488,300 24,312,671 -------------- DENMARK--1.1% Unidanmark Class A.................... 294,900 14,605,583 -------------- FINLAND--1.6% Kymmene Corp. ........................ 797,000 21,073,022 -------------- FRANCE--11.7% Accor................................. 97,629 12,639,736 Alcatel Alsthom (Cie Gen El).......... 421,900 36,374,552 Banque Nationale de Paris............. 446,722 20,151,295 Cie De St Gobain...................... 193,600 21,111,374 Generale des Eaux..................... 216,692 21,633,800 Roussel Uclaf......................... 1,000 169,491 Roussel Uclaf 144A (b)................ 224,400 18,905,700 Total SA-B............................ 308,081 20,792,479 -------------- TOTAL FRANCE.......................... 151,778,427 -------------- GERMANY--8.0% Hoechst AG............................ 107,250 29,083,479 Mannesmann AG......................... 25,520 8,124,771 Mannesmann AG (b)..................... 52,205 16,601,190 Siemens AG............................ 45,800 25,063,088 Veba AG............................... 580,880 24,660,573 -------------- TOTAL GERMANY......................... 103,533,101 -------------- NUMBER OF SHARES ------------ HONG KONG--2.1% HSBC Holdings Ltd. ................... 1,418,444 $ 21,462,392 Peregrine Investment.................. 4,806,000 6,215,325 -------------- TOTAL HONG KONG....................... 27,677,717 -------------- ITALY--1.4% Fiat SPA.............................. 9,620,500 17,567,540 -------------- JAPAN--26.4% Dai Nippon Printing................... 615,000 10,423,729 DDI Corp. ............................ 3,122 24,189,830 Hitachi............................... 1,927,000 19,409,976 Matsushita Electric Industrial Co. ... 1,486,000 24,178,983 Mazda Motor Corp. (a)................. 4,151,000 17,649,288 Mitsubishi Heavy Ind. ................ 4,131,000 32,927,971 Nintendo Co. ......................... 262,700 19,972,833 Omron Corp. .......................... 911,000 20,999,322 Orix Corp. ........................... 500,000 20,581,114 Promise Co. .......................... 203,600 9,800,407 Ricoh Company, Ltd. .................. 1,150,000 12,585,956 Rohm Company, Ltd. ................... 467,000 26,369,104 Sekisui Chemical...................... 1,661,000 24,452,494 Sony Corp. ........................... 411,000 24,640,097 Sumitomo Trust & Banking.............. 1,981,000 28,012,203 Toyota Motor Corp. ................... 1,269,000 26,916,320 -------------- TOTAL JAPAN........................... 343,109,627 -------------- NETHERLANDS--7.4% Heineken NV........................... 156,400 27,747,916 ING Groep NV.......................... 427,220 28,539,904 Koninklijke Nedlloyd Groep NV......... 483,200 10,960,603 Royal Dutch Petroleum Co. (b)......... 202,600 28,591,925 -------------- TOTAL NETHERLANDS..................... 95,840,348 --------------
The accompanying notes are an integral part of these financial statements. 8 11 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - -------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY PORTFOLIO (CONTINUED) NEW ZEALAND--1.9% Fletcher Challenge.................... 5,504,000 $ 12,702,092 Lion Nathan Ltd. ..................... 5,031,100 12,005,436 -------------- TOTAL NEW ZEALAND..................... 24,707,528 -------------- NORWAY--0.8% Aker AS Class A....................... 401,700 5,327,166 Aker AS Class B....................... 467,600 5,684,343 -------------- TOTAL NORWAY.......................... 11,011,509 -------------- SPAIN--2.3% Banco Santander SA.................... 225,100 11,301,393 ENDESA................................ 323,500 18,321,888 -------------- TOTAL SPAIN........................... 29,623,281 -------------- SWEDEN--3.9% Astra AB Series B..................... 601,900 23,841,394 Electrolux AB Series B................ 324,300 13,309,600 Volvo AB Series B..................... 691,900 14,172,086 -------------- TOTAL SWEDEN.......................... 51,323,080 -------------- SWITZERLAND--7.1% Baloise Holdings...................... 6,428 13,374,252 Ciba Geigy AG......................... 32,820 28,879,324 Nestle SA............................. 23,630 26,139,471 SGS Holding........................... 11,706 23,239,480 -------------- TOTAL SWITZERLAND..................... 91,632,527 -------------- UNITED KINGDOM--15.1% Allied Domecq PLC..................... 1,425,500 11,600,590 British Aerospace Ord. PLC............ 2,114,187 26,129,779 Cadbury Schweppes PLC................. 3,493,230 28,834,474 Lloyds Abbey Life PLC................. 1,917,400 13,400,062 Midlands Electric PLC................. 1,441,300 17,011,772 Mirror Group PLC...................... 4,500,900 12,302,507 National Grid Group PLC (a)........... 1,166,011 3,603,606 National Power Ord. PLC............... 1,292,600 9,023,508 National Power P/P Ord. PLC........... 2,020,800 4,833,098 Rank Organisation PLC................. 3,441,200 24,904,476 Sears PLC............................. 11,817,700 19,087,448 Thorn EMI PLC......................... 1,107,100 26,074,191 -------------- TOTAL UNITED KINGDOM.................. 196,805,511 -------------- TOTAL COMMON STOCKS (Identified cost $1,080,502,927) 1,204,601,472 -------------- PREFERRED STOCKS--2.1% (Identified cost $24,881,403) AUSTRALIA--2.1% News Corporation, Ltd. (b)............ 1,409,000 27,123,250 -------------- WARRANTS--0.0% (Identified cost $0) UNITED KINGDOM--0.0% British Aerospace PLC (a)............. 117,216 569,787 -------------- PRINCIPAL DESCRIPTION AMOUNT VALUE - ---------------------------------------------------------------------------------- SHORT TERM INVESTMENT--5.4% REPURCHASE AGREEMENT--5.4% (Identified cost $70,037,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $74,995,000; valued at $71,439,787)..................... $ 70,037,000 $ 70,037,000 -------------- TOTAL INVESTMENTS (Identified cost $1,175,421,330) (c).... 100.2% 1,302,331,509 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS.................................. (0.2) (2,782,062) ---- ------------ NET ASSETS............................... 100.0% $1,299,549,447 ===== ==============
(a) Non-income producing security. (b) American Depository Receipts. (c) The aggregate cost for federal income tax purposes is $1,175,447,648; aggregate gross unrealized appreciation is $154,092,979 and the aggregate gross unrealized depreciation is $27,209,118, resulting in net unrealized appreciation of $126,883,861. * Percentages of common and preferred stocks are presented in the portfolio by country. Percentages by industry are as follows: Aerospace & Defense 2.0%, Automotive 5.9%, Banks 8.7%, Chemicals & Plastics 4.1%, Computer & Business Equipment 1.0%, Construction Materials 1.6%, Domestic Oil 0.8%, Drugs & Health Care 5.5%, Electrical Equipment 11.0%, Electronics 5.5%, Energy 2.2% , Entertainment 1.9%, Financial Services 4.2%, Food & Beverage 8.7%, Insurance 2.1%, International Oil 1.6%, Machinery 3.2%, Miscellaneous 0.9%, Mortgage Backed Securities 1.3%, Paper Products 2.6%, Publishing 3.0%, Retailing 3.5%, Services 3.5%, Telephone 1.9%, Transportation & Freight Services 0.8%, Utilities 7.3%. Forward Foreign Currency Contracts open at December 31, 1995:
Unrealized Contracts In Exchange Delivery Appreciation to Deliver For Date (Depreciation) - --------------- ---------------- -------- -------------- $ 3,971,727 GPB 2,555,480 1/5/96 $ (2,974) NZD 230,101 $149,750 1/4/96 (682) $ 7,327,986 JPY 750,385,723 1/4/96 (60,327) $ 856,911 ESP 103,986,191 1/3/96 353 $ 1,861,380 ESP 226,995,238 1/2/96 9,974 -------- $(53,656) ========
- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 9 12 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO CURRENCY DENOMINATED BONDS*--93.2% AUSTRALIAN DOLLAR--1.0% CORPORATE BOND Bayerische Vereinsbank, 10.00%, 12/16/99........................ AUD 210,000 $ 166,403 GOVERNMENT OBLIGATION Commonwealth of Australia, 9.50%, 8/15/03......................... 345,000 277,126 ----------- TOTAL AUSTRALIAN DOLLAR........... 443,529 ----------- AUSTRIAN SCHILLING--0.9% GOVERNMENT OBLIGATION Republic of Austria, 5.625%, 12/14/00........................ ATS 4,000,000 404,227 ----------- BELGIAN FRANC--1.4% GOVERNMENT OBLIGATION Belgium Kingdom, 6.50%, 3/31/05......................... BEL 19,000,000 637,078 ----------- BRAZILIAN REAL--0.4% CORPORATE BOND Chase Brazil Note, 27.152%, 3/1/96 (a)............................. BRL 198,729 195,410 ----------- BRITISH POUND--6.2% CORPORATE BONDS Barclays Bank PLC, 12.75%, 11/26/97........................ GBP 310,000 531,993 Bayerische Landesbank Girozentrale, 8.50%, 2/26/03.... 275,000 446,517 Tokyo Electric Power, 11.00%, 6/5/01.......................... 100,000 179,667 West LB Finance Curacao NV, 8.50%, 6/2/03.......................... 820,000 1,319,717 GOVERNMENT OBLIGATION United Kingdom Treasury, 8.50%, 7/16/07......................... 200,000 333,903 ----------- TOTAL BRITISH POUND............... 2,811,797 ----------- CANADIAN DOLLAR--3.1% CORPORATE BOND Quebec Housing, 8.95%, 5/13/13......................... CAD 419,000 332,985 GOVERNMENT OBLIGATIONS Government of Canada, 7.50%, 12/1/03......................... 800,000 603,752 Government of Canada, 9.00%, 12/1/04......................... 600,000 494,983 ----------- TOTAL CANADIAN DOLLAR............. 1,431,720 ----------- CZECH KORUNA--3.8% CORPORATE BONDS CEZ AS, 14.375%, 1/27/01.......... CZK 10,000,000 401,260 Czech Trade Bank, 11.125%, 8/26/97......................... 5,000,000 188,630 Skofin, 11.625%, 2/9/98........... 30,000,000 1,137,966 ----------- TOTAL CZECH KORUNA................ 1,727,856 ----------- PRINCIPAL DESCRIPTION AMOUNT VALUE - ---------------------------------------------------------------------------------- DANISH KRONE--5.3% CORPORATE BONDS Kreditforen Denmark, 10.20%, 4/15/04 (a)..................... DKK 5,000,000 $ 992,346 Nykredit, 6.00%, 10/1/26.......... 8,285,520 1,240,776 GOVERNMENT OBLIGATION Kingdom of Denmark, 8.00%, 5/15/03......................... 1,000,000 191,463 ----------- TOTAL DANISH KRONE................ 2,424,585 ----------- DUTCH GUILDER--4.9% GOVERNMENT OBLIGATIONS Government of Netherlands, 6.75%, 2/15/99......................... NLG 1,590,000 1,053,262 Government of Netherlands, 8.75%, 1/15/07......................... 300,000 224,154 Government of Netherlands, 9.00%, 5/15/00......................... 1,300,000 936,742 ----------- TOTAL DUTCH GUILDER............... 2,214,158 ----------- FRENCH FRANC--6.4% GOVERNMENT OBLIGATIONS Government of France, 6.75%, 10/25/03........................ FRF 2,300,000 477,425 Government of France, 7.50%, 4/25/05......................... 4,700,000 1,017,070 Government of France, 7.75%, 4/12/00......................... 2,000,000 437,819 Government of France, 8.50%, 10/25/19........................ 2,850,000 657,356 United Mexican States, 6.63%, 12/31/19........................ 3,000,000 340,770 ----------- TOTAL FRENCH FRANC................ 2,930,440 ----------- GERMAN MARK--11.0% CORPORATE BONDS Autobahn Tank & Rast, 6.00%, 10/16/00........................ DEM 610,000 435,739 Baden Wurttemberg, 6.75%, 6/22/05......................... 1,574,000 1,133,894 Bank Nederlandse Gem, 6.50%, 11/4/08......................... 800,000 550,603 International Bank Reconstruction & Development, 7.125%, 4/12/05......................... 1,700,000 1,259,150 Land Hessen, 6.00%, 11/29/13........................ 1,000,000 690,136 GOVERNMENT OBLIGATION Federal Republic of Germany, 8.25%, 9/20/01.................. 1,210,000 962,517 ----------- TOTAL GERMAN MARK................. 5,032,039 ----------- GREEK DRACHMA--0.2% GOVERNMENT OBLIGATION Greek Treasury Bill, 0.00%, 7/17/96......................... GRD 25,000,000 97,748 ----------- HUNGARIAN FORINTS--0.2% GOVERNMENT OBLIGATION Hungarian Treasury Bill, 0.00%, 10/11/96........................ HUF 15,200,000 89,745 -----------
The accompanying notes are an integral part of these financial statements. 10 13 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) IRISH POUND--2.7% GOVERNMENT OBLIGATION Republic of Ireland, 6.25%, 4/1/99.......................... IEP 770,000 $ 1,222,310 ----------- ITALIAN LIRA--8.9% GOVERNMENT OBLIGATIONS Republic of Italy, 8.50%, 8/1/99.......................... ITL 5,885,000,000 3,517,011 Republic of Italy, 12.00%, 5/1/97.......................... 400,000,000 256,907 Republic of Italy, 12.00%, 1/1/02.......................... 400,000,000 268,216 ----------- TOTAL ITALIAN LIRA................ 4,042,134 ----------- JAPANESE YEN--26.0% CORPORATE BOND Export-Import Bank of Japan, 4.375%, 10/1/03................. JPY 205,000,000 2,181,537 GOVERNMENT OBLIGATIONS Credit Local De France, 6.00%, 10/31/01........................ 80,000,000 923,002 Government of Japan, 5.50%, 9/20/02......................... 475,000,000 5,391,768 Republic of Austria, 4.50%, 9/28/05......................... 80,000,000 863,923 Republic of Austria, 6.25%, 10/16/03........................ 15,000,000 179,600 Republic of Italy, 3.50%, 6/20/01......................... 230,000,000 2,337,591 ----------- TOTAL JAPANESE YEN................ 11,877,421 ----------- NORWEGIAN KRONE--2.2% CORPORATE BOND Sparebanken Norway, 10.25%, 6/23/03 (a)..................... NOK 6,000,000 1,022,560 ----------- PORTUGUESE ESCUDO--0.2% GOVERNMENT OBLIGATION Republic of Portugal, 11.875%, 2/23/00......................... PTE 13,000,000 93,525 ----------- SOUTH AFRICAN RAND--0.2% GOVERNMENT OBLIGATION Republic of South Africa, 11.50%, 5/30/00......................... ZAR 405,500 102,085 ----------- SPANISH PESETA--3.2% GOVERNMENT OBLIGATION Kingdom of Spain, 12.25%, 3/25/00......................... ESP 160,000,000 1,448,178 ----------- SWEDISH KRONA--1.1% GOVERNMENT OBLIGATION Kingdom of Sweden, 10.25%, 5/5/00.......................... SEK 3,000,000 484,969 ----------- THAILAND BAHT--0.3% CORPORATE BOND Industrial Group Finance of Thailand, 11.25%, 5/14/96....... THB 3,000,000 119,177 ----------- PRINCIPAL DESCRIPTION AMOUNT VALUE - ----------------------------------------------------------------------------------- UNITED STATES DOLLAR--3.6% CONVERTIBLE BOND Zenith Electric, 6.25%, 4/1/11.... USD $ 225,000 $ 159,750 CORPORATE BOND Reliance Industries Ltd. 144A, 8.125%, 9/27/05................. 250,000 251,250 GOVERNMENT OBLIGATION Argentina Bono 1998 Boax0, 8.9922%, 4/4/98 (b)............. 500,000 494,500 YANKEE BONDS Astra International, 9.75%, 4/29/01......................... 100,000 106,000 Den Norske Credit, 6.125%, 11/29/49 (a).................... 700,000 552,545 Hong Kong & Shanghai Bank, 6.25%, 8/29/49 (a)..................... 100,000 79,850 ----------- TOTAL UNITED STATES DOLLAR........ 1,643,895 ----------- TOTAL CURRENCY DENOMINATED BONDS* (Identified cost $40,755,329)....... 42,496,586 ----------- STRUCTURED NOTES--1.1% ING Polish Note, 0.00%, 2/21/96......................... 224,047 216,766 United Mexican States 144A, 0.00%, 11/27/96 (c).................... 300,000 305,250 ----------- TOTAL STRUCTURED NOTES (Identified cost $500,017).......... 522,016 ----------- SHORT TERM INVESTMENT--8.5% REPURCHASE AGREEMENT--8.5% (Identified cost $3,866,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $4,140,000; valued at $3,943,739)..................... 3,866,000 3,866,000 ----------- TOTAL INVESTMENTS (Identified cost $45,121,346) (d)... 102.8% 46,884,602 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS........................ (2.8) (1,260,299) ---- --------- NET ASSETS........................... 100.0% $45,624,303 ===== ===========
(a) Variable rate security. Interest shown is the current rate. (b) Coupon set quarterly to 3 month LIBOR. Current rate shown. (c) Value set monthly based on CETES/LIBOR rates. (d) The aggregate cost for federal income tax purposes is $45,125,136; aggregate gross unrealized appreciation is $1,948,773 and the aggregate gross unrealized depreciation is $189,307, resulting in net unrealized appreciation of $1,759,466. The accompanying notes are an integral part of these financial statements. 11 14 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - -------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO (CONTINUED) * Percentages of holdings are presented in the portfolio by currency denomination. Percentages by country are as follows: Argentina 1.1%, Australia 1.0%, Austria 0.9%, Belgium 1.4%, Brazil 0.4%, Canada 3.1%, Czech Republic 3.8%, Denmark 5.3%, France 6.4%, Germany 11.0%, Greece 0.2%, Hong Kong 0.2%, Hungary 0.2%, Ireland 2.7%, Italy 8.9%, Japan 26.1%, Mexico 0.7%, Netherlands 4.9%, Norway 3.5%, Poland 0.5%, Portugal 0.2%, South Africa 0.2%, Spain 3.2%, Sweden 1.3%, Thailand 0.3%, United Kingdom 6.2%, United States 0.6%. Forward Foreign Currency Contracts open at December 31, 1995:
In Unrealized Contracts Exchange Delivery Appreciation to Deliver For Date (Depreciation) - ------------------------------------- ---- ------------- ------------- AUD 162,499 $121,000 3/12/96 $ 642 $ 486,000 CAD 660,814 3/12/96 (2,132) $ 229,503 DEM 328,025 3/12/96 5 DEM 153,082 $106,526 3/12/96 (580) $ 986,922 DKK 5,454,127 3/12/96 (2,887) DKK 3,050,518 $549,000 3/12/96 (1,376) $ 1,398,000 FRF 6,906,120 3/12/96 13,991 $ 451,000 JPY 45,330,010 3/12/96 (7,382) JPY 27,531,450 $275,000 3/12/96 5,566 NOK 6,557,669 $1,038,000 3/12/96 1,839 $ 171,000 SEK 1,123,453 3/12/96 (2,760) XEU 48,513 $62,240 3/12/96 134 $ 3,548,592 ITL 5,684,489,869 1/19/96 30,780 DKK 5,452,746 $983,948 1/2/96 1,914 ------- $ 37,754 ============
- --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO ASSET-BACKED SECURITIES--17.7% American Financial Home Equity Loan, Series 1991-1, Class A, 8.00%, 7/25/06................................. $ 72,756 $ 74,484 AT & T Universal Card Master Trust, Series 1995-2, Class A, 5.95%, 10/17/02................................ 810,000 817,087 Banc One Credit Card Master Trust, Series 1995-B, Class A, 6.30%, 10/15/02................................ 400,000 409,500 Bridgestone Firestone, Series 1992-A, Class A, 6.25%, 12/1/99................. 83,333 83,437 Chase Manhattan Grantor Trust, Series 1995-A, Class A, 5.90%, 11/15/01................................ 389,662 391,002 Chase Manhattan Grantor Trust, Series 1995-B, Class A, 6.00%, 9/17/01......... 641,571 644,578 Discover Card Master Trust I, Series 1995-2, Class A, 6.55%, 2/18/03......... 750,000 774,135 Fical Home Equity Loan Trust, Series 1990-1, Class A, 8.90%, 11/15/97................................ 1,057 1,056 First Chicago Master Trust II, Series 1992-E, Class A, 6.25%, 8/15/99......... 400,000 404,248 Ford Credit Grantor Trust, Series 1994-B, Class A, 7.30%, 10/15/99................ 347,198 353,815 Ford Credit Grantor Trust, Series 1995-A, Class A, 5.90%, 5/15/00................. 461,522 463,253 G E Home Equity Loan, Inc., Series 1991-1, Class A, 7.20%, 9/15/11................. 49,714 50,195 Green Tree Financial Corp., Series 1994-3, Class A, 6.60%, 6/15/19................. 299,343 301,307 Green Tree Financial Corp., Series 1994-6, Class A2, 7.25%, 11/15/19............... 600,000 609,558 MBNA Master Credit Card Trust, Series 1995-D, Class A, 6.05%, 11/15/02................................ 773,000 784,595 PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------------- Olympic Automobile Receivable Trust, Series 1994-B, Class A2, 6.85%, 6/15/01................................. $ 273,922 $ 278,673 Premier Auto Trust, Series 1994-1, Class A3, 5.90%, 7/6/99....................... 252,000 252,709 Premier Auto Trust, Series 1995-4, Class A2, 4.75%, 2/2/00....................... 746,072 740,476 Security Pacific Home Equity Loan, Series 1991-1, Class A, 7.85%, 5/15/98......... 32,530 32,835 Standard Credit Card Master Trust I, Series 1995-3, Class A, 7.85%, 2/7/02... 660,000 708,464 ------------ TOTAL ASSET-BACKED SECURITIES (Identified Cost $8,080,503)................ 8,175,407 ------------ CORPORATE BONDS--12.7% AUTOMOTIVE--1.6% General Motors Acceptance Corp., 5.625%, 2/1/99.................................. 750,000 746,445 ------------ AUTO PARTS--0.7% Walbro Corp. 144A, 9.875%, 7/15/05........ 335,000 334,163 ------------ BROADCASTING--2.7% Act III Broadcasting Inc., 10.25%, 12/15/05................................ 170,000 174,250 Comcast Corp., 9.50%, 1/15/08............. 184,000 195,040 Comcast Corp., 9.125%, 10/15/06........... 367,000 382,598 Paxson Communications Corp. 144A, 11.625%, 10/1/02................................. 160,000 162,400 SCI Television Inc., 11.00%, 6/30/05...... 294,000 310,905 ------------ 1,225,193 ------------ CHEMICALS & PLASTICS--0.6% Arcadian Partners LP, Series B, 10.75%, 5/1/05.................................. 263,000 290,615 ------------ ELECTRONICS--0.8% Alpine Group Inc. 144A, 12.25%, 7/15/03................................. 368,000 360,640 ------------
The accompanying notes are an integral part of these financial statements. 12 15 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONTINUED) FINANCIAL SERVICES--1.7% Avco Financial Services Inc., 6.35%, 9/15/00................................. $ 128,000 $ 130,479 Bank of Boston Corp., 6.625%, 2/1/04...... 104,000 105,618 Citicorp, 8.00%, 2/1/03................... 126,000 139,258 Norwest Corporation Medium Term Note, 6.125%, 10/15/00........................ 149,000 151,235 Salomon Inc., 8.55%, 2/17/97.............. 265,000 271,919 ------------ 798,509 ------------ FOREST PRODUCTS--0.5% Williamhouse Regency Delaware Inc. 144A, 13.00%, 11/15/05........................ 238,000 249,900 ------------ MANUFACTURING--1.0% Silgan Corp., 11.75%, 6/15/02............. 434,000 465,465 ------------ PAPER PRODUCTS--0.4% Crown Paper Co., 11.00%, 9/1/05........... 215,000 188,125 ------------ RESTAURANTS, LODGING & ENTERTAINMENT--0.7% Flagstar Corp., 10.75%, 9/15/01........... 335,000 306,525 ------------ RETAIL GROCERY--0.2% Pueblo Xtra International, 9.50%, 8/1/03.................................. 73,000 69,715 ------------ RETAIL--0.9% D.R. Structured Finance Corp., Series 1994-K2, Class A2, 9.35%, 8/15/19................................. 600,000 396,000 ------------ RETAIL TRADE--0.7% Mothers Work Inc. 144A, 12.625%, 8/1/05.................................. 328,000 323,080 ------------ UTILITIES--0.2% Texas New Mexico Power Co., 9.25%, 9/15/00................................. 80,000 82,800 ------------ TOTAL CORPORATE BONDS (Identified cost $5,980,173)................ 5,837,175 ------------ FEDERAL AGENCIES--5.2% Federal Home Loan Mortgage Corp., 8.50%, 1/1/99.................................. 362,000 377,272 Federal Home Loan Mortgage Corp., 7.00%, 1/1/99.................................. 367,000 369,408 Federal Home Loan Mortgage Corp., 7.00%, 9/1/25.................................. 619,485 625,098 Federal Home Loan Mortgage Corp., 7.00%, 8/1/25.................................. 1,012,108 1,021,277 ------------ TOTAL FEDERAL AGENCIES (Identified cost $2,342,473)................ 2,393,055 ------------ MUNICIPAL BOND--0.9% (Identified cost $379,772) Allegheny County Pennsylvania Hospital Development, 5.375%, 12/1/25............ 400,000 393,256 ------------ MORTGAGE PASS-THROUGH SECURITIES--13.4% Federal National Mortgage Association, 9.00%, 1/1/99........................... 55,000 57,956 Federal National Mortgage Association, 9.00%, 10/1/25.......................... 173,675 182,901 PRINCIPAL DESCRIPTION AMOUNT VALUE - ------------------------------------------------------------------------------------ Federal National Mortgage Association, 7.50%, 1/1/99........................... $ 303,000 $ 310,480 Federal National Mortgage Association, 9.00%, 7/1/25........................... 310,369 326,856 Federal National Mortgage Association, 8.00%, 10/1/25.......................... 391,577 405,525 Federal National Mortgage Association, 8.00%, 1/1/99........................... 414,000 429,008 Federal National Mortgage Association, 7.50%, 10/1/25.......................... 489,712 501,798 Federal National Mortgage Association, 7.50%, 9/1/25........................... 852,458 873,496 Federal National Mortgage Association, 8.00%, 9/1/25........................... 1,444,880 1,496,346 Government National Mortgage Association, 9.00%, 9/15/25.......................... 127,130 134,678 Government National Mortgage Association, 6.00%, 1/20/99.......................... 275,000 277,922 Government National Mortgage Association, 6.00%, 10/20/25 (a)..................... 1,154,060 1,165,600 ------------ TOTAL MORTGAGE PASS-THROUGH SECURITIES (Identified cost $6,068,445)................ 6,162,566 ------------ U.S. GOVERNMENT OBLIGATIONS--43.2% United States Treasury Bond Strip, 0.00%, 11/15/21................................ 1,270,000 258,788 United States Treasury Notes, 7.50%, 11/15/01................................ 491,000 540,792 United States Treasury Notes, 8.875%, 2/15/99................................. 720,000 793,800 United States Treasury Notes, 5.75%, 10/31/00................................ 1,115,000 1,131,023 United States Treasury Notes, 7.375%, 11/15/97................................ 1,580,000 1,639,740 United States Treasury Notes, 7.875%, 11/15/04................................ 3,044,000 3,523,430 United States Treasury Notes, 7.75%, 12/31/99................................ 3,436,000 3,728,610 United States Treasury Notes, 5.125%, 4/30/98................................. 6,500,000 6,486,805 United States Treasury Strips, 0.00%, 8/15/02................................. 1,000,000 699,840 United States Treasury Strips, 0.00%, 5/15/05................................. 1,898,000 1,116,992 ------------ TOTAL U.S. GOVERNMENT OBLIGATIONS (Identified cost $19,686,260)............... 19,919,820 ------------ SHORT TERM INVESTMENTS--5.4% REPURCHASE AGREEMENT--3.9% State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $1,935,000; valued at $1,843,269)....... 1,806,000 1,806,000 ------------ FEDERAL AGENCIES--0.7% Federal National Mortgage Association Discount Notes, 5.45%, 1/16/96.......... 130,000 129,705 Federal National Mortgage Association Discount Notes, 5.45%, 1/3/96........... 185,000 184,944 ------------ 314,649 ------------
The accompanying notes are an integral part of these financial statements. 13 16 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO (CONTINUED) U.S. GOVERNMENT OBLIGATION--0.8% United States Treasury Bills, 4.65%, 1/11/96................................. $ 385,000 $ 384,503 ------------ TOTAL SHORT TERM INVESTMENTS (Identified cost $2,505,151)................ 2,505,152 ------------ TOTAL INVESTMENTS (Identified cost $45,042,777) (b)........... 98.5% 45,386,431 PRINCIPAL DESCRIPTION AMOUNT VALUE - -------------------------------------------------------------------------------- CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES................................. 1.5 $ 696,972 ---- --------- NET ASSETS................................... 100.0% $ 46,083,403 ===== ==========
(a) Variable rate security. Interest shown is the current rate. (b) The aggregate cost for federal income tax purposes is $45,042,777; aggregate gross unrealized appreciation is $574,652 and the aggregate gross unrealized depreciation is $230,998, resulting in net unrealized appreciation of $343,654. - -------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO CURRENCY DENOMINATED BONDS*--89.3% ARGENTINA PESO--1.2% GOVERNMENT OBLIGATION Bocon Pre 1 Pesos 2197, 0.00%, 4/1/01......................... ARP 1,100,000 $ 956,809 ----------- AUSTRALIAN DOLLAR--2.9% GOVERNMENT OBLIGATIONS Commonwealth of Australia, 8.75%, 1/15/01........................ AUD 1,218,000 941,130 Commonwealth of Australia, 13.00%, 7/15/00................ 1,469,000 1,310,930 ----------- TOTAL AUSTRALIAN DOLLAR.......... 2,252,060 ----------- BRAZILIAN REAL--1.2% CORPORATE BOND Chase Brazil Note, 27.152%, 3/1/96 (a)..................... BRL 973,037 956,787 ----------- BRITISH POUND--0.8% GOVERNMENT OBLIGATIONS United Kingdom Treasury, 2.50%, 7/17/24........................ GBP 350,000 657,201 ----------- CANADIAN DOLLAR--4.9% CONVERTIBLE BOND Canada Trustco, 7.00%, 7/1/09.... CAD 2,000,000 1,340,169 GOVERNMENT OBLIGATIONS Canada Government, 7.50%, 12/1/03........................ CAD 2,930,000 2,211,243 Quebec Housing, 8.95%, 5/13/13... 394,000 313,117 ----------- TOTAL CANADIAN DOLLAR............ 3,864,529 ----------- CZECH KORUNA--3.9% CORPORATE BONDS CEZ AS, 14.375%, 1/27/01......... CZK 20,370,000 817,366 Czech Trade Bank, 11.125%, 8/26/97........................ 20,000,000 754,519 Skofin, 11.625%, 2/9/98.......... 40,000,000 1,517,288 ----------- TOTAL CZECH KORUNA............... 3,089,173 ----------- DANISH KRONE--3.6% CORPORATE BONDS Kreditforen Denmark, 10.20%, 4/15/04........................ DKK 9,000,000 1,786,223 Nykredit, 6.00%, 10/1/26......... 7,089,480 1,061,666 ----------- TOTAL DANISH KRONE............... 2,847,889 ----------- GERMAN MARK--1.0% CORPORATE BOND Autobahn Tank & Rast, 6.00%, 10/16/00....................... DEM 1,050,000 750,042 ----------- GREEK DRACHMA--0.6% GOVERNMENT OBLIGATION Greek Treasury Bill, 0.00%, 7/17/96........................ GRD 130,000,000 508,288 ----------- HUNGARIAN FORINTS--0.6% GOVERNMENT OBLIGATION Hungarian Treasury Bill, 0.00%, 10/11/96....................... HUF 75,900,000 448,134 ----------- INDONESIAN RUPIAH--1.1% CORPORATE BONDS Bakrie & Brothers, 0.00%, 4/15/96........................ IDR 1,000,000,000 413,345 Indah Kiat, 0.00%, 3/21/96....... 1,000,000,000 422,086 ----------- TOTAL INDONESIAN RUPIAH.......... 835,431 ----------- IRISH POUND--3.0% GOVERNMENT OBLIGATION Republic of Ireland, 6.25%, 4/1/99......................... IEP 1,505,000 2,389,061 ----------- ITALIAN LIRA--2.0% GOVERNMENT OBLIGATION Republic of Italy, 8.50%, 8/1/99......................... ITL 2,575,000,000 1,538,879 ----------- MEXICAN PESO--0.2% CORPORATE BOND Ajustobonos, 0.00%, 2/15/96...... MXP 555,000 163,398 ----------- NEW ZEALAND DOLLAR--0.9% GOVERNMENT OBLIGATION Government of New Zealand, 10.00%, 7/15/97................ NZD 1,065,000 715,375 ----------- NORWEGIAN KRONE--2.2% CORPORATE BOND Sparebanken Norway, 10.25%, 6/23/03 (a).................... NOK 10,000,000 1,704,267 ----------- PORTUGUESE ESCUDO--0.6% GOVERNMENT OBLIGATION Republic of Portugal, 11.875%, 2/23/00........................ PTE 61,500,000 442,447 ----------- SOUTH AFRICAN RAND--0.7% GOVERNMENT OBLIGATION Republic of South Africa, 11.50%, 5/30/00........................ ZAR 2,032,200 511,608 -----------
The accompanying notes are an integral part of these financial statements. 14 17 - ------------------------------------------------------------------------ The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - ------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - ------------------------------------------------------------------------ LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) SPANISH PESETA--1.6% GOVERNMENT OBLIGATION Kingdom of Spain, 12.25%, 3/25/00........................ ESP 140,000,000 $ 1,267,156 ----------- THAILAND BAHT--1.6% CORPORATE BONDS Industrial Group Finance of Thailand, 11.25%, 5/14/96...... THB 3,000,000 119,177 Krung Thai Than BE, 0.00%, 1/12/96........................ 10,000,000 395,671 Phatra Thanakit BE, 0.00%, 6/20/96 (a).................... 20,000,000 755,592 ----------- TOTAL THAILAND BAHT.............. 1,270,440 ----------- UNITED STATES DOLLAR--54.7% CONVERTIBLE BONDS Burns Philp, 5.50%, 4/30/04...... USD $ 800,000 692,000 Dairy Farm International Holdings Ltd., 0.00%, 5/10/49........... 250,000 197,500 Zenith Electric, 6.25%, 4/1/11... 535,000 379,850 CORPORATE BONDS Act III Broadcasting Inc., 10.25%, 12/15/05............... 400,000 410,000 Alpine Group Inc. 144A, 12.25%, 7/15/03........................ 718,000 703,640 Arcadian Partners Series B, 10.75%, 5/1/05................. 798,000 881,790 Astra International, 9.75%, 4/29/01........................ 1,540,000 1,632,400 Ce Casecnan Water & Energy Inc. Series B 144A, 11.95%, 11/15/10....................... 750,000 757,500 Comcast Corp., 9.125%, 10/15/06....................... 320,000 333,600 Comcast Corp., 9.50%, 1/15/08........................ 479,000 507,740 Crown Paper Co., 11.00%, 9/1/05......................... 390,000 341,250 Den Norske Credit, 6.125%, 11/29/49 (a)................... 800,000 631,480 Eletson Holdings Inc., 9.25%, 11/15/03....................... 700,000 693,000 Export-Import Bank of Japan, 8.00%, 6/4/00.................. 444,125 448,886 Flagstar Corp., 10.75%, 9/15/01........................ 800,000 732,000 Forenings Banken 144A, 7.234%, 11/29/49 (a)................... 750,000 745,500 Fort Howard Corp., 8.25%, 2/1/02......................... 785,000 765,375 Fundy Cable Ltd., 11.00%, 11/15/05....................... 535,000 556,400 Hong Kong & Shanghai Bank, 6.25%, 8/29/49 (a).................... 1,200,000 958,200 Lennar Central Partners Ltd. Participating Class D 144A, 9.89%, 9/15/04................. 370,000 370,000 Mothers Work Inc. 144A, 12.625%, 8/1/05......................... 739,000 727,915 PRINCIPAL DESCRIPTION AMOUNT VALUE - ------------------------------------------------------------------------- Noble Drilling Corp., 9.25%, 10/1/03........................ $ 820,000 $ 861,000 NorthWest Airlines Inc., 8.625%, 8/1/96......................... 420,000 421,050 Paxson Communications Corp. 144A, 11.625%, 10/1/02............... 425,000 432,969 Pueblo Xtra International, 9.50%, 8/1/03......................... 96,000 91,680 Reliance Industries, Ltd. 144A, 8.125%, 9/27/05................ 1,500,000 1,507,500 Rowan Companies, Inc., 11.875%, 12/1/01........................ 820,000 889,700 Silgan Corp., 11.75%, 6/15/02.... 767,000 822,607 Sparbankernas Bank, 7.719%, 10/20/49 (a)................... 900,000 914,985 Walbro Corp. 144A, 9.875%, 7/15/05........................ 850,000 847,875 Williamhouse Regency Delaware Inc. 144A, 13.00%, 11/15/05....................... 575,000 603,750 FEDERAL AGENCIES Federal Home Loan Mortgage Corp., 6.946%, 2/1/24 (a)............. 1,646,326 1,681,825 Federal Home Loan Mortgage Corp., 8.00%, 5/1/25.................. 2,116,850 2,193,585 Federal National Mortgage Association, 7.503%, 11/1/27 (a)............................ 1,635,385 1,667,582 Government National Mortgage Association, 6.00%, 10/20/25 (a)............................ 1,756,821 1,774,389 Government National Mortgage Association, 6.00%, 11/20/25 (a)............................ 2,176,013 2,198,453 FOREIGN GOVERNMENT OBLIGATIONS Argentina Bono 1998 Boax 0, 8.992%, 4/4/98 (b)............. 350,000 346,150 Argentina Bote X, 5.688%, 4/1/00 (b)............................ 600,000 358,800 Argentina Pensioner Bocon, 0.00%, 4/1/01 (c)..................... 200,000 194,750 Banco Central de Costa Rica Series A, 6.727%, 5/21/05 (a).................... 240,032 196,827 Federal Republic of Brazil, 6.6875%, 1/1/01 (a)............ 855,000 734,231 Government of Poland, 6.875%, 10/27/24 (a)................... 2,200,000 1,661,000 Kingdom of Jordan, 4.00%, 12/23/23....................... 1,750,000 848,750 Republic of Brazil Federative, 6.8125%, 4/15/06 (a)........... 1,900,000 1,301,500 Republic of South Africa, 9.625%, 12/15/99....................... 750,000 811,875 MUNICIPAL BOND Allegheny County Pennsylvania Hospital Development, 5.375%, 12/1/25........................ 810,000 796,343
The accompanying notes are an integral part of these financial statements. 15 18 - ------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - -------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - ------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED) U.S. GOVERNMENT OBLIGATIONS United States Treasury Notes, 5.625%, 8/31/97................ $ 1,435,000 $ 1,444,198 United States Treasury Notes, 6.875%, 10/31/96............... 100,000 101,281 YANKEE BOND Bridas Corp., 12.50%, 11/15/99... 800,000 794,000 COLLATERALIZED MORTGAGE OBLIGATIONS Asset Securitization Corp. Series 1995-MD4, Class ACS2, 2.433%, 8/13/29 (a).................... 3,880,000 759,631 Federal Home Loan Mortgage PC Guaranteed, Series 1490, Class E, 6.50%, 4/15/08.............. 3,575,000 750,750 Federal Home Loan Mortgage PC Guaranteed, Series 1694, Class V, 6.50%, 12/15/21............. 4,750,000 699,141 Federal Home Loan Mortgage PC, Series 1587, Class HA, 6.50%, 10/15/08....................... 5,518,488 735,511 ----------- TOTAL UNITED STATES DOLLAR....... 42,909,714 ----------- TOTAL CURRENCY DENOMINATED BONDS* (Identified cost $68,865,827)...... 70,078,688 ----------- STRUCTURED NOTES--4.5% ING Polish Note, 0.00%, 2/21/96.. 335,665 324,756 J P Morgan Polish Note, 0.00%, 1/24/96........................ 724,280 701,031 Morgan Stanley Group Inc., 14.25%, 6/26/96 (a)............ 500,000 419,500 YPF Sociedad Anonima, 7.50%, 10/26/02....................... 736,325 743,688 United Mexican States 144A, 0.00%, 11/27/96 (d)............ 1,300,000 1,322,750 ----------- TOTAL STRUCTURED NOTES (Identified cost $3,517,303)....... 3,511,725 ----------- SHORT TERM INVESTMENT--4.5% REPURCHASE AGREEMENT--4.5% (Identified cost $3,520,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $3,770,000; valued at $3,591,279).................... 3,520,000 3,520,000 ----------- TOTAL INVESTMENTS (Identified cost $75,903,130) (e).............................. 98.3% 77,110,413 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................ 1.7 1,363,511 ---- --------- NET ASSETS.......................... 100.0% $78,473,924 ===== ==========
(a) Variable rate security. Interest shown is the current rate. (b) Coupon set quarterly to 3 month LIBOR. Current rate shown. (c) Zero coupon until 5/1/97, then coupon set monthly to 30 day LIBOR. (d) Value set monthly based on CETES/LIBOR rates. (e) The aggregate cost for federal income tax purposes is $76,140,116; aggregate gross unrealized appreciation is $1,517,650 and the aggregate gross unrealized depreciation is $547,353, resulting in net unrealized appreciation of $970,297. * Percentages of holdings are presented in the portfolio by currency denomination. Percentages by country are as follows: Argentina 3.3%, Australia 2.9%, Brazil 3.8%, Canada 4.9%, Costa Rica 0.3%, Czech Republic 3.9%, Denmark 3.6%, Germany 1.0%, Greece 0.6%, Hong Kong 1.2%, Hungary 0.6%, Indonesia 1.1%, Ireland 3.0%, Italy 2.0%, Japan 0.6%, Jordan 1.1%, Mexico 1.9%, New Zealand 0.9%, Norway 5.1%, Philippines 1.0%, Poland 3.4%, Portugal 0.6%, South Africa 1.7%, Spain 1.6%, Sweden 2.1%, Thailand 1.6%, United Kingdom 0.8%, United States 39.2%. Percentages by industry are as follows: Auto Parts 3.2%, Banking 6.6%, Broadcasting 1.1%, Building & Building Materials 1.0%, Cable Systems 1.1%, Chemicals & Chemical Manufacturing 3.0%, Electronics 1.4%, Food & Beverages 0.3%, Holdings Company 0.9%, Oil & Gas Equipment 2.2%, Packaging 1.0%, Paper Manufacturing & Products 2.7%, Restaurants 0.9%, Retail 1.0%, Shipbuilding 0.9%, Telecommunications 0.7%, Transportation & Freight Services 0.5%, Utilities 2.0%, Collateralized Mortgage Obligation 3.8%, U.S. Government Obligations 16.9%, Foreign Government Obligations 37.8%, Municipal Bonds 1.0%, Structured Notes 2.8%, Yankee Bonds 1.0%. Forward Foreign Currency Contracts open at December 31, 1995:
Unrealized Contracts In Exchange Delivery Appreciation to Deliver For Date (Depreciation) - ------------------- ------------------- -------- -------------- $ 2,319,053 JPY 222,420,361 9/3/96 $(92,983) JPY 222,420,361 $2,364,916 9/3/96 138,846 $ 755,892 THB 19,033,360 4/5/96 (300) AUD 2,897,236 $2,155,000 3/12/96 9,100 CAD 4,790,223 $3,523,000 3/12/96 15,455 $ 282,658 DEM 403,700 3/12/96 (203) DEM 6,008,452 $4,199,968 3/12/96 (3,940) $ 1,113,480 DKK 6,153,537 3/12/96 (3,257) DKK 21,775,923 $3,919,000 3/12/96 (9,819) ESP 147,262,500 $1,190,000 3/12/96 (15,194) GBP 447,225 $685,000 3/12/96 (8,321) IEP 1,455,175 $2,313,000 3/12/96 (17,341) ITL 2,461,074,000 $1,522,000 3/12/96 (13,064) $ 95,000 JPY 9,567,450 3/12/96 (1,369) JPY 32,520,300 $325,000 3/12/96 6,743 NOK 10,417,722 $1,649,000 3/12/96 2,922 $ 56,983 XEU 44,624 3/12/96 144 XEU 669,831 $860,792 3/12/96 3,285 $ 1,552,698 ITL 2,487,266,171 1/19/96 13,468 $ 247,918 ZAR 911,967 1/4/96 2,244 DKK 6,152,360 $1,110,194 1/2/96 2,159 -------- $ 28,575 ========
- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 16 19 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO COMMON STOCKS--91.4% AUTO PARTS--5.3% A.O. Smith Class B...................... 300,000 $ 6,225,000 Carlisle Companies, Inc. ............... 133,000 5,369,875 Durakon Industries, Inc. (a)............ 430,000 5,375,000 Lear Seating Corp. (a).................. 224,800 6,519,200 Masland Corp. .......................... 528,000 7,392,000 Standard Motor Products, Inc. Class A... 215,000 3,225,000 ------------- 34,106,075 ------------- BANKS--4.7% Albank Financial Corp. ................. 169,000 5,070,000 Baybanks, Inc. ......................... 59,600 5,855,700 Cullen Frost Bankers, Inc. ............. 136,000 6,800,000 Hibernia Corp. Class A.................. 580,000 6,235,000 Signet Banking Corp. ................... 274,600 6,521,750 ------------- 30,482,450 ------------- BROADCASTING--2.2% Cablevision Systems Corp. Class A (a)... 84,600 4,589,550 Evergreen Media Corp. Class A (a)....... 100,000 3,200,000 Katz Media Group, Inc. (a).............. 348,200 6,137,025 ------------- 13,926,575 ------------- BUILDING & CONSTRUCTION--1.7% Centex Construction Products, Inc. (a)................................... 288,400 4,145,750 Redman Industries, Inc. (New) (a)....... 200,000 6,750,000 ------------- 10,895,750 ------------- CHEMICALS & PLASTICS--3.6% Crompton & Knowles Corp. ............... 563,700 7,469,025 Fuller H B Co. ......................... 237,400 8,249,650 Mississippi Chemical Corp. ............. 319,000 7,416,750 ------------- 23,135,425 ------------- COMMUNICATIONS--3.0% Associated Group, Inc. Class A (a)...... 56,650 1,069,269 Associated Group, Inc. Class B (a)...... 256,650 4,876,350 Cellular Communications of Puerto Rico, Inc. (a).............................. 230,058 6,384,109 International CableTel, Inc. (a)........ 296,000 7,252,000 ------------- 19,581,728 ------------- COMPUTERS & BUSINESS EQUIPMENT--1.7% Wang Labs, Inc. (a)..................... 643,100 10,691,538 ------------- COMPUTER SOFTWARE--0.9% Ameridata Technologies, Inc. (a)........ 610,000 5,871,250 ------------- COSMETICS & TOILETRIES--2.9% Alberto Culver Co. Class A.............. 276,900 8,445,450 Maybelline, Inc. ....................... 291,800 10,577,750 ------------- 19,023,200 ------------- DRUGS & HEALTH CARE--1.7% FHP International Corp. (a)............. 132,500 3,776,250 Perrigo Co. (a)......................... 618,000 7,338,750 ------------- 11,115,000 ------------- ELECTRICAL EQUIPMENT--2.4% Belden, Inc. ........................... 252,900 6,512,175 UCAR International, Inc. (a)............ 275,000 9,281,250 ------------- 15,793,425 ------------- NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- ELECTRONICS--4.1% Amphenol Corp. Class A (a).............. 416,800 $ 10,107,400 Lexmark International Group, Inc. Class A (a)................................. 413,600 7,548,200 Oak Industries, Inc. (a)................ 455,900 8,548,125 ------------- 26,203,725 ------------- ENERGY--0.2% California Energy Company, Inc. (a)..... 81,700 1,593,150 ------------- FINANCIAL SERVICES--1.2% Rollins Truck Leasing Corp. ............ 685,800 7,629,525 ------------- HOUSEHOLD APPLIANCES & HOME FURNISHINGS--3.9% Ethan Allen Interiors, Inc. (a)......... 298,000 6,071,750 Heilig Meyers Co. ...................... 277,900 5,106,413 Miller (Herman), Inc. .................. 276,700 8,301,000 Sunbeam Corp. Delaware (New)............ 364,100 5,552,525 ------------- 25,031,688 ------------- INDUSTRIAL & MACHINERY--2.3% Mark IV Industries, Inc. ............... 431,729 8,526,648 Trinova Corp. .......................... 211,400 6,051,325 ------------- 14,577,973 ------------- INSURANCE--6.4% Alexander & Alexander Services, Inc. ... 167,900 3,190,100 American Bankers Insurance Group, Inc. ................................. 208,600 8,135,400 Gryphon Holdings, Inc. (a).............. 150,000 2,887,500 NAC Re Corp. ........................... 240,000 8,640,000 Prudential Reinsurance Holdings, Inc. ................................. 310,900 7,267,287 Reliance Group Holdings, Inc. .......... 276,100 2,381,363 Western National Corp. ................. 550,000 8,868,750 ------------- 41,370,400 ------------- LEISURE TIME--2.1% Players International, Inc. (a)......... 570,000 6,091,875 Polaris Industries, Inc. ............... 260,000 7,637,500 ------------- 13,729,375 ------------- MACHINERY--4.5% Briggs & Stratton Corp. ................ 289,300 12,548,387 Manitowoc, Inc. ........................ 313,000 9,585,625 Measurex Corp. ......................... 248,700 7,025,775 ------------- 29,159,787 ------------- MANUFACTURING--4.0% Alltrista Corp. (a)..................... 311,400 5,605,200 Crane Co. .............................. 271,400 10,007,875 Pentair, Inc. .......................... 139,500 6,940,125 Varlen Corp. ........................... 157,700 3,390,550 ------------- 25,943,750 ------------- MEDICAL SUPPLIES--1.5% Dentsply International, Inc. ........... 240,000 9,600,000 ------------- OIL & GAS--3.4% Diamond Shamrock, Inc. ................. 200,000 5,175,000 Helmerich & Payne, Inc. ................ 306,500 9,118,375 Vintage Petroleum, Inc. ................ 332,000 7,470,000 ------------- 21,763,375 ------------- PAPER PRODUCTS--0.9% Bowater, Inc. .......................... 155,000 5,502,500 -------------
The accompanying notes are an integral part of these financial statements. 17 20 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO (CONTINUED) PUBLISHING--2.4% Banta Corp. ............................ 211,100 $ 9,288,400 Houghton Mifflin Co. ................... 144,000 6,192,000 ------------- 15,480,400 ------------- REAL ESTATE--4.8% Avalon Properties, Inc. ................ 238,600 5,129,900 Bay Apartment Communities, Inc. ........ 175,000 4,243,750 Crescent Real Estate Equities, Inc. .... 193,900 6,616,837 FelCor Suite Hotels, Inc. .............. 330,000 9,157,500 Liberty Property Trust.................. 271,500 5,633,625 ------------- 30,781,612 ------------- RESTAURANTS, LODGING & ENTERTAINMENT--2.2% IHOP Corp. (New) (a).................... 297,500 7,735,000 Sbarro, Inc. ........................... 301,300 6,477,950 ------------- 14,212,950 ------------- RETAIL--8.4% Alexander's, Inc. (a)................... 80,000 5,560,000 Carson Pirie Scott & Co. (a)............ 431,200 8,570,100 Fred Meyer, Inc. (a).................... 119,300 2,684,250 Good Guys, Inc. (a)..................... 175,800 1,582,200 Home Shopping Network, Inc. (a)......... 648,900 5,840,100 Intelligent Electronics, Inc. .......... 855,600 5,133,600 Jones Apparel Group, Inc. (a)........... 232,600 9,158,625 Revco D.S., Inc. (a).................... 217,062 6,132,001 Sothebys Holdings, Inc. ................ 693,200 9,878,100 ------------- 54,538,976 ------------- SERVICES--3.0% Gtech Holdings Corp. (a)................ 321,700 8,364,200 The Pittston Services Group............. 356,400 11,182,050 ------------- 19,546,250 ------------- STEEL--2.0% Huntco, Inc. Class A.................... 301,300 4,632,488 Lukens, Inc. ........................... 298,800 8,590,500 ------------- 13,222,988 ------------- TECHNOLOGY--0.0% Verbex Voice Systems, Inc. (a),(b)...... 180,501 180,501 ------------- TELECOMMUNICATION--0.5% CAI Wireless Systems, Inc. (a).......... 330,000 3,176,250 ------------- TELECOMMUNICATION EQUIPMENT--1.3% Scientific Atlanta, Inc. ............... 575,000 8,625,000 ------------- TEXTILES, SHOES & APPAREL--2.2% Authentic Fitness Corp. ................ 275,000 5,706,250 Warnaco Group, Inc. Class A............. 265,000 6,625,000 Westpoint Stevens, Inc. Class A (a)..... 90,300 1,811,644 ------------- 14,142,894 ------------- TOTAL COMMON STOCKS (Identified cost $511,858,156)............ 590,635,485 ------------- NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- PREFERRED STOCKS--0.1% (Identified cost $1,500,000) TECHNOLOGY--0.1% Verbex Voice Systems, Inc. Series F (conv.) (a),(b)....................... 687,285 $ 500,343 ------------- PRINCIPAL AMOUNT ------------ CONVERTIBLE BONDS--0.3% COMMUNICATIONS--0.2% International CableTel, Inc. 144A, 7.25%, 4/15/05........................ $ 1,400,000 1,498,000 ------------- RESTAURANTS, LODGING & ENTERTAINMENT--0.1% Interactive Light Holdings, Inc., 8.00%, 1/25/99 (b)........................... 1,000,000 500,000 ------------- TECHNOLOGY--0.0% Verbex Voice Systems, Inc., 10.00%, 12/31/95 (b).......................... 100,000 100,000 ------------- TOTAL CONVERTIBLE BONDS (Identified cost $2,500,000).............. 2,098,000 ------------- SHORT TERM INVESTMENT--7.4% REPURCHASE AGREEMENT--7.4% (Identified cost $47,748,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Notes, 5.75%, due 9/30/97; total par value $47,615,000; valued at $48,704,574).......................... 47,748,000 47,748,000 ------------- TOTAL INVESTMENTS (Identified cost $563,606,156) (c)........ 99.2% 640,981,828 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................... 0.8 5,389,176 ---- ---------- NET ASSETS................................. 100.0% $ 646,371,004 ===== =============
(a) Non-income producing security. (b) Private placement (see note 6). (c) The aggregate cost for federal income tax purposes is $563,606,156; aggregate gross unrealized appreciation is $96,906,783 and the aggregate gross unrealized depreciation is $19,531,111, resulting in net unrealized appreciation of $77,375,672. - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 18 21 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - ---------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO COMMON STOCKS--87.9% ARGENTINA--2.0% Capex SA 144A (c)....................... 158,200 $ 2,293,900 ------------- AUSTRALIA--1.2% Bibury Ltd. (a),(d)..................... 472,100 0 Pacific Mutual Ltd. .................... 991,200 1,436,628 ------------- TOTAL AUSTRALIA......................... 1,436,628 ------------- AUSTRIA--1.3% Vae Eisenbahnsyst....................... 17,400 1,467,480 ------------- BRAZIL--1.7% Capco Automotive Products Corp. ........ 275,200 1,960,800 ------------- DENMARK--2.4% Spar Nord Holding....................... 39,100 1,323,872 Sparekassen Bikube...................... 45,200 1,497,848 ------------- TOTAL DENMARK........................... 2,821,720 ------------- FINLAND--2.6% Finnair................................. 296,700 2,217,030 Sampo Insurance Company Ltd. ........... 14,500 776,774 ------------- TOTAL FINLAND........................... 2,993,804 ------------- FRANCE--3.9% Club Mediterranee....................... 4,622 369,043 Imetal.................................. 17,600 2,102,512 Unibail SA.............................. 19,400 2,004,574 ------------- TOTAL FRANCE............................ 4,476,129 ------------- GERMANY--9.0% Cewe Color Holding AG................... 6,100 2,019,868 Doerries Scharmann AG................... 76,994 279,100 Hornbach Holding AG..................... 30,300 2,640,293 Moebel Walther AG....................... 101,770 3,369,867 WMF Wuerttembergische Metallwarenfabrik AG.................................... 9,600 2,074,590 ------------- TOTAL GERMANY........................... 10,383,718 ------------- HONG KONG--3.5% Manhattan Card Co. ..................... 4,026,000 1,718,177 Peregrine Investment.................... 1,800,000 2,327,837 ------------- TOTAL HONG KONG......................... 4,046,014 ------------- IRELAND--3.4% Fitzwilton PLC.......................... 2,861,700 2,199,193 Unidare PLC............................. 378,200 1,695,421 ------------- TOTAL IRELAND........................... 3,894,614 ------------- ISRAEL--2.1% ECI Telecom Ltd. ....................... 105,400 2,404,437 ------------- ITALY--2.7% Arnoldo Mondadori Editore............... 350,800 3,039,438 Unipol.................................. 21,000 134,546 ------------- TOTAL ITALY............................. 3,173,984 ------------- JAPAN--7.2% Cowboy Company Ltd. .................... 149,000 2,525,424 FCC Company Ltd. ....................... 80,000 2,820,339 Towa Pharmaceutical Company Ltd. ....... 80,000 2,944,310 ------------- TOTAL JAPAN............................. 8,290,073 ------------- NUMBER DESCRIPTION OF SHARES VALUE - ---------------------------------------------------------------------------- NEW ZEALAND--4.8% Fisher & Paykel......................... 719,416 $ 2,187,032 Warehouse Group......................... 437,100 1,160,189 Wrightson Ltd. ......................... 2,925,200 2,218,379 ------------- TOTAL NEW ZEALAND....................... 5,565,600 ------------- NORWAY--5.0% Aker AS Class B......................... 186,800 2,270,820 Fokus Bank (a).......................... 649,000 3,504,176 ------------- TOTAL NORWAY............................ 5,774,996 ------------- PAKISTAN--0.0% Lever Brothers.......................... 540 11,126 Packages................................ 750 2,214 ------------- TOTAL PAKISTAN.......................... 13,340 ------------- PHILIPPINES--1.9% Philippine Commercial International Bank (a).............................. 243,000 2,241,937 ------------- PORTUGAL--2.0% Corticeira Amorim SA.................... 197,100 2,271,572 ------------- SPAIN--5.1% Corporation Financiera Reunida SA....... 1,070,400 3,706,249 Vallehermoso SA......................... 120,000 2,230,833 ------------- TOTAL SPAIN............................. 5,937,082 ------------- SWEDEN--6.0% Getinge Industrier AB................... 44,466 2,025,839 IRO AB (a).............................. 204,100 2,305,451 TV 4 AB Series A........................ 149,200 2,584,153 ------------- TOTAL SWEDEN............................ 6,915,443 ------------- SWITZERLAND--6.9% Bil GT Gruppe AG........................ 5,000 2,947,551 Logitech International PLC.............. 25,100 2,589,423 Swisslog Holding AG..................... 8,690 2,410,750 ------------- TOTAL SWITZERLAND....................... 7,947,724 ------------- TAIWAN--1.6% Yageo Corp. (a), (c).................... 213,100 1,917,900 ------------- UNITED KINGDOM--11.6% Amec PLC................................ 35,247 51,455 Bell Cablemedia PLC (a),(b)............. 75,400 1,206,400 Greycoat PLC............................ 832,175 1,796,433 London Clubs International PLC.......... 342,800 2,246,647 McBride PLC (a)......................... 660,000 1,978,258 Scholl PLC.............................. 1,028,400 3,066,513 Takare PLC.............................. 1,087,400 3,039,789 ------------- TOTAL UNITED KINGDOM.................... 13,385,495 ------------- TOTAL COMMON STOCKS (Identified cost $103,585,858)............ 101,614,390 ------------- PREFERRED STOCKS--4.7% AUSTRIA--1.3% Bau Holdings AG......................... 39,900 1,500,432 ------------- GERMANY--1.7% Sander (Jil) AG......................... 2,700 1,976,298 -------------
The accompanying notes are an integral part of these financial statements. 19 22 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER DESCRIPTION OF SHARES VALUE - ---------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO (CONTINUED) UNITED KINGDOM--1.7% Signet Group PLC (a),(b)................ 38 $ 1,900,000 ------------- TOTAL PREFERRED STOCKS (Identified cost $5,664,250).............. 5,376,730 ------------- PRINCIPAL AMOUNT ----------- CONVERTIBLE BONDS--3.0% PHILIPPINES--1.4% Bacnotan Consolidated Industries, 5.50%, 6/21/04........................ $ 2,000,000 1,700,000 ------------- UNITED STATES--1.6% International CableTel Inc. 144A, 7.25%, 4/15/05........................ 1,700,000 1,819,000 ------------- TOTAL CONVERTIBLE BONDS (Identified cost $3,700,000).............. 3,519,000 ------------- SHORT TERM INVESTMENT--6.7% REPURCHASE AGREEMENT--6.7% (Identified cost $7,711,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $8,260,000; valued at $7,868,426)........................... 7,711,000 7,711,000 ------------- TOTAL INVESTMENTS (Identified cost $120,661,108) (e)........ 102.3% 118,221,120 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS.............................. (2.3) (2,686,681) ---- ---------- NET ASSETS................................. 100.0% $ 115,534,439 ===== =============
(a) Non-income producing security. (b) American Depository Receipts. (c) Global Depository Receipts. (d) Company currently in bankruptcy. (e) The aggregate cost for federal income tax purposes is $120,735,712; aggregate gross unrealized appreciation is $6,708,912 and the aggregate gross unrealized depreciation is $9,223,504, resulting in net unrealized depreciation of $2,514,592. * Percentages of common stocks, preferred stocks, and convertible bonds are presented in the portfolio by currency denomination. Percentages by industry are as follows: Agriculture 1.9%, Automotive 1.7%, Auto Parts 2.4%, Broadcasting 2.2%, Computers 2.2%, Construction Materials 5.3%, Cosmetics & Toiletries 4.4%, Electrical Equipment 1.5%, Electronics 1.9%, Engineering & Construction 1.3%, Entertainment 1.9%, Financial Services 14.8%, Food & Beverages 2.2%, Health Care 2.6%, Household Products 1.8%, Industrial & Machinery 2.3%, Insurance 0.8%, Leisure Time 1.8%, Lodging 0.3%, Manufacturing 3.3%, Miscellaneous 5.1%, Mortgage Backed Securities 5.7%, Paper Products 2.0%, Pharmaceuticals 2.6%, Publishing 2.6%, Real Estate 5.2%, Retailing 2.6%, Retail Trade 2.9%, Telecommunication 1.6%, Telecommunication Equipment 2.1%, Telephone 1.0%, Textiles, Shoes, and Apparel 1.7%, Transportation & Freight Services 1.9%, Venture Capital 2.0%. Forward Foreign Currency Contracts open at December 31, 1995:
Unrealized Contracts In Exchange Delivery Appreciation to Deliver For Date (Depreciation) - ---------------- --------------- -------- -------------- BEL 93,045,843 $3,141,000 3/13/96 $(32,706) DEM 7,821,860 $5,436,000 3/13/96 (36,959) SEK 63,425,392 $9,599,000 3/13/96 101,636 $ 1,094,460 GBP 702,929 1/4/96 (2,786) $ 117,722 NZD 180,278 1/4/96 138 $ 142,407 NZD 218,583 1/3/96 495 $ 264,919 SEK 1,754,164 1/3/96 (728) $ 758,901 FIM 3,282,247 1/2/96 (4,257) -------- $ 24,833 ========
- --------------------------------------------------------------------------------
NUMBER OF SHARES ----------- LAZARD SPECIAL EQUITY PORTFOLIO COMMON STOCKS--89.5% AEROSPACE & DEFENSE--1.2% Tech-Sym Corp. (a)........................ 17,500 $ 557,812 ------------ AUTO & TRUCK--1.0% Oshkosh Truck Corp. Class B............... 18,000 270,000 Republic Automotive Parts, Inc. (a)....... 15,000 191,250 ------------ 461,250 ------------ BUILDING & HOUSING--5.0% Puerto Rican Cement Co., Inc. ............ 65,000 2,153,125 Simpson Manufacturing Co. (a)............. 15,000 195,000 ------------ 2,348,125 ------------ BUSINESS SERVICES & SUPPLIES--2.6% Ennis Business Forms...................... 100,000 1,225,000 ------------ CHEMICALS & PLASTICS--6.2% Aceto Corp. .............................. 77,000 1,174,250 MacDermid, Inc. .......................... 30,000 1,755,000 ------------ 2,929,250 ------------ NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- FOOD & BEVERAGE--4.2% Farmer Brothers Co. ...................... 15,000 $ 1,980,000 ------------ HOUSEHOLD APPLIANCES & HOME FURNISHINGS--14.2% Allen Organ Co. Class B................... 60,000 2,445,000 Boston Acoustics, Inc. ................... 40,000 920,000 Chromcraft Revington, Inc. (a)............ 9,000 239,625 Mikasa, Inc. (a).......................... 22,000 297,000 National Presto Industries, Inc. ......... 47,100 1,872,225 Virco Manufacturing Co. .................. 99,000 903,375 ------------ 6,677,225 ------------ INDUSTRIAL & MACHINERY--9.7% Amtrol, Inc. ............................. 25,000 381,250 Paul Mueller Co. ......................... 15,000 476,250 Penn Engineering & Manufacturing Corp. ... 20,000 1,940,000 Robbins & Myers, Inc. .................... 40,000 1,140,000 Tecumseh Products Co. Class A............. 12,000 621,000 ------------ 4,558,500 ------------
The accompanying notes are an integral part of these financial statements. 20 23 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER OF DESCRIPTION SHARES VALUE - ---------------------------------------------------------------------------- LAZARD SPECIAL EQUITY PORTFOLIO (CONTINUED) MISCELLANEOUS--6.8% Brenco, Inc. ............................. 15,300 $ 156,825 Matthews International Corp. ............. 8,500 159,375 Mine Safety Appliances Co. ............... 800 38,200 NCH Corp. ................................ 16,400 947,100 Tranzonic Companies Class A............... 80,000 1,100,000 Tranzonic Companies Class B............... 40,000 555,000 Versa Technologies, Inc. ................. 16,400 250,100 ------------ 3,206,600 ------------ MULTI-INDUSTRY--4.2% American Filtrona Corp. .................. 15,000 502,500 Core Industries, Inc. .................... 12,300 158,363 Kysor Industrial Corp. Delaware........... 6,200 150,350 Latshaw Enterprises, Inc. (a),(b)......... 38,400 259,200 RPC Energy Services, Inc. (a)............. 18,500 168,812 Wynns International, Inc. ................ 24,400 722,850 ------------ 1,962,075 ------------ RESTAURANTS, LODGING & ENTERTAINMENT--2.7% Bowl America, Inc. Class A................ 80,000 610,000 International Dairy Queen, Inc. Class A (a)............................. 30,000 682,500 ------------ 1,292,500 ------------ RETAIL--11.0% Arden Group, Inc. Class A (a)............. 25,000 1,425,000 Blair Corp. .............................. 58,000 1,834,250 Dress Barn, Inc. (a)...................... 100,000 962,500 Haverty Furniture Company, Inc. .......... 11,800 160,775 Value City Department Stores, Inc. (a).... 115,000 776,250 ------------ 5,158,775 ------------ SERVICES--11.6% AFA Protective Systems, Inc. (b).......... 15,100 1,661,000 Grey Advertising, Inc. ................... 4,000 784,000 Hilb, Rogal & Hamilton Co. ............... 100,000 1,337,500 NUMBER DESCRIPTION OF SHARES VALUE - --------------------------------------------------------------------------- Isomedix, Inc. (a)........................ 28,400 $ 408,250 Value Line, Inc. ......................... 35,000 1,286,250 ------------ 5,477,000 ------------ TEXTILES, SHOES & APPAREL--9.1% Fab Industries, Inc. ..................... 50,000 1,593,750 Garan, Inc. .............................. 80,000 1,350,000 Superior Surgical Manufacturing Company, Inc. ................................... 100,000 950,000 Weyco Group, Inc. ........................ 10,000 375,000 ------------ 4,268,750 ------------ TOTAL COMMON STOCKS (Identified cost $34,483,841)............... 42,102,862 ------------ PRINCIPAL AMOUNT ----------- SHORT TERM INVESTMENT--11.1% FEDERAL AGENCY--11.1% (Identified cost $5,209,190) Federal Home Loan Mortgage Corp., 5.60%, 1/2/96.................................. $ 5,210,000 5,209,190 ------------ TOTAL INVESTMENTS (Identified cost $39,693,031) (c)........... 100.6% $ 47,312,052 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS...................................... (0.6) (291,849) ---- --------- NET ASSETS................................... 100.0% $ 47,020,203 ===== ============
(a) Non-income producing security. (b) Affiliated issuer under the Investment Company Act of 1940 in as much as the Portfolio owns more than 5% of the voting securities of the Company. (c) The aggregate cost for federal income tax purposes is $39,693,031; aggregate gross unrealized appreciation is $9,365,862 and the aggregate gross unrealized depreciation is $1,746,841, resulting in net unrealized appreciation of $7,619,021. - -------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO COMMON STOCKS--79.9% ARGENTINA--7.4% Capex SA.................................. 140,000 $ 1,021,796 Juan Minetti.............................. 144,000 475,105 Metrogas SA Class B (b)................... 57,000 555,750 YPF Sociedad Anonima Class D (b).......... 25,000 540,625 ----------- TOTAL ARGENTINA........................... 2,593,276 ----------- BRAZIL--2.8% Capco Automotive Products Corp. (a)....... 60,100 428,212 Makro Atacadista SA (a),(c)............... 100,000 568,500 ----------- TOTAL BRAZIL.............................. 996,712 ----------- CHILE--4.2% AFP Provida SA (b)........................ 17,000 469,625 Chilectra SA (b).......................... 8,000 398,000 Compania De Telefonos Chile (b)........... 7,300 604,987 ----------- TOTAL CHILE............................... 1,472,612 -----------
NUMBER OF SHARES ---------- CHINA--1.6% Ek Chor China Motorcycle Co. ............. 47,000 $ 546,375 ----------- COLOMBIA--1.7% Banco De Bogota........................... 66,451 318,589 Banco Industrial Colombiano............... 82,000 290,507 ----------- TOTAL COLOMBIA............................ 609,096 ----------- CZECH REPUBLIC--1.5% Komercni Banka AS 144A (a),(c)............ 30,000 546,000 ----------- GREECE--3.0% Ergo Bank................................. 10,000 398,372 Papastratos Cigarette SA.................. 10,000 316,336 Titan Cement Co. SA (a)................... 8,000 335,737 ----------- TOTAL GREECE.............................. 1,050,445 -----------
The accompanying notes are an integral part of these financial statements. 21 24 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
NUMBER OF DESCRIPTION SHARES VALUE - ------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED) HONG KONG--5.2% China Hong Kong Photo Products............ 1,100,000 $ 622,373 Harbin Power Equipment.................... 1,248,000 183,992 Peregrine Investment...................... 360,000 465,568 Yue Yuen Industrial Holding............... 2,100,000 556,741 ----------- TOTAL HONG KONG........................... 1,828,674 ----------- HUNGARY--3.0% Danubius Hotel............................ 51,600 485,296 Egis Gyogyszergyar........................ 25,000 555,332 ----------- TOTAL HUNGARY............................. 1,040,628 ----------- INDIA--2.9% Ashok Leyland Ltd. 144A (a), (c).......... 58,600 600,650 Hindalco Industries Ltd. 144A (a), (c).... 12,500 426,625 ----------- TOTAL INDIA............................... 1,027,275 ----------- INDONESIA--5.9% Bank Bali................................. 125,750 247,485 Bimantara Citra (a)....................... 540,000 448,721 Citra Marga Nusaphala Persada............. 470,000 441,942 Kawasan Industries Jababeka............... 298,000 482,222 Trias Sentosa............................. 210,000 468,403 ----------- TOTAL INDONESIA........................... 2,088,773 ----------- ISRAEL--0.5% Blue Square (a)........................... 24,000 161,433 ----------- KOREA--7.8% Chosun Brewery............................ 7,610 301,251 Chosun Brewery Ord. (New) (a)............. 2,790 109,676 Korea Chemical............................ 3,760 389,401 Korea Mobile Telecom...................... 836 942,420 Pohang Iron & Steel (b)................... 9,600 210,000 Samsung Electronics Ltd. 144A (a), (c).... 6,800 397,800 Shinhan Bank.............................. 17,100 381,964 ----------- TOTA KOREA................................ 2,732,512 ----------- LUXEMBOURG--1.4% First NIS Regional Fund (a)............... 88,000 484,000 ----------- MALAYSIA--2.9% Genting Berhad............................ 33,000 275,466 Kian Joo Can Factory Berhad............... 125,000 516,793 Southern Bank Berhad...................... 125,000 238,217 ----------- TOTAL MALAYSIA............................ 1,030,476 ----------- MEXICO--6.7% Cemex SA.................................. 204,000 671,627 Fomento Economico Series B................ 271,200 609,541 Grupo Fernandez Editores Series B (a)..... 1,070,000 298,185 Pan American Beverage Class A............. 11,000 352,000 Telefonos de Mexico SA (b)................ 13,000 414,375 ----------- TOTAL MEXICO.............................. 2,345,728 ----------- PAKISTAN--1.9% Hub Power Ltd. 144A (a),(c)............... 38,000 655,500 ----------- PERU--1.3% Backus & Johnston......................... 265,358 455,851 ----------- PHILIPPINES--3.4% Alaska Milk Corp. (a)..................... 2,300,000 333,206 Benpress Holdings Corp. 144A (c).......... 64,600 323,000 NUMBER DESCRIPTION OF SHARES VALUE - ------------------------------------------------------------------------- C & P Homes (a)........................... 300,100 $ 220,241 Philippine Commercial International Bank (a)................................ 34,400 317,377 ----------- TOTAL PHILIPPINES......................... 1,193,824 ----------- POLAND--0.7% Jelfa (a)................................. 22,000 253,417 ----------- PORTUGAL--3.5% Corticeira Amorim SA...................... 31,800 366,494 Investec-Consultoria Internacional SA (a)..................................... 27,000 541,172 Portugal Telecom SA (a),(b)............... 18,000 342,000 ----------- TOTAL PORTUGAL............................ 1,249,666 ----------- SOUTH AFRICA--5.0% JD Group Ltd. ............................ 100,654 662,651 Kersaf Investments........................ 50,000 630,915 Malbak.................................... 69,391 480,623 ----------- TOTAL SOUTH AFRICA........................ 1,774,189 ----------- SRI LANKA--0.3% Blue Diamond Jewel........................ 408,186 120,832 ----------- TAIWAN--2.1% Siliconware Precision Industries Inc. 144A (a),(c)................................. 16,700 275,550 Yageo Corp. (a),(c)....................... 52,600 473,400 ----------- TOTAL TAIWAN.............................. 748,950 ----------- VENEZUELA--1.1% Venezolana De Ceme........................ 309,000 379,492 ----------- ZIMBABWE--2.1% Bindura Nickel............................ 250,000 362,171 Delta Corp. .............................. 225,000 376,658 ----------- TOTAL ZIMBABWE............................ 738,829 ----------- TOTAL COMMON STOCKS (Identified cost $28,827,960)............... 28,124,565 ----------- PREFERRED STOCKS--6.6% BRAZIL--4.4% Brahma Cia Cervejaria..................... 1,700,000 699,606 Cemig Cia Energetica de Minas Gerais...... 20,000,000 442,387 Dixie Toga SA (a)......................... 467,000 408,385 ----------- TOTAL BRAZIL.............................. 1,550,378 ----------- COLOMBIA--2.2% Banco Industrial Colombiano SA (b)........ 35,000 573,125 Gran Cadena De Almacenes Class B 144A (a), (b)..................................... 18,000 207,000 ----------- TOTAL COLOMBIA............................ 780,125 ----------- TOTAL PREFERRED STOCKS (Identified cost $2,368,183)................ 2,330,503 ----------- WARRANTS--0.0% (Identified cost $0) INDONESIA--0.0% Bank Bali (a)............................. 29,000 12,683 -----------
The accompanying notes are an integral part of these financial statements. 22 25 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995 - --------------------------------------------------------------------------------
PRINCIPAL DESCRIPTION AMOUNT VALUE - ------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED) CONVERTIBLE BONDS--3.7% PHILIPPINES--1.3% Bacnotan Consolidated Industries, 5.50%, 6/21/04................................. $ 550,000 $ 467,500 ----------- TAIWAN--1.0% United Micro Electronics, 1.25%, 6/8/04... 285,000 357,675 ----------- UNITED STATES--1.4% International Financial Holdings, Inc. 144A, 6.50%, 8/1/99..................... 370,000 492,100 ----------- TOTAL CONVERTIBLE BONDS (Identified cost $1,527,925)................ 1,317,275 ----------- SHORT TERM INVESTMENT--13.8% REPURCHASE AGREEMENT--13.8% (Identified cost $4,852,000) State Street Bank and Trust Co., 5.70%, 1/2/96 (collateralized by U.S. Treasury Bills, due 12/12/96; total par value $5,200,000; valued at $4,953,489)....... 4,852,000 4,852,000 ----------- TOTAL INVESTMENTS (Identified cost $37,576,068) (d)........... 104.0% 36,637,026 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS...................................... (4.0) (1,420,768) ----- ----------- NET ASSETS................................... 100.0% $35,216,258 ===== ===========
(a) Non-income producing security. (b) American Depository Receipts. (c) Global Depository Receipts. (d) The aggregate cost for federal income tax purposes is $37,579,111; aggregate gross unrealized appreciation is $2,072,339 and the aggregate gross unrealized depreciation is $3,014,424, resulting in net unrealized depreciation of $942,085. * Percentages of common and preferred stocks and convertible bonds are presented in the portfolio by currency denomination. Percentage by industry are as follows: Apparel & Textiles 1.6%, Auto Parts 1.2%, Banks 3.4%, Brewery 2.0%, Chemicals 1.3 %, Chemicals & Plastics 1.1%, Commercial Services 1.3%, Communications 8.3%, Construction Materials 7.7%, Consumer Goods 0.4%, Domestic Oil 1.6%, Drugs & Health Care 2.3%, Electrical Equipment 0.5%, Electronics 2.9%, Financial Services 10.2%, Food & Beverages 6.1%, Forest Products 1.1%, Holding Company--Diversified 1.4%, Homebuilders 0.6%, International Oil 1.5%, Leisure Time 3.3%, Manufacturing 1.5%, Metals 1.2%, Miscellaneous 4.9%, Mortgage Backed Securities 6.2%, Publishing 2.3%, Restaurants, Lodging & Entertainment 2.2%, Retailing 2.9%, Steel 0.6%, Tobacco 0.9%, Utilities 4.3%, Wholesale Trade 3.4%. Forward Foreign Currency Contracts open at December 31, 1995:
Unrealized Contracts In Exchange Delivery Appreciation to Deliver For Date (Depreciation) - ----------- ----------- -------- -------------- $ 141,295 PEN 326,108 1/2/96 $ (183)
The accompanying notes are an integral part of these financial statements. 23 26 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1995 - --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD INTERNATIONAL INTERNATIONAL EQUITY EQUITY FIXED-INCOME PORTFOLIO PORTFOLIO PORTFOLIO - ---------------------------------------------------------------------------------------------------------------- ASSETS Investments in securities, at value*..................... $ 157,812,496 $1,232,294,509 $ 43,018,602 Investments in repurchase agreements, at cost and value.................................................. 5,694,000 70,037,000 3,866,000 Cash..................................................... 438 1,017 262 Net foreign currency contracts (note 2).................. -- -- 37,754 Receivables for: Investments sold....................................... -- 2,923,500 2,218,953 Dividends and interest................................. 288,199 2,212,207 1,366,951 Capital stock sold..................................... 374,224 13,482,088 122,511 Deferred organizational expenses (note 2)................ -- 11,265 11,696 Other.................................................... -- -- -- ------------- -------------- ------------ Total assets............................................. 164,169,357 1,320,961,586 50,642,729 ------------- -------------- ------------ LIABILITIES Payables for: Investments purchased.................................. -- 19,016,374 4,816,290 Capital stock repurchased.............................. 191,954 993,056 10,826 Dividends declared..................................... -- 16,445 37,253 Investment management fees payable (note 3).............. 118,750 798,137 101,798 Net foreign currency contracts (note 2).................. -- 53,656 -- Due to Manager........................................... -- -- -- Accrued directors fees payable........................... 2,778 2,778 2,778 Accrued expenses and other payables...................... 68,887 531,693 49,481 ------------- -------------- ------------ Total liabilities........................................ 382,369 21,412,139 5,018,426 ------------- -------------- ------------ Net assets, at value..................................... 163,786,988 1,299,549,447 45,624,303 ============= ============== ============ NET ASSETS Paid in capital.......................................... 131,965,086 1,169,741,962 43,666,321 Undistributed (distributions in excess of) investment income--net............................................ -- 63,301 24,037 Unrealized appreciation (depreciation) on: Investments--net....................................... 25,156,509 126,910,179 1,763,256 Foreign currency--net.................................. -- (35,747) 13,676 Accumulated realized gain (loss)--net.................... 6,665,393 2,869,752 157,013 ------------- -------------- ------------ NET ASSETS, AT VALUE..................................... $ 163,786,988 $1,299,549,447 $ 45,624,303 ============= ============== ============ Shares of capital stock outstanding**.................... 9,405,110 103,988,517 4,204,312 ============= ============== ============ NET ASSET VALUE PER SHARE................................ $ 17.41 $ 12.50 $ 10.85 ============= ============== ============
* For identified cost, see accompanying portfolios of investments ** $0.001 par value, 1,000,000,000 shares authorized The accompanying notes are an integral part of these financial statements. 24 27 - --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD LAZARD STRATEGIC LAZARD INTERNATIONAL SPECIAL EMERGING BOND YIELD SMALL CAP SMALL CAP EQUITY MARKETS PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------- $ 43,580,431 $ 73,590,413 $ 593,233,828 $ 110,510,120 $ 47,312,052 $ 31,785,026 1,806,000 3,520,000 47,748,000 7,711,000 -- 4,852,000 63 995 728 763,380 9,076 1,149 -- 28,575 -- 24,833 -- -- 366,924 2,934,989 7,165,530 -- 221,037 40,889 553,239 1,845,795 749,739 390,583 53,462 54,388 2,315,034 1,100,000 1,498,625 48,088 5,151 1,136,426 11,768 10,221 11,301 10,283 -- 14,674 -- -- -- -- 23,086 -- ------------ ------------ ------------- ------------- ------------ ------------ 48,633,459 83,030,988 650,407,751 119,458,287 47,623,864 37,884,552 ------------ ------------ ------------- ------------- ------------ ------------ 2,253,838 4,305,501 3,117,733 3,704,869 409,404 2,132,621 140,279 31,271 348,671 36,706 -- 397,087 40,260 64,009 -- -- -- -- 80,148 93,407 402,416 64,707 156,547 69,012 -- -- -- -- -- 183 -- -- -- -- -- 20,680 2,778 2,778 2,778 2,778 2,778 2,778 32,753 60,098 165,149 114,788 34,932 45,933 ------------ ------------ ------------- ------------- ------------ ------------ 2,550,056 4,557,064 4,036,747 3,923,848 603,661 2,668,294 ------------ ------------ ------------- ------------- ------------ ------------ 46,083,403 78,473,924 646,371,004 115,534,439 47,020,203 35,216,258 ============ ============ ============= ============= ============ ============ 45,330,824 80,585,414 569,127,212 119,225,351 37,141,252 37,977,655 40,199 62,968 -- (22,525) -- 3,727 343,654 1,207,283 77,375,672 (2,439,988) 7,619,021 (939,042) -- 8,059 -- 27,094 -- (1,569) 368,726 (3,389,800) (131,880) (1,255,493) 2,259,930 (1,824,513) ------------ ------------ ------------- ------------- ------------ ------------ $ 46,083,403 $ 78,473,924 $ 646,371,004 $ 115,534,439 $ 47,020,203 $ 35,216,258 ============ ============ ============= ============= ============ ============ 4,560,693 8,245,403 40,536,196 10,986,319 3,842,845 3,812,846 ============ ============ ============= ============= ============ ============ $ 10.10 $ 9.52 $ 15.95 $ 10.52 $ 12.24 $ 9.24 ============ ============ ============= ============= ============ ============
25 28 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 - --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD INTERNATIONAL INTERNATIONAL EQUITY EQUITY FIXED-INCOME PORTFOLIO PORTFOLIO PORTFOLIO - --------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Interest*......................................................... $ 535,797 $ 4,165,491 $ 2,966,123 Dividends*........................................................ 2,571,107 24,929,197 -- ------------ ------------- ------------- Total investment income............................................. 3,106,904 29,094,688 2,966,123 ------------ ------------- ------------- EXPENSES: Management fee (note 3)........................................... 982,130 7,895,766 314,329 Administration fees (note 3)...................................... 39,265 147,565 27,200 Custodian fees (note 3)........................................... 61,339 1,442,079 74,621 Professional services............................................. 23,741 139,202 38,965 Registration fees................................................. 40,646 163,159 23,517 Shareholder services.............................................. 28,098 56,217 15,195 Directors' fees and expenses...................................... 11,217 13,792 14,190 Shareholders' reports............................................. 6,706 12,175 2,337 Amortization of organizational expenses (note 2).................. -- 13,505 13,505 Other............................................................. 13,739 111,644 2,173 ------------ ------------- ------------- Total expenses before fees waived and expenses reimbursed........... 1,206,881 9,995,104 526,032 Management fees waived and expenses reimbursed (note 3)........... -- -- (81,792) Administration fees waived (note 3)............................... -- -- -- Fees paid indirectly (note 2)..................................... (820) (12,411) (1,547) ------------ ------------- ------------- Expenses--net....................................................... 1,206,061 9,982,693 442,693 ------------ ------------- ------------- INVESTMENT INCOME--NET.............................................. 1,900,843 19,111,995 2,523,430 ------------ ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NET Realized gain (loss) on: Investments--net*.............................................. 17,975,165 34,556,028 2,294,418 Foreign exchange transactions--net............................. -- (16,586,286) 423,923 Net unrealized appreciation (depreciation) during the period on: Investments--net............................................... 20,838,939 102,387,630 1,899,941 Foreign currency--net.......................................... -- 1,622,255 8,865 ------------ ------------- ------------- Realized and unrealized gain (loss) on investments--net........... 38,814,104 121,979,627 4,627,147 ------------ ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 40,714,947 $ 141,091,622 $ 7,150,577 ============ ============= ========== *Net of foreign withholding taxes of:............................... $ 68,660 $ 3,114,151 $ 29,944 ============ ============= ==========
The accompanying notes are an integral part of these financial statements. 26 29 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD LAZARD LAZARD STRATEGIC LAZARD INTERNATIONAL SPECIAL EMERGING BOND YIELD SMALL CAP SMALL CAP EQUITY MARKETS PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------ $ 2,255,143 $ 6,380,257 $ 2,657,903 $ 543,364 $ 314,283 $ 218,910 -- -- 6,738,744 2,093,899 1,318,974 376,771 ----------- ----------- ------------ ------------- ------------- ------------- 2,255,143 6,380,257 9,396,647 2,637,263 1,633,257 595,681 ----------- ----------- ------------ ------------- ------------- ------------- 164,220 525,597 4,066,987 736,353 888,834 236,306 26,180 30,732 91,734 34,635 28,661 25,173 45,246 104,008 117,360 214,946 32,541 110,068 24,226 34,117 86,437 35,325 29,918 26,210 14,302 14,219 49,700 20,181 27,815 26,945 15,550 13,523 41,852 29,968 23,332 23,460 11,316 12,978 11,266 11,590 11,314 12,131 2,943 7,108 12,377 7,681 2,983 5,627 13,505 13,505 13,505 3,530 -- 4,136 2,664 8,664 56,085 14,044 29,194 2,781 ----------- ----------- ------------ ------------- ------------- ------------- 320,152 764,451 4,547,303 1,108,253 1,074,592 472,837 (34,072) -- -- -- (132,906) (142,805) (21,875) -- -- -- -- (21,875) (1,235) (5,026) (9,569) (614) (55) (959) ----------- ----------- ------------ ------------- ------------- ------------- 262,970 759,425 4,537,734 1,107,639 941,631 307,198 ----------- ----------- ------------ ------------- ------------- ------------- 1,992,173 5,620,832 4,858,913 1,529,624 691,626 288,483 ----------- ----------- ------------ ------------- ------------- ------------- 1,538,947 613,040 48,772,968 2,832,676 5,875,256 (1,723,841) -- (829,920) -- (3,047,215) -- (79,972) 1,262,427 3,392,780 45,544,351 215,054 2,433,242 594,358 -- 105,454 -- 287,871 -- (2,651) ----------- ----------- ------------ ------------- ------------- ------------- 2,801,374 3,281,354 94,317,319 288,386 8,308,498 (1,212,106) ----------- ----------- ------------ ------------- ------------- ------------- $ 4,793,547 $ 8,902,186 $ 99,176,232 $ 1,818,010 $ 9,000,124 $ (923,623) ========== ========== ============ ========== ========== ============ $ -- $ 12,123 $ -- $ 270,513 $ 11,220 $ 36,665 ========== ========== ============ ========== ========== ============
27 30 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
LAZARD LAZARD LAZARD INTERNATIONAL INTERNATIONAL EQUITY EQUITY FIXED-INCOME PORTFOLIO PORTFOLIO PORTFOLIO ---------------------------- ------------------------------- ------------- YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------------- ------------------------------- ------------- 1995 1994 1995 1994 1995 - -------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: Operations: Investment income--net................... $ 1,900,843 $ 775,588 $ 19,111,995 $ 5,752,469 $ 2,523,430 Realized gain (loss) on investments and foreign exchange transactions.......... 17,975,165 3,165,434 17,969,742 50,645,245 2,718,341 Unrealized appreciation (depreciation)-- net.................................... 20,838,939 (1,765,260) 104,009,885 (68,363,473) 1,908,806 ------------- ------------ -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations................ 40,714,947 2,175,762 141,091,622 (11,965,759) 7,150,577 ------------- ------------ -------------- -------------- ------------- Distributions to shareholders: From investment income--net.............. (1,412,326) (819,467) (6,515,474) (5,752,469) (2,523,430) From realized gains--net................. (11,452,652) (3,479,186) (14,115,900) (74,500,587) (801,842) (In excess of) offset to investment income--net............................ -- -- -- 5,752,469 (1,799,275) In excess of realized gains--net......... -- -- -- -- -- ------------- ------------ -------------- -------------- ------------- (12,864,978) (4,298,653) (20,631,374) (74,500,587) (5,124,547) ------------- ------------ -------------- -------------- ------------- Capital stock transaction: Net proceeds from sales.................. 55,622,979 44,216,711 497,338,051 348,583,561 13,752,209 Net proceeds from reinvestment of distributions.......................... 12,294,787 4,207,450 19,395,497 72,041,335 4,630,486 Cost of shares redeemed.................. (21,085,965) (4,318,758) (169,521,331) (105,923,266) (10,587,176) ------------- ------------ -------------- -------------- ------------- Net increase (decrease) in net assets from capital stock transactions............... 46,831,801 44,105,403 347,212,217 314,701,630 7,795,519 ------------- ------------ -------------- -------------- ------------- Total increase (decrease) in net assets... 74,681,770 41,982,512 467,672,465 228,235,284 9,821,549 Net assets at beginning of period......... 89,105,218 47,122,706 831,876,982 603,641,698 35,802,754 ------------- ------------ -------------- -------------- ------------- Net assets at end of period*.............. $ 163,786,988 $ 89,105,218 $1,299,549,447 $ 831,876,982 $ 45,624,303 =============== ============= ================= ================ =============== Shares issued and repurchased: Shares outstanding at beginning of period................................... 6,482,310 3,391,490 74,103,632 48,980,591 3,499,078 ------------- ------------ -------------- -------------- ------------- Shares sold.............................. 3,491,105 3,088,569 42,535,462 27,102,620 1,219,616 Shares issued to shareholders from reinvestment of distributions.......... 710,986 304,879 1,554,544 6,362,069 418,379 Shares repurchased....................... (1,279,291) (302,628) (14,205,121) (8,341,648) (932,761) ------------- ------------ -------------- -------------- ------------- Net increase (decrease)................... 2,922,800 3,090,820 29,884,885 25,123,041 705,234 ------------- ------------ -------------- -------------- ------------- Shares outstanding at end of period....... 9,405,110 6,482,310 103,988,517 74,103,632 4,204,312 =============== ============= ================= ================ =============== * Includes undistributed (overdistributed) net investment income of:................ $ -- $ (12,571) $ 63,301 $ 1,965 $ 24,037 =============== ============= ================= ================ =============== LAZARD INTERNATIONAL LAZARD FIXED-INCOME BOND PORTFOLIO PORTFOLIO -------------- --------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, -------------- --------------------------- 1994 1995 1994 - ---------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: Operations: Investment income--net................... $ 1,206,922 $ 1,992,173 $ 1,235,348 Realized gain (loss) on investments and foreign exchange transactions.......... 180,322 1,538,947 (1,151,722) Unrealized appreciation (depreciation)-- net.................................... (512,114) 1,262,427 (965,163) ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................ 875,130 4,793,547 (881,537) ------------ ------------ ------------ Distributions to shareholders: From investment income--net.............. (1,206,922) (1,992,173) (1,235,348) From realized gains--net................. (287,561) (16,046) (58,029) (In excess of) offset to investment income--net............................ -- -- -- In excess of realized gains--net......... -- -- -- ------------ ------------ ------------ (1,494,483) (2,008,219) (1,293,377) ------------ ------------ ------------ Capital stock transaction: Net proceeds from sales.................. 25,803,649 24,539,689 18,506,638 Net proceeds from reinvestment of distributions.......................... 1,439,206 1,820,886 1,205,567 Cost of shares redeemed.................. (4,276,403) (7,556,034) (6,605,325) ------------ ------------ ------------ Net increase (decrease) in net assets from capital stock transactions............... 22,966,452 18,804,541 13,106,880 ------------ ------------ ------------ Total increase (decrease) in net assets... 22,347,099 21,589,869 10,931,966 Net assets at beginning of period......... 13,455,655 24,493,534 13,561,568 ------------ ------------ ------------ Net assets at end of period*.............. $ 35,802,754 $ 46,083,403 $ 24,493,534 ============= ============= ============= Shares issued and repurchased: Shares outstanding at beginning of period................................... 1,279,788 2,650,557 1,319,047 ------------ ------------ ------------ Shares sold.............................. 2,492,028 2,500,066 1,891,145 Shares issued to shareholders from reinvestment of distributions.......... 138,395 186,028 125,665 Shares repurchased....................... (411,133) (775,958) (685,300) ------------ ------------ ------------ Net increase (decrease)................... 2,219,290 1,910,136 1,331,510 ------------ ------------ ------------ Shares outstanding at end of period....... 3,499,078 4,560,693 2,650,557 ============= ============= ============= * Includes undistributed (overdistributed) net investment income of:................ $ 1,314 $ 40,199 $ -- ============= ============= =============
+ For the period July 15, 1994 through December 31, 1994 The accompanying notes are an integral part of these financial statements. 28 31 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
LAZARD STRATEGIC LAZARD LAZARD YIELD LAZARD INTERNATIONAL SPECIAL PORTFOLIO SMALL CAP SMALL CAP EQUITY - --------------------------------- PORTFOLIO PORTFOLIO PORTFOLIO ------------------------------ ----------------------------- ------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, - --------------------------------- ------------------------------ ----------------------------- ------------- 1995 1994 1995 1994 1995 1994 1995 - ------------------------------------------------------------------------------------------------------------------------ $ 5,620,832 $ 4,065,416 $ 4,858,913 $ 2,022,125 $ 1,529,624 $ 591,036 $ 691,626 (216,880) (3,078,071) 48,772,968 22,502,779 (214,539) (4,068,829) 5,875,256 3,498,234 (2,316,644) 45,544,351 (17,010,725) 502,925 (3,653,545) 2,433,242 ------------- ------------- -------------- ------------- ------------- ------------- ------------- 8,902,186 (1,329,299) 99,176,232 7,514,179 1,818,010 (7,131,338) 9,000,124 ------------- ------------- -------------- ------------- ------------- ------------- ------------- (5,620,832) (4,065,416) (4,858,913) (1,181,605) -- (591,036) (691,626) -- (182,040) (48,772,968) (31,911,994) -- -- (5,248,285) (88,052) -- -- -- -- 591,036 -- -- -- (778,930) -- (594,717) -- -- ------------- ------------- -------------- ------------- ------------- ------------- ------------- (5,708,884) (4,247,456) (54,410,811) (33,093,599) (594,717) -- (5,939,911) ------------- ------------- -------------- ------------- ------------- ------------- ------------- 22,589,307 47,082,168 239,938,336 96,349,172 45,713,631 87,421,230 2,211,152 5,445,026 4,028,879 54,147,470 32,373,017 584,483 -- 5,125,731 (15,082,042) (18,148,713) (122,152,846) (24,422,634) (15,419,174) (10,380,143) (24,874,498) ------------- ------------- -------------- ------------- ------------- ------------- ------------- 12,952,291 32,962,334 171,932,960 104,299,555 30,878,940 77,041,087 (17,537,615) ------------- ------------- -------------- ------------- ------------- ------------- ------------- 16,145,593 27,385,579 216,698,381 78,720,135 32,102,233 69,909,749 (14,477,402) 62,328,331 34,942,752 429,672,623 350,952,488 83,432,206 13,522,457 61,497,605 ------------- ------------- -------------- ------------- ------------- ------------- ------------- $ 78,473,924 $ 62,328,331 $ 646,371,004 $ 429,672,623 $ 115,534,439 $ 83,432,206 $ 47,020,203 =============== =============== ================ =============== =============== =============== =============== 6,846,915 3,449,123 29,940,743 23,005,203 8,034,455 1,244,608 5,170,257 ------------- ------------- -------------- ------------- ------------- ------------- ------------- 2,439,621 4,889,580 14,336,125 6,292,755 4,381,937 7,756,773 175,167 590,779 425,219 3,421,484 2,255,296 56,201 -- 414,107 (1,631,912) (1,917,007) (7,162,156) (1,612,511) (1,486,274) (966,926) (1,916,686) ------------- ------------- -------------- ------------- ------------- ------------- ------------- 1,398,488 3,397,792 10,595,453 6,935,540 2,951,864 6,789,847 (1,327,412) ------------- ------------- -------------- ------------- ------------- ------------- ------------- 8,245,403 6,846,915 40,536,196 29,940,743 10,986,319 8,034,455 3,842,845 =============== =============== ================ =============== =============== =============== =============== $ 62,968 $ (13,973) $ -- $ 848,046 $ (22,525) $ 1,577 $ -- =============== =============== ================ =============== =============== =============== =============== LAZARD LAZARD EMERGING SPECIAL EQUITY MARKETS PORTFOLIO PORTFOLIO -------------- --------------------------------- YEAR ENDED YEAR ENDED PERIOD ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------- --------------- --------------- 1994 1995 1994+ - --------------------------------------------------------- $ 764,923 $ 288,483 $ 18,035 10,854,080 (1,803,813) (187,391) (13,546,230) 591,707 (1,532,318) ------------- --------------- --------------- (1,927,227) (923,623) (1,701,674) ------------- --------------- --------------- (760,649) (136,100) (18,035) (16,861,086) -- -- -- -- 18,035 -- -- -- ------------- --------------- --------------- (17,621,735) (136,100) -- ------------- --------------- --------------- 6,540,035 28,211,253 19,386,871 16,313,998 113,328 -- (59,936,521) (9,073,505) (660,292) ------------- --------------- --------------- (37,082,488) 19,251,076 18,726,579 ------------- --------------- --------------- (56,631,450) 18,191,353 17,024,905 118,129,055 17,024,905 -- ------------- --------------- --------------- $ 61,497,605 $35,216,258 $17,024,905 =============== ================== ================== 7,508,865 1,727,237 -- ------------- --------------- --------------- 429,986 3,079,834 1,786,246 1,278,144 12,192 -- (4,046,738) (1,006,417) (59,009) ------------- --------------- --------------- (2,338,608) 2,085,609 1,727,237 ------------- --------------- --------------- 5,170,257 3,812,846 1,727,237 =============== ================== ================== $ (918) $ 3,727 $ -- =============== ================== ==================
29 32 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: - --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS ------------------------------------------- LESS: TOTAL ---------------------------- NET FROM DIVIDENDS DISTRIBU- NET ASSET NET REALIZED INVEST- FROM AND TIONS ASSET VALUE, AND UNREALIZED MENT IN EXCESS OF FROM VALUE, BEGINNING INVESTMENT GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF PERIOD OF PERIOD INCOME-NET ON INVESTMENTS TIONS INCOME-NET GAINS PERIOD - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD EQUITY PORTFOLIO Year ended 12/31/95................. $ 13.75 $ 0.226 $ 4.931 $ 5.157 $(0.175) $(1.322) $17.41 12/31/94................. 13.89 0.141 0.441 0.582 (0.152) (0.574) 13.75 12/31/93................. 12.74 0.158 2.172 2.330 (0.165) (1.015) 13.89 12/31/92................. 12.34 0.123 0.518 0.641 (0.132) (0.109) 12.74 12/31/91................. 11.53 0.107 3.051 3.158 (0.082) (2.266) 12.34 12/31/90................. 12.34 0.191 (0.778) (0.587 ) (0.223)(b) -- 11.53 12/31/89................. 10.32 0.204 2.231 2.435 (0.214) (0.201) 12.34 12/31/88................. 8.73 0.181 1.597 1.778 (0.188) -- 10.32 6/1/87* to 12/31/87...... 10.00 0.110 (1.280) (1.170 ) (0.100) -- 8.73 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD INTERNATIONAL EQUITY PORTFOLIO Year ended 12/31/95................. 11.23 0.187 1.288 1.475 (0.091) (0.114) 12.50 12/31/94................. 12.32 0.078 (0.049) 0.029 -- (1.123) 11.23 12/31/93................. 9.48 0.021 2.919 2.940 (0.021) (0.079) 12.32 12/31/92................. 10.30 0.097 (0.779) (0.682 ) (0.138) -- 9.48 10/29/91* to 12/31/91.... 10.00 0.020 0.300 0.320 (0.020) -- 10.30 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO Year ended 12/31/95................. 10.23 0.701 1.250 1.951 (1.129) (0.202) 10.85 12/31/94................. 10.51 0.592 (0.161) 0.431 (0.593) (0.116) 10.23 12/31/93................. 9.79 0.571 0.912 1.483 (0.570) (0.193) 10.51 12/31/92................. 10.28 0.614 (0.403) 0.211 (0.614) (0.087) 9.79 11/8/91* to 12/31/91..... 10.00 0.110 0.280 0.390 (0.110) -- 10.28 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD BOND PORTFOLIO Year ended 12/31/95................. 9.24 0.595 0.863 1.458 (0.594) (0.004) 10.10 12/31/94................. 10.28 0.584 (1.010) (0.426 ) (0.584) (0.029) 9.24 12/31/93................. 10.21 0.551 0.302 0.853 (0.551) (0.232) 10.28 12/31/92................. 10.25 0.577 (0.004) 0.573 (0.577) (0.036) 10.21 11/12/91* to 12/31/91.... 10.00 0.140 0.250 0.390 (0.140) -- 10.25 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD STRATEGIC YIELD PORTFOLIO Year ended 12/31/95................. 9.10 0.748 0.430 1.178 (0.758) -- 9.52 12/31/94................. 10.13 0.762 (0.990) (0.228 ) (0.761) (0.039) 9.10 12/31/93................. 9.50 0.644 0.738 1.382 (0.633) (0.119) 10.13 12/31/92................. 9.97 1.049 (0.450) 0.599 (1.049) (0.020) 9.50 10/1/91* to 12/31/91..... 10.00 0.250 (0.030) 0.220 (0.250) -- 9.97 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP PORTFOLIO Year ended 12/31/95................. 14.35 0.126 2.951 3.077 (0.154) (1.323) 15.95 12/31/94................. 15.26 0.070 0.220 0.290 (0.042) (1.158) 14.35 12/31/93................. 12.98 0.019 3.830 3.849 (0.020) (1.549) 15.26 12/31/92................. 10.42 0.019 2.560 2.579 (0.019) -- 12.98 10/30/91* to 12/31/91.... 10.00 0.030 0.420 0.450 (0.030) -- 10.42 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD INTERNATIONAL SMALL CAP PORTFOLIO Year ended 12/31/95................. 10.38 0.139 0.056 0.195 -- (0.055) 10.52 12/31/94................. 10.86 0.072 (0.548) (0.476 ) -- -- 10.38 12/1/93* to 12/31/93..... 10.00 0.004 0.859 0.863 (0.003) -- 10.86 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS ----------------- NET INVEST- ASSETS, MENT PORTFOLIO END OF TOTAL INCOME- TURNOVER PERIOD PERIOD RETURN++ EXPENSES NET RATE (000'S) - ------------------------------------------------------------------------------------------------------ LAZARD EQUITY PORTFOLIO Year ended 12/31/95................. 37.7 % 0.92%(h) 1.45% 80.72% $163,787 12/31/94................. 4.2 1.05 1.15 66.52 89,105 12/31/93................. 18.6 1.05(e) 1.31 63.92 47,123 12/31/92................. 5.3 1.05(d) 1.19 174.45 24,646 12/31/91................. 27.5 1.93 0.84 90.00 14,821 12/31/90................. (4.7 ) 1.77 1.62 70.00 14,397 12/31/89................. 23.6 1.78 1.71 78.00 16,239 12/31/88................. 20.4 1.84 1.86 111.00 12,336 6/1/87* to 12/31/87...... (11.7 ) 1.68+ 1.93+ 97.00 10,186 - ------------------------------------------------------------------------------------------------------ LAZARD INTERNATIONAL EQUITY PORTFOLIO Year ended 12/31/95................. 13.1 0.95(h) 1.82 62.54 1,299,549 12/31/94................. 0.2 0.94 0.75 106.15 831,877 12/31/93................. 31.0 0.99 1.13 86.95 603,642 12/31/92................. (6.6 ) 1.05(d) 2.13 60.37 176,005 10/29/91* to 12/31/91.... 3.2 1.05+,(c) 2.19+ 0.18 4,967 - ------------------------------------------------------------------------------------------------------ LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO Year ended 12/31/95................. 19.4 1.05(g),(h) 5.99 189.97 45,624 12/31/94................. 4.2 1.05(f) 5.68 65.90 35,803 12/31/93................. 15.7 1.05(e) 5.50 115.84 13,546 12/31/92................. 2.0 1.05(d) 6.08 256.20 8,183 11/8/91* to 12/31/91..... 3.9 1.05+,(c) 4.82+ 6.43 1,427 - ------------------------------------------------------------------------------------------------------ LAZARD BOND PORTFOLIO Year ended 12/31/95................. 16.2 0.80(g),(h) 6.07 244.28 46,083 12/31/94................. (4.2 ) 0.80(f) 6.11 120.51 24,494 12/31/93................. 8.6 0.80(e) 5.22 174.63 13,562 12/31/92................. 5.7 0.80(d) 5.59 131.38 8,532 11/12/91* to 12/31/91.... 3.9 0.80+,(c) 5.50+ 10.46 3,256 - ------------------------------------------------------------------------------------------------------ LAZARD STRATEGIC YIELD PORTFOLIO Year ended 12/31/95................. 13.6 1.09(h) 8.02 205.33 78,474 12/31/94................. (2.3 ) 1.05(f) 8.03 195.18 62,328 12/31/93................. 15.6 1.05(e) 6.36 215.60 34,943 12/31/92................. 6.0 1.05(d) 10.57 122.88 9,641 10/1/91* to 12/31/91..... 2.1 1.05+,(c) 9.52+ 11.26 4,256 - ------------------------------------------------------------------------------------------------------ LAZARD SMALL CAP PORTFOLIO Year ended 12/31/95................. 21.5 0.84(h) 0.90 69.68 646,371 12/31/94................. 2.0 0.85 0.51 70.11 429,673 12/31/93................. 30.1 0.88 0.16 98.47 350,952 12/31/92................. 24.8 1.05(d) 0.29 106.91 168,171 10/30/91* to 12/31/91.... 4.5 1.05+,(c) 2.47+ 5.50 2,512 - ------------------------------------------------------------------------------------------------------ LAZARD INTERNATIONAL SMALL CAP PORTFOLIO Year ended 12/31/95................. 1.9 1.13(h) 1.56 117.53 115,534 12/31/94................. (4.5 ) 1.05(f) 0.95 112.92 83,432 12/1/93* to 12/31/93..... 8.7 1.05+,(e) 1.76+ 0.84 13,522 - ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 30 33 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD: - --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS ------------------------------------------- LESS: TOTAL ---------------------------- NET FROM DIVIDENDS DISTRIBU- NET ASSET NET REALIZED INVEST- FROM AND TIONS ASSET VALUE, AND UNREALIZED MENT IN EXCESS OF FROM VALUE, BEGINNING INVESTMENT GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF PERIOD OF PERIOD INCOME-NET ON INVESTMENTS TIONS INCOME-NET GAINS PERIOD - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD SPECIAL EQUITY PORTFOLIO Year ended 12/31/95................. $ 11.89 $ 0.195 $ 1.725 $ 1.920 $(0.188) $(1.382) $12.24 12/31/94................. 15.73 0.156 (0.557) (0.401 ) (0.155) (3.279) 11.89 12/31/93................. 16.90 0.157 1.478 1.635 (0.157) (2.648) 15.73 12/31/92................. 15.14 0.161 2.181 2.342 (0.160) (0.422) 16.90 12/31/91................. 11.54 0.230 4.160 4.390 (0.227) (0.563) 15.14 12/31/90................. 13.72 0.714 (2.155) (1.441 ) (0.739) -- 11.54 12/31/89................. 13.13 0.260 1.874 2.134 (0.264) (1.280) 13.72 12/31/88................. 10.64 0.224 2.761 2.985 (0.245) (0.250) 13.13 12/31/87................. 11.66 0.112 (0.291) (0.179 ) (0.105) (0.736) 10.64 1/16/86* to 12/31/86..... 10.00 0.075 1.585 1.660 -- -- 11.66 - ---------------------------------------------------------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORTFOLIO Year ended 12/31/95................. 9.86 0.080 (0.660) (0.580 ) (0.040) -- 9.24 7/15/94* to 12/31/94..... 10.00 0.010 (0.154) (0.144 ) -- -- 9.86 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS -------------------- NET INVEST- ASSETS, MENT PORTFOLIO END OF TOTAL INCOME- TURNOVER PERIOD PERIOD RETURN++ EXPENSES NET RATE (000'S) - ---------------------------------------------------------------------------------------- LAZARD SPECIAL EQUITY PORTFO Year ended 12/31/95................. 16.3 % 1.59%(g),(h) 1.17% 15.35% $ 47,020 12/31/94................. (2.6 ) 1.71 0.87 11.29 61,498 12/31/93................. 10.2 1.67 0.74 26.31 118,129 12/31/92................. 15.5 1.70 1.04 10.93 150,488 12/31/91................. 38.2 1.77 1.63 19.48 111,395 12/31/90................. (10.5 ) 1.78 4.70(a) 27.18 76,972 12/31/89................. 16.2 1.78 1.82 40.67 101,522 12/31/88................. 28.0 1.96 1.87 64.90 74,695 12/31/87................. (1.9 ) 1.81 0.82 90.86 53,942 1/16/86* to 12/31/86..... 16.6 2.23+ 0.71+ 73.12 51,403 - ---------------------------------------------------------------------------------------- LAZARD EMERGING MARKETS PORT Year ended 12/31/95................. (5.9 ) 1.30(g),(h) 1.22 102.22 35,216 7/15/94* to 12/31/94..... (1.4 ) 1.30+,(f) 0.31+ 30.68 17,025 - ----------------------------------------------------------------------------------------
* Commencement of operations. + Annualized. ++ Total return represents aggregate total return for the periods indicated. (a) The Portfolio received a special distribution from one of its portfolio investments. Had the Fund not received this distribution, the ratio would have been 2.20%. (b) Includes $.032 per share of distributions from paid-in capital, none of which is a return of capital for tax purposes. (c) If the Investment Manager had not waived management fees and reimbursed certain expenses the ratio of expenses to average net assets (and net investment income per share) would have been 10.84%+ ($0.056) for the International Equity Portfolio, 20.70%+ ($0.293) for the International Fixed-Income Portfolio, 7.80%+ ($.0114) for the Bond Portfolio, 6.22%+ ($0.075) for the Strategic Yield Portfolio, and 11.05%+ ($0.085) for the Small Cap Portfolio. (d) If the Investment Manager had not waived management fees and reimbursed certain expenses the ratio of expenses to average net assets (and net investment income per share) would have been 1.53% ($0.050) for the Equity Portfolio, 1.37% ($0.014) for the International Equity Portfolio, 2.80% ($0.176) for the International Fixed-Income Portfolio, 3.23% ($0.0251) for the Bond Portfolio, 2.99% ($0.192) for the Strategic Yield Portfolio, and 1.14%+ ($0.006) for the Small Cap Portfolio. (e) If the Investment Manager had not waived management fees and reimbursed certain expenses the ratio of expenses to average net assets (and net investment income per share) would have been 1.18% ($0.020) for the Equity Portfolio, 2.87%+ ($0.010) for the International Small Cap Portfolio, 2.08% ($0.119) for the International Fixed-Income Portfolio, 1.76% ($0.101) for the Bond Portfolio, and 1.63% ($0.058) for the Strategic Yield Portfolio. (f) If the Investment Manager had not waived management fees and reimbursed certain expenses the ratio of expenses to average net assets (and net investment income per share) would have been 1.26% ($0.016) for the International Small Cap Portfolio, 1.51% ($0.048) for the International Fixed-Income Portfolio, 1.23% ($0.041) for the Bond Portfolio, 1.15% ($0.009) for the Strategic Yield Portfolio, and 2.31%+ ($0.034) for the Emerging Markets Portfolio. (g) If the Investment Manager and Administrator had not waived certain fees and reimbursed certain expenses and the Portfolios had not paid fees indirectly the ratio of expenses to average net assets (and net investment income per share) would have been 1.25% ($0.678) for the International Fixed-Income Portfolio, 0.97% ($0.578) for the Bond Portfolio, 1.81% ($0.157) for the Special Equity Portfolio and 2.00% ($0.034) for the Emerging Markets Portfolio. (h) "Ratio of total expenses to average net assets" for the year ended December 31, 1995 includes fees paid indirectly. Excluding fees paid indirectly for the year ended December 31, 1995, the expense ratios would have been 0.92% for the Equity Portfolio, 0.95% for the International Equity Portfolio, 1.05% for the International Fixed-Income Portfolio, 0.80% for the Bond Portfolio, 1.08% for the Strategic Yield Portfolio, 0.84% for the Small Cap Portfolio, 1.13% for the International Small Cap Portfolio, 1.59% for the Special Equity Portfolio, 1.30% for the Emerging Markets Portfolio. 31 34 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION The Lazard Funds, Inc. (the "Fund") was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940 (the "Act"), as amended, as an open-end management investment company. The Fund was originally composed of five portfolios: Lazard International Equity Portfolio (the "International Equity Portfolio"), Lazard International Fixed-Income Portfolio, formerly Lazard Global Fixed-Income Portfolio (the "International Fixed-Income Portfolio"), Lazard Bond Portfolio, formerly Lazard High Quality Bond Portfolio (the "Bond Portfolio"), Lazard Strategic Yield Portfolio, formerly Lazard High-Yield Portfolio, (the "Strategic Yield Portfolio") and Lazard Small Cap Portfolio (the "Small Cap Portfolio"). Effective January 1, 1992, the Lazard Equity Fund and the Lazard Special Equity Fund, Inc. ("Old Funds") were reorganized as separate portfolios ("New Funds") of the Fund, namely Lazard Equity Portfolio (the "Equity Portfolio"), and Lazard Special Equity Portfolio (the "Special Equity Portfolio"), respectively. The per share data included herein includes per share data for both the Old Funds and New Funds. Effective November 1, 1993, Lazard International Small Cap Portfolio (the "International Small Cap Portfolio") and Lazard Emerging Markets Portfolio (the "Emerging Markets Portfolio") were added to the Fund. Effective December 30, 1995, Lazard Global Equity Portfolio, Lazard Bantam Value Portfolio and Lazard Emerging World Funds Portfolio were added to the Fund. The Lazard Global Equity Portfolio was first offered for sale on January 4, 1996. The Equity Portfolio and Special Equity Portfolio are operated as "diversified" as defined in the Act. The remaining Portfolios are "non-diversified." 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies: (A) VALUATION OF INVESTMENTS--The value of securities, other than options listed on national securities exchanges and debt securities maturing in 60 days or less, is determined as of the close of regular trading on the New York Stock Exchange. Options on stocks and stock indices traded on national securities exchanges are valued as of the close of options trading on such exchanges (which is currently 4:10 p.m. New York time). Debt securities maturing in sixty days or less are valued at amortized cost. Each security for which the primary market is on a national securities exchange is valued at the last sale price in the principal exchange on which it is traded, or, if no sales are reported on such exchange on that day, at the closing bid price. Any security held by any Portfolio except the Special Equity Portfolio for which the primary market is the National Association of Securities Dealers Automated Quotations National Market System is valued at the last sale price as quoted by such System or, in the absence of any sale on the valuation date, at the closing bid price. Any other unlisted security for which current over-the-counter market quotations or bids are readily available is valued at its last quoted bid price or, for each of these Portfolios except the Equity Portfolio, if available, the mean of two such prices. Any security held by the Special Equity Portfolio that is not listed on a national securities exchange but that is quoted on the National Association of Securities Dealers Automated Quotations System is valued at the last bid price as quoted by such System. Any other security held by the Special Equity Portfolio for which current over-the-counter market quotations or bids are readily available is valued at its last quoted bid price or, if available, the mean of two such prices. All other securities and other assets for which current market quotations are not readily available are valued at fair value as determined in good faith by the Fund's Board of Directors and in accordance with procedures adopted by the Board of Directors. The portfolio securities of any of the Portfolios may also be valued on the basis of prices provided by a pricing service when such prices are believed by the Investment Manager to reflect the fair market value of such securities. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Security transactions are accounted for on the trade date. Realized gains and losses on sales of investments are recorded on a first-in, first-out or specific identification basis. Dividend income is recorded on the ex-date. 32 35 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Interest income is accrued daily. The Portfolios amortize premiums and accrue discounts on fixed income securities. (C) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The International Equity Portfolio, International Fixed-Income Portfolio, Strategic Yield Portfolio, International Small Cap Portfolio and the Emerging Markets Portfolio (the "eligible portfolios") may enter into forward foreign currency exchange contracts ("forward contracts"). To the extent permitted by each eligible portfolio's investment objectives, restrictions and policies, forward contracts may be entered into for risk management purposes. Depending on how such strategies are utilized, the risks associated with their use may vary. Certain risks may arise upon entering into these forward contracts from the possible movement in foreign exchange rates and the potential inability of counterparties to meet the terms of their agreements. Forward contracts are presented at an amount representing the net increase or decrease in value from the date that the forward contract was entered into, to the financial statement date. Gains and losses on these forward contracts are included in realized or unrealized foreign exchange transactions in the accompanying Statements of Operations. Risk management includes hedging strategies which serve to reduce an eligible portfolio's exposure to foreign currency fluctuations. Such exposure may exist during the period that a foreign denominated investment is held, or during the period between the trade date and settlement date of an investment which is purchased or sold. (D) FOREIGN CURRENCY TRANSLATIONS--The books and records of the eligible portfolios are maintained in U.S. dollars. Foreign exchange transactions are translated into U.S. dollars on the following basis: (i) the foreign currency market value of investment securities, contracts, and other assets and liabilities stated in foreign currencies are translated at the exchange rate at the end of the period; and (ii) purchases and sales of investment securities, dividends, interest income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. The eligible portfolios do not isolate that portion of the results of operations from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with net realized and unrealized gain or loss from investments. Foreign exchange gain (loss) is treated as ordinary income for federal income tax purposes to the extent constituting "Section 988 Transactions" pursuant to the Internal Revenue Code ("IRC"), including, currency gains (losses) related to the sale of debt securities, forward foreign currency exchange contracts, payments of liabilities, and collections of receivables. (E) FEDERAL INCOME TAXES--The Fund's policy is to qualify each Portfolio as a regulated investment company under the IRC and to distribute all of its taxable income, including any realized net capital gains to shareholders. Therefore, no Federal income tax provision is required. (F) DIVIDENDS AND DISTRIBUTIONS--The Fund intends to declare dividends from net investment income on shares of the International Fixed-Income Portfolio, the Bond Portfolio and the Strategic Yield Portfolio daily and pay such dividends monthly. Dividends from net investment income on shares of the Equity Portfolio will be declared and paid quarterly. Dividends from net investment income on shares of the International Equity Portfolio, Small Cap Portfolio, International Small Cap Portfolio, Emerging Markets Portfolio and the Special Equity Portfolio will be declared and paid annually. During any particular year, net realized gains from investment transactions in excess of available capital loss carry forwards would be taxable to the Fund if not distributed. The Fund intends to declare and distribute these amounts annually to shareholders; however, to avoid taxation a second distribution may be required. Income distributions 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. Permanent book and tax differences relating to shareholder distributions 33 36 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- will result in reclassifications and may affect the allocation between investment income--net and realized gains--net. (G) ORGANIZATIONAL EXPENSES--Costs incurred by the Fund in connection with its organization and initial registration of shares 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. In the event that any of the initial shares of any of the Portfolios during such period are redeemed, the appropriate Portfolio will be reimbursed by such holder for any unamortized organizational expenses in the same proportion as the number of shares redeemed bears to the number of initial shares held at the time of redemption. (H) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific Portfolio are allocated primarily on the basis of relative net assets. (I) FEES PAID INDIRECTLY--Portfolios leaving excess cash in demand deposit accounts may receive credits which are available to offset custody expenses. The Statements of Operations report gross custody expense, and reflect the amount of such credits as a reduction in total expenses. (J) ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires the Fund to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. 3. INVESTMENT MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into an investment management agreement (the "Management Agreement") with Lazard Freres Asset Management (the "Manager"), a division of Lazard Freres & Co. LLC, on behalf of each Portfolio. Pursuant to the Management Agreement, the Manager will regularly provide the Portfolios with investment research, advice and supervision and furnish continuously an investment program for each Portfolio consistent with its investment objectives and policies, including the purchase, retention and disposition of securities. Each of the Portfolios pays the Manager an investment management fee at the annual rate set forth below as a percentage of the average daily value of the net assets of the relevant Portfolio: Equity Portfolio, 0.75%; International Equity Portfolio, 0.75%; International Fixed-Income Portfolio, 0.75%; Bond Portfolio, 0.50%; Strategic Yield Portfolio, 0.75%; Small Cap Portfolio, 0.75%; International Small Cap, 0.75%; Special Equity Portfolio, 1.50% and Emerging Markets Portfolio, 1.00%. The investment management fees are accrued daily and payable monthly with the exception of those paid by the Special Equity Portfolio, which are payable quarterly. Under certain state regulations, if the total expenses of any of the Portfolios exceed certain limitations the Fund's Manager is required to reimburse the Portfolio for such excess. The Manager has agreed to maintain the annualized total operating expenses of the International Fixed-Income Portfolio at a level not to exceed 1.05%; Emerging Market Portfolio at a level not to exceed 1.30%; and Bond Portfolio at a level not to exceed 0.80% of the average daily value of net assets of the relevant portfolio until December 31, 1996 or such time as the respective Portfolio reaches total net assets of $100 million. For the period commencing May 1, 1995, the Manager has agreed to bear total operating expenses (exclusive of extraordinary expenses) of the Special Equity Portfolio in excess of 1.50% of the average daily value of the net assets until October 31, 1996, or such time as the total net assets of the Portfolio equals or exceeds $90 million. For the year ended December 31, 1995, the Manager did not impose part of its management fee amounting to $81,792 for International Fixed-Income Portfolio, $34,072 for Bond Portfolio, $104,245 for Special Equity Portfolio and $142,805 for Emerging Markets Portfolio. For the Special Equity Portfolio, the Manager reimbursed $28,661 for Administrative Fees. Effective June 1, 1995, the Fund has engaged State Street Bank and Trust Company ("State Street") to provide certain administrative services. Each Portfolio will bear the cost of such expenses at the annual rate of $37,500 plus 0.02% of average assets up to average assets of $1 billion and plus 0.01% of average assets over $1 billion. State Street has agreed to waive the $37,500 fee for the Bond and 34 37 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Emerging Markets Portfolios for one year or until each Portfolio reaches net assets of $50 million. The Fund has a distribution agreement with Lazard Freres & Co. LLC. As the distributor, Lazard Freres & Co. LLC acts as distributor for shares of each of the Portfolios and bears the cost of printing and mailing prospectuses to potential investors and of any advertising expenses incurred in connection with the distribution of shares. Certain Directors of the Fund are Managing Directors of the Manager. The Fund pays each director who is not an officer of the Manager or an interested Director, $20,000 per year, plus $1,000 per meeting attended, and reimburses them for travel and out of pocket expenses. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES Purchase and sales of portfolio securities, (excluding short-term securities), for the year ended December 31, 1995 were as follows:
PURCHASES SALES ------------- ------------- Equity Portfolio $ 136,115,551 $ 98,319,414 International Equity 958,136,052 617,956,968 International Fixed- Income 82,002,248 77,059,477 Bond(1) 93,823,671 77,259,918 Strategic Yield(2) 142,277,826 127,543,921 Small Cap 433,744,267 348,508,399 International Small Cap 137,601,260 108,309,231 Special Equity 8,213,439 33,702,368 Emerging Markets 39,309,777 22,364,600
(1) Includes purchases and sales of U.S. Government securities of $68,932,503 and $63,560,433, respectively. (2) Includes purchases and sales of U.S. Government securities of $15,853,916 and $17,588,675, respectively. For the period, the Small Cap Portfolio and Special Equity Portfolio paid brokerage commissions of $3,324 and $13,658, respectively, to Lazard Freres & Co. LLC for portfolio transactions executed on behalf of the Portfolios. Included in the payable for investments purchased at December 31, 1995, for the Special Equity Portfolio, is $285,255 for unsettled purchases with Lazard Freres & Co. LLC. 5. FEDERAL INCOME TAXES For Federal income tax purposes capital loss carryforwards (exclusive of certain capital losses incurred after October 31) of $3,297,896 and $1,537,156 are available to the extent provided by regulations to offset future realized capital gains of the Strategic Yield Portfolio and Emerging Markets Portfolio, respectively. These losses expire through 2003. Additionally, certain capital and currency losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Portfolio's next taxable year. During the year ended December 31, 1995, International Equity Portfolio, Bond Portfolio, Strategic Yield Portfolio, Small Cap Portfolio, International Small Cap Portfolio, and Emerging Markets Portfolio will elect to defer net capital and currency losses of $4,705,302, $29,502, $7,241, $1,687,171, $1,180,891, and $284,313, respectively. The Special Equity Portfolio and the International Equity Portfolio redesignated $50,277, and $2,679,708, respectively, of ordinary income dividends to long-term capital gain distributions. 6. PRIVATE PLACEMENTS At December 31, 1995, the Small Cap Portfolio held the following securities which were private placements and represented 0.20% (at value) of the net assets of the Portfolio:
ACQUISITION SECURITY DATE VALUE - --------------------------- ----------- ---------- Interactive Light Holdings Inc. 8.00%, 1/25/99 2/4/94 $ 500,000 Verbex Voice Systems Inc. Series F Preferred (conv.) 7/12/93 500,343 Verbex Voice Systems Inc. 6/7/94 180,501 Verbex Voice Systems Inc. 10.00%, 12/31/95 3/17/95 100,000 ---------- $1,280,844 ==========
Verbex Voice Systems Inc. and Interactive Light Holdings Inc. are valued as determined in good faith by the Fund's Board of Directors and in accordance with the procedures adopted by the Board of Directors. The Small Cap Portfolio will bear any cost, including those involved in registration under the Securities Act of 1933, in connection with the disposition of such securities. 35 38 - -------------------------------------------------------------------------------- The Lazard Funds, Inc. REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- The Board of Directors and Shareholders The Lazard Funds, Inc. We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of The Lazard Funds, Inc. (comprised of, Lazard Equity Portfolio, Lazard International Equity Portfolio, Lazard International Fixed-Income Portfolio, Lazard Bond Portfolio, Lazard Strategic Yield Portfolio, Lazard Small Cap Portfolio, Lazard International Small Cap Portfolio, Lazard Special Equity Portfolio, and Lazard Emerging Markets Portfolio) as of December 31, 1995, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, except as noted below. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods through December 31, 1991 of Lazard Equity Portfolio and Lazard Special Equity Portfolio were audited by other auditors whose reports dated February 5, 1992 and February 3, 1992, respectively, expressed unqualified opinions on those financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights audited by us, as stated above, present fairly, in all material respects, the financial position of each of the respective portfolios constituting the Lazard Funds, Inc. as of December 31, 1995, the results of their operations for the year then ended and changes in their net assets for each of the two years in the period then ended and the financial highlights for the periods presented in conformity with generally accepted accounting principles. ANCHIN, BLOCK & ANCHIN LLP New York, New York January 27, 1996 36 39 THE LAZARD FUNDS, INC. 30 Rockefeller Plaza New York, New York 10020 TELEPHONE (800) 823-6300 INVESTMENT MANAGER Lazard Freres Asset Management 30 Rockefeller Plaza New York, New York 10020 Telephone: (212) 632-6400 DISTRIBUTOR Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, New York 10020 CUSTODIAN State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Scudder Service Corporation P.O. Box 2038 Boston, Massachusetts 02106 Telephone: (800) 854-8525 INDEPENDENT PUBLIC ACCOUNTANTS Anchin, Block & Anchin LLP 1375 Broadway New York, New York 10019 LEGAL COUNSEL Stroock & Stroock & Lavan 7 Hanover Square New York, New York 10004 This report is for the information of the stockholders of The Lazard Funds, Inc. Its use in connection with any offering of the Fund's shares is authorized only in the case of a concurrent or prior delivery of the Fund's current prospectus. -----END PRIVACY-ENHANCED MESSAGE-----