UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06312
The Lazard Funds, Inc.
(Exact name of registrant as specified in charter)
30 Rockefeller Plaza
New York, New York 10112
(Address of principal executive offices) (Zip code)
Mark R. Anderson, Esq.
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112
(Name and address of agent for service)
Registrant’s telephone number, including area code: | (212) 632-6000 |
Date of fiscal year end: | 12/31 |
Date of reporting period: | 12/31/18 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Lazard Funds
Annual Report
December 31, 2018
Alternatives Funds
Lazard Emerging Markets Income Portfolio
Lazard Enhanced Opportunities Portfolio
Lazard Explorer Total Return Portfolio
Important Information on Paperless Delivery
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly with the Fund may elect to receive shareholder reports and other communications from the Fund electronically by signing up for paperless delivery at www.icsdelivery.com/lazardassetmanagement. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by following the instructions included with this disclosure and visiting www.fundreports.com. If you own these shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this disclosure to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or your financial intermediary.
PRIVACY NOTICE
WHAT DOES LAZARD DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information. U.S. federal law gives our clients the right to limit some but not all sharing. U.S. federal and other applicable law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
We do not disclose nonpublic personal information about our clients or former clients to third parties other than as described below.
Personal information we collect. We collect personal information about you in connection with our providing advisory services to you. The legal basis for our collection of your personal information is our contract with you and our legitimate business interest to provide contractual services to you. The collection of this information is necessary for us to be able to provide advisory services to you and the failure to provide such information will result in our inability to provide our services. This information includes your social security number (for U.S. persons) and may include other information such as your:
• | Assets and income; | |
• | Investment experience; | |
• | Transaction history; | |
• | Credit history; and | |
• | Wire transfer instructions. |
How we collect this information.We collect this information from you through various means. For example, when you give us your contact information, enter into an investment advisory contract with us, buy securities (i.e., interests in a fund) from us, direct us to buy or sell securities for your account, tell us where to send money, or make a wire transfer. We also may collect your personal information from other sources, such as our affiliates1 or other non-affiliated companies (such as credit bureaus).
1 | Our affiliates are companiesrelated to us by common ownership or control and can include both financial and nonfinancial companies. Non-affiliates are companiesnot related to us by common ownership or control and can include both financial and nonfinancial companies. |
How we use this information.All financial companies need to share customers’ personal information to run their everyday business and we use the personal information we collect from you for our everyday business purposes. These purposes may include for example:
• | To provide advisory services to you; | |
• | To open an account for you; | |
• | To process a transaction for your account; | |
• | To market products and services to you; and/or | |
• | To respond to court orders and legal investigations. |
If you are an investor located within a European Union country, please note that personal information may be collected, shared and/or stored outside of the European Union.
Disclosure to others.We may provide your personal information to our affiliates and to firms that assist us in servicing your account and have a need for such information, such as a broker, counterparty, fund administrator or third party service provider that aggregates data in a central repository for access by a broker, counterparty or fund administrator to provide its services. We may also disclose such information to service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you. We require third party service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you to protect the confidentiality of your information and to use the information only for the purposes for which we disclose the information to them. These sharing practices are consistent with applicable privacy and related laws, and in general, you may not limit our use of your personal information for these purposes under such laws. We note that the U.S. federal privacy laws only give you the right to limit the certain types of information sharing that we do not engage in (e.g., sharing with our affiliates certain information relating to your transaction history or creditworthiness for their use in marketing to you, or sharing any personal information with non-affiliates for them to market to you). We may also share your personal information with nonaffiliates (such as a government agency or regulatory authority) as required by applicable law.
How we protect your personal information.To protect your personal information from unauthorized access and use, we use security measures that comply with applicable law. These measures include computer safeguards and secured files and buildings.
How long we keep your personal information.We retain your personal information for the duration of your advisory relationship with us and for a period of time thereafter as required by applicable law.
Your rights with respect to this information.If you are an investor located within a European Union country, you have the following rights with respect to your personal information:
• | The right to request and obtain a copy of your personal information that we maintain; | |
• | The right to correct your personal information that we maintain; | |
• | The right to request the erasure of your personal information from our systems, subject to applicable recordkeeping requirements applicable to us; and | |
• | The right to lodge a complaint with a supervisory authority. |
Who is providing this Privacy Notice.This Privacy Notice relates to the following entities:
• | Lazard Asset Management LLC | |
• | Lazard Asset Management (Canada), Inc.2 | |
• | Lazard Asset Management Securities LLC |
Who to contact with questions.If you have any questions about this Privacy Notice, please call (800) 823-6300 or visit our website at http://www.lazardassetmanagement.com.
2 | Lazard Asset Management (Canada), Inc. does not disclose any non-public personal information about its customers to any third party, except as permitted by or required by any applicable law, including the laws of the United States and Canada. |
The Lazard Funds, Inc.Table of Contents
Please consider a Portfolio’s investment objectives, risks, charges and expenses carefully before investing. For more complete information about The Lazard Funds, Inc. (the “Fund”), you may obtain a prospectus or summary prospectus by calling 800-823-6300, or online, at www.lazardassetmanagement.com. Read the prospectus or each Portfolio’s summary prospectus carefully before you invest. The prospectus and each Portfolio’s summary prospectus contain the investment objectives, risks, charges, expenses and other information about each Portfolio of the Fund, which are not detailed in this report.
Distributed by Lazard Asset Management Securities LLC.
Annual Report 1
The Lazard Funds, Inc.A Message from Lazard (unaudited)
Dear Shareholder,
In 2018, volatility returned to global markets. The economic trajectories of the major economies diverged during the year, with US growth accelerating and non-US growth decelerating. Tighter US monetary policy, declining oil prices, and trade tensions between the United States and China also increased risk aversion. Against this backdrop, almost every major developed and emerging equity market declined during the year. Despite the uptick in global market turbulence, our portfolio management teams remain steadfast in their investment discipline and continue to focus on fundamental research.
The US equity market ended the year down after a severe fourth quarter sell-off. During the quarter, volatility as measured by the CBOE Volatility®Index increased, corporate credit spreads widened, the yield curve flattened, and the yield on the 10-year US Treasury declined. Crude oil prices fell by nearly $29 per barrel on the back of concerns over flagging global demand and elevated supply.
In Europe, political risks increased throughout the year as the Italian election led to a governing coalition of the League and the Five Star Movement. The United Kingdom struggled with finalizing a resolution to exit the European Union (“Brexit”) and German Chancellor Angela Merkel announced she would step down in 2021. The European Central Bank ended its monthly asset purchase program in December, but kept its benchmark interest rate at zero.
Emerging markets equities and debt fell significantly in 2018 as macroeconomic and geopolitical developments weighed on market sentiment. The rising US dollar pressured most emerging markets during the year. In Turkey, uncertainty related to the country’s trade deficit was exacerbated by US sanctions and a diplomatic dispute with the United States over a detained American pastor. Uncertainty about trade and concerns about decelerating Chinese growth rippled through the global economy. Despite these challenges, our emerging markets equity and debt teams believe that many emerging markets still have solid fundamentals, and are well positioned to grow faster than the global growth average.
2 Annual Report
We are privileged that you have turned to Lazard for your investment needs and value your continued confidence in our investment management capabilities. Be assured that our specialist investment teams, supported by our global infrastructure, are continuing to strive for the long-term patterns of performance that you expect.
Sincerely,
Lazard Asset Management LLC
Annual Report 3
The Lazard Funds, Inc.Investment Overviews (unaudited)
Alternatives
Emerging markets local currency and debt markets began 2018 on strong footing, but a combination of factors caused negative performance in the second and third quarters, which overwhelmed the positive results early and late in the year. Among the drivers that hurt sentiment toward emerging markets broadly were: perceptions of a more hawkish US Federal Reserve (“Fed”), global trade tensions, the introduction of sanctions and tariffs in select emerging markets, and a downgraded outlook for global GDP, alongside idiosyncratic country pressures in Argentina, Turkey, and Brazil. The dynamics which have propelled the US dollar sharply stronger during much of 2018 (i.e., US cyclical growth, monetary policy divergence, overseas profit repatriation, etc.) appear to be waning, and the Fed’s highly anticipated rate hikes with dovish guidance ultimately lowered the value of the US dollar at the close of a challenging year for fixed income and equity investors alike.
Emerging markets debt fell 5.15% in 2018, as measured in US dollar terms, (as represented by the 50% JPMorgan EMBI Global Diversified®Index/50% JPMorgan GBI-EM Global Diversified®Index) (the “Global Diversified Index”), marking the lowest calendar-year return for the asset class since 2015. Declines occurred in both local currency and external debt. Coming off abnormally low volatility in 2017, this year may have felt like a roller coaster for emerging markets debt investors, but volatility was in line with historical averages for the asset class (as represented by the Global Diversified Index).
The decline in local currency debt was mainly driven by spot depreciation in emerging markets currencies, which ended the year down almost 10% versus the US dollar. Meanwhile, external debt posted only the third negative calendar year return for the JPMorgan EMBI Global Diversified Index in the past 20 years, primarily driven by credit spreads, which ended the year 130 basis points (bps) wider at 415 bps, their widest level since 2016.
Following a fairly subdued volatility backdrop in 2017, risk assets experienced numerous, significant re-pricings throughout 2018. On three occasions, the S&P 500® Index experienced a drawdown of greater than 10%, including the recent December drawdown of
4 Annual Report
16.6%. As a result, volatility opportunities were well bid, while credit-oriented paper was better for sale.
Lazard Emerging Markets Income Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Income Portfolio’s Institutional Shares posted a total return of -5.79%, while Open Shares posted a total return of -5.97%, as compared with the -3.33% return for the JPMorgan Emerging Local Markets®Index Plus.
Turkey, Argentina, and Mexico detracted from Portfolio performance in 2018. Despite our active exposure management, sharp volatility in these countries caused underperformance. Greater-than-benchmark exposure and out-of-benchmark security selection in longer duration bonds in Russia, Indonesia, and South Africa hurt during the second and third quarter weakness. However, these countries recovered in the fourth quarter.
Conversely, the Portfolio’s performance benefited from idiosyncratic alpha from out-of-index frontier markets (e.g., Egypt, Uruguay, Morocco, Uganda, Ghana, and Nigeria) which contributed 130 bps in aggregate. Underweight exposure to Asian economies such as Taiwan, Malaysia, China, and South Korea also helped annual performance as these markets underperformed due to ongoing trade war rhetoric.
The Portfolio management team uses currency forwards both opportunistically, for direct currency exposure, and defensively, for hedging purposes. For the year, the use of derivatives detracted from the Portfolio’s performance.
Lazard Enhanced Opportunities Portfolio
For the year ended December 31, 2018, the Lazard Enhanced Opportunities Portfolio’s Institutional Shares posted a total return of -1.43%, while Open Shares posted a total return of -1.68%, as compared with the 0.65% return for the ICE BofAML U.S. Convertible ex Mandatory®Index and -7.01% return for the HFRX Global Hedge Fund®Index.
Annual Report 5
Generally, convertible bond valuations improved markedly, both on a relative and absolute basis, whether measured by implied spread or yield/premium relationships. The repricing of equities also resulted in significant improvement in yields, carry, convexity, and risk-return sets broadly.
Pacing gains for the Portfolio were a richening in selected volatility-sensitive names, and idiosyncratic developments, including bond-for-bond exchanges. Detractors included measured directional biases, and to a lesser degree, a broad-based widening in credit spreads.
The Portfolio uses derivatives, including currency forwards and options, both opportunistically and defensively, for hedging purposes. For the year, the use of derivatives contributed to performance.
Lazard Explorer Total Return Portfolio
For the year ended December 31, 2018, the Lazard Explorer Total Return Portfolio’s Institutional Shares posted a total return of -9.65%, while Open Shares posted a total return of -9.97%, as compared with the -5.15% blended return for the Global Diversified Index.
The Portfolio’s near fully-invested view served the Portfolio well in the second half of 2017, but led it to capture the downside of the emerging markets debt asset class in 2018. The main detractors from absolute performance were the Portfolio’s outright long position in local currencies and bottom-up positioning in external sovereign credit. While we reduced exposure to local debt early in the year, the Portfolio’s diversified long positions in emerging markets currencies detracted significantly from absolute performance amid sharp spot depreciation in emerging markets currencies. Within this allocation, long positions in the Brazilian real, Russian ruble, and South African rand were among the most notable detractors.
The other main detractor was the Portfolio’s more idiosyncratic exposure to US dollar-denominated sovereign credits, which was mainly focused on high-yield countries. On a bottom-up basis, long positions in Argentina, Venezuela, and Egypt were key detractors.
6 Annual Report
These losses were partially offset by long positions in Mozambique—which was beneficial due to positive developments in the country’s restructuring process—and Brazil. The Portfolio’s idiosyncratic local rates positions also contributed to absolute returns, particularly in Brazil and South Africa.
The Portfolio management team uses currency forwards, options, credit default swaps, and interest rate swaps both opportunistically, for direct currency exposure, and defensively, for hedging purposes. For the year, the use of derivatives detracted from the Portfolio’s performance.
Notes to Investment Overviews:
All Portfolios’ total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of a Portfolio may have been waived or reimbursed by Lazard Asset Management LLC, the Fund’s investment manager (the “Investment Manager”), State Street Bank and Trust Company, the Fund’s administrator (“State Street”), or DST Asset Manager Solutions, Inc., the Fund’s transfer and dividend disbursing agent (“DST”); without such waiver/reimbursement of expenses, such Portfolio’s returns would have been lower. Past performance is not indicative, or a guarantee, of future results.
The performance data of the indices and other market data have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged, have no fees or costs and are not available for investment.
The views of the Investment Manager and the securities described in this report are as of December 31, 2018, except as otherwise indicated; these views and portfolio holdings may have changed subsequent to this date. Nothing herein should be construed as a recommendation to buy, sell, or hold a particular security. There is no assurance that the securities discussed herein will remain in a Portfolio at the time you receive this report, or that securities sold will not have been repurchased. The specific securities discussed may, in aggregate, represent only a small percentage of a Portfolio’s holdings. It should not be assumed that securities identified and discussed were, or will be, profitable, or that the investment decisions made in the future will be profitable, or equal the investment performance of the securities discussed herein.
The views and opinions expressed are provided for general information only, and do not constitute specific tax, legal, or investment advice to, or recommendations for, any person. There can be no guarantee as to the accuracy of any outlooks for markets, sectors and securities as discussed herein. You should read the Fund’s prospectus or each Portfolio’s summary prospectus for a more detailed discussion of each Portfolio’s investment objectives, strategies, risks and fees.
Annual Report 7
The Lazard Funds, Inc.Performance Overviews (unaudited)
Lazard Emerging Markets Income Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Income Portfolio and JPMorgan Emerging Local Markets®Index Plus*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Since | ||||
Year | Inception | † | |||
Institutional Shares** | –5.79% | –1.94% | |||
Open Shares** | –5.97% | –2.20% | |||
JPMorgan Emerging Local Markets Index Plus | –3.33% | –1.06% |
† | The inception date for the Portfolio was April 30, 2014. |
8 Annual Report
Lazard Enhanced Opportunities Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Enhanced Opportunities Portfolio, ICE BofAML U.S. Convertible ex Mandatory®Index and HFRX Global Hedge Fund®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Since | ||||
Year | Inception | † | |||
Institutional Shares** | –1.43% | 1.46% | |||
Open Shares** | –1.68% | 1.20% | |||
ICE BofAML U.S. Convertible ex Mandatory Index | 0.65% | 6.05% | |||
HFRX Global Hedge Fund Index | –7.01% | –0.67% |
† | The inception date for the Portfolio was December 31, 2014. |
Annual Report 9
Lazard Explorer Total Return Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Explorer Total Return Portfolio, JPMorgan EMBI Global Diversified®Index, JPMorgan GBI-EM Global Diversified®Index and Global Diversified Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Since | |||||
Year | Years | Inception | † | ||||
Institutional Shares** | –9.65% | –0.44% | –0.33% | ||||
Open Shares** | –9.97% | –0.78% | –0.66% | ||||
JPMorgan EMBI Global Diversified Index | –4.26% | 4.80% | 4.86% | ||||
JPMorgan GBI-EM Global Diversified Index | –6.21% | –0.96% | –1.23% | ||||
Global Diversified Index | –5.15% | 1.95% | 1.84% |
† | The inception date for the Portfolio was June 28, 2013. |
Notes to Performance Overviews:
* | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
Performance results do not include adjustments made for financial reporting purposes in accordance with US Generally Accepted Accounting Principles, if any, and may differ from amounts reported in the financial highlights. For Institutional Shares and Open Shares of Lazard Enhanced Opportunities Portfolio, a one-time voluntary reimbursement by the administrator increased the total return ratio by 0.49% for year ended December 31, 2017. | |
The performance quoted represents past performance. Current performance may be lower or higher than the performance quoted. Past performance is not indicative, or a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares. |
10 Annual Report
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. The indices are unmanaged, have no fees or costs and are not available for investment. | |
The JPMorgan Emerging Local Markets Index Plus tracks total returns for local currency-denominated money market instruments. | |
The ICE BofAML U.S. Convertible ex Mandatory Index measures the performance of convertible securities of all corporate sectors with a par amount of $25 million or more and a maturity of at least one year and excludes preferred equity redemption stocks and converted securities. | |
The HFRX Global Hedge Fund Index is designed to be representative of the overall composition of the hedge fund universe. It is comprised of all eligible hedge fund strategies, including but not limited to convertible arbitrage, distressed securities, equity hedge, equity market neutral, event-driven, macro, merger arbitrage, and relative value arbitrage. The strategies are asset weighted based on the distribution of assets in the hedge fund industry. | |
The JPMorgan EMBI Global Diversified Index is a uniquely weighted version of the EMBI Global. Risks associated with the securities comprising this index include fixed income and emerging markets. The JPMorgan GBI-EM Global Diversified Index is a uniquely weighted version of the GBI-EM Global. Risks include fixed income, emerging markets and derivatives. These indices limit the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in both indices are identical. | |
The Global Diversified Index is an unmanaged Index created by the Investment Manager and is a 50/50 blend of the JPMorgan EMBI Global Diversified Index and the JPMorgan GBI-EM Global Diversified Index. | |
** | The performance of Institutional Shares and Open Shares may vary, primarily based on the differences in fees borne by shareholders investing in different classes. |
Annual Report 11
The Lazard Funds, Inc.
Information About Your Portfolio’s Expenses (unaudited)
Expense Example
As a shareholder in a Portfolio of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (Open Shares only), and other expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the six month period from July 1, 2018 through December 31, 2018 and held for the entire period.
Actual Expenses
For each Share class of the Portfolios, the first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each Share class of the Portfolios, the second line of the table below provides information about hypothetical account values and hypothetical expenses based on the class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds.
12 Annual Report
Expenses | Annualized | ||||||||||||||||
Beginning | Ending | Paid During | Expense Ratio | ||||||||||||||
Account | Account | Period | * | During Period | |||||||||||||
Value | Value | 7/1/18 - | 7/1/18 - | ||||||||||||||
Portfolio | 7/1/18 | 12/31/18 | 12/31/18 | 12/31/18 | |||||||||||||
Emerging Markets Income | |||||||||||||||||
Institutional Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 989.90 | $4.51 | 0.90 | % | ||||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.67 | $4.58 | 0.90 | % | ||||||||||
Open Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 988.50 | $5.26 | 1.05 | % | ||||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.91 | $5.35 | 1.05 | % | ||||||||||
Enhanced Opportunities† | |||||||||||||||||
Institutional Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 977.80 | $ | 12.76 | 2.56 | % | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,012.30 | $ | 12.98 | 2.56 | % | |||||||||
Open Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 976.40 | $ | 14.05 | 2.82 | % | |||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,010.99 | $ | 14.29 | 2.82 | % | |||||||||
Explorer Total Return | |||||||||||||||||
Institutional Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 971.90 | $5.72 | 1.15 | % | ||||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.41 | $5.85 | 1.15 | % | ||||||||||
Open Shares | |||||||||||||||||
Actual | $ | 1,000.00 | $ | 969.80 | $7.00 | 1.41 | % | ||||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.10 | $7.17 | 1.41 | % |
* | Expenses are equal to the annualized expenses ratio, net of expense waivers and reimbursements, of each Share class multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
† | The expense ratios include broker expense and dividend expense on securities sold short. |
Annual Report 13
The Lazard Funds, Inc.Portfolio Holdings Presented by Asset Class/Sector and Region December 31, 2018
Lazard Enhanced | |||||||||
Opportunities Portfolio | |||||||||
Asset Class/Sector | Long | * | Short | † | |||||
Equity | |||||||||
Communication Services | 5.0 | % | –4.9 | % | |||||
Consumer Discretionary | 5.3 | –5.5 | |||||||
Consumer Staples | 0.7 | –0.9 | |||||||
Energy | 5.0 | –2.7 | |||||||
Financials | 11.7 | –4.3 | |||||||
Health Care | 16.8 | –21.6 | |||||||
Industrials | 4.2 | –3.6 | |||||||
Information Technology | 25.3 | –37.9 | |||||||
Materials | 5.3 | –3.7 | |||||||
Real Estate | 1.2 | –6.4 | |||||||
Utilities | 1.9 | –1.8 | |||||||
Exchange-Traded Funds | 5.8 | –6.7 | |||||||
Short-Term Investments | 11.8 | — | |||||||
Total Investments | 100.0 | % | –100.0 | % |
* | Represents percentage of total investments excluding securities sold short. |
† | Represents percentage of total securities sold short. |
Lazard | Lazard | ||||||||
Emerging | Explorer | ||||||||
Markets Income | Total Return | ||||||||
Asset Class/Region* | Portfolio | Portfolio | |||||||
Fixed Income | |||||||||
Africa | 11.5 | % | 20.2 | % | |||||
Asia | 3.4 | 22.6 | |||||||
Europe | 9.4 | 16.2 | |||||||
North America | 65.7 | 6.8 | |||||||
South America | 1.8 | 33.6 | |||||||
Purchased Options | — | 0.5 | |||||||
Short-Term Investments | 8.2 | 0.1 | |||||||
Total Investments | 100.0 | % | 100.0 | % |
* | Represents percentage of total investments. |
14 Annual Report
The Lazard Funds, Inc.Portfolios of Investments
December 31, 2018
The accompanying notes are an integral part of these financial statements.
Annual Report 15
Principal | ||||||||||
Security | Amount | Fair | ||||||||
Description | Currency | (000) | Value | |||||||
Lazard Emerging Markets Income Portfolio (continued) | ||||||||||
Supranational Bonds | 3.6% | ||||||||||
European Investment Bank, 7.200%, 07/09/19 (#) (Cost $209,382) | IDR | 2,700,000 | $ | 185,451 | ||||||
US Treasury Securities | 60.3% | ||||||||||
US Treasury Notes: | ||||||||||
1.125%, 01/15/19 | USD | 200 | 199,917 | |||||||
1.500%, 01/31/19 | USD | 200 | 199,867 | |||||||
2.750%, 02/15/19 | USD | 200 | 200,085 | |||||||
1.375%, 02/28/19 | USD | 200 | 199,675 | |||||||
1.500%, 02/28/19 | USD | 200 | 199,714 | |||||||
1.000%, 03/15/19 | USD | 250 | 249,299 | |||||||
1.250%, 03/31/19 | USD | 150 | 149,572 | |||||||
1.500%, 03/31/19 | USD | 250 | 249,435 | |||||||
0.875%, 04/15/19 | USD | 200 | 199,121 | |||||||
1.625%, 04/30/19 | USD | 150 | 149,578 | |||||||
3.125%, 05/15/19 | USD | 250 | 250,557 | |||||||
1.250%, 05/31/19 | USD | 300 | 298,465 | |||||||
0.875%, 06/15/19 | USD | 165 | 163,795 | |||||||
1.625%, 06/30/19 | USD | 200 | 199,094 | |||||||
1.625%, 07/31/19 | USD | 210 | 208,876 | |||||||
Total US Treasury Securities (Cost $3,117,260) | 3,117,050 |
The accompanying notes are an integral part of these financial statements.
16 Annual Report
Fair | ||||||||
Description | Shares | Value | ||||||
Lazard Emerging Markets Income Portfolio (continued) | ||||||||
Short-Term Investments | 8.5% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $438,410) | 438,410 | $ | 438,410 | |||||
Total Investments | 103.3% (Cost $5,510,073) (») | $ | 5,339,032 | ||||||
Liabilities in Excess of Cash and Other Assets | (3.3)% | (169,528 | ) | ||||||
Net Assets | 100.0% | $ | 5,169,504 |
The accompanying notes are an integral part of these financial statements.
Annual Report 17
Lazard Emerging Markets Income Portfolio (continued)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
ARS | 684,675 | USD | 17,000 | BNP | 01/25/19 | $ | 633 | $ | — | |||||||||||||
ARS | 1,065,220 | USD | 26,000 | CIT | 01/10/19 | 2,009 | — | |||||||||||||||
ARS | 1,070,550 | USD | 27,000 | CIT | 01/10/19 | 1,149 | — | |||||||||||||||
ARS | 2,364,000 | USD | 60,000 | HSB | 01/18/19 | 1,471 | — | |||||||||||||||
BRL | 260,630 | USD | 67,000 | CIT | 01/11/19 | 199 | — | |||||||||||||||
BRL | 316,022 | USD | 81,000 | SCB | 01/11/19 | 481 | — | |||||||||||||||
BRL | 188,736 | USD | 48,000 | SCB | 01/18/19 | 647 | — | |||||||||||||||
CLP | 14,852,420 | USD | 22,000 | BNP | 01/30/19 | — | 583 | |||||||||||||||
CLP | 35,755,200 | USD | 52,000 | BNP | 02/15/19 | — | 433 | |||||||||||||||
CNY | 2,493,973 | USD | 359,000 | HSB | 01/11/19 | 4,434 | — | |||||||||||||||
COP | 146,634,750 | USD | 45,000 | CIT | 01/11/19 | 134 | — | |||||||||||||||
CZK | 6,446,000 | USD | 283,701 | HSB | 02/07/19 | 3,578 | — | |||||||||||||||
DOP | 1,261,383 | USD | 25,000 | CIT | 03/13/19 | — | 205 | |||||||||||||||
GHS | 670,560 | USD | 132,000 | SCB | 01/22/19 | 3,897 | — | |||||||||||||||
HUF | 62,670,000 | USD | 222,119 | CIT | 02/22/19 | 2,309 | — | |||||||||||||||
IDR | 874,755,000 | USD | 63,000 | CIT | 01/07/19 | — | 2,258 | |||||||||||||||
IDR | 796,000,000 | USD | 50,000 | HSB | 09/20/19 | 3,281 | — | |||||||||||||||
ILS | 175,000 | USD | 47,306 | CIT | 01/10/19 | — | 480 | |||||||||||||||
ILS | 199,000 | USD | 53,949 | CIT | 01/10/19 | — | 700 | |||||||||||||||
ILS | 188,000 | USD | 50,699 | CIT | 01/11/19 | — | 390 | |||||||||||||||
INR | 164,000 | USD | 2,278 | HSB | 01/09/19 | 79 | — | |||||||||||||||
INR | 25,682,670 | USD | 351,000 | HSB | 01/09/19 | 18,046 | — | |||||||||||||||
KRW | 395,292,500 | USD | 355,000 | HSB | 01/10/19 | 30 | — | |||||||||||||||
KZT | 57,964,400 | USD | 150,167 | HSB | 06/19/19 | — | 4,235 | |||||||||||||||
KZT | 19,252,500 | USD | 51,000 | SCB | 03/19/19 | — | 1,617 | |||||||||||||||
MXN | 1,340,000 | USD | 64,810 | HSB | 01/11/19 | 3,308 | — | |||||||||||||||
PEN | 154,606 | USD | 46,000 | CIT | 02/15/19 | — | 177 | |||||||||||||||
PHP | 2,816,840 | USD | 52,000 | HSB | 01/25/19 | 1,627 | — | |||||||||||||||
PHP | 4,587,945 | USD | 87,000 | SCB | 01/25/19 | 345 | — | |||||||||||||||
PLN | 917,000 | USD | 243,034 | BNP | 02/07/19 | 2,162 | — | |||||||||||||||
RON | 127,000 | USD | 30,940 | CIT | 01/28/19 | 308 | — | |||||||||||||||
RON | 316,101 | USD | 78,917 | CIT | 03/15/19 | — | 1,211 | |||||||||||||||
RUB | 3,566,750 | USD | 53,628 | SCB | 01/11/19 | — | 2,451 | |||||||||||||||
SGD | 438,000 | USD | 320,615 | HSB | 01/10/19 | 801 | — | |||||||||||||||
THB | 1,451,000 | USD | 43,966 | CIT | 01/18/19 | 603 | — |
The accompanying notes are an integral part of these financial statements.
18 Annual Report
Lazard Emerging Markets Income Portfolio (concluded)
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
THB | 681,000 | USD | 20,775 | HSB | 02/01/19 | $ | 148 | $ | — | |||||||||||||
THB | 6,027,000 | USD | 183,941 | SCB | 02/15/19 | 1,305 | — | |||||||||||||||
TRY | 671,000 | USD | 123,035 | CIT | 01/25/19 | 2,152 | — | |||||||||||||||
USD | 25,190 | CAD | 33,000 | HSB | 01/09/19 | 1,013 | — | |||||||||||||||
USD | 21,000 | IDR | 320,250,000 | CIT | 01/07/19 | — | 1,238 | |||||||||||||||
USD | 57,507 | IDR | 859,676,000 | SCB | 01/07/19 | — | 2,188 | |||||||||||||||
USD | 49,892 | ILS | 188,000 | BNP | 01/10/19 | — | 413 | |||||||||||||||
USD | 24,000 | RON | 90,433 | CIT | 03/15/19 | 1,769 | — | |||||||||||||||
USD | 59,911 | RON | 225,668 | CIT | 03/15/19 | 4,437 | — | |||||||||||||||
USD | 90,612 | RUB | 6,027,559 | SCB | 01/11/19 | 4,126 | — | |||||||||||||||
USD | 51,092 | TRY | 282,000 | SCB | 01/25/19 | — | 1,520 | |||||||||||||||
USD | 51,000 | UYU | 1,658,010 | HSB | 01/16/19 | — | 19 | |||||||||||||||
USD | 133,278 | ZAR | 1,915,000 | SCB | 01/14/19 | 343 | — | |||||||||||||||
UYU | 1,652,500 | USD | 50,000 | CIT | 01/16/19 | 850 | — | |||||||||||||||
UYU | 1,685,268 | USD | 52,000 | HSB | 02/08/19 | — | 352 | |||||||||||||||
ZAR | 693,000 | USD | 50,027 | CIT | 02/08/19 | — | 2,068 | |||||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 67,674 | $ | 22,538 |
The accompanying notes are an integral part of these financial statements.
Annual Report 19
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Convertible Corporate Bonds | 106.7% | ||||||||||
Argentina | 1.2% | ||||||||||
MercadoLibre, Inc., 2.000%, 08/15/28 (±) | USD | 215 | $ | 193,500 | ||||||
Bermuda | 1.3% | ||||||||||
Golar LNG, Ltd., 2.750%, 02/15/22 (±) | USD | 143 | 131,620 | |||||||
Teekay Corp., 5.000%, 01/15/23 (±) | USD | 110 | 72,853 | |||||||
204,473 |
The accompanying notes are an integral part of these financial statements.
20 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Canada | 5.7% | ||||||||||
Canopy Growth Corp., 4.250%, 07/15/23 (#), (±) | CAD | 292 | $ | 239,020 | ||||||
Element Fleet Management Corp., 5.125%, 06/30/19 (±) | CAD | 241 | 175,749 | |||||||
First Majestic Silver Corp., 1.875%, 03/01/23 (#), (±) | USD | 148 | 133,022 | |||||||
SSR Mining, Inc., 2.875%, 02/01/33 (±) | USD | 190 | 189,050 | |||||||
Tilray, Inc., 5.000%, 10/01/23 (±) | USD | 274 | 194,211 | |||||||
931,052 | ||||||||||
China | 4.2% | ||||||||||
Ctrip.com International, Ltd., 1.000%, 07/01/20 (±) | USD | 69 | 63,904 | |||||||
GDS Holdings, Ltd., 2.000%, 06/01/25 (#), (±) | USD | 140 | 100,590 | |||||||
Huazhu Group, Ltd., 0.375%, 11/01/22 (±) | USD | 215 | 210,028 | |||||||
iQIYI, Inc., 3.750%, 12/01/23 (#), (±) | USD | 266 | 253,926 | |||||||
Momo, Inc., 1.250%, 07/01/25 (#), (±) | USD | 69 | 53,475 | |||||||
681,923 | ||||||||||
Japan | 3.0% | ||||||||||
Kyushu Electric Power Co., Inc., 0.000%, 03/31/20 (±) | JPY | 10,000 | 94,112 | |||||||
Mirait Holdings Corp., 0.000%, 12/30/21 (±) | JPY | 10,000 | 112,879 | |||||||
Mitsubishi Chemical Holdings Corp., 0.000%, 03/30/22 (±) | JPY | 10,000 | 91,431 | |||||||
Nipro Corp., 0.000%, 01/29/21 (±) | JPY | 10,000 | 100,707 | |||||||
The Chugoku Electric Power Co., Inc., 0.000%, 01/24/20 (±) | JPY | 10,000 | 95,036 | |||||||
494,165 |
The accompanying notes are an integral part of these financial statements.
Annual Report 21
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Mexico | 2.8% | ||||||||||
Cemex SAB de CV, 3.720%, 03/15/20 (±) | USD | 470 | $ | 457,806 | ||||||
Monaco | 0.4% | ||||||||||
Endeavour Mining Corp., 3.000%, 02/15/23 (#), (±) | USD | 62 | 60,022 | |||||||
Netherlands | 1.8% | ||||||||||
Fugro NV: | ||||||||||
4.000%, 10/26/21 (±) | EUR | 200 | 189,278 | |||||||
4.500%, 11/02/24 (±) | EUR | 100 | 97,389 | |||||||
286,667 | ||||||||||
Thailand | 0.7% | ||||||||||
Sea, Ltd., 2.250%, 07/01/23 (#), (±) | USD | 138 | 119,649 | |||||||
United States | 85.6% | ||||||||||
Advanced Micro Devices, Inc., 2.125%, 09/01/26 (±) | USD | 141 | 342,454 | |||||||
Akamai Technologies, Inc., 0.125%, 05/01/25 (±) | USD | 100 | 91,705 | |||||||
Alder Biopharmaceuticals, Inc., 2.500%, 02/01/25 (±) | USD | 184 | 146,774 | |||||||
Allscripts Healthcare Solutions, Inc., 1.250%, 07/01/20 (±) | USD | 166 | 159,796 | |||||||
Alteryx, Inc., 0.500%, 06/01/23 (±) | USD | 139 | 206,767 | |||||||
Amicus Therapeutics, Inc., 3.000%, 12/15/23 (#), (±) | USD | 191 | 333,056 | |||||||
Atlas Air Worldwide Holdings, Inc., 1.875%, 06/01/24 (±) | USD | 175 | 166,822 | |||||||
Atlassian, Inc., 0.625%, 05/01/23 (±) | USD | 180 | 228,196 | |||||||
Avaya Holdings Corp., 2.250%, 06/15/23 (±) | USD | 129 | 110,056 |
The accompanying notes are an integral part of these financial statements.
22 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Benefitfocus, Inc., 1.250%, 12/15/23 (±) | USD | 88 | $ | 93,471 | ||||||
Boingo Wireless, Inc., 1.000%, 10/01/23 (±) | USD | 137 | 115,820 | |||||||
CalAmp Corp.: | ||||||||||
1.625%, 05/15/20 (±) | USD | 88 | 83,714 | |||||||
2.000%, 08/01/25 (#), (±) | USD | 104 | 79,950 | |||||||
Carbonite, Inc., 2.500%, 04/01/22 (±) | USD | 146 | 173,927 | |||||||
Chegg, Inc., 0.250%, 05/15/23 (#), (±) | USD | 176 | 212,759 | |||||||
Cleveland-Cliffs, Inc., 1.500%, 01/15/25 (±) | USD | 175 | 194,634 | |||||||
Colony Capital, Inc., 3.875%, 01/15/21 (±) | USD | 163 | 150,788 | |||||||
Cowen, Inc., 3.000%, 12/15/22 (±) | USD | 121 | 121,900 | |||||||
Cree, Inc., 0.875%, 09/01/23 (±) | USD | 97 | 93,854 | |||||||
DexCom, Inc., 0.750%, 12/01/23 (±) | USD | 208 | 210,091 | |||||||
Electronics For Imaging, Inc., 2.250%, 11/15/23 (±) | USD | 101 | 97,945 | |||||||
Encore Capital Group, Inc.: | ||||||||||
2.875%, 03/15/21 (±) | USD | 220 | 182,632 | |||||||
3.250%, 03/15/22 (±) | USD | 308 | 251,761 | |||||||
Evolent Health, Inc.: | ||||||||||
2.000%, 12/01/21 (±) | USD | 123 | 136,392 | |||||||
1.500%, 10/15/25 (±) | USD | 87 | 79,952 | |||||||
EZCORP, Inc.: | ||||||||||
2.125%, 06/15/19 (±) | USD | 381 | 370,895 | |||||||
2.375%, 05/01/25 (±) | USD | 137 | 103,881 | |||||||
Five9, Inc., 0.125%, 05/01/23 (±) | USD | 138 | 168,166 | |||||||
Forestar Group, Inc., 3.750%, 03/01/20 (±) | USD | 112 | 108,679 |
The accompanying notes are an integral part of these financial statements.
Annual Report 23
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
FTI Consulting, Inc., 2.000%, 08/15/23 (±) | USD | 104 | $ | 99,125 | ||||||
Green Plains, Inc.: | ||||||||||
3.250%, 10/01/19 (±) | USD | 269 | 267,601 | |||||||
4.125%, 09/01/22 (±) | USD | 152 | 133,950 | |||||||
HC2 Holdings, Inc., 7.500%, 06/01/22 (±) | USD | 27 | 22,890 | |||||||
Herbalife Nutrition, Ltd., 2.625%, 03/15/24 (±) | USD | 139 | 155,913 | |||||||
Hope Bancorp, Inc., 2.000%, 05/15/38 (#), (±) | USD | 140 | 117,417 | |||||||
IH Merger Sub LLC, 3.000%, 07/01/19 (±) | USD | 476 | 529,599 | |||||||
Infinera Corp., 2.125%, 09/01/24 (±) | USD | 134 | 96,989 | |||||||
Innoviva, Inc., 2.125%, 01/15/23 (±) | USD | 172 | 185,867 | |||||||
Inphi Corp., 0.750%, 09/01/21 (±) | USD | 229 | 211,697 | |||||||
Insulet Corp., 1.375%, 11/15/24 (±) | USD | 68 | 72,217 | |||||||
Ionis Pharmaceuticals, Inc., 1.000%, 11/15/21 (±) | USD | 180 | 192,619 | |||||||
Karyopharm Therapeutics, Inc., 3.000%, 10/15/25 (±) | USD | 138 | 120,640 | |||||||
KBR, Inc., 2.500%, 11/01/23 (±) | USD | 152 | 135,135 | |||||||
Knowles Corp., 3.250%, 11/01/21 (±) | USD | 153 | 157,661 | |||||||
Liberty Interactive LLC: | ||||||||||
4.000%, 11/15/29 (±) | USD | 266 | 179,498 | |||||||
3.750%, 02/15/30 (±) | USD | 185 | 121,853 | |||||||
Liberty Media Corp., 2.250%, 12/01/48 (±) | USD | 207 | 204,301 | |||||||
Ligand Pharmaceuticals, Inc., 0.750%, 05/15/23 (±) | USD | 105 | 92,978 |
The accompanying notes are an integral part of these financial statements.
24 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Microchip Technology, Inc., 1.625%, 02/15/27 (±) | USD | 274 | $ | 267,641 | ||||||
MINDBODY, Inc., 0.375%, 06/01/23 (±) | USD | 146 | 143,868 | |||||||
MongoDB, Inc., 0.750%, 06/15/24 (#), (±) | USD | 138 | 189,944 | |||||||
Navistar International Corp., 4.750%, 04/15/19 (±) | USD | 100 | 99,749 | |||||||
Neurocrine Biosciences, Inc., 2.250%, 05/15/24 (±) | USD | 219 | 261,427 | |||||||
NII Holdings, Inc., 4.250%, 08/15/23 (±) | USD | 219 | 220,369 | |||||||
NRG Energy, Inc., 2.750%, 06/01/48 (±) | USD | 201 | 216,453 | |||||||
Nutanix, Inc., 0.000%, 01/15/23 (±) | USD | 74 | 80,849 | |||||||
Okta, Inc., 0.250%, 02/15/23 (±) | USD | 183 | 266,625 | |||||||
ON Semiconductor Corp., 1.625%, 10/15/23 (±) | USD | 184 | 197,469 | |||||||
OSI Systems, Inc., 1.250%, 09/01/22 (±) | USD | 143 | 132,552 | |||||||
Pacira Pharmaceuticals, Inc., 2.375%, 04/01/22 (±) | USD | 153 | 151,757 | |||||||
Palo Alto Networks, Inc., 0.750%, 07/01/23 (±) | USD | 266 | 263,071 | |||||||
Patrick Industries, Inc., 1.000%, 02/01/23 (±) | USD | 141 | 106,178 | |||||||
PDL BioPharma, Inc., 2.750%, 12/01/21 (±) | USD | 174 | 176,207 | |||||||
Perficient, Inc., 2.375%, 09/15/23 (#), (±) | USD | 138 | 122,638 | |||||||
PRA Group, Inc.: | ||||||||||
3.000%, 08/01/20 (±) | USD | 178 | 163,135 | |||||||
3.500%, 06/01/23 (±) | USD | 189 | 159,223 | |||||||
PROS Holdings, Inc., 2.000%, 06/01/47 (±) | USD | 188 | 174,444 |
The accompanying notes are an integral part of these financial statements.
Annual Report 25
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Radius Health, Inc., 3.000%, 09/01/24 (±) | USD | 171 | $ | 131,456 | ||||||
Rapid7, Inc., 1.250%, 08/01/23 (±) | USD | 175 | 177,263 | |||||||
Redwood Trust, Inc., 4.750%, 08/15/23 (±) | USD | 80 | 73,297 | |||||||
Retrophin, Inc., 2.500%, 09/15/25 (±) | USD | 139 | 124,548 | |||||||
RWT Holdings, Inc., 5.625%, 11/15/19 (±) | USD | 198 | 198,867 | |||||||
SEACOR Holdings, Inc., 3.000%, 11/15/28 (±) | USD | 180 | 166,145 | |||||||
Servicenow, Inc., 0.000%, 06/01/22 (±) | USD | 88 | 122,829 | |||||||
Splunk, Inc., 0.500%, 09/15/23 (#), (±) | USD | 131 | 130,130 | |||||||
Square, Inc., 0.500%, 05/15/23 (±) | USD | 194 | 201,877 | |||||||
Synaptics, Inc., 0.500%, 06/15/22 (±) | USD | 73 | 63,970 | |||||||
Team, Inc., 5.000%, 08/01/23 (±) | USD | 142 | 141,156 | |||||||
TerraVia Holdings, Inc., 5.000%, 10/01/19 («) | USD | 216 | 4,320 | |||||||
The Medicines Co.: | ||||||||||
2.500%, 01/15/22 (±) | USD | 124 | 106,385 | |||||||
3.500%, 01/15/24 (±) | USD | 124 | 122,480 | |||||||
Twilio, Inc., 0.250%, 06/01/23 (±) | USD | 145 | 206,992 | |||||||
Vishay Intertechnology, Inc., 2.250%, 06/15/25 (±) | USD | 194 | 171,611 | |||||||
Wayfair, Inc., 1.125%, 11/01/24 (±) | USD | 131 | 133,049 |
The accompanying notes are an integral part of these financial statements.
26 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||
Western Digital Corp., 1.500%, 02/01/24 (±) | USD | 145 | $ | 117,508 | ||||||
Wright Medical Group, Inc., 1.625%, 06/15/23 (±) | USD | 162 | 164,971 | |||||||
Zillow Group, Inc., 2.000%, 12/01/21 (±) | USD | 87 | 84,540 | |||||||
13,951,780 | ||||||||||
Total Convertible Corporate Bonds | ||||||||||
(Cost $18,606,982) | 17,381,037 |
Description | Counterparty | Number of Contracts | Exercise Price | Notional Amount | Fair Value | |||||||||||
Purchased Options | 0.0% | ||||||||||||||||
Call | ||||||||||||||||
Alder Biopharmaceuticals, Inc. 15, Expires 04/18/19 | RBS | 1 | $ | 15.00 | $ | 100 | $ | 30 | ||||||||
Alder Biopharmaceuticals, Inc. 15, Expires 07/19/19 | RBS | 13 | 15.00 | 1,300 | 650 | |||||||||||
Allegheny Technologies, Inc. 27.5, Expires 04/18/19 | RBS | 17 | 27.50 | 1,700 | 799 | |||||||||||
Amicus Therapeutics, Inc. 13, Expires 04/18/19 | RBS | 9 | 13.00 | 900 | 225 | |||||||||||
Atlas Air Worldwide Holdings, Inc. 55, Expires 05/17/19 | RBS | 9 | 55.00 | 900 | 1,080 | |||||||||||
Cemex SAB de CV 16, Expires 01/18/19 | RBS | 53 | 16.00 | 5,300 | 53 | |||||||||||
Cleveland-Cliffs, Inc. 10, Expires 04/18/19 | RBS | 26 | 10.00 | 2,600 | 832 |
The accompanying notes are an integral part of these financial statements.
Annual Report 27
Description | Counterparty | Number of Contracts | Exercise Price | Notional Amount | Fair Value | |||||||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||||||||||
Ctrip.com International, Ltd. 35, Expires 06/21/19 | RBS | 9 | $ | 35.00 | $ | 900 | $ | 720 | ||||||||
Evolent Health, Inc. 25, Expires 01/18/19 | RBS | 4 | 25.00 | 400 | 120 | |||||||||||
First Majestic Silver Corp. 7, Expires 04/18/19 | RBS | 35 | 7.00 | 3,500 | 1,400 | |||||||||||
HubSpot, Inc. 140, Expires 01/18/19 | RBS | 1 | 140.00 | 100 | 115 | |||||||||||
iShares MSCI Japan ETF 55, Expires 06/21/19 | RBS | 63 | 55.00 | 6,300 | 6,174 | |||||||||||
NII Holdings, Inc. 7.5, Expires 03/15/19 | RBS | 4 | 7.50 | 400 | 188 | |||||||||||
NRG Energy, Inc. 45, Expires 01/18/19 | RBS | 9 | 45.00 | 900 | 45 | |||||||||||
Rapid7, Inc. 35, Expires 01/18/19 | RBS | 2 | 35.00 | 200 | 60 | |||||||||||
Sea, Ltd. 15, Expires 01/18/19 | RBS | 18 | 15.00 | 1,800 | 90 | |||||||||||
Square, Inc. 70, Expires 01/18/19 | RBS | 2 | 70.00 | 200 | 34 | |||||||||||
Put | ||||||||||||||||
iShares 7-10 Year Treasury Bond ETF 103, Expires 03/15/19 | RBS | 22 | 103.00 | 2,200 | 1,254 | |||||||||||
iShares Russell 2000 ETF 128, Expires 02/15/19 | RBS | 43 | 128.00 | 4,300 | 11,696 | |||||||||||
Total Purchased Options (Cost $36,133) | 25,565 |
The accompanying notes are an integral part of these financial statements.
28 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||
Short-Term Investments | 15.4% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $2,500,469) | 2,500,469 | $ | 2,500,469 | |||||
Total Investments excluding Securities Sold Short | 130.1% (Cost $22,461,962) | 21,197,965 | |||||||
Securities Sold Short | (39.9)% | ||||||||
Common Stocks | (37.2)% | ||||||||
Argentina | (0.5)% | ||||||||
MercadoLibre, Inc. | (293 | ) | (85,805 | ) | ||||
Bermuda | (0.2)% | ||||||||
Golar LNG, Ltd. | (1,118 | ) | (24,328 | ) | ||||
Teekay Corp. | (4,547 | ) | (15,187 | ) | ||||
(39,515 | ) | |||||||
Canada | (1.4)% | ||||||||
Canopy Growth Corp. | (4,017 | ) | (107,722 | ) | ||||
First Majestic Silver Corp. | (9,890 | ) | (58,252 | ) | ||||
Tilray, Inc. | (764 | ) | (53,893 | ) | ||||
(219,867 | ) | |||||||
China | (1.1)% | ||||||||
GDS Holdings, Ltd. ADR | (1,953 | ) | (45,095 | ) | ||||
Huazhu Group, Ltd. ADR | (1,990 | ) | (56,974 | ) | ||||
iQIYI, Inc. ADR | (4,267 | ) | (63,450 | ) | ||||
Momo, Inc. Sponsored ADR | (592 | ) | (14,060 | ) | ||||
(179,579 | ) | |||||||
Japan | (1.2)% | ||||||||
Kyushu Electric Power Co., Inc. | (2,700 | ) | (32,105 | ) | ||||
Mirait Holdings Corp. | (4,900 | ) | (71,691 | ) | ||||
Mitsubishi Chemical Holdings Corp. | (2,200 | ) | (16,551 | ) |
The accompanying notes are an integral part of these financial statements.
Annual Report 29
Description | Shares | Fair Value | ||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||
Nipro Corp. | (3,000 | ) | $ | (36,629 | ) | |||
The Chugoku Electric Power Co., Inc. | (3,100 | ) | (40,194 | ) | ||||
(197,170 | ) | |||||||
Mexico | (0.1)% | ||||||||
Cemex SAB de CV Sponsored ADR | (2,270 | ) | (10,941 | ) | ||||
Monaco | (0.1)% | ||||||||
Endeavour Mining Corp. | (1,473 | ) | (24,146 | ) | ||||
Netherlands | (0.4)% | ||||||||
Fugro NV | (8,052 | ) | (69,138 | ) | ||||
Thailand | (0.3)% | ||||||||
Sea, Ltd. ADR | (4,655 | ) | (52,695 | ) | ||||
United Kingdom | (1.0)% | ||||||||
Atlassian Corp. PLC, Class A | (1,779 | ) | (158,295 | ) | ||||
United States | (30.9)% | ||||||||
Advanced Micro Devices, Inc. | (16,383 | ) | (302,430 | ) | ||||
Akamai Technologies, Inc. | (421 | ) | (25,715 | ) | ||||
Alder Biopharmaceuticals, Inc. | (5,636 | ) | (57,769 | ) | ||||
Allscripts Healthcare Solutions, Inc. | (1,253 | ) | (12,079 | ) | ||||
Alteryx, Inc., Class A | (2,352 | ) | (139,874 | ) | ||||
Amicus Therapeutics, Inc. | (26,792 | ) | (256,667 | ) | ||||
Atlas Air Worldwide Holdings, Inc. | (788 | ) | (33,246 | ) | ||||
Avaya Holdings Corp. | (2,122 | ) | (30,896 | ) | ||||
Benefitfocus, Inc. | (1,095 | ) | (50,063 | ) | ||||
Boingo Wireless, Inc. | (1,789 | ) | (36,800 | ) | ||||
CalAmp Corp. | (1,368 | ) | (17,798 | ) | ||||
Carbonite, Inc. | (3,616 | ) | (91,340 | ) | ||||
Chegg, Inc. | (4,974 | ) | (141,361 | ) | ||||
Cleveland-Cliffs, Inc. | (16,907 | ) | (130,015 | ) | ||||
Cowen, Inc. | (4,392 | ) | (58,589 | ) | ||||
Cree, Inc. | (1,030 | ) | (44,058 | ) | ||||
DexCom, Inc. | (814 | ) | (97,517 | ) |
The accompanying notes are an integral part of these financial statements.
30 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||
Electronics For Imaging, Inc. | (1,687 | ) | $ | (41,838 | ) | |||
Encore Capital Group, Inc. | (3,720 | ) | (87,420 | ) | ||||
Evolent Health, Inc., Class A | (3,685 | ) | (73,516 | ) | ||||
EZCORP, Inc. Class A | (5,679 | ) | (43,899 | ) | ||||
Five9, Inc. | (2,345 | ) | (102,523 | ) | ||||
Green Plains, Inc. | (4,962 | ) | (65,052 | ) | ||||
HC2 Holdings, Inc. | (2,752 | ) | (7,265 | ) | ||||
Herbalife Nutrition, Ltd. | (985 | ) | (58,066 | ) | ||||
Hope Bancorp, Inc. | (840 | ) | (9,962 | ) | ||||
Infinera Corp. | (7,998 | ) | (31,912 | ) | ||||
Innoviva, Inc. | (4,924 | ) | (85,924 | ) | ||||
Inphi Corp. | (584 | ) | (18,776 | ) | ||||
Insulet Corp. | (478 | ) | (37,915 | ) | ||||
Invitation Homes, Inc. REIT | (20,892 | ) | (419,511 | ) | ||||
Ionis Pharmaceuticals, Inc. | (823 | ) | (44,491 | ) | ||||
Karyopharm Therapeutics, Inc. | (5,240 | ) | (49,099 | ) | ||||
KBR, Inc. | (2,974 | ) | (45,145 | ) | ||||
Knowles Corp. | (4,547 | ) | (60,521 | ) | ||||
Live Nation Entertainment, Inc. | (469 | ) | (23,098 | ) | ||||
Microchip Technology, Inc. | (2,529 | ) | (181,886 | ) | ||||
MINDBODY, Inc., Class A | (983 | ) | (35,781 | ) | ||||
MongoDB, Inc. | (1,591 | ) | (133,230 | ) | ||||
Neurocrine Biosciences, Inc. | (1,949 | ) | (139,178 | ) | ||||
NII Holdings, Inc. | (24,603 | ) | (108,499 | ) | ||||
NRG Energy, Inc. | (1,082 | ) | (42,847 | ) | ||||
Nutanix, Inc., Class A | (1,065 | ) | (44,293 | ) | ||||
Okta, Inc. | (3,118 | ) | (198,928 | ) | ||||
ON Semiconductor Corp. | (2,629 | ) | (43,405 | ) | ||||
OSI Systems, Inc. | (432 | ) | (31,666 | ) | ||||
Pacira Pharmaceuticals, Inc. | (1,258 | ) | (54,119 | ) | ||||
Palo Alto Networks, Inc. | (403 | ) | (75,905 | ) | ||||
Patrick Industries, Inc. | (507 | ) | (15,012 | ) | ||||
PDL BioPharma, Inc. | (28,417 | ) | (82,409 | ) | ||||
Perficient, Inc. | (1,867 | ) | (41,559 | ) | ||||
PRA Group, Inc. | (2,455 | ) | (59,828 | ) | ||||
PROS Holdings, Inc. | (1,066 | ) | (33,472 | ) |
The accompanying notes are an integral part of these financial statements.
Annual Report 31
Description | Shares | Fair Value | ||||||
Lazard Enhanced Opportunities Portfolio (continued) | ||||||||
Radius Health, Inc. | (2,145 | ) | $ | (35,371 | ) | |||
Rapid7, Inc. | (2,447 | ) | (76,249 | ) | ||||
Redwood Trust, Inc. REIT | (1,308 | ) | (19,712 | ) | ||||
Retrophin, Inc. | (1,834 | ) | (41,504 | ) | ||||
SEACOR Holdings, Inc. | (83 | ) | (3,071 | ) | ||||
ServiceNow, Inc. | (507 | ) | (90,271 | ) | ||||
Splunk, Inc. | (403 | ) | (42,255 | ) | ||||
Square, Inc. Class A | (1,611 | ) | (90,361 | ) | ||||
Synaptics, Inc. | (417 | ) | (15,517 | ) | ||||
Team, Inc. | (4,129 | ) | (60,490 | ) | ||||
The Medicines Co. | (4,953 | ) | (94,800 | ) | ||||
Twilio, Inc., Class A | (1,693 | ) | (151,185 | ) | ||||
Vishay Intertechnology, Inc. | (1,182 | ) | (21,288 | ) | ||||
Wayfair, Inc., Class A | (829 | ) | (74,676 | ) | ||||
Wright Medical Group NV | (1,484 | ) | (40,395 | ) | ||||
Zillow Group, Inc. Class C | (742 | ) | (23,433 | ) | ||||
(5,034,745 | ) | |||||||
Total Common Stocks (Proceeds $6,765,249) | (6,071,896 | ) | ||||||
Exchange-Traded Funds | (2.7)% | ||||||||
iShares 7-10 Year Treasury Bond ETF (Proceeds $425,287) | (4,203 | ) | (437,953 | ) | ||||
Total Securities Sold Short (Proceeds $7,190,536) | (6,509,849 | ) | ||||||
Total Investments | 90.2% (Cost and short proceeds $15,271,426) (») | $ | 14,688,116 | ||||||
Cash and Other Assets in Excess of Liabilities | 9.8% | 1,600,437 | |||||||
Net Assets | 100.0% | $ | 16,288,553 |
The accompanying notes are an integral part of these financial statements.
32 Annual Report
Lazard Enhanced Opportunities Portfolio (concluded)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||
USD | 84,398 | CAD | 115,000 | SSB | 03/19/19 | $ | 12 | $ | — | |||||||||||
USD | 233,530 | CAD | 312,000 | SSB | 03/19/19 | 4,586 | — | |||||||||||||
USD | 258,541 | EUR | 227,000 | SSB | 03/19/19 | — | 3,199 | |||||||||||||
USD | 249,512 | JPY | 28,057,000 | SSB | 03/19/19 | — | 7,940 | |||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 4,598 | $ | 11,139 |
Written Options open at December 31, 2018:
Description | Counterparty | Number of Contracts | Strike Price | Expiration Date | Notional Amount | Premiums | Fair Value | ||||||||||||||||
Put | |||||||||||||||||||||||
Evolent Health, Inc. 22.5 | RBS | 2 | $ 22.50 | 01/18/19 | $ 200 | $ | 295 | $ | (540 | ) | |||||||||||||
HubSpot, Inc. 125 | RBS | 1 | 125.00 | 01/18/19 | 100 | 460 | (470 | ) | |||||||||||||||
iShares Russell 2000 ETF 120 | RBS | 43 | 120.00 | 02/15/19 | 4,300 | 7,974 | (5,160 | ) | |||||||||||||||
NII Holdings, Inc. 5 | RBS | 4 | 5.00 | 03/15/19 | 400 | 435 | (560 | ) | |||||||||||||||
NRG Energy, Inc. 40 | RBS | 9 | 40.00 | 01/18/19 | 900 | 436 | (1,395 | ) | |||||||||||||||
Rapid7, Inc. 25 | RBS | 2 | 25.00 | 02/15/19 | 200 | 179 | (130 | ) | |||||||||||||||
Sea, Ltd. 12.5 | RBS | 9 | 12.50 | 02/15/19 | 900 | 960 | (1,395 | ) | |||||||||||||||
Square, Inc. 60 | RBS | 2 | 60.00 | 01/18/19 | 200 | 531 | (1,100 | ) | |||||||||||||||
Zillow Group, Inc. 35 | RBS | 1 | 35.00 | 01/18/19 | 100 | 157 | (403 | ) | |||||||||||||||
Total Written Options | 73 | $ | 11,427 | $ | (11,153 | ) |
The accompanying notes are an integral part of these financial statements.
Annual Report 33
The accompanying notes are an integral part of these financial statements.
34 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Guanay Finance, Ltd., 6.000%, 12/15/20 | USD | 240 | $ | 239,837 | ||||||
VTR Finance BV, 6.875%, 01/15/24 | USD | 359 | 358,551 | |||||||
1,196,888 | ||||||||||
China | 0.0% | ||||||||||
G3 Exploration, Ltd.: | ||||||||||
10.000%, 11/20/18 (#), («) | USD | 400 | 0 | |||||||
0.000%, 12/31/99 («) | USD | 60 | 0 | |||||||
0 | ||||||||||
Colombia | 1.1% | ||||||||||
AI Candelaria Spain SLU, 7.500%, 12/15/28 (#) | USD | 500 | 481,935 | |||||||
Gran Tierra Energy International Holdings, Ltd., 6.250%, 02/15/25 (#) | USD | 725 | 674,975 | |||||||
1,156,910 | ||||||||||
Georgia | 0.3% | ||||||||||
BGEO Group JSC, 6.000%, 07/26/23 | USD | 350 | 339,063 | |||||||
Guatemala | 1.1% | ||||||||||
Comcel Trust, 6.875%, 02/06/24 | USD | 1,185 | 1,210,181 | |||||||
India | 0.7% | ||||||||||
Greenko Dutch BV, 5.250%, 07/24/24 | USD | 400 | 358,500 | |||||||
Vedanta Resources PLC, 6.375%, 07/30/22 | USD | 400 | 357,500 | |||||||
716,000 | ||||||||||
Indonesia | 0.6% | ||||||||||
Star Energy Geothermal Wayang Windu, Ltd., 6.750%, 04/24/33 (#) | USD | 737 | 673,740 |
The accompanying notes are an integral part of these financial statements.
Annual Report 35
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Israel | 0.5% | ||||||||||
Altice Financing SA, 7.500%, 05/15/26 | USD | 615 | $ | 559,650 | ||||||
Nigeria | 1.3% | ||||||||||
IHS Netherlands Holdco BV: | ||||||||||
9.500%, 10/27/21 | USD | 425 | 427,365 | |||||||
9.500%, 10/27/21 (#) | USD | 725 | 729,034 | |||||||
Zenith Bank PLC, 6.250%, 04/22/19 | USD | 250 | 250,000 | |||||||
1,406,399 | ||||||||||
Oman | 0.4% | ||||||||||
Oztel Holdings SPC, Ltd., 6.625%, 04/24/28 (#) | USD | 450 | 412,313 | |||||||
Panama | 0.2% | ||||||||||
C&W Senior Financing DAC, 7.500%, 10/15/26 (#) | USD | 200 | 192,250 | |||||||
Peru | 1.1% | ||||||||||
Hunt Oil Co. of Peru LLC Sucursal Del Peru, 6.375%, 06/01/28 (#) | USD | 900 | 906,075 | |||||||
Inkia Energy, Ltd., 5.875%, 11/09/27 (#) | USD | 250 | 231,250 | |||||||
1,137,325 | ||||||||||
Russia | 1.3% | ||||||||||
Sberbank of Russia, 4.150%, 03/06/19 | USD | 1,450 | 1,442,677 | |||||||
Saudi Arabia | 0.8% | ||||||||||
Acwa Power Management And Investments One, Ltd., 5.950%, 12/15/39 (#) | USD | 875 | 817,250 |
The accompanying notes are an integral part of these financial statements.
36 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Singapore | 0.6% | ||||||||||
Puma International Financing SA: | ||||||||||
5.125%, 10/06/24 | USD | 400 | $ | 319,500 | ||||||
5.125%, 10/06/24 (#) | USD | 350 | 279,562 | |||||||
599,062 | ||||||||||
South Africa | 0.8% | ||||||||||
Liquid Telecommunications Financing PLC, 8.500%, 07/13/22 (#) | USD | 850 | 854,477 | |||||||
South Korea | 0.6% | ||||||||||
Heungkuk Life Insurance Co., Ltd., 4.475%, 11/09/47 (§) | USD | 200 | 176,250 | |||||||
SK E&S Co., Ltd., 4.875%, 11/26/19 (§), (¶) | USD | 510 | 499,800 | |||||||
676,050 | ||||||||||
Tanzania | 0.6% | ||||||||||
HTA Group, Ltd., 9.125%, 03/08/22 | USD | 625 | 634,375 | |||||||
Thailand | 0.2% | ||||||||||
PTT Exploration & Production Public Co. Ltd., 4.875%, 12/31/99 (§), (¶) | USD | 213 | 211,669 | |||||||
Turkey | 0.9% | ||||||||||
Petkim Petrokimya Holding AS, 5.875%, 01/26/23 (#) | USD | 350 | 317,625 | |||||||
Turkiye Halk Bankasi, 4.750%, 06/04/19 | USD | 240 | 234,300 | |||||||
Turkiye Is Bankasi AS, 5.000%, 04/30/20 | USD | 455 | 441,350 | |||||||
993,275 |
The accompanying notes are an integral part of these financial statements.
Annual Report 37
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Zambia | 0.8% | ||||||||||
First Quantum Minerals, Ltd.: | ||||||||||
7.000%, 02/15/21 (#) | USD | 260 | $ | 249,600 | ||||||
7.500%, 04/01/25 (#) | USD | 675 | 556,875 | |||||||
806,475 | ||||||||||
Total Corporate Bonds (Cost $22,737,506) | 21,173,624 | |||||||||
Foreign Government Obligations | 75.0% | ||||||||||
Angola | 2.9% | ||||||||||
Republic of Angola: | ||||||||||
9.500%, 11/12/25 | USD | 1,760 | 1,850,200 | |||||||
8.250%, 05/09/28 | USD | 210 | 197,925 | |||||||
8.250%, 05/09/28 (#) | USD | 540 | 508,950 | |||||||
9.375%, 05/08/48 (#) | USD | 540 | 506,250 | |||||||
3,063,325 | ||||||||||
Argentina | 4.3% | ||||||||||
Republic of Argentina: | ||||||||||
4.625%, 01/11/23 | USD | 975 | 769,031 | |||||||
7.500%, 04/22/26 | USD | 600 | 480,750 | |||||||
6.875%, 01/26/27 | USD | 1,570 | 1,193,200 | |||||||
5.875%, 01/11/28 | USD | 1,827 | 1,308,589 | |||||||
6.625%, 07/06/28 | USD | 120 | 88,800 | |||||||
7.625%, 04/22/46 | USD | 430 | 310,675 | |||||||
7.125%, 06/28/2117 | USD | 615 | 439,725 | |||||||
4,590,770 | ||||||||||
Bahrain | 2.7% | ||||||||||
Kingdom of Bahrain, 6.125%, 07/05/22 | USD | 2,890 | 2,944,187 | |||||||
Brazil | 10.0% | ||||||||||
Brazil Letras do Tesouro Nacional: | ||||||||||
0.000%, 04/01/19 | BRL | 11,730 | 2,980,136 | |||||||
0.000%, 01/01/22 | BRL | 8,550 | 1,745,555 |
The accompanying notes are an integral part of these financial statements.
38 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Brazil NTN-B: | ||||||||||
6.000%, 05/15/23 | BRL | 1,610 | $ | 1,401,397 | ||||||
6.000%, 08/15/50 | BRL | 710 | 669,999 | |||||||
Federal Republic of Brazil: | ||||||||||
6.000%, 04/07/26 | USD | 955 | 1,015,881 | |||||||
4.625%, 01/13/28 | USD | 1,595 | 1,534,159 | |||||||
5.000%, 01/27/45 | USD | 495 | 432,383 | |||||||
5.625%, 02/21/47 | USD | 1,065 | 1,004,827 | |||||||
10,784,337 | ||||||||||
Colombia | 2.7% | ||||||||||
Republic of Colombia: | ||||||||||
3.875%, 04/25/27 | USD | 1,670 | 1,593,598 | |||||||
5.000%, 06/15/45 | USD | 1,355 | 1,285,556 | |||||||
2,879,154 | ||||||||||
Congo | 1.9% | ||||||||||
Republic of Congo, 6.000%, 06/30/29 (Ø) | USD | 2,657 | 2,059,438 | |||||||
Costa Rica | 1.7% | ||||||||||
Republic of Costa Rica: | ||||||||||
4.250%, 01/26/23 | USD | 220 | 192,995 | |||||||
5.520%, 08/23/23 | USD | 770 | 650,596 | |||||||
4.375%, 04/30/25 | USD | 285 | 240,710 | |||||||
7.000%, 04/04/44 | USD | 315 | 266,726 | |||||||
7.158%, 03/12/45 | USD | 530 | 454,077 | |||||||
1,805,104 | ||||||||||
Dominican Republic | 3.7% | ||||||||||
Dominican Republic: | ||||||||||
7.450%, 04/30/44 | USD | 1,905 | 1,972,628 | |||||||
6.850%, 01/27/45 | USD | 885 | 868,406 | |||||||
6.500%, 02/15/48 (#) | USD | 1,170 | 1,102,725 | |||||||
3,943,759 | ||||||||||
Ecuador | 2.1% | ||||||||||
Republic of Ecuador: | ||||||||||
10.500%, 03/24/20 | USD | 770 | 774,812 | |||||||
10.750%, 03/28/22 | USD | 1,105 | 1,111,906 |
The accompanying notes are an integral part of these financial statements.
Annual Report 39
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
9.650%, 12/13/26 | USD | 210 | $ | 190,838 | ||||||
7.875%, 01/23/28 | USD | 210 | 170,363 | |||||||
2,247,919 | ||||||||||
Egypt | 2.6% | ||||||||||
Arab Republic of Egypt: | ||||||||||
6.588%, 02/21/28 | USD | 475 | 423,344 | |||||||
6.588%, 02/21/28 (#) | USD | 500 | 445,625 | |||||||
8.500%, 01/31/47 | USD | 1,105 | 995,881 | |||||||
8.500%, 01/31/47 (#) | USD | 745 | 671,431 | |||||||
7.903%, 02/21/48 (#) | USD | 310 | 266,600 | |||||||
2,802,881 | ||||||||||
Ghana | 1.5% | ||||||||||
Republic of Ghana: | ||||||||||
7.625%, 05/16/29 (#) | USD | 1,495 | 1,336,156 | |||||||
8.627%, 06/16/49 (#) | USD | 275 | 238,563 | |||||||
1,574,719 | ||||||||||
Hungary | 2.5% | ||||||||||
Hungary: | ||||||||||
5.375%, 02/21/23 | USD | 1,330 | 1,407,971 | |||||||
5.750%, 11/22/23 | USD | 1,180 | 1,274,769 | |||||||
2,682,740 | ||||||||||
Indonesia | 3.5% | ||||||||||
Republic of Indonesia: | ||||||||||
2.950%, 01/11/23 | USD | 370 | 352,772 | |||||||
5.375%, 10/17/23 | USD | 220 | 229,385 | |||||||
5.875%, 01/15/24 | USD | 180 | 191,025 | |||||||
4.125%, 01/15/25 | USD | 1,325 | 1,300,156 | |||||||
4.750%, 01/08/26 | USD | 305 | 308,657 | |||||||
3.850%, 07/18/27 | USD | 940 | 891,825 | |||||||
4.100%, 04/24/28 | USD | 545 | 527,969 | |||||||
3,801,789 | ||||||||||
Kenya | 0.8% | ||||||||||
Republic of Kenya, 8.250%, 02/28/48 (#) | USD | 1,075 | 913,750 |
The accompanying notes are an integral part of these financial statements.
40 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Mozambique | 2.9% | ||||||||||
Mozambique International Bonds, 10.500%, 01/18/23 | USD | 3,278 | $ | 3,064,930 | ||||||
Nigeria | 2.5% | ||||||||||
Nigeria Treasury Bills: | ||||||||||
0.000%, 01/03/19 | NGN | 60,680 | 158,045 | |||||||
0.000%, 01/17/19 | NGN | 144,830 | 394,656 | |||||||
0.000%, 01/31/19 | NGN | 98,000 | 265,589 | |||||||
Republic of Nigeria: | ||||||||||
6.500%, 11/28/27 | USD | 425 | 375,594 | |||||||
7.625%, 11/28/47 | USD | 320 | 269,200 | |||||||
7.625%, 11/28/47 (#) | USD | 1,395 | 1,173,544 | |||||||
2,636,628 | ||||||||||
Oman | 1.7% | ||||||||||
Oman Government International Bonds: | ||||||||||
4.750%, 06/15/26 | USD | 760 | 655,500 | |||||||
5.375%, 03/08/27 | USD | 820 | 715,450 | |||||||
5.625%, 01/17/28 | USD | 460 | 404,225 | |||||||
1,775,175 | ||||||||||
Pakistan | 1.1% | ||||||||||
Islamic Republic of Pakistan, 6.875%, 12/05/27 | USD | 1,355 | 1,221,194 | |||||||
Paraguay | 2.0% | ||||||||||
Republic of Paraguay: | ||||||||||
4.700%, 03/27/27 | USD | 1,190 | 1,173,637 | |||||||
6.100%, 08/11/44 | USD | 485 | 501,975 | |||||||
5.600%, 03/13/48 | USD | 480 | 471,000 | |||||||
2,146,612 | ||||||||||
Qatar | 2.6% | ||||||||||
State of Qatar, 5.103%, 04/23/48 | USD | 2,625 | 2,752,969 |
The accompanying notes are an integral part of these financial statements.
Annual Report 41
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Saudi Arabia | 3.4% | ||||||||||
Saudi Government International Bonds: | ||||||||||
4.000%, 04/17/25 | USD | 3,115 | $ | 3,086,965 | ||||||
3.250%, 10/26/26 | USD | 230 | 214,935 | |||||||
3.625%, 03/04/28 | USD | 335 | 316,994 | |||||||
3,618,894 | ||||||||||
Senegal | 0.6% | ||||||||||
Republic of Senegal, 6.750%, 03/13/48 | USD | 755 | 623,819 | |||||||
South Africa | 3.1% | ||||||||||
Republic of South Africa: | ||||||||||
7.750%, 02/28/23 | ZAR | 7,490 | 513,802 | |||||||
10.500%, 12/21/26 | ZAR | 26,310 | 1,994,025 | |||||||
8.250%, 03/31/32 | ZAR | 13,580 | 847,912 | |||||||
3,355,739 | ||||||||||
Sri Lanka | 1.6% | ||||||||||
Republic of Sri Lanka: | ||||||||||
6.750%, 04/18/28 | USD | 60 | 54,225 | |||||||
6.750%, 04/18/28 (#) | USD | 1,865 | 1,685,494 | |||||||
1,739,719 | ||||||||||
Turkey | 6.0% | ||||||||||
Republic of Turkey: | ||||||||||
7.250%, 12/23/23 | USD | 1,235 | 1,265,875 | |||||||
5.750%, 03/22/24 | USD | 1,015 | 980,744 | |||||||
4.875%, 10/09/26 | USD | 580 | 513,300 | |||||||
6.000%, 03/25/27 | USD | 1,005 | 943,444 | |||||||
5.125%, 02/17/28 | USD | 390 | 341,250 | |||||||
6.125%, 10/24/28 | USD | 780 | 726,375 | |||||||
6.875%, 03/17/36 | USD | 1,025 | 959,656 | |||||||
6.000%, 01/14/41 | USD | 200 | 169,000 | |||||||
5.750%, 05/11/47 | USD | 690 | 559,762 | |||||||
6,459,406 |
The accompanying notes are an integral part of these financial statements.
42 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Ukraine | 0.9% | ||||||||||
Ukraine Government Bonds: | ||||||||||
7.750%, 09/01/20 | USD | 270 | $ | 260,887 | ||||||
7.750%, 09/01/23 | USD | 330 | 296,587 | |||||||
7.750%, 09/01/24 | USD | 195 | 171,113 | |||||||
7.375%, 09/25/32 | USD | 345 | 274,275 | |||||||
1,002,862 | ||||||||||
Uruguay | 1.5% | ||||||||||
Republica Orient Uruguay: | ||||||||||
5.100%, 06/18/50 | USD | 625 | 615,469 | |||||||
4.975%, 04/20/55 | USD | 500 | 477,375 | |||||||
Uruguay Treasury Bills: | ||||||||||
0.000%, 02/08/19 | UYU | 3,400 | 104,079 | |||||||
0.000%, 03/08/19 | UYU | 15,180 | 460,509 | |||||||
1,657,432 | ||||||||||
Venezuela | 2.2% | ||||||||||
Republic of Venezuela: | ||||||||||
12.750%, 08/23/22 («) | USD | 613 | 145,223 | |||||||
9.000%, 05/07/23 («) | USD | 746 | 167,430 | |||||||
8.250%, 10/13/24 («) | USD | 1,976 | 453,344 | |||||||
7.650%, 04/21/25 («) | USD | 1,442 | 324,450 | |||||||
11.750%, 10/21/26 («) | USD | 802 | 193,999 | |||||||
9.250%, 09/15/27 («) | USD | 815 | 186,981 | |||||||
9.250%, 05/07/28 («) | USD | 619 | 140,049 | |||||||
11.950%, 08/05/31 («) | USD | 903 | 207,171 | |||||||
9.375%, 01/13/34 («) | USD | 909 | 254,520 | |||||||
7.000%, 03/31/38 («) | USD | 1,108 | 248,677 | |||||||
2,321,844 | ||||||||||
Total Foreign Government Obligations (Cost $84,108,792) | 80,471,095 |
The accompanying notes are an integral part of these financial statements.
Annual Report 43
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||
Quasi Government Bonds | 0.2% | ||||||||||
Venezuela | 0.2% | ||||||||||
Petroleos de Venezuela SA: | ||||||||||
6.000%, 05/16/24 («) | USD | 350 | $ | 51,625 | ||||||
6.000%, 11/15/26 («) | USD | 325 | 47,818 | |||||||
5.375%, 04/12/27 («) | USD | 315 | 46,462 | |||||||
5.500%, 04/12/37 («) | USD | 470 | 69,152 | |||||||
Total Quasi Government Bonds (Cost $548,460) | 215,057 |
Description | Shares | Fair Value | ||||||
Short-Term Investments | 0.1% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $146,699) | 146,699 | $ | 146,699 |
Description | Counterparty | Number of Contracts | Exercise Price | Notional Amount (000) | Fair Value | |||||||||||||
Purchased Options | 0.5% | ||||||||||||||||||
Call | ||||||||||||||||||
USD vs BRL Jan 19 4.32, Expires 01/02/19 | GSC | 8,800 | $ | 4.32 | $ | 880 | $ | 0 | ||||||||||
USD vs BRL Jan 19 4.32, Expires 01/02/19 | JPMS | 11,650 | 4.32 | 1,165 | 0 | |||||||||||||
USD vs CLP Jan 19 689.5, Expires 01/02/19 | GSC | 16,000 | 689.50 | 1,600 | 12,339 | |||||||||||||
USD vs CLP Jan 19 689.5, Expires 01/02/19 | JPMS | 16,300 | 689.50 | 1,630 | 12,571 |
The accompanying notes are an integral part of these financial statements.
44 Annual Report
Description | Counterparty | Number of Contracts | Exercise Price | Notional Amount (000) | Fair Value | |||||||||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||||||||||
USD vs CNH Jul 19 6.87, Expires 07/01/19 | BRC | 56,900 | $ | 6.87 | $ | 5,690 | $ | 93,549 | ||||||||||
USD vs CNH Jun 19 6.9, Expires 06/26/19 | JPMS | 60,700 | 6.90 | 6,070 | 86,291 | |||||||||||||
USD vs COP Jan 19 3,325, Expires 01/02/19 | GSC | 34,000 | 3,325.00 | 3,400 | 221 | |||||||||||||
USD vs HUF Jan 19 288.25, Expires 01/02/19 | GSC | 17,100 | 288.25 | 1,710 | 9 | |||||||||||||
USD vs HUF Jan 19 288.25, Expires 01/02/19 | JPMS | 18,100 | 288.25 | 1,810 | 9 | |||||||||||||
USD vs INR Jan 19 77.91, Expires 01/03/19 | JPMS | 43,000 | 77.91 | 4,300 | 0 | |||||||||||||
USD vs KRW Jan 19 1,147.7, Expires 01/03/19 | GSC | 23,850 | 1,147.70 | 2,385 | 14 | |||||||||||||
USD vs KRW Jan 19 1,147.7, Expires 01/03/19 | JPMS | 22,500 | 1,147.70 | 2,250 | 14 | |||||||||||||
USD vs PLN Jan 19 3.86, Expires 01/02/19 | GSC | 15,950 | 3.86 | 1,595 | 5 | |||||||||||||
USD vs PLN Jan 19 3.86, Expires 01/02/19 | BRC | 16,650 | 3.86 | 1,665 | 5 | |||||||||||||
USD vs TRY Jan 19 6.96, Expires 01/02/19 | BRC | 7,450 | 6.96 | 745 | 0 | |||||||||||||
USD vs TRY Jan 19 6.96, Expires 01/02/19 | JPMS | 6,900 | 6.96 | 690 | 0 | |||||||||||||
USD vs ZAR Jan 19 15.55, Expires 01/02/19 | GSC | 9,850 | 15.55 | 985 | 0 | |||||||||||||
USD vs ZAR Jan 19 15.55, Expires 01/02/19 | JPMS | 10,150 | 15.55 | 1,015 | 0 | |||||||||||||
Put | ||||||||||||||||||
USD vs CLP Feb 19 670, Expires 02/07/19 | JPMS | 48,200 | 670.00 | 4,820 | 17,063 | |||||||||||||
USD vs EUR Jan 19 0.87, Expires 01/08/19 | GSC | 176,700 | 0.87 | 17,670 | 44,104 | |||||||||||||
USD vs JPY Feb 19 110.71, Expires 02/22/19 | GSC | 73,800 | 110.71 | 7,380 | 149,002 |
The accompanying notes are an integral part of these financial statements.
Annual Report 45
Description | Counterparty | Number of Contracts | Exercise Price | Notional Amount (000) | Fair Value | |||||||||||||
Lazard Explorer Total Return Portfolio (continued) | ||||||||||||||||||
USD vs RUB Mar 19 66, Expires 03/12/19 | GSC | 118,980 | $ | 66.00 | $ | 11,898 | $ | 40,085 | ||||||||||
USD vs RUB Mar 19 66, Expires 03/12/19 | JPMS | 59,960 | 66.00 | 5,996 | 20,200 | |||||||||||||
USD vs RUB Mar 19 66, Expires 03/12/19 | BRC | 28,360 | 66.00 | 2,836 | 9,554 | |||||||||||||
Total Purchased Options (Cost $1,152,430) | 485,035 | |||||||||||||||||
Total Investments | 95.5% (Cost $108,693,887) (») | $ | 102,491,510 | ||||||||||||||||
Cash and Other Assets in Excess of Liabilities | 4.5% | 4,879,339 | |||||||||||||||||
Net Assets | 100.0% | $ | 107,370,849 |
The accompanying notes are an integral part of these financial statements.
46 Annual Report
Lazard Explorer Total Return Portfolio (continued)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||
BRL | 199,349 | USD | 51,770 | BRC | 01/16/19 | $ | — | $ | 383 | |||||||||||||||||
BRL | 1,017,295 | USD | 267,921 | BRC | 01/16/19 | — | 5,689 | |||||||||||||||||||
BRL | 4,598,892 | USD | 1,168,551 | BRC | 01/16/19 | 16,923 | — | |||||||||||||||||||
BRL | 3,854,131 | USD | 978,877 | CIT | 01/16/19 | 14,618 | — | |||||||||||||||||||
BRL | 5,257,369 | USD | 1,336,427 | GSC | 01/16/19 | 18,786 | — | |||||||||||||||||||
BRL | 4,859,079 | USD | 1,232,487 | HSB | 01/16/19 | 20,057 | — | |||||||||||||||||||
BRL | 1,109,975 | USD | 288,230 | JPM | 01/16/19 | — | 2,108 | |||||||||||||||||||
BRL | 4,534,516 | USD | 1,151,411 | UBS | 01/16/19 | 17,469 | — | |||||||||||||||||||
CLP | 2,227,085,000 | USD | 3,206,658 | BRC | 01/04/19 | 2,411 | — | |||||||||||||||||||
COP | 637,905,599 | USD | 199,883 | BRC | 01/25/19 | — | 3,673 | |||||||||||||||||||
COP | 3,804,605,443 | USD | 1,188,902 | BRC | 01/25/19 | — | 18,665 | |||||||||||||||||||
COP | 637,905,599 | USD | 199,995 | SCB | 01/25/19 | — | 3,786 | |||||||||||||||||||
COP | 637,905,599 | USD | 199,876 | UBS | 01/25/19 | — | 3,667 | |||||||||||||||||||
IDR | 6,703,560,781 | USD | 455,963 | BRC | 01/15/19 | 9,656 | — | |||||||||||||||||||
IDR | 8,145,884,485 | USD | 525,982 | BRC | 01/29/19 | 38,983 | — | |||||||||||||||||||
IDR | 6,703,560,780 | USD | 455,715 | JPM | 01/15/19 | 9,904 | — | |||||||||||||||||||
IDR | 16,256,294,303 | USD | 1,050,080 | JPM | 01/29/19 | 77,390 | — | |||||||||||||||||||
IDR | 6,703,560,781 | USD | 455,715 | SCB | 01/15/19 | 9,904 | — | |||||||||||||||||||
IDR | 11,827,169,236 | USD | 763,536 | SCB | 01/29/19 | 56,748 | — | |||||||||||||||||||
IDR | 6,703,560,781 | USD | 455,306 | UBS | 01/15/19 | 10,313 | — | |||||||||||||||||||
IDR | 9,548,120,096 | USD | 618,610 | UBS | 01/29/19 | 43,608 | — | |||||||||||||||||||
MXN | 7,399,789 | USD | 368,200 | BRC | 01/22/19 | 7,296 | — | |||||||||||||||||||
MXN | 7,403,655 | USD | 368,200 | BRC | 01/22/19 | 7,492 | — | |||||||||||||||||||
MXN | 5,958,469 | USD | 295,000 | GSC | 01/22/19 | 7,357 | — | |||||||||||||||||||
MXN | 5,960,829 | USD | 295,000 | GSC | 01/22/19 | 7,477 | — | |||||||||||||||||||
MXN | 16,413,596 | USD | 816,800 | GSC | 01/22/19 | 16,094 | — | |||||||||||||||||||
MXN | 16,424,704 | USD | 816,800 | GSC | 01/22/19 | 16,657 | — | |||||||||||||||||||
MYR | 2,464,607 | USD | 590,000 | SCB | 01/28/19 | 6,172 | — | |||||||||||||||||||
MYR | 2,497,800 | USD | 600,000 | SCB | 01/28/19 | 4,201 | — | |||||||||||||||||||
PHP | 9,316,267 | USD | 176,044 | BRC | 02/20/19 | 341 | — | |||||||||||||||||||
PHP | 10,530,215 | USD | 199,300 | SCB | 02/20/19 | 69 | — | |||||||||||||||||||
PHP | 10,544,609 | USD | 199,256 | SCB | 02/20/19 | 385 | — | |||||||||||||||||||
PHP | 21,052,755 | USD | 398,500 | SCB | 02/20/19 | 92 | — | |||||||||||||||||||
PLN | 1,512,091 | USD | 405,920 | BOA | 02/14/19 | — | 1,529 | |||||||||||||||||||
PLN | 1,002,571 | USD | 269,125 | BRC | 02/14/19 | — | 999 | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements. |
Annual Report 47
Lazard Explorer Total Return Portfolio (continued)
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||
PLN | 1,815,963 | USD | 479,714 | BRC | 02/19/19 | $ | 6,006 | $ | — | |||||||||||||||||
PLN | 2,937,058 | USD | 788,544 | CIT | 02/14/19 | — | 3,063 | |||||||||||||||||||
PLN | 1,815,964 | USD | 479,885 | CIT | 02/19/19 | 5,835 | — | |||||||||||||||||||
PLN | 1,944,077 | USD | 521,914 | HSB | 02/14/19 | — | 1,994 | |||||||||||||||||||
PLN | 1,815,963 | USD | 479,773 | JPM | 02/19/19 | 5,948 | — | |||||||||||||||||||
PLN | 1,684,020 | USD | 452,086 | SCB | 02/14/19 | — | 1,715 | |||||||||||||||||||
PLN | 1,815,963 | USD | 479,969 | BOA | 02/19/19 | 5,751 | — | |||||||||||||||||||
PLN | 1,815,963 | USD | 479,785 | SCB | 02/19/19 | 5,935 | — | |||||||||||||||||||
TRY | 3,200,750 | USD | 590,000 | BRC | 01/14/19 | 10,776 | — | |||||||||||||||||||
TRY | 6,531,465 | USD | 1,180,000 | BRC | 02/07/19 | 30,016 | — | |||||||||||||||||||
USD | 267,161 | BRL | 1,017,295 | SCB | 01/16/19 | 4,929 | — | |||||||||||||||||||
USD | 267,217 | BRL | 1,017,295 | SCB | 01/16/19 | 4,985 | — | |||||||||||||||||||
USD | 375,353 | BRL | 1,428,480 | SCB | 01/16/19 | 7,128 | — | |||||||||||||||||||
USD | 458,188 | BRL | 1,745,332 | SCB | 01/16/19 | 8,288 | — | |||||||||||||||||||
USD | 480,000 | BRL | 1,862,640 | SCB | 01/16/19 | — | 140 | |||||||||||||||||||
USD | 482,591 | BRL | 1,827,910 | SCB | 01/16/19 | 11,403 | — | |||||||||||||||||||
USD | 794,516 | BRL | 3,017,412 | SCB | 01/16/19 | 16,706 | — | |||||||||||||||||||
USD | 1,014,859 | BRL | 3,841,953 | SCB | 01/16/19 | 24,504 | — | |||||||||||||||||||
USD | 2,979,306 | BRL | 11,497,971 | SCB | 01/16/19 | 15,429 | — | |||||||||||||||||||
USD | 150,000 | COP | 487,500,000 | SCB | 01/25/19 | 53 | — | |||||||||||||||||||
USD | 290,000 | IDR | 4,218,050,000 | SCB | 01/15/19 | — | 2,979 | |||||||||||||||||||
USD | 1,520,000 | IDR | 22,004,432,000 | SCB | 01/15/19 | — | 8,393 | |||||||||||||||||||
USD | 360,000 | MXN | 7,083,810 | SCB | 01/22/19 | 538 | — | |||||||||||||||||||
USD | 1,181,589 | MYR | 4,964,680 | SCB | 01/28/19 | — | 19,334 | |||||||||||||||||||
USD | 110,000 | PLN | 413,859 | SCB | 02/14/19 | — | 681 | |||||||||||||||||||
USD | 300,000 | PLN | 1,126,275 | SCB | 02/14/19 | — | 1,209 | |||||||||||||||||||
USD | 160,000 | TRY | 850,816 | SCB | 01/16/19 | 479 | — | |||||||||||||||||||
USD | 176,044 | TWD | 5,387,837 | BRC | 02/21/19 | 39 | — | |||||||||||||||||||
USD | 199,256 | TWD | 6,099,215 | SCB | 02/21/19 | 11 | — | |||||||||||||||||||
USD | 199,300 | TWD | 6,112,531 | SCB | 02/21/19 | — | 379 | |||||||||||||||||||
USD | 398,500 | TWD | 12,210,040 | SCB | 02/21/19 | — | 368 | |||||||||||||||||||
USD | 1,557,676 | ZAR | 22,410,441 | BOA | 02/20/19 | 9,019 | — | |||||||||||||||||||
USD | 675,983 | ZAR | 9,746,834 | BRC | 02/20/19 | 2,436 | — | |||||||||||||||||||
USD | 668,452 | ZAR | 9,623,972 | JPM | 02/20/19 | 3,395 | — | |||||||||||||||||||
USD | 941,171 | ZAR | 13,565,375 | SCB | 02/20/19 | 3,745 | — |
The accompanying notes are an integral part of these financial statements.
48 Annual Report
Lazard Explorer Total Return Portfolio (continued)
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||
UYU | 1,760,000 | USD | 53,790 | CIT | 03/14/19 | $ | — | $ | 210 | |||||||||||||||||
UYU | 3,453,471 | USD | 106,019 | HSB | 03/13/19 | — | 865 | |||||||||||||||||||
ZAR | 6,114,342 | USD | 422,614 | SCB | 02/20/19 | — | 87 | |||||||||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 603,757 | $ | 81,916 |
Written Options open at December 31, 2018:
Description | Counterparty | Number of Contracts | Strike Price | Expiration Date | Notional Amount (000) | Premiums | Fair Value | ||||||||||||||||||||
Call | |||||||||||||||||||||||||||
USD vs CNH Jul 19 7.1 | BRC | 56,900 | $ | 7.10 | 07/01/19 | $ | 5,690 | $ | 41,025 | $ | (38,612 | ) | |||||||||||||||
USD vs CNH Jun 19 7.13 | JPMS | 60,700 | 7.13 | 06/26/19 | 6,070 | 42,338 | (35,607 | ) | |||||||||||||||||||
Put | |||||||||||||||||||||||||||
USD vs JPY Feb 19 108 | GSC | 73,800 | 108.00 | 02/22/19 | 7,380 | 36,524 | (64,634 | ) | |||||||||||||||||||
Total Written Options | 191,400 | $ | 119,887 | $ | (138,853 | ) |
The accompanying notes are an integral part of these financial statements.
Annual Report 49
Lazard Explorer Total Return Portfolio (concluded)
Credit Default Swap Agreements open at December 31, 2018:
Counter- party | Notional Amount | Expiration Date | Buy/ Sell | Receive (Pay) Rate | Payment Frequency Paid/ Received | S&P Credit Rating | Fair Value | Upfront Premiums Paid (Received) | Unrealized Appreciation | ||||||||||||||||||||
Referenced Obligations: United Mexican States, 4.150%, 03/28/27 | |||||||||||||||||||||||||||||
BOA | $ | 404,000 | 12/20/23 | Buy | (1.000 | )% | Quarterly | BBB+ | $ | 9,813 | $ | 4,127 | $ | 5,686 | |||||||||||||||
GSC | 1,090,000 | 12/20/23 | Buy | (1.000 | ) | Quarterly | BBB+ | 26,767 | 8,228 | 18,539 | |||||||||||||||||||
BOA | 3,338,000 | 12/20/23 | Buy | (1.000 | ) | Quarterly | BBB+ | 81,972 | 43,291 | 38,681 | |||||||||||||||||||
BRC | 5,765,000 | 12/20/23 | Buy | (1.000 | ) | Quarterly | BBB+ | 141,573 | 69,373 | 72,200 | |||||||||||||||||||
Total Credit Default Swap Agreements | $ | 260,125 | $ | 125,019 | $ | 135,106 |
Interest Rate Swap Agreements open at December 31, 2018:
Currency | Counter- party | Notional Amount | Expiration Date | Receive (Pay) Rate | Payment Frequency | Variable Rate | Unrealized Appreciation | ||||||||||||||
BRL | JPM | $ | 13,838,945 | 01/03/22 | 8.69% | Upon Maturity | Brazil Cetip Interbank Deposit Rate | $ | 80,288 |
The accompanying notes are an integral part of these financial statements.
50 Annual Report
The Lazard Funds, Inc.Notes to Portfolios of Investments
December 31, 2018
(#) | Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.” At December 31, 2018, the percentage of net assets for each Portfolio was as follows: |
Portfolio | Percentage of Net Assets | |||
Emerging Markets Income | 4.6 | % | ||
Enhanced Opportunities | 13.2 | |||
Explorer Total Return | 18.1 |
(») | The Portfolio, at all times, maintains portfolio securities in sufficient amount to cover its obligations related to investments in forward currency contracts. |
(±) | Some or all of this security position has been pledged to cover collateral requirements on securities sold short. |
(*) | Non-income producing security. |
(§) | Variable and floating rate securities are securities for which interest rate changes are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2018. |
(¶) | Date shown is the next perpetual call date. |
(«) | Issue in default. |
(Ø) | Step up bonds are securities which increase the interest payment rate at a specified point in time. Rate shown reflects rate in effect at December 31, 2018 which may step up at a future date. |
Security Abbreviations: | |||||
ADR | — | American Depositary Receipt | |||
ETF | — | Exchange-Traded Fund | |||
JSC | — | Joint Stock Company | |||
NTN-B | — | Brazil Sovereign “Nota do Tesouro Nacional” Series B | |||
NTN- F | — | Brazil Sovereign “Nota do Tesouro Nacional” Series F | |||
REIT | — | Real Estate Investment Trust | |||
Currency Abbreviations: | |||||
ARS | — | Argentine Peso | KRW | — | South Korean Won |
BRL | — | Brazilian Real | KZT | — | Kazakhstan Tenge |
CAD | — | Canadian Dollar | MXN | — | Mexican New Peso |
CLP | — | Chilean Peso | MYR | — | Malaysian Ringgit |
CNH | — | Chinese Yuan Renminbi | NGN | — | Nigerian Naira |
CNY | — | Chinese Renminbi | PEN | — | Peruvian Nuevo Sol |
COP | — | Colombian Peso | PHP | — | Philippine Peso |
CZK | — | Czech Koruna | PLN | — | Polish Zloty |
DOP | — | Dominican Republic Peso | RON | — | New Romanian Leu |
EGP | — | Egyptian Pound | RUB | — | Russian Ruble |
EUR | — | Euro | SGD | — | Singapore Dollar |
GHS | — | Ghanaian Cedi | THB | — | Thai Baht |
HUF | — | Hungarian Forint | TRY | — | New Turkish Lira |
IDR | — | Indonesian Rupiah | TWD | — | Taiwan Dollar |
ILS | — | Israeli Shekel | USD | — | Unites States Dollar |
INR | — | Indian Rupee | UYU | — | Uruguayan Peso |
JPY | — | Japanese Yen | ZAR | — | South African Rand |
The accompanying notes are an integral part of these financial statements. |
Annual Report 51
Counterparty Abbreviations: | |||||
BNP | — | BNP Paribas SA | JPM | — | JPMorgan Chase Bank NA |
BOA | — | Bank of America NA | JPMS | — | JPMorgan Securities, Inc. |
BRC | — | Barclays Bank PLC | RBS | — | RBS Securities, Inc. |
CIT | — | Citibank NA | SCB | — | Standard Chartered Bank |
GSC | — | Goldman Sachs International | SSB | — | State Street Bank and Trust Co. |
HSB | — | HSBC Bank USA NA | UBS | — | UBS AG |
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country:
Industry† | Lazard Explorer Total Return Portfolio | ||||
Corporate & Quasi Government Bonds | |||||
Banks | 2.9 | % | |||
Capital Markets | 0.2 | ||||
Chemicals | 0.3 | ||||
Communications Equipment | 1.1 | ||||
Diversified Financial Services | 0.9 | ||||
Diversified Telecommunication Services | 0.8 | ||||
Electric Utilities | 3.4 | ||||
Energy Equipment & Services | 0.3 | ||||
Food & Staples Retailing | 0.4 | ||||
Independent Power & Renewable Electricity Producers | 2.0 | ||||
Insurance | 0.2 | ||||
Media | 0.3 | ||||
Metals & Mining | 1.7 | ||||
Oil, Gas & Consumable Fuels | 3.5 | ||||
Wireless Telecommunication Services | 1.9 | ||||
Subtotal | 19.9 | ||||
Foreign Government Obligations | 75.0 | ||||
Purchased Options | 0.5 | ||||
Short-Term Investments | 0.1 | ||||
Total Investments | 95.5 | % |
The accompanying notes are an integral part of these financial statements.
52 Annual Report
Lazard Enhanced Opportunities Portfolio | |||||||||
Industry† | Long | Short | |||||||
Common Stocks and Convertible Corporate Bonds | |||||||||
Air Freight & Logistics | 1.0 | % | –0.2 | % | |||||
Banks | 0.7 | –0.1 | |||||||
Biotechnology | 9.7 | –4.3 | |||||||
Building Products | 0.7 | –0.1 | |||||||
Capital Markets | 0.8 | –0.4 | |||||||
Chemicals | 0.6 | –0.1 | |||||||
Commercial Services & Supplies | 0.9 | –0.4 | |||||||
Communications Equipment | 1.6 | –0.3 | |||||||
Construction & Engineering | 1.7 | –0.8 | |||||||
Construction Materials | 2.8 | –0.1 | |||||||
Consumer Finance | 7.6 | –1.2 | |||||||
Diversified Consumer Services | 1.3 | –0.9 | |||||||
Diversified Financial Services | 1.2 | — | |||||||
Electric Utilities | 1.2 | –0.4 | |||||||
Electronic Equipment, Instruments & Components | 2.8 | –0.7 | |||||||
Energy Equipment & Services | 2.8 | –0.4 | |||||||
Entertainment | 2.3 | –0.8 | |||||||
Equity Real Estate Investment Trusts (REITs) | 5.4 | –2.6 | |||||||
Health Care Equipment & Supplies | 3.4 | –1.3 | |||||||
Health Care Technology | 2.3 | –0.5 | |||||||
Hotels, Restaurants & Leisure | 1.3 | –0.3 | |||||||
Independent Power & Renewable Electricity Producers | 1.3 | –0.3 | |||||||
Interactive Media & Services | 0.9 | –0.2 | |||||||
Internet & Direct Marketing Retail | 2.4 | –1.0 | |||||||
IT Services | 8.3 | –4.8 | |||||||
Life Sciences Tools & Services | 0.3 | — | |||||||
Machinery | 0.6 | — | |||||||
Media | 3.1 | — | |||||||
Metals & Mining | 3.5 | –1.3 | |||||||
Mortgage Real Estate Investment Trusts (REITs) | 0.4 | –0.1 | |||||||
Oil, Gas & Consumable Fuels | 3.7 | –0.6 | |||||||
Personal Products | 1.0 | –0.3 | |||||||
Pharmaceuticals | 6.1 | –2.4 | |||||||
Professional Services | 0.6 | — | |||||||
Real Estate Management & Development | 0.7 | — | |||||||
Semiconductors & Semiconductor Equipment | 7.2 | –3.7 | |||||||
Software | 11.7 | –5.4 | |||||||
Technology Hardware, Storage & Peripherals | 1.3 | –0.3 | |||||||
Wireless Telecommunications Services | 2.1 | –0.9 | |||||||
Subtotal | 107.2 | –37.2 | |||||||
Exchange-Traded Funds | 7.5 | –2.7 | |||||||
Short-Term Investments | 15.4 | — | |||||||
Total Investments | 130.1 | % | –39.9 | % |
† | Industry classifications may be different than those used for compliance monitoring purposes. |
The accompanying notes are an integral part of these financial statements.
Annual Report 53
The Lazard Funds, Inc.Statements of Assets and Liabilities
December 31, 2018 | Lazard Emerging Markets Income Portfolio | Lazard Enhanced Opportunities Portfolio | |||||||
ASSETS | |||||||||
Investments in securities, at fair value | $ | 5,339,032 | $ | 21,197,965 | |||||
Cash | — | — | |||||||
Cash collateral due from broker on options | — | 2,873,950 | |||||||
Foreign currency, at fair value | 42,268 | 4,165 | |||||||
Receivables for: | |||||||||
Investments sold | — | 2,209,085 | |||||||
Dividends and interest | 39,151 | 109,769 | |||||||
Capital stock sold | — | — | |||||||
Amount due from Investment Manager (Note 3) | 5,901 | — | |||||||
Gross unrealized appreciation on: | |||||||||
Forward currency contracts | 67,674 | 4,598 | |||||||
Swap agreements | — | — | |||||||
Premiums for swap agreements purchased | — | — | |||||||
Total assets | 5,494,026 | 26,399,532 | |||||||
LIABILITIES | |||||||||
Securities sold short, at fair value | — | 6,509,849 | |||||||
Cash collateral due to broker on options and swap agreements | — | 516,698 | |||||||
Due to custodian | 54,934 | 521,413 | |||||||
Payables for: | |||||||||
Management fees | — | 6,270 | |||||||
Accrued professional services | 25,621 | 27,463 | |||||||
Investments purchased | 210,356 | 1,855,888 | |||||||
Capital stock redeemed | 451 | 600,000 | |||||||
Dividends on securities sold short | — | 2,513 | |||||||
Gross unrealized depreciation on forward currency contracts | 22,538 | 11,139 | |||||||
Line of credit outstanding | — | — | |||||||
Written options, at fair value | — | 11,153 | |||||||
Other accrued expenses and payables | 10,622 | 48,593 | |||||||
Total liabilities | 324,522 | 10,110,979 | |||||||
Net assets | $ | 5,169,504 | $ | 16,288,553 | |||||
NET ASSETS | |||||||||
Paid in capital | $ | 5,378,007 | $ | 17,674,745 | |||||
Distributable earnings (Accumulated loss) | (208,503 | ) | (1,386,192 | ) | |||||
Net assets | $ | 5,169,504 | $ | 16,288,553 |
The accompanying notes are an integral part of these financial statements.
54 Annual Report
Lazard Explorer Total Return Portfolio | |||||
$ | 102,491,510 | ||||
570,313 | |||||
— | |||||
132,996 | |||||
6,004,062 | |||||
1,539,999 | |||||
42 | |||||
— | |||||
603,757 | |||||
215,394 | |||||
125,019 | |||||
111,683,092 | |||||
— | |||||
570,000 | |||||
— | |||||
90,003 | |||||
33,002 | |||||
243,852 | |||||
53,798 | |||||
— | |||||
81,916 | |||||
3,070,000 | |||||
138,853 | |||||
30,819 | |||||
4,312,243 | |||||
$ | 107,370,849 | ||||
$ | 137,097,518 | ||||
(29,726,669 | ) | ||||
$ | 107,370,849 |
Annual Report 55
December 31, 2018 | Lazard Emerging Markets Income Portfolio | Lazard Enhanced Opportunities Portfolio | |||||||
Institutional Shares | |||||||||
Net assets | $ | 5,058,655 | $ | 16,183,735 | |||||
Shares of capital stock outstanding* | 685,762 | 1,948,553 | |||||||
Net asset value, offering and redemption price per share | $ | 7.38 | $ | 8.31 | |||||
Open Shares | |||||||||
Net assets | $ | 110,849 | $ | 104,818 | |||||
Shares of capital stock outstanding* | 13,908 | 12,624 | |||||||
Net asset value, offering and redemption price per share | $ | 7.97 | $ | 8.30 | |||||
Cost of investments in securities | $ | 5,510,073 | $ | 22,461,962 | |||||
Proceeds received from securities sold short | $ | — | $ | 7,190,536 | |||||
Proceeds received from written options | $ | — | $ | 11,427 | |||||
Cost of foreign currency | $ | 42,729 | $ | 4,165 |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
56 Annual Report
Lazard Explorer Total Return Portfolio | |||||
$ | 107,276,140 | ||||
13,774,341 | |||||
$ | 7.79 | ||||
$ | 94,709 | ||||
12,090 | |||||
$ | 7.83 | ||||
$ | 108,693,887 | ||||
$ | — | ||||
$ | 119,887 | ||||
$ | 132,763 |
Annual Report 57
The Lazard Funds, Inc.Statements of Operations
For the Year Ended December 31, 2018 | Lazard Emerging Markets Income Portfolio | Lazard Enhanced Opportunities Portfolio | |||||||
Investment Income (Loss) | |||||||||
Income | |||||||||
Interest* | $ | 272,732 | $ | 510,382 | |||||
Dividends | — | 36,956 | |||||||
Total investment income* | 272,732 | 547,338 | |||||||
Expenses | |||||||||
Management fees (Note 3) | 35,698 | 171,294 | |||||||
Custodian fees | 43,416 | 176,333 | |||||||
Professional services | 62,827 | 55,700 | |||||||
Registration fees | 34,514 | 34,313 | |||||||
Administration fees | 10,511 | 12,043 | |||||||
Shareholders’ services | 22,987 | 23,126 | |||||||
Directors’ fees and expenses | 5,218 | 5,614 | |||||||
Shareholders’ reports | 2,855 | 8,363 | |||||||
Distribution fees (Open Shares) | 297 | 272 | |||||||
Other^ | 1,265 | 5,617 | |||||||
Total gross expenses before expenses on securities sold short | 219,588 | 492,675 | |||||||
Broker expense on securities sold short | — | 115,394 | |||||||
Dividend expense on securities sold short | — | 77,934 | |||||||
Total gross expenses | 219,588 | 686,003 | |||||||
Management fees waived and expenses reimbursed | (169,960 | ) | (267,707 | ) | |||||
Total net expenses | 49,628 | 418,296 | |||||||
Net investment income (loss) | 223,104 | 129,042 | |||||||
Net Realized and Unrealized Gain (Loss) on Investments, Securities Sold Short, Foreign Currency Transactions, Forward Currency Contracts, Futures Contracts, Options and Swap Agreements | |||||||||
Net realized gain (loss) on: | |||||||||
Investments | (212,079 | ) | 10,596 | ||||||
Securities sold short | — | 414,693 | |||||||
Foreign currency transactions | (5,285 | ) | (9,717 | ) | |||||
Forward currency contracts | (97,393 | ) | 42,836 | ||||||
Futures contracts | — | — | |||||||
Written options | — | (44,128 | ) | ||||||
Swap agreements | — | — | |||||||
Total net realized gain (loss) on investments, securities sold short, foreign currency transactions, forward currency contracts, futures contracts, options and swap agreements | (314,757 | ) | 414,280 |
The accompanying notes are an integral part of these financial statements.
58 Annual Report
Lazard Explorer Total Return Portfolio | |||||
$ | 9,098,750 | ||||
— | |||||
9,098,750 | |||||
1,426,569 | |||||
154,160 | |||||
54,117 | |||||
37,045 | |||||
29,638 | |||||
23,513 | |||||
11,651 | |||||
4,166 | |||||
717 | |||||
12,022 | |||||
1,753,598 | |||||
— | |||||
— | |||||
1,753,598 | |||||
(11,308 | ) | ||||
1,742,290 | |||||
7,356,460 | |||||
(4,211,038 | ) | ||||
— | |||||
882,136 | |||||
(3,174,522 | ) | ||||
(13,648 | ) | ||||
(3,502,385 | ) | ||||
(3,652,024 | ) | ||||
(13,671,481 | ) |
Annual Report 59
For the Year Ended December 31, 2018 | Lazard Emerging Markets Income Portfolio | Lazard Enhanced Opportunities Portfolio | ||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||
Investments† | $ | (143,045 | ) | $ | (1,884,345 | ) | ||||
Securities sold short | — | 1,059,193 | ||||||||
Foreign currency translations | (203 | ) | (207 | ) | ||||||
Forward currency contracts | (75,726 | ) | (312 | ) | ||||||
Written options | — | (341 | ) | |||||||
Swap agreements | — | — | ||||||||
Total net change in unrealized appreciation (depreciation) on investments, securities sold short, foreign currency translations, forward currency contracts, options and swap agreements | (218,974 | ) | (826,012 | ) | ||||||
Net realized and unrealized gain (loss) on investments, securities sold short, foreign currency transactions, forward currency contracts, futures contracts, options and swap agreements | (533,731 | ) | (411,732 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | $ | (310,627 | ) | $ | (282,690 | ) | ||||
* | Net of foreign withholding taxes of | $ | 543 | $ | 229 | |||||
† | Includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of | $ | 865 | $ | — | |||||
^ | Includes interest on line of credit of | $ | — | $ | 82 |
The accompanying notes are an integral part of these financial statements.
60 Annual Report
Lazard Explorer Total Return Portfolio | |||||
$ | (11,485,946 | ) | |||
— | |||||
3,403 | |||||
901,192 | |||||
1,478,758 | |||||
(81,608 | ) | ||||
(9,184,201 | ) | ||||
(22,855,682 | ) | ||||
$ | (15,499,222 | ) | |||
$ | 39,800 | ||||
$ | — | ||||
$ | 6,472 |
Annual Report 61
The Lazard Funds, Inc.Statements of Changes in Net Assets
Lazard Emerging Markets Income Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Increase (Decrease) in Net Assets | ||||||||||
Operations | ||||||||||
Net investment income (loss) | $ | 223,104 | $ | 247,057 | ||||||
Net realized gain (loss) on investments, securities sold short, foreign currency transactions, forward currency contracts, futures contracts, options and swap agreements | (314,757 | ) | 709,651 | |||||||
Net change in unrealized appreciation (depreciation) on investments, securities sold short, foreign currency translations, forward currency contracts, options and swap agreements | (218,974 | ) | 408,811 | |||||||
Net increase (decrease) in net assets resulting from operations | (310,627 | ) | 1,365,519 | |||||||
Distributions to shareholders (Note 2(i)) | ||||||||||
Net investment income and net realized gains | ||||||||||
Institutional Shares | (538,715 | ) | (271,702 | ) | ||||||
Open Shares | (8,027 | ) | (471 | ) | ||||||
Return of capital | ||||||||||
Institutional Shares | (215,126 | ) | — | |||||||
Open Shares | (3,206 | ) | — | |||||||
Net decrease in net assets resulting from distributions | (765,074 | ) | (272,173 | ) | ||||||
Capital stock transactions | ||||||||||
Net proceeds from sales | ||||||||||
Institutional Shares | 353,037 | 279,121 | ||||||||
Open Shares | 40,296 | 2,500 | ||||||||
Net proceeds from reinvestment of distributions | ||||||||||
Institutional Shares | 753,834 | 271,421 | ||||||||
Open Shares | 11,233 | 471 | ||||||||
Cost of shares redeemed | ||||||||||
Institutional Shares | (917,500 | ) | (7,861,554 | ) | ||||||
Open Shares | (29,858 | ) | (35,393 | ) | ||||||
Net increase (decrease) in net assets from capital stock transactions | 211,042 | (7,343,434 | ) | |||||||
Total increase (decrease) in net assets | (864,659 | ) | (6,250,088 | ) | ||||||
Net assets at beginning of period | 6,034,163 | 12,284,251 | ||||||||
Net assets at end of period | $ | 5,169,504 | $ | 6,034,163 |
The accompanying notes are an integral part of these financial statements.
62 Annual Report
Lazard Enhanced Opportunities Portfolio | Lazard Explorer Total Return Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 129,042 | $ | 173,786 | $ | 7,356,460 | $ | 8,603,092 | |||||||||
414,280 | 562,543 | (13,671,481 | ) | 2,136,719 | ||||||||||||
(826,012 | ) | 12,467 | (9,184,201 | ) | 4,713,330 | |||||||||||
(282,690 | ) | 748,796 | (15,499,222 | ) | 15,453,141 | |||||||||||
(425,197 | ) | (1,635,070 | ) | (6,311,065 | ) | (6,253,137 | ) | |||||||||
(2,387 | ) | (12,071 | ) | (10,083 | ) | (28,104 | ) | |||||||||
— | — | (833,996 | ) | (1,907,478 | ) | |||||||||||
— | — | (1,333 | ) | (8,573 | ) | |||||||||||
(427,584 | ) | (1,647,141 | ) | (7,156,477 | ) | (8,197,292 | ) | |||||||||
4,469,209 | 3,913,116 | 6,934,144 | 9,865,405 | |||||||||||||
7 | 2,100 | 8,549 | 262,829 | |||||||||||||
415,898 | 1,608,034 | 7,088,834 | 8,119,904 | |||||||||||||
2,387 | 12,071 | 11,416 | 36,460 | |||||||||||||
(3,201,293 | ) | (3,500,001 | ) | (126,158,624 | ) | (39,498,370 | ) | |||||||||
(10,796 | ) | (2,057 | ) | (889,813 | ) | (517,628 | ) | |||||||||
1,675,412 | 2,033,263 | (113,005,494 | ) | (21,731,400 | ) | |||||||||||
965,138 | 1,134,918 | (135,661,193 | ) | (14,475,551 | ) | |||||||||||
15,323,415 | 14,188,497 | 243,032,042 | 257,507,593 | |||||||||||||
$ | 16,288,553 | $ | 15,323,415 | $ | 107,370,849 | $ | 243,032,042 |
Annual Report 63
Lazard Emerging Markets Income Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Shares issued and redeemed | ||||||||||
Institutional Shares | ||||||||||
Shares outstanding at beginning of period | 648,255 | 1,447,433 | ||||||||
Shares sold | 39,351 | 31,224 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 98,805 | 30,314 | ||||||||
Shares redeemed | (100,649 | ) | (860,716 | ) | ||||||
Net increase (decrease) | 37,507 | (799,178 | ) | |||||||
Shares outstanding at end of period | 685,762 | 648,255 | ||||||||
Open Shares | ||||||||||
Shares outstanding at beginning of period | 11,589 | 15,090 | ||||||||
Shares sold | 4,177 | 278 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 1,424 | 50 | ||||||||
Shares redeemed | (3,282 | ) | (3,829 | ) | ||||||
Net increase (decrease) | 2,319 | (3,501 | ) | |||||||
Shares outstanding at end of period | 13,908 | 11,589 |
The accompanying notes are an integral part of these financial statements.
64 Annual Report
Lazard Enhanced Opportunities Portfolio | Lazard Explorer Total Return Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
1,754,786 | 1,537,093 | 26,808,845 | 29,244,079 | |||||||||||||
512,981 | 409,971 | 803,468 | 1,104,102 | |||||||||||||
51,342 | 181,646 | 840,498 | 907,944 | |||||||||||||
(370,556 | ) | (373,924 | ) | (14,678,470 | ) | (4,447,280 | ) | |||||||||
193,767 | 217,693 | (13,034,504 | ) | (2,435,234 | ) | |||||||||||
1,948,553 | 1,754,786 | 13,774,341 | 26,808,845 | |||||||||||||
13,575 | 12,204 | 109,240 | 133,440 | |||||||||||||
1 | 224 | 979 | 29,262 | |||||||||||||
289 | 1,365 | 1,314 | 4,055 | |||||||||||||
(1,241 | ) | (218 | ) | (99,443 | ) | (57,517 | ) | |||||||||
(951 | ) | 1,371 | (97,150 | ) | (24,200 | ) | ||||||||||
12,624 | 13,575 | 12,090 | 109,240 |
Annual Report 65
The Lazard Funds, Inc.Financial Highlights
LAZARD EMERGING MARKETS INCOME PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | For the Period 4/30/14* to | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.14 | $ | 8.40 | $ | 8.42 | $ | 9.16 | $ | 10.00 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.34 | 0.19 | 0.16 | 0.01 | 0.01 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.87 | ) | 0.79 | 0.08 | (0.74 | ) | (0.85 | ) | ||||||||||||
Total from investment operations | (0.53 | ) | 0.98 | 0.24 | (0.73 | ) | (0.84 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.90 | ) | (0.20 | ) | (0.16 | ) | — | — | ||||||||||||
Net realized gains | — | (0.04 | ) | (0.10 | ) | — | — | |||||||||||||
Return of capital | (0.33 | ) | — | — | (0.01 | ) | — | |||||||||||||
Total distributions | (1.23 | ) | (0.24 | ) | (0.26 | ) | (0.01 | ) | — | |||||||||||
Net asset value, end of period | $ | 7.38 | $ | 9.14 | $ | 8.40 | $ | 8.42 | $ | 9.16 | ||||||||||
Total Return(b) | –5.79 | % | 11.73 | % | 2.82 | % | –7.94 | % | –8.30 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,059 | $ | 5,925 | $ | 12,156 | $ | 12,800 | $ | 4,985 | ||||||||||
Ratios to average net assets (c): | ||||||||||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||
Gross expenses | 3.79 | % | 2.13 | % | 2.25 | % | 2.55 | % | 5.15 | % | ||||||||||
Net investment income (loss) | 4.06 | % | 2.17 | % | 1.80 | % | 0.09 | % | 0.10 | % | ||||||||||
Portfolio turnover rate | 65 | % | 74 | % | 174 | % | 175 | % | 125 | % |
The accompanying notes are an integral part of these financial statements.
66 Annual Report
Selected data for a share of capital stock outstanding | Year Ended | For the Period 4/30/14* to | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.43 | $ | 8.50 | $ | 8.39 | $ | 9.14 | $ | 10.00 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.35 | 0.18 | 0.13 | (0.02 | ) | (0.01 | ) | |||||||||||||
Net realized and unrealized gain (loss) | (0.92 | ) | 0.79 | 0.08 | (0.73 | ) | (0.85 | ) | ||||||||||||
Total from investment operations | (0.57 | ) | 0.97 | 0.21 | (0.75 | ) | (0.86 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.65 | ) | — | — | — | — | ||||||||||||||
Net realized gains | — | (0.04 | ) | (0.10 | ) | — | — | |||||||||||||
Return of capital | (0.24 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.89 | ) | (0.04 | ) | (0.10 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 7.97 | $ | 9.43 | $ | 8.50 | $ | 8.39 | $ | 9.14 | ||||||||||
Total Return(b) | –5.97 | % | 11.42 | % | 2.52 | % | –8.21 | % | –8.50 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 111 | $ | 109 | $ | 128 | $ | 155 | $ | 132 | ||||||||||
Ratios to average net assets (c): | ||||||||||||||||||||
Net expenses | 1.05 | % | 1.13 | % | 1.20 | % | 1.20 | % | 1.20 | % | ||||||||||
Gross expenses | 13.51 | % | 12.51 | % | 12.29 | % | 12.19 | % | 13.96 | % | ||||||||||
Net investment income (loss) | 3.95 | % | 1.96 | % | 1.51 | % | –0.18 | % | –0.18 | % | ||||||||||
Portfolio turnover rate | 65 | % | 74 | % | 174 | % | 175 | % | 125 | % |
* | Portfolio commenced operations on April 30, 2014. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(c) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 67
LAZARD ENHANCED OPPORTUNITIES PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | Period Ended | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | * | ||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 8.67 | $ | 9.16 | $ | 8.89 | $ | 10.00 | $ | 10.00 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.06 | 0.11 | ^ | 0.05 | (0.02 | ) | — | (b) | ||||||||||||
Net realized and unrealized gain (loss) | (0.20 | ) | 0.40 | 0.35 | (0.21 | ) | — | (b) | ||||||||||||
Total from investment operations | (0.14 | ) | 0.51 | 0.40 | (0.23 | ) | — | (b) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.10 | ) | (0.17 | ) | (0.08 | ) | (0.14 | ) | — | |||||||||||
Net realized gains | (0.12 | ) | (0.83 | ) | (0.05 | ) | (0.35 | ) | — | |||||||||||
Return of capital | — | — | — | (0.39 | ) | — | ||||||||||||||
Total distributions | (0.22 | ) | (1.00 | ) | (0.13 | ) | (0.88 | ) | — | |||||||||||
Net asset value, end of period | $ | 8.31 | $ | 8.67 | $ | 9.16 | $ | 8.89 | $ | 10.00 | ||||||||||
Total Return(c) | –1.66 | % | 5.56 | %^ | 4.50 | % | –2.32 | % | 0.00 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,184 | $ | 15,206 | $ | 14,077 | $ | 4,823 | $ | 4,899 | ||||||||||
Ratios to average net assets (d): | ||||||||||||||||||||
Net expenses | 2.36 | % | 2.78 | %^ | 1.79 | % | 1.70 | % | 1.70 | % | ||||||||||
Gross expenses | 3.80 | % | 5.02 | %^ | 3.60 | % | 13.45 | % | 69.35 | %(e) | ||||||||||
Gross expenses, excluding expenses on securities sold short | 2.71 | % | 3.45 | % | 3.51 | % | 13.45 | % | 69.35 | %(e) | ||||||||||
Net investment income (loss) | 0.73 | % | 1.20 | % | 0.57 | % | –0.22 | % | –1.70 | % | ||||||||||
Portfolio turnover rate: | ||||||||||||||||||||
Excluding securities sold short | 312 | % | 210 | % | 247 | % | 639 | % | 37 | % | ||||||||||
Including securities sold short | 409 | % | 310 | % | 340 | % | N/A | N/A |
The accompanying notes are an integral part of these financial statements.
68 Annual Report
Selected data for a share of capital stock outstanding | Year Ended | Period Ended | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | * | ||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 8.65 | $ | 9.15 | $ | 8.89 | $ | 10.00 | $ | 10.00 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.04 | 0.10 | ^ | 0.04 | (0.05 | ) | — | (b) | ||||||||||||
Net realized and unrealized gain (loss) | (0.19 | ) | 0.37 | 0.33 | (0.21 | ) | — | (b) | ||||||||||||
Total from investment operations | (0.15 | ) | 0.47 | 0.37 | (0.26 | ) | — | (b) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.08 | ) | (0.14 | ) | (0.06 | ) | (0.11 | ) | — | |||||||||||
Net realized gains | (0.12 | ) | (0.83 | ) | (0.05 | ) | (0.35 | ) | — | |||||||||||
Return of capital | — | — | — | (0.39 | ) | — | ||||||||||||||
Total distributions | (0.20 | ) | (0.97 | ) | (0.11 | ) | (0.85 | ) | — | |||||||||||
Net asset value, end of period | $ | 8.30 | $ | 8.65 | $ | 9.15 | $ | 8.89 | $ | 10.00 | ||||||||||
Total Return(c) | –1.80 | % | 5.16 | %^ | 4.13 | % | –2.57 | % | 0.00 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 105 | $ | 117 | $ | 112 | $ | 110 | $ | 100 | ||||||||||
Ratios to average net assets (d): | ||||||||||||||||||||
Net expenses | 2.60 | % | 3.01 | %^ | 2.07 | % | 1.95 | % | 1.95 | % | ||||||||||
Gross expenses | 14.49 | % | 16.40 | %^ | 15.58 | % | 26.46 | % | 69.36 | %(e) | ||||||||||
Gross expenses, excluding expenses on securities sold short | 13.40 | % | 14.85 | % | 15.46 | % | 26.46 | % | 69.36 | %(e) | ||||||||||
Net investment income (loss) | 0.48 | % | 1.06 | % | 0.45 | % | –0.46 | % | –1.95 | % | ||||||||||
Portfolio turnover rate: | ||||||||||||||||||||
Excluding securities sold short | 312 | % | 210 | % | 247 | % | 639 | % | 37 | % | ||||||||||
Including securities sold short | 409 | % | 310 | % | 340 | % | N/A | N/A |
^ | A one-time voluntary reimbursement by the administrator increased the net investment income per share amount of $0.04 per share. For Institutional Shares and Open Shares, the one-time voluntary reimbursement by the administrator increased the total return ratio by 0.49%, decreased the gross expense and net expense ratios by 0.44% and increased the net investment income (loss) ratio by 0.44%. |
* | The Portfolio commenced operations on December 31, 2014. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
(e) | Gross expense ratio was the result of the Portfolio being in existence for one day during the period ended December 31, 2014. |
The accompanying notes are an integral part of these financial statements.
Annual Report 69
LAZARD EXPLORER TOTAL RETURN PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.03 | $ | 8.77 | $ | 8.56 | $ | 9.32 | $ | 9.86 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.40 | 0.31 | 0.42 | 0.28 | 0.36 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.25 | ) | 0.24 | 0.21 | (0.75 | ) | (0.38 | ) | ||||||||||||
Total from investment operations | (0.85 | ) | 0.55 | 0.63 | (0.47 | ) | (0.02 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.35 | ) | (0.22 | ) | (0.19 | ) | (0.15 | ) | (0.49 | ) | ||||||||||
Net realized gains | — | — | — | — | (0.01 | ) | ||||||||||||||
Return of capital | (0.04 | ) | (0.07 | ) | (0.23 | ) | (0.14 | ) | (0.02 | ) | ||||||||||
Total distributions | (0.39 | ) | (0.29 | ) | (0.42 | ) | (0.29 | ) | (0.52 | ) | ||||||||||
Redemption fees | — | — | — | — | — | (b) | ||||||||||||||
Net asset value, end of period | $ | 7.79 | $ | 9.03 | $ | 8.77 | $ | 8.56 | $ | 9.32 | ||||||||||
Total Return(c) | –9.65 | % | 6.41 | % | 7.47 | % | –5.13 | % | –0.21 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 107,276 | $ | 242,040 | $ | 256,331 | $ | 249,222 | $ | 133,473 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 1.10 | % | 1.06 | % | 1.12 | % | 1.16 | % | 1.24 | % | ||||||||||
Gross expenses | 1.10 | % | 1.06 | % | 1.12 | % | 1.16 | % | 1.30 | % | ||||||||||
Net investment income (loss) | 4.64 | % | 3.45 | % | 4.80 | % | 3.17 | % | 3.57 | % | ||||||||||
Portfolio turnover rate | 151 | % | 152 | % | 173 | % | 262 | % | 182 | % |
The accompanying notes are an integral part of these financial statements.
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Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.08 | $ | 8.82 | $ | 8.61 | $ | 9.37 | $ | 9.88 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.35 | 0.28 | 0.39 | 0.24 | 0.33 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.24 | ) | 0.24 | 0.21 | (0.75 | ) | (0.38 | ) | ||||||||||||
Total from investment operations | (0.89 | ) | 0.52 | 0.60 | (0.51 | ) | (0.05 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.32 | ) | (0.20 | ) | (0.17 | ) | (0.12 | ) | (0.43 | ) | ||||||||||
Net realized gains | — | — | — | — | (0.01 | ) | ||||||||||||||
Return of capital | (0.04 | ) | (0.06 | ) | (0.22 | ) | (0.14 | ) | (0.02 | ) | ||||||||||
Total distributions | (0.36 | ) | (0.26 | ) | (0.39 | ) | (0.26 | ) | (0.46 | ) | ||||||||||
Redemption fees | — | — | — | 0.01 | — | (b) | ||||||||||||||
Net asset value, end of period | $ | 7.83 | $ | 9.08 | $ | 8.82 | $ | 8.61 | $ | 9.37 | ||||||||||
Total Return(c) | –9.97 | % | 6.02 | % | 7.07 | % | –5.42 | % | –0.52 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 95 | $ | 992 | $ | 1,176 | $ | 1,342 | $ | 7,150 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 1.40 | % | 1.42 | % | 1.48 | % | 1.50 | % | 1.54 | % | ||||||||||
Gross expenses | 5.22 | % | 2.36 | % | 2.34 | % | 1.66 | % | 1.78 | % | ||||||||||
Net investment income (loss) | 3.94 | % | 3.09 | % | 4.46 | % | 2.62 | % | 3.26 | % | ||||||||||
Portfolio turnover rate | 151 | % | 152 | % | 173 | % | 262 | % | 182 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
Annual Report 71
The Lazard Funds, Inc.Notes to Financial Statements
December 31, 2018
1. Organization
The Lazard Funds, Inc. was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of December 31, 2018, the Fund was comprised of thirty-three no-load portfolios (each referred to as a “Portfolio”). This report includes only the financial statements of Emerging Markets Income, Enhanced Opportunities and Explorer Total Return Portfolios. The financial statements of the other thirty Portfolios are presented separately.
The Portfolios are operated as “non-diversified” funds, as defined in the 1940 Act.
Each Portfolio currently offers Institutional Shares and Open Shares, and certain Portfolios offer R6 Shares. Each share class is identical except as to minimum investment requirements; eligibility requirements for R6 Shares; the services offered to, and expenses borne by, each class; and the availability of Service Payments (as defined in the Portfolios’ Prospectus).
2. Significant Accounting Policies
The accompanying financial statements are presented in conformity with US Generally Accepted Accounting Principles (“GAAP”). The Fund is an investment company and therefore applies specialized accounting guidance in accordance with Accounting Standards Codification Topic 946. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements:
(a) Valuation of Investments—Equity securities traded on a securities exchange or market, including exchange-traded option contracts, rights and warrants, are valued at the last reported sales price (for domestic equity securities) or the closing price (for foreign equity securities) on the exchange or market on which the security is principally traded or, for securities trading on the NASDAQ National Market System (“NASDAQ”), the NASDAQ Official Closing Price. If there is no available closing price for a foreign equity security, the last reported sales price is used. If there are no
72 Annual Report
reported sales of a security on the valuation date, the security is valued at the most recent quoted bid price on such date reported by such principal exchange or market. Exchange-traded futures contracts are valued at the settlement price on the exchange on which the contract is principally traded. Swap agreements, such as credit default, interest rate and total return swap agreements, generally are valued by an independent pricing service. Forward currency contracts generally are valued using quotations from an independent pricing service. Investments in money market funds are valued at the fund’s net asset value (“NAV”) per share.
Bonds and other fixed-income securities that are not exchange-traded are valued on the basis of prices provided by independent pricing services which are based on, among other things, trading in securities with similar characteristics, brokers’ quotations and/or a matrix system which considers such factors as other security prices, yields and maturities.
Calculation of a Portfolio���s NAV may not take place contemporaneously with the determination of the prices of portfolio assets used in such calculation. Trading on Europe, Latin and South America and Far East securities exchanges and in over-the-counter markets ordinarily is completed well before the close of business on each business day in New York (i.e., a day on which the New York Stock Exchange (the “NYSE”) is open). In addition, European or Far Eastern securities trading generally, or in a particular country or countries, may not take place on all business days in New York and on which the NAV of a Portfolio is calculated.
The Valuation Committee of the Investment Manager, which meets periodically under the direction of the Board of Directors (the “Board”), may evaluate a variety of factors to determine the fair value of securities for which market quotations are determined not to be readily available or reliable. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager’s portfolio managers/analysts also will be considered.
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If a significant event materially affecting the value of securities occurs between the close of the exchange or market on which the security is principally traded and the time when a Portfolio’s NAV is calculated, or when current market quotations otherwise are determined not to be readily available or reliable (including restricted or other illiquid securities such as certain derivative instruments), such securities will be valued at their fair value as determined by, or in accordance with procedures approved by, the Board. The fair value of non-US securities may be determined with the assistance of an independent pricing service using correlations between the movement of prices of such securities and indices of US securities and other appropriate indicators, such as closing market prices of relevant ADRs or futures contracts. Non-US securities may trade on days when a Portfolio is not open for business, thus affecting the value of the Portfolio’s assets on days when Portfolio shareholders may not be able to buy or sell Portfolio shares.
The effect of using fair value pricing is that the NAV of a Portfolio will reflect the affected securities’ values as determined in the judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios’ NAVs.
(b) Portfolio Securities Transactions and Investment Income—Portfolio securities transactions are accounted for on trade date. Realized gain (loss) on sales of investments are recorded on a specific identification basis. Dividend income and dividend expenses on short sales are recorded on the ex-dividend date except for certain dividends from non-US securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by a Portfolio. Interest income, if any, is accrued daily. A Portfolio amortizes premiums and accretes discounts on fixed-income securities using the effective yield method.
A Portfolio may be subject to taxes imposed by non-US countries in which it invests. Such taxes are generally based upon income earned or capital gains (realized and/or unrealized). An affected Portfolio accrues and applies such taxes to net investment income,
74 Annual Report
net realized gains and net unrealized gains concurrent with the recognition of income earned or capital gains (realized and/or unrealized) from the applicable portfolio securities.
(c) Foreign Currency Translation and Forward Currency Contracts—The accounting records of the Fund are maintained in US dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into US dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into US dollars at the prevailing exchange rates on the respective transaction dates.
The Portfolios do not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions and forward currency contracts represent net foreign currency gain (loss) from forward currency contracts, disposition of foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of dividends, interest and foreign withholding taxes recorded on the Portfolios’ accounting records and the US dollar equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on foreign currency translations reflects the impact of changes in exchange rates on the value of assets and liabilities, other than investments in securities, during the period.
A forward currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the US dollar.
The US dollar value of forward currency contracts is determined using quotations provided by an independent pricing service. Daily fluctuations in the value of such contracts are recorded as unrealized appreciation (depreciation) on forward currency con-
Annual Report 75
tracts. When the contract is closed, a Portfolio records a realized gain (loss) equal to the difference between the value at the time it was opened and the value at the time it was closed.
During the year ended December 31, 2018, the Emerging Markets Income, Enhanced Opportunities and Explorer Total Return Portfolios traded in forward currency contracts.
(d) Futures Contracts—For hedging and investment purposes, certain Portfolios may enter into futures contracts in US domestic markets, or exchanges located outside the United States.
Foreign markets may offer advantages such as trading opportunities or arbitrage possibilities not available in the United States. Foreign markets, however, may have greater risk potential than domestic markets. For example, some foreign exchanges are principal markets so that no common clearing facility exists and an investor may look only to the broker for performance of the contract. In addition, any profits a Portfolio might realize in trading could be eliminated by adverse changes in the currency exchange rate, or the Portfolio could incur losses as a result of those changes. Transactions on foreign exchanges may include both commodities which are traded on domestic exchanges and those which are not. Unlike trading on domestic commodity exchanges, trading on foreign commodity exchanges is not regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Portfolio which could adversely affect the value of the Portfolio’s net assets. Although each of these Portfolios intends to purchase or sell futures contracts only if there is an active market for such contracts, no assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt
76 Annual Report
liquidation of futures positions and potentially subjecting the Portfolio to substantial losses.
During the year ended December 31, 2018, the Explorer Total Return Portfolio traded in futures contracts.
(e) Options Transactions—For hedging and investment purposes, the Portfolios may purchase and write (sell) put and call options. Such options may be traded on US or non-US securities exchanges or on over-the-counter markets.
The risk associated with purchasing an option is that the Portfolios pay a premium whether or not the option is exercised. Additionally, the Portfolios will not benefit from exercise of an option should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities and other assets.
The risk involved in writing an option is that the Portfolios bear the market risk of an unfavorable change in the price of the security or currency underlying the written option. A Portfolio as a writer of an option has no control over whether the underlying instrument may be sold (“call”) or purchased (“put”) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Portfolios may not be able to enter into a closing transaction because of an illiquid market. Certain options may be written with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. When the Portfolios write an option, the premium received by the Portfolios is recorded as a liability and is subsequently adjusted to the current market value of the option written.
During the year ended December 31, 2018, the Enhanced Opportunities and Explorer Total Return Portfolios traded in options.
(f) Short Sales—A short sale is a transaction in which a Portfolio sells securities it does not own but has borrowed in anticipation of a decline in the market price of the securities. The initial amount of a short sale is recorded as a liability which is marked-to-market
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daily. Fluctuations in the value of the short liability are recorded as unrealized gains or losses. A Portfolio realizes a gain or loss upon closing of the short sale (returning the security to the counterparty by way of purchase or delivery of a long position owned). Short sales by a Portfolio involve certain risks and special considerations. Possible losses from short sales differ from losses that could be incurred from a purchase of a security because losses from short sales may be unlimited, whereas losses from purchases cannot exceed the total amount invested. The Portfolio may have to pay a fee to borrow the particular security and is liable to the buyer for any dividends or interest payable on securities while those securities are in a short position. These dividends and interest amounts are an expense of the Portfolio. The Portfolio designates collateral consisting of cash, US government securities or other liquid assets sufficient to collateralize the market value of short positions.
Proceeds from short sales are generally retained in cash accounts or invested in securities that are cash equivalents. With regard to securities borrowed as of December 31, 2018, pursuant to short sale arrangements, the Portfolios have a right to set off any assets held (including the borrowed securities) or obligations owed to the lender (State Street), in the event of the lender’s default, against any obligations owed by the lender to the Portfolios under any agreement or collateral document, including the collateral value of the Securities Loan Collateral, as that term is defined in the Securities Lending and Services Agreement between the Portfolios and State Street. At December 31, 2018, the Enhanced Opportunities Portfolio had pledged $18,472,376 of long securities as collateral under such arrangements.
For the year ended December 31, 2018, proceeds from securities sold short and purchases to cover short positions for the Enhanced Opportunities Portfolio were $50,696,643 and $44,438,508, respectively.
(g) Swap Agreements—A Portfolio may enter into credit default swap agreements whereby one counterparty (the “Protection Buyer”) pays an upfront payment or a periodic fee throughout the term of the swap agreement provided there is no credit event,
78 Annual Report
which is expressed in basis points on the notional amount, in return for a payment by the seller of the credit default swap agreement (the “Protection Seller”) that results if a credit event such as defined in the swap agreement occurs, such as bankruptcy of the reference entity, obligation or index. Such credit default swap agreements are cash settled transactions. If a Portfolio enters into a credit default swap agreement as the Protection Buyer, the Portfolio is exposed to credit risk arising from the potential inability of the Protection Seller to perform under the agreement. If a Portfolio enters into a credit default swap agreement as the Protection Seller, the Portfolio is not exposed to credit risk but is subject to market risk as the credit default swap agreement is recorded at fair value which reflects the creditworthiness of the reference entity. As a Protection Seller, a Portfolio would effectively add leverage to its portfolio because, in addition to its total net assets, a Portfolio would be subject to risk of loss limited to the notional amount of the swap agreement.
Credit ratings on the reference obligor underlying the credit derivatives, together with the periods of expiration, are generally indicators of payment/performance risk. In such instances where a Portfolio is the seller of protection, the likelihood of payment and performance is generally considered greater as the credit spread on the reference obligor underlying the credit derivatives and the period of expiration increases.
Interest rate swap agreements involve the exchange by a Portfolio with another party of their respective commitments to pay or receive interest with respect to the notional amount of principal. Certain forms of interest rate swap agreements may include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap,” (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor,” (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels, (iv) callable interest rate
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swaps, under which the counterparty may terminate the swap transaction in whole at zero cost by a predetermined date and time prior to the maturity date, (v) spread locks, which allow the interest rate swap users to lock in the forward differential (or spread) between the interest rate swap rate and specified benchmark, or (vi) basis swaps, under which two parties can exchange variable interest rates based on different money markets.
Swap agreements generally are valued by an independent pricing service, and the change in value, if any, is recorded as unrealized appreciation (depreciation) on swap agreements in a Portfolio’s accompanying Statement of Assets and Liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain (loss) on swap agreements in a Portfolio’s accompanying Statement of Operations, in addition to any realized gain (loss) recorded upon the termination of swap agreements.
During the year ended December 31, 2018, the Explorer Total Return Portfolio traded in swap agreements.
(h) Federal Income Taxes—The Fund’s policy is to have each Portfolio qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”) and to distribute all of its taxable income, including any net realized capital gains, to shareholders. Therefore, no federal income tax provision is required.
At December 31, 2018, the following Portfolios had unused realized capital loss carryovers which, for federal income tax purposes, could be used to offset future realized capital gains with no expiration date as follows:
Portfolio | Short-Term | |||
Emerging Markets Income | $ | 24,288 | ||
Explorer Total Return | 22,514,234 |
Under current tax law, post-October capital losses or certain late-year ordinary losses, as defined by the Code, within the taxable year may be deferred and treated as occurring on the first day of the following tax year. For the tax year ended December 31, 2018, the Portfolios had no such losses to defer.
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For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized depreciation and the net unrealized appreciation (depreciation) were as follows:
Portfolio | Aggregate Cost | Aggregate Gross Unrealized Appreciation | Aggregate Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Emerging Markets Income | $ | 5,510,073 | $ | 30,453 | $ | 202,107 | $ | (171,654 | ) | |||||||
Enhanced Opportunities | 16,112,352 | 1,214,079 | 2,638,501 | (1,424,422 | ) | |||||||||||
Explorer Total Return | 109,930,377 | 1,835,352 | 9,240,660 | (7,405,308 | ) |
Management has analyzed the Portfolios’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns filed for any open tax years (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitations. Each Portfolio files a US federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
(i) Dividends and Distributions—Emerging Markets Income and Explorer Total Return Portfolios intend to declare dividends from net investment income, if any, daily and to pay such dividends monthly. Dividends from net investment income, if any, for Enhanced Opportunities Portfolio will be declared and paid annually. During any particular year, net realized gains from investment transactions in excess of available capital loss carryforwards would be taxable to the Portfolios, if not distributed. The Portfolios intend to declare and distribute these amounts, at least annually, to shareholders; however, to avoid taxation, a second distribution may be required. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
Income and capital gains distributions are determined in accordance with federal income tax regulations which may differ from GAAP. These book/tax differences, which may result in distribution reclassifications, are primarily due to differing treatments of for-
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eign currency transactions, wash sales, return of capital distributions, certain fixed-income securities and fund expenses, derivatives and distributions from real estate investment trusts. The book/tax differences relating to shareholder distributions resulted in reclassifications among certain capital accounts as follows:
Portfolio | Paid in Capital | Distributable Earnings (Accumulated Loss) | ||||||
Emerging Markets Income | $ | (374,961 | ) | $ | 374,961 | |||
Explorer Total Return | (831,688 | ) | 831,688 |
In October 2018, the US Securities and Exchange Commission (the “SEC”) adopted amendments to certain disclosure requirements included in Regulation S-X that had become “redundant, duplicative, overlapping, outdated or superseded, in light of the other Commission disclosure requirements, GAAP or changes in the information environment.” The compliance date for the amendments to Regulation S-X was November 5, 2018 (for reporting period end dates of September 30, 2018 or after). The Fund adopted these amendments and such changes are reflected in these financial statements.
Under these amendments, it is no longer required to differentiate distributions from earnings as either net investment income or net realized capital gains or disclose a Portfolio’s undistributed net investment income within a Portfolio’s Statement of Changes in Net Assets. The presentation within the Portfolios’ Statement of Changes in Net Assets for the year ended December 31, 2017 also has been modified accordingly.
Below is the characterization of the Portfolio distributions and undistributed (distributions in excess of) net investment income (loss) for the year ended December 31, 2017 as previously disclosed in the Statement of Changes in Net Assets within the December 31, 2017 Annual Report:
From net investment income | Institutional Shares | Open Shares | ||||||
Emerging Markets Income | $ | 245,410 | $ | — | ||||
Enhanced Opportunities | 274,175 | 1,785 | ||||||
Explorer Total Return | 6,253,137 | 28,104 |
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From net realized gains | Institutional Shares | Open Shares | ||||||
Emerging Markets Income | $ | 26,292 | $ | 471 | ||||
Enhanced Opportunities | 1,360,895 | 10,286 |
Undistributed (Distributions in excess of) net investment income (loss) | Amount | |||||||
Emerging Markets Income | $ | 400,025 | ||||||
Enhanced Opportunities | (85,269 | ) | ||||||
Explorer Total Return | (1,244,305 | ) |
The tax character of dividends and distributions paid during the years ended December 31, were as follows:
Ordinary Income | Long-Term Capital Gain | ||||||||||||||||
Portfolio | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Emerging Markets Income* | $ | 546,742 | $ | 272,173 | $ | — | $ | — | |||||||||
Enhanced Opportunities | 399,185 | 1,482,118 | 28,399 | 165,023 | |||||||||||||
Explorer Total Return* | 6,321,148 | 6,281,241 | — | — |
* | Emerging Markets Income and Explorer Total Return Portfolios had return of capital distributions of $218,332 and $835,329 in 2018 and $0 and $1,916,051 in 2017, respectively. |
At December 31, 2018, the components of distributable earnings (accumulated loss), on a tax basis, were as follows:
Portfolio | Undistributed Ordinary Income (Deferred Ordinary Losses) | Undistributed Long-Term Capital Gain (Deferred Capital Losses) | Net Unrealized Appreciation (Depreciation) Including Foreign Currency | |||||||||
Emerging Markets Income | $ | — | $ | (24,288 | ) | $ | (184,215 | ) | ||||
Enhanced Opportunities | 91,573 | — | (1,477,579 | ) | ||||||||
Explorer Total Return | — | (22,514,234 | ) | (7,212,435 | ) |
(j) Allocation of Expenses—Expenses common to the Fund, Lazard Retirement Series, Inc., Lazard Global Total Return and Income Fund, Inc. and Lazard World Dividend & Income Fund, Inc. (each a “Lazard Fund” and collectively, the “Lazard Fund Complex”), each a registered management investment company advised by the Investment Manager, not directly chargeable to one or more specific Lazard Funds are allocated to the Fund and among its Portfolios primarily on the basis of relative net assets. Expenses of the Fund not directly chargeable to one or more Portfolios are similarly allocated among the Portfolios on the basis of relative net
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assets. Portfolios accrue distribution and service (12b-1) fees to Open Shares. The Portfolios’ income, expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.
(k) Redemption Fee—Until August 15, 2016, the Portfolios imposed a 1.00% redemption fee (short-term trading fee) on Portfolio shares redeemed less than 30 days after such shares were acquired. The fees were retained by the Portfolios and are included as paid in capital on the Statements of Assets and Liabilities. As of August 15, 2016, redemption fees no longer apply to transactions in Portfolio shares.
(l) Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates.
(m) Net Asset Value—NAV per share for each class of each Portfolio is determined each day the NYSE is open for trading as of the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time). The Fund will not treat an intraday unscheduled disruption in NYSE trading as a closure of the NYSE, and will price its shares as of 4:00 p.m., if the particular disruption directly affects only the NYSE. NAV per share is determined by dividing the value of the total assets of the Portfolio represented by such class, less all liabilities, by the total number of Portfolio shares of such class outstanding.
3. Investment Management, Administration, Custody, Distribution and Transfer Agency Agreements
The Fund, on behalf of the Portfolios, has entered into a management agreement (the “Management Agreement”) with the Investment Manager. Pursuant to the Management Agreement, the Investment Manager regularly provides each Portfolio with investment research, advice and supervision and furnishes continuously
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an investment program for each Portfolio consistent with its investment objectives and policies, including the purchase, retention and disposition of securities, and provides the Portfolios with administrative, operational and compliance assistance services. For its services provided to the Portfolios, the Investment Manager earns a management fee, accrued daily as a percentage of each Portfolio’s average daily net assets and payable by each Portfolio monthly, at the annual rate set forth below:
Portfolio | Annual Rate | |||
Emerging Markets Income | 0.65 | % | ||
Enhanced Opportunities (a) | 0.95 | |||
Explorer Total Return | 0.90 |
(a) | From January 1, 2018 to January 18, 2018, percentage was 1.30%. |
The Investment Manager has voluntarily agreed to waive its fees and, if necessary, reimburse the Portfolios until May 1, 2019 if the aggregate direct expenses of the Portfolios, exclusive of taxes, brokerage, interest on borrowings, dividend and interest expenses on securities sold short, fees and expenses of “Acquired Funds” (as defined in Form N-1A) and extraordinary expenses, but including the management fee stated in the Management Agreement between the Investment Manager and the Fund, on behalf of the Portfolios, exceed the percentages of the value of the Portfolio’s average daily net assets set forth opposite the Portfolio’s name on table below. The Fund, on behalf of the Portfolio, may deduct from the payment to be made to the Investment Manager under the Management Agreement, or the Investment Manager will bear, such excess expense.
Portfolio | Institutional Shares | Open Shares | ||||||
Emerging Markets Income | 0.90 | % | 1.05 | % | ||||
Enhanced Opportunities (a) | 1.25 | 1.50 | ||||||
Explorer Total Return | 1.10 | 1.40 |
(a) | From January 1, 2018 to January 18, 2018, percentages were 1.60% and 1.85%, respectively. |
During the year ended December 31, 2018, the Investment Manager waived its management fees and reimbursed the following Portfolios for other expenses as follows:
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Institutional Shares | Open Shares | |||||||||||||||
Portfolio | Management Fees Waived | Expenses Reimbursed | Management Fees Waived | Expenses Reimbursed | ||||||||||||
Emerging Markets Income | $ | 34,927 | $ | 120,254 | $ | 771 | $ | 14,008 | ||||||||
Enhanced Opportunities | 170,240 | 84,530 | 1,054 | 11,883 | ||||||||||||
Explorer Total Return | — | — | — | 11,308 |
The aforementioned waivers and/or reimbursements are not subject to recoupment by the Investment Manager.
State Street provides the Fund with custody and certain fund administration and accounting services.
The Fund has a distribution agreement with Lazard Asset Management Securities LLC (the “Distributor”), a wholly-owned subsidiary of the Investment Manager, to serve as the distributor for shares of each Portfolio. The Distributor bears the cost of printing and mailing prospectuses to potential investors and certain expenses in connection with the offering of Portfolio shares.
Under a distribution and servicing plan adopted pursuant to Rule 12b-1 under the 1940 Act, each Portfolio pays a monthly fee to the Distributor, at an annual rate of 0.25% of the average daily net assets of its Open Shares, for distribution and servicing of accounts. The Distributor may make payments to certain financial institutions, securities dealers and other industry professionals for providing these services.
DST is the Fund’s transfer and dividend disbursing agent.
4. Directors’ Compensation
Certain Directors of the Fund are officers of the Investment Manager. For the year ended December 31, 2018, each Director who is not an affiliated person of the Investment Manager or any of its affiliates was paid by all of the funds in the Lazard Fund Complex: (1) an annual retainer of $225,000, (2) an additional annual fee of $32,500 to the lead Independent Director (an “Independent Director” is a Director who is not an “interested person” (as defined in the 1940 Act) of the Fund), and (3) an additional annual fee of $22,500 to the Audit Committee Chair. Effective January 1, 2019,
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the aggregate compensation for Independent Directors for the Lazard Fund Complex is comprised of: (1) an annual retainer of $232,000, (2) an additional annual fee of $33,000 to the lead Independent Director, and (3) an additional annual fee of $23,000 to the Audit Committee Chair. The Independent Directors may be paid additional compensation for participation on ad hoc committees or other work performed on behalf of the Board. The Independent Directors also are reimbursed for travel and other out-of-pocket expenses for attending Board and committee meetings. The Directors do not receive benefits from the Fund pursuant to any pension, retirement or similar arrangement. Independent Directors’ fees are allocated among the funds in the Lazard Fund Complex at a rate of $5,000 per fund with the remainder allocated based upon each fund’s proportionate share of combined net assets. The Statements of Operations show the Independent Directors’ fees and expenses paid by each Portfolio.
5. Securities Transactions and Transactions with Affiliates
Purchases and sales of portfolio securities (excluding short-term investments and short sales) for the year ended December 31, 2018 were as follows:
Portfolio | Purchases | Sales | ||||||
Emerging Markets Income | $ | 1,430,929 | $ | 1,078,766 | ||||
Enhanced Opportunities | 63,327,263 | 51,677,664 | ||||||
Explorer Total Return | 189,542,326 | 227,452,645 |
For the year ended December 31, 2018, the Portfolios did not engage in any cross-trades in accordance with Rule 17a-7 under the 1940 Act, and no brokerage commissions were paid to affiliates of the Investment Manager or other affiliates of the Fund for portfolio transactions executed on behalf of the Fund.
At December 31, 2018, the Investment Manager owned 88.26% and 32.50% of the outstanding shares of the Emerging Markets Income and Enhanced Opportunities Portfolios, respectively.
6. Line of Credit
The Fund has a $50 million Line of Credit Agreement (the “Agreement”) with State Street, primarily for temporary or emergency
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purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest on borrowings is payable at the higher of the Federal Funds rate or One-Month LIBOR rate plus 1.00%, on an annualized basis. Under the Agreement, the Fund has agreed to pay a 0.20% per annum fee on the unused portion of the commitment, payable quarterly in arrears. The Fund has also agreed to pay an upfront fee of 0.05% of the committed line amount. During the year ended December 31, 2018, the following Portfolios had borrowings under the Agreement as follows:
Portfolio | Average Daily Loan Balance | * | Maximum Daily Loan Outstanding | Weighted Average Interest Rate | Number of Days Borrowings were Outstanding | |||||||||||
Enhanced Opportunities | $ | 208,750 | $ | 295,000 | 3.52 | % | 4 | |||||||||
Explorer Total Return | 5,657,143 | 10,450,000 | 2.94 | 14 |
* | For days borrowings were outstanding. |
Management believes that the fair value of the liabilities under the line of credit is equivalent to the recorded amount based on its short-term maturity and interest rate, which fluctuates with LIBOR. A Portfolio’s outstanding balance on the line of credit, if any, would be categorized as Level 2.
7. Investment Risks
(a) Non-US Securities Risk—A Portfolio’s performance will be influenced by political, social and economic factors affecting the non-US countries and companies in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity.
(b) Emerging Market Risk—Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. The economies of countries with emerging markets may be based predominantly on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme debt burdens or volatile inflation rates. The
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securities markets of emerging market countries have historically been extremely volatile. These market conditions may continue or worsen. Investments in these countries may be subject to political, economic, legal, market and currency risks. The risks may include less protection of property rights and uncertain political and economic policies, the imposition of capital controls and/or foreign investment limitations by a country, nationalization of businesses and the imposition of sanctions by other countries, such as the US. Significant devaluation of emerging market currencies against the US dollar may occur subsequent to acquisition of investments denominated in emerging market currencies.
(c) Foreign Currency Risk—Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to fluctuations in currency exchange rates. A Portfolio’s currency investments could be adversely affected by delays in, or a refusal to grant, repatriation of funds or conversion of emerging market currencies. The Investment Manager generally does not intend to actively hedge the Portfolio’s foreign currency exposure.
(d) Fixed-Income and Debt Securities Risk—The market value of a debt security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The debt securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening.
Prices of bonds and other debt securities tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect debt securities and, accordingly, will cause the value of a Portfolio’s investments in these securities to decline. Interest rate risk is usually greater for fixed-income securities with longer maturities or durations. A rise in interest rates (or the expectation of a rise in interest rates) may result in periods of volatility, decreased liquidity and increased redemptions, and, as a result, the Portfolio may have to liquidate portfolio securities at
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disadvantageous prices. During periods of reduced market liquidity, a Portfolio may not be able to readily sell debt securities at prices at or near their perceived value. An unexpected increase in Portfolio redemption requests, including requests from shareholders who may own a significant percentage of a Portfolio’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the Portfolio to sell its holdings at a loss or at undesirable prices and adversely affect the Portfolio’s share price and increase the Portfolio’s liquidity risk, Portfolio expenses and/or taxable distributions. Economic and other developments can adversely affect debt securities markets.
A Portfolio’s investments in lower-rated, higher-yielding securities (“junk bonds”) are subject to greater credit risk than its higher-rated investments. Credit risk is the risk that the issuer will not make interest or principal payments, or will not make payments on a timely basis. Non-investment grade securities tend to be more volatile, less liquid and are considered speculative. If there is a decline, or perceived decline, in the credit quality of a debt security (or any guarantor of payment on such security), the security’s value could fall, potentially lowering a Portfolio’s share price. The prices of non-investment grade securities, unlike investment grade debt securities, may fluctuate unpredictably and not necessarily inversely with changes in interest rates. The prices of high yield securities can fall in response to negative news about the issuer or its industry, or the economy in general to a greater extent than those of higher-rated securities. The market for these securities may be less liquid and therefore these securities may be harder to value or sell at an acceptable price, especially during times of market volatility or decline.
Some fixed-income securities may give the issuer the option to call, or redeem, the securities before their maturity. If securities held by a Portfolio are called during a time of declining interest rates (which is typically the case when issuers exercise options to call outstanding securities), the Portfolio may have to reinvest the proceeds in an investment offering a lower yield (and the Portfolio may not fully benefit from any increase in the value of its portfolio holdings as a result of declining interest rates).
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Adjustable rate securities provide a Portfolio with a certain degree of protection against rises in interest rates, although such securities will participate in any declines in interest rates as well. Certain adjustable rate securities, such as those with interest rates that fluctuate directly or indirectly based on multiples of a stated index, are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme reductions of yield and possibly loss of principal. Certain fixed-income securities may be issued at a discount from their face value (such as zero coupon securities) or purchased at a price less than their stated face amount or at a price less than their issue price plus the portion of “original issue discount” previously accrued thereon,i.e., purchased at a “market discount.“The amount of original issue discount and/or market discount on certain obligations may be significant, and accretion of market discount together with original issue discount will cause a Portfolio to realize income prior to the receipt of cash payments with respect to these securities.
(e) Underlying Funds Risk—Shares of ETFs, closed-end funds and exchange-traded notes (“ETNs” and collectively with ETFs and closed-end funds, “Underlying Funds”) in which certain Portfolios invest may trade at prices that vary from their NAVs, sometimes significantly. The shares of ETFs and closed-end funds may trade at prices at, below or above their most recent NAV. Shares of closed-end funds, in particular, frequently trade at persistent discounts to their NAV. In addition, the performance of an ETF pursuing a passive index-based strategy may diverge from the performance of the index. ETNs may not trade in the secondary market, but typically are redeemable by the issuer. A Portfolio’s investments in Underlying Funds are subject to the risks of Underlying Funds’ investments, as well as to the general risks of investing in Underlying Funds. Portfolio shares will bear not only the Portfolio’s management fees and operating expenses, but also their proportional share of the management fees and operating expenses of the ETFs and closed-end funds in which the Portfolio invests. While ETNs do not have management fees, they are subject to certain investor fees. ETNs are debt securities that, like ETFs, typically are listed on exchanges and their terms generally provide for a return that tracks specified market indexes. However,
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unlike ETFs and closed-end funds, ETNs are not registered investment companies and thus are not registered under the 1940 Act. In addition, as debt securities, ETNs are subject to the additional risk of the creditworthiness of the issuer. ETNs typically do not make periodic interest payments.
These Portfolios may be limited by the 1940 Act in the amount of their assets that may be invested in ETFs and closed-end funds unless an ETF or a closed-end fund has received an exemptive order from the SEC on which the Portfolios may rely or an exemption is available.
Many ETFs have received an exemptive order from the SEC providing an exemption from the 1940 Act limits on the amount of assets that may be invested in ETFs and closed-end funds, and a Portfolio’s reliance on an order is conditioned on compliance with certain conditions of the order. If an exemptive order has not been received and an exemption is not available under the 1940 Act, the Portfolio will be limited in the amount it can invest in Underlying Funds that are registered investment companies to: (1) 3% or less of an Underlying Fund’s voting shares, (2) an Underlying Fund’s shares in value equal to or less than 5% of the Portfolio’s assets and (3) shares of Underlying Funds in the aggregate in value equal to or less than 10% of the Portfolio’s total assets.
(f) Short Position Risk—Short sales or positions may involve substantial risks. If a short position appreciates in value during a period of the Portfolio’s investment, there will be a loss to the Portfolio that could be substantial. Short positions involve more risk than long positions because the maximum sustainable loss on a security purchased is limited to the amount paid for the security plus the transaction costs. However, a Portfolio’s potential loss on a short position is unlimited because, theoretically, there is no limit to the potential price increase of a security.
Short sales of securities also may involve additional transaction-related costs such as those in connection with borrowing the securities sold short.
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There is a risk that certain Portfolios may be unable to fully implement their investment strategies due to a lack of available securities to borrow to effect short sales or for some other reason.
When seeking to effect short sales of securities, a Portfolio may not always be able to borrow a security the Portfolio seeks to sell short at a particular time or at an acceptable price. In addition, a Portfolio may not always be able to close out a short sale position at a particular time or at an acceptable price. If the lender of a borrowed security requires a Portfolio to return the security to it on short notice, and the Portfolio is unable to borrow the security from another lender, the Portfolio may have to buy the borrowed security at an unfavorable price, resulting in a loss. In addition, there is a risk that the collateral pledged to the Portfolio’s custodian to secure securities borrowings in connection with short sales of securities may not be returned to the Portfolio or may not be returned in a timely manner.
It is possible that the market value of the securities a Portfolio holds in long positions will decline at the same time that the market value of the securities to which the Portfolio has short exposure increases, thereby increasing the Portfolio’s potential volatility.
(g) Derivatives and Hedging Risk—Derivatives transactions, including those entered into for hedging purposes (i.e., seeking to protect Portfolio investments), may increase volatility, reduce returns, limit gains or magnify losses, perhaps substantially, particularly since most derivatives have a leverage component that provides investment exposure in excess of the amount invested. Over-the-counter swap agreements, forward currency contracts, writing or purchasing over-the-counter options on securities (including options on ETFs and ETNs), indexes and currencies and other over-the-counter derivatives transactions are subject to the risk of default by the counterparty and can be illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. These derivatives transactions, as well as the exchange-traded futures and options in which certain Portfolios may invest, are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related index, commodity, interest rate, currency, security or other reference asset.
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As such, a small investment could have a potentially large impact on a Portfolio’s performance. Purchasing options will reduce returns by the amount of premiums paid for options that are not exercised. In fact, many derivatives may be subject to greater risks than those associated with investing directly in the underlying or other reference asset. Derivatives transactions incur costs, either explicitly or implicitly, which reduce returns, and costs of engaging in such transactions may outweigh any gains or any losses averted from hedging activities. Successful use of derivatives, whether for hedging or for other investment purposes, is subject to the Investment Manager’s ability to predict correctly movements in the direction of the relevant reference asset or market and, for hedging activities, correlation of the derivative instruments used with the investments seeking to be hedged. Use of derivatives transactions, even when entered into for hedging purposes, may cause a Portfolio to experience losses greater than if the Portfolio had not engaged in such transactions.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnification provisions. A Portfolio’s maximum exposure under these arrangements is unknown. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Fair Value Measurements
Fair value is defined as the price that a Portfolio would receive to sell an asset, or would pay to transfer a liability, in an orderly transaction between market participants at the date of measurement. The Fair Value Measurements and Disclosures provisions of GAAP also establish a framework for measuring fair value, and a three-level hierarchy for fair value measurement that is based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer, broadly, to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions
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about the assumptions that market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The fair value measurement level within the fair value hierarchy for the assets and liabilities of the Fund is based on the lowest level of any input that is significant to the overall fair value measurement. The three-level hierarchy of inputs is summarized below:
• | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities |
• | Level 2 – other significant observable inputs (including unadjusted quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets and liabilities) |
Changes in valuation technique may result in transfers into or out of the current assigned level within the hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in these securities.
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The following table summarizes the valuation of the Portfolios’ assets and liabilities by each fair value hierarchy level as of December 31, 2018:
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Emerging MarketsIncome Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Foreign Government Obligations* | $ | — | $ | 1,598,121 | $ | — | $ | 1,598,121 | |||||||||
Supranational Bonds | — | 185,451 | — | 185,451 | |||||||||||||
US Treasury Securities | — | 3,117,050 | — | 3,117,050 | |||||||||||||
Short-Term Investments | 438,410 | — | — | 438,410 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 67,674 | — | 67,674 | |||||||||||||
Total | $ | 438,410 | $ | 4,968,296 | $ | — | $ | 5,406,706 | |||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (22,538 | ) | $ | — | $ | (22,538 | ) | |||||||
Enhanced OpportunitiesPortfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Common Stocks* | $ | 77,678 | $ | — | $ | — | $ | 77,678 | |||||||||
Convertible Corporate Bonds* | — | 17,381,037 | — | 17,381,037 | |||||||||||||
Exchange-Traded Funds | 1,213,216 | — | — | 1,213,216 | |||||||||||||
Purchased Options | 25,565 | — | — | 25,565 | |||||||||||||
Short-Term Investments | 2,500,469 | — | — | 2,500,469 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 4,598 | — | 4,598 | |||||||||||||
Total | $ | 3,816,928 | $ | 17,385,635 | $ | — | $ | 21,202,563 | |||||||||
Liabilities: | |||||||||||||||||
Securities Sold Short | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Argentina | $ | (85,805 | ) | $ | — | $ | — | $ | (85,805 | ) | |||||||
Bermuda | (39,515 | ) | — | — | (39,515 | ) | |||||||||||
Canada | (219,867 | ) | — | — | (219,867 | ) | |||||||||||
China | (179,579 | ) | — | — | (179,579 | ) | |||||||||||
Japan | — | (197,170 | ) | — | (197,170 | ) | |||||||||||
Mexico | (10,941 | ) | — | — | (10,941 | ) | |||||||||||
Monaco | (24,146 | ) | — | — | (24,146 | ) | |||||||||||
Netherlands | — | (69,138 | ) | — | (69,138 | ) | |||||||||||
Thailand | (52,695 | ) | — | — | (52,695 | ) | |||||||||||
United Kingdom | (158,295 | ) | — | — | (158,295 | ) | |||||||||||
United States | (5,034,745 | ) | — | — | (5,034,745 | ) | |||||||||||
Exchange-Traded Funds | (437,953 | ) | — | — | (437,953 | ) | |||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | (11,139 | ) | — | (11,139 | ) | |||||||||||
Written Options | (11,153 | ) | — | — | (11,153 | ) | |||||||||||
Total | $ | (6,254,694 | ) | $ | (277,447 | ) | $ | — | $ | (6,532,141 | ) |
96 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Explorer Total Return Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Corporate Bonds* | $ | — | $ | 21,173,624 | $ | — | $ | 21,173,624 | |||||||||
Foreign Government Obligations* | — | 80,471,095 | — | 80,471,095 | |||||||||||||
Quasi Government Bonds* | — | 215,057 | — | 215,057 | |||||||||||||
Short-Term Investments | 146,699 | — | — | 146,699 | |||||||||||||
Purchased Options | — | 485,035 | — | 485,035 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Credit Default Swap Agreements | — | 135,106 | — | 135,106 | |||||||||||||
Forward Currency Contracts | — | 603,757 | — | 603,757 | |||||||||||||
Interest Rate Swap Agreements | — | 80,288 | — | 80,288 | |||||||||||||
Total | $ | 146,699 | $ | 103,163,962 | $ | — | $ | 103,310,661 | |||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (81,916 | ) | $ | — | $ | (81,916 | ) | |||||||
Written Options | — | (138,853 | ) | — | (138,853 | ) | |||||||||||
Total | $ | — | $ | (220,769 | ) | $ | — | $ | (220,769 | ) |
* | Please refer to Portfolios of Investments and Notes to Portfolios of Investments for portfolio holdings by country and industry. |
† | Other financial instruments are derivative instruments which are valued at their respective unrealized appreciation (depreciation). |
10. Derivative Instruments
Certain Portfolios may use derivative instruments, including forward currency contracts, futures contracts, options or swap agreements.
Forward currency contracts may be used for hedging purposes or to seek to increase returns.
A Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and/or currency exchange rates, to increase total return, or to otherwise gain access or attain exposure to certain markets or other underliers.
A Portfolio may write or purchase a call or put option to seek to realize, through the receipt of premiums or changes in market
Annual Report 97
value, a greater return than would be realized on the underlying securities alone, or to seek to protect the Portfolio from losses.
A Portfolio enters into swap agreements in an attempt to obtain a particular exposure when it is considered desirable to do so, possibly at a lower cost to such Portfolio than if it had invested directly in the asset that yielded the desired exposure.
During the year ended December 31, 2018, the approximate average monthly notional exposure for derivative instruments was as follows:
Derivative Instruments | Emerging Markets Income Portfolio | Enhanced Opportunities Portfolio | Explorer Total Return Portfolio | |||||||||
Credit default swap agreements: | ||||||||||||
Average notional value – buy protection | $ | — | $ | — | $22,600,000 | # | ||||||
Average notional value – sell protection | — | — | 5,800,000 | * | ||||||||
Forward currency contracts: | ||||||||||||
Average amounts purchased | 5,300,000 | 100,000 | 70,300,000 | |||||||||
Average amounts sold | 1,700,000 | 800,000 | 43,600,000 | |||||||||
Futures contracts: | ||||||||||||
Average notional value of contracts – long | — | — | 2,900,000 | † | ||||||||
Interest rate swap agreements: | ||||||||||||
Average notional value – pays fixed rate | — | — | 7,800,000 | ‡ | ||||||||
Average notional value – receives fixed rate | — | — | 22,100,000 | |||||||||
Options: | ||||||||||||
Average value of purchased options | — | — | 1,200,000 | |||||||||
Average value of written options | — | — | 22,600,000 | # |
# | Represents average monthly notional exposure for the 11 months the derivative instrument was open during the period. |
* | Represents average monthly notional exposure for the six months the derivative instrument was open during the period. |
† | Represents notional exposure for one day the derivative instrument was open during the period. |
‡ | Represents average monthly notional exposure for the three months the derivative instrument was open during the period. |
The Enhanced Opportunities Portfolio traded in purchased options having an average monthly value of less than $50,000.
The Enhanced Opportunities Portfolio also traded in written options having an average monthly value of less than $50,000.
98 Annual Report
Emerging Markets Income Portfolio
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Assets – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized appreciation on forward currency contracts | $ | 67,674 | |||
Liabilities – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized depreciation on forward currency contracts | $ | 22,538 | |||
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was: | ||||||
Net Realized Gain (Loss) from: | Total | |||||
Forward currency contracts | $ | (97,393 | ) | |||
Net Change in Unrealized Appreciation (Depreciation) on: | Total | |||||
Forward currency contracts | $ | (75,726 | ) |
Enhanced Opportunities Portfolio
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Foreign | ||||||||||||
Equity | Currency | |||||||||||
Assets – Derivative Financial Instruments | Contracts | Contracts | Total | |||||||||
Forward currency contracts Unrealized appreciation on forward currency contracts | $ | — | $ | 4,598 | $ | 4,598 | ||||||
Purchased options Investments in securities, at fair value | 25,565 | — | 25,565 | |||||||||
Total | $ | 25,565 | $ | 4,598 | $ | 30,163 | ||||||
Foreign | ||||||||||||
Equity | Currency | |||||||||||
Liabilities – Derivative Financial Instruments | Contracts | Contracts | Total | |||||||||
Forward currency contracts Unrealized depreciation on forward currency contracts | $ | — | $ | 11,139 | $ | 11,139 | ||||||
Written options Written options, at fair value | 11,153 | — | 11,153 | |||||||||
Total | $ | 11,153 | $ | 11,139 | $ | 22,292 |
Annual Report 99
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Foreign | ||||||||||||
Equity | Currency | |||||||||||
Net Realized Gain (Loss) from: | Contracts | Contracts | Total | |||||||||
Forward currency contracts | $ | — | $ | 42,836 | $ | 42,836 | ||||||
Purchased options | (109,120 | ) | — | (109,120 | ) | |||||||
Written options | (44,128 | ) | — | (44,128 | ) | |||||||
Total | $ | (153,248 | ) | $ | 42,836 | $ | (110,412 | ) | ||||
Foreign | ||||||||||||
Equity | Currency | |||||||||||
Net Change in Unrealized Appreciation (Depreciation) on: | Contracts | Contracts | Total | |||||||||
Forward currency contracts | $ | — | $ | (312 | ) | $ | (312 | ) | ||||
Purchased options | (8,677 | ) | — | (8,677 | ) | |||||||
Written options | (341 | ) | — | (341 | ) | |||||||
Total | $ | (9,018 | ) | $ | (312 | ) | $ | (9,330 | ) |
Explorer Total Return Portfolio
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Foreign | Interest | |||||||||||||||
Credit | Currency | Rate | ||||||||||||||
Assets – Derivative Financial Instruments | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts Unrealized appreciation on forward currency contracts | $ | — | $ | 603,757 | $ | — | $ | 603,757 | ||||||||
Purchased options Investments in securities, at fair value | — | 485,035 | — | 485,035 | ||||||||||||
Swap agreements Unrealized appreciation on swap agreements; Premiums for swap agreements purchased | 260,125 | — | 80,288 | 340,413 | ||||||||||||
Total | $ | 260,125 | $ | 1,088,792 | $ | 80,288 | $ | 1,429,205 |
100 Annual Report
Foreign | Interest | |||||||||||||||
Credit | Currency | Rate | ||||||||||||||
Liabilities – Derivative Financial Instruments | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts Unrealized depreciation on forward currency contracts | $ | — | $ | 81,916 | $ | — | $ | 81,916 | ||||||||
Written options | ||||||||||||||||
Written options, at fair value | — | 138,853 | — | 138,853 | ||||||||||||
Total | $ | — | $ | 220,769 | $ | — | $ | 220,769 | ||||||||
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was: | ||||||||||||||||
Foreign | Interest | |||||||||||||||
Credit | Currency | Rate | ||||||||||||||
Net Realized Gain (Loss) from: | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | $ | — | $ | (3,174,522 | ) | $ | — | $ | (3,174,522 | ) | ||||||
Futures contracts | — | — | (13,648 | ) | (13,648 | ) | ||||||||||
Purchased options | — | 2,781,535 | — | 2,781,535 | ||||||||||||
Written options | — | (3,502,385 | ) | — | (3,502,385 | ) | ||||||||||
Swap agreements | (4,576,117 | ) | — | 924,093 | (3,652,024 | ) | ||||||||||
Total | $ | (4,576,117 | ) | $ | (3,895,372 | ) | $ | 910,445 | $ | (7,561,044 | ) | |||||
Foreign | Interest | |||||||||||||||
Net Change in Unrealized Appreciation | Credit | Currency | Rate | |||||||||||||
(Depreciation) on: | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | $ | — | $ | 901,192 | $ | — | $ | 901,192 | ||||||||
Purchased options | — | (2,093,824 | ) | — | (2,093,824 | ) | ||||||||||
Written options | — | 1,478,758 | — | 1,478,758 | ||||||||||||
Swap agreements | 135,106 | — | (216,714 | ) | (81,608 | ) | ||||||||||
Total | $ | 135,106 | $ | 286,126 | $ | (216,714 | ) | $ | 204,518 |
As of December 31, 2018, the Emerging Markets Income, Enhanced Opportunities and Explorer Total Return Portfolios held derivative instruments that are eligible for offset in the Statements of Assets and Liabilities and are subject to master netting arrangements. A master netting arrangement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as any cash collateral, through a single payment in the event of default on, or termination of, any one contract.
Annual Report 101
The required information for the affected Portfolios are presented in the below table, as of December 31, 2018:
Emerging Markets Income Portfolio
Net Amounts of | ||||||||
Gross Amounts Offset | Assets Presented | |||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||
Description | Recognized Assets | Assets and Liabilities | Assets and Liabilities | |||||
Forward Currency Contracts | $67,674 | $ — | $67,674 |
Amounts Not Offset | |||||||||||||||||
in the Statement of | |||||||||||||||||
Assets and Liabilities | |||||||||||||||||
Net Amounts of | |||||||||||||||||
Assets Presented | |||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | ||||||||||||||
Counterparty | Assets and Liabilities | Instruments | Received | Derivative Assets | |||||||||||||
BNP Paribas SA | $ | 2,795 | $ | (1,429 | ) | $ | — | $ | 1,366 | ||||||||
Citibank NA | 15,919 | (8,727 | ) | — | 7,192 | ||||||||||||
HSBC Bank USA NA | 37,816 | (4,606 | ) | — | 33,210 | ||||||||||||
Standard Chartered Bank | 11,144 | (7,776 | ) | — | 3,368 | ||||||||||||
Total | $ | 67,674 | $ | (22,538 | ) | $ | — | $ | 45,136 |
Net Amounts of | ||||||||
Gross Amounts Offset | Liabilities Presented | |||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||
Description | Recognized Liabilities | Assets and Liabilities | Assets and Liabilities | |||||
Forward Currency Contracts | $22,538 | $ — | $22,538 |
Amounts Not Offset | |||||||||||||||||
in the Statement of | |||||||||||||||||
Assets and Liabilities | |||||||||||||||||
Net Amounts of | |||||||||||||||||
Liabilities Presented | |||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | ||||||||||||||
Counterparty | Assets and Liabilities | Instruments | Pledged | Derivative Liabilities | |||||||||||||
BNP Paribas SA | $ | 1,429 | $ | (1,429 | ) | $ | — | $ | — | ||||||||
Citibank NA | 8,727 | (8,727 | ) | — | — | ||||||||||||
HSBC Bank USA NA | 4,606 | (4,606 | ) | — | — | ||||||||||||
Standard Chartered Bank | 7,776 | (7,776 | ) | — | — | ||||||||||||
Total | $ | 22,538 | $ | (22,538 | ) | $ | — | $ | — |
102 Annual Report
Enhanced Opportunities Portfolio
Net Amounts of | ||||||||
Gross Amounts Offset | Assets Presented | |||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||
Description | Recognized Assets | Assets and Liabilities | Assets and Liabilities | |||||
Forward Currency Contracts | $4,598 | $ — | $4,598 |
Amounts Not Offset | |||||||||||||||||
in the Statement of | |||||||||||||||||
Assets and Liabilities | |||||||||||||||||
Net Amounts of | |||||||||||||||||
Assets Presented | |||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | ||||||||||||||
Counterparty | Assets and Liabilities | Instruments | Received | Derivative Assets | |||||||||||||
State Street Bank and Trust Co. | $ | 4,598 | $ | 4,598 | $ | — | $ | — |
Net Amounts of | ||||||||
Gross Amounts Offset | Liabilities Presented | |||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||
Description | Recognized Liabilities | Assets and Liabilities | Assets and Liabilities | |||||
Forward Currency Contracts | $11,139 | $ — | $11,139 |
Amounts Not Offset | |||||||||||||||||
in the Statement of | |||||||||||||||||
Assets and Liabilities | |||||||||||||||||
Net Amounts of | |||||||||||||||||
Liabilities Presented | |||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | ||||||||||||||
Counterparty | Assets and Liabilities | Instruments | Pledged | Derivative Liabilities | |||||||||||||
State Street Bank and Trust Co. | $11,139 | $ | (4,598 | ) | $ | — | $ | 6,541 |
Explorer Total Return Portfolio
Net Amounts of | |||||||||||||||
Gross Amounts Offset | Assets Presented | ||||||||||||||
Gross Amounts of | in the Statement of | in the Statement of | |||||||||||||
Description | Recognized Assets | Assets and Liabilities | Assets and Liabilities | ||||||||||||
Credit Default Swap Agreements | $ | 260,125 | $ | — | $ | 260,125 | |||||||||
Forward Currency Contracts | 603,757 | — | 603,757 | ||||||||||||
Interest Rate Swap Agreements | 80,288 | — | 80,288 | ||||||||||||
Purchased Options | 485,035 | — | 485,035 | ||||||||||||
Total | $ | 1,429,205 | $ | — | $ | 1,429,205 |
Annual Report 103
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Assets Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Received (a) | Derivative Assets | ||||||||||||
Bank of America NA | $ | 106,555 | $ | (1,529 | ) | $ | (105,026 | ) | $ | — | ||||||
Barclays Bank PLC | 377,056 | (68,021 | ) | (205,288 | ) | 103,747 | ||||||||||
Citibank NA | 20,453 | (3,273 | ) | — | 17,180 | |||||||||||
Goldman Sachs International | 338,917 | (64,634 | ) | (274,283 | ) | — | ||||||||||
HSBC Bank USA NA | 20,057 | (2,859 | ) | — | 17,198 | |||||||||||
JPMorgan Chase Bank NA | 176,925 | (2,108 | ) | (80,000 | ) | 94,817 | ||||||||||
JPMorgan Securities, Inc. | 136,148 | (35,607 | ) | — | 100,541 | |||||||||||
Standard Chartered Bank | 181,704 | (39,071 | ) | — | 142,633 | |||||||||||
UBS AG | 71,390 | (3,667 | ) | — | 67,723 | |||||||||||
Total | $ | 1,429,205 | $ | (220,769 | ) | $ | (664,597 | ) | $ | 543,839 |
Net Amounts of | |||||||||
Gross Amounts Offset | Liabilities Presented | ||||||||
Gross Amounts of | in the Statement of | in the Statement of | |||||||
Description | Recognized Liabilities | Assets and Liabilities | Assets and Liabilities | ||||||
Forward Currency Contracts | $ 81,916 | $ — | $ 81,916 | ||||||
Written Options | 138,853 | — | 138,853 | ||||||
Total | $220,769 | $ — | $220,769 |
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Liabilities Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Pledged | Derivative Liabilities | ||||||||||||
Bank of America NA | $ | 1,529 | $ | (1,529 | ) | $ | — | $ | — | |||||||
Barclays Bank PLC | 68,021 | (68,021 | ) | — | — | |||||||||||
Citibank NA | 3,273 | (3,273 | ) | — | — | |||||||||||
Goldman Sachs International | 64,634 | (64,634 | ) | — | — | |||||||||||
HSBC Bank USA NA | 2,859 | (2,859 | ) | — | — | |||||||||||
JPMorgan Chase Bank NA | 2,108 | (2,108 | ) | — | — | |||||||||||
JPMorgan Securities, Inc. | 35,607 | (35,607 | ) | — | — | |||||||||||
Standard Chartered Bank | 39,071 | (39,071 | ) | — | — | |||||||||||
UBS AG | 3,667 | (3,667 | ) | — | — | |||||||||||
Total | $ | 220,769 | $ | (220,769 | ) | $ | — | $ | — |
(a) | Collateral amounts disclosed in the table above may be adjusted due to the requirement to limit collateral amounts to avoid the effect of over-collateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein. |
104 Annual Report
11. Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08,Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization of Purchased Callable Debt Securities,which amends the amortization period for certain purchased callable debt securities. Management is currently evaluating the impact that the adoption of the amendment will have on the Fund’s financial statements and related disclosures. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, modifies and adds disclosures to Topic 820. The amendments in this ASU apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has evaluated the impact of the amendments and has elected to adopt these amendments and incorporate the changes in the current financial statements.
12. Subsequent Events
Management has evaluated subsequent events affecting the Portfolios through the issuance of the financial statements and has determined that there were no subsequent events that required adjustment or disclosure.
Annual Report 105
The Lazard Funds, Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors of The Lazard Funds, Inc. and Shareholders of Lazard Emerging Markets Income Portfolio, Lazard Enhanced Opportunities Portfolio, and Lazard Explorer Total Return Portfolio:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Lazard Emerging Markets Income Portfolio, Lazard Enhanced Opportunities Portfolio, and Lazard Explorer Total Return Portfolio (collectively the “Portfolios”), three of the portfolios constituting The Lazard Funds, Inc. (the “Fund”), as of December 31, 2018, 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, the financial highlights for each of the five years in the period then ended for the Portfolios except Lazard Emerging Markets Income Portfolio and Lazard Enhanced Opportunities Portfolio which are indicated in the table below, and the related notes to the financial statements. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the portfolios, as of December 31, 2018, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended (or for the period listed in the table below), in conformity with accounting principles generally accepted in the United States of America.
Portfolio Name | Financial Highlights |
Lazard Emerging Markets Income Portfolio | For the years ended December 31, 2018, 2017, 2016 and 2015 and for the period from April 30, 2014 (commencement of operations) through December 31, 2014 |
Lazard Enhanced Opportunities Portfolio | For the years ended December 31, 2018, 2017, 2016 and 2015 and for December 31, 2014 (commencement of operations) |
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on the Portfolios’ financial statements and
106 Annual Report
financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Portfolios in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Portfolios are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 2019
We have served as the auditor of one or more of the investment companies in the Lazard Fund Complex since 2004.
Annual Report 107
The Lazard Funds, Inc.
Board of Directors and Officers Information (unaudited)
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | ||
Independent Directors(3): | ||||
Franci J. Blassberg (1953) | Director (August 2014) | Debevoise & Plimpton LLP, a law firm,Of Counsel(2013 – present)
Cornell Law School,Adjunct Professor(2013 – 2016, 2019)
The Buchmann Faculty of Law, Tel Aviv University,VisitingProfessor(2019)
University of California, Berkeley School of Law,Adjunct Professor (Spring 2017) | ||
Kenneth S. Davidson (1945) | Director (August 1995) | Davidson Capital Management Corporation, an investment manager,President (1978 – present)
Landseer Advisors LLC, an investment manager,Senior Advisor(2012 – 2014) | ||
Nancy A. Eckl (1962) | Director (April 2007) | College Retirement Equities Fund (eight accounts),Trustee (2007 – present)
TIAA-CREF Funds (69 funds) and TIAA-CREF Life Funds (11 funds),Trustee(2007 – present)
TIAA Separate Account VA-1,Member of the ManagementCommittee(2007 – present) | ||
Trevor W. Morrison (1971) | Director (April 2014) | New York University School of Law,Dean and Eric M. and Laurie B.Roth Professor of Law (2013 – present)
Columbia Law School,Professor of Law(2008 – 2013) | ||
Richard Reiss, Jr. (1944) | Director (May 1991) | Georgica Advisors LLC, an investment manager,Chairman (1997 – present)
Resource America, Inc., a real estate asset management company,Director(2016 – 2018) |
108 Annual Report
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | ||
Robert M. Solmson (1947) | Director (September 2004) | Fairwood Capital, LLC, a private investment corporation engaged primarily in real estate and hotel investments,Co-Managing Partnerand Managing Director (2008 – present) | ||
Interested Directors(4): | ||||
Ashish Bhutani (1960) | Director (July 2005) | Investment Manager,ChiefExecutive Officer(2004 – present)
Lazard Ltd,Vice Chairman andDirector(2010 – present) | ||
Nathan A. Paul (1973) | Director (October 2017), Chief Executive Officer and President (February 2017; previously, Vice President and Secretary since April 2002) | Investment Manager,ChiefBusiness Officer (April 2017 – present) andManaging Director (2003 – present)
Investment Manager,GeneralCounsel(2002 – April 2017) |
(1) | The address of each Director of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each Director serves as a Director for each of the funds in the Lazard Fund Complex (comprised of, as of January 31, 2019, 39 active investment portfolios). Each Director serves an indefinite term, until his or her successor is elected, and each Director serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | “Independent Directors” are not “interested persons” (as defined in the 1940 Act) of the Fund. |
(4) | Messrs. Bhutani and Paul are “interested persons” (as defined in the 1940 Act) of the Fund because of their positions with the Investment Manager. |
The Fund’s Statement of Additional Information contains further information about the Directors and is available without charge by calling 800-823-6300, or online, at www.lazardassetmanagement.com.
Annual Report109
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) During the Past Five Years | ||
Officers(3): | ||||
Mark R. Anderson (1970) | Chief Compliance Officer (September 2014), Vice President and Secretary (February 2017) | Managing Director (since February 2017, previously Director), Chief Compliance Officer (since September 2014) and General Counsel (since April 2017) of the Investment Manager
Senior Vice President, Counsel and Deputy Chief Compliance Officer of AllianceBernstein L.P. (2004 – August 2014) | ||
Christopher Snively (1984) | Chief Financial Officer (March 2016) | Senior Vice President of the Investment Manager (since November 2015)
Assurance Manager at PricewaterhouseCoopers LLP (2008 – November 2015) | ||
Stephen St. Clair (1958) | Treasurer (May 2003) | Vice President of the Investment Manager | ||
Shari L. Soloway (1981) | Assistant Secretary (November 2015) | Head of Legal, North America (since January 2019, previously Senior Vice President, Legal and Compliance (since September 2015)) of the Investment Manager
Vice President and Associate General Counsel of GE Asset Management (July 2011 – September 2015) | ||
Jessica A. Falzone (1989) | Assistant Secretary (January 2019) | Vice President, Legal and Compliance, of the Investment Manager (since March 2018)
Associate at Schulte Roth & Zabel LLP (2014 – March 2018) | ||
Cesar A. Trelles (1975) | Assistant Treasurer (December 2004) | Vice President of the Investment Manager |
(1) | The address of each officer of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza,New York, New York 10112-6300. |
(2) | Each officer serves for an indefinite term, until his or her successor is elected and qualifies oruntil his or her earlier resignation or removal. Each officer serves in the same capacity for theother funds in the Lazard Fund Complex. |
(3) | In addition to Nathan A. Paul, Chief Executive Officer and President (since February 2017; previously, Vice President and Secretary since April 2002), whose information is included in the Interested Directors section above. |
110 Annual Report
The Lazard Funds, Inc.Tax and Other Information (unaudited)
Tax Information
Year Ended December 31, 2018
The following tax information represents year end disclosures of the tax benefits passed through to shareholders for 2018:
Of the dividends paid by the Portfolios, the corresponding percentage shown below is qualified dividend income.
Portfolio | Percentage | |||
Emerging Markets Income | — | % | ||
Enhanced Opportunities | 3.62 | |||
Explorer Total Return | — |
Of the dividends paid by the Portfolios, the corresponding percentage represents the amount of each dividend that qualifies for the dividends received deduction available to corporate shareholders.
Portfolio | Percentage | |||
Emerging Markets Income | — | % | ||
Enhanced Opportunities | 2.98 | |||
Explorer Total Return | — |
Pursuant to Section 871 of the Code, the Portfolios have no designated qualified short-term gains for purposes of exempting withholding of tax on such distributions to US nonresident shareholders.
Proxy Voting
A description of the policies and procedures used to determine how proxies relating to Fund portfolio securities are voted is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov.
The Fund’s proxy voting record for the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov. Information as of June 30 each year will generally be available by the following August 31.
Annual Report 111
Schedule of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at https://www.sec.gov.
112 Annual Report
The Lazard Funds, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
https://www.lazardassetmanagement.com
Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
Distributor
Lazard Asset Management Securities LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Custodian
State Street Bank and Trust Company
One Iron Street
Boston, Massachusetts 02210
Transfer Agent and Dividend Disbursing Agent
DST Asset Manager Solutions, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169
Telephone: 617-483-7000
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, New York 10112-0015
Legal Counsel
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
http://www.proskauer.com
Lazard Asset Management LLC•30 Rockefeller Plaza•New York, NY 10112•www.lazardassetmanagement.com | |
Performance information as of the most recent month end is available online at www.lazardassetmanagement.com. LZDPS031 |
Lazard Funds Annual Report
December 31, 2018
Equity Funds
Lazard Developing Markets Equity Portfolio | Lazard International Equity Advantage Portfolio |
Lazard Emerging Markets Core Equity Portfolio | Lazard International Equity Concentrated Portfolio |
Lazard Emerging Markets Equity Advantage Portfolio | Lazard International Equity Portfolio |
Lazard Emerging Markets Equity Blend Portfolio | Lazard International Equity Select Portfolio |
Lazard Emerging Markets Equity Portfolio | Lazard International Equity Value Portfolio |
Lazard Equity Franchise Portfolio | Lazard International Small Cap Equity Portfolio |
Lazard Global Equity Select Portfolio | Lazard International Strategic Equity Portfolio |
Lazard Global Listed Infrastructure Portfolio | Lazard Managed Equity Volatility Portfolio |
Lazard Global Realty Equity Portfolio | Lazard US Equity Concentrated Portfolio |
Lazard Global Strategic Equity Portfolio | Lazard US Equity Select Portfolio |
Lazard International Compounders Portfolio | Lazard US Realty Equity Portfolio |
Lazard US Small-Mid Cap Equity Portfolio |
Important Information on Paperless Delivery
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly with the Fund may elect to receive shareholder reports and other communications from the Fund electronically by signing up for paperless delivery at www.icsdelivery.com/lazardassetmanagement. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by following the instructions included with this disclosure and visiting www.fundreports.com. If you own these shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this disclosure to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or your financial intermediary.
PRIVACY NOTICE
WHAT DOES LAZARD DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information. U.S. federal law gives our clients the right to limit some but not all sharing. U.S. federal and other applicable law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
We do not disclose nonpublic personal information about our clients or former clients to third parties other than as described below.
Personal information we collect.We collect personal information about you in connection with our providing advisory services to you. The legal basis for our collection of your personal information is our contract with you and our legitimate business interest to provide contractual services to you. The collection of this information is necessary for us to be able to provide advisory services to you and the failure to provide such information will result in our inability to provide our services. This information includes your social security number (for U.S. persons) and may include other information such as your:
• | Assets and income; | |
• | Investment experience; | |
• | Transaction history; | |
• | Credit history; and | |
• | Wire transfer instructions. |
How we collect this information.We collect this information from you through various means. For example, when you give us your contact information, enter into an investment advisory contract with us, buy securities (i.e., interests in a fund) from us, direct us to buy or sell securities for your account, tell us where to send money, or make a wire transfer. We also may collect your personal information from other sources, such as our affiliates1or other non-affiliated companies (such as credit bureaus).
1 | Our affiliates are companiesrelatedto us by common ownership or control and can include both financial and nonfinancial companies. Non-affiliates are companiesnot relatedto us by common ownership or control and can include both financial and nonfinancial companies. |
How we use this information.All financial companies need to share customers’ personal information to run their everyday business and we use the personal information we collect from you for our everyday business purposes. These purposes may include for example:
• | To provide advisory services to you; | |
• | To open an account for you; | |
• | To process a transaction for your account; | |
• | To market products and services to you; and/or | |
• | To respond to court orders and legal investigations. |
If you are an investor located within a European Union country, please note that personal information may be collected, shared and/or stored outside of the European Union.
Disclosure to others.We may provide your personal information to our affiliates and to firms that assist us in servicing your account and have a need for such information, such as a broker, counterparty, fund administrator or third party service provider that aggregates data in a central repository for access by a broker, counterparty or fund administrator to provide its services. We may also disclose such information to service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you. We require third party service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you to protect the confidentiality of your information and to use the information only for the purposes for which we disclose the information to them. These sharing practices are consistent with applicable privacy and related laws, and in general, you may not limit our use of your personal information for these purposes under such laws. We note that the U.S. federal privacy laws only give you the right to limit the certain types of information sharing that we do not engage in (e.g., sharing with our affiliates certain information relating to your transaction history or creditworthiness for their use in marketing to you, or sharing any personal information with non-affiliates for them to market to you). We may also share your personal information with non-affiliates (such as a government agency or regulatory authority) as required by applicable law.
How we protect your personal information.To protect your personal information from unauthorized access and use, we use security measures that comply with applicable law. These measures include computer safeguards and secured files and buildings.
How long we keep your personal information.We retain your personal information for the duration of your advisory relationship with us and for a period of time thereafter as required by applicable law.
Your rights with respect to this information.If you are an investor located within a European Union country, you have the following rights with respect to your personal information:
• | The right to request and obtain a copy of your personal information that we maintain; | |
• | The right to correct your personal information that we maintain; | |
• | The right to request the erasure of your personal information from our systems, subject to applicable recordkeeping requirements applicable to us; and | |
• | The right to lodge a complaint with a supervisory authority. |
Who is providing this Privacy Notice.This Privacy Notice relates to the following entities:
• | Lazard Asset Management LLC | |
• | Lazard Asset Management (Canada), Inc.2 | |
• | Lazard Asset Management Securities LLC |
Who to contact with questions.If you have any questions about this Privacy Notice, please call (800) 823-6300 or visit our website at http://www.lazardassetmanagement.com.
2 | Lazard Asset Management (Canada), Inc. does not disclose any non-public personal information about its customers to any third party, except as permitted by or required by any applicable law, including the laws of the United States and Canada. |
The Lazard Funds, Inc.Table of Contents
Please consider a Portfolio’s investment objectives, risks, charges and expenses carefully before investing. For more complete information about The Lazard Funds, Inc. (the “Fund”), you may obtain a prospectus or summary prospectus by calling 800-823-6300, or online, at www.lazardassetmanagement.com. Read the prospectus or each Portfolio’s summary prospectus carefully before you invest. The prospectus and each Portfolio’s summary prospectus contain the investment objectives, risks, charges, expenses and other information about each Portfolio of the Fund, which are not detailed in this report.
Distributed by Lazard Asset Management Securities LLC.
Annual Report 1
The Lazard Funds, Inc.A Message from Lazard (unaudited)
Dear Shareholder,
In 2018, volatility returned to global markets. The economic trajectories of the major economies diverged during the year, with US growth accelerating and non-US growth decelerating. Tighter US monetary policy, declining oil prices, and trade tensions between the United States and China also increased risk aversion. Against this backdrop, almost every major developed and emerging equity market declined during the year. Despite the uptick in global market turbulence, our portfolio management teams remained steadfast in their investment discipline and continue to focus on fundamental research.
The US equity market ended the year down after a severe fourth quarter sell-off. During the quarter, volatility as measured by the CBOE Volatility®Index increased, corporate credit spreads widened, the yield curve flattened, and the yield on the 10-year US Treasury declined. Crude oil prices fell by nearly $29 per barrel on the back of concerns over flagging global demand and elevated supply.
In Europe, political risks increased throughout the year as the Italian election led to a governing coalition of the League and the Five Star Movement. The United Kingdom struggled with finalizing a resolution to exit the European Union (“Brexit”) and German Chancellor Angela Merkel announced she would step down in 2021. The European Central Bank ended its monthly asset purchase program in December, but kept its benchmark interest rate at zero.
Emerging markets equities and debt fell significantly in 2018 as macroeconomic and geopolitical developments weighed on market sentiment. The rising US dollar pressured most emerging markets during the year. In Turkey, uncertainty related to the country’s trade deficit was exacerbated by US sanctions and a diplomatic dispute with the United States over a detained American pastor. Uncertainty about trade and concerns about decelerating Chinese growth rippled through the global economy. Despite these challenges, our emerging markets equity and debt teams believe that many emerging markets still have solid fundamentals, and are well positioned to grow faster than the global growth average.
2 Annual Report
We are privileged that you have turned to Lazard for your investment needs and value your continued confidence in our investment management capabilities. Be assured that our specialist investment teams, supported by our global infrastructure, are continuing to strive for the long-term patterns of performance that you expect.
Sincerely,
Lazard Asset Management LLC
Annual Report 3
The Lazard Funds, Inc.Investment Overviews (unaudited)
Emerging Markets Equities
Emerging markets equities experienced a highly volatile year in 2018, dominated by mostly political and macroeconomic factors. At different moments, the markets were primarily affected by sanctions, the effects of strong US economic growth and a strong US dollar, and a major trade dispute between the United States and China. The MSCI Emerging Markets®Index fell by 14.6%, as measured in US dollar terms, over the year. Although several Latin American markets were negatively impacted by US dollar strength, Brazilian shares rallied towards year-end on the election of fiscal reform candidate, Jair Bolsonaro, and returns for the year were less impacted than in Asia. Asian markets were hurt by the trade rhetoric and particularly by tariff increases that were implemented after May.
Chinese equities fell by 18.9% over the year as trade measures, such as tariffs, were implemented and internet companies recorded decelerating revenues. Investor worries over the possibility of severe earnings volatility pressured large technology company stocks in Taiwan and Korea on a relative basis. Thai shares benefited from robust trade performance and Indian stocks performed well despite political worries towards year-end. Pakistani shares and currency, however, fell throughout the year as the country’s trade and financial position undermined returns.
Most Latin American markets performed poorly over the year, pressured by the strong US dollar and volatile commodity prices. The election of Andres Manuel Lopez Obrador in Mexico initially helped markets, as he impressed investors but then, following unusual political decisions, Mexican share prices declined. The regional returns for the year were dominated by Brazil, where stocks were initially negatively impacted by the effects of the strong US dollar, but were later buttressed by the presidential victory of fiscal reform-seeking candidate Jair Bolsonaro.
Despite being hit by ongoing threats and several versions of sanctions, Russian equities managed to rally and finish the year only marginally lower than zero. Greek shares fell sharply as measures to stabilize the stock market did not impress investors. Equities in
4 Annual Report
the Czech Republic and Hungary held up relatively well as European economic performance was sustained throughout the year. Shares in South Africa, which descended into recession, and Turkey, where interest rates had to be increased substantially after authorities appeared to demonstrate a lack of action in an inflationary crisis, were considerably hurt by the effects of the strong US dollar.
From a sector perspective, consumer discretionary, communication services, health care, information technology, and real estate were the biggest underperformers. Utilities and financials fell slightly, while energy stocks rose in 2018.
International Equities
International equities declined significantly in 2018 as investor sentiment was undermined by global macroeconomic and geopolitical trends, including interest rate pressures, trade disputes, and populism. Riskier assets around the world sold off, with many generating their worst calendar-year performance since the global financial crisis a decade ago.
The MSCI EAFE®Index declined 12.5% in the fourth quarter and was down 13.8% in 2018. Emerging markets equities (represented by the MSCI Emerging Markets Index) fell less in the fourth quarter, declining 7.5%, but also fell dramatically in the second quarter and ended 2018 down 14.6%. US equities joined the rout, with the S&P 500®Index plunging 13.5% in the fourth quarter to end the year down 4.4%. In the fourth quarter, international equities (represented by the MSCI EAFE Index) outperformed US equities (represented by the S&P 500 Index) by about 100 basis points (bps), fueled by December’s outperformance of more than 400 bps. These returns are notable given the outperformance of US equities over international equities over much of the past decade.
Over the past couple of years, we believed that investors had not been pricing in many global risks, especially in the United States. As global economic data began to plateau and decline from peak levels earlier in 2018, markets entered the later phases of the economic cycle. International equity valuations at this point came under more pressure, bearing the brunt of investor fears about
Annual Report 5
slowing global growth and geopolitical tensions. This trend began to change later in the fourth quarter as US equities (represented by the S&P 500 Index) in December dropped 9%.
The latest economic data shows a deceleration in global growth, with recent indicators for manufacturing in decline. In the United States, which had resisted the slowing global trend, manufacturing (as measured by the Institute for Supply Management’s manufacturing index) decreased unexpectedly in December to a 2-year low. In Europe, leading indicators fell from elevated levels, and the euro zone’s 0.2% fourth quarter rise in GDP was the lowest since 2014. The Japanese economy contracted 0.3% in the third quarter with the MSCI Japan®Index returning -14.2% in the fourth quarter. China, in the meantime, has implemented stimulus (including liquidity injections, tax cuts, and regulatory easing) for several months as its economy slows and US tariffs weigh on sentiment.
One of the main factors compressing multiples in global equity markets has been political uncertainty. In the United States, trade tensions persisted, while the government shut down over funding for a physical wall on the nation’s southern border. In the United Kingdom, Prime Minister Theresa May’s Brexit deal with the European Union drew opposition from across the UK political spectrum, raising further investor uncertainty as the March 29th deadline for a deal draws closer. Elsewhere, France, Italy and Germany also experienced their own political tensions.
The decline of investor confidence in 2018 was most pronounced in emerging markets equities, with the MSCI Emerging Markets Index falling 14.6% for the year. Most of these losses occurred earlier in the year before the decline in developed markets. Some of this performance reflected the fact that emerging markets generated extraordinary returns in 2017 and that the asset class is relatively volatile. However, the downturn was also due to a significant shift in investor sentiment going into the year, when confidence was high as the major global economies appeared to be growing together and investors expected healthy earnings. Within a few months, however, US economic growth, boosted by tax cuts and fiscal stimulus, appeared to diverge from the rest of the world.
6 Annual Report
Relatively strong US growth supported further rate hikes by the US Federal Reserve (“Fed”), which in turn boosted the US dollar early in the year.
The rising dollar put pressure on emerging markets in general, but investors focused on countries with high current account deficits and/or significant holdings of US dollar-denominated debt, significantly impacting Argentina’s and Turkey’s equity markets. Another weight on emerging markets sentiment last year was trade. President Donald Trump in 2018 took action against trade deficits, implementing or threatening tariffs on nearly a quarter of US imports. Uncertainty about trade lowered Chinese confidence just as policymakers were trying to restrict credit growth, reduce systemic risk, and deleverage the economy. Chinese equities sold off, and decelerating Chinese growth rippled through the global economy. However, in the fourth quarter, emerging markets showed signs of resilience, with equities down far less than in developed markets.
The uncertainty and volatility global investors faced in 2018 will likely continue in 2019. We see this, however, as a partly positive development. The fact that investors are pricing in risks leads us to be more constructive about markets going forward given that valuations have come down. We acknowledge challenges for growth, geopolitics, and corporate earnings, but we also note that prior market reversals have led to more realistic pricing and, in some cases, opportunities.
US Equities
The S&P 500 Index fell 4.4% for the year. Following strong performance in 2017, stocks continued to set new records into the new year as solid economic data and progress in government initiatives spurred investor optimism. Corporate earnings and other indicators of economic health were largely positive, as the majority of companies reported quarterly earnings above expectations, the economy continued to add jobs at a strong rate, and consumer confidence hit an 18-year high in September. Annualized GDP growth readings during the year were broadly above consensus expectations, with second and third quarter readings at multi-year highs. However, markets suffered their worst quarter since 2011 in
Annual Report 7
the fourth quarter, as many investors worried that valuations for many higher-growth companies had gotten extended, while continued concerns about a prolonged US government shutdown, tariffs, Brexit, and a slowdown in the housing and oil markets accelerated the sell-off.
Global Securities
Global equities fell over the year. Although global economies remained on solid footing, the synchronized growth theme faded by the close of the year. The United States led gains through the first nine months of the year, with strong corporate fundamentals and powerful economic drivers. The Fed continued to hike rates at a measured pace and the yield on the US 10-year bond rose back above the 3% level. Trade concerns permeated, but some progress was made as the United States reached a preliminary agreement with Mexico and Canada and took steps toward resolving its differences with the European Union. Europe underperformed on renewed political anxiety and as the European Central Bank shifted its focus towards the end of its quantitative easing policy. The United Kingdom lagged, as the Brexit process dragged on without a clear deal in sight, while emerging markets were beset by concerns of slowing growth. Global markets declined sharply in the fourth quarter, as heightened trade tensions between the United States and China and added uncertainty around the Fed’s trajectory for future rate hikes drove an increase in volatility.
Global Infrastructure
During the year, the decline in global equity markets was steep and broad-based, partially reversing the gains in 2017. Dominating headlines in 2018 were concerns about the uncertainty around trade, investors’ low confidence, Italian budget disputes, a Brexit impasse, and interest rate concerns. The Fed hiked rates four times during the year, increasing the benchmark federal funds rate to 2.50% and indicating in its statement that further rate hikes would be appropriate, although emphasizing uncertainty around the exact timing. Italy reached a deal with the European Union over its 2019 budget, agreeing to reduce its deficit target to 2.04%.
8 Annual Report
Real Estate Equities
After a turbulent year in which the US real estate investment trust (“REIT”) market was at times lagging broader equities by more than twelve percentage points, a strong fourth quarter helped close the underperformance gap so that 2018 ended with the -4.3 % return of the MSCI USA Investable Market Index (“IMI”) Core Real Estate®Index, in line with the -4.4% return for the S&P 500 Index. While still marred by overall stock market weakness in the fourth quarter, REITs ended up benefiting from a risk-off environment and lower than expected interest rates. Triple net (a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the three “nets”) on the property), manufactured homes, and healthcare REITs delivered the best total return during the year, while community center retail, office, and data center REITs fared the worst.
Lazard Developing Markets Equity Portfolio
For the year ended December 31, 2018, the Lazard Developing Markets Equity Portfolio’s Institutional Shares posted a total return of -20.58%, while Open Shares posted a total return of -20.83%, as compared with the -14.58% return for the MSCI Emerging Markets Index.
Stock selection in the communication services, consumer staples, energy, financials, industrials, information technology and materials sectors as well as in Russia, China, and Taiwan detracted value. Baidu, a Chinese internet search company, declined on concerns of lower growth as the domestic economy slowed. China State Construction, a Chinese building and engineering services firm, fell as investors were disappointed by the slow pace of balance sheet improvement. Samsung Electronics, a South Korean technology company, eased in step with declining prices of memory chips. First Quantum, a copper miner with assets in Zambia, moved lower with commodity prices and concerns about new potential tax policies. Kingsoft, a Chinese gaming and software company, underperformed after it delayed the launch of its JX III mobile game.
In contrast, stock selection in the consumer discretionary sector as well as in Brazil, South Africa, and India helped performance. An
Annual Report 9
underweight in the communication services sector, South Africa and South Korea, and an overweight in the energy sector, Peru and China also added value. Novatek, an independent Russian oil and gas producer, outperformed on the continued ramp-up of Yamal Liquified Natural Gas (“LNG”) and the announcement of partnerships for Arctic LNG. Duratex, a Brazilian producer of wooden panels and sanitary chinaware products, rose after the election of President Jair Bolsonaro and on the expectation of rising prices and margins in the fourth quarter of 2018. Notre Dame Intermedica, a Brazilian vertically integrated healthcare insurance and medical service provider, did well on solid results. China Gas Holdings, a Chinese gas distribution company, outperformed as strong gas demand continued and concerns on distribution margins and connection fees were eased. Li Ning, a Chinese sportswear manufacturer, outperformed on optimism that its business would deliver strong results.
Lazard Emerging Markets Core Equity Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Core Equity Portfolio’s Institutional Shares posted a total return of -18.12%, while Open Shares posted a total return of -18.43%, as compared with the -14.58% return for the MSCI Emerging Markets Index. The R6 Shares posted a total return of -17.52% since inception on April 6, 2018 through December 31, 2018, as compared with the -15.48% return for the MSCI Emerging Markets Index for the same period.
Stock selection in the information technology and consumer discretionary sectors detracted from returns, as did stock selection in China, India, and Taiwan. Off-benchmark exposure to Argentina hampered returns, as it was one of the worst performing equity and currency markets. Grupo Supervielle, an Argentine private sector bank, hurt performance, as the Argentine peso was one of the worst performing currencies over the year due to external debt concerns and US dollar strength. Following newly imposed sanctions on Russia, Sberbank, the leading bank in the country with access to a large deposit base, was a detractor for the year. Tofas, a Turkish manufacturer and exporter of passenger and commercial vehicles, declined as potentially lower demand in key export markets, including Italy
10 Annual Report
and Spain, weighed on the company’s share price. We sold the security during the year. New Oriental Education, a Chinese private education business, underperformed due to rising trade tensions with the United States and weaker economic data. China National Building Material, a Chinese building materials company, pulled back on domestic GDP growth concerns.
In contrast, stock selection in the industrials sector helped performance during the year, as did stock selection in Brazil and Colombia. In addition, an overweight to Brazil and Russia, along with an underweight to China, added to returns. Russian integrated oil company, LUKOIL, outperformed as the company announced a share cancellation and provided clarity over its planned share buyback program. Brazil was one of the best performing equity markets over the year following the election victory of president-elect Jair Bolsonaro, who is perceived by many to be the more market-friendly candidate. As a result, Brazilian securities Banco do Brasil, a state-owned bank, and Azul, an airline company, were among the best performing securities in the Portfolio. HDFC Bank, a private sector Indian bank, ended higher on a pick-up in loan growth for private sector banks quarter-over-quarter. Ecopetrol, a Colombian integrated oil company, benefited from higher energy prices over the year.
Lazard Emerging Markets Equity Advantage Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Equity Advantage Portfolio’s Institutional Shares posted a total return of -16.23%, while Open Shares posted a total return of -16.40%, as compared with the -14.58% return for the MSCI Emerging Markets Index.
Stock selection in the financials and industrials sectors accounted for the underperformance for the year. The less-than-benchmark exposure in financials sector and greater-than-benchmark exposure in the real estate sector detracted slightly for the year. Stocks that detracted included Sberbank, which was hurt by the Russian sanctions, as the sanctions were expected to reduce loan demand. The company also reported weakening in their net-interest margins, which concerned investors. Turk Telekomunikasyon, the leading telecommunications firm in Turkey, fell on concerns over their abil-
Annual Report 11
ity to repay their non-lira denominated debt with the sharp fall in the Turkish lira. In our view, while they maintain outstanding debt, they are not unduly levered relative to their industry. Country Garden, a property development company based in China, suffered after they reported two accidents resulting in a loss of life. The company announced a halt of all construction until inspections could be completed. The overhang coupled with weaker sales growth in the second half of 2018 caused a sharp sell-off in the stock.
Conversely, stock selection was favorable in the consumer staples and information technology sectors. Less-than-benchmark exposure in the consumer discretionary sector and greater-than-benchmark exposure to the information technology sector also added value for the year. Stocks that contributed to the year’s return included Yageo, the Taiwan electronics component manufacturer, which enjoyed a strong first half of the year. The industry’s continued appetite for mid-end and high-end components, including ceramic capacitators and chip resistors, along with chronic shortages have benefited the company and allowed the company to maintain favorable pricing. After a difficult first quarter, LG Uplus, the Korean telecom, rebounded with a 17% gain for the year. They reported a solid increase in operating profits and substantial subscriber growth driven by its new data plan. Yuanta Financial, the Taiwan investment banking and brokerage concern, also recovered from a first quarter sell-off; their brokerage business continued to gain strength supported by a high level of market activity and interest from retail investors.
Lazard Emerging Markets Equity Blend Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Equity Blend Portfolio’s Institutional Shares posted a total return of -21.05%, while Open Shares posted a total return of -21.39%, as compared with the -14.58% return for the MSCI Emerging Markets Index.
Performance was hurt by the Portfolio’s allocation to small cap stocks and dynamic allocation between value and growth stocks. Another detractor was stock selection in the energy, financials, health care, and information technology sectors as well as stock
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selection in China, Korea, Russia, Taiwan, and Turkey. Finally, the Portfolio’s greater-than-benchmark exposure to Turkey and off-benchmark exposure to Argentina lowered returns.
In contrast, the Portfolio benefited from stock selection in the utilities sector as well as in Brazil, Colombia, and India. Performance was also helped by lower-than-index exposures to the communication services sector and to South Africa.
Lazard Emerging Markets Equity Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Equity Portfolio’s Institutional Shares posted a total return of -18.09%, while Open Shares posted a total return of -18.32%, and R6 Shares posted a total return of -18.09%, as compared with the -14.58% return for the MSCI Emerging Markets Index.
During the year, shares of Cielo, a Brazilian credit card processor, fell on concerns about increased competition and regulatory change. SK Hynix and Samsung Electronics, a Korean semiconductor manufacturer and a Korean manufacturer of electronic goods, respectively, were both hurt by falling memory chip prices. Sberbank, a Russian bank, was hurt by renewed sanction concerns. Concerns over recent weakness in Apple smartphone sales negatively affected sentiment for AAC Technologies, a Chinese manufacturer of smartphone components. Stock selection within the financials and energy sectors and within Brazil and Russia hurt performance. A higher-than-index exposure to Turkey also detracted from value.
In contrast, Banco do Brasil, a Brazilian bank, continued its recent strong performance with more positive data in Brazil for loan growth, non-performing loans, and net interest margins, and optimism for economic reforms under the Bolsonaro administration. Tata Consultancy Services, an Indian IT services provider, continued to benefit from a weaker rupee and improved sentiment regarding IT spending across the sector. LUKOIL, a Russian energy company, benefited from the environment of higher oil prices and a weaker ruble, and shares were also boosted by a share buyback program. ENN Energy, a Chinese gas distribution company, continued to benefit from healthy volume growth and the government’s
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strong push to boost gas consumption. Petrobras Distribuidora, an operator of petrol stations in Brazil and throughout Latin America, was boosted by positive sentiment on the back of the election of market-friendly candidate, Jair Bolsonaro. Stock selection within China helped performance. A greater-than-benchmark exposure to Russia also added value.
Lazard Equity Franchise Portfolio
For the year ended December 31, 2018, the Lazard Equity Franchise Portfolio’s Institutional Shares posted a total return of -5.10%, while Open Shares posted a total return of -5.34%, as compared with the -8.71% return for the MSCI World®Index.
Express Scripts shares performed strongly during the year, driven by strong results including an encouraging outlook for 2019 claims volumes. Furthermore, Express Scripts shareholders approved the acquisition by Cigna, despite the short-lived opposition of activist investor Carl Icahn. We exited our position in the fourth quarter of the year to make room for new investment candidates with better risk/reward characteristics.
SES, one of the leading providers of satellite infrastructure, was one of the strongest contributors to performance following market speculation that a deal will be completed on C-Band spectrum in the United States for use by mobile operators for 5G networks during 2019. This was supported by a series of positive developments including the US Federal Communications Commission (FCC) voting to approve allocation of some or all of the 500 MHz C-Band spectrum for 5G use, at least two FCC Commissioners speaking in favor of a market-based approach, and Eutelsat signing up to the Intelsat-SES consortium. Telesat also signed up to the consortium. We have undertaken a review of the potential release of the C-Band spectrum for 5G use in the United States and have incorporated the valuation, on a risk-adjusted basis while applying what we believe to be a margin of safety, in our base value for SES.
US company Cisco, the dominant global manufacturer of switch and router networking equipment, performed strongly during the year. Cisco’s results demonstrated growth across multiple busi-
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nesses, including its core switch business, which generated stagnant revenue growth in recent years. Cisco also showed progress in growing recurring revenues, and the ongoing conversion of customers to subscription plans. We believe that underlying revenues in the core switch business are stronger than headline numbers suggest, given the drive to sell new products on subscription plans. Cisco is a strong generator of cash, with no net debt.
Medical waste services business Stericycle was the largest detractor during the year. We remain somewhat perplexed by its performance in 2018, as we believe the business continues to perform well. Stericycle’s regulated concession pricing is tracking as expected, core regulated waste continuing to grow and the late 2017 restructuring program (headcount reduction and sourcing initiatives) is already yielding around half of the targeted recurring savings. Additionally, results were improved by reduced taxes, depreciation and interest costs. The company continues to execute well on its enterprise resource planning system integration, although this will not be completed until 2022, and it is selling underperforming assets. We believe that Stericycle is one of the most attractive names in our Franchise universe and we used the price falls to increase our stake in the business during the year.
US drug distributor McKesson fell during the year. CEO and Chairman John Hammergren announced his resignation effective March 2019, to be succeeded by COO Brian Tyler, who previously ran Europe and US Pharma. We regard Hammergren’s departure as a positive development, as McKesson had missed several important performance targets. Additional positive news was the announcement Rite Aid has renewed its drug distribution services with McKesson for 10 years to 2029, albeit most likely at lower pricing, and the sale of half of McKesson’s stores to Walgreens. Finally, a New York court has found the state’s Opioid Stewardship Act, which required the company to put a portion of its sales of opioids into a fund for the purposes of dealing with the opioid crisis, unconstitutional. The firm is still expecting to spend around $100 million on opioid related costs in 2019.
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Lazard Global Equity Select Portfolio
For the year ended December 31, 2018, the Lazard Global Equity Select Portfolio’s Institutional Shares posted a total return of -7.12%, while Open Shares posted a total return of -7.33%, as compared with the -9.42% return for the MSCI All Country World®Index (“ACWI”).
Stock selection in the health care sector contributed to performance. Shares of healthcare IT company IQVIA rose after the company reported third-quarter results above expectations, driven by strength in its R&D Solutions segment. Stock selection in the consumer staples sector also helped returns. Shares of Coca-Cola rose after the company reported strong earnings in the latter half of the year, driven by strong organic sales growth, refranchising, and ongoing productivity initiatives.
In contrast, less than-benchmark exposure to the utilities sector detracted from performance, as the sector was among the best performers in the benchmark index during the year. Stock selection in the energy sector also hurt returns. Shares of oil services provider Schlumberger fell along with peers amid a steep decline in oil prices during the year.
Lazard Global Listed Infrastructure Portfolio
For the year ended December 31, 2018, the Lazard Global Listed Infrastructure Portfolio’s Institutional Shares posted a total return of -3.73%, while Open Shares posted a total return of -3.98%, as compared with the 2.56% return for the Global Listed Infrastructure Index (USD Hedged)1and -8.71% return for the MSCI World Index.
SES, one of the leading providers of satellite infrastructure, was the strongest contributor to performance following market speculation that a deal will be completed on C-Band spectrum in the United States for use by mobile operators for 5G networks. We have undertaken a review of the potential release of the C-Band spectrum for 5G use in the United States, and have incorporated the valuation on a risk-adjusted basis, while applying what we believe to be a margin of safety, in our base value for the company. This was supported by a series of positive developments, including
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the FCC voting to approve allocation of some or all of the 500 MHz C-Band spectrum for 5G use, and at least two FCC Commissioners speaking in favor of a market-based approach, and Eutelsat signing up to the Intelsat-SES consortium.
Red Electrica, owner of Spanish electricity transmission assets, rose during the year. Newsworthy events included the purchase of a transmission concession in Peru for 181 million euros, albeit a high price, and the Spanish Commission of Markets and Competition (CNMC) confirming a recommended 5.6% allowed return for the next regulatory period. The CNMC is currently an advisory body only; the ultimate decision on prices is made by the Ministry of Industry. This is likely to change in future with the CNMC being given more say in the final decision. We consider an adjustment in the decision making process, from an elected ministerial official to an independent commission, as a positive development.
The most significant detractor during the year was Atlantia, an Italian holding company operating toll motorways and airports, as the company’s share price fell sharply after the collapse of the Morandi bridge in Genoa. The tragedy resulted in the death of 43 people and censure from the Italian government, including the start of a process to revoke the concession agreement. Investigations into the collapse are ongoing and we believe are unlikely to yield specific details of causality or financial liability to the company for some time. It is worth noting the concession agreement includes terms that, in the event the concession is revoked and Atlantia is found responsible, the Italian government will pay Atlantia the remaining value of the concession less 10% of the equity portion as a penalty. The company has so far expressed condolences to the victims, indicated 500 million euros is available for compensation and bridge re-building, and confirmed full compliance with all concession requirements, including maintenance and safety monitoring of the bridge. We have been in regular contact with Atlantia management and continue to monitor the situation closely. Another detractor during the period was PG&E after its share price fell due to concerns that the utility equipment of the company may have contributed to the spate of wildfires in northern California that occurred in early November 2018.
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Lazard Global Realty Equity Portfolio
For the year ended December 31, 2018, the Lazard Global Realty Equity Portfolio’s Institutional Shares posted a total return of -11.86%, while Open Shares posted a total return of -12.14%, as compared with the -6.33% return for the MSCI ACWI IMI Core Real Estate®Index.
The underperformance was due to both poor country and stock selection, with the negative impact weighted toward stock selection. Country selection negatively affected performance due to a general overweight within emerging markets, primarily Brazil, India, and Indonesia. Poor stock and sector selection was primarily concentrated in North America (Canada and United States) as those markets shifted toward defensive positioning which benefited longer-term leased sectors such as health care and triple net REITs. With the Portfolio’s less-than-benchmark exposure to those sectors due to lackluster property fundamentals and little earnings growth for the US-based healthcare REITs, performance lagged. Negative contributors to relative performance also included some emerging market-based companies, namely SOHO China, Times China, and Emaar Properties (UAE), and in one US company, Weyerhaeuser. While we view these companies as top-quality real estate companies that generated outsized cash flow growth within their respective regions, and trade at significant discounts to fair value, emerging markets were weaker throughout 2018 due to concerns of a global economic slowdown, trade tensions, government-enacted policies meant to curb property price appreciation in China, and lower oil prices in the UAE. As a result of the more negative macro sentiment in China, the Portfolio consolidated its Chinese exposure during the second half of 2018 by exiting Times China. Weyerhaeuser, meanwhile, was hurt by trade tensions, tariff concerns, and falling timber prices due to an oversupply in the market. This glut has begun to dissipate and with that shift, lumber prices have begun to recover.
From an individual stock perspective, the primary contributors to relative performance were Americold (United States, industrial), American Tower (United States, telecom/infrastructure), and Goodman Group (Australia, industrial). Americold, an owner of special-
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ized cold storage industrial properties, benefited from strong execution post-IPO and increasing investor acceptance of the unique cold storage warehouse sector. As one of the largest global owners of telecommunication towers, American Tower continues to benefit from the strong growth in data transmission and the move to 5G throughout the globe and is posting among the highest levels of earnings growth among US-domiciled REITs. Meanwhile, Goodman Group, a global player in industrial warehouses, is benefiting from the increasing demand for logistics-oriented properties due to e-commerce and global trade.
Lazard Global Strategic Equity Portfolio
For the year ended December 31, 2018, the Lazard Global Strategic Equity Portfolio’s Institutional Shares posted a total return of -9.16%, while Open Shares posted a total return of -9.39%, as compared with the -9.42% return for the MSCI ACWI.
Stock selection benefited relative performance during the year. In the communications services sector, media and entertainment companies, French video company, Ubisoft, and American video company, Activision, both had good starts to the year before being sold off in the fourth quarter, while South African multinational internet and media group, Naspers, suffered due to its holding in Tencent. In the industrials sector, capital goods company, Bunzl, performed well with its solid balance sheet and strong cash flows supporting the stock, while the professional publisher RELX also held up well. In New Zealand, a private equity bid for Trade Me, the largest internet auction website operating in New Zealand, helped to validate our view that the stock was undervalued. In the financials sector, our holding in Intercontinental Exchange performed well, as the company benefited from greater market volatility.
On the negative side, the Portfolio’s energy holdings, EOG, Suncor, and Halliburton, were perceived as linked to the falling oil price, and on a relative basis, the Portfolio was hurt by its low exposure to the utilities sector. In the consumer discretionary sector, luxury watchmaker, Swatch, fell on cyclical concerns despite having a very strong balance sheet while Techtronic, a designer and manufacturer of power tools and outdoor power equipment, fell on weak
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results from the United States. Our Japanese small cap holdings, Digital Garage and TechnoPro, were hurt on cyclical concerns despite giving solid results. Within emerging markets, Indian bank ICICI recovered from market jitters helped by currency stabilization and solid results.
New Fund Launched: Lazard International Compounders Portfolio
We are pleased to announce the December 31, 2018 launch of the Lazard International Compounders Portfolio. Fund commentary is not available at this time due to the short interval between the Portfolio’s inception date and the end date of the period covered by this annual report. However, we look forward to providing you with a performance review of this Portfolio in the next Lazard Funds annual report.
Lazard International Equity Advantage Portfolio
For the year ended December 31, 2018, the Lazard International Equity Advantage Portfolio’s Institutional Shares posted a total return of -16.26%, while Open Shares posted a total return of -16.52%, as compared with the -13.79% return for the MSCI EAFE Index.
Adverse stock selection accounted for the year’s underperformance. The Portfolio underperformed the MSCI EAFE Index in seven of eleven sectors, and was hurt primarily by holdings in the consumer discretionary, materials, and information technology sectors. Health care and consumer staples sector holdings added value in the year. Regionally, stock selection was strongest in Asia ex-Japan, but lagged in Europe, including the United Kingdom. Our residual cash position helped to mitigate negative returns. Lazard’s factor family (factors used in quantitative analysis and the weight placed on those factors) performance was mixed, as value provided favorable results offset by weakness in sentiment and growth.
Detractors for the year included Covestro, the German chemicals company, which struggled in the year with the uncertain global economic outlook. Their proprietary polyurethane precursor product, TDI, is facing new competition from two rival chemical firms, which will place pressure on prices. They issued a profit warning in
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November, further depressing the stock. Continental AG, the German tire manufacturer, issued a profit warning in August after their second quarter conference call warning of lower margins and revenues across all of their divisions. The timing disappointed analysts who downgraded the stock. With the outlook for auto sales remaining uncertain, the stock has continued to sell off. Deutsche Lufthansa also disappointed, as the airline’s focus remains on cutting costs to preserve profit, as fare growth is slight at best while fuel costs are rising. Strong competition from low-cost airlines in Europe and national carriers in Asia and the Middle East is pressuring fares to all regions.
Stocks that contributed to the Portfolio’s return included CSL, as the Australian biotech giant was one of the Portfolio’s largest active positions. Demand for the company’s hemophilia drug and other higher margin offerings, including plasma protein therapies, remains high. The company retains a dominant market position and its growth continues to outpace its competitors. We have trimmed our overweight modestly over the course of the year. Elsewhere, Evraz, the UK-listed Russian steel producer, posted strong results during the year and has a significant dividend yield of 15%. The price of vanadium, which is used in the manufacture of various auto components, increased during the year and a healthy steel market backdrop aided rapid deleveraging and higher shareholder returns. Finally, Saracen Mineral Holdings, the Australian gold mining concern, enjoyed strong returns notably in the last quarter as gold prices surged with some investors exiting stocks in favor of tangible assets. The company maintains extensive reserves, which should allow it to meet its ambitious growth targets.
Lazard International Equity Concentrated Portfolio
For the year ended December 31, 2018, the Lazard International Equity Concentrated Portfolio’s Institutional Shares posted a total return of -16.20%, while Open Shares posted a total return of -16.47%, as compared with the -14.20% return for the MSCI ACWI ex-US.
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In a very volatile year, performance for the Portfolio was the result of a combination of some significant wins and losses in individual stocks, as one would expect in a concentrated portfolio. However, the effect of stock selection explains slightly less than half of the underperformance against the benchmark, with most of the underperformance explained by allocation (i.e. stock weighting). The Portfolio was negatively affected by some problematic stocks, which detracted from performance. Three of the four stocks were sold in the year, as the team judged that the investment thesis had been violated. In the communication services sector, our holding in Turkcell fell sharply, although the main driver of this was the acute depreciation of the Turkish Lira, as the country battled a material current account deficit and erratic political leadership. The son-in-law of President Erdogan was appointed the head of the Turkish central bank during the period, which led the market to question the independence of the central bank, triggering the violent selling of the currency. We believe Turkcell management actually executed well during the period, and the business model proved relatively defensive when compared with other sectors including banks, but this was not enough to offset the difficult macro situation in Turkey created by President Erdogan.
French global automotive supplier, Valeo, which has been a long term (and largely successful) holding in the Portfolio, was also sold in the period as our thesis, specifically that growth in the order book would lead to impressive organic growth in revenues and operating profit, was challenged by some uncharacteristically weak quarterly numbers. Despite detailed work, we were not able to reconcile the relationship of orders to revenues, and weak cash conversion also represented a problem. We think, given this, Valeo will struggle to meet its medium-term financial targets and we will assess the stock again after this potential disappointment.
Lastly, our holding in British American Tobacco (“BAT”) fell as a combination of high leverage after the Reynolds acquisition, fears about disruption from vaping products including Juul, and the Food and Drug Administration’s attempt to ban menthol cigarettes hit the stock. We still believe vaping will be incremental to overall nicotine demand and that BAT will launch a competitive product
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with an attractive form factor, but in the short term, it could be a headwind. The stance of the FDA has not been helpful for BAT shareholders. For the first time, the availability of vaping products means that the FDA’s threat to reduce nicotine content in cigarettes must be taken seriously. Addicted consumers can now satisfy their craving in a less harmful way. BAT is threatened by any action on menthol cigarettes, since after the Reynolds acquisition around 15% of operating profit comes from menthol, mostly under the Newport brand. Our scenario analysis showed an increased probability of a more acute bear case scenario, where falling operating profit would combine with this higher financial leverage, and have an adverse effect on equity value, hence the team decided to exit the position.
On the positive side, stock selection in the industrials sector was very helpful to overall performance. Two stocks in particular, Safran and Wolters Kluwer (“Wolters”), contributed over 2.5% to outperformance. Safran, the French Aerospace engine manufacturer, appreciated materially after the firm successfully ramped up deliveries of the LEAP engine. Our investment thesis, that a greater proportion of aftermarket engines spares and supplies in the overall business mix would enhance financial profitability and stability, gained a greater appreciation among the investing community. Safran’s performance was enhanced by the successful integration of Zodiac Aerospace, an underperforming manufacturer of aerospace seating. Our impression was that Zodiac Aerospace was undermanaged and had a relatively simple product when compared with the equipment typically made by Safran. This has been supported by recent results, which indicate a rapid turnaround at Safran is underway. Netherlands professional publisher, Wolters, is a very different business model to Safran, although the essence of the investment thesis was similar. Wolters, like Safran, was experiencing a change in its mix of business, which we were able to identify before a majority of market participants. This change in mix would, we believed, lead Wolters to be a company with faster organic growth, better margins, and a more stable recurring business model. The specific business mix change at Wolters was the transition from print to digital. As print subscriptions declined, and digital subscriptions increased, the overall organic growth of the
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business accelerated. This is relatively simple, but was poorly understood by the market, in our view. In addition, we have very high regard for Wolters digital products, which are typically software packages that automate and simplify professional services including law, medical services, and accounting. They are almost indispensable and natural monopolies, making them very highly profitable, stable businesses. Wolters has lower financial productivity when compared with Safran, but had a very pronounced positive multiple rerating. We have maintained our position in Safran, but sold our position in Wolters in the year, as it reached our target price during the period.
Stock picking in the health care and information technology sectors was also helpful. Medtronic, a Dublin-based but US-focused medical device company, had a much better period of execution in 2018, vindicating our decision to add to the stock during the challenging year before. The company showed the formula of mid-single digit organic growth and positive operating leverage from the fixed selling, general and administrative expenses base of sales people was intact. The execution was not remarkable, but the very low valuation of the company when compared with medical device company peers showed it was priced for disappointment, while we view Medtronic as a great business led by a decent management team. In the information technology sector, our holdings in SAP, the German enterprise software company, Taiwan Semiconductor, a Taiwan-based manufacturer of semiconductors, and Digital Garage, the Japan context company, were also helpful to relative return.
Lazard International Equity Portfolio
For the year ended December 31, 2018, the Lazard International Equity Portfolio’s Institutional Shares posted a total return of -13.61%, while Open Shares posted a total return of -13.83%, and R6 Shares posted a total return of -13.62%, as compared with the -13.79% return for the MSCI EAFE Index.
Stock selection in the consumer staples sector detracted from relative returns. British American Tobacco declined as a potential ban of menthol in the US combustibles market made the potential for significant earnings per share contraction more of a reality. For several quarters, we had thought the growth algorithm in the com-
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bustible business (revenues lost from modest volume declines were more than offset by revenues gains by price increases) remained generally intact, despite a short-term larger volume setback early in the year, and the stock represented good relative value. However, due to the fact that management had more recently appeared less confident in their margin outlook, along with the potential menthol ban and high financial leverage in the business model, we deemed the thesis impaired and sold the stock. In the energy sector, the Canadian integrated oil sands and refinery company, Suncor, lagged on the back of a very weak commodity. With cash operating costs below $50/barrel, however, we believe Suncor will continue to generate significant free cash flow. Management spent the past several years repositioning their portfolio by selling highly valued infrastructure and renewables as well as downstream assets and buying cheap, synergistic oil assets. Total operating costs continue to decline while production growth remains steady amidst declining capital expenditures. This capital allocation model allows Suncor to be one of the rare large energy companies with the ability to buy back stock and increase their dividend. Lastly, the Portfolio’s lower-than-benchmark weights in the utilities and health care sectors detracted from relative returns.
In contrast, stock selection in the consumer discretionary sector was among the largest drivers of relative returns. Don Quijote, a Japanese discount retailer that focuses on lower cost household items to drive store traffic, performed well, rising almost 20%. The company announced a favorable, significant transaction with FamilyMart involving Don Quijote taking full control of FamilyMart’s struggling Uny chain of stores, while FamilyMart made a tender offer for 20% of Don Quijote shares in the market. Elsewhere, stock selection in the financials sector was additive to relative returns. Aon, the global insurance broker domiciled in the United Kingdom, helped performance during the year. This long-term holding has demonstrated the ability to generate strong free cash flow from operating leverage derived from improving organic growth and disciplined spending and capital allocation. The rising free cash flow has been used for sizable and consistent share buybacks. More recently, investors have rewarded the stock for the increasingly consistent level of organic revenue growth. Also in the finan-
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cial services sector, DBS Group Holdings, Singapore’s largest bank, outperformed. Our original thesis was predicated on an increase in net interest margins and fading bad debt charges. In a year when most US and European banks saw significant multiple compression, DBS outperformed with higher margins resulting from a consistent focus on increasing digitization, improving credit quality, and solid loan demand. Stock selection in the health care sector was also beneficial to relative returns as shares of Medtronic, the Irish-domiciled global leader in medical devices, positively impacted performance. Our thesis of improving revenue growth from new product launches coupled with margin expansion from an increased focus on costs continued to play out.
Lazard International Equity Select Portfolio
For the year ended December 31, 2018, the Lazard International Equity Select Portfolio’s Institutional Shares posted a total return of -14.90%, while Open Shares posted a total return of -15.16%, as compared with the -14.20% return for the MSCI ACWI ex-US.
Stock selection in the consumer staples sector detracted from relative returns. BAT declined as the sensitivities around the potential ban of menthol in the US combustibles market made the potential for significant earnings per share contraction more of a reality. For several quarters, we had thought the growth algorithm in the combustible business (revenues lost from modest volume declines were more than offset by revenues gained by price increases) remained generally intact, despite a short-term volume setback early in the year, and the stock represented good relative value. However, due to the fact that management had more recently appeared less confident in their margin outlook, along with the potential menthol ban and high financial leverage of the business model, we deemed the thesis impaired and sold the stock. In the energy sector, the Canadian integrated oil sands and refinery company, Suncor, lagged on the back of a very weak commodity. With cash operating costs below $50/barrel, however, we believe Suncor will continue to generate significant free cash flow. Management spent the past several years repositioning their portfolio by selling highly valued infrastructure and renewables as well as downstream assets and buying cheap, synergistic oil assets. Total operat-
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ing costs continue to decline while production growth continues amidst declining capital expenditures. This capital allocation model allows Suncor to be one of the rare large energy companies with the ability to buy back stock and increase their dividend. Additionally, the Portfolio’s lower-than-benchmark weight to the outperforming energy sector detracted from relative returns.
In contrast, stock selection in the financials sector was among the largest drivers of relative returns during the year. After a period of deteriorating credit quality, Indian bank ICICI Bank’s problem assets, in our view, have peaked and should begin to fall. As domestic loans increase relative to the total, these higher margin loans should also provide a tailwind for net interest margins. As a beneficiary of the recent liquidity squeeze in Indian markets resulting from the debt default from a non-bank financial competitor, the path to a mid-teens return on equity is clearer and should drive the book value multiple higher as a result. Elsewhere, Aon, the global insurance broker domiciled in the United Kingdom, helped performance during the year. This long-term holding has demonstrated the ability to generate strong free cash flow from operating leverage derived from improving organic growth and disciplined spending and capital allocation. The rising free cash flow has been used for sizable and consistent share buybacks. More recently, investors have rewarded the stock for the increasingly consistent level of organic revenue growth, which has enabled the compounding effect of the company’s solid return on equity of nearly 20%. Also in the sector, DBS Group Holdings, Singapore’s largest bank, outperformed. Our original thesis was predicated on an increase in net interest margins and fading bad debt charges. In a year when most US and European banks saw significant multiple compression, DBS outperformed with higher margins resulting from a consistent focus on increasing digitization, improving credit quality, and solid loan demand. Stock selection in the health care sector was also beneficial to relative returns as shares of Medtronic, the Irish-domiciled global leader in medical devices, positively impacted performance. Our thesis of improving revenue growth from new product launches coupled with margin expansion from an increased focus on costs continued to play out.
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Lazard International Equity Value Portfolio
Since inception on October 31, 2018, the Lazard International Equity Value Portfolio’s Institutional Shares posted a total return of -8.49%, while Open Shares posted a total return of -8.63%, as compared with the -4.97% return for the MSCI EAFE Index.
Great Canadian Gaming (“GC”), the largest casino operator in Canada, contributed to performance in the fourth quarter. When we invested in GC, the company had just won a large contract to operate and redevelop casinos in the Greater Toronto Area (“GTA”). This contract consisted of three gaming facilities with 4,300 slot machines, 60 table games, and 2,200 staff. After extensive due diligence, we invested in this under-followed stock because we believed the GTA opportunity to redevelop and dramatically expand the gaming facilities would prove much larger than other investors expected. At the time, we conservatively estimated the GTA was worth more than 60% of the company’s market cap and felt it would be a matter of “when not if” other investors began to properly value these new operations.
During the period, GC reported quarterly results that were significantly higher than expectations. In line with our thesis, GTA operations were the key driver of significant sales and profit growth. We were particularly pleased to see that this growth was achieved despite the fact that GC’s redevelopment plans are in the very early stages of execution. We believe the upside potential from the GTA remains much larger than many other investors appreciate. As redevelopment plans progress, operational efficiency improves and additional gaming capacity comes on line, we think the value of GC will continue to climb. As of year-end, we remained holders of the stock.
Genting Malaysia (“Genting”), the country’s largest casino operator, was a large detractor from performance in the period. We invested in Genting because we believed the transformation of its core Highlands casino facility into a world-class gaming and entertainment resort would generate high returns on capital. The final phase of this capital allocation-based catalyst was the planned
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opening of a 20th Century Fox (“Fox”) theme park—the only one of its kind in Asia, early in 2019.
In November, however, Genting suffered from two events that invalidated our investment thesis. First, the government’s planned gaming tax increase was set at a significantly higher rate than expected (41%, the highest effective gaming tax in Asia). Second, Fox announced it was pulling out of the theme park project. We believe these developments will result in lower returns, less cash flow, and, very likely, significant write-downs (as Genting now has a theme park with no theme). We exited the position in the fourth quarter.
Lazard International Small Cap Equity Portfolio
For the year ended December 31, 2018, the Lazard International Small Cap Equity Portfolio’s Institutional Shares posted a total return of -24.88%, while Open Shares posted a total return of -25.09%, as compared with the -17.89% return for the MSCI EAFE Small Cap®Index.
Stock selection in all major regions detracted from performance, particularly in Japan, Asia ex-Japan, and Continental Europe. On a sector basis, stock selection’s contribution to performance in industrials and materials was more than offset by stock selection in consumer discretionary, real estate, and health care. Some of the names that affected performance during the year include Speed-Cast, an Australian-listed provider of satellite-based communication network services, which detracted from performance during the year. In August, the company guided full-year numbers below previous expectations. The guidance, coupled with higher debt levels due to an acquisition, led to a pullback in the shares. After speaking with management, the Portfolio team reviewed the position and actually added to the holding. Taptica International, a London-listed, Israel-based provider of online advertising solutions also detracted for the year. The company has made a number of strategic acquisitions and now operates on a global basis. Its shares were impacted early in the year by market concerns related to Facebook’s data privacy issues. The stock fell further in the fourth quarter after the CEO resigned for matters unrelated to his posi-
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tion. We exited our Taptica position to make room for new investment candidates with better risk/reward characteristics.
On the positive side, Aroundtown, a German-listed real estate company which acquires assets at attractive yields and over time improves those assets to earn higher rents and returns, contributed to the year’s performance. The company reported strong progress on its pace of investments as well as positive first-half results, which helped propel the stock. We continue to hold the shares. JTC PLC is a UK-based provider of administrative services to institutional and private clients in the investment management industry. The stock performed well in the fourth quarter, apparently on investor recognition of the company’s stable business model and defensive characteristics in an otherwise weak market environment.
Lazard International Strategic Equity Portfolio
For the year ended December 31, 2018, the Lazard International Strategic Equity Portfolio’s Institutional Shares posted a total return of -10.35%, while Open Shares posted a total return of -10.55%, and R6 Shares posted a total return of -10.35%, as compared with the -13.79% return for the MSCI EAFE Index.
The Portfolio’s outperformance in the year was driven by stock selection. In the consumer discretionary sector, Japanese media company, CyberAgent, rerated as investors took a less negative view on its Abema TV business, and games company, Ubisoft, saw very strong progress in an improving industry environment. Information technology company, Accenture, continued to benefit from digital transformation programs, while the Portfolio’s professional services companies, RELX and Wolters Kluwer, and aerospace supplier, Safran, held up well. In the consumer discretionary sector, Japanese discounter, Don Quijote, entered a significant positive transaction with convenience store rival FamilyMart. In the financials sector, while Julius Baer and Prudential PLC were hurt by weak financial markets, uncorrelated bank, DBS, was strong, as was insurance broker, Aon and the emerging market banks, Housing Development Finance Corp., ICICI (India) and Ping An (China). European Coca-Cola bottler Coca-Cola European Partners, saw strong trading partly as a result of the warm summer weather.
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On the negative side, tobacco company BAT was hurt by regulatory pressure from the FDA, specifically the proposal to ban menthol cigarettes, as well as continued volume pressure. In the energy sector, New Zealand petrol supply company, Z Energy, was hurt by rising competition. Despite encouraging results from medical devices stock, Medtronic, the Portfolio was hurt on a relative basis by its low exposure to large pharmaceutical stocks, and to the utilities sector, which performed strongly as the market weakened. French building materials stock, Cie de Saint-Gobain, fell on cyclical fears, while Chinese internet companies, 58.com and CTrip.com saw rising competition.
Lazard Managed Equity Volatility Portfolio
For the year ended December 31, 2018, the Lazard Managed Equity Volatility Portfolio’s Institutional Shares posted a total return of -7.21%, while Open Shares posted a total return of -7.50%, as compared with the -8.71% return for the MSCI World Index.
Stock selection and sector allocations were both favorable during the year. Less-than-benchmark exposure to financials and greater-than-benchmark exposure to the utilities sector provided the greatest value in terms of sector positioning. This was partially offset by less-than-benchmark exposure to the information technology sector and greater-than-benchmark exposure to the industrials sector. Regionally, less-than-benchmark exposure to Japan and Germany benefited relative performance, while greater-than-benchmark exposure to Canada and less-than-benchmark exposure to the United States detracted. Stock selection was favorable in six of eleven sectors led by holdings in the consumer staples and financials sectors. Consumer discretionary and information technology holdings lagged the benchmark.
Stocks that contributed to the Portfolio’s 2018 return included Eli Lilly, as the US drug manufacturer reported a third quarter largely in line with expectations despite a drop in US revenue. Pricing difficulties in their insulin business appeared to stabilize and this encouraged investors. CSL Limited, an Australian global specialty biotechnology company, was a standout performer for the year. Their subsidiary, Seqirus, a global leader in influenza vaccine inno-
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vation, announced FDA approval of its next generation cell-based manufacturing process, which will enable Seqirus to more than double current production levels for supply in the 2019-2020 influenza season. After struggling for several years, Procter & Gamble, an American multinational consumer goods corporation, appears to have regained its momentum with a strong pick-up in US sales, the most profitable component of its business. A strong third quarter and encouraging channel checks led to a number of upgrades to the stock. The defensive character of their business was also appealing to investors in light of the market weakness.
Detractors for the year included Danske Bank. The Danish bank’s share price fell as investor concerns over improving European growth and accompanying higher interest rates, which boost bank profitability, faded. A money laundering scandal in their Estonia branch also is weighing on the stock. We sold our position during the year. Covestro AG, the German chemicals company, struggled with the uncertain global economic outlook. Their proprietary polyurethane precursor product,TDI, is facing new competition from two rival chemical firms, which will place pressure on prices. They issued a profit warning in November, further depressing the stock. Deutsche Lufthansa also disappointed as the airline’s focus remains on cutting costs to preserve profit, as fare growth was slight at best while fuel costs are rising. Strong competition from low-cost airlines in Europe and national carriers in Asia and the Middle East is pressuring fares to all regions.
Lazard US Equity Concentrated Portfolio
For the year ended December 31, 2018, the Lazard US Equity Concentrated Portfolio’s Institutional Shares posted a total return of -6.07%, while Open Shares posted a total return of -6.35%, and R6 Shares posted a total return of -6.08%, as compared with the -4.38% return for the S&P 500 Index.
A position in chipmaker Skyworks detracted from returns, as shares fell after management guided for a weak December amid uncertainty in global handset markets. The Portfolio was also hurt by its position in Molson Coors, as shares were impacted by weaker-than-expected industry volumes and a sector rotation away
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from consumer staples in the first half of the year, compounded by operational issues and weak performance in the United States. However, the company’s third quarter results did show solid pricing and margin improvement in the United States. A position in eBay also hurt performance, as shares fell, as the company’s structured data initiative has not been driving as many benefits as anticipated. Management subsequently reset its strategy around these realities, which encouraged investors.
In contrast, a position in communications equipment maker Motorola Solutions contributed to performance during the year, as shares rose as the company continued to execute on its evolution from a hardware company to one focused on providing a public safety platform, which has been driving recurring software and services revenues. A position in Coca-Cola also helped returns, as shares rose after the company reported strong earnings in the latter half of the year, driven by strong organic sales growth, refranchising, and ongoing productivity initiatives. The Portfolio was also helped by its position in medical device maker Medtronic, as shares rose as the company experienced strong organic revenue growth throughout the year with robust sales across all business lines, with the standout line being the company’s diabetes products. The market has also been enthusiastic about Medtronic’s pipeline and emerging markets footprint.
Lazard US Equity Select Portfolio
For the year ended December 31, 2018, the Lazard US Equity Select Portfolio’s Institutional Shares posted a total return of -3.12%, while Open Shares posted a total return of -3.40%, and R6 Shares posted a total return of -3.13%, as compared with the -4.38% return for the S&P 500 Index.
Stock selection and an overweight position in the information technology sector contributed to performance. Shares of communications equipment maker Motorola Solutions rose as the company continued to execute on its evolution from a hardware company to one focused on providing a public safety platform, which has been driving recurring software and services revenues. Stock selection in the health care sector also helped returns. Shares of medical device
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maker Medtronic rose as the company experienced strong organic revenue growth throughout the year with robust sales across all business lines, with the standout being its diabetes products.
In contrast, stock selection in the consumer discretionary sector detracted from performance. Shares of eBay fell, as the company’s structured data initiative has not been driving as many benefits as hoped. Management subsequently reset its strategy around these realities, which encouraged investors. Stock selection and an overweight position in the financials sector also hurt returns. Shares of lenders, including Citizens Financial and SunTrust, fell amid uncertainty around the Fed’s path of interest rate increases.
Lazard US Realty Equity Portfolio
For the year ended December 31, 2018, the Lazard US Realty Equity Portfolio’s Institutional Shares posted a total return of -7.77%, while Open Shares posted a total return of -8.06%, as compared with the -4.33% return for the MSCI USA IMI Core Real Estate Index.
The majority of the Portfolio’s underperformance stemmed from sector positioning rather than stock selection. From a sector allocation perspective, the less-than-benchmark exposure to health care and triple net REITs compromised performance as those sectors benefited from the market’s sentiment shift to a more “risk-off” posture due to the longer lease structures within those sectors. These underweights particularly hurt relative performance during the fourth quarter when the market shifted to a more risk-off environment. From a stock perspective, Weyerhaeuser Corporation, General Growth Properties (“GGP”) and Equinix (“EQIX”) hurt relative performance the most during the period. Weyerhaeuser, a timber REIT, struggled due to tariff tensions and weakening in lumber prices. We remain encouraged by the company’s ability to accrue timber value by aging trees in the absence of lumber demand or near-term price increases. With a high performing regional mall portfolio, we had expected GGP to achieve better pricing on the sale of the company which ultimately went to Brookfield Property Partners. As such, we exited the position after the sale announcement. Meanwhile, EQIX, a data center REIT, sold off in concert with broader technology company weakness even though underlying
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business growth remains robust and at rates exceeding the average REIT.
In contrast, the Portfolio’s continued greater-than-benchmark exposure to residential REITs helped performance, as that sector benefits when renting is more attractive than home ownership (in the current case, due to rising mortgage interest rates). Americold Realty Trust (“COLD”), American Tower and Equity LifeStyle Properties contributed the most to relative performance during the year, as all three companies are executing well and have strong growth drivers. In particular, COLD benefited from strong execution post-IPO and increasing investor acceptance of the unique cold storage warehouse sector.
Lazard US Small-Mid Cap Equity Portfolio
For the year ended December 31, 2018, the Lazard US Small-Mid Cap Equity Portfolio’s Institutional Shares posted a total return of -13.27%, while Open Shares posted a total return of -13.49%, as compared with the -10.00% return for the Russell 2500®Index.
Stock selection in the consumer discretionary sector detracted from performance. Shares of household appliance maker Whirlpool fell after the company reported disappointing second-quarter results, hurt by weakness in its businesses in the United States, Europe, the Middle East, and Africa. We sold our position in October, as our thesis had changed. Stock selection in the energy sector also hurt returns. Shares of U.S. Silica fell after the company reported quarterly earnings generally below expectations, hurt by disappointing price and volume metrics in its oil and gas business. We sold our position in September, as our thesis had changed.
In contrast, stock selection in the industrials sector contributed to performance. Shares of FTI Consulting rose after the company reported quarterly earnings broadly above expectations, driven by strong performance across most of its businesses. Stock selection in the health care sector also helped performance. Shares of Evolent Health rose after the company reported broadly strong quarterly results and several new contracts.
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Notes to Investment Overviews:
All Portfolios’ total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of a Portfolio may have been waived or reimbursed by Lazard Asset Management LLC, the Fund’s investment manager (the “Investment Manager”), State Street Bank and Trust Company, the Fund’s administrator (“State Street”), or DST Asset Manager Solutions, Inc., the Fund’s transfer and dividend disbursing agent (“DST”); without such waiver/reimbursement of expenses, such Portfolio’s returns would have been lower. Past performance is not indicative, or a guarantee, of future results. Returns for a period of less than one year are not annualized.
The performance data of the indices and other market data have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged, have no fees or costs and are not available for investment.
The views of the Investment Manager and the securities described in this report are as of December 31, 2018, except as otherwise indicated; these views and portfolio holdings may have changed subsequent to this date. Nothing herein should be construed as a recommendation to buy, sell, or hold a particular security. There is no assurance that the securities discussed herein will remain in a Portfolio at the time you receive this report, or that securities sold will not have been repurchased. The specific securities discussed may, in aggregate, represent only a small percentage of a Portfolio’s holdings. It should not be assumed that securities identified and discussed were, or will be, profitable, or that the investment decisions made in the future will be profitable, or equal the investment performance of the securities discussed herein.
The views and opinions expressed are provided for general information only, and do not constitute specific tax, legal, or investment advice to, or recommendations for, any person. There can be no guarantee as to the accuracy of any outlooks for markets, sectors and securities as discussed herein. You should read the Fund’s prospectus or each Portfolio’s summary prospectus for a more detailed discussion of each Portfolio’s investment objectives, strategies, risks and fees.
1 | The Global Listed Infrastructure Index (USD Hedged) is an unmanaged index created by the Investment Manager, which is the performance of the UBS Global 50/50 Infrastructure & Utilities®Index for all periods through March 31, 2015, when the index ceased to be published, and the FTSE Developed Core Infrastructure 50/50®Index for all periods thereafter. |
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The Lazard Funds, Inc.Performance Overviews (unaudited)
Lazard Developing Markets Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Developing Markets Equity Portfolio and MSCI Emerging Markets®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | |||||
Institutional Shares** | –20.58% | 0.13% | 8.42% | ||||
Open Shares** | –20.83% | –0.23% | 8.07% | ||||
MSCI Emerging Markets Index | –14.58% | 1.65% | 8.02% |
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Lazard Emerging Markets Core Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Core Equity Portfolio and MSCI Emerging Markets Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Year | Since Inception | † | ||||
Institutional Shares** | –18.12% | 1.03% | 0.66% | ||||
Open Shares** | –18.43% | 0.65% | 0.30% | ||||
R6 Shares** | N/A | N/A | –17.52% | ||||
MSCI Emerging Markets Index | –14.58% | 1.65% | 1.02% | ||||
(Institutionaland OpenShares) –15.48% (R6 Shares) |
† | The inception date for the Institutional and Open Shares was October 31, 2013 and for the R6 Shares was April 6, 2018. |
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Lazard Emerging Markets Equity Advantage Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Equity Advantage Portfolio and MSCI Emerging Markets Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –16.23% | 2.05% | |||
Open Shares** | –16.40% | 1.77% | |||
MSCI Emerging Markets Index | –14.58% | 1.35% |
† | The inception date for the Portfolio was May 29, 2015. |
Lazard Emerging Markets Equity Blend Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Equity Blend Portfolio and MSCI Emerging Markets Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Since Inception | † | ||||
Institutional Shares** | –21.05% | –0.65% | 1.35% | ||||
Open Shares** | –21.39% | –0.96% | 1.04% | ||||
MSCI Emerging Markets Index | –14.58% | 1.65% | 2.93% |
† | The inception date for the Portfolio was May 28, 2010. |
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Lazard Emerging Markets Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Equity Portfolio and MSCI Emerging Markets Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | Since Inception | † | |||||
Institutional Shares** | –18.09% | –0.67% | 7.25% | 6.20% | |||||
Open Shares** | –18.32% | –0.92% | 6.94% | 5.88% | |||||
R6 Shares** | –18.09% | N/A | N/A | 0.12% | |||||
MSCI Emerging Markets Index | –14.58% | 1.65% | 8.02% | 5.14% | |||||
(Institutional Shares) 5.65% | |||||||||
(Open Shares) 2.62% | |||||||||
(R6 Shares) |
† | The inception date for the Institutional Shares was July 15, 1994, for the Open Shares was January 8, 1997 and for the R6 Shares was January 19, 2015. |
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Lazard Equity Franchise Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Equity Franchise Portfolio and MSCI World®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –5.10% | –0.85% | |||
Open Shares** | –5.34% | –1.10% | |||
MSCI World Index | –8.71% | –2.96% |
† | The inception date for the Portfolio was September 29, 2017. |
Lazard Global Equity Select Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Global Equity Select Portfolio and MSCI ACWI®*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Since Inception | † | ||||
Institutional Shares** | –7.12% | 5.03% | 5.03% | ||||
Open Shares** | –7.33% | 4.73% | 4.73% | ||||
MSCI ACWI | –9.42% | 4.26% | 4.26% |
† | The inception date for the Portfolio was December 31, 2013. |
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Lazard Global Listed Infrastructure Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Global Listed Infrastructure Portfolio, Global Listed Infrastructure Index (USD Hedged) and MSCI World Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Since Inception | † | ||||
Institutional Shares** | –3.73% | 10.38% | 11.05% | ||||
Open Shares** | –3.98% | 10.09% | 10.72% | ||||
Global Listed Infrastructure Index (USD Hedged) | 2.56% | 9.38% | 9.04% | ||||
MSCI World Index | –8.71% | 4.56% | 7.61% |
† | The inception date for the Portfolio was December 31, 2009. |
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Lazard Global Realty Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Open Shares of Lazard Global Realty Equity Portfolio and MSCI ACWI REITs®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
Institutional Shares | Open Shares | ||||||||||||
One Year | Five Years | Since Inception | † | One Year | Five Years | Since Inception | † | ||||||
Global Realty Equity Portfolio** | –11.86% | 2.86% | 7.47% | –12.14% | 2.54% | 10.73% | |||||||
MSCI ACWI REITs Index | –5.88% | 5.90% | 8.09% | –5.88% | 5.90% | 9.60% | |||||||
MSCI ACWI IMI Core Real Estate®Index | –6.33% | N/A | N/A | –6.33% | N/A | N/A |
† | The inception date for the Institutional Shares was September 26, 2011 and for the Open Shares was December 31, 2008. |
Annual Report 43
Lazard Global Strategic Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Global Strategic Equity Portfolio and MSCI ACWI*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –9.16% | 2.25% | |||
Open Shares** | –9.39% | 1.93% | |||
MSCI ACWI | –9.42% | 3.26% |
† | The inception date for the Portfolio was August 29, 2014. |
Lazard International Equity Advantage Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Equity Advantage Portfolio and MSCI EAFE®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –16.26% | –0.95% | |||
Open Shares** | –16.52% | –1.25% | |||
MSCI EAFE Index | –13.79% | –0.16% |
† | The inception date for the Portfolio was May 29, 2015. |
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Lazard International Equity Concentrated Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Equity Concentrated Portfolio and MSCI ACWI ex-US*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –16.20% | –2.20% | |||
Open Shares** | –16.47% | –2.47% | |||
MSCI ACWI ex-US | –14.20% | –0.37% |
† | The inception date for the Portfolio was August 29, 2014. |
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Lazard International Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Equity Portfolio and MSCI EAFE Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | Since Inception | † | ||||
Institutional Shares** | –13.61% | –0.23% | 6.29% | 5.42% | ||||
Open Shares** | –13.83% | –0.49% | 6.00% | 4.14% | ||||
R6 Shares** | –13.62% | N/A | N/A | –0.67% | ||||
MSCI EAFE Index | –13.79% | 0.53% | 6.32% | 4.85% | ||||
(Institutional | ||||||||
Shares) | ||||||||
4.31% | ||||||||
(Open Shares) | ||||||||
0.74% | ||||||||
(R6 Shares) |
† | The inception date for the Institutional Shares was October 29, 1991, for the Open Shares was January 23, 1997 and for the R6 Shares was April 1, 2015. |
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Lazard International Equity Select Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Equity Select Portfolio, MSCI ACWI ex-US and MSCI EAFE/ACWI ex-US Linked Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | |||||
Institutional Shares** | –14.90% | 0.02% | 5.47% | ||||
Open Shares** | –15.16% | –0.34% | 5.13% | ||||
MSCI ACWI ex-US | –14.20% | 0.67% | 6.57% | ||||
MSCI EAFE/ACWI ex-US Linked Index | –14.20% | 0.67% | 5.56% |
Lazard International Equity Value Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Equity Value Portfolio and MSCI EAFE Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
Since Inception | † | ||
Institutional Shares** | –8.49% | ||
Open Shares** | –8.63% | ||
MSCI EAFE Index | –4.97% |
† | The inception date for the Portfolio was October 31, 2018. |
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Lazard International Small Cap Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Small Cap Equity Portfolio and MSCI EAFE Small Cap®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | |||||
Institutional Shares** | –24.88% | 0.85% | 9.39% | ||||
Open Shares** | –25.09% | 0.58% | 9.08% | ||||
MSCI EAFE Small Cap Index | –17.89% | 3.06% | 10.51% |
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Lazard International Strategic Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard International Strategic Equity Portfolio and MSCI EAFE Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | Since Inception | † | |||||
Institutional Shares** | –10.35% | 1.03% | 8.06% | 5.42% | |||||
Open Shares** | –10.55% | 0.78% | 7.78% | 4.08% | |||||
R6 Shares** | –10.35% | N/A | N/A | 1.68% | |||||
MSCI EAFE Index | –13.79% | 0.53% | 6.32% | 3.50% | |||||
(Institutional | |||||||||
Shares) | |||||||||
2.54% | |||||||||
(Open Shares) | |||||||||
2.44% | |||||||||
(R6 Shares) |
† | The inception date for the Institutional Shares was October 31, 2005, for the Open Shares was February 3, 2006 and for the R6 Shares was January 19, 2015. |
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Lazard Managed Equity Volatility Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Managed Equity Volatility Portfolio and MSCI World Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Since Inception | † | |||
Institutional Shares** | –7.21% | 4.27% | |||
Open Shares** | –7.50% | 3.93% | |||
MSCI World Index | –8.71% | 3.54% |
† | The inception date for the Portfolio was May 29, 2015. |
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Lazard US Equity Concentrated Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard US Equity Concentrated Portfolio, S&P 500®Index and Russell 1000 Value/S&P 500 Linked Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | Since Inception | † | |||||
Institutional Shares** | –6.07% | 8.18% | 11.94% | 7.23% | |||||
Open Shares** | –6.35% | 7.83% | 11.59% | 6.91% | |||||
R6 Shares** | –6.08% | N/A | N/A | 3.99% | |||||
S&P 500 Index | –4.38% | 8.49% | 13.12% | 7.77% | |||||
(Institutional | |||||||||
and | |||||||||
Open Shares) | |||||||||
8.93% | |||||||||
(R6 Shares) | |||||||||
Russell 1000 Value/S&P 500 Linked Index | –4.38% | 8.49% | 12.14% | 7.01% | |||||
(Institutional | |||||||||
and | |||||||||
Open Shares) | |||||||||
N/A | |||||||||
(R6 Shares) |
† | The inception date for the Institutional and Open Shares was September 30, 2005 and for the R6 Shares was November 15, 2016. |
Annual Report 51
Lazard US Equity Select Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard US Equity Select Portfolio and S&P 500 Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | Since Inception | † | |||||
Institutional Shares** | –3.12% | 6.59% | 11.54% | 6.39% | |||||
Open Shares** | –3.40% | 6.28% | 11.21% | 6.08% | |||||
R6 Shares** | –3.13% | N/A | N/A | 6.59% | |||||
S&P 500 Index | –4.38% | 8.49% | 13.12% | 7.53% | |||||
(Institutional and Open Shares) 8.64% (R6 Shares) |
† | The inception date for the Institutional and Open Shares was December 30, 2004 and for the R6 Shares was May 19, 2014. |
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Lazard US Realty Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Open Shares of Lazard US Realty Equity Portfolio and MSCI US REIT®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
Institutional Shares | Open Shares | ||||||||||||
One Year | Five Years | Since Inception | † | One Year | Five Years | Since Inception | † | ||||||
US Realty Equity Portfolio** | –7.77% | 6.63% | 10.37% | –8.06% | 6.33% | 14.74% | |||||||
MSCI US REIT Index | –5.83% | 6.43% | 8.60% | –5.83% | 6.43% | 10.75% | |||||||
MSCI USA IMI Core RealEstate®Index | –4.33% | N/A | N/A | –4.33% | N/A | N/A |
† | The inception date for the Institutional Shares was September 26, 2011 and for the Open Shares was December 31, 2008. |
Annual Report 53
Lazard US Small-Mid Cap Equity Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard US Small-Mid Cap Equity Portfolio and Russell 2500®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One Year | Five Years | Ten Years | |||||
Institutional Shares** | –13.27% | 4.64% | 13.05% | ||||
Open Shares** | –13.49% | 4.33% | 12.71% | ||||
Russell 2500 Index | –10.00% | 5.15% | 13.15% |
Notes to Performance Overviews: |
* | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
Performance results do not include adjustments made for financial reporting purposes in accordance with US Generally Accepted Accounting Principles (“GAAP”), if any, and also exclude one-time adjustments related to reimbursed custodian out-of-pocket expenses (Note 3 in the Notes to Financial Statements) for Lazard International Small Cap Equity and Lazard US Small-Mid Cap Equity Portfolios and settlement proceeds received from class action lawsuits (Lazard Developing Markets Equity Portfolio Open Shares, Lazard International Equity and Lazard International Small Cap Equity Portfolios), and may differ from amounts reported in the financial highlights. | |
The performance quoted represents past performance. Current performance may be lower or higher than the performance quoted. Past performance is not indicative, or a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares. | |
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. The indices are unmanaged, have no fees or costs and are not avail- |
54 Annual Report
able for investment.
The MSCI Emerging Markets Index is a free-float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The MSCI Emerging Markets Index consists of 24 emerging markets country indices.
The MSCI World Index is a free-float-adjusted market capitalization index that is designed to measure global developed markets equity performance. The MSCI World Index consists of 23 developed markets country indices.
The MSCI ACWI is a free-float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 47 country indices comprising 23 developed and 24 emerging markets country indices.
The Global Listed Infrastructure Index (USD Hedged) is an unmanaged index created by the Investment Manager, which is the performance of the UBS Global 50/50 Infrastructure & Utilities®Index for all periods through March 31, 2015, when the index ceased to be published, and the FTSE Developed Core Infrastructure 50/50®Index for all periods thereafter. The UBS Global 50/50 Infrastructure & Utilities Index tracked a 50% exposure to the global developed markets utilities sector and a 50% exposure to the global developed markets infrastructure sector. The FTSE Developed Core Infrastructure 50/50 Index tracks a 50% exposure to the global developed markets utilities sector and a 50% exposure to the global developed markets infrastructure sector.
The MSCI ACWI REITs Index is a free-float-adjusted market capitalization index that captures large and mid cap representation across 23 developed and 24 emerging markets countries. All securities in the index are classified in the Equity REITs Industry (under the Real Estate sector) according to the Global Industry Classification Standard (GICS®).
The MSCI ACWI IMI Core Real Estate Index was launched on May 2015 and is a free-float-adjusted market capitalization index that consists of large, mid and small-cap stocks across 23 developed markets and 24 emerging markets countries engaged in the ownership, development and management of specific core property type real estate. The index excludes companies, such as real estate services and real estate financing companies that do not own properties.
The MSCI EAFE Index (Europe, Australasia, Far East) is a free-float-adjusted market capitalization index that is designed to measure developed markets equity performance, excluding the United States and Canada. The MSCI EAFE Index consists of 21 developed markets country indices.
The MSCI ACWI ex-US is a free-float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. The MSCI ACWI ex-US consists of 46 country indices comprising 22 developed and 24 emerging markets country indices.
The MSCI EAFE/ACWI ex-US Linked Index is an unmanaged index created by the Investment Manager, which links the performance of the MSCI EAFE Index for all periods through June 30, 2010 (when Lazard International Equity Select Portfolio’s benchmark index changed) and the MSCI ACWI ex-US for all periods thereafter.
The MSCI EAFE Small Cap Index targets all companies with market capitalizations below that of the companies in the MSCI EAFE Index and up to 99% coverage of the
Annual Report 55
free-float-adjusted market capitalization in each market (subject to minimum investability criteria and a universal minimum size range). The MSCI EAFE Small Cap Index consists of 21 developed markets country indices.
The S&P 500 Index is a market capitalization-weighted index of 500 companies in leading industries of the US economy.
The Russell 1000 Value/S&P 500 Linked Index is an unmanaged index created by the Investment Manager, which links the performance of the Russell 1000® Value Index for all periods through May 30, 2012 (when Lazard US Equity Concentrated Portfolio’s investment strategy changed) and the S&P 500 Index for all periods thereafter.
The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index measures the performance of the large-cap segment of the US equity universe. It includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership.
The MSCI US REIT Index is a free-float-adjusted market capitalization index that is comprised of equity REITs. The index is based on its parent index, the MSCI USA IMI®, which captures large, mid and small caps securities. With 152 constituents, the MSCI US REIT Index represents about 99% of the US REIT universe and securities are classified in the Equity REITs Industry (under the Real Estate sector) according to the GICS. It however excludes Mortgage REITs and selected Specialized REITs.
The MSCI USA IMI Core Real Estate Index was launched on October 2014 and is a free-float-adjusted market capitalization index that consists of large, mid and small cap stocks engaged in the ownership, development and management of specific core property type real estate. The index excludes companies, such as real estate services and real estate financing companies that do not own properties.
The Russell 2500 Index measures the performance of the small-to mid-cap segment of the US equity universe, commonly referred to as “smid” cap. The Russell 2500 Index is a subset of the Russell 3000®Index. The Russell 3000 Index measures the performance of the largest 3000 US companies, representing approximately 98% of the investable US equity market. The Russell 2500 Index includes approximately 2500 of the smallest securities based on a combination of their market cap and current index membership.
** | The performance of Institutional Shares, Open Shares and R6 Shares may vary, primarily based on the differences in fees borne by shareholders investing in different classes. |
56 Annual Report
The Lazard Funds, Inc.
Information About Your Portfolio’s Expenses (unaudited)
Expense Example
As a shareholder in a Portfolio of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (Open Shares only), and other expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the six month period from July 1, 2018 through December 31, 2018 and held for the entire period.
Actual Expenses
For each Share class of the Portfolios, the first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each Share class of the Portfolios, the second line of the table below provides information about hypothetical account values and hypothetical expenses based on the class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds.
Annual Report 57
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
Developing Markets Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 873.20 | $5.43 | 1.15% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.41 | $5.85 | 1.15% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 872.00 | $7.22 | 1.53% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,017.49 | $7.78 | 1.53% | |||||
Emerging Markets Core Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 893.60 | $5.87 | 1.23% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.00 | $6.26 | 1.23% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 892.00 | $7.39 | 1.55% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,017.39 | $7.88 | 1.55% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 893.60 | $5.58 | 1.17% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.31 | $5.96 | 1.17% | |||||
Emerging Markets Equity Advantage | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 894.60 | $5.25 | 1.10% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.66 | $5.60 | 1.10% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 893.60 | $6.68 | 1.40% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.15 | $7.12 | 1.40% |
58 Annual Report
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
Emerging Markets Equity Blend | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 877.00 | $5.49 | 1.16% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.36 | $5.90 | 1.16% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 874.50 | $7.32 | 1.55% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,017.39 | $7.88 | 1.55% | |||||
Emerging Markets Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 929.10 | $5.25 | 1.08% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.76 | $5.50 | 1.08% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 928.10 | $6.46 | 1.33% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.50 | $6.77 | 1.33% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 929.10 | $5.25 | 1.08% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.76 | $5.50 | 1.08% | |||||
Equity Franchise | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 935.50 | $4.63 | 0.95% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.42 | $4.84 | 0.95% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 934.80 | $5.85 | 1.20% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.16 | $6.11 | 1.20% |
Annual Report 59
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
Global Equity Select | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 917.50 | $5.07 | 1.05% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.91 | $5.35 | 1.05% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 916.90 | $6.52 | 1.35% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.40 | $6.87 | 1.35% | |||||
Global Listed Infrastructure | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 958.90 | $4.69 | 0.95% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.42 | $4.84 | 0.95% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 957.10 | $5.92 | 1.20% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.16 | $6.11 | 1.20% | |||||
Global Realty Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 911.90 | $4.58 | 0.95% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.42 | $4.84 | 0.95% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 910.30 | $6.02 | 1.25% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.90 | $6.36 | 1.25% | |||||
Global Strategic Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 908.40 | $4.81 | 1.00% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.16 | $5.09 | 1.00% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 906.10 | $6.25 | 1.30% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.65 | $6.61 | 1.30% |
60 Annual Report
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
International Equity Advantage | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 872.50 | $4.25 | 0.90% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.67 | $4.58 | 0.90% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 871.50 | $5.66 | 1.20% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.16 | $6.11 | 1.20% | |||||
International Equity Concentrated | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 871.40 | $4.48 | 0.95% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.42 | $4.84 | 0.95% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 870.30 | $5.89 | 1.25% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.90 | $6.36 | 1.25% | |||||
International Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 887.90 | $3.85 | 0.81% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.12 | $4.13 | 0.81% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 886.70 | $5.09 | 1.07% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.81 | $5.45 | 1.07% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 887.80 | $3.81 | 0.80% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.17 | $4.08 | 0.80% |
Annual Report 61
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
International Equity Select | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 884.80 | $5.13 | 1.08% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.76 | $5.50 | 1.08% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 882.80 | $6.41 | 1.35% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.40 | $6.87 | 1.35% | |||||
International Equity Value† | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 915.10 | $1.52 | 0.95% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,006.77 | $1.59 | 0.95% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 913.70 | $1.93 | 1.21% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,006.33 | $2.03 | 1.21% | |||||
International Small Cap Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 773.00 | $5.05 | 1.13% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.51 | $5.75 | 1.13% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 771.40 | $6.43 | 1.44% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,017.95 | $7.32 | 1.44% |
62 Annual Report
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
International Strategic Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 894.80 | $3.82 | 0.80% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.17 | $4.08 | 0.80% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 893.90 | $5.06 | 1.06% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.86 | $5.40 | 1.06% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 894.80 | $3.82 | 0.80% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.17 | $4.08 | 0.80% | |||||
Managed Equity Volatility | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 943.40 | $3.67 | 0.75% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.42 | $3.82 | 0.75% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 941.30 | $5.14 | 1.05% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.91 | $5.35 | 1.05% | |||||
US Equity Concentrated | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 915.40 | $3.62 | 0.75% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.42 | $3.82 | 0.75% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 913.90 | $5.02 | 1.04% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.96 | $5.30 | 1.04% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 915.30 | $3.62 | 0.75% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.42 | $3.82 | 0.75% |
Annual Report 63
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
US Equity Select | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 941.50 | $3.67 | 0.75% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.42 | $3.82 | 0.75% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 939.60 | $5.13 | 1.05% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.91 | $5.35 | 1.05% | |||||
R6 Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 940.70 | $3.67 | 0.75% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,021.42 | $3.82 | 0.75% | |||||
US Realty Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 920.80 | $4.84 | 1.00% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.16 | $5.09 | 1.00% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 919.40 | $6.24 | 1.29% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.70 | $6.56 | 1.29% | |||||
US Small-Mid Cap Equity | |||||||||||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 832.70 | $4.11 | 0.89% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.72 | $4.53 | 0.89% | |||||
Open Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 831.70 | $5.59 | 1.21% | |||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.11 | $6.16 | 1.21% |
* | Expenses are equal to the annualized expense ratio, net of expenses waivers and reimbursements, of each Share class multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
† | The Portfolio commenced operations on October 31, 2018. |
64 Annual Report
The Lazard Funds, Inc.
Portfolio Holdings Presented by Asset Class/Sector December 31, 2018
Asset Class/Sector* | Lazard Developing Markets Equity Portfolio | Lazard Emerging Markets Core Equity Portfolio | Lazard Emerging Markets Equity Advantage Portfolio | Lazard Emerging Markets Equity Blend Portfolio | |||||||||||||
Equity | |||||||||||||||||
Communication Services | 15.5 | % | 14.1 | % | 11.8 | % | 15.3 | % | |||||||||
Consumer Discretionary | 9.9 | 10.3 | 8.0 | 8.9 | |||||||||||||
Consumer Staples | — | 3.4 | 7.4 | 2.7 | |||||||||||||
Energy | 7.7 | 7.7 | 8.4 | 7.2 | |||||||||||||
Financials | 28.2 | 27.3 | 22.7 | 25.9 | |||||||||||||
Health Care | 2.8 | 0.9 | 2.6 | 1.7 | |||||||||||||
Industrials | 10.6 | 5.1 | 6.1 | 7.2 | |||||||||||||
Information Technology | 14.2 | 16.4 | 15.9 | 18.6 | |||||||||||||
Materials | 6.6 | 13.2 | 9.2 | 6.9 | |||||||||||||
Real Estate | — | 0.4 | 3.0 | 0.3 | |||||||||||||
Utilities | 3.9 | — | 2.9 | 3.4 | |||||||||||||
Short-Term Investments | 0.6 | 1.2 | 2.0 | 1.9 | |||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Asset Class/Sector* | Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | Lazard Global Equity Select Portfolio | Lazard Global Listed Infrastructure Portfolio | |||||||||||||
Equity | |||||||||||||||||
Communication Services | 14.6 | % | 11.5 | % | 5.5 | % | 9.4 | % | |||||||||
Consumer Discretionary | 7.6 | 14.8 | 8.9 | — | |||||||||||||
Consumer Staples | 6.3 | 4.2 | 12.7 | — | |||||||||||||
Energy | 9.1 | — | 0.8 | 4.6 | |||||||||||||
Financials | 29.3 | — | 21.0 | — | |||||||||||||
Health Care | 0.8 | 15.4 | 14.6 | — | |||||||||||||
Industrials | 4.8 | 24.3 | 15.8 | 32.3 | |||||||||||||
Information Technology | 18.8 | 18.7 | 12.9 | — | |||||||||||||
Materials | 5.4 | — | 1.8 | — | |||||||||||||
Real Estate | — | — | 1.3 | — | |||||||||||||
Utilities | 1.0 | 10.1 | — | 50.8 | |||||||||||||
Short-Term Investments | 2.3 | 1.0 | 4.7 | 2.9 | |||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
* | Represents percentage of total investments. |
Annual Report 65
Asset Class/Sector* | Lazard Global Realty Equity Portfolio | Lazard Global Strategic Equity Portfolio | Lazard International Compounders Portfolio | Lazard International Equity Advantage Portfolio | |||||||||||||
Equity | |||||||||||||||||
Communication Services | — | % | 15.0 | % | 5.7 | % | 4.4 | % | |||||||||
Consumer Discretionary | — | 6.1 | 15.2 | 9.2 | |||||||||||||
Consumer Staples | — | 4.6 | 6.2 | 12.0 | |||||||||||||
Energy | — | 4.2 | — | 7.3 | |||||||||||||
Financials | — | 23.3 | 19.4 | 20.0 | |||||||||||||
Health Care | — | 15.7 | 10.3 | 12.5 | |||||||||||||
Industrials | — | 12.9 | 26.8 | 14.5 | |||||||||||||
Information Technology | — | 13.3 | 14.0 | 5.4 | |||||||||||||
Materials | — | 1.0 | 2.4 | 6.5 | |||||||||||||
Real Estate | — | — | — | 3.6 | |||||||||||||
Utilities | — | — | — | 4.6 | |||||||||||||
Short-Term Investments | 100.0 | 3.9 | — | — | |||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Asset Class/Sector* | Lazard International Equity Concentrated Portfolio | Lazard International Equity Portfolio | Lazard International Equity Select Portfolio | Lazard International Equity Value Portfolio | |||||||||||||
Equity | |||||||||||||||||
Communication Services | 14.5 | % | 9.1 | % | 12.4 | % | 9.9 | % | |||||||||
Consumer Discretionary | 19.4 | 9.3 | 8.2 | 26.7 | |||||||||||||
Consumer Staples | 3.9 | 8.1 | 5.9 | 8.0 | |||||||||||||
Energy | 8.8 | 6.5 | 6.4 | 5.1 | |||||||||||||
Financials | 18.4 | 19.3 | 20.0 | 21.8 | |||||||||||||
Health Care | 6.2 | 7.8 | 7.0 | 2.1 | |||||||||||||
Industrials | 7.5 | 20.0 | 17.6 | 9.4 | |||||||||||||
Information Technology | 13.6 | 5.1 | 8.5 | — | |||||||||||||
Materials | 6.2 | 5.6 | 2.3 | 7.2 | |||||||||||||
Real Estate | — | 2.7 | 1.7 | — | |||||||||||||
Utilities | — | 1.8 | 2.7 | — | |||||||||||||
Short-Term Investments | 1.5 | 4.7 | 7.3 | 9.8 | |||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
* | Represents percentage of total investments. |
66 Annual Report
Asset Class/Sector* | Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | Lazard Managed Equity Volatility Portfolio | Lazard US Equity Concentrated Portfolio | |||||||||||||
Equity | |||||||||||||||||
Communication Services | 11.5 | % | 12.1 | % | 6.7 | % | 10.3 | % | |||||||||
Consumer Discretionary | 11.2 | 8.8 | 9.9 | 9.8 | |||||||||||||
Consumer Staples | 5.1 | 10.1 | 13.2 | 15.7 | |||||||||||||
Energy | 1.7 | 4.2 | 3.2 | — | |||||||||||||
Financials | 11.7 | 24.9 | 13.8 | 3.6 | |||||||||||||
Health Care | 8.9 | 6.5 | 12.3 | 14.2 | |||||||||||||
Industrials | 20.8 | 20.9 | 12.7 | 9.1 | |||||||||||||
Information Technology | 13.7 | 4.1 | 8.9 | 29.7 | |||||||||||||
Materials | 3.1 | 2.2 | 2.7 | 4.9 | |||||||||||||
Real Estate | 9.7 | 2.3 | 5.4 | — | |||||||||||||
Utilities | 1.0 | 1.8 | 7.0 | — | |||||||||||||
Short-Term Investments | 1.6 | 2.1 | 4.2 | 2.7 | |||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Asset Class/Sector* | Lazard US Equity Select Portfolio | Lazard US Realty Equity Portfolio | Lazard US Small-Mid Cap Equity Portfolio | ||||||||||||||
Equity | |||||||||||||||||
Communication Services | 6.9 | % | — | % | 1.6 | % | |||||||||||
Consumer Discretionary | 9.9 | 3.3 | 10.4 | ||||||||||||||
Consumer Staples | 7.5 | — | 2.0 | ||||||||||||||
Energy | 6.5 | — | 1.8 | ||||||||||||||
Financials | 15.8 | — | 17.9 | ||||||||||||||
Health Care | 18.4 | — | 12.2 | ||||||||||||||
Industrials | 11.1 | — | 17.9 | ||||||||||||||
Information Technology | 21.4 | — | 13.6 | ||||||||||||||
Materials | 0.7 | — | 6.6 | ||||||||||||||
Real Estate | 1.4 | 96.7 | 12.2 | ||||||||||||||
Utilities | — | — | 3.8 | ||||||||||||||
Short-Term Investments | 0.4 | — | — | ||||||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % |
* | Represents percentage of total investments. |
Annual Report 67
The Lazard Funds, Inc.Portfolios of Investments
December 31, 2018
The accompanying notes are an integral part of these financial statements.
68 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Developing Markets Equity Portfolio (continued) | ||||||||
Colombia | 1.9% | ||||||||
Bancolombia SA Sponsored ADR | 112,547 | $ | 4,288,041 | |||||
Hong Kong | 3.8% | ||||||||
China Gas Holdings, Ltd. | 1,113,200 | 3,938,898 | ||||||
Techtronic Industries Co., Ltd. | 865,500 | 4,562,004 | ||||||
8,500,902 | ||||||||
India | 11.1% | ||||||||
HDFC Bank, Ltd. ADR | 57,285 | 5,934,153 | ||||||
ICICI Bank, Ltd. Sponsored ADR | 756,501 | 7,784,395 | ||||||
Reliance Industries, Ltd. | 366,369 | 5,898,548 | ||||||
Shriram Transport Finance Co., Ltd. | 280,746 | 4,970,376 | ||||||
24,587,472 | ||||||||
Indonesia | 2.0% | ||||||||
PT Bank Rakyat Indonesia (Persero) Tbk | 17,760,500 | 4,533,555 | ||||||
Mexico | 0.9% | ||||||||
Grupo Financiero Banorte SAB de CV, Class O | 393,957 | 1,920,094 | ||||||
Peru | 2.7% | ||||||||
Credicorp, Ltd. | 27,455 | 6,085,950 | ||||||
Philippines | 1.3% | ||||||||
BDO Unibank, Inc. | 1,194,245 | 2,977,090 | ||||||
Portugal | 1.5% | ||||||||
Galp Energia SGPS SA | 212,172 | 3,359,794 | ||||||
Russia | 5.4% | ||||||||
Mail.Ru Group, Ltd. GDR (*) | 103,785 | 2,428,721 | ||||||
Novatek OAO Sponsored GDR | 20,336 | 3,472,678 | ||||||
Sberbank of Russia PJSC | 697,481 | 1,865,355 | ||||||
Yandex NV Class A (*) | 158,835 | 4,344,137 | ||||||
12,110,891 |
The accompanying notes are an integral part of these financial statements.
Annual Report 69
Description | Shares | Fair Value | ||||||
Lazard Developing Markets Equity Portfolio (continued) | ||||||||
South Africa | 4.4% | ||||||||
Capitec Bank Holdings, Ltd. | 74,496 | $ | 5,761,413 | |||||
Petra Diamonds, Ltd. (*) | 1,794,484 | 857,609 | ||||||
Standard Bank Group, Ltd. | 255,536 | 3,175,319 | ||||||
9,794,341 | ||||||||
South Korea | 8.9% | ||||||||
Doosan Bobcat, Inc. | 153,814 | 4,330,748 | ||||||
NCSoft Corp. (*) | 6,225 | 2,608,106 | ||||||
Netmarble Corp. (*) | 17,418 | 1,735,874 | ||||||
Partron Co., Ltd. | 263,344 | 1,934,275 | ||||||
Samsung Biologics Co., Ltd. (*) | 3,915 | 1,362,401 | ||||||
Samsung Electronics Co., Ltd. | 224,263 | 7,759,650 | ||||||
19,731,054 | ||||||||
Taiwan | 9.1% | ||||||||
Airtac International Group | 261,000 | 2,516,398 | ||||||
ASE Technology Holding Co., Ltd. | 1,126,289 | 2,111,991 | ||||||
Bizlink Holding, Inc. | 149,000 | 1,071,053 | ||||||
Catcher Technology Co., Ltd. | 205,670 | 1,482,787 | ||||||
Hiwin Technologies Corp. | 222,185 | 1,571,610 | ||||||
Largan Precision Co., Ltd. | 21,860 | 2,291,113 | ||||||
MediaTek, Inc. | 420,000 | 3,097,381 | ||||||
Silicon Motion Technology Corp. ADR | 98,510 | 3,398,595 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 372,000 | 2,700,451 | ||||||
20,241,379 | ||||||||
United Kingdom | 1.7% | ||||||||
KAZ Minerals PLC | 540,219 | 3,663,811 | ||||||
Total Common Stocks (Cost $218,985,408) | 212,869,200 | |||||||
Preferred Stocks | 1.9% | ||||||||
Brazil | 1.9% | ||||||||
Banco Bradesco SA ADR (Cost $4,050,846) | 414,786 | 4,102,233 |
The accompanying notes are an integral part of these financial statements.
70 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Developing Markets Equity Portfolio (concluded) | ||||||||
Short-Term Investments | 0.5% | ||||||||
State Street Institutional TreasuryMoney Market Fund, Premier Class,2.24% (7 day yield) (Cost $1,218,722) | 1,218,722 | $ | 1,218,722 | |||||
Total Investments | 98.1% (Cost $224,254,976) | $ | 218,190,155 | ||||||
Cash and Other Assets in Excessof Liabilities|1.9% | 4,192,481 | |||||||
Net Assets|100.0% | $ | 222,382,636 |
The accompanying notes are an integral part of these financial statements.
Annual Report 71
The accompanying notes are an integral part of these financial statements.
72 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Core Equity Portfolio (continued) | ||||||||
Hong Kong | 1.2% | ||||||||
Techtronic Industries Co., Ltd. | 465,000 | $ | 2,450,990 | |||||
Hungary | 1.1% | ||||||||
MOL Hungarian Oil & Gas PLC | 201,537 | 2,212,180 | ||||||
India | 10.8% | ||||||||
HDFC Bank, Ltd. ADR | 70,669 | 7,320,602 | ||||||
Hindalco Industries, Ltd. | 1,045,918 | 3,375,820 | ||||||
Hindustan Zinc, Ltd. | 582,987 | 2,326,693 | ||||||
Infosys, Ltd. Sponsored ADR | 235,915 | 2,245,911 | ||||||
Maruti Suzuki India, Ltd. | 25,657 | 2,736,176 | ||||||
Motherson Sumi Systems, Ltd. | 734,258 | 1,754,482 | ||||||
UPL, Ltd. | 279,265 | 3,028,441 | ||||||
22,788,125 | ||||||||
Indonesia | 2.3% | ||||||||
PT Bank Mandiri (Persero) Tbk | 5,842,000 | 2,994,917 | ||||||
PT Telekomunikasi Indonesia (Persero) TbkSponsored ADR | 71,860 | 1,883,451 | ||||||
4,878,368 | ||||||||
Luxembourg | 2.0% | ||||||||
Tenaris SA ADR | 50,800 | 1,083,056 | ||||||
Ternium SA Sponsored ADR | 115,400 | 3,127,340 | ||||||
4,210,396 | ||||||||
Mexico | 3.2% | ||||||||
Arca Continental SAB de CV | 290,245 | 1,621,239 | ||||||
Gruma SAB de CV, Class B | 183,038 | 2,074,246 | ||||||
Grupo Aeroportuario del Pacifico SAB de CV ADR | 15,600 | 1,272,180 | ||||||
Grupo Financiero Banorte SAB de CV, Class O | 370,100 | 1,803,818 | ||||||
6,771,483 | ||||||||
Peru | 1.2% | ||||||||
Credicorp, Ltd. | 11,650 | 2,582,456 | ||||||
Philippines | 1.7% | ||||||||
BDO Unibank, Inc. | 907,981 | 2,263,473 | ||||||
GT Capital Holdings, Inc. | 66,431 | 1,231,562 | ||||||
3,495,035 |
The accompanying notes are an integral part of these financial statements.
Annual Report 73
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Core Equity Portfolio (continued) | ||||||||
Portugal | 1.1% | ||||||||
Galp Energia SGPS SA | 141,380 | $ | 2,238,786 | |||||
Russia | 6.5% | ||||||||
LUKOIL PJSC Sponsored ADR | 100,618 | 7,182,638 | ||||||
Sberbank of Russia PJSC Sponsored ADR (London) | 336,519 | 3,688,827 | ||||||
Sberbank of Russia PJSC Sponsored ADR(United States) | 53,682 | 588,355 | ||||||
Severstal PJSC GDR | 166,597 | 2,274,119 | ||||||
13,733,939 | ||||||||
South Africa | 5.3% | ||||||||
Barloworld, Ltd. | 147,303 | 1,171,841 | ||||||
FirstRand, Ltd. | 587,654 | 2,677,432 | ||||||
Mondi PLC | 117,574 | 2,432,878 | ||||||
Naspers, Ltd., N Shares | 13,214 | 2,624,794 | ||||||
The Bidvest Group, Ltd. | 155,393 | 2,236,901 | ||||||
11,143,846 | ||||||||
South Korea | 12.0% | ||||||||
Coway Co., Ltd. | 22,566 | 1,497,144 | ||||||
DB Insurance Co., Ltd. (*) | 36,659 | 2,312,509 | ||||||
Lotte Chemical Corp. (*) | 5,104 | 1,264,026 | ||||||
NCSoft Corp. (*) | 6,273 | 2,628,217 | ||||||
S-Oil Corp. | 19,463 | 1,698,200 | ||||||
Samsung Electro-Mechanics Co., Ltd. (*) | 13,253 | 1,238,834 | ||||||
Samsung Electronics Co., Ltd. | 327,361 | 11,326,911 | ||||||
SK Hynix, Inc. | 62,151 | 3,359,495 | ||||||
25,325,336 | ||||||||
Taiwan | 10.5% | ||||||||
ASE Technology Holding Co., Ltd. ADR | 376,650 | 1,412,437 | ||||||
Far EasTone Telecommunications Co., Ltd. | 881,000 | 2,185,733 | ||||||
Formosa Plastics Corp. | 1,100,000 | 3,585,204 | ||||||
Largan Precision Co., Ltd. | 28,000 | 2,934,637 | ||||||
Silicon Motion Technology Corp. ADR | 44,910 | 1,549,395 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd.Sponsored ADR | 284,578 | 10,503,774 | ||||||
22,171,180 |
The accompanying notes are an integral part of these financial statements.
74 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Core Equity Portfolio (concluded) | ||||||||
Thailand | 1.4% | ||||||||
Bangkok Bank Public Co. Ltd. | 230,200 | $ | 1,465,401 | |||||
Kasikornbank Public Co. Ltd. (‡) | 273,500 | 1,556,168 | ||||||
3,021,569 | ||||||||
United Arab Emirates | 0.4% | ||||||||
Emaar Properties PJSC | 734,693 | 826,480 | ||||||
United Kingdom | 1.6% | ||||||||
Unilever NV NY Shares | 64,000 | 3,443,200 | ||||||
Total Common Stocks (Cost $216,207,162) | 206,353,942 | |||||||
Preferred Stocks | 1.1% | ||||||||
Brazil | 1.1% | ||||||||
Itau Unibanco Holding SA Sponsored ADR (Cost $1,840,190) | 240,643 | 2,199,477 | ||||||
Short-Term Investments | 1.2% | ||||||||
State Street Institutional TreasuryMoney Market Fund, Premier Class,2.24% (7 day yield) (Cost $2,544,384) | 2,544,384 | 2,544,384 | ||||||
Total Investments | 100.4% (Cost $220,591,736) | $ | 211,097,803 | ||||||
Liabilities in Excess of Cash andOther Assets|(0.4)% | (795,659 | ) | ||||||
Net Assets | 100.0% | $ | 210,302,144 |
The accompanying notes are an integral part of these financial statements.
Annual Report 75
The accompanying notes are an integral part of these financial statements.
76 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
China Resources Cement Holdings, Ltd. | 12,000 | $ | 10,667 | |||||
China Resources Gas Group, Ltd. | 2,000 | 7,872 | ||||||
China SCE Group Holdings, Ltd. | 17,000 | 6,155 | ||||||
China Telecom Corp., Ltd., Class H | 78,000 | 39,690 | ||||||
China Unicom Hong Kong, Ltd. | 20,000 | 21,243 | ||||||
China Vanke Co., Ltd., Class H | 2,200 | 7,406 | ||||||
CNOOC, Ltd. | 24,000 | 36,770 | ||||||
Country Garden Holdings Co., Ltd. | 16,000 | 19,274 | ||||||
CSPC Pharmaceutical Group, Ltd. | 14,000 | 20,013 | ||||||
Foshan Haitian Flavouring & Food Co., Ltd., Class A | 1,400 | 14,013 | ||||||
Guangzhou Automobile Group Co., Ltd., Class H | 5,200 | 5,138 | ||||||
Henan Shuanghui Investment & Development Co., Ltd.,Class A | 1,900 | 6,524 | ||||||
Industrial & Commercial Bank of China, Ltd., Class H | 86,000 | 61,034 | ||||||
Industrial Bank Co., Ltd., Class A | 12,700 | 27,723 | ||||||
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A | 300 | 4,134 | ||||||
Jiayuan International Group, Ltd. | 2,000 | 3,695 | ||||||
Longfor Group Holdings, Ltd. | 3,000 | 8,981 | ||||||
Lonking Holdings, Ltd. | 17,000 | 4,359 | ||||||
Maanshan Iron & Steel Co., Ltd., Class A | 16,800 | 8,462 | ||||||
Momo, Inc. Sponsored ADR (*) | 347 | 8,241 | ||||||
New Oriental Education & Technology Group, Inc.Sponsored ADR (*) | 106 | 5,810 | ||||||
PetroChina Co., Ltd., Class H | 44,000 | 27,203 | ||||||
PICC Property & Casualty Co., Ltd., Class H | 6,000 | 6,109 | ||||||
Ping An Insurance (Group) Co. of China, Ltd., Class H | 6,000 | 52,683 | ||||||
Postal Savings Bank of China Co., Ltd., Class H | 10,000 | 5,252 | ||||||
RiseSun Real Estate Development Co., Ltd., Class A | 6,500 | 7,555 | ||||||
Shenzhou International Group Holdings, Ltd. | 1,000 | 11,251 | ||||||
Sinotruk Hong Kong, Ltd. | 5,500 | 8,320 | ||||||
Sunny Optical Technology Group Co., Ltd. | 800 | 7,019 | ||||||
Tencent Holdings, Ltd. | 3,500 | 138,737 | ||||||
Tianneng Power International, Ltd. | 10,000 | 8,294 | ||||||
YiChang HEC ChangJiang Pharmaceutical Co., Ltd.,Class H | 1,600 | 5,301 |
The accompanying notes are an integral part of these financial statements.
Annual Report 77
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
YY, Inc. ADR (*) | 119 | $ | 7,123 | |||||
Zhongsheng Group Holdings, Ltd. | 3,500 | 6,957 | ||||||
Zijin Mining Group Co., Ltd., Class H | 20,000 | 7,559 | ||||||
1,013,725 | ||||||||
Colombia | 0.3% | ||||||||
Ecopetrol SA Sponsored ADR | 692 | 10,989 | ||||||
Egypt | 0.4% | ||||||||
Commercial International Bank Egypt SAE ADR | 3,121 | 12,952 | ||||||
Greece | 0.2% | ||||||||
JUMBO SA | 450 | 6,558 | ||||||
Hong Kong | 0.9% | ||||||||
Lee & Man Paper Manufacturing, Ltd. | 9,000 | 7,574 | ||||||
Shimao Property Holdings, Ltd. | 5,500 | 14,548 | ||||||
Sino Biopharmaceutical, Ltd. | 17,500 | 11,394 | ||||||
33,516 | ||||||||
Hungary | 1.1% | ||||||||
Magyar Telekom Telecommunications PLC | 4,623 | 7,258 | ||||||
MOL Hungarian Oil & Gas PLC | 2,905 | 31,887 | ||||||
39,145 | ||||||||
India | 6.5% | ||||||||
Dr Reddy’s Laboratories, Ltd. ADR | 340 | 12,818 | ||||||
GAIL India, Ltd. GDR | 1,446 | 44,397 | ||||||
HDFC Bank, Ltd. ADR | 404 | 41,850 | ||||||
ICICI Bank, Ltd. Sponsored ADR | 880 | 9,055 | ||||||
Infosys, Ltd. Sponsored ADR | 6,848 | 65,193 | ||||||
Reliance Industries, Ltd. Sponsored GDR (#) | 709 | 22,585 | ||||||
State Bank of India GDR (*) | 225 | 9,587 | ||||||
Vedanta, Ltd. ADR | 363 | 4,189 | ||||||
Wipro, Ltd. ADR | 3,573 | 18,330 | ||||||
WNS Holdings, Ltd. ADR (*) | 117 | 4,827 | ||||||
232,831 |
The accompanying notes are an integral part of these financial statements.
78 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
Indonesia | 2.0% | ||||||||
PT Bank Central Asia Tbk | 6,500 | $ | 11,751 | |||||
PT Bank Rakyat Indonesia (Persero) Tbk | 106,900 | 27,287 | ||||||
PT Gudang Garam Tbk | 2,500 | 14,535 | ||||||
PT Unilever Indonesia Tbk | 6,000 | 18,979 | ||||||
72,552 | ||||||||
Malaysia | 2.3% | ||||||||
AirAsia Group Berhad | 12,100 | 8,671 | ||||||
Astro Malaysia Holdings Berhad | 16,900 | 5,343 | ||||||
Hartalega Holdings Berhad | 4,100 | 6,102 | ||||||
Hong Leong Bank Berhad | 2,800 | 13,807 | ||||||
Inari Amertron Berhad | 17,150 | 6,235 | ||||||
Nestle Malaysia Berhad | 300 | 10,690 | ||||||
Petronas Chemicals Group Berhad | 12,600 | 28,298 | ||||||
Public Bank Berhad | 800 | 4,786 | ||||||
83,932 | ||||||||
Mexico | 3.0% | ||||||||
Alfa SAB de CV, Class A | 11,300 | 13,444 | ||||||
America Movil SAB de CV, Class L Sponsored ADR | 449 | 6,398 | ||||||
Grupo Aeroportuario del Centro Norte SAB de CV | 2,800 | 13,344 | ||||||
Grupo Financiero Banorte SAB de CV, Class O | 3,900 | 19,008 | ||||||
Grupo Mexico SAB de CV, Series B | 2,800 | 5,762 | ||||||
Mexichem SAB de CV | 6,300 | 16,010 | ||||||
Wal-Mart de Mexico SAB de CV | 13,400 | 34,073 | ||||||
108,039 | ||||||||
Peru | 0.2% | ||||||||
Credicorp, Ltd. | 39 | 8,645 | ||||||
Philippines | 1.2% | ||||||||
Ayala Land, Inc. | 17,400 | 13,465 | ||||||
Cebu Air, Inc. | 7,180 | 9,992 | ||||||
DMCI Holdings, Inc. | 61,300 | 14,924 | ||||||
JG Summit Holdings, Inc. | 5,570 | 5,899 | ||||||
44,280 |
The accompanying notes are an integral part of these financial statements.
Annual Report 79
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
Poland | 1.4% | ||||||||
Enea SA (*) | 3,668 | $ | 9,700 | |||||
Grupa Lotos SA | 551 | 13,022 | ||||||
Jastrzebska Spolka Weglowa SA (*) | 283 | 5,079 | ||||||
LPP SA | 4 | 8,386 | ||||||
PGE Polska Grupa Energetyczna SA (*) | 2,094 | 5,619 | ||||||
Tauron Polska Energia SA (*) | 11,891 | 6,955 | ||||||
48,761 | ||||||||
Russia | 4.5% | ||||||||
Gazprom PJSC Sponsored ADR | 4,599 | 20,342 | ||||||
LUKOIL PJSC Sponsored ADR | 396 | 28,269 | ||||||
Mobile TeleSystems PJSC Sponsored ADR | 798 | 5,586 | ||||||
Novolipetsk Steel PJSC GDR | 768 | 17,573 | ||||||
Sberbank of Russia PJSC Sponsored ADR | 3,541 | 38,815 | ||||||
Severstal PJSC GDR | 816 | 11,139 | ||||||
Tatneft PJSC Sponsored ADR | 487 | 30,640 | ||||||
VTB Bank PJSC GDR | 7,699 | 8,519 | ||||||
160,883 | ||||||||
Singapore | 0.4% | ||||||||
BOC Aviation, Ltd. | 1,800 | 13,243 | ||||||
South Africa | 4.1% | ||||||||
Anglo American Platinum, Ltd. | 484 | 18,067 | ||||||
Astral Foods, Ltd. | 281 | 3,124 | ||||||
AVI, Ltd. | 1,874 | 13,241 | ||||||
Clicks Group, Ltd. | 489 | 6,486 | ||||||
FirstRand, Ltd. | 4,933 | 22,475 | ||||||
Imperial Logistics, Ltd. | 768 | 3,635 | ||||||
Motus Holdings, Ltd. (*) | 768 | 4,698 | ||||||
Mr Price Group, Ltd. | 1,355 | 23,108 | ||||||
Naspers, Ltd., N Shares | 255 | 50,653 | ||||||
145,487 | ||||||||
South Korea | 14.7% | ||||||||
AfreecaTV Co., Ltd. (*) | 179 | 6,276 | ||||||
BGF retail Co., Ltd. (*) | 49 | 8,959 | ||||||
Celltrion, Inc. (*) | 32 | 6,361 |
The accompanying notes are an integral part of these financial statements.
80 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
Daelim Industrial Co., Ltd. (*) | 201 | $ | 18,421 | |||||
GS Engineering & Construction Corp. N Ap (*) | 285 | 11,118 | ||||||
Hana Financial Group, Inc. | 217 | 7,042 | ||||||
Hyundai Department Store Co., Ltd. (*) | 81 | 6,548 | ||||||
Hyundai Marine & Fire Insurance Co., Ltd. (*) | 438 | 16,111 | ||||||
Industrial Bank of Korea | 738 | 9,292 | ||||||
Jin Air Co., Ltd. (*) | 301 | 5,210 | ||||||
KB Financial Group, Inc. ADR | 946 | 39,713 | ||||||
KCC Corp. | 21 | 5,805 | ||||||
Korea Electric Power Corp. Sponsored ADR | 756 | 11,151 | ||||||
Korea Investment Holdings Co., Ltd. (*) | 95 | 5,043 | ||||||
KT&G Corp. | 116 | 10,553 | ||||||
LG Chem, Ltd. (*) | 33 | 10,220 | ||||||
LG Corp. (*) | 273 | 17,114 | ||||||
LG Electronics, Inc. | 159 | 8,940 | ||||||
LG Household & Health Care, Ltd. (*) | 11 | 10,861 | ||||||
LG Uplus Corp. (*) | 1,402 | 22,142 | ||||||
Lotte Chemical Corp. (*) | 34 | 8,420 | ||||||
Meritz Fire & Marine Insurance Co., Ltd. (*) | 708 | 13,859 | ||||||
NCSoft Corp. (*) | 22 | 9,217 | ||||||
POSCO | 62 | 13,572 | ||||||
Samsung Electro-Mechanics Co., Ltd. (*) | 143 | 13,367 | ||||||
Samsung Electronics Co., Ltd. GDR | 200 | 173,024 | ||||||
Samsung SDS Co., Ltd. (*) | 70 | 12,762 | ||||||
SK Holdings Co., Ltd. | 62 | 14,431 | ||||||
SK Hynix, Inc. | 570 | 30,811 | ||||||
526,343 | ||||||||
Taiwan | 11.3% | ||||||||
Advantech Co., Ltd. | 2,000 | 13,610 | ||||||
Asia Cement Corp. | 6,000 | 6,574 | ||||||
Cheng Loong Corp. | 13,000 | 7,830 | ||||||
Eva Airways Corp. | 12,100 | 6,230 | ||||||
Feng TAY Enterprise Co., Ltd. | 2,000 | 11,359 | ||||||
Formosa Chemicals & Fibre Corp. | 8,000 | 27,104 | ||||||
Hiwin Technologies Corp. | 1,030 | 7,286 |
The accompanying notes are an integral part of these financial statements.
Annual Report 81
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (continued) | ||||||||
Hung Sheng Construction, Ltd. | 10,800 | $ | 8,911 | |||||
President Chain Store Corp. | 2,000 | 20,207 | ||||||
St Shine Optical Co., Ltd. | 1,000 | 17,355 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR | 5,134 | 189,496 | ||||||
Uni-President Enterprises Corp. | 16,000 | 36,211 | ||||||
Yageo Corp. | 718 | 7,332 | ||||||
Yuanta Financial Holding Co., Ltd. | 92,000 | 46,057 | ||||||
405,562 | ||||||||
Thailand | 2.7% | ||||||||
Advanced Info Service Public Co. Ltd. (‡) | 2,200 | 11,655 | ||||||
Bumrungrad Hospital Public Co. Ltd. (‡) | 1,600 | 9,214 | ||||||
Central Pattana Public Co. Ltd. NVDR | 5,000 | 11,461 | ||||||
CP ALL Public Co. Ltd. | 5,000 | 10,557 | ||||||
Krungthai Card Public Co. Ltd. NVDR | 9,500 | 8,885 | ||||||
Muangthai Capital Public Co. Ltd. NVDR | 4,348 | 6,533 | ||||||
PTT Exploration & Production Public Co. Ltd. (‡) | 1,900 | 6,623 | ||||||
PTT Global Chemical Public Co. Ltd. (‡) | 3,700 | 8,097 | ||||||
PTT Public Co. Ltd. (‡) | 6,000 | 8,477 | ||||||
Sri Trang Agro-Industry Public Co. Ltd (‡) | 12,500 | 5,413 | ||||||
Tisco Financial Group Public Co. Ltd. NVDR | 4,100 | 9,866 | ||||||
96,781 | ||||||||
Turkey | 0.7% | ||||||||
Haci Omer Sabanci Holding AS | 4,584 | 6,500 | ||||||
Tekfen Holding AS | 1,588 | 6,205 | ||||||
Turkiye Garanti Bankasi AS ADR | 7,348 | 10,728 | ||||||
23,433 | ||||||||
United States | 0.4% | ||||||||
Yum China Holdings, Inc. | 427 | 14,317 | ||||||
Total Common Stocks (Cost $3,180,704) | 3,299,232 |
The accompanying notes are an integral part of these financial statements.
82 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Advantage Portfolio (concluded) | ||||||||
Preferred Stocks | 0.9% | ||||||||
Brazil | 0.9% | ||||||||
Banco Bradesco SA ADR (Cost $28,110) | 3,421 | $ | 33,834 | |||||
Short-Term Investments | 1.9% | ||||||||
State Street Institutional TreasuryMoney Market Fund, Premier Class,2.24% (7 day yield) (Cost $67,762) | 67,762 | 67,762 | ||||||
Total Investments | 94.9% (Cost $3,276,576) | $ | 3,400,828 | ||||||
Cash and Other Assets in Excessof Liabilities|5.1% | 181,404 | |||||||
Net Assets|100.0% | $ | 3,582,232 |
The accompanying notes are an integral part of these financial statements.
Annual Report 83
The accompanying notes are an integral part of these financial statements.
84 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (continued) | ||||||||
China Shenhua Energy Co., Ltd., Class H | 1,424,000 | $ | 3,101,609 | |||||
China State Construction International Holdings, Ltd. | 4,554,249 | 3,602,219 | ||||||
CNOOC, Ltd. | 1,923,800 | 2,947,390 | ||||||
Consun Pharmaceutical Group, Ltd. | 1,891,000 | 1,088,329 | ||||||
Fufeng Group, Ltd. | 1,613,000 | 682,627 | ||||||
Hangzhou Hikvision Digital Technology Co., Ltd., Class A | 775,200 | 2,928,930 | ||||||
Huami Corp. ADR | 53,445 | 525,364 | ||||||
JNBY Design, Ltd. | 1,011,500 | 1,417,557 | ||||||
Kingsoft Corp., Ltd. | 2,046,000 | 2,956,298 | ||||||
NetEase, Inc. ADR | 28,750 | 6,766,887 | ||||||
Ping An Insurance (Group) Co. of China, Ltd., Class H | 712,000 | 6,251,779 | ||||||
Precision Tsugami China Corp., Ltd. | 766,000 | 700,878 | ||||||
RISE Education Cayman, Ltd. ADR (*) | 110,000 | 882,200 | ||||||
Sinotrans, Ltd., Class H (*) | 3,175,000 | 1,366,185 | ||||||
Tencent Holdings, Ltd. | 142,100 | 5,632,706 | ||||||
Tianyun International Holdings, Ltd. | 5,494,000 | 782,733 | ||||||
West China Cement, Ltd. | 8,556,000 | 1,150,733 | ||||||
Yestar Healthcare Holdings Co., Ltd. | 3,037,500 | 710,559 | ||||||
ZTO Express Cayman, Inc. ADR | 222,430 | 3,521,067 | ||||||
85,219,611 | ||||||||
Colombia | 1.5% | ||||||||
Bancolombia SA Sponsored ADR | 116,592 | 4,442,155 | ||||||
Egypt | 0.9% | ||||||||
Commercial International Bank Egypt SAE GDR | 446,092 | 1,893,567 | ||||||
Credit Agricole Egypt SAE | 240,239 | 550,095 | ||||||
Dice Sport & Casual Wear (*) | 266,817 | 200,970 | ||||||
2,644,632 | ||||||||
Estonia | 0.1% | ||||||||
Tallinna Sadam AS | 125,200 | 292,663 | ||||||
Georgia | 0.6% | ||||||||
Bank of Georgia Group PLC | 67,581 | 1,182,495 | ||||||
TBC Bank Group PLC | 33,962 | 655,889 | ||||||
1,838,384 |
The accompanying notes are an integral part of these financial statements.
Annual Report 85
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (continued) | ||||||||
Greece | 0.5% | ||||||||
OPAP SA | 154,619 | $ | 1,343,096 | |||||
Hong Kong | 4.0% | ||||||||
China Gas Holdings, Ltd. | 906,000 | 3,205,751 | ||||||
China Water Affairs Group, Ltd. | 1,364,000 | 1,461,948 | ||||||
Kingboard Laminates Holdings, Ltd. | 1,077,500 | 890,815 | ||||||
NewOcean Energy Holdings, Ltd. (*) | 1,724,000 | 562,327 | ||||||
Techtronic Industries Co., Ltd. | 936,500 | 4,936,241 | ||||||
TK Group Holdings, Ltd. | 796,000 | 434,170 | ||||||
Tongda Group Holdings, Ltd. | 4,839,114 | 478,351 | ||||||
11,969,603 | ||||||||
Hungary | 1.0% | ||||||||
OTP Bank Nyrt. | 75,888 | 3,060,790 | ||||||
India | 12.4% | ||||||||
Axis Bank, Ltd. (*) | 838,508 | 7,459,633 | ||||||
Bajaj Auto, Ltd. | 66,982 | 2,604,929 | ||||||
Dewan Housing Finance Corp., Ltd. | 201,553 | 721,681 | ||||||
Graphite India, Ltd. | 63,684 | 688,286 | ||||||
HCL Technologies, Ltd. | 101,830 | 1,403,993 | ||||||
ICICI Bank, Ltd. Sponsored ADR | 808,983 | 8,324,435 | ||||||
Infosys, Ltd. Sponsored ADR | 147,300 | 1,402,296 | ||||||
Jubilant Life Sciences, Ltd. | 143,917 | 1,467,616 | ||||||
Kiri Industries, Ltd. (*) | 101,928 | 655,406 | ||||||
Mahanagar Gas, Ltd. | 75,300 | 976,411 | ||||||
Mirza International, Ltd. | 229,418 | 273,849 | ||||||
Reliance Industries, Ltd. | 336,772 | 5,422,036 | ||||||
Tata Consultancy Services, Ltd. | 141,149 | 3,829,653 | ||||||
The South Indian Bank, Ltd. | 1,318,722 | 292,754 | ||||||
Uflex, Ltd. | 118,719 | 480,779 | ||||||
UPL, Ltd. | 87,379 | 947,567 | ||||||
36,951,324 |
The accompanying notes are an integral part of these financial statements.
86 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (continued) | ||||||||
Indonesia | 4.2% | ||||||||
PT Bank Mandiri (Persero) Tbk | 7,658,400 | $ | 3,926,100 | |||||
PT Bank Pembangunan Daerah Jawa Timur Tbk | 7,531,400 | 361,375 | ||||||
PT Bank Rakyat Indonesia (Persero) Tbk | 19,513,490 | 4,981,024 | ||||||
PT Bekasi Fajar Industrial Estate Tbk | 40,140,000 | 580,537 | ||||||
PT Telekomunikasi Indonesia (Persero) Tbk Sponsored ADR | 102,630 | 2,689,932 | ||||||
12,538,968 | ||||||||
Kenya | 0.2% | ||||||||
KCB Group, Ltd. | 1,537,700 | 565,299 | ||||||
Kuwait | 0.3% | ||||||||
Human Soft Holding Co. KSC | 77,918 | 842,098 | ||||||
Mexico | 2.1% | ||||||||
Alpek SAB de CV (*) | 1,018,900 | 1,246,939 | ||||||
America Movil SAB de CV, Class L Sponsored ADR | 118,843 | 1,693,513 | ||||||
Credito Real SAB de CV | 354,900 | 319,111 | ||||||
Grupo Mexico SAB de CV, Series B | 567,701 | 1,168,233 | ||||||
Kimberly-Clark de Mexico SAB de CV, Series A | 1,128,100 | 1,789,300 | ||||||
6,217,096 | ||||||||
Morocco | 0.1% | ||||||||
Residences Dar Saada | 21,421 | 221,791 | ||||||
Oman | 0.3% | ||||||||
Ooredoo | 556,898 | 821,031 | ||||||
Pakistan | 0.2% | ||||||||
Bank Alfalah, Ltd. | 1,507,000 | 439,852 | ||||||
Kohinoor Textile Mills, Ltd. | 565,890 | 183,565 | ||||||
623,417 | ||||||||
Philippines | 0.2% | ||||||||
PLDT, Inc. Sponsored ADR | 34,502 | 737,653 | ||||||
Poland | 0.3% | ||||||||
Dino Polska SA (*) | 40,572 | 1,037,510 |
The accompanying notes are an integral part of these financial statements.
Annual Report 87
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (continued) | ||||||||
Russia | 6.0% | ||||||||
Gazprom PJSC Sponsored ADR | 399,093 | $ | 1,765,255 | |||||
LUKOIL PJSC Sponsored ADR | 48,873 | 3,486,600 | ||||||
Mobile TeleSystems PJSC Sponsored ADR | 301,200 | 2,108,400 | ||||||
Sberbank of Russia PJSC | 656,095 | 1,754,672 | ||||||
Sberbank of Russia PJSC Sponsored ADR | 472,547 | 5,179,115 | ||||||
Yandex NV Class A (*) | 126,800 | 3,467,980 | ||||||
17,762,022 | ||||||||
Singapore | 0.4% | ||||||||
BOC Aviation, Ltd. | 172,700 | 1,270,601 | ||||||
South Africa | 1.3% | ||||||||
Petra Diamonds, Ltd. (*) | 2,160,614 | 1,032,587 | ||||||
Standard Bank Group, Ltd. | 234,235 | 2,910,630 | ||||||
3,943,217 | ||||||||
South Korea | 11.4% | ||||||||
ELP Corp. (*) | 27,880 | 317,648 | ||||||
Eugene Technology Co., Ltd. | 108,147 | 1,041,388 | ||||||
F&F Co., Ltd. (*) | 19,478 | 695,274 | ||||||
Hanwha Life Insurance Co., Ltd. (*) | 196,246 | 740,813 | ||||||
HS Industries Co., Ltd. (*) | 228,345 | 1,395,900 | ||||||
Hyundai Mobis Co., Ltd. (*) | 16,020 | 2,721,672 | ||||||
Innocean Worldwide, Inc. (*) | 22,889 | 1,297,576 | ||||||
KT&G Corp. | 20,343 | 1,850,666 | ||||||
Nasmedia Co., Ltd. (*) | 30,957 | 785,862 | ||||||
NCSoft Corp. (*) | 6,501 | 2,723,743 | ||||||
Nice Information & Telecommunication, Inc. (*) | 35,109 | 617,594 | ||||||
Samjin Pharmaceutical Co., Ltd. (*) | 16,494 | 596,636 | ||||||
Samsung Electronics Co., Ltd. | 318,176 | 11,009,103 | ||||||
Shinhan Financial Group Co., Ltd. | 87,803 | 3,115,803 | ||||||
SK Hynix, Inc. | 94,268 | 5,095,539 | ||||||
34,005,217 |
The accompanying notes are an integral part of these financial statements.
88 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (continued) | ||||||||
Taiwan | 7.7% | ||||||||
Chailease Holding Co., Ltd. | 414,300 | $ | 1,296,066 | |||||
Gourmet Master Co., Ltd. | 150,782 | 1,004,910 | ||||||
Hon Hai Precision Industry Co., Ltd. | 708,136 | 1,634,464 | ||||||
Largan Precision Co., Ltd. | 29,614 | 3,103,798 | ||||||
MediaTek, Inc. | 325,000 | 2,396,783 | ||||||
Powertech Technology, Inc. | 400,000 | 851,519 | ||||||
Primax Electronics, Ltd. | 843,000 | 1,194,158 | ||||||
Silicon Motion Technology Corp. ADR | 90,851 | 3,134,359 | ||||||
Sunny Friend Environmental Technology Co., Ltd. | 106,000 | 697,713 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 904,720 | 6,567,614 | ||||||
Tripod Technology Corp. | 345,000 | 897,503 | ||||||
22,778,887 | ||||||||
Thailand | 0.5% | ||||||||
Tisco Financial Group Public Co. Ltd. (‡) | 571,100 | 1,372,499 | ||||||
Turkey | 0.8% | ||||||||
KOC Holding AS ADR | 172,067 | 2,271,284 | ||||||
Ukraine | 0.2% | ||||||||
Kernel Holding SA | 52,958 | 692,104 | ||||||
Total Common Stocks (Cost $316,023,063) | 288,292,594 | |||||||
Preferred Stocks | 1.3% | ||||||||
Brazil | 1.3% | ||||||||
Banco Bradesco SA ADR (Cost $2,910,303) | 380,490 | 3,763,046 |
The accompanying notes are an integral part of these financial statements.
Annual Report 89
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Blend Portfolio (concluded) | ||||||||
Warrants | 0.0% | ||||||||
Brazil | 0.0% | ||||||||
Iochpe Maxion SA, Expires 06/03/19 (*) (Cost $0) | 15,354 | $ | 37,437 | |||||
Short-Term Investments | 1.9% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $5,709,402) | 5,709,402 | 5,709,402 | ||||||
Total Investments | 100.1% (Cost $324,642,768) | $ | 297,802,479 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.1)% | (198,191 | ) | ||||||
Net Assets | 100.0% | $ | 297,604,288 |
The accompanying notes are an integral part of these financial statements.
90 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 91
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Portfolio (continued) | ||||||||
India | 9.1% | ||||||||
Axis Bank, Ltd. (*) | 22,458,196 | $ | 199,795,242 | |||||
Bajaj Auto, Ltd. | 2,124,873 | 82,636,273 | ||||||
Bharat Petroleum Corp., Ltd. | 4,812,251 | 24,951,096 | ||||||
HCL Technologies, Ltd. | 5,555,249 | 76,593,635 | ||||||
Hero MotoCorp, Ltd. | 3,005,411 | 133,433,170 | ||||||
Infosys, Ltd. Sponsored ADR | 7,848,652 | 74,719,167 | ||||||
Tata Consultancy Services, Ltd. | 7,632,389 | 207,081,904 | ||||||
799,210,487 | ||||||||
Indonesia | 5.9% | ||||||||
PT Astra International Tbk | 204,321,600 | 117,618,294 | ||||||
PT Bank Mandiri (Persero) Tbk | 347,304,142 | 178,046,428 | ||||||
PT Semen Indonesia (Persero) Tbk | 98,966,200 | 79,117,889 | ||||||
PT Telekomunikasi Indonesia (Persero) Tbk Sponsored ADR | 5,494,310 | 144,005,865 | ||||||
518,788,476 | ||||||||
Luxembourg | 0.7% | ||||||||
Ternium SA Sponsored ADR | 2,171,622 | 58,850,956 | ||||||
Malaysia | 0.7% | ||||||||
British American Tobacco Malaysia Berhad | 6,960,700 | 60,594,729 | ||||||
Mexico | 3.1% | ||||||||
America Movil SAB de CV, Class L Sponsored ADR | 11,607,171 | 165,402,187 | ||||||
Grupo Mexico SAB de CV, Series B | 24,709,047 | 50,847,068 | ||||||
Kimberly-Clark de Mexico SAB de CV, Series A | 39,066,195 | 61,963,606 | ||||||
278,212,861 | ||||||||
Pakistan | 1.2% | ||||||||
Habib Bank, Ltd. | 23,714,780 | 20,585,936 | ||||||
Oil & Gas Development Co., Ltd. | 19,854,917 | 18,303,821 | ||||||
Pakistan Petroleum, Ltd. | 59,350,052 | 63,999,418 | ||||||
102,889,175 | ||||||||
Philippines | 0.6% | ||||||||
PLDT, Inc. Sponsored ADR | 2,658,385 | 56,836,271 |
The accompanying notes are an integral part of these financial statements.
92 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Portfolio (continued) | ||||||||
Russia | 9.2% | ||||||||
ALROSA PAO | 58,722,879 | $ | 83,118,066 | |||||
Gazprom PJSC Sponsored ADR | 22,947,240 | 101,499,475 | ||||||
LUKOIL PJSC Sponsored ADR | 2,486,739 | 177,516,403 | ||||||
Magnit PJSC Sponsored GDR | 4,649,846 | 59,194,548 | ||||||
Mobile TeleSystems PJSC Sponsored ADR | 15,984,243 | 111,889,701 | ||||||
Sberbank of Russia PJSC | 105,631,065 | 282,501,516 | ||||||
815,719,709 | ||||||||
South Africa | 9.7% | ||||||||
Imperial Logistics, Ltd. (^) | 7,191,474 | 34,041,858 | ||||||
Life Healthcare Group Holdings, Ltd. | 37,238,007 | 67,891,687 | ||||||
Motus Holdings, Ltd. (*) | 7,191,474 | 43,991,077 | ||||||
Nedbank Group, Ltd. | 5,026,896 | 95,646,305 | ||||||
PPC, Ltd. (*) | 69,760,695 | 28,578,558 | ||||||
Sanlam, Ltd. | 17,908,856 | 99,316,334 | ||||||
Shoprite Holdings, Ltd. | 9,791,761 | 128,713,524 | ||||||
Standard Bank Group, Ltd. | 7,871,108 | 97,807,263 | ||||||
The Bidvest Group, Ltd. | 6,144,646 | 88,452,923 | ||||||
Vodacom Group, Ltd. | 11,131,696 | 102,209,474 | ||||||
Woolworths Holdings, Ltd. | 16,956,187 | 64,537,359 | ||||||
851,186,362 | ||||||||
South Korea | 14.1% | ||||||||
Coway Co., Ltd. | 1,551,063 | 102,905,483 | ||||||
Hanwha Life Insurance Co., Ltd. (*) | 13,853,670 | 52,296,524 | ||||||
Hyundai Mobis Co., Ltd. (*) | 684,352 | 116,266,032 | ||||||
KB Financial Group, Inc. | 2,567,620 | 107,177,544 | ||||||
KT&G Corp. | 895,252 | 81,443,874 | ||||||
Samsung Electronics Co., Ltd. | 10,621,891 | 367,524,564 | ||||||
Shinhan Financial Group Co., Ltd. | 5,006,452 | 177,660,417 | ||||||
SK Hynix, Inc. | 4,346,642 | 234,952,307 | ||||||
1,240,226,745 | ||||||||
Taiwan | 5.2% | ||||||||
Catcher Technology Co., Ltd. | 9,183,000 | 66,205,256 | ||||||
Hon Hai Precision Industry Co., Ltd. | 38,991,425 | 89,996,927 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 41,192,284 | 299,026,225 | ||||||
455,228,408 |
The accompanying notes are an integral part of these financial statements.
Annual Report 93
Description | Shares | Fair Value | ||||||
Lazard Emerging Markets Equity Portfolio (concluded) | ||||||||
Thailand | 1.6% | ||||||||
Kasikornbank Public Co. Ltd. (‡) | 12,110,054 | $ | 68,904,143 | |||||
The Siam Cement Public Co. Ltd. (‡) | 5,425,800 | 72,655,061 | ||||||
141,559,204 | ||||||||
Turkey | 2.1% | ||||||||
KOC Holding AS | 27,486,003 | 73,409,523 | ||||||
Tupras Turkiye Petrol Rafinerileri AS | 5,097,405 | 112,385,440 | ||||||
185,794,963 | ||||||||
Total Common Stocks (Cost $8,834,771,508) | 8,629,323,895 | |||||||
Short-Term Investments | 2.4% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $209,726,438) | 209,726,438 | 209,726,438 | ||||||
Total Investments | 100.3% (Cost $9,044,497,946) | $ | 8,839,050,333 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.3)% | (28,113,525 | ) | ||||||
Net Assets | 100.0% | $ | 8,810,936,808 |
The accompanying notes are an integral part of these financial statements.
94 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 95
Description | Shares | Fair Value | ||||||
Lazard Equity Franchise Portfolio (concluded) | ||||||||
Microsoft Corp. | 1,713 | $ | 173,989 | |||||
Nielsen Holdings PLC | 22,092 | 515,406 | ||||||
Norfolk Southern Corp. | 1,195 | 178,700 | ||||||
Omnicom Group, Inc. | 4,752 | 348,037 | ||||||
Oracle Corp. | 11,804 | 532,951 | ||||||
PG&E Corp. (*) | 9,181 | 218,049 | ||||||
QUALCOMM, Inc. | 3,462 | 197,022 | ||||||
Stericycle, Inc. (*) | 13,527 | 496,306 | ||||||
Tapestry, Inc. | 5,076 | 171,315 | ||||||
Visa, Inc., Class A | 633 | 83,518 | ||||||
5,779,487 | ||||||||
Total Common Stocks (Cost $9,402,903) | 8,317,776 | |||||||
Short-Term Investments | 1.0% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $83,365) | 83,365 | 83,365 | ||||||
Total Investments | 98.5% (Cost $9,486,268) | $ | 8,401,141 | ||||||
Cash and Other Assets in Excess of Liabilities | 1.5% | 129,748 | |||||||
Net Assets | 100.0% | $ | 8,530,889 |
The accompanying notes are an integral part of these financial statements.
96 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 97
Description | Shares | Fair Value | ||||||
Lazard Global Equity Select Portfolio (continued) | ||||||||
Japan | 6.5% | ||||||||
Daiwa House Industry Co., Ltd. | 26,085 | $ | 828,448 | |||||
Kansai Paint Co., Ltd. | 29,400 | 564,249 | ||||||
Kao Corp. | 10,500 | 774,122 | ||||||
Ryohin Keikaku Co., Ltd. | 3,360 | 817,722 | ||||||
TechnoPro Holdings, Inc. | 15,800 | 645,386 | ||||||
Yamaha Corp. | 16,400 | 696,286 | ||||||
4,326,213 | ||||||||
Netherlands | 2.4% | ||||||||
Wolters Kluwer NV | 26,868 | 1,586,644 | ||||||
Singapore | 1.7% | ||||||||
Oversea-Chinese Banking Corp., Ltd. | 133,000 | 1,092,420 | ||||||
South Africa | 1.6% | ||||||||
Distell Group Holdings, Ltd. | 74,339 | 554,781 | ||||||
Sanlam, Ltd. | 85,692 | 475,218 | ||||||
1,029,999 | ||||||||
Sweden | 3.1% | ||||||||
Assa Abloy AB, Class B | 28,798 | 514,887 | ||||||
Epiroc AB, Class A (*) | 87,792 | 833,756 | ||||||
Hexagon AB, B Shares | 15,165 | 699,971 | ||||||
2,048,614 | ||||||||
Switzerland | 2.1% | ||||||||
Julius Baer Group, Ltd. | 9,824 | 351,048 | ||||||
Novartis AG | 12,207 | 1,045,510 | ||||||
1,396,558 | ||||||||
Taiwan | 1.0% | ||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR | 17,360 | 640,758 |
The accompanying notes are an integral part of these financial statements.
98 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Equity Select Portfolio (continued) | ||||||||
United Kingdom | 12.0% | ||||||||
Bunzl PLC | 18,701 | $ | 562,690 | |||||
Coca-Cola European Partners PLC | 19,260 | 883,071 | ||||||
Compass Group PLC | 40,153 | 842,999 | ||||||
Diageo PLC | 41,619 | 1,479,286 | ||||||
Prudential PLC | 34,171 | 610,536 | ||||||
RELX PLC (*) | 61,391 | 1,263,816 | ||||||
RSA Insurance Group PLC | 83,755 | 546,478 | ||||||
The Weir Group PLC | 22,380 | 367,967 | ||||||
Unilever PLC | 26,971 | 1,411,599 | ||||||
7,968,442 | ||||||||
United States | 49.3% | ||||||||
Accenture PLC, Class A | 8,320 | 1,173,203 | ||||||
Alphabet, Inc., Class A (*) | 1,939 | 2,026,177 | ||||||
Aon PLC | 9,760 | 1,418,714 | ||||||
Biogen, Inc. (*) | 5,035 | 1,515,132 | ||||||
Boston Scientific Corp. N Ap (*) | 28,865 | 1,020,089 | ||||||
Cisco Systems, Inc. | 20,245 | 877,216 | ||||||
Comerica, Inc. | 8,485 | 582,835 | ||||||
Eaton Corp. PLC | 7,725 | 530,399 | ||||||
eBay, Inc. (*) | 17,500 | 491,225 | ||||||
Honeywell International, Inc. | 8,358 | 1,104,259 | ||||||
Intercontinental Exchange, Inc. | 17,395 | 1,310,365 | ||||||
IQVIA Holdings, Inc. (*) | 12,560 | 1,459,095 | ||||||
Johnson & Johnson | 12,225 | 1,577,636 | ||||||
Lowe’s Cos., Inc. | 7,915 | 731,029 | ||||||
McDonald’s Corp. | 6,030 | 1,070,747 | ||||||
Microsoft Corp. | 17,685 | 1,796,265 | ||||||
Motorola Solutions, Inc. | 7,520 | 865,101 | ||||||
Rockwell Automation, Inc. | 4,525 | 680,922 | ||||||
S&P Global, Inc. | 5,865 | 996,698 | ||||||
Schlumberger, Ltd. | 14,571 | 525,722 | ||||||
Starbucks Corp. | 12,400 | 798,560 | ||||||
The Charles Schwab Corp. | 21,575 | 896,010 | ||||||
The Coca-Cola Co. | 37,615 | 1,781,070 |
The accompanying notes are an integral part of these financial statements.
Annual Report 99
Description | Shares | Fair Value | ||||||
Lazard Global Equity Select Portfolio (concluded) | ||||||||
The Procter & Gamble Co. | 10,765 | $ | 989,519 | |||||
Thermo Fisher Scientific, Inc. | 7,705 | 1,724,302 | ||||||
United Technologies Corp. | 4,484 | 477,456 | ||||||
Visa, Inc., Class A | 10,088 | 1,331,011 | ||||||
Welbilt, Inc. (*) | 25,950 | 288,305 | ||||||
Worldpay, Inc., Class A (*) | 15,685 | 1,198,805 | ||||||
Zoetis, Inc. | 16,167 | 1,382,925 | ||||||
32,620,792 | ||||||||
Total Common Stocks (Cost $60,538,016) | 63,369,231 | |||||||
Short-Term Investments | 4.7% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $3,109,649) | 3,109,649 | 3,109,649 | ||||||
Total Investments | 100.5% (Cost $63,647,665) | $ | 66,478,880 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.5)% | (333,980 | ) | ||||||
Net Assets | 100.0% | $ | 66,144,900 |
The accompanying notes are an integral part of these financial statements.
100 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 101
Description | Shares | Fair Value | ||||||
Lazard Global Listed Infrastructure Portfolio (continued) | ||||||||
United Kingdom | 16.5% | ||||||||
National Grid PLC | 24,884,298 | $ | 240,645,206 | |||||
Pennon Group PLC | 17,678,748 | 155,894,195 | ||||||
Severn Trent PLC | 10,202,401 | 235,711,601 | ||||||
United Utilities Group PLC | 26,598,242 | 249,070,690 | ||||||
881,321,692 | ||||||||
United States | 21.9% | ||||||||
American Electric Power Co., Inc. | 2,910,883 | 217,559,395 | ||||||
Consolidated Edison, Inc. | 1,012,600 | 77,423,396 | ||||||
CSX Corp. | 1,300,000 | 80,769,000 | ||||||
Edison International | 3,057,809 | 173,591,817 | ||||||
Kansas City Southern | 1,537,800 | 146,783,010 | ||||||
Norfolk Southern Corp. | 1,685,137 | 251,995,387 | ||||||
PG&E Corp. (*) | 9,504,849 | 225,740,164 | ||||||
1,173,862,169 | ||||||||
Total Common Stocks (Cost $5,462,346,658) | 5,143,504,348 | |||||||
Short-Term Investments | 2.8% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $152,170,295) | 152,170,295 | 152,170,295 | ||||||
Total Investments | 99.0% (Cost $5,614,516,953) (») | $ | 5,295,674,643 | ||||||
Cash and Other Assets in Excess of Liabilities | 1.0% | 55,434,047 | |||||||
Net Assets | 100.0% | $ | 5,351,108,690 |
The accompanying notes are an integral part of these financial statements.
102 Annual Report
Lazard Global Listed Infrastructure Portfolio (concluded)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
AUD | 32,595,580 | USD | 23,031,450 | RBC | 03/28/19 | $ | — | $ | 39,902 | |||||||||||||
USD | 122,642,240 | AUD | 170,632,682 | BNP | 03/28/19 | 2,285,142 | — | |||||||||||||||
USD | 74,087,174 | AUD | 103,062,752 | CIT | 03/28/19 | 1,391,055 | — | |||||||||||||||
USD | 101,085,498 | AUD | 140,610,369 | HSB | 03/28/19 | 1,904,872 | — | |||||||||||||||
USD | 84,364,897 | AUD | 117,343,780 | RBC | 03/28/19 | 1,595,543 | — | |||||||||||||||
USD | 76,047,779 | AUD | 105,770,288 | SCB | 03/28/19 | 1,441,878 | — | |||||||||||||||
USD | 88,526,512 | AUD | 123,143,335 | SSB | 03/28/19 | 1,666,396 | — | |||||||||||||||
USD | 11,519,082 | CAD | 15,441,053 | BNP | 03/28/19 | 186,391 | — | |||||||||||||||
USD | 13,448,964 | CAD | 18,026,992 | HSB | 03/28/19 | 218,369 | — | |||||||||||||||
USD | 24,525,538 | CAD | 32,863,608 | SCB | 03/28/19 | 405,868 | — | |||||||||||||||
USD | 33,934,844 | CHF | 33,362,703 | CAN | 03/28/19 | — | 279,690 | |||||||||||||||
USD | 388,555,695 | EUR | 337,108,256 | BNP | 03/28/19 | — | 457,235 | |||||||||||||||
USD | 340,321,123 | EUR | 295,444,570 | CAN | 03/28/19 | — | 613,149 | |||||||||||||||
USD | 345,062,058 | EUR | 299,603,256 | CIT | 03/28/19 | — | 671,214 | |||||||||||||||
USD | 414,673,461 | EUR | 359,950,228 | HSB | 03/28/19 | — | 698,427 | |||||||||||||||
USD | 419,305,540 | EUR | 363,977,344 | MEL | 03/28/19 | — | 713,521 | |||||||||||||||
USD | 233,460,779 | EUR | 202,665,722 | RBC | 03/28/19 | — | 409,454 | |||||||||||||||
USD | 386,010,296 | EUR | 335,079,836 | SSB | 03/28/19 | — | 661,898 | |||||||||||||||
USD | 122,236,121 | GBP | 96,102,566 | BNP | 03/28/19 | — | 760,876 | |||||||||||||||
USD | 170,217,339 | GBP | 133,833,393 | CAN | 03/28/19 | — | 1,069,507 | |||||||||||||||
USD | 137,681,034 | GBP | 108,253,423 | CIT | 03/28/19 | — | 867,254 | |||||||||||||||
USD | 124,391,414 | GBP | 97,794,299 | HSB | 03/28/19 | — | 770,749 | |||||||||||||||
USD | 212,532,177 | GBP | 167,077,164 | RBC | 03/28/19 | — | 1,301,753 | |||||||||||||||
USD | 134,257,276 | GBP | 105,561,036 | SSB | 03/28/19 | — | 845,156 | |||||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 11,095,514 | $ | 10,159,785 |
The accompanying notes are an integral part of these financial statements.
Annual Report 103
The accompanying notes are an integral part of these financial statements.
104 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 105
Description | Shares | Fair Value | ||||||
Lazard Global Strategic Equity Portfolio (continued) | ||||||||
Japan | 3.2% | ||||||||
Digital Garage, Inc. | 1,000 | $ | 22,976 | |||||
Nexon Co., Ltd. (*) | 2,300 | 29,381 | ||||||
TechnoPro Holdings, Inc. | 800 | 32,678 | ||||||
85,035 | ||||||||
Netherlands | 1.5% | ||||||||
ABN AMRO Group NV | 1,661 | 38,906 | ||||||
New Zealand | 1.3% | ||||||||
Trade Me Group, Ltd. | 8,105 | 34,621 | ||||||
South Africa | 2.4% | ||||||||
Naspers, Ltd., N Shares | 166 | 32,974 | ||||||
Sanlam, Ltd. | 5,637 | 31,261 | ||||||
64,235 | ||||||||
Switzerland | 4.9% | ||||||||
Novartis AG | 635 | 54,387 | ||||||
Partners Group Holding AG | 70 | 42,548 | ||||||
The Swatch Group AG | 114 | 33,350 | ||||||
130,285 | ||||||||
United Kingdom | 9.3% | ||||||||
Bunzl PLC | 1,419 | 42,696 | ||||||
Coca-Cola European Partners PLC | 989 | 45,492 | ||||||
Informa PLC | 5,815 | 46,629 | ||||||
Prudential PLC | 1,661 | 29,677 | ||||||
RELX PLC (*) | 2,713 | 55,850 | ||||||
Rio Tinto PLC | 533 | 25,414 | ||||||
245,758 | ||||||||
United States | 53.3% | ||||||||
Accenture PLC, Class A | 432 | 60,916 | ||||||
Alphabet, Inc., Class A (*) | 132 | 137,935 | ||||||
Aon PLC | 449 | 65,267 | ||||||
Bank of America Corp. | 1,967 | 48,467 | ||||||
Baxter International, Inc. | 409 | 26,920 | ||||||
Biogen, Inc. (*) | 127 | 38,217 | ||||||
Comerica, Inc. | 685 | 47,053 | ||||||
Danaher Corp. | 425 | 43,826 |
The accompanying notes are an integral part of these financial statements.
106 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Strategic Equity Portfolio (concluded) | ||||||||
Deere & Co. | 323 | $ | 48,182 | |||||
Dollar Tree, Inc. (*) | 252 | 22,761 | ||||||
Electronic Arts, Inc. (*) | 265 | 20,911 | ||||||
EOG Resources, Inc. | 421 | 36,715 | ||||||
Halliburton Co. | 1,244 | 33,066 | ||||||
Henry Schein, Inc. (*) | 475 | 37,297 | ||||||
Intercontinental Exchange, Inc. | 938 | 70,660 | ||||||
IPG Photonics Corp. (*) | 101 | 11,442 | ||||||
IQVIA Holdings, Inc. (*) | 623 | 72,374 | ||||||
Medtronic PLC | 618 | 56,213 | ||||||
Microsoft Corp. | 833 | 84,608 | ||||||
Palo Alto Networks, Inc. (*) | 250 | 47,087 | ||||||
Raytheon Co. | 315 | 48,305 | ||||||
S&P Global, Inc. | 339 | 57,610 | ||||||
The Coca-Cola Co. | 1,637 | 77,512 | ||||||
Union Pacific Corp. | 265 | 36,631 | ||||||
Visa, Inc., Class A | 643 | 84,837 | ||||||
Worldpay, Inc., Class A (*) | 538 | 41,119 | ||||||
Zoetis, Inc. | 585 | 50,041 | ||||||
1,405,972 | ||||||||
Total Common Stocks (Cost $2,505,753) | 2,545,706 | |||||||
Short-Term Investments | 3.9% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $102,289) | 102,289 | 102,289 | ||||||
Total Investments | 100.4% (Cost $2,608,042) | $ | 2,647,995 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.4)% | (11,304 | ) | ||||||
Net Assets | 100.0% | $ | 2,636,691 |
The accompanying notes are an integral part of these financial statements.
Annual Report 107
The accompanying notes are an integral part of these financial statements.
108 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Compounders Portfolio (continued) | ||||||||
Japan | 3.9% | ||||||||
Pigeon Corp. ADR | 356 | $ | 3,774 | |||||
Shimano, Inc. ADR | 149 | 2,117 | ||||||
5,891 | ||||||||
Netherlands | 2.0% | ||||||||
ASML Holding NV | 19 | 2,986 | ||||||
Norway | 1.9% | ||||||||
Gjensidige Forsikring ASA ADR | 187 | 2,907 | ||||||
South Africa | 5.6% | ||||||||
Clicks Group, Ltd. | 318 | 4,218 | ||||||
Mr Price Group, Ltd. | 113 | 1,927 | ||||||
Sanlam, Ltd. | 415 | 2,301 | ||||||
8,446 | ||||||||
Spain | 1.7% | ||||||||
Industria de Diseno Textil SA | 98 | 2,498 | ||||||
Sweden | 5.0% | ||||||||
Assa Abloy AB ADR | 488 | 4,329 | ||||||
Hexagon AB ADR | 68 | 3,182 | ||||||
7,511 | ||||||||
Taiwan | 2.9% | ||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR | 118 | 4,355 | ||||||
United Kingdom | 13.4% | ||||||||
Bunzl PLC | 127 | 3,821 | ||||||
Compass Group PLC | 175 | 3,674 | ||||||
Intertek Group PLC | 57 | 3,487 | ||||||
London Stock Exchange Group PLC | 56 | 2,900 | ||||||
Prudential PLC | 113 | 2,019 | ||||||
RELX PLC (*) | 201 | 4,138 | ||||||
20,039 |
The accompanying notes are an integral part of these financial statements.
Annual Report 109
Description | Shares | Fair Value | ||||||
Lazard International Compounders Portfolio (concluded) | ||||||||
United States | 5.3% | ||||||||
Aon PLC | 33 | $ | 4,797 | |||||
QIAGEN NV (*) | 91 | 3,135 | ||||||
7,932 | ||||||||
Total Common Stocks (Cost $129,053) | 128,758 | |||||||
Total Investments | 86.0% (Cost $129,053) | $ | 128,758 | ||||||
Cash and Other Assets in Excess of Liabilities | 14.0% | 20,947 | |||||||
Net Assets | 100.0% | $ | 149,705 |
The accompanying notes are an integral part of these financial statements.
110 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 111
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (continued) | ||||||||
�� | ||||||||
Finland | 0.5% | ||||||||
Fortum Oyj | 202 | $ | 4,430 | |||||
Neste Oyj | 84 | 6,486 | ||||||
10,916 | ||||||||
France | 11.2% | ||||||||
Air France-KLM (*) | 248 | 2,681 | ||||||
AXA SA | 906 | 19,520 | ||||||
BNP Paribas SA | 208 | 9,368 | ||||||
Credit Agricole SA | 326 | 3,507 | ||||||
Eiffage SA | 71 | 5,940 | ||||||
Electricite de France SA | 1,869 | 29,449 | ||||||
Faurecia SA | 238 | 8,933 | ||||||
Hermes International | 27 | 14,932 | ||||||
Ipsen SA | 131 | 16,896 | ||||||
Kering SA | 16 | 7,488 | ||||||
L’Oreal SA | 87 | 19,971 | ||||||
Peugeot SA | 1,274 | 27,082 | ||||||
Safran SA | 40 | 4,806 | ||||||
Schneider Electric SE | 43 | 2,927 | ||||||
Societe Generale SA | 47 | 1,492 | ||||||
Total SA | 1,108 | 58,533 | ||||||
Unibail-Rodamco-Westfield REIT (*) | 47 | 7,291 | ||||||
240,816 | ||||||||
Germany | 7.2% | ||||||||
Allianz SE | 253 | 50,769 | ||||||
Continental AG | 114 | 15,764 | ||||||
Covestro AG | 323 | 15,980 | ||||||
Deutsche Lufthansa AG | 537 | 12,111 | ||||||
HUGO BOSS AG | 161 | 9,929 | ||||||
MTU Aero Engines AG | 124 | 22,522 | ||||||
SAP SE | 181 | 18,029 | ||||||
Schaeffler AG (Preference Shares) | 418 | 3,564 | ||||||
Siltronic AG | 84 | 6,947 | ||||||
155,615 |
The accompanying notes are an integral part of these financial statements.
112 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (continued) | ||||||||
Hong Kong | 3.7% | ||||||||
CK Asset Holdings, Ltd. | 2,000 | $ | 14,543 | |||||
CK Hutchison Holdings, Ltd. | 500 | 4,778 | ||||||
Hang Seng Bank, Ltd. | 300 | 6,701 | ||||||
Jardine Matheson Holdings, Ltd. | 201 | 13,995 | ||||||
Kerry Properties, Ltd. | 1,500 | 5,096 | ||||||
Lifestyle International Holdings, Ltd. | 3,000 | 4,524 | ||||||
Link Real Estate Investment Trust | 1,000 | 10,071 | ||||||
Sands China, Ltd. | 1,600 | 6,929 | ||||||
Swire Pacific, Ltd., Class A | 500 | 5,253 | ||||||
Techtronic Industries Co., Ltd. | 500 | 2,635 | ||||||
Xinyi Glass Holdings, Ltd. | 4,000 | 4,393 | ||||||
78,918 | ||||||||
Israel | 0.3% | ||||||||
Attunity, Ltd. (*) | 100 | 1,968 | ||||||
Israel Discount Bank, Ltd., Class A | 1,071 | 3,301 | ||||||
5,269 | ||||||||
Italy | 3.8% | ||||||||
Enel SpA | 7,619 | 43,954 | ||||||
Intesa Sanpaolo SpA | 10,511 | 23,295 | ||||||
Poste Italiane SpA | 531 | 4,262 | ||||||
UniCredit SpA | 950 | 10,777 | ||||||
82,288 | ||||||||
Japan | 25.3% | ||||||||
Advantest Corp. | 100 | 2,015 | ||||||
AGC, Inc. | 300 | 9,309 | ||||||
Canon, Inc. | 400 | 11,022 | ||||||
Capcom Co., Ltd. | 500 | 9,967 | ||||||
Daicel Corp. | 1,400 | 14,387 | ||||||
Daiwa House Industry Co., Ltd. | 1,100 | 34,935 | ||||||
DMG Mori Co., Ltd. | 800 | 8,929 | ||||||
East Japan Railway Co. ADR | 2,054 | 30,019 | ||||||
FUJIFILM Holdings Corp. | 300 | 11,577 | ||||||
Fukuoka Financial Group, Inc. | 100 | 2,017 | ||||||
Haseko Corp. | 200 | 2,094 | ||||||
Hitachi Capital Corp. | 100 | 2,088 |
The accompanying notes are an integral part of these financial statements.
Annual Report 113
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (continued) | ||||||||
Hitachi, Ltd. | 400 | $ | 10,633 | |||||
Honda Motor Co., Ltd. | 400 | 10,452 | ||||||
Japan Post Holdings Co., Ltd. | 3,300 | 37,942 | ||||||
JFE Holdings, Inc. | 500 | 7,955 | ||||||
JSR Corp. | 300 | 4,483 | ||||||
Kakaku.com, Inc. | 100 | 1,759 | ||||||
KDDI Corp. | 200 | 4,766 | ||||||
Kose Corp. | 100 | 15,859 | ||||||
Maeda Corp. | 200 | 1,857 | ||||||
Mitsubishi Heavy Industries, Ltd. | 100 | 3,592 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 3,800 | 18,738 | ||||||
MS&AD Insurance Group Holdings, Inc. | 800 | 22,708 | ||||||
Nippon Steel & Sumitomo Metal Corp. | 100 | 1,710 | ||||||
Nitto Denko Corp. | 200 | 9,986 | ||||||
Nomura Holdings, Inc. | 1,700 | 6,482 | ||||||
NTT DOCOMO, Inc. | 1,900 | 42,664 | ||||||
ORIX Corp. | 1,900 | 27,606 | ||||||
Raysum Co., Ltd. | 200 | 1,748 | ||||||
Seven & I Holdings Co., Ltd. | 400 | 17,417 | ||||||
Shin-Etsu Chemical Co., Ltd. | 100 | 7,704 | ||||||
Shionogi & Co., Ltd. | 200 | 11,341 | ||||||
Showa Denko KK | 200 | 5,866 | ||||||
Sompo Holdings, Inc. | 500 | 16,877 | ||||||
Sumitomo Mitsui Construction Co., Ltd. | 900 | 5,455 | ||||||
Sumitomo Mitsui Trust Holdings, Inc. | 400 | 14,560 | ||||||
Suzuken Co., Ltd. | 300 | 15,397 | ||||||
Taisei Corp. | 300 | 12,755 | ||||||
The Chiba Bank, Ltd. | 400 | 2,218 | ||||||
The Dai-ichi Life Insurance Co., Ltd. | 200 | 3,099 | ||||||
The Shizuoka Bank, Ltd. | 300 | 2,335 | ||||||
Tokai Carbon Co., Ltd. | 200 | 2,247 | ||||||
Tokyo Electron, Ltd. | 200 | 22,946 | ||||||
Tokyo Gas Co., Ltd. | 400 | 10,116 | ||||||
Tosoh Corp. | 500 | 6,470 | ||||||
Toyo Seikan Group Holdings, Ltd. | 300 | 6,843 |
The accompanying notes are an integral part of these financial statements.
114 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (continued) | ||||||||
UT Group Co., Ltd. (*) | 200 | $ | 3,462 | |||||
West Japan Railway Co. | 100 | 7,062 | ||||||
543,469 | ||||||||
Macau | 0.2% | ||||||||
Wynn Macau, Ltd. | 2,400 | 5,164 | ||||||
Netherlands | 6.0% | ||||||||
Aegon NV | 1,499 | 6,968 | ||||||
Euronext NV | 97 | 5,571 | ||||||
ING Groep NV | 2,255 | 24,166 | ||||||
Koninklijke Ahold Delhaize NV | 712 | 17,962 | ||||||
Royal Dutch Shell PLC, A Shares | 1,639 | 48,106 | ||||||
Wolters Kluwer NV | 445 | 26,279 | ||||||
129,052 | ||||||||
New Zealand | 0.3% | ||||||||
a2 Milk Co., Ltd. (*) | 746 | 5,517 | ||||||
Norway | 2.5% | ||||||||
Aker BP ASA | 226 | 5,723 | ||||||
DNO ASA | 1,569 | 2,288 | ||||||
Equinor ASA | 1,797 | 38,323 | ||||||
Salmar ASA | 98 | 4,847 | ||||||
Telenor ASA | 128 | 2,471 | ||||||
53,652 | ||||||||
Russia | 0.5% | ||||||||
Evraz PLC | 1,680 | 10,290 | ||||||
South Africa | 0.1% | ||||||||
Mondi PLC | 104 | 2,152 | ||||||
Spain | 2.5% | ||||||||
Amadeus IT Group SA | 339 | 23,604 | ||||||
Banco Bilbao Vizcaya Argentaria SA | 2,902 | 15,308 | ||||||
Industria de Diseno Textil SA | 614 | 15,653 | ||||||
54,565 |
The accompanying notes are an integral part of these financial statements.
Annual Report 115
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (continued) | ||||||||
Sweden | 1.2% | ||||||||
Atlas Copco AB, Class A | 133 | $ | 3,178 | |||||
Granges AB | 175 | 1,594 | ||||||
Mycronic AB | 250 | 3,347 | ||||||
Sandvik AB | 216 | 3,091 | ||||||
Volvo AB, Class B | 1,092 | 14,358 | ||||||
25,568 | ||||||||
Switzerland | 9.8% | ||||||||
Ferguson PLC | 257 | 16,460 | ||||||
Georg Fischer AG | 7 | 5,584 | ||||||
Nestle SA | 344 | 27,967 | ||||||
Novartis AG | 733 | 62,780 | ||||||
Partners Group Holding AG | 23 | 13,980 | ||||||
Roche Holding AG | 312 | 77,150 | ||||||
The Swatch Group AG | 99 | 5,739 | ||||||
209,660 | ||||||||
United Kingdom | 16.6% | ||||||||
Anglo American PLC | 477 | 10,545 | ||||||
Ashtead Group PLC | 441 | 9,137 | ||||||
Associated British Foods PLC | 690 | 17,945 | ||||||
Burberry Group PLC | 429 | 9,439 | ||||||
Cineworld Group PLC | 5,426 | 18,160 | ||||||
Fiat Chrysler Automobiles NV (*) | 481 | 6,993 | ||||||
Games Workshop Group PLC | 158 | 6,098 | ||||||
Hargreaves Lansdown PLC | 941 | 22,171 | ||||||
Howden Joinery Group PLC | 1,885 | 10,425 | ||||||
HSBC Holdings PLC | 843 | 6,918 | ||||||
Imperial Brands PLC | 1,382 | 41,792 | ||||||
International Consolidated Airlines Group SA | 2,478 | 19,666 | ||||||
KAZ Minerals PLC | 416 | 2,821 | ||||||
Lloyds Banking Group PLC | 35,153 | 23,228 | ||||||
National Grid PLC | 1,313 | 12,697 | ||||||
Pearson PLC | 499 | 5,949 | ||||||
Persimmon PLC | 130 | 3,185 | ||||||
Royal Bank of Scotland Group PLC | 9,771 | 26,866 | ||||||
SSP Group PLC | 249 | 2,051 |
The accompanying notes are an integral part of these financial statements.
116 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Advantage Portfolio (concluded) | ||||||||
Tate & Lyle PLC | 2,220 | $ | 18,638 | |||||
Taylor Wimpey PLC | 4,026 | 6,964 | ||||||
Unilever NV | 1,009 | 54,824 | ||||||
Vodafone Group PLC | 5,408 | 10,508 | ||||||
WH Smith PLC | 129 | 2,818 | ||||||
Wm Morrison Supermarkets PLC | 2,421 | 6,562 | ||||||
356,400 | ||||||||
United States | 0.3% | ||||||||
ICON PLC (*) | 48 | 6,202 | ||||||
Total Common Stocks (Cost $2,416,129) | 2,188,168 | |||||||
Total Investments | 101.9% (Cost $2,416,129) | $ | 2,188,168 | ||||||
Liabilities in Excess of Cash and Other Assets | (1.9)% | (40,106 | ) | ||||||
Net Assets | 100.0% | $ | 2,148,062 |
The accompanying notes are an integral part of these financial statements.
Annual Report 117
The accompanying notes are an integral part of these financial statements.
118 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Concentrated Portfolio (concluded) | ||||||||
United Kingdom | 17.0% | ||||||||
BP PLC | 314,222 | $ | 1,982,560 | |||||
Compass Group PLC | 119,935 | 2,517,997 | ||||||
Prudential PLC | 120,951 | 2,161,039 | ||||||
Rio Tinto PLC | 36,529 | 1,741,735 | ||||||
8,403,331 | ||||||||
United States | 10.0% | ||||||||
Aon PLC | 12,942 | 1,881,249 | ||||||
Medtronic PLC | 33,999 | 3,092,549 | ||||||
4,973,798 | ||||||||
Total Common Stocks (Cost $52,083,152) | 46,836,271 | |||||||
Preferred Stocks | 5.2% | ||||||||
Germany | 5.2% | ||||||||
Volkswagen AG (Cost $3,043,438) | 15,990 | 2,544,544 | ||||||
Short-Term Investments | 1.5% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $745,150) | 745,150 | 745,150 | ||||||
Total Investments | 101.3% (Cost $55,871,740) | $ | 50,125,965 | ||||||
Liabilities in Excess of Cash and Other Assets | (1.3)% | (621,752 | ) | ||||||
Net Assets | 100.0% | $ | 49,504,213 |
The accompanying notes are an integral part of these financial statements.
Annual Report 119
The accompanying notes are an integral part of these financial statements.
120 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Portfolio (continued) | ||||||||
Hong Kong | 0.9% | ||||||||
Techtronic Industries Co., Ltd. | 4,258,500 | $ | 22,446,326 | |||||
India | 1.4% | ||||||||
ICICI Bank, Ltd. Sponsored ADR | 3,351,730 | 34,489,302 | ||||||
Ireland | 1.4% | ||||||||
Ryanair Holdings PLC Sponsored ADR (*) | 464,239 | 33,118,810 | ||||||
Israel | 0.8% | ||||||||
Bank Leumi Le-Israel BM | 3,102,273 | 18,782,617 | ||||||
Japan | 13.0% | ||||||||
Daiwa House Industry Co., Ltd. | 2,039,978 | 64,788,806 | ||||||
Don Quijote Holdings Co., Ltd. | 717,300 | 44,498,528 | ||||||
Kao Corp. | 459,180 | 33,853,463 | ||||||
Makita Corp. | 929,200 | 32,904,429 | ||||||
Nexon Co., Ltd. (*) | 2,588,500 | 33,067,086 | ||||||
Shin-Etsu Chemical Co., Ltd. | 427,700 | 32,950,357 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 1,190,900 | 39,272,110 | ||||||
Suzuki Motor Corp. | 240,300 | 12,159,301 | ||||||
Yamaha Corp. | 522,100 | 22,166,521 | ||||||
315,660,601 | ||||||||
Netherlands | 6.9% | ||||||||
ABN AMRO Group NV | 1,205,463 | 28,235,951 | ||||||
Koninklijke DSM NV | 225,029 | 18,309,781 | ||||||
Royal Dutch Shell PLC, A Shares | 2,821,593 | 82,815,186 | ||||||
Wolters Kluwer NV | 648,529 | 38,297,773 | ||||||
167,658,691 | ||||||||
Norway | 3.2% | ||||||||
Equinor ASA | 1,324,101 | 28,238,042 | ||||||
Telenor ASA | 2,617,102 | 50,520,245 | ||||||
78,758,287 |
The accompanying notes are an integral part of these financial statements.
Annual Report 121
Description | Shares | Fair Value | ||||||
Lazard International Equity Portfolio (continued) | ||||||||
Singapore | 2.7% | ||||||||
DBS Group Holdings, Ltd. | 2,659,320 | $ | 45,946,378 | |||||
NetLink NBN Trust | 34,371,800 | 19,275,848 | ||||||
65,222,226 | ||||||||
South Korea | 0.7% | ||||||||
Samsung Electronics Co., Ltd. | 502,804 | 17,397,356 | ||||||
Spain | 1.8% | ||||||||
Red Electrica Corporacion SA | 1,955,236 | 43,552,157 | ||||||
Sweden | 3.3% | ||||||||
Assa Abloy AB, Class B | 2,679,226 | 47,902,624 | ||||||
Epiroc AB, Class A (*) | 3,549,190 | 33,706,449 | ||||||
81,609,073 | ||||||||
Switzerland | 7.4% | ||||||||
Ferguson PLC | 882,965 | 56,550,301 | ||||||
Julius Baer Group, Ltd. | 620,543 | 22,174,347 | ||||||
Novartis AG | 1,193,435 | 102,215,774 | ||||||
180,940,422 | ||||||||
United Kingdom | 15.4% | ||||||||
Compass Group PLC | 2,742,591 | 57,579,823 | ||||||
Diageo PLC | 831,826 | 29,566,022 | ||||||
Howden Joinery Group PLC | 3,693,290 | 20,426,079 | ||||||
Informa PLC | 3,469,374 | 27,819,881 | ||||||
Melrose Industries PLC | 11,352,506 | 23,508,135 | ||||||
Prudential PLC | 4,120,592 | 73,622,882 | ||||||
RELX PLC | 3,099,983 | 63,670,303 | ||||||
RSA Insurance Group PLC | 3,699,785 | 24,140,064 | ||||||
Unilever PLC | 1,043,670 | 54,623,244 | ||||||
374,956,433 | ||||||||
United States | 5.5% | ||||||||
Aon PLC | 439,375 | 63,867,550 | ||||||
Medtronic PLC | 766,910 | 69,758,134 | ||||||
133,625,684 | ||||||||
Total Common Stocks (Cost $2,318,435,882) | 2,276,856,016 |
The accompanying notes are an integral part of these financial statements.
122 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Portfolio (concluded) | ||||||||
Preferred Stocks | 1.9% | ||||||||
Germany | 1.9% | ||||||||
Volkswagen AG (Cost $53,619,686) | 287,329 | $ | 45,723,664 | |||||
Short-Term Investments | 4.7% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $113,486,251) | 113,486,251 | 113,486,251 | ||||||
Total Investments | 100.0% (Cost $2,485,541,819) | $ | 2,436,065,931 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.0% | 667,300 | |||||||
Net Assets | 100.0% | $ | 2,436,733,231 |
The accompanying notes are an integral part of these financial statements.
Annual Report 123
The accompanying notes are an integral part of these financial statements.
124 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Select Portfolio (continued) | ||||||||
France | 7.6% | ||||||||
Cie Generale des Etablissements Michelin SCA | 8,134 | $ | 804,202 | |||||
Safran SA | 15,843 | 1,903,380 | ||||||
Ubisoft Entertainment SA (*) | 11,771 | 944,328 | ||||||
Vinci SA | 12,613 | 1,036,509 | ||||||
Vivendi SA | 46,362 | 1,126,472 | ||||||
5,814,891 | ||||||||
Germany | 2.9% | ||||||||
SAP SE | 22,006 | 2,192,011 | ||||||
India | 2.1% | ||||||||
ICICI Bank, Ltd. Sponsored ADR | 158,165 | 1,627,518 | ||||||
Indonesia | 0.9% | ||||||||
PT Telekomunikasi Indonesia (Persero) Tbk Sponsored ADR | 27,158 | 711,811 | ||||||
Ireland | 1.2% | ||||||||
Ryanair Holdings PLC Sponsored ADR (*) | 12,397 | 884,402 | ||||||
Japan | 8.9% | ||||||||
Daiwa House Industry Co., Ltd. | 41,700 | 1,324,374 | ||||||
Kao Corp. | 11,400 | 840,475 | ||||||
Komatsu, Ltd. | 30,900 | 658,222 | ||||||
Makita Corp. | 39,400 | 1,395,216 | ||||||
Ryohin Keikaku Co., Ltd. | 5,800 | 1,411,543 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 34,276 | 1,130,314 | ||||||
6,760,144 | ||||||||
Netherlands | 6.6% | ||||||||
ABN AMRO Group NV | 37,391 | 875,821 | ||||||
Royal Dutch Shell PLC, A Shares | 84,001 | 2,463,706 | ||||||
Wolters Kluwer NV | 27,933 | 1,649,536 | ||||||
4,989,063 |
The accompanying notes are an integral part of these financial statements.
Annual Report 125
Description | Shares | Fair Value | ||||||
Lazard International Equity Select Portfolio (continued) | ||||||||
Norway | 2.9% | ||||||||
Equinor ASA | 46,567 | $ | 993,097 | |||||
Telenor ASA | 64,133 | 1,238,016 | ||||||
2,231,113 | ||||||||
Russia | 1.1% | ||||||||
Yandex NV Class A (*) | 30,355 | 830,209 | ||||||
Singapore | 1.9% | ||||||||
DBS Group Holdings, Ltd. | 84,600 | 1,461,676 | ||||||
South Africa | 2.1% | ||||||||
Mr Price Group, Ltd. | 33,399 | 569,578 | ||||||
Sanlam, Ltd. | 183,288 | 1,016,452 | ||||||
1,586,030 | ||||||||
South Korea | 0.7% | ||||||||
Samsung Electronics Co., Ltd. | 15,412 | 533,265 | ||||||
Spain | 2.0% | ||||||||
Red Electrica Corporacion SA | 68,202 | 1,519,174 | ||||||
Sweden | 2.1% | ||||||||
Assa Abloy AB, Class B | 90,182 | 1,612,389 | ||||||
Switzerland | 6.9% | ||||||||
ABB, Ltd. | 43,722 | 833,585 | ||||||
Cie Financiere Richemont SA | 7,905 | 508,034 | ||||||
Ferguson PLC | 16,862 | 1,079,942 | ||||||
Novartis AG | 28,516 | 2,442,349 | ||||||
Sonova Holding AG | 2,566 | 418,390 | ||||||
5,282,300 | ||||||||
Taiwan | 2.0% | ||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 205,741 | 1,493,531 | ||||||
Thailand | 0.8% | ||||||||
Kasikornbank Public Co. Ltd. (‡) | 100,200 | 570,121 |
The accompanying notes are an integral part of these financial statements.
126 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Select Portfolio (concluded) | ||||||||
United Kingdom | 9.0% | ||||||||
Ashtead Group PLC | 13,868 | $ | 287,323 | |||||
Compass Group PLC | 80,240 | 1,684,613 | ||||||
Prudential PLC | 109,761 | 1,961,107 | ||||||
RELX PLC | 75,092 | 1,542,308 | ||||||
Unilever PLC | 26,094 | 1,365,699 | ||||||
6,841,050 | ||||||||
United States | 7.7% | ||||||||
Accenture PLC, Class A | 13,950 | 1,967,089 | ||||||
Aon PLC | 11,760 | 1,709,434 | ||||||
Medtronic PLC | 23,525 | 2,139,834 | ||||||
5,816,357 | ||||||||
Total Common Stocks (Cost $76,410,571) | 70,843,965 | |||||||
Preferred Stocks | 1.9% | ||||||||
Germany | 1.9% | ||||||||
Volkswagen AG (Cost $1,556,252) | 8,923 | 1,419,948 | ||||||
Short-Term Investments | 7.5% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $5,712,559) | 5,712,559 | 5,712,559 | ||||||
Total Investments | 102.5% (Cost $83,679,382) | $ | 77,976,472 | ||||||
Liabilities in Excess of Cash and Other Assets | (2.5)% | (1,892,154 | ) | ||||||
Net Assets | 100.0% | $ | 76,084,318 |
The accompanying notes are an integral part of these financial statements.
Annual Report 127
The accompanying notes are an integral part of these financial statements.
128 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Equity Value Portfolio (continued) | ||||||||
Netherlands | 7.0% | ||||||||
Euronext NV | 13,410 | $ | 770,149 | |||||
Koninklijke DSM NV | 10,421 | 847,918 | ||||||
1,618,067 | ||||||||
South Korea | 3.9% | ||||||||
Kangwon Land, Inc. (*) | 31,223 | 894,995 | ||||||
Switzerland | 7.3% | ||||||||
Coca-Cola HBC AG | 27,850 | 866,574 | ||||||
Glencore PLC | 217,353 | 801,676 | ||||||
1,668,250 | ||||||||
United Kingdom | 17.8% | ||||||||
BP PLC | 136,655 | 862,214 | ||||||
Cineworld Group PLC | 135,600 | 453,819 | ||||||
CNH Industrial NV | 48,538 | 436,672 | ||||||
GVC Holdings PLC | 49,580 | 426,145 | ||||||
Standard Chartered PLC | 132,868 | 1,027,026 | ||||||
Vodafone Group PLC | 454,516 | 883,183 | ||||||
4,089,059 | ||||||||
United States | 4.1% | ||||||||
International Game Technology PLC | 64,772 | 947,615 | ||||||
Total Common Stocks (Cost $20,894,620) | 19,498,352 | |||||||
Preferred Stocks | 4.9% | ||||||||
Germany | 4.9% | ||||||||
Volkswagen AG (Cost $1,194,398) | 7,088 | 1,127,938 |
The accompanying notes are an integral part of these financial statements.
Annual Report 129
Description | Shares | Fair Value | ||||||
Lazard International Equity Value Portfolio (concluded) | ||||||||
Short-Term Investments | 9.8% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $2,249,879) | 2,249,879 | $ | 2,249,879 | |||||
Total Investments | 99.5% (Cost $24,338,897) | $ | 22,876,169 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.5% | 107,738 | |||||||
Net Assets | 100.0% | $ | 22,983,907 |
The accompanying notes are an integral part of these financial statements.
130 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 131
Description | Shares | Fair Value | ||||||
Lazard International Small Cap Equity Portfolio (continued) | ||||||||
Germany | 10.5% | ||||||||
Aroundtown SA | 148,753 | $ | 1,234,551 | |||||
AURELIUS Equity Opportunities SE & Co. KGaA | 10,738 | 390,280 | ||||||
CompuGroup Medical SE | 11,454 | 530,252 | ||||||
Corestate Capital Holding SA | 14,799 | 513,955 | ||||||
Dermapharm Holding SE | 23,792 | 618,857 | ||||||
FinTech Group AG (*) | 30,204 | 587,793 | ||||||
JOST Werke AG | 23,302 | 703,682 | ||||||
Norma Group SE | 11,977 | 592,261 | ||||||
PATRIZIA Immobilien AG | 34,822 | 665,271 | ||||||
5,836,902 | ||||||||
Hong Kong | 2.3% | ||||||||
China Water Affairs Group, Ltd. | 494,000 | 529,474 | ||||||
Tongda Group Holdings, Ltd. | 2,110,000 | 208,575 | ||||||
VTech Holdings, Ltd. | 64,100 | 529,878 | ||||||
1,267,927 | ||||||||
India | 0.9% | ||||||||
Jubilant Life Sciences, Ltd. | 47,636 | 485,776 | ||||||
Ireland | 3.3% | ||||||||
Dalata Hotel Group PLC | 127,054 | 680,747 | ||||||
Glenveagh Properties PLC (*) | 592,142 | 478,587 | ||||||
Total Produce PLC | 405,145 | 645,521 | ||||||
1,804,855 | ||||||||
Italy | 3.3% | ||||||||
Banca Generali SpA | 31,334 | 649,533 | ||||||
Carel Industries SpA | 52,038 | 538,981 | ||||||
Cerved Group SpA | 74,652 | 612,158 | ||||||
1,800,672 | ||||||||
Japan | 25.3% | ||||||||
Ai Holdings Corp. | 39,160 | 687,040 | ||||||
ARTERIA Networks Corp. | 45,000 | 478,719 | ||||||
Create SD Holdings Co., Ltd. | 24,700 | 588,300 | ||||||
DaikyoNishikawa Corp. | 60,500 | 588,793 | ||||||
Digital Garage, Inc. | 22,300 | 512,356 | ||||||
Dip Corp. | 36,800 | 608,550 |
The accompanying notes are an integral part of these financial statements.
132 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Small Cap Equity Portfolio (continued) | ||||||||
Financial Products Group Co., Ltd. | 91,737 | $ | 948,524 | |||||
GMO internet, Inc. | 47,200 | 622,322 | ||||||
Iriso Electronics Co., Ltd. | 16,982 | 621,274 | ||||||
Jafco Co., Ltd. | 21,300 | 674,146 | ||||||
Japan Lifeline Co., Ltd. | 51,400 | 653,202 | ||||||
KOMEDA Holdings Co., Ltd. | 37,500 | 737,522 | ||||||
Macromill, Inc. | 37,400 | 482,256 | ||||||
Nippon Shinyaku Co., Ltd. | 10,700 | 674,067 | ||||||
Nissei ASB Machine Co., Ltd. | 22,000 | 708,142 | ||||||
Open House Co., Ltd. | 21,300 | 726,226 | ||||||
Persol Holdings Co., Ltd. | 41,000 | 602,130 | ||||||
Sanwa Holdings Corp. | 58,900 | 664,676 | ||||||
TechnoPro Holdings, Inc. | 15,145 | 618,632 | ||||||
Tokai Carbon Co., Ltd. | 40,000 | 449,429 | ||||||
USS Co., Ltd. | 37,900 | 632,544 | ||||||
Zenkoku Hosho Co., Ltd. | 24,342 | 756,555 | ||||||
14,035,405 | ||||||||
Jersey | 1.7% | ||||||||
JTC PLC | 188,499 | 933,408 | ||||||
Luxembourg | 1.9% | ||||||||
Orion Engineered Carbons SA | 16,300 | 412,064 | ||||||
Stabilus SA | 10,319 | 647,746 | ||||||
1,059,810 | ||||||||
Netherlands | 2.3% | ||||||||
Aalberts Industries NV | 18,127 | 600,158 | ||||||
Van Lanschot Kempen NV | 30,585 | 692,345 | ||||||
1,292,503 | ||||||||
Singapore | 0.8% | ||||||||
XP Power, Ltd. | 17,019 | 456,429 |
The accompanying notes are an integral part of these financial statements.
Annual Report 133
Description | Shares | Fair Value | ||||||
Lazard International Small Cap Equity Portfolio (continued) | ||||||||
Sweden | 6.0% | ||||||||
Dometic Group AB | 79,618 | $ | 495,712 | |||||
Granges AB | 60,578 | 551,771 | ||||||
Indutrade AB | 28,343 | 659,019 | ||||||
Lifco AB, B Shares | 21,857 | 810,166 | ||||||
Loomis AB, B Shares | 24,473 | 791,886 | ||||||
3,308,554 | ||||||||
Switzerland | 1.2% | ||||||||
Kardex AG | 5,918 | 681,062 | ||||||
Taiwan | 0.3% | ||||||||
TaiDoc Technology Corp. | 32,000 | 182,242 | ||||||
United Kingdom | 17.2% | ||||||||
Arrow Global Group PLC | 188,937 | 423,607 | ||||||
Ascential PLC | 131,287 | 629,387 | ||||||
Auto Trader Group PLC | 135,314 | 780,960 | ||||||
Burford Capital, Ltd. | 33,251 | 698,394 | ||||||
Clinigen Healthcare, Ltd. | 80,792 | 778,834 | ||||||
Electrocomponents PLC | 79,852 | 513,537 | ||||||
Equiniti Group PLC | 244,987 | 673,176 | ||||||
Hunting PLC | 93,415 | 567,020 | ||||||
Huntsworth PLC | 538,264 | 738,955 | ||||||
Polypipe Group PLC | 150,609 | 626,707 | ||||||
Rentokil Initial PLC | 168,339 | 720,436 | ||||||
Rightmove PLC | 133,815 | 735,303 | ||||||
Savills PLC | 58,991 | 530,070 | ||||||
Smart Metering Systems PLC | 109,496 | 731,116 | ||||||
Victoria PLC (*) | 65,126 | 390,140 | ||||||
9,537,642 | ||||||||
United States | 1.5% | ||||||||
Core Laboratories NV | 5,960 | 355,573 | ||||||
Samsonite International SA | 173,400 | 489,521 | ||||||
845,094 | ||||||||
Total Common Stocks (Cost $60,459,703) | 54,008,038 |
The accompanying notes are an integral part of these financial statements.
134 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Small Cap Equity Portfolio (concluded) | ||||||||
Short-Term Investments | 1.5% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $850,623) | 850,623 | $ | 850,623 | |||||
Total Investments | 99.0% (Cost $61,310,326) | $ | 54,858,661 | ||||||
Cash and Other Assets in Excess of Liabilities | 1.0% | 527,538 | |||||||
Net Assets | 100.0% | $ | 55,386,199 |
The accompanying notes are an integral part of these financial statements.
Annual Report 135
The accompanying notes are an integral part of these financial statements.
136 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Strategic Equity Portfolio (continued) | ||||||||
India | 1.9% | ||||||||
Housing Development Finance Corp., Ltd. | 2,410,516 | $ | 67,981,242 | |||||
ICICI Bank, Ltd. Sponsored ADR | 3,747,300 | 38,559,717 | ||||||
106,540,959 | ||||||||
Ireland | 1.4% | ||||||||
Kerry Group PLC, Class A | 360,128 | 35,575,584 | ||||||
Ryanair Holdings PLC Sponsored ADR (*) | 606,480 | 43,266,283 | ||||||
78,841,867 | ||||||||
Israel | 0.7% | ||||||||
Bank Leumi Le-Israel BM | 6,456,275 | 39,089,319 | ||||||
Japan | 12.9% | ||||||||
AEON Financial Service Co., Ltd. | 4,642,800 | 83,402,182 | ||||||
Daiwa House Industry Co., Ltd. | 3,980,000 | 126,403,054 | ||||||
Don Quijote Holdings Co., Ltd. | 1,483,700 | 92,043,030 | ||||||
Kao Corp. | 1,432,100 | 105,582,873 | ||||||
Makita Corp. | 2,904,100 | 102,838,735 | ||||||
Nexon Co., Ltd. (*) | 8,462,400 | 108,103,887 | ||||||
Suzuki Motor Corp. | 854,600 | 43,243,190 | ||||||
Yamaha Corp. | 1,288,200 | 54,692,420 | ||||||
716,309,371 | ||||||||
Netherlands | 4.4% | ||||||||
ABN AMRO Group NV | 4,775,405 | 111,855,862 | ||||||
Wolters Kluwer NV | 2,272,982 | 134,227,070 | ||||||
246,082,932 | ||||||||
New Zealand | 0.7% | ||||||||
Z Energy, Ltd. | 10,774,387 | 39,607,077 | ||||||
Norway | 1.6% | ||||||||
Equinor ASA | 4,092,404 | 87,275,424 | ||||||
Philippines | 0.8% | ||||||||
GT Capital Holdings, Inc. | 2,430,637 | 45,061,486 | ||||||
Singapore | 2.2% | ||||||||
DBS Group Holdings, Ltd. | 6,955,100 | 120,166,681 |
The accompanying notes are an integral part of these financial statements.
Annual Report 137
Description | Shares | Fair Value | ||||||
Lazard International Strategic Equity Portfolio (continued) | ||||||||
Spain | 2.3% | ||||||||
Bankia SA | 10,306,619 | $ | 30,012,669 | |||||
Red Electrica Corporacion SA | 4,519,788 | 100,676,603 | ||||||
130,689,272 | ||||||||
Sweden | 3.1% | ||||||||
Assa Abloy AB, Class B | 5,035,832 | 90,037,035 | ||||||
Hexagon AB, B Shares | 1,745,346 | 80,559,962 | ||||||
170,596,997 | ||||||||
Switzerland | 5.6% | ||||||||
Julius Baer Group, Ltd. | 2,574,310 | 91,989,826 | ||||||
Novartis AG | 1,698,428 | 145,467,606 | ||||||
Partners Group Holding AG | 119,797 | 72,816,459 | ||||||
310,273,891 | ||||||||
United Kingdom | 20.5% | ||||||||
Ashtead Group PLC | 2,760,586 | 57,194,897 | ||||||
British American Tobacco PLC | 1,639,550 | 52,283,905 | ||||||
Bunzl PLC | 2,715,457 | 81,704,760 | ||||||
CNH Industrial NV | 7,545,172 | 67,880,077 | ||||||
Coca-Cola European Partners PLC | 2,474,362 | 113,815,254 | ||||||
Compass Group PLC | 3,742,463 | 78,571,817 | ||||||
Diageo PLC | 4,412,120 | 156,822,264 | ||||||
Informa PLC | 18,282,317 | 146,600,479 | ||||||
Prudential PLC | 4,307,997 | 76,971,260 | ||||||
RELX PLC | 7,223,148 | 148,355,658 | ||||||
Rio Tinto PLC | 2,560,857 | 122,103,895 | ||||||
The Weir Group PLC | 2,224,267 | 36,570,906 | ||||||
1,138,875,172 | ||||||||
United States | 7.8% | ||||||||
Accenture PLC, Class A | 1,061,480 | 149,679,295 | ||||||
Aon PLC | 923,620 | 134,257,403 | ||||||
Medtronic PLC | 1,623,170 | 147,643,543 | ||||||
431,580,241 | ||||||||
Total Common Stocks (Cost $5,271,842,902) | 5,286,615,399 |
The accompanying notes are an integral part of these financial statements.
138 Annual Report
Description | Shares | Fair Value | ||||||
Lazard International Strategic Equity Portfolio (concluded) | ||||||||
Preferred Stocks | 2.6% | ||||||||
Germany | 2.6% | ||||||||
Volkswagen AG (Cost $170,720,845) | 905,090 | $ | 144,030,123 | |||||
Short-Term Investments | 2.1% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $114,430,082) | 114,430,082 | 114,430,082 | ||||||
Total Investments | 99.7% (Cost $5,556,993,829) | $ | 5,545,075,604 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.3% | 15,199,878 | |||||||
Net Assets | 100.0% | $ | 5,560,275,482 |
The accompanying notes are an integral part of these financial statements.
Annual Report 139
The accompanying notes are an integral part of these financial statements.
140 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
China | 0.3% | ||||||||
Yangzijiang Shipbuilding Holdings, Ltd. | 58,500 | $ | 53,186 | |||||
Denmark | 0.4% | ||||||||
Carlsberg A/S, Class B | 459 | 48,832 | ||||||
H. Lundbeck A/S | 931 | 40,826 | ||||||
89,658 | ||||||||
France | 1.7% | ||||||||
Engie SA | 6,966 | 99,559 | ||||||
Hermes International | 91 | 50,327 | ||||||
Ipsen SA | 480 | 61,907 | ||||||
Total SA | 1,733 | 91,551 | ||||||
Unibail-Rodamco-Westfield REIT (*) | 353 | 54,763 | ||||||
358,107 | ||||||||
Germany | 1.7% | ||||||||
Allianz SE | 805 | 161,536 | ||||||
Covestro AG | 1,135 | 56,151 | ||||||
Deutsche Lufthansa AG | 3,983 | 89,826 | ||||||
Schaeffler AG (Preference Shares) | 4,373 | 37,287 | ||||||
344,800 | ||||||||
Hong Kong | 1.8% | ||||||||
CK Asset Holdings, Ltd. | 8,500 | 61,810 | ||||||
Kerry Properties, Ltd. | 19,000 | 64,552 | ||||||
Link Real Estate Investment Trust | 16,000 | 161,130 | ||||||
Swire Pacific, Ltd., Class A | 8,000 | 84,042 | ||||||
371,534 | ||||||||
Israel | 1.6% | ||||||||
Bank Leumi Le-Israel BM | 19,524 | 118,208 | ||||||
Israel Discount Bank, Ltd., Class A | 45,950 | 141,609 | ||||||
Nice, Ltd. (*) | 597 | 64,651 | ||||||
324,468 | ||||||||
Italy | 1.7% | ||||||||
Enel SpA | 22,383 | 129,129 | ||||||
Poste Italiane SpA | 11,566 | 92,826 | ||||||
Terna SpA | 22,882 | 129,893 | ||||||
351,848 |
The accompanying notes are an integral part of these financial statements.
Annual Report 141
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
Japan | 7.8% | ||||||||
Amano Corp. | 2,300 | $ | 44,141 | |||||
Astellas Pharma, Inc. | 5,700 | 72,539 | ||||||
Daito Trust Construction Co., Ltd. | 400 | 54,634 | ||||||
Daiwa House Industry Co., Ltd. | 3,500 | 111,158 | ||||||
East Japan Railway Co. | 3,100 | 275,539 | ||||||
Japan Post Holdings Co., Ltd. | 15,900 | 182,809 | ||||||
Kamigumi Co., Ltd. | 2,000 | 40,810 | ||||||
McDonald’s Holdings Co. Japan, Ltd. | 2,400 | 102,252 | ||||||
MS&AD Insurance Group Holdings, Inc. | 2,200 | 62,448 | ||||||
NTT DOCOMO, Inc. | 7,600 | 170,658 | ||||||
Seven & I Holdings Co., Ltd. | 2,600 | 113,210 | ||||||
Shikoku Electric Power Co., Inc. | 3,900 | 47,091 | ||||||
Sompo Holdings, Inc. | 1,200 | 40,505 | ||||||
Sumitomo Mitsui Construction Co., Ltd. | 10,900 | 66,067 | ||||||
Taisei Corp. | 1,500 | 63,773 | ||||||
The Gunma Bank, Ltd. | 11,400 | 47,355 | ||||||
Tokyo Gas Co., Ltd. | 3,500 | 88,513 | ||||||
Tosoh Corp. | 3,600 | 46,581 | ||||||
1,630,083 | ||||||||
Malta | 0.2% | ||||||||
Kindred Group PLC | 4,373 | 40,370 | ||||||
Netherlands | 1.0% | ||||||||
Euronext NV | 1,165 | 66,907 | ||||||
Koninklijke Ahold Delhaize NV | 3,612 | 91,122 | ||||||
Royal Dutch Shell PLC, A Shares | 2,003 | 58,789 | ||||||
216,818 | ||||||||
New Zealand | 0.2% | ||||||||
Spark New Zealand, Ltd. | 17,472 | 48,527 | ||||||
Norway | 2.7% | ||||||||
DNO ASA | 28,360 | 41,357 | ||||||
Equinor ASA | 8,546 | 182,254 | ||||||
Leroy Seafood Group ASA | 7,552 | 57,830 | ||||||
Marine Harvest ASA | 1,793 | 37,744 |
The accompanying notes are an integral part of these financial statements.
142 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
Salmar ASA | 1,820 | $ | 90,016 | |||||
Telenor ASA | 8,205 | 158,388 | ||||||
567,589 | ||||||||
Portugal | 0.2% | ||||||||
Galp Energia SGPS SA | 2,947 | 46,666 | ||||||
Singapore | 0.8% | ||||||||
Singapore Technologies Engineering, Ltd. | 43,600 | 111,191 | ||||||
UOL Group, Ltd. | 10,100 | 45,699 | ||||||
156,890 | ||||||||
Spain | 0.3% | ||||||||
Amadeus IT Group SA | 724 | 50,411 | ||||||
Corporacion Financiera Alba SA | 417 | 20,285 | ||||||
70,696 | ||||||||
Sweden | 0.3% | ||||||||
Axfood AB | 3,758 | 64,405 | ||||||
Switzerland | 2.2% | ||||||||
Partners Group Holding AG | 101 | 61,391 | ||||||
Roche Holding AG | 1,466 | 362,504 | ||||||
The Swatch Group AG | 666 | 38,605 | ||||||
462,500 | ||||||||
United Kingdom | 6.3% | ||||||||
Admiral Group PLC | 3,328 | 86,511 | ||||||
Anglo American PLC | 3,326 | 73,525 | ||||||
Cineworld Group PLC | 24,201 | 80,995 | ||||||
Compass Group PLC | 7,598 | 159,518 | ||||||
GlaxoSmithKline PLC | 4,373 | 82,998 | ||||||
Hargreaves Lansdown PLC | 1,893 | 44,602 | ||||||
Howden Joinery Group PLC | 8,211 | 45,412 | ||||||
Imperial Brands PLC | 4,317 | 130,546 | ||||||
International Consolidated Airlines Group SA | 6,485 | 50,893 | ||||||
Lloyds Banking Group PLC | 70,360 | 46,492 | ||||||
National Grid PLC | 19,950 | 192,928 | ||||||
Pearson PLC | 6,751 | 80,482 |
The accompanying notes are an integral part of these financial statements.
Annual Report 143
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
Rio Tinto, Ltd. | 986 | $ | 54,535 | |||||
Tate & Lyle PLC | 5,987 | 50,263 | ||||||
WH Smith PLC | 1,888 | 41,240 | ||||||
Wm Morrison Supermarkets PLC | 37,832 | 102,540 | ||||||
1,323,480 | ||||||||
United States | 54.7% | ||||||||
Adobe, Inc. (*) | 368 | 83,256 | ||||||
Aflac, Inc. | 1,951 | 88,888 | ||||||
American Electric Power Co., Inc. | 2,824 | 211,066 | ||||||
Anthem, Inc. | 290 | 76,163 | ||||||
Aon PLC | 2,360 | 343,050 | ||||||
Apple, Inc. | 329 | 51,896 | ||||||
Atmos Energy Corp. | 2,413 | 223,733 | ||||||
Avnet, Inc. | 2,839 | 102,488 | ||||||
Best Buy Co., Inc. | 716 | 37,919 | ||||||
BGC Partners, Inc., Class A | 5,214 | 26,956 | ||||||
Booking Holdings, Inc. (*) | 25 | 43,061 | ||||||
Bristol-Myers Squibb Co. | 1,257 | 65,339 | ||||||
Broadridge Financial Solutions, Inc. | 1,651 | 158,909 | ||||||
Burlington Stores, Inc. (*) | 343 | 55,796 | ||||||
Carnival PLC | 928 | 44,513 | ||||||
Cboe Global Markets, Inc. | 547 | 53,513 | ||||||
CBRE Group, Inc., Class A (*) | 1,159 | 46,406 | ||||||
Centene Corp. (*) | 511 | 58,918 | ||||||
Cigna Corp. | 1,272 | 241,505 | ||||||
Comcast Corp., Class A | 1,564 | 53,254 | ||||||
Copart, Inc. (*) | 1,087 | 51,937 | ||||||
Cracker Barrel Old Country Store, Inc. | 420 | 67,141 | ||||||
Darden Restaurants, Inc. | 1,145 | 114,340 | ||||||
Eastman Chemical Co. | 547 | 39,991 | ||||||
Eli Lilly & Co. | 3,137 | 363,014 | ||||||
Encompass Health Corp. | 1,651 | 101,867 | ||||||
Exelon Corp. | 2,895 | 130,565 | ||||||
F5 Networks, Inc. (*) | 896 | 145,179 | ||||||
FactSet Research Systems, Inc. | 470 | 94,061 |
The accompanying notes are an integral part of these financial statements.
144 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
Fiserv, Inc. (*) | 2,510 | $ | 184,460 | |||||
Graco, Inc. | 2,188 | 91,568 | ||||||
Grand Canyon Education, Inc. (*) | 463 | 44,513 | ||||||
H&R Block, Inc. | 1,886 | 47,848 | ||||||
Honeywell International, Inc. | 732 | 96,712 | ||||||
Humana, Inc. | 345 | 98,836 | ||||||
Ingredion, Inc. | 522 | 47,711 | ||||||
Insperity, Inc. | 796 | 74,315 | ||||||
Intel Corp. | 1,942 | 91,138 | ||||||
Intercontinental Exchange, Inc. | 1,205 | 90,773 | ||||||
Intuit, Inc. | 378 | 74,409 | ||||||
IQVIA Holdings, Inc. (*) | 744 | 86,430 | ||||||
j2 Global, Inc. | 932 | 64,662 | ||||||
Johnson & Johnson | 1,926 | 248,550 | ||||||
Jones Lang LaSalle, Inc. | 332 | 42,031 | ||||||
KAR Auction Services, Inc. | 1,286 | 61,368 | ||||||
Kimberly-Clark Corp. | 2,211 | 251,921 | ||||||
Lamb Weston Holdings, Inc. | 1,523 | 112,032 | ||||||
Lockheed Martin Corp. | 435 | 113,900 | ||||||
Lowe’s Cos., Inc. | 534 | 49,320 | ||||||
LPL Financial Holdings, Inc. | 846 | 51,674 | ||||||
MasterCard, Inc., Class A | 1,095 | 206,572 | ||||||
McGrath RentCorp | 979 | 50,399 | ||||||
MetLife, Inc. | 1,481 | 60,810 | ||||||
Morgan Stanley | 1,645 | 65,224 | ||||||
NetApp, Inc. | 788 | 47,020 | ||||||
Newmark Group, Inc., Class A | 2,419 | 19,400 | ||||||
NIKE, Inc., Class B | 2,207 | 163,627 | ||||||
Nordstrom, Inc. | 694 | 32,347 | ||||||
Northern Trust Corp. | 505 | 42,213 | ||||||
Occidental Petroleum Corp. | 1,496 | 91,825 | ||||||
Omnicom Group, Inc. | 3,349 | 245,281 | ||||||
Paychex, Inc. | 2,736 | 178,250 | ||||||
PepsiCo, Inc. | 2,930 | 323,706 | ||||||
Philip Morris International, Inc. | 2,212 | 147,673 |
The accompanying notes are an integral part of these financial statements.
Annual Report 145
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (continued) | ||||||||
Phillips 66 | 491 | $ | 42,300 | |||||
Pinnacle West Capital Corp. | 535 | 45,582 | ||||||
Ralph Lauren Corp. | 614 | 63,524 | ||||||
Raytheon Co. | 1,121 | 171,905 | ||||||
Republic Services, Inc. | 4,356 | 314,024 | ||||||
Rockwell Automation, Inc. | 317 | 47,702 | ||||||
Ross Stores, Inc. | 3,389 | 281,965 | ||||||
Simon Property Group, Inc. REIT | 1,794 | 301,374 | ||||||
Starbucks Corp. | 3,980 | 256,312 | ||||||
Synchrony Financial | 2,479 | 58,157 | ||||||
Sysco Corp. | 4,614 | 289,113 | ||||||
Texas Instruments, Inc. | 1,427 | 134,852 | ||||||
The Boeing Co. | 512 | 165,120 | ||||||
The Estee Lauder Cos., Inc., Class A | 2,144 | 278,934 | ||||||
The Procter & Gamble Co. | 3,415 | 313,907 | ||||||
The Southern Co. | 1,196 | 52,528 | ||||||
The TJX Cos., Inc. | 6,133 | 274,390 | ||||||
The Toro Co. | 1,723 | 96,281 | ||||||
Tyson Foods, Inc., Class A | 1,471 | 78,551 | ||||||
United States Cellular Corp. (*) | 1,211 | 62,936 | ||||||
UnitedHealth Group, Inc. | 340 | 84,701 | ||||||
Unum Group | 1,446 | 42,483 | ||||||
USANA Health Sciences, Inc. (*) | 499 | 58,747 | ||||||
Verizon Communications, Inc. | 5,699 | 320,398 | ||||||
Visa, Inc., Class A | 438 | 57,790 | ||||||
Walgreens Boots Alliance, Inc. | 929 | 63,479 | ||||||
Waste Management, Inc. | 2,381 | 211,885 | ||||||
WW Grainger, Inc. | 420 | 118,591 | ||||||
Xcel Energy, Inc. | 1,391 | 68,535 | ||||||
Zoetis, Inc. | 2,364 | 202,217 | ||||||
11,431,525 | ||||||||
Total Common Stocks (Cost $21,401,600) | 20,325,842 |
The accompanying notes are an integral part of these financial statements.
146 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Managed Equity Volatility Portfolio (concluded) | ||||||||
Short-Term Investments | 4.3% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $903,136) | 903,136 | $ | 903,136 | |||||
Total Investments | 101.6% (Cost $22,304,736) | $ | 21,228,978 | ||||||
Liabilities in Excess of Cash and Other Assets | (1.6)% | (336,911 | ) | ||||||
Net Assets | 100.0% | $ | 20,892,067 |
The accompanying notes are an integral part of these financial statements.
Annual Report 147
The accompanying notes are an integral part of these financial statements.
148 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Equity Concentrated Portfolio (concluded) | ||||||||
Machinery | 4.4% | ||||||||
Kennametal, Inc. | 710,090 | $ | 23,631,795 | |||||
Wabtec Corp. | 351,195 | 24,671,449 | ||||||
48,303,244 | ||||||||
Semiconductors & Semiconductor Equipment | 14.9% | ||||||||
Analog Devices, Inc. | 1,340,480 | 115,053,398 | ||||||
Skyworks Solutions, Inc. | 716,186 | 47,998,786 | ||||||
163,052,184 | ||||||||
Specialty Retail | 4.4% | ||||||||
Lowe’s Cos., Inc. | 453,905 | 41,922,666 | ||||||
Ross Stores, Inc. | 71,766 | 5,970,931 | ||||||
47,893,597 | ||||||||
Total Common Stocks (Cost $1,087,862,296) | 1,062,366,873 | |||||||
Short-Term Investments | 2.7% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $29,746,626) | 29,746,626 | 29,746,626 | ||||||
Total Investments | 99.9% (Cost $1,117,608,922) | $ | 1,092,113,499 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.1% | 1,618,747 | |||||||
Net Assets | 100.0% | $ | 1,093,732,246 |
The accompanying notes are an integral part of these financial statements.
Annual Report 149
The accompanying notes are an integral part of these financial statements.
150 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Equity Select Portfolio (continued) | ||||||||
Energy Equipment & Services | 0.7% | ||||||||
Halliburton Co. | 19,750 | $ | 524,955 | |||||
Entertainment | 0.7% | ||||||||
Electronic Arts, Inc. (*) | 6,647 | 524,515 | ||||||
Equity Real Estate Investment Trusts (REITs) | 1.4% | ||||||||
Prologis, Inc. | 17,510 | 1,028,187 | ||||||
Health Care Equipment & Supplies | 5.4% | ||||||||
Danaher Corp. | 11,545 | 1,190,520 | ||||||
Medtronic PLC | 29,725 | 2,703,786 | ||||||
3,894,306 | ||||||||
Health Care Providers & Services | 3.1% | ||||||||
CVS Health Corp. | 12,105 | 793,120 | ||||||
Humana, Inc. | 3,015 | 863,737 | ||||||
Laboratory Corp. of America Holdings (*) | 4,275 | 540,189 | ||||||
2,197,046 | ||||||||
Hotels, Restaurants & Leisure | 3.7% | ||||||||
McDonald’s Corp. | 10,625 | 1,886,681 | ||||||
Starbucks Corp. | 11,455 | 737,702 | ||||||
2,624,383 | ||||||||
Household Products | 3.2% | ||||||||
The Procter & Gamble Co. | 25,305 | 2,326,036 | ||||||
Industrial Conglomerates | 2.2% | ||||||||
Honeywell International, Inc. | 11,988 | 1,583,855 | ||||||
Insurance | 1.8% | ||||||||
Aon PLC | 8,760 | 1,273,354 | ||||||
Interactive Media & Services | 6.2% | ||||||||
Alphabet, Inc., Class A (*) | 4,240 | 4,430,630 | ||||||
Internet & Direct Marketing Retail | 1.1% | ||||||||
eBay, Inc. (*) | 26,800 | 752,276 |
The accompanying notes are an integral part of these financial statements.
Annual Report 151
Description | Shares | Fair Value | ||||||
Lazard US Equity Select Portfolio (continued) | ||||||||
IT Services | 4.3% | ||||||||
Accenture PLC, Class A | 4,070 | $ | 573,911 | |||||
DXC Technology Co. | 6,528 | 347,094 | ||||||
Visa, Inc., Class A | 11,845 | 1,562,829 | ||||||
Worldpay, Inc., Class A (*) | 7,620 | 582,396 | ||||||
3,066,230 | ||||||||
Life Sciences Tools & Services | 1.0% | ||||||||
Thermo Fisher Scientific, Inc. | 3,265 | 730,674 | ||||||
Machinery | 1.8% | ||||||||
Deere & Co. | 5,495 | 819,689 | ||||||
Stanley Black & Decker, Inc. | 3,670 | 439,446 | ||||||
1,259,135 | ||||||||
Multiline Retail | 1.1% | ||||||||
Dollar Tree, Inc. (*) | 8,570 | 774,042 | ||||||
Oil, Gas & Consumable Fuels | 5.8% | ||||||||
Chevron Corp. | 17,240 | 1,875,540 | ||||||
ConocoPhillips | 19,685 | 1,227,360 | ||||||
EOG Resources, Inc. | 11,740 | 1,023,845 | ||||||
4,126,745 | ||||||||
Pharmaceuticals | 8.3% | ||||||||
Johnson & Johnson | 22,095 | 2,851,360 | ||||||
Pfizer, Inc. | 49,314 | 2,152,556 | ||||||
Zoetis, Inc. | 11,324 | 968,655 | ||||||
5,972,571 | ||||||||
Road & Rail | 1.2% | ||||||||
Norfolk Southern Corp. | 5,545 | 829,199 | ||||||
Semiconductors & Semiconductor Equipment | 2.7% | ||||||||
Analog Devices, Inc. | 17,253 | 1,480,825 | ||||||
Skyworks Solutions, Inc. | 6,610 | 443,002 | ||||||
1,923,827 |
The accompanying notes are an integral part of these financial statements.
152 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Equity Select Portfolio (concluded) | ||||||||
Software | 6.1% | ||||||||
Microsoft Corp. | 34,610 | $ | 3,515,338 | |||||
Palo Alto Networks, Inc. (*) | 4,480 | 843,808 | ||||||
4,359,146 | ||||||||
Specialty Retail | 3.3% | ||||||||
Lowe’s Cos., Inc. | 17,010 | 1,571,044 | ||||||
Ross Stores, Inc. | 9,180 | 763,776 | ||||||
2,334,820 | ||||||||
Technology Hardware, Storage & Peripherals | 3.8% | ||||||||
Apple, Inc. | 17,233 | 2,718,334 | ||||||
Total Common Stocks (Cost $68,376,553) | 71,627,460 | |||||||
Short-Term Investments | 0.4% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $258,650) | 258,650 | 258,650 | ||||||
Total Investments | 100.4% (Cost $68,635,203) | $ | 71,886,110 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.4)% | (319,151 | ) | ||||||
Net Assets | 100.0% | $ | 71,566,959 |
The accompanying notes are an integral part of these financial statements.
Annual Report 153
The accompanying notes are an integral part of these financial statements.
154 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Realty Equity Portfolio (concluded) | ||||||||
VICI Properties, Inc. | 31,445 | $ | 590,537 | |||||
Vornado Realty Trust | 21,240 | 1,317,517 | ||||||
Weyerhaeuser Co. | 82,208 | 1,797,067 | ||||||
Total Real Estate Investment Trusts (Cost $57,982,583) | 57,340,373 | |||||||
Total Investments | 99.4% (Cost $59,951,937) | $ | 59,302,882 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.6% | 358,632 | |||||||
Net Assets | 100.0% | $ | 59,661,514 |
The accompanying notes are an integral part of these financial statements.
Annual Report 155
The accompanying notes are an integral part of these financial statements.
156 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Small-Mid Cap Equity Portfolio (continued) | ||||||||
Commercial Services & Supplies | 1.1% | ||||||||
The Brink’s Co. N Ap | 22,700 | $ | 1,467,555 | |||||
Communications Equipment | 1.7% | ||||||||
Ciena Corp. (*) | 64,445 | 2,185,330 | ||||||
Construction & Engineering | 0.7% | ||||||||
Dycom Industries, Inc. (*) | 15,695 | 848,158 | ||||||
Construction Materials | 1.3% | ||||||||
Eagle Materials, Inc. | 26,680 | 1,628,280 | ||||||
Containers & Packaging | 1.4% | ||||||||
Graphic Packaging Holding Co. | 165,210 | 1,757,834 | ||||||
Electric Utilities | 3.8% | ||||||||
OGE Energy Corp. | 63,300 | 2,480,727 | ||||||
PNM Resources, Inc. | 58,560 | 2,406,230 | ||||||
4,886,957 | ||||||||
Electrical Equipment | 5.3% | ||||||||
Atkore International Group, Inc. (*) | 119,740 | 2,375,642 | ||||||
EnerSys | 21,995 | 1,707,032 | ||||||
Generac Holdings, Inc. (*) | 13,370 | 664,489 | ||||||
Regal Beloit Corp. | 29,450 | 2,062,972 | ||||||
6,810,135 | ||||||||
Electronic Equipment, Instruments & Components | 1.3% | ||||||||
FLIR Systems, Inc. | 37,655 | 1,639,499 | ||||||
Equity Real Estate Investment Trusts (REITs) | 12.1% | ||||||||
Alexandria Real Estate Equities, Inc. | 23,430 | 2,700,073 | ||||||
Brixmor Property Group, Inc. | 91,600 | 1,345,604 | ||||||
Camden Property Trust | 32,735 | 2,882,317 | ||||||
Hudson Pacific Properties, Inc. | 59,390 | 1,725,873 | ||||||
Invitation Homes, Inc. | 72,075 | 1,447,266 |
The accompanying notes are an integral part of these financial statements.
Annual Report 157
Description | Shares | Fair Value | ||||||
Lazard US Small-Mid Cap Equity Portfolio (continued) | ||||||||
Kilroy Realty Corp. | 35,150 | $ | 2,210,232 | |||||
PS Business Parks, Inc. | 23,850 | 3,124,350 | ||||||
15,435,715 | ||||||||
Food & Staples Retailing | 0.8% | ||||||||
Sprouts Farmers Market, Inc. (*) | 45,350 | 1,066,179 | ||||||
Food Products | 1.1% | ||||||||
The Simply Good Foods Co. (*) | 75,540 | 1,427,706 | ||||||
Health Care Equipment & Supplies | 5.3% | ||||||||
AngioDynamics, Inc. (*) | 87,190 | 1,755,135 | ||||||
Avanos Medical, Inc. (*) | 23,405 | 1,048,310 | ||||||
Lantheus Holdings, Inc. (*) | 89,070 | 1,393,946 | ||||||
STERIS PLC | 23,470 | 2,507,769 | ||||||
6,705,160 | ||||||||
Health Care Providers & Services | 1.3% | ||||||||
Henry Schein, Inc. (*) | 20,400 | 1,601,808 | ||||||
Health Care Technology | 1.0% | ||||||||
Evolent Health, Inc., Class A (*) | 65,930 | 1,315,304 | ||||||
Hotels, Restaurants & Leisure | 2.4% | ||||||||
Penn National Gaming, Inc. (*) | 80,780 | 1,521,088 | ||||||
The Cheesecake Factory, Inc. | 33,920 | 1,475,859 | ||||||
2,996,947 | ||||||||
Household Durables | 1.8% | ||||||||
Leggett & Platt, Inc. | 65,130 | 2,334,259 | ||||||
Insurance | 6.5% | ||||||||
Arch Capital Group, Ltd. (*) | 108,610 | 2,902,059 | ||||||
Brown & Brown, Inc. | 100,875 | 2,780,115 | ||||||
Reinsurance Group of America, Inc. | 18,410 | 2,581,635 | ||||||
8,263,809 |
The accompanying notes are an integral part of these financial statements.
158 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Small-Mid Cap Equity Portfolio (continued) | ||||||||
IT Services | 3.0% | ||||||||
CoreLogic, Inc. (*) | 46,030 | $ | 1,538,323 | |||||
Leidos Holdings, Inc. | 42,825 | 2,257,734 | ||||||
3,796,057 | ||||||||
Life Sciences Tools & Services | 1.3% | ||||||||
Cambrex Corp. (*) | 43,615 | 1,646,902 | ||||||
Machinery | 4.9% | ||||||||
Gates Industrial Corp. PLC | 139,605 | 1,848,370 | ||||||
Kennametal, Inc. | 45,559 | 1,516,204 | ||||||
TriMas Corp. (*) | 58,545 | 1,597,693 | ||||||
Wabtec Corp. | 18,660 | 1,310,865 | ||||||
6,273,132 | ||||||||
Media | 1.6% | ||||||||
Scholastic Corp. | 49,332 | 1,986,106 | ||||||
Oil, Gas & Consumable Fuels | 1.8% | ||||||||
Cabot Oil & Gas Corp. | 51,300 | 1,146,555 | ||||||
Centennial Resource Development, Inc., Class A (*) | 109,900 | 1,211,098 | ||||||
2,357,653 | ||||||||
Pharmaceuticals | 1.7% | ||||||||
Catalent, Inc. (*) | 69,590 | 2,169,816 | ||||||
Professional Services | 1.2% | ||||||||
FTI Consulting, Inc. (*) | 22,305 | 1,486,405 | ||||||
Semiconductors & Semiconductor Equipment | 2.4% | ||||||||
Cypress Semiconductor Corp. | 113,670 | 1,445,882 | ||||||
MKS Instruments, Inc. | 25,575 | 1,652,401 | ||||||
3,098,283 |
The accompanying notes are an integral part of these financial statements.
Annual Report 159
Description | Shares | Fair Value | ||||||
Lazard US Small-Mid Cap Equity Portfolio (concluded) | ||||||||
Software | 5.1% | ||||||||
Bottomline Technologies de, Inc. (*) | 17,195 | $ | 825,360 | |||||
CyberArk Software, Ltd. (*) | 26,960 | 1,998,814 | ||||||
j2 Global, Inc. | 27,165 | 1,884,708 | ||||||
Palo Alto Networks, Inc. (*) | 9,200 | 1,732,820 | ||||||
6,441,702 | ||||||||
Specialty Retail | 1.5% | ||||||||
Floor & Decor Holdings, Inc., Class A (*) | 34,000 | 880,600 | ||||||
Foot Locker, Inc. | 18,500 | 984,200 | ||||||
1,864,800 | ||||||||
Textiles, Apparel & Luxury Goods | 3.4% | ||||||||
Carter’s, Inc. | 17,900 | 1,460,998 | ||||||
Fossil Group, Inc. (*) | 72,200 | 1,135,706 | ||||||
Steven Madden, Ltd. | 58,382 | 1,766,639 | ||||||
4,363,343 | ||||||||
Trading Companies & Distributors | 0.1% | ||||||||
DXP Enterprises, Inc. (*) | 2,673 | 74,416 | ||||||
Total Common Stocks (Cost $136,005,202) | 126,473,826 | |||||||
Total Investments | 99.3% (Cost $136,005,202) | $ | 126,473,826 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.7% | 928,906 | |||||||
Net Assets | 100.0% | $ | 127,402,732 |
The accompanying notes are an integral part of these financial statements.
160 Annual Report
The Lazard Funds, Inc.Notes to Portfolios of Investments
December 31, 2018
(*) | Non-income producing security. |
(‡) | Security valued using Level 2 inputs, based on reference to a similar security which was trading on an active market, under GAAP hierarchy — see Note 9 in the Notes to Financial Statements. |
(#) | Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.” At December 31, 2018, these securities amounted to 0.6% of net assets of Lazard Emerging Markets Equity Advantage Portfolio. |
(^) | Refer to Note 5 in the Notes to Financial Statements for further details related to holdings of 5% voting securities of portfolio companies. |
(») | The Portfolio, at all times, maintains portfolio securities in sufficient amount to cover its obligations related to investments in forward currency contracts. |
Security Abbreviations:
ADR | — | American Depositary Receipt |
GDR | — | Global Depositary Receipt |
NVDR | — | Non-Voting Depository Receipt |
PJSC | — | Public Joint Stock Company |
REIT | — | Real Estate Investment Trust |
Currency Abbreviations:
AUD | — | Australian Dollar | EUR | — | Euro |
CAD | — | Canadian Dollar | GBP | — | British Pound Sterling |
CHF | — | Swiss Franc | USD | — | United States Dollar |
Counterparty Abbreviations:
BNP | — | BNP Paribas SA | MEL | — | The Bank of New York Mellon Corp. |
CAN | — | Canadian Imperial | RBC | — | Royal Bank of Canada |
Bank of Commerce | SCB | — | Standard Chartered Bank | ||
CIT | — | Citibank NA | SSB | — | State Street Bank and Trust Co. |
HSB | — | HSBC Bank USA NA |
The accompanying notes are an integral part of these financial statements.
Annual Report 161
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country:
Industry† | Lazard Developing Markets Equity Portfolio | Lazard Emerging Markets Core Equity Portfolio | Lazard Emerging Markets Equity Advantage Portfolio | Lazard Emerging Markets Equity Blend Portfolio | |||||||||||||
Common & Preferred Stocks | |||||||||||||||||
Aerospace & Defense | — | % | — | % | — | % | — | % | |||||||||
Air Freight & Logistics | 1.2 | — | 0.1 | 1.6 | |||||||||||||
Airlines | — | 1.2 | 1.0 | — | |||||||||||||
Auto Components | — | 0.8 | 0.4 | 0.9 | |||||||||||||
Automobiles | — | 1.3 | 0.1 | 0.9 | |||||||||||||
Banks | 23.2 | 20.8 | 16.0 | 22.8 | |||||||||||||
Beverages | — | 0.8 | 0.8 | 0.6 | |||||||||||||
Biotechnology | — | — | 0.2 | — | |||||||||||||
Building Products | — | — | 0.2 | — | |||||||||||||
Capital Markets | — | — | 1.9 | — | |||||||||||||
Chemicals | — | 5.1 | 3.1 | 1.2 | |||||||||||||
Commercial Services & Suppliers | — | — | — | 0.6 | |||||||||||||
Communications Equipment | — | — | — | — | |||||||||||||
Construction & Engineering | 1.5 | — | 1.0 | 1.2 | |||||||||||||
Construction Materials | 0.9 | 1.8 | 1.1 | 2.2 | |||||||||||||
Consumer Finance | 2.2 | — | 0.4 | 0.1 | |||||||||||||
Containers & Packaging | — | — | 0.2 | 0.2 | |||||||||||||
Diversified Consumer Services | 1.2 | 1.0 | 0.4 | 0.6 | |||||||||||||
Diversified Financial Services | — | 1.9 | 0.8 | 0.4 | |||||||||||||
Diversified Telecommunication Services | — | 2.1 | 2.5 | 0.9 | |||||||||||||
Electric Utilities | — | — | 0.9 | — | |||||||||||||
Electrical Equipment | 3.2 | — | — | 0.2 | |||||||||||||
Electronic Equipment, Instruments & Components | 3.4 | 2.0 | 0.9 | 3.5 | |||||||||||||
Energy Equipment & Services | — | 0.5 | — | — | |||||||||||||
Entertainment | 1.9 | 2.4 | 0.3 | 3.2 | |||||||||||||
Food & Staples Retailing | — | — | 2.2 | 0.4 | |||||||||||||
Food Products | — | 1.0 | 2.5 | 0.5 | |||||||||||||
Gas Utilities | 1.8 | — | 1.8 | 1.4 | |||||||||||||
Health Care Equipment & Supplies | — | — | 0.7 | 0.2 | |||||||||||||
Health Care Providers & Services | 2.2 | 0.7 | 0.3 | 0.4 | |||||||||||||
Hotels, Restaurants & Leisure | 2.6 | — | 0.4 | 0.8 | |||||||||||||
Household Durables | 2.0 | 1.9 | 0.2 | 1.7 | |||||||||||||
Household Products | — | — | 0.5 | 0.6 | |||||||||||||
Industrial Conglomerates | — | 1.1 | 1.8 | 0.8 |
The accompanying notes are an integral part of these financial statements.
162 Annual Report
Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | Lazard Global Equity Select Portfolio | Lazard Global Listed Infrastructure Portfolio | Lazard Global Realty Equity Portfolio | Lazard Global Strategic Equity Portfolio | ||||||||||||||||||
— | % | — | % | 1.6 | % | — | % | — | % | 3.5 | % | ||||||||||||
0.4 | — | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
1.3 | — | — | — | — | — | ||||||||||||||||||
3.8 | — | — | — | — | — | ||||||||||||||||||
26.0 | — | 7.6 | — | — | 8.2 | ||||||||||||||||||
1.1 | 4.2 | 8.0 | — | — | 4.7 | ||||||||||||||||||
— | — | 2.3 | — | — | 2.8 | ||||||||||||||||||
— | — | 0.8 | — | — | — | ||||||||||||||||||
— | — | 5.4 | — | — | 6.5 | ||||||||||||||||||
— | — | 1.7 | — | — | — | ||||||||||||||||||
— | 5.8 | — | — | — | — | ||||||||||||||||||
— | 1.0 | 2.6 | — | — | — | ||||||||||||||||||
— | — | — | 4.5 | — | — | ||||||||||||||||||
3.2 | — | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
— | 4.6 | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
1.6 | — | — | — | — | — | ||||||||||||||||||
— | 2.6 | — | 26.8 | — | — | ||||||||||||||||||
— | — | 1.8 | — | — | — | ||||||||||||||||||
1.8 | 3.7 | 1.1 | — | — | 0.4 | ||||||||||||||||||
— | — | 0.8 | — | — | 1.2 | ||||||||||||||||||
2.9 | — | 1.3 | — | — | 5.2 | ||||||||||||||||||
2.1 | — | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
1.0 | — | — | 3.1 | — | — | ||||||||||||||||||
— | 2.2 | 1.5 | — | — | 4.8 | ||||||||||||||||||
0.8 | 13.0 | — | — | — | 1.4 | ||||||||||||||||||
— | 5.9 | 4.1 | — | — | — | ||||||||||||||||||
1.2 | — | — | — | — | 0.9 | ||||||||||||||||||
0.7 | — | 1.5 | — | — | — | ||||||||||||||||||
1.8 | — | 1.7 | — | — | — |
Annual Report 163
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country (continued):
Industry† | Lazard Developing Markets Equity Portfolio | Lazard Emerging Markets Core Equity Portfolio | Lazard Emerging Markets Equity Advantage Portfolio | Lazard Emerging Markets Equity Blend Portfolio | |||||||||||||
Insurance | 2.2 | % | 4.7 | % | 2.5 | % | 2.4 | % | |||||||||
Interactive Media & Services | 13.3 | 7.3 | 5.3 | 6.9 | |||||||||||||
Internet & Direct Marketing Retail | 1.8 | 4.0 | 3.1 | 1.7 | |||||||||||||
IT Services | 0.6 | 1.1 | 2.8 | 3.4 | |||||||||||||
Leisure Products | — | — | — | — | |||||||||||||
Life Sciences Tools & Services | 0.6 | 0.3 | — | — | |||||||||||||
Machinery | 4.6 | — | 0.6 | 0.9 | |||||||||||||
Media | — | 1.2 | 1.6 | 0.7 | |||||||||||||
Metals & Mining | 3.7 | 5.3 | 4.1 | 1.9 | |||||||||||||
Multiline Retail | — | — | 0.3 | — | |||||||||||||
Multi-Utilities | — | — | — | — | |||||||||||||
Oil, Gas & Consumable Fuels | 7.5 | 7.2 | 8.0 | 7.3 | |||||||||||||
Paper & Forest Products | 1.9 | 1.1 | 0.2 | 1.5 | |||||||||||||
Personal Products | — | 1.6 | 0.3 | — | |||||||||||||
Pharmaceuticals | — | — | 1.4 | 1.1 | |||||||||||||
Professional Services | — | — | — | — | |||||||||||||
Real Estate Management & Development | — | 0.4 | 2.8 | 0.3 | |||||||||||||
Road & Rail | — | 1.1 | — | 0.7 | |||||||||||||
Semiconductors & Semiconductor Equipment | 5.1 | 8.0 | 6.1 | 6.5 | |||||||||||||
Software | 0.7 | — | — | 1.0 | |||||||||||||
Specialty Retail | 1.1 | — | 1.2 | 1.0 | |||||||||||||
Technology Hardware, Storage & Peripherals | 4.2 | 5.4 | 5.2 | 4.1 | |||||||||||||
Textiles, Apparel & Luxury Goods | 0.9 | 1.3 | 1.4 | 1.4 | |||||||||||||
Thrifts & Mortgage Finance | — | — | — | 0.2 | |||||||||||||
Tobacco | — | — | 0.7 | 0.6 | |||||||||||||
Trading Companies & Distributors | — | 0.6 | 0.4 | 0.4 | |||||||||||||
Transportation Infrastructure | — | 1.2 | 0.8 | 0.7 | |||||||||||||
Water Utilities | 2.1 | — | — | 2.0 | |||||||||||||
Wireless Telecommunication Services | — | 1.0 | 1.5 | 3.6 | |||||||||||||
Subtotal | 97.6 | 99.2 | 93.0 | 98.2 | |||||||||||||
Short-Term Investments | 0.5 | 1.2 | 1.9 | 1.9 | |||||||||||||
Total Investments | 98.1 | % | 100.4 | % | 94.9 | % | 100.1 | % |
† | Industry classifications may be different than those used for compliance monitoring purposes. |
The accompanying notes are an integral part of these financial statements.
164 Annual Report
Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | Lazard Global Equity Select Portfolio | Lazard Global Listed Infrastructure Portfolio | Lazard Global Realty Equity Portfolio | Lazard Global Strategic Equity Portfolio | ||||||||||||||||||
3.4 | % | — | % | 7.3 | % | — | % | — | % | 8.7 | % | ||||||||||||
1.2 | 1.1 | 4.3 | — | — | 6.7 | ||||||||||||||||||
— | — | 1.5 | — | — | 3.1 | ||||||||||||||||||
5.1 | 1.0 | 5.6 | — | — | 7.9 | ||||||||||||||||||
— | — | 1.1 | — | — | — | ||||||||||||||||||
— | — | 4.8 | — | — | 2.7 | ||||||||||||||||||
1.5 | — | 2.2 | — | — | 1.8 | ||||||||||||||||||
— | 10.2 | — | 9.3 | — | 3.2 | ||||||||||||||||||
2.2 | — | — | — | — | 1.0 | ||||||||||||||||||
0.7 | 2.0 | 1.2 | — | — | 0.9 | ||||||||||||||||||
— | 3.0 | — | 8.4 | — | — | ||||||||||||||||||
9.1 | — | — | 4.6 | — | 2.9 | ||||||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
0.7 | — | 3.3 | — | — | — | ||||||||||||||||||
— | — | 6.1 | — | — | 4.0 | ||||||||||||||||||
— | 8.1 | 5.3 | — | — | 3.4 | ||||||||||||||||||
— | — | 1.2 | — | — | — | ||||||||||||||||||
— | 2.1 | 1.6 | 9.0 | — | 1.4 | ||||||||||||||||||
7.1 | 4.4 | 1.0 | — | — | — | ||||||||||||||||||
— | 8.3 | 2.7 | — | — | 5.0 | ||||||||||||||||||
0.6 | — | 1.1 | — | — | — | ||||||||||||||||||
4.9 | — | — | — | — | — | ||||||||||||||||||
— | 2.0 | — | — | — | 1.3 | ||||||||||||||||||
— | — | 0.8 | — | — | — | ||||||||||||||||||
1.6 | — | — | — | — | — | ||||||||||||||||||
— | — | 0.9 | — | — | 2.9 | ||||||||||||||||||
1.1 | 7.9 | — | 18.5 | — | — | ||||||||||||||||||
— | 4.4 | — | 12.0 | — | — | ||||||||||||||||||
9.0 | — | — | — | — | — | ||||||||||||||||||
97.9 | 97.5 | 95.8 | 96.2 | — | 96.5 | ||||||||||||||||||
2.4 | 1.0 | 4.7 | 2.8 | 100.0 | 3.9 | ||||||||||||||||||
100.3 | % | 98.5 | % | 100.5 | % | 99.0 | % | 100.0 | % | 100.4 | % |
Annual Report 165
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country (continued):
Industry† | Lazard International Compounders Portfolio | Lazard International Equity Advantage Portfolio | Lazard International Equity Concentrated Portfolio | Lazard International Equity Portfolio | |||||||||||||
Common & Preferred Stocks | |||||||||||||||||
Aerospace & Defense | 2.3 | % | 1.3 | % | 7.6 | % | 2.1 | % | |||||||||
Air Freight & Logistics | — | — | — | — | |||||||||||||
Airlines | — | 2.2 | — | 1.4 | |||||||||||||
Auto Components | — | 1.5 | 4.5 | 0.9 | |||||||||||||
Automobiles | — | 2.1 | 5.1 | 2.4 | |||||||||||||
Banks | 6.8 | 9.2 | 10.5 | 10.3 | |||||||||||||
Beverages | — | 0.2 | 4.0 | 4.4 | |||||||||||||
Biotechnology | 2.2 | 2.3 | — | — | |||||||||||||
Building Products | 5.0 | 0.4 | — | 2.8 | |||||||||||||
Capital Markets | 1.9 | 2.2 | — | 0.9 | |||||||||||||
Chemicals | 2.1 | 3.3 | — | 3.6 | |||||||||||||
Commercial Services & Suppliers | — | 0.1 | — | — | |||||||||||||
Communications Equipment | — | — | — | — | |||||||||||||
Construction & Engineering | — | 2.0 | — | 1.6 | |||||||||||||
Consumer Finance | — | 0.1 | — | — | |||||||||||||
Containers & Packaging | — | 0.3 | 2.7 | — | |||||||||||||
Diversified Consumer Services | — | — | — | — | |||||||||||||
Diversified Financial Services | — | 1.3 | — | — | |||||||||||||
Diversified Telecommunication Services | — | 0.1 | — | 2.9 | |||||||||||||
Electric Utilities | — | 3.6 | — | 1.8 | |||||||||||||
Electrical Equipment | 2.1 | 0.1 | — | 1.0 | |||||||||||||
Electronic Equipment, Instruments & Components | 2.1 | 0.6 | 4.0 | — | |||||||||||||
Energy Equipment & Services | — | — | — | — | |||||||||||||
Equity Real Estate Investment Trusts (REITs) | — | 0.8 | — | — | |||||||||||||
Entertainment | 2.3 | 1.3 | 3.4 | 3.2 | |||||||||||||
Food & Staples Retailing | 2.8 | 2.2 | — | — | |||||||||||||
Food Products | — | 3.7 | — | — | |||||||||||||
Gas Utilities | — | 0.5 | — | — | |||||||||||||
Health Care Equipment & Supplies | 2.4 | 0.3 | 6.3 | 2.9 | |||||||||||||
Health Care Providers & Services | 2.2 | 0.7 | — | 0.7 | |||||||||||||
Health Care Technology | — | — | — | — | |||||||||||||
Hotels, Restaurants & Leisure | 2.5 | 1.4 | 5.1 | 2.4 | |||||||||||||
Household Durables | — | 0.7 | 4.9 | 0.9 | |||||||||||||
Household Products | 2.5 | — | — | — | |||||||||||||
Industrial Conglomerates | — | 0.9 | — | — |
The accompanying notes are an integral part of these financial statements.
166 Annual Report
Lazard International Equity Select Portfolio | Lazard International Equity Value Portfolio | Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | Lazard Managed Equity Volatility Portfolio | |||||||||||||||
2.5 | % | 3.5 | % | — | % | 5.6 | % | 3.1 | % | ||||||||||
— | 3.4 | — | — | — | |||||||||||||||
1.2 | 0.5 | — | 0.8 | 1.4 | |||||||||||||||
1.1 | — | 1.9 | — | 0.2 | |||||||||||||||
1.9 | 9.1 | — | 3.4 | — | |||||||||||||||
9.6 | 14.1 | 1.2 | 8.6 | 5.0 | |||||||||||||||
3.1 | 3.8 | 2.8 | 6.6 | 1.8 | |||||||||||||||
0.6 | — | — | 1.2 | 1.0 | |||||||||||||||
2.1 | — | 2.3 | 2.7 | — | |||||||||||||||
— | 3.3 | 5.4 | 3.0 | 3.1 | |||||||||||||||
— | 3.7 | 1.5 | — | 0.7 | |||||||||||||||
— | — | 2.7 | — | 3.3 | |||||||||||||||
— | — | 1.0 | — | 0.7 | |||||||||||||||
1.3 | — | — | — | 0.6 | |||||||||||||||
— | — | 0.8 | 1.5 | 0.3 | |||||||||||||||
— | — | — | — | — | |||||||||||||||
— | — | — | — | 0.4 | |||||||||||||||
— | — | 4.2 | 0.8 | 0.1 | |||||||||||||||
2.6 | — | 1.8 | — | 2.8 | |||||||||||||||
2.0 | — | — | 1.8 | 3.9 | |||||||||||||||
1.1 | — | 0.8 | — | 0.2 | |||||||||||||||
— | — | 7.3 | 1.5 | 0.7 | |||||||||||||||
— | — | 1.7 | — | — | |||||||||||||||
— | — | — | — | 2.7 | |||||||||||||||
2.7 | 6.0 | 1.6 | 6.1 | 0.4 | |||||||||||||||
— | 4.2 | 2.2 | — | 3.7 | |||||||||||||||
— | — | — | 0.6 | 2.3 | |||||||||||||||
— | — | — | — | 1.5 | |||||||||||||||
3.4 | — | 0.3 | 2.7 | 0.2 | |||||||||||||||
— | — | 2.2 | — | 3.2 | |||||||||||||||
— | — | 1.0 | — | — | |||||||||||||||
2.2 | 14.5 | 2.6 | 1.4 | 3.7 | |||||||||||||||
— | — | 2.8 | — | — | |||||||||||||||
— | — | — | — | 2.7 | |||||||||||||||
— | — | 1.5 | — | 0.5 |
Annual Report 167
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country (concluded):
Industry† | Lazard International Compounders Portfolio | Lazard International Equity Advantage Portfolio | Lazard International Equity Concentrated Portfolio | Lazard International Equity Portfolio | |||||||||||||
Insurance | 8.0 | % | 7.5 | % | 8.2 | % | 8.1 | % | |||||||||
Interactive Media & Services | 2.7 | 0.1 | 6.5 | — | |||||||||||||
Internet & Direct Marketing Retail | 2.0 | — | — | — | |||||||||||||
IT Services | — | 1.4 | 2.1 | 1.4 | |||||||||||||
Leisure Products | 1.4 | 0.3 | — | 0.9 | |||||||||||||
Life Sciences Tools & Services | 2.1 | 0.3 | — | — | |||||||||||||
Machinery | — | 3.0 | — | 2.7 | |||||||||||||
Media | — | 0.3 | — | 1.1 | |||||||||||||
Metals & Mining | — | 3.0 | 3.5 | 2.0 | |||||||||||||
Multiline Retail | 3.0 | 0.4 | — | 1.8 | |||||||||||||
Multi-Utilities | — | 0.6 | — | — | |||||||||||||
Oil, Gas & Consumable Fuels | — | 7.4 | 8.9 | 6.5 | |||||||||||||
Paper & Forest Products | — | 0.1 | — | — | |||||||||||||
Personal Products | — | 4.2 | — | 3.6 | |||||||||||||
Pharmaceuticals | — | 9.2 | — | 4.2 | |||||||||||||
Professional Services | 5.1 | 1.4 | — | 4.2 | |||||||||||||
Real Estate Management & Development | — | 2.9 | — | 2.7 | |||||||||||||
Road & Rail | 3.0 | 1.7 | — | 1.0 | |||||||||||||
Semiconductors & Semiconductor Equipment | 4.9 | 1.5 | — | — | |||||||||||||
Software | 5.0 | 0.9 | 5.6 | 3.0 | |||||||||||||
Specialty Retail | 3.0 | 0.8 | — | — | |||||||||||||
Technology Hardware, Storage & Peripherals | — | 1.0 | 2.1 | 0.7 | |||||||||||||
Textiles, Apparel & Luxury Goods | 1.2 | 2.2 | — | — | |||||||||||||
Thrifts & Mortgage Finance | — | — | — | — | |||||||||||||
Tobacco | — | 1.9 | — | — | |||||||||||||
Trading Companies & Distributors | 5.4 | 1.7 | — | 3.2 | |||||||||||||
Transportation Infrastructure | — | — | — | — | |||||||||||||
Water Utilities | — | — | — | — | |||||||||||||
Wireless Telecommunication Services | — | 2.7 | 4.8 | 2.0 | |||||||||||||
Subtotal | 86.0 | 101.9 | 99.8 | 95.3 | |||||||||||||
Short-Term Investments | — | — | 1.5 | 4.7 | |||||||||||||
Total Investments | 86.0 | % | 101.9 | % | 101.3 | % | 100.0 | % | |||||||||
† | Industry classifications may be different than those used for compliance monitoring purposes. |
The accompanying notes are an integral part of these financial statements.
168 Annual Report
Lazard International Equity Select Portfolio | Lazard International Equity Value Portfolio | Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | Lazard Managed Equity Volatility Portfolio | |||||||||||||||
10.9 | % | 4.2 | % | — | % | 9.7 | % | 5.6 | % | ||||||||||
5.2 | — | 4.7 | 1.0 | — | |||||||||||||||
— | — | — | 1.3 | 0.2 | |||||||||||||||
3.2 | — | 3.3 | 2.7 | 4.5 | |||||||||||||||
— | 3.0 | — | 1.0 | 0.2 | |||||||||||||||
— | — | 1.4 | — | 0.4 | |||||||||||||||
2.7 | 1.9 | 7.1 | 4.1 | 1.2 | |||||||||||||||
— | — | 3.3 | 2.6 | 1.8 | |||||||||||||||
2.4 | 3.5 | 1.5 | 2.2 | 2.0 | |||||||||||||||
1.9 | — | — | 1.7 | 0.2 | |||||||||||||||
— | — | — | — | 1.8 | |||||||||||||||
6.5 | 5.1 | — | 4.2 | 3.2 | |||||||||||||||
— | — | — | — | — | |||||||||||||||
2.9 | — | — | 1.9 | 1.6 | |||||||||||||||
3.2 | 2.1 | 3.9 | 2.6 | 7.6 | |||||||||||||||
4.2 | — | 3.9 | 5.1 | 0.4 | |||||||||||||||
1.7 | — | 9.6 | 2.3 | 2.8 | |||||||||||||||
1.1 | — | — | — | 1.3 | |||||||||||||||
2.0 | — | — | — | 1.1 | |||||||||||||||
2.9 | — | 2.2 | — | 1.6 | |||||||||||||||
0.7 | — | 1.1 | — | 3.5 | |||||||||||||||
0.7 | — | — | — | 0.5 | |||||||||||||||
0.7 | — | 2.6 | — | 1.5 | |||||||||||||||
— | — | — | 1.2 | — | |||||||||||||||
— | — | — | 0.9 | 1.3 | |||||||||||||||
1.8 | — | 2.3 | 2.5 | 0.8 | |||||||||||||||
— | — | — | — | 0.2 | |||||||||||||||
0.7 | — | 1.0 | — | — | |||||||||||||||
2.2 | 3.8 | — | 2.3 | 1.8 | |||||||||||||||
95.0 | 89.7 | 97.5 | 97.6 | 97.3 | |||||||||||||||
7.5 | 9.8 | 1.5 | 2.1 | 4.3 | |||||||||||||||
102.5 | % | 99.5 | % | 99.0 | % | 99.7 | % | 101.6 | % |
Annual Report 169
The Lazard Funds, Inc.Statements of Assets and Liabilities
Lazard | Lazard Emerging | |||||||||
Developing Markets | Markets Core | |||||||||
December 31, 2018 | Equity Portfolio | Equity Portfolio | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 218,190,155 | $ | 211,097,803 | ||||||
Non-controlled affiliated issuers, at fair value (Note 5) | — | — | ||||||||
Cash | 106,261 | — | ||||||||
Foreign currency, at fair value | 234,952 | 75,110 | ||||||||
Receivables for: | ||||||||||
Dividends | 763,098 | 427,346 | ||||||||
Capital stock sold | 1,254,657 | 1,808,461 | ||||||||
Investments sold | 3,188,530 | 760,523 | ||||||||
Amount due from Investment Manager (Note 3) | — | — | ||||||||
Deferred offering costs (Note 2(f)) | — | 2,729 | ||||||||
Total assets | 223,737,653 | 214,171,972 | ||||||||
LIABILITIES | ||||||||||
Due to Investment Manager | — | — | ||||||||
Due to custodian | — | 1,633,209 | ||||||||
Payables for: | ||||||||||
Foreign capital gains taxes | — | — | ||||||||
Management fees | 199,317 | 187,675 | ||||||||
Accrued custodian fees | 21,753 | 28,296 | ||||||||
Accrued distribution fees | 1,585 | 373 | ||||||||
Accrued professional services | 32,014 | 31,619 | ||||||||
Capital stock redeemed | 608,536 | 1,971,003 | ||||||||
Investments purchased | 470,568 | 3,264 | ||||||||
Other accrued expenses and payables | 21,244 | 14,389 | ||||||||
Total liabilities | 1,355,017 | 3,869,828 | ||||||||
Net assets | $ | 222,382,636 | $ | 210,302,144 | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 355,744,337 | $ | 223,817,236 | ||||||
Distributable earnings (Accumulated loss) | (133,361,701 | ) | (13,515,092 | ) | ||||||
Net assets | $ | 222,382,636 | $ | 210,302,144 | ||||||
Institutional Shares | ||||||||||
Net assets | $ | 215,119,548 | $ | 207,954,672 | ||||||
Shares of capital stock outstanding* | 18,836,550 | 21,031,193 | ||||||||
Net asset value, offering and redemption price per share | $ | 11.42 | $ | 9.89 | ||||||
Open Shares | ||||||||||
Net assets | $ | 7,263,088 | $ | 1,853,320 | ||||||
Shares of capital stock outstanding* | 639,563 | 187,835 | ||||||||
Net asset value, offering and redemption price per share | $ | 11.36 | $ | 9.87 | ||||||
R6 Shares | ||||||||||
Net assets | — | $ | 494,152 | |||||||
Shares of capital stock outstanding* | — | 49,941 | ||||||||
Net asset value, offering and redemption price per share | — | $ | 9.89 | |||||||
Cost of investments in securities | $ | 224,254,976 | $ | 220,591,736 | ||||||
Cost of non-controlled affiliated issuers | $ | — | $ | — | ||||||
Cost of foreign currency | $ | 236,253 | $ | 74,973 |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
170 Annual Report
Lazard | ||||||||||||||||||||||||
Emerging Markets | Lazard Emerging | Lazard | Lazard | Lazard Global | ||||||||||||||||||||
Equity Advantage | Markets Equity | Emerging Markets | Equity Franchise | Equity Select | ||||||||||||||||||||
Portfolio | Blend Portfolio | Equity Portfolio | Portfolio | Portfolio | ||||||||||||||||||||
$ | 3,400,828 | $ | 297,802,479 | $ | 8,670,891,992 | $ | 8,401,141 | $ | 66,478,880 | |||||||||||||||
— | — | 168,158,341 | — | — | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
307 | 54,476 | 3,727,774 | 10 | 1,930 | ||||||||||||||||||||
3,491 | 815,930 | 18,174,978 | 30,001 | 63,071 | ||||||||||||||||||||
200,357 | 184,024 | 17,228,366 | 12,270 | 104,405 | ||||||||||||||||||||
1,839 | 105,117 | 3,432,766 | 130,627 | — | ||||||||||||||||||||
24,160 | — | — | — | — | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
3,630,982 | 298,962,026 | 8,881,614,217 | 8,574,049 | 66,648,286 | ||||||||||||||||||||
— | — | — | 10,221 | — | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
— | 387,210 | 37,618,367 | — | — | ||||||||||||||||||||
— | 262,520 | 7,765,178 | — | 46,758 | ||||||||||||||||||||
11,547 | 30,842 | 661,088 | 6,125 | 8,842 | ||||||||||||||||||||
99 | 1,349 | 222,973 | 39 | 166 | ||||||||||||||||||||
33,811 | 36,386 | 59,286 | 22,912 | 25,067 | ||||||||||||||||||||
— | 626,811 | 23,686,911 | — | 111,089 | ||||||||||||||||||||
— | 22 | 233,232 | 60 | 309,191 | ||||||||||||||||||||
3,293 | 12,598 | 430,374 | 3,803 | 2,273 | ||||||||||||||||||||
48,750 | 1,357,738 | 70,677,409 | 43,160 | 503,386 | ||||||||||||||||||||
$ | 3,582,232 | $ | 297,604,288 | $ | 8,810,936,808 | $ | 8,530,889 | $ | 66,144,900 | |||||||||||||||
$ | 3,527,102 | $ | 382,058,314 | $ | 9,822,444,349 | $ | 9,625,620 | $ | 63,706,419 | |||||||||||||||
55,130 | (84,454,026 | ) | (1,011,507,541 | ) | (1,094,731 | ) | 2,438,481 | |||||||||||||||||
$ | 3,582,232 | $ | 297,604,288 | $ | 8,810,936,808 | $ | 8,530,889 | $ | 66,144,900 | |||||||||||||||
$ | 3,106,646 | $ | 291,403,975 | $ | 7,573,861,013 | $ | 8,341,142 | $ | 65,382,048 | |||||||||||||||
309,610 | 29,084,201 | 471,588,782 | 943,047 | 5,577,806 | ||||||||||||||||||||
$ | 10.03 | $ | 10.02 | $ | 16.06 | $ | 8.84 | $ | 11.72 | |||||||||||||||
$ | 475,586 | $ | 6,200,313 | $ | 1,004,569,253 | $ | 189,747 | $ | 762,852 | |||||||||||||||
47,382 | 617,871 | 60,776,573 | 21,455 | 65,049 | ||||||||||||||||||||
$ | 10.04 | $ | 10.03 | $ | 16.53 | $ | 8.84 | $ | 11.73 | |||||||||||||||
— | — | $ | 232,506,542 | — | — | |||||||||||||||||||
— | — | 14,479,168 | — | — | ||||||||||||||||||||
— | — | $ | 16.06 | — | — | |||||||||||||||||||
$ | 3,276,576 | $ | 324,642,768 | $ | 8,903,535,124 | $ | 9,486,268 | $ | 63,647,665 | |||||||||||||||
$ | — | $ | — | $ | 140,962,822 | $ | — | $ | — | |||||||||||||||
$ | 306 | $ | 54,313 | $ | 3,717,255 | $ | 10 | $ | 1,930 |
Annual Report 171
Lazard | ||||||||||
Global Listed | Lazard | |||||||||
Infrastructure | Global Realty | |||||||||
December 31, 2018 | Portfolio | Equity Portfolio (a) | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 5,295,674,643 | $ | 4,321,682 | ||||||
Foreign currency, at fair value | 818,798 | — | ||||||||
Receivables for: | ||||||||||
Dividends | 22,792,366 | 3,638 | ||||||||
Capital stock sold | 36,848,249 | — | ||||||||
Investments sold | 44,086,138 | 152,961 | ||||||||
Amount due from Investment Manager (Note 3) | — | 798 | ||||||||
Gross unrealized appreciation on forward currency contracts | 11,095,514 | — | ||||||||
Deferred offering costs (Note 2(f)) | — | — | ||||||||
Total assets | 5,411,315,708 | 4,479,079 | ||||||||
LIABILITIES | ||||||||||
Due to custodian | — | — | ||||||||
Foreign currency due to custodian | — | 61,632 | ||||||||
Payables for: | ||||||||||
Management fees | 4,134,490 | — | ||||||||
Accrued custodian fees | 142,941 | 6,779 | ||||||||
Accrued distribution fees | 94,494 | 231 | ||||||||
Accrued professional services | 34,898 | 14,083 | ||||||||
Offering costs (Note 2(f)) | — | — | ||||||||
Capital stock redeemed | 39,375,635 | 4,387,932 | ||||||||
Investments purchased | 6,099,035 | 189 | ||||||||
Gross unrealized depreciation on forward currency contracts | 10,159,785 | — | ||||||||
Other accrued expenses and payables | 165,740 | 8,233 | ||||||||
Total liabilities | 60,207,018 | 4,479,079 | ||||||||
Net assets | $ | 5,351,108,690 | $ | — | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 5,666,269,734 | $ | — | ||||||
Distributable earnings (Accumulated loss) | (315,161,044 | ) | — | |||||||
Net assets | $ | 5,351,108,690 | $ | — | ||||||
Institutional Shares | ||||||||||
Net assets | $ | 4,924,359,244 | $ | — | ||||||
Shares of capital stock outstanding* | 364,507,349 | — | ||||||||
Net asset value, offering and redemption price per share | $ | 13.51 | $ | — | ||||||
Open Shares | ||||||||||
Net assets | $ | 426,749,446 | $ | — | ||||||
Shares of capital stock outstanding* | 31,560,099 | — | ||||||||
Net asset value, offering and redemption price per share | $ | 13.52 | $ | — | ||||||
R6 Shares | ||||||||||
Net assets | — | — | ||||||||
Shares of capital stock outstanding* | — | — | ||||||||
Net asset value, offering and redemption price per share | — | — | ||||||||
Cost of investments in securities | $ | 5,614,516,953 | $ | 4,321,682 | ||||||
Cost of foreign currency | $ | 818,602 | $ | (61,632 | ) |
(a) | The Portfolio was liquidated on December 31, 2018. |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
172 Annual Report
Lazard | Lazard | |||||||||||||||||||||||
Lazard | International | International | Lazard | |||||||||||||||||||||
Lazard | International | Equity | Equity | International | ||||||||||||||||||||
Global Strategic | Compounders | Advantage | Concentrated | Equity | ||||||||||||||||||||
Equity Portfolio | Portfolio | Portfolio | Portfolio | Portfolio | ||||||||||||||||||||
$ | 2,647,995 | $ | 128,758 | $ | 2,188,168 | $ | 50,125,965 | $ | 2,436,065,931 | |||||||||||||||
32 | — | 1,312 | 5 | — | ||||||||||||||||||||
6,750 | — | 6,389 | 122,924 | 4,484,035 | ||||||||||||||||||||
— | 150,000 | — | 632,290 | 9,616,000 | ||||||||||||||||||||
— | — | — | 489,765 | 27,726,320 | ||||||||||||||||||||
16,945 | 12,599 | 8,828 | — | — | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
— | 98,816 | — | — | — | ||||||||||||||||||||
2,671,722 | 390,173 | 2,204,697 | 51,370,949 | 2,477,892,286 | ||||||||||||||||||||
— | — | 13,566 | — | — | ||||||||||||||||||||
— | — | — | — | 1,477,369 | ||||||||||||||||||||
— | — | — | 24,020 | 1,656,115 | ||||||||||||||||||||
6,759 | — | 10,239 | 7,511 | 87,064 | ||||||||||||||||||||
28 | — | 21 | 89 | 48,990 | ||||||||||||||||||||
25,385 | 8,650 | 29,686 | 25,073 | 31,811 | ||||||||||||||||||||
— | 98,816 | — | — | — | ||||||||||||||||||||
— | — | — | 1,804,162 | 34,639,389 | ||||||||||||||||||||
— | 129,053 | — | 1,679 | 3,068,054 | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
2,859 | 3,949 | 3,123 | 4,202 | 150,263 | ||||||||||||||||||||
35,031 | 240,468 | 56,635 | 1,866,736 | 41,159,055 | ||||||||||||||||||||
$ | 2,636,691 | $ | 149,705 | $ | 2,148,062 | $ | 49,504,213 | $ | 2,436,733,231 | |||||||||||||||
$ | 2,620,519 | $ | 150,000 | $ | 2,412,086 | $ | 57,933,802 | $ | 2,533,006,202 | |||||||||||||||
16,172 | (295 | ) | (264,024 | ) | (8,429,589 | ) | (96,272,971 | ) | ||||||||||||||||
$ | 2,636,691 | $ | 149,705 | $ | 2,148,062 | $ | 49,504,213 | $ | 2,436,733,231 | |||||||||||||||
$ | 2,505,299 | $ | 148,705 | $ | 2,051,478 | $ | 49,105,126 | $ | 2,102,734,614 | |||||||||||||||
1,530,838 | 14,900 | 235,905 | 5,888,251 | 134,128,473 | ||||||||||||||||||||
$ | 1.64 | $ | 9.98 | $ | 8.70 | $ | 8.34 | $ | 15.68 | |||||||||||||||
$ | 131,392 | $ | 1,000 | $ | 96,584 | $ | 399,087 | $ | 227,482,526 | |||||||||||||||
80,778 | 100 | 11,106 | 47,769 | 14,336,300 | ||||||||||||||||||||
$ | 1.63 | $ | 10.00 | $ | 8.70 | $ | 8.35 | $ | 15.87 | |||||||||||||||
— | — | — | — | $ | 106,516,091 | |||||||||||||||||||
— | — | — | — | 6,803,382 | ||||||||||||||||||||
— | — | — | — | $ | 15.66 | |||||||||||||||||||
$ | 2,608,042 | $ | 129,053 | $ | 2,416,129 | $ | 55,871,740 | $ | 2,485,541,819 | |||||||||||||||
$ | 32 | $ | — | $ | 1,306 | $ | 5 | $ | (1,475,626 | ) |
Annual Report 173
Lazard | Lazard | |||||||||
International Equity | International Equity | |||||||||
December 31, 2018 | Select Portfolio | Value Portfolio | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 77,976,472 | $ | 22,876,169 | ||||||
Foreign currency, at fair value | 85 | — | ||||||||
Receivables for: | ||||||||||
Dividends | 152,452 | 24,987 | ||||||||
Capital stock sold | 1,690,344 | — | ||||||||
Investments sold | 6,552 | 140,615 | ||||||||
Amount due from Investment Manager (Note 3) | — | 8,472 | ||||||||
Deferred offering costs (Note 2(f)) | — | 91,803 | ||||||||
Total assets | 79,825,905 | 23,142,046 | ||||||||
LIABILITIES | ||||||||||
Due to custodian | — | — | ||||||||
Payables for: | ||||||||||
Foreign capital gains taxes | — | — | ||||||||
Management fees | 43,607 | — | ||||||||
Accrued custodian fees | 10,380 | 9,852 | ||||||||
Accrued distribution fees | 325 | 10 | ||||||||
Accrued professional services | 30,536 | 21,573 | ||||||||
Offering costs (Note 2(f)) | — | 16,902 | ||||||||
Capital stock redeemed | 641,965 | — | ||||||||
Investments purchased | 3,008,808 | 107,172 | ||||||||
Other accrued expenses and payables | 5,966 | 2,630 | ||||||||
Total liabilities | 3,741,587 | 158,139 | ||||||||
Net assets | $ | 76,084,318 | $ | 22,983,907 | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 82,665,545 | $ | 25,139,968 | ||||||
Distributable earnings (Accumulated loss) | (6,581,227 | ) | (2,156,061 | ) | ||||||
Net assets | $ | 76,084,318 | $ | 22,983,907 | ||||||
Institutional Shares | ||||||||||
Net assets | $ | 74,582,445 | $ | 22,945,443 | ||||||
Shares of capital stock outstanding* | 8,172,571 | 2,509,997 | ||||||||
Net asset value, offering and redemption price per share | $ | 9.13 | $ | 9.14 | ||||||
Open Shares | ||||||||||
Net assets | $ | 1,501,873 | $ | 38,464 | ||||||
Shares of capital stock outstanding* | 163,761 | 4,211 | ||||||||
Net asset value, offering and redemption price per share | $ | 9.17 | $ | 9.13 | ||||||
R6 Shares | ||||||||||
Net assets | — | — | ||||||||
Shares of capital stock outstanding* | — | — | ||||||||
Net asset value, offering and redemption price per share | — | — | ||||||||
Cost of investments in securities | $ | 83,679,382 | $ | 24,338,897 | ||||||
Cost of foreign currency | $ | 84 | $ | — |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
174 Annual Report
Lazard | Lazard | Lazard | ||||||||||||||||||||||
International | International | Lazard | US Equity | Lazard | ||||||||||||||||||||
Small Cap | Strategic | Managed Equity | Concentrated | US Equity Select | ||||||||||||||||||||
Equity Portfolio | Equity Portfolio | Volatility Portfolio | Portfolio | Portfolio | ||||||||||||||||||||
$ | 54,858,661 | $ | 5,545,075,604 | $ | 21,228,978 | $ | 1,092,113,499 | $ | 71,886,110 | |||||||||||||||
27,994 | 488,086 | 5,956 | — | — | ||||||||||||||||||||
130,912 | 9,322,476 | 35,353 | 978,078 | 47,824 | ||||||||||||||||||||
453,816 | 45,328,263 | 9 | 4,585,097 | 349,275 | ||||||||||||||||||||
216,378 | 61,582 | — | 23,765,156 | — | ||||||||||||||||||||
— | — | 11,925 | — | — | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
55,687,761 | 5,600,276,011 | 21,282,221 | 1,121,441,830 | 72,283,209 | ||||||||||||||||||||
— | — | — | 3,839,429 | — | ||||||||||||||||||||
— | 41,848 | — | — | — | ||||||||||||||||||||
35,964 | 3,678,410 | — | 772,499 | 22,225 | ||||||||||||||||||||
12,258 | 182,364 | 11,964 | 30,322 | 8,922 | ||||||||||||||||||||
4,373 | 183,958 | 60 | 11,550 | 195 | ||||||||||||||||||||
33,315 | 40,730 | 27,571 | 25,107 | 22,543 | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
38,710 | 27,825,446 | — | 22,966,711 | 657,364 | ||||||||||||||||||||
170,518 | 7,847,725 | 346,060 | — | — | ||||||||||||||||||||
6,424 | 200,048 | 4,499 | 63,966 | 5,001 | ||||||||||||||||||||
301,562 | 40,000,529 | 390,154 | 27,709,584 | 716,250 | ||||||||||||||||||||
$ | 55,386,199 | $ | 5,560,275,482 | $ | 20,892,067 | $ | 1,093,732,246 | $ | 71,566,959 | |||||||||||||||
$ | 60,911,741 | $ | 5,583,165,303 | $ | 22,318,041 | $ | 1,136,678,042 | $ | 68,606,503 | |||||||||||||||
(5,525,542 | ) | (22,889,821 | ) | (1,425,974 | ) | (42,945,796 | ) | 2,960,456 | ||||||||||||||||
$ | 55,386,199 | $ | 5,560,275,482 | $ | 20,892,067 | $ | 1,093,732,246 | $ | 71,566,959 | |||||||||||||||
$ | 35,121,363 | $ | 4,630,333,866 | $ | 20,708,603 | $ | 1,040,850,895 | $ | 60,629,270 | |||||||||||||||
3,529,666 | 359,227,186 | 1,963,386 | 80,772,130 | 5,927,072 | ||||||||||||||||||||
$ | 9.95 | $ | 12.89 | $ | 10.55 | $ | 12.89 | $ | 10.23 | |||||||||||||||
$ | 20,264,836 | $ | 832,547,691 | $ | 183,464 | $ | 50,981,044 | $ | 881,360 | |||||||||||||||
2,031,598 | 64,009,753 | 17,404 | 3,925,727 | 85,762 | ||||||||||||||||||||
$ | 9.97 | $ | 13.01 | $ | 10.54 | $ | 12.99 | $ | 10.28 | |||||||||||||||
— | $ | 97,393,925 | — | $ | 1,900,307 | $ | 10,056,329 | |||||||||||||||||
— | 7,549,275 | — | 147,098 | 982,747 | ||||||||||||||||||||
— | $ | 12.90 | — | $ | 12.92 | $ | 10.23 | |||||||||||||||||
$ | 61,310,326 | $ | 5,556,993,829 | $ | 22,304,736 | $ | 1,117,608,922 | $ | 68,635,203 | |||||||||||||||
$ | 27,994 | $ | 487,889 | $ | 5,931 | $ | — | $ | — |
Annual Report 175
Lazard | Lazard | |||||||||
US Realty Equity | US Small-Mid Cap | |||||||||
December 31, 2018 | Portfolio | Equity Portfolio | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 59,302,882 | $ | 126,473,826 | ||||||
Cash | 3,309 | 1,234,602 | ||||||||
Receivables for: | ||||||||||
Dividends | 319,514 | 147,057 | ||||||||
Capital stock sold | 105,580 | 27,490 | ||||||||
Investments sold | 2,215,627 | 47,344 | ||||||||
Total assets | 61,946,912 | 127,930,319 | ||||||||
LIABILITIES | ||||||||||
Payables for: | ||||||||||
Management fees | 40,671 | 88,847 | ||||||||
Accrued custodian fees | 5,895 | 10,125 | ||||||||
Accrued distribution fees | 10,070 | 3,067 | ||||||||
Accrued professional services | 34,346 | 22,747 | ||||||||
Capital stock redeemed | 304,025 | 394,604 | ||||||||
Investments purchased | 690,995 | — | ||||||||
Line of credit outstanding | 1,190,000 | — | ||||||||
Other accrued expenses and payables | 9,396 | 8,197 | ||||||||
Total liabilities | 2,285,398 | 527,587 | ||||||||
Net assets | $ | 59,661,514 | $ | 127,402,732 | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 59,223,251 | $ | 139,805,913 | ||||||
Distributable earnings (Accumulated loss) | 438,263 | (12,403,181 | ) | |||||||
Net assets | $ | 59,661,514 | $ | 127,402,732 | ||||||
Institutional Shares | ||||||||||
Net assets | $ | 15,715,185 | $ | 113,677,104 | ||||||
Shares of capital stock outstanding* | 941,829 | 10,493,688 | ||||||||
Net asset value, offering and redemption price per share | $ | 16.69 | $ | 10.83 | ||||||
Open Shares | ||||||||||
Net assets | $ | 43,946,329 | $ | 13,725,628 | ||||||
Shares of capital stock outstanding* | 2,621,072 | 1,368,812 | ||||||||
Net asset value, offering and redemption price per share | $ | 16.77 | $ | 10.03 | ||||||
Cost of investments in securities | $ | 59,951,937 | $ | 136,005,202 |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
176 Annual Report
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Annual Report 177
The Lazard Funds, Inc.Statements of Operations
For the Year Ended December 31, 2018 | Lazard Developing Markets Equity Portfolio | Lazard Emerging Markets Core Equity Portfolio | |||||||||
Investment Income (Loss) | |||||||||||
Income | |||||||||||
Dividends | |||||||||||
Unaffiliated issuers | $ | 5,408,751 | $ | 6,894,928 | |||||||
Non-controlled affiliated issuers (Note 5) | — | — | |||||||||
Total investment income* | 5,408,751 | 6,894,928 | |||||||||
Expenses | |||||||||||
Management fees (Note 3) | 2,747,387 | 2,640,091 | |||||||||
Custodian fees | 156,285 | 183,414 | |||||||||
Distribution fees (Open Shares) | 27,992 | 5,080 | |||||||||
Administration fees | 44,167 | 45,076 | |||||||||
Shareholders’ reports | 31,413 | 29,815 | |||||||||
Professional services | 60,705 | 80,603 | |||||||||
Shareholders’ services | 33,598 | 35,706 | |||||||||
Directors’ fees and expenses | 14,865 | 14,106 | |||||||||
Registration fees | 45,580 | 81,238 | |||||||||
Amortization of offering costs (Note 2(f)) | — | 6,077 | |||||||||
Organization expenses (Note 2(f)) | — | 3,888 | |||||||||
Other^ | 16,641 | 15,603 | |||||||||
Total gross expenses | 3,178,633 | 3,140,697 | |||||||||
Management fees waived and expenses reimbursed | — | (21,845 | ) | ||||||||
Shareholders’ services fees waived | — | (6,127 | ) | ||||||||
Total net expenses | 3,178,633 | 3,112,725 | |||||||||
Net investment income (loss) | 2,230,118 | 3,782,203 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments, Non-Controlled Affiliated Issuers and Foreign Currency Transactions | |||||||||||
Net realized gain (loss) on: | |||||||||||
Investments** | 11,224,424 | 8,151,668 | |||||||||
Non-controlled affiliated issuers | — | — | |||||||||
Foreign currency transactions | (161,620 | ) | (27,595 | ) | |||||||
Total net realized gain (loss) on investments, non-controlled affiliated issuers and foreign currency transactions | 11,062,804 | 8,124,073 | |||||||||
Net change in unrealized appreciation (depreciation) on: | |||||||||||
Investments† | (76,298,411 | ) | (67,553,910 | ) | |||||||
Non-controlled affiliated issuers | — | — | |||||||||
Foreign currency translations | (18,527 | ) | 11,307 | ||||||||
Total net change in unrealized appreciation (depreciation) on investments, non-controlled affiliated issuers and foreign currency translations | (76,316,938 | ) | (67,542,603 | ) | |||||||
Net realized and unrealized gain (loss) on investments, non-controlled affiliated issuers and foreign currency transactions | (65,254,134 | ) | (59,418,530 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | (63,024,016 | ) | $ | (55,636,327 | ) | |||||
* | Net of foreign withholding taxes of | $ | 577,349 | $ | 795,272 | ||||||
** | Net of foreign capital gains taxes of | $ | 4,350 | $ | — | ||||||
† | Includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of | $ | 207,678 | $ | 185,721 | ||||||
^ | Includes interest on line of credit of | $ | 1,419 | $ | 3,988 |
The accompanying notes are an integral part of these financial statements.
178 Annual Report
Lazard Emerging Markets Equity Advantage Portfolio | Lazard Emerging Markets Equity Blend Portfolio | Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | Lazard Global Equity Select Portfolio | ||||||||||||||||
$ | 116,111 | $ | 9,201,223 | $ | 355,366,834 | $ | 234,327 | $ | 1,183,871 | |||||||||||
— | — | 11,413,295 | — | — | ||||||||||||||||
116,111 | 9,201,223 | 366,780,129 | 234,327 | 1,183,871 | ||||||||||||||||
36,531 | 3,624,355 | 114,914,746 | 64,826 | 540,293 | ||||||||||||||||
76,542 | 219,027 | 4,693,856 | 35,380 | 55,894 | ||||||||||||||||
1,198 | 21,490 | 3,138,283 | 447 | 1,986 | ||||||||||||||||
10,362 | 55,129 | 1,017,143 | 10,838 | 18,267 | ||||||||||||||||
3,122 | 81,000 | 753,059 | 3,216 | 3,724 | ||||||||||||||||
61,312 | 72,036 | 491,811 | 38,647 | 42,428 | ||||||||||||||||
23,361 | 34,122 | 475,422 | 23,723 | 24,144 | ||||||||||||||||
5,156 | 18,302 | 439,075 | 5,254 | 7,243 | ||||||||||||||||
33,468 | 46,225 | 174,145 | 34,219 | 44,609 | ||||||||||||||||
— | — | — | 71,087 | — | ||||||||||||||||
— | — | — | — | — | ||||||||||||||||
1,374 | 15,179 | 321,682 | 1,554 | 6,761 | ||||||||||||||||
252,426 | 4,186,865 | 126,419,222 | 289,191 | 745,349 | ||||||||||||||||
(203,673 | ) | (215 | ) | (440 | ) | (205,573 | ) | (33,560 | ) | |||||||||||
— | — | — | (6,104 | ) | — | |||||||||||||||
48,753 | 4,186,650 | 126,418,782 | 77,514 | 711,789 | ||||||||||||||||
67,358 | 5,014,573 | 240,361,347 | 156,813 | 472,082 | ||||||||||||||||
170,032 | 8,116,950 | 106,137,980 | 657,224 | 1,139,416 | ||||||||||||||||
— | — | (17,242,805 | ) | — | — | |||||||||||||||
(1,447 | ) | (301,165 | ) | (5,521,964 | ) | (1,329 | ) | (10,306 | ) | |||||||||||
168,585 | 7,815,785 | 83,373,211 | 655,895 | 1,129,110 | ||||||||||||||||
(998,827 | ) | (95,666,320 | ) | (2,637,937,486 | ) | (1,249,755 | ) | (6,721,193 | ) | |||||||||||
— | — | 53,903,513 | — | — | ||||||||||||||||
— | (1,509 | ) | (3,271 | ) | 115 | 64 | ||||||||||||||
(998,827 | ) | (95,667,829 | ) | (2,584,037,244 | ) | (1,249,640 | ) | (6,721,129 | ) | |||||||||||
(830,242 | ) | (87,852,044 | ) | (2,500,664,033 | ) | (593,745 | ) | (5,592,019 | ) | |||||||||||
$ | (762,884 | ) | $ | (82,837,471 | ) | $ | (2,260,302,686 | ) | $ | (436,932 | ) | $ | (5,119,937 | ) | ||||||
$ | 16,304 | $ | 957,577 | $ | 44,324,042 | $ | 15,363 | $ | 60,996 | |||||||||||
$ | — | $ | 211,336 | $ | 7,570,595 | $ | — | $ | — | |||||||||||
$ | — | $ | (128,827 | ) | $ | (36,371,907 | ) | $ | — | $ | — | |||||||||
$ | 24 | $ | — | $ | 4,198 | $ | 49 | $ | — |
Annual Report 179
For the Year Ended December 31, 2018 | Lazard Global Listed Infrastructure Portfolio | Lazard Global Realty Equity Portfolio (a) | |||||||||
Investment Income (Loss) | |||||||||||
Income | |||||||||||
Dividends* | $ | 190,268,087 | $ | 157,097 | |||||||
Expenses | |||||||||||
Management fees (Note 3) | 47,634,471 | 40,526 | |||||||||
Custodian fees | 835,867 | 43,538 | |||||||||
Distribution fees (Open Shares) | 1,243,199 | 3,153 | |||||||||
Administration fees | 518,242 | 10,439 | |||||||||
Shareholders’ reports | 241,566 | 7,201 | |||||||||
Professional services | 245,542 | 39,186 | |||||||||
Shareholders’ services | 174,058 | 23,066 | |||||||||
Directors’ fees and expenses | 189,756 | 5,176 | |||||||||
Registration fees | 146,288 | 36,960 | |||||||||
Organization expenses (Note 2(f)) | — | — | |||||||||
Other^ | 145,380 | 1,411 | |||||||||
Total gross expenses | 51,374,369 | 210,656 | |||||||||
Management fees waived and expenses reimbursed | — | (158,931 | ) | ||||||||
Total net expenses | 51,374,369 | 51,725 | |||||||||
Net investment income (loss) | 138,893,718 | 105,372 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions and Forward Currency Contracts | |||||||||||
Net realized gain (loss) on: | |||||||||||
Investments | 244,077,217 | (298,958 | ) | ||||||||
Foreign currency transactions | (3,274,134 | ) | (2,733 | ) | |||||||
Forward currency contracts | 233,725,528 | — | |||||||||
Total net realized gain (loss) on investments, foreign currency transactions and forward currency contracts | 474,528,611 | (301,691 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on: | |||||||||||
Investments† | (892,391,077 | ) | (413,289 | ) | |||||||
Foreign currency translations | 354,019 | 779 | |||||||||
Forward currency contracts | 55,621,091 | — | |||||||||
Total net change in unrealized appreciation (depreciation) on investments, foreign currency translations and forward currency contracts | (836,415,967 | ) | (412,510 | ) | |||||||
Net realized and unrealized gain (loss) on investments, foreign currency transactions and forward currency contracts | (361,887,356 | ) | (714,201 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | (222,993,638 | ) | $ | (608,829 | ) | |||||
* | Net of foreign withholding taxes of | $ | 18,276,953 | $ | 4,902 | ||||||
† | Includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of | $ | — | $ | 312 | ||||||
^ | Includes interest on line of credit of | $ | 6,037 | $ | 26 |
(a) The Portfolio was liquidated on December 31, 2018.
(b) From the Portfolio’s commencement of operations on December 31, 2018.
The accompanying notes are an integral part of these financial statements.
180 Annual Report
Lazard Global Strategic Equity Portfolio | Lazard International Compounders Portfolio (b) | Lazard International Equity Advantage Portfolio | Lazard International Equity Concentrated Portfolio | Lazard International Equity Portfolio | ||||||||||||||||
$ | 47,925 | $ | — | $ | 80,510 | $ | 1,745,155 | $ | 89,157,582 | |||||||||||
23,255 | — | 16,421 | 606,717 | 24,456,354 | ||||||||||||||||
45,326 | — | 63,162 | 53,132 | 593,335 | ||||||||||||||||
369 | — | 278 | 749 | 661,503 | ||||||||||||||||
10,188 | — | 10,140 | 18,744 | 357,760 | ||||||||||||||||
4,762 | — | 3,137 | 6,135 | 280,076 | ||||||||||||||||
45,849 | 8,650 | 47,248 | 48,157 | 195,119 | ||||||||||||||||
22,960 | — | 22,884 | 23,439 | 105,656 | ||||||||||||||||
5,128 | — | 5,091 | 7,528 | 127,643 | ||||||||||||||||
38,693 | — | 33,465 | 43,784 | 106,674 | ||||||||||||||||
— | 3,949 | — | — | — | ||||||||||||||||
1,342 | — | 1,327 | 7,032 | 98,066 | ||||||||||||||||
197,872 | 12,599 | 203,153 | 815,417 | 26,982,186 | ||||||||||||||||
(166,874 | ) | (12,599 | ) | (180,052 | ) | (100,378 | ) | (15,452 | ) | |||||||||||
30,998 | — | 23,101 | 715,039 | 26,966,734 | ||||||||||||||||
16,927 | — | 57,409 | 1,030,116 | 62,190,848 | ||||||||||||||||
108,803 | — | 76,522 | (536,821 | ) | 132,634,722 | |||||||||||||||
130 | — | (137 | ) | (2,811 | ) | (414,179 | ) | |||||||||||||
— | — | — | — | — | ||||||||||||||||
108,933 | — | 76,385 | (539,632 | ) | 132,220,543 | |||||||||||||||
(397,182 | ) | (295 | ) | (562,061 | ) | (12,702,091 | ) | (625,039,822 | ) | |||||||||||
(650 | ) | — | (96 | ) | 71 | (37,158 | ) | |||||||||||||
— | — | — | — | — | ||||||||||||||||
(397,832 | ) | (295 | ) | (562,157 | ) | (12,702,020 | ) | (625,076,980 | ) | |||||||||||
(288,899 | ) | (295 | ) | (485,772 | ) | (13,241,652 | ) | (492,856,437 | ) | |||||||||||
$ | (271,972 | ) | $ | (295 | ) | $ | (428,363 | ) | $ | (12,211,536 | ) | $ | (430,665,589 | ) | ||||||
$ | 3,570 | $ | — | $ | 9,183 | $ | 190,751 | $ | 9,444,000 | |||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
$ | 14 | $ | — | $ | 20 | $ | 104 | $ | 2,258 |
Annual Report 181
For the Year Ended December 31, 2018 | Lazard International Equity Select Portfolio | Lazard International Equity Value Portfolio (c) | |||||||||
Investment Income (Loss) | |||||||||||
Income | |||||||||||
Dividends* | $ | 2,156,165 | $ | 67,063 | |||||||
Expenses | |||||||||||
Management fees (Note 3) | 582,470 | 32,058 | |||||||||
Custodian fees | 77,074 | 9,852 | |||||||||
Distribution fees (Open Shares) | 5,322 | 23 | |||||||||
Administration fees | 19,532 | 2,948 | |||||||||
Shareholders’ reports | 12,341 | 484 | |||||||||
Professional services | 55,946 | 24,388 | |||||||||
Shareholders’ services | 25,447 | 1,140 | |||||||||
Directors’ fees and expenses | 7,565 | — | |||||||||
Registration fees | 42,008 | 651 | |||||||||
Amortization of offering costs (Note 2(f)) | — | 12,885 | |||||||||
Organization expenses (Note 2(f)) | — | 3,949 | |||||||||
Other^ | 7,057 | 374 | |||||||||
Total gross expenses | 834,762 | 88,752 | |||||||||
Management fees waived and expenses reimbursed | (12,542 | ) | (50,649 | ) | |||||||
Total net expenses | 822,220 | 38,103 | |||||||||
Net investment income (loss) | 1,333,945 | 28,960 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions | |||||||||||
Net realized gain (loss) on: | |||||||||||
Investments** | 371,516 | (672,351 | ) | ||||||||
Foreign currency transactions | (33,118 | ) | (24,139 | ) | |||||||
Total net realized gain (loss) on investments and foreign currency transactions | 338,398 | (696,490 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on: | |||||||||||
Investments† | (14,661,814 | ) | (1,462,728 | ) | |||||||
Foreign currency translations | (3,676 | ) | 202 | ||||||||
Total net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (14,665,490 | ) | (1,462,526 | ) | |||||||
Net realized and unrealized gain (loss) on investments and foreign currency transactions | (14,327,092 | ) | (2,159,016 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | (12,993,147 | ) | $ | (2,130,056 | ) | |||||
* | Net of foreign withholding taxes of | $ | 235,428 | $ | 2,697 | ||||||
** | Net of foreign capital gains taxes of | $ | — | $ | — | ||||||
† | Includes net change in unrealized appreciation(depreciation) of foreign capital gains taxes of | $ | — | $ | — | ||||||
^ | Includes interest on line of credit of | $ | 27 | $ | — |
(c) From the Portfolio’s commencement of operations on October 31, 2018.
The accompanying notes are an integral part of these financial statements.
182 Annual Report
Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | Lazard Managed Equity Volatility Portfolio | Lazard US Equity Concentrated Portfolio | Lazard US Equity Select Portfolio | ||||||||||||||||
$ | 1,573,715 | $ | 146,020,807 | $ | 459,781 | $ | 28,882,749 | $ | 1,545,012 | |||||||||||
563,046 | 50,780,330 | 114,695 | 10,728,742 | 562,996 | ||||||||||||||||
73,177 | 1,191,878 | 82,300 | 185,871 | 57,548 | ||||||||||||||||
80,630 | 2,643,299 | 782 | 175,885 | 2,486 | ||||||||||||||||
19,209 | 639,481 | 12,214 | 191,092 | 23,256 | ||||||||||||||||
9,550 | 371,154 | 3,226 | 69,062 | 11,545 | ||||||||||||||||
71,557 | 376,065 | 42,854 | 85,065 | 44,981 | ||||||||||||||||
28,804 | 176,948 | 24,207 | 64,159 | 36,709 | ||||||||||||||||
7,800 | 251,998 | 5,508 | 60,680 | 7,977 | ||||||||||||||||
35,460 | 89,611 | 35,755 | 75,671 | 38,717 | ||||||||||||||||
— | — | — | — | — | ||||||||||||||||
— | — | — | — | — | ||||||||||||||||
7,606 | 186,392 | 5,478 | 61,532 | 7,952 | ||||||||||||||||
896,839 | 56,707,156 | 327,019 | 11,697,759 | 794,167 | ||||||||||||||||
— | (19,420 | ) | (182,636 | ) | (11,740 | ) | (164,862 | ) | ||||||||||||
896,839 | 56,687,736 | 144,383 | 11,686,019 | 629,305 | ||||||||||||||||
676,876 | 89,333,071 | 315,398 | 17,196,730 | 915,707 | ||||||||||||||||
7,583,637 | 558,807,295 | (318,875 | ) | 74,632,752 | 7,992,281 | |||||||||||||||
(23,554 | ) | (3,053,109 | ) | 24,266 | — | — | ||||||||||||||
7,560,083 | 555,754,186 | (294,609 | ) | 74,632,752 | 7,992,281 | |||||||||||||||
(27,321,365 | ) | (1,299,771,167 | ) | (1,538,414 | ) | (172,165,758 | ) | (10,904,671 | ) | |||||||||||
(2,193 | ) | 115,729 | (249 | ) | — | — | ||||||||||||||
(27,323,558 | ) | (1,299,655,438 | ) | (1,538,663 | ) | (172,165,758 | ) | (10,904,671 | ) | |||||||||||
(19,763,475 | ) | (743,901,252 | ) | (1,833,272 | ) | (97,533,006 | ) | (2,912,390 | ) | |||||||||||
$ | (19,086,599 | ) | $ | (654,568,181 | ) | $ | (1,517,874 | ) | $ | (80,336,276 | ) | $ | (1,996,683 | ) | ||||||
$ | 140,797 | $ | 14,123,082 | $ | 29,696 | $ | — | $ | 1,031 | |||||||||||
$ | 93 | $ | — | $ | — | $ | — | $ | — | |||||||||||
$ | — | $ | 1,408,679 | $ | — | $ | — | $ | — | |||||||||||
$ | 499 | $ | — | $ | — | $ | 14,081 | $ | 99 |
Annual Report 183
For the Year Ended December 31, 2018 | Lazard US Realty Equity Portfolio | Lazard US Small-Mid Cap Equity Portfolio | ||||||||
Investment Income (Loss) | ||||||||||
Income | ||||||||||
Dividends | $ | 1,539,647 | $ | 2,294,402 | ||||||
Expenses | ||||||||||
Management fees (Note 3) | 452,237 | 1,401,317 | ||||||||
Custodian fees | 32,927 | 65,311 | ||||||||
Distribution fees (Open Shares) | 111,717 | 50,667 | ||||||||
Administration fees | 17,362 | 33,180 | ||||||||
Shareholders’ reports | 14,482 | 11,772 | ||||||||
Professional services | 46,759 | 47,146 | ||||||||
Shareholders’ services | 27,322 | 27,881 | ||||||||
Directors’ fees and expenses | 7,126 | 11,947 | ||||||||
Registration fees | 34,321 | 36,931 | ||||||||
Other^ | 3,776 | 10,327 | ||||||||
Total gross expenses | 748,029 | 1,696,479 | ||||||||
Management fees waived | (13,590 | ) | — | |||||||
Total net expenses | 734,439 | 1,696,479 | ||||||||
Net investment income (loss) | 805,208 | 597,923 | ||||||||
Net Realized and Unrealized Gain (Loss) on Investments | ||||||||||
Net realized gain (loss) on investments | 2,480,557 | 15,587,339 | ||||||||
Net change in unrealized appreciation (depreciation) on investments | (9,938,039 | )* | (36,201,275 | ) | ||||||
Net realized and unrealized gain (loss) on investments | (7,457,482 | ) | (20,613,936 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | $ | (6,652,274 | ) | $ | (20,016,013 | ) | ||||
^ Includes interest on line of credit of | $ | 648 | $ | 255 |
* | Includes net unrealized gain of $1,004,535 from acquisition of US Realty Income Portfolio, Refer to Note 11 in the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
184 Annual Report
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Annual Report 185
The Lazard Funds, Inc.Statements of Changes in Net Assets
Lazard Developing Markets Equity Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 2,230,118 | $ | 540,016 | |||||
Net realized gain (loss) on investments and foreign currency transactions | 11,062,804 | 25,214,996 | |||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (76,316,938 | ) | 54,811,816 | ||||||
Net increase (decrease) in net assets resulting from operations | (63,024,016 | ) | 80,566,828 | ||||||
Distributions to shareholders (Note 2(e)) | |||||||||
Net investment income and net realized gains | |||||||||
Institutional Shares | (1,769,297 | ) | (545,028 | ) | |||||
Open Shares | (72,262 | ) | — | ||||||
R6 Shares | — | — | |||||||
Return of capital | |||||||||
Institutional Shares | — | — | |||||||
Open Shares | — | — | |||||||
Net decrease in net assets resulting from distributions | (1,841,559 | ) | (545,028 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 109,622,584 | 78,511,154 | |||||||
Open Shares | 4,292,325 | 5,394,446 | |||||||
R6 Shares | — | — | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 1,162,422 | 415,178 | |||||||
Open Shares | 69,269 | — | |||||||
R6 Shares | — | — | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (102,082,155 | ) | (76,215,062 | ) | |||||
Open Shares | (7,115,548 | ) | (3,135,641 | ) | |||||
R6 Shares | — | — | |||||||
Net increase (decrease) in net assets from capital stock transactions | 5,948,897 | 4,970,075 | |||||||
Total increase (decrease) in net assets | (58,916,678 | ) | 84,991,875 | ||||||
Net assets at beginning of period | 281,299,314 | 196,307,439 | |||||||
Net assets at end of period | $ | 222,382,636 | $ | 281,299,314 |
The accompanying notes are an integral part of these financial statements.
186 Annual Report
Lazard Emerging Markets Core Equity Portfolio | Lazard Emerging Markets Equity Advantage Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 3,782,203 | $ | 1,663,930 | $ | 67,358 | $ | 42,959 | |||||||||
8,124,073 | 874,343 | 168,585 | 259,029 | |||||||||||||
(67,542,603 | ) | 52,693,224 | (998,827 | ) | 1,003,926 | |||||||||||
(55,636,327 | ) | 55,231,497 | (762,884 | ) | 1,305,914 | |||||||||||
(3,760,098 | ) | (1,586,481 | ) | (69,604 | ) | (45,503 | ) | |||||||||
(23,933 | ) | (6,719 | ) | (9,266 | ) | (2,873 | ) | |||||||||
(6,411 | ) | — | — | — | ||||||||||||
— | — | (4,975 | ) | (2,064 | ) | |||||||||||
— | — | (662 | ) | (130 | ) | |||||||||||
(3,790,442 | ) | (1,593,200 | ) | (84,507 | ) | (50,570 | ) | |||||||||
139,344,970 | 85,403,283 | 682,689 | 74,003 | |||||||||||||
1,474,772 | 868,346 | 410,412 | 190,542 | |||||||||||||
620,586 | — | — | — | |||||||||||||
3,136,183 | 1,345,985 | 74,579 | 47,567 | |||||||||||||
23,781 | 6,640 | 9,928 | 3,003 | |||||||||||||
6,411 | — | — | — | |||||||||||||
(105,969,725 | ) | (32,647,462 | ) | (1,100,816 | ) | (20,514 | ) | |||||||||
(1,017,541 | ) | (169,401 | ) | (194,160 | ) | (18,223 | ) | |||||||||
(60,674 | ) | — | — | — | ||||||||||||
37,558,763 | 54,807,391 | (117,368 | ) | 276,378 | ||||||||||||
(21,868,006 | ) | 108,445,688 | (964,759 | ) | 1,531,722 | |||||||||||
232,170,150 | 123,724,462 | 4,546,991 | 3,015,269 | |||||||||||||
$ | 210,302,144 | $ | 232,170,150 | $ | 3,582,232 | $ | 4,546,991 |
Annual Report 187
Lazard Developing Markets Equity Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 18,562,591 | 18,387,759 | |||||||
Shares sold | 8,208,714 | 6,432,207 | |||||||
Shares issued to shareholders from reinvestment of distributions | 92,256 | 29,197 | |||||||
Shares redeemed | (8,027,011 | ) | (6,286,572 | ) | |||||
Net increase (decrease) | 273,959 | 174,832 | |||||||
Shares outstanding at end of period | 18,836,550 | 18,562,591 | |||||||
Open Shares | |||||||||
Shares outstanding at beginning of period | 869,884 | 707,429 | |||||||
Shares sold | 308,910 | 420,603 | |||||||
Shares issued to shareholders from reinvestment of distributions | 5,519 | — | |||||||
Shares redeemed | (544,750 | ) | (258,148 | ) | |||||
Net increase (decrease) | (230,321 | ) | 162,455 | ||||||
Shares outstanding at end of period | 639,563 | 869,884 | |||||||
R6 Shares† | |||||||||
Shares outstanding at beginning of period | — | — | |||||||
Shares sold | — | — | |||||||
Shares issued to shareholders from reinvestment of distributions | — | — | |||||||
Shares redeemed | — | — | |||||||
Net increase (decrease) | — | — | |||||||
Shares outstanding at end of period | — | — |
† | The inception date for the Emerging Markets Core Equity Portfolio R6 Shares was April 6, 2018. |
The accompanying notes are an integral part of these financial statements.
188 Annual Report
Lazard Emerging Markets Core Equity Portfolio | Lazard Emerging Markets Equity Advantage Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
18,723,561 | 13,928,987 | 341,687 | 332,573 | |||||||||||||
11,637,703 | 7,668,413 | 61,001 | 7,161 | |||||||||||||
323,559 | 111,106 | 7,564 | 3,944 | |||||||||||||
(9,653,630 | ) | (2,984,945 | ) | (100,642 | ) | (1,991 | ) | |||||||||
2,307,632 | 4,794,574 | (32,077 | ) | 9,114 | ||||||||||||
21,031,193 | 18,723,561 | 309,610 | 341,687 | |||||||||||||
148,907 | 82,765 | 29,020 | 13,749 | |||||||||||||
129,653 | 81,829 | 33,843 | 16,642 | |||||||||||||
2,458 | 550 | 1,007 | 249 | |||||||||||||
(93,183 | ) | (16,237 | ) | (16,488 | ) | (1,620 | ) | |||||||||
38,928 | 66,142 | 18,362 | 15,271 | |||||||||||||
187,835 | 148,907 | 47,382 | 29,020 | |||||||||||||
— | — | — | — | |||||||||||||
54,318 | — | — | — | |||||||||||||
661 | — | — | — | |||||||||||||
(5,038 | ) | — | — | — | ||||||||||||
49,941 | — | — | — | |||||||||||||
49,941 | — | — | — |
Annual Report 189
Lazard Emerging Markets Equity Blend Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 5,014,573 | $ | 3,122,251 | |||||
Net realized gain (loss) on investments, non-controlled affiliated issuers and foreign currency transactions | 7,815,785 | 41,961,099 | |||||||
Net change in unrealized appreciation (depreciation) on investments, non-controlled affiliated issuers and foreign currency translations | (95,667,829 | ) | 59,343,281 | ||||||
Net increase (decrease) in net assets resulting from operations | (82,837,471 | ) | 104,426,631 | ||||||
Distributions to shareholders (Note 2(e)) | |||||||||
Institutional Shares | (5,376,473 | ) | (3,582,638 | ) | |||||
Open Shares | (90,707 | ) | (54,048 | ) | |||||
R6 Shares | — | — | |||||||
Net decrease in net assets resulting from distributions | (5,467,180 | ) | (3,636,686 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 61,509,551 | 52,451,495 | |||||||
Open Shares | 2,180,238 | 2,400,025 | |||||||
R6 Shares | — | — | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 5,295,445 | 3,521,619 | |||||||
Open Shares | 89,138 | 52,594 | |||||||
R6 Shares | — | — | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (74,641,893 | ) | (51,346,472 | ) | |||||
Open Shares | (3,743,056 | ) | (1,926,477 | ) | |||||
R6 Shares | — | — | |||||||
Net increase (decrease) in net assets from capital stock transactions | (9,310,577 | ) | 5,152,784 | ||||||
Total increase (decrease) in net assets | (97,615,228 | ) | 105,942,729 | ||||||
Net assets at beginning of period | 395,219,516 | 289,276,787 | |||||||
Net assets at end of period | $ | 297,604,288 | $ | 395,219,516 |
The accompanying notes are an integral part of these financial statements.
190 Annual Report
Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 (a) | |||||||||||||
$ | 240,361,347 | $ | 232,149,086 | $ | 156,813 | $ | 16,773 | |||||||||
83,373,211 | 313,691,860 | 655,895 | 42,187 | |||||||||||||
(2,584,037,244 | ) | 2,560,467,147 | (1,249,640 | ) | 164,664 | |||||||||||
(2,260,302,686 | ) | 3,106,308,093 | (436,932 | ) | 223,624 | |||||||||||
(161,807,179 | ) | (226,996,334 | ) | (840,278 | ) | (23,920 | ) | |||||||||
(18,476,071 | ) | (25,915,499 | ) | (17,593 | ) | (394 | ) | |||||||||
(5,115,396 | ) | (7,709,553 | ) | — | — | |||||||||||
(185,398,646 | ) | (260,621,386 | ) | (857,871 | ) | (24,314 | ) | |||||||||
1,966,180,706 | 2,397,757,706 | 3,799,029 | 5,344,107 | |||||||||||||
306,879,204 | 235,224,321 | 133,054 | 108,930 | |||||||||||||
31,823,654 | 206,333,563 | — | — | |||||||||||||
151,836,697 | 209,533,744 | 840,278 | 23,919 | |||||||||||||
18,130,779 | 25,363,644 | 17,593 | 394 | |||||||||||||
3,561,076 | 5,546,775 | — | — | |||||||||||||
(3,712,443,436 | ) | (3,081,652,165 | ) | (598,862 | ) | (147 | ) | |||||||||
(575,821,409 | ) | (357,782,554 | ) | (41,913 | ) | — | ||||||||||
(107,150,726 | ) | (109,573,255 | ) | — | — | |||||||||||
(1,917,003,455 | ) | (469,248,221 | ) | 4,149,179 | 5,477,203 | |||||||||||
(4,362,704,787 | ) | 2,376,438,486 | 2,854,376 | 5,676,513 | ||||||||||||
13,173,641,595 | 10,797,203,109 | 5,676,513 | — | |||||||||||||
$ | 8,810,936,808 | $ | 13,173,641,595 | $ | 8,530,889 | $ | 5,676,513 |
Annual Report 191
Lazard Emerging Markets Equity Blend Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 29,825,093 | 29,418,600 | |||||||
Shares sold | 5,068,945 | 4,610,925 | |||||||
Shares issued to shareholders from reinvestment of distributions | 536,388 | 277,075 | |||||||
Shares redeemed | (6,346,225 | ) | (4,481,507 | ) | |||||
Net increase (decrease) | (740,892 | ) | 406,493 | ||||||
Shares outstanding at end of period | 29,084,201 | 29,825,093 | |||||||
Open Shares | |||||||||
Shares outstanding at beginning of period | 751,456 | 707,428 | |||||||
Shares sold | 174,662 | 207,312 | |||||||
Shares issued to shareholders from reinvestment of distributions | 9,005 | 4,131 | |||||||
Shares redeemed | (317,252 | ) | (167,415 | ) | |||||
Net increase (decrease) | (133,585 | ) | 44,028 | ||||||
Shares outstanding at end of period | 617,871 | 751,456 | |||||||
R6 Shares | |||||||||
Shares outstanding at beginning of period | — | — | |||||||
Shares sold | — | — | |||||||
Shares issued to shareholders from reinvestment of distributions | — | — | |||||||
Shares redeemed | — | — | |||||||
Net increase (decrease) | — | — | |||||||
Shares outstanding at end of period | — | — |
(a) | The Portfolio commenced operations on September 29, 2017. |
The accompanying notes are an integral part of these financial statements.
192 Annual Report
Lazard Emerging Markets Equity Portfolio | Lazard Equity Franchise Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 (a) | |||||||||||||
563,580,657 | 583,417,967 | 536,277 | — | |||||||||||||
104,450,860 | 135,632,859 | 366,709 | 534,004 | |||||||||||||
9,444,619 | 10,790,481 | 96,662 | 2,287 | |||||||||||||
(205,887,354 | ) | (166,260,650 | ) | (56,601 | ) | (14 | ) | |||||||||
(91,991,875 | ) | (19,837,310 | ) | 406,770 | 536,277 | |||||||||||
471,588,782 | 563,580,657 | 943,047 | 536,277 | |||||||||||||
73,583,131 | 78,456,674 | 10,687 | — | |||||||||||||
16,934,111 | 12,723,698 | 12,698 | 10,650 | |||||||||||||
1,095,146 | 1,272,648 | 2,021 | 37 | |||||||||||||
(30,835,815 | ) | (18,869,889 | ) | (3,951 | ) | — | ||||||||||
(12,806,558 | ) | (4,873,543 | ) | 10,768 | 10,687 | |||||||||||
60,776,573 | 73,583,131 | 21,455 | 10,687 | |||||||||||||
18,608,156 | 12,405,126 | — | — | |||||||||||||
1,671,090 | 11,657,944 | — | — | |||||||||||||
221,226 | 285,927 | — | — | |||||||||||||
(6,021,304 | ) | (5,740,841 | ) | — | — | |||||||||||
(4,128,988 | ) | 6,203,030 | — | — | ||||||||||||
14,479,168 | 18,608,156 | — | — |
Annual Report 193
Lazard Global Equity Select Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Increase (Decrease) in Net Assets | ||||||||||
Operations | ||||||||||
Net investment income (loss) | $ | 472,082 | $ | 258,710 | ||||||
Net realized gain (loss) on investments, foreign currency transactions and forward currency contracts | 1,129,110 | 2,537,185 | ||||||||
Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and forward currency contracts | (6,721,129 | ) | 7,975,828 | |||||||
Net increase (decrease) in net assets resulting from operations | (5,119,937 | ) | 10,771,723 | |||||||
Distributions to shareholders (Note 2(e)) | ||||||||||
Net investment income and net realized gains | ||||||||||
Institutional Shares | (2,021,764 | ) | (2,006,775 | ) | ||||||
Open Shares | (21,670 | ) | (24,026 | ) | ||||||
Return of capital | ||||||||||
Institutional Shares | (55,115 | ) | — | |||||||
Open Shares | (591 | ) | — | |||||||
Net decrease in net assets resulting from distributions | (2,099,140 | ) | (2,030,801 | ) | ||||||
Capital stock transactions | ||||||||||
Net proceeds from sales | ||||||||||
Institutional Shares | 27,026,953 | 26,989,184 | ||||||||
Open Shares | 183,864 | 76,128 | ||||||||
Net proceeds from reinvestment of distributions | ||||||||||
Institutional Shares | 2,076,864 | 2,006,754 | ||||||||
Open Shares | 22,261 | 24,026 | ||||||||
Cost of shares redeemed | ||||||||||
Institutional Shares | (14,792,583 | ) | (10,607,033 | ) | ||||||
Open Shares | (65,826 | ) | (29,426 | ) | ||||||
Net increase (decrease) in net assets from capital stock transactions | 14,451,533 | 18,459,633 | ||||||||
Total increase (decrease) in net assets | 7,232,456 | 27,200,555 | ||||||||
Net assets at beginning of period | 58,912,444 | 31,711,889 | ||||||||
Net assets at end of period | $ | 66,144,900 | $ | 58,912,444 | ||||||
Shares issued and redeemed | ||||||||||
Institutional Shares | ||||||||||
Shares outstanding at beginning of period | 4,464,645 | 2,962,172 | ||||||||
Shares sold | 2,056,703 | 2,230,573 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 179,116 | 154,485 | ||||||||
Shares redeemed | (1,122,658 | ) | (882,585 | ) | ||||||
Net increase (decrease) | 1,113,161 | 1,502,473 | ||||||||
Shares outstanding at end of period | 5,577,806 | 4,464,645 | ||||||||
Open Shares | ||||||||||
Shares outstanding at beginning of period | 54,514 | 48,903 | ||||||||
Shares sold | 13,747 | 6,158 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 1,916 | 1,848 | ||||||||
Shares redeemed | (5,128 | ) | (2,395 | ) | ||||||
Net increase (decrease) | 10,535 | 5,611 | ||||||||
Shares outstanding at end of period | 65,049 | 54,514 |
(b) | The Portfolio was liquidated on December 31, 2018. |
The accompanying notes are an integral part of these financial statements.
194 Annual Report
Lazard Global Listed Infrastructure Portfolio | Lazard Global Realty Equity Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 (b) | Year Ended December 31, 2017 | |||||||||||||
$ | 138,893,718 | $ | 113,031,895 | $ | 105,372 | $ | 96,143 | |||||||||
474,528,611 | 197,470,588 | (301,691 | ) | 199,586 | ||||||||||||
(836,415,967 | ) | 467,074,965 | (412,510 | ) | 354,379 | |||||||||||
(222,993,638 | ) | 777,577,448 | (608,829 | ) | 650,108 | |||||||||||
(630,234,998 | ) | (307,407,250 | ) | (75,795 | ) | (167,608 | ) | |||||||||
(56,258,605 | ) | (43,380,367 | ) | (26,309 | ) | (56,301 | ) | |||||||||
— | — | — | — | |||||||||||||
— | — | — | — | |||||||||||||
(686,493,603 | ) | (350,787,617 | ) | (102,104 | ) | (223,909 | ) | |||||||||
2,344,513,648 | 2,047,406,028 | — | 1,000,001 | |||||||||||||
148,282,804 | 442,199,716 | 21,068 | 137,466 | |||||||||||||
504,145,256 | 263,569,592 | 75,795 | 167,608 | |||||||||||||
55,689,132 | 42,974,115 | 24,420 | 52,265 | |||||||||||||
(1,871,789,545 | ) | (834,047,015 | ) | (3,375,986 | ) | (76,128 | ) | |||||||||
(331,531,149 | ) | (371,380,188 | ) | (1,227,839 | ) | (516,531 | ) | |||||||||
849,310,146 | 1,590,722,248 | (4,482,542 | ) | 764,681 | ||||||||||||
(60,177,095 | ) | 2,017,512,079 | (5,193,475 | ) | 1,190,880 | |||||||||||
5,411,285,785 | 3,393,773,706 | 5,193,475 | 4,002,595 | |||||||||||||
$ | 5,351,108,690 | $ | 5,411,285,785 | $ | — | $ | 5,193,475 | |||||||||
298,732,092 | 206,858,471 | 246,774 | 172,535 | |||||||||||||
154,668,026 | 126,908,791 | — | 68,213 | |||||||||||||
35,491,935 | 16,317,320 | 5,132 | 10,967 | |||||||||||||
(124,384,704 | ) | (51,352,490 | ) | (251,906 | ) | (4,941 | ) | |||||||||
65,775,257 | 91,873,621 | (246,774 | ) | 74,239 | ||||||||||||
364,507,349 | 298,732,092 | — | 246,774 | |||||||||||||
39,560,407 | 32,579,713 | 87,901 | 110,297 | |||||||||||||
9,614,733 | 27,109,459 | 1,413 | 9,223 | |||||||||||||
3,911,178 | 2,652,932 | 1,658 | 3,425 | |||||||||||||
(21,526,219 | ) | (22,781,697 | ) | (90,972 | ) | (35,044 | ) | |||||||||
(8,000,308 | ) | 6,980,694 | (87,901 | ) | (22,396 | ) | ||||||||||
31,560,099 | 39,560,407 | — | 87,901 |
Annual Report 195
Lazard Global Strategic Equity Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Increase (Decrease) in Net Assets | ||||||||||
Operations | ||||||||||
Net investment income (loss) | $ | 16,927 | $ | 113,832 | ||||||
Net realized gain (loss) on investments and foreign currency transactions | 108,933 | 3,246,916 | ||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (397,832 | ) | (241,599 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | (271,972 | ) | 3,119,149 | |||||||
Distributions to shareholders (Note 2(e)) | ||||||||||
Institutional Shares | (620,429 | ) | (2,330,701 | ) | ||||||
Open Shares | (33,292 | ) | (117,419 | ) | ||||||
Net decrease in net assets resulting from distributions | (653,721 | ) | (2,448,120 | ) | ||||||
Capital stock transactions | ||||||||||
Net proceeds from sales | ||||||||||
Institutional Shares | 97,922 | 11,001 | ||||||||
Open Shares | 6,946 | 21,042 | ||||||||
Net proceeds from reinvestment of distributions | ||||||||||
Institutional Shares | 620,429 | 2,330,702 | ||||||||
Open Shares | 33,292 | 117,418 | ||||||||
Cost of shares redeemed | ||||||||||
Institutional Shares | (85,002 | ) | (20,168,629 | ) | ||||||
Open Shares | (10,368 | ) | (13,481 | ) | ||||||
Net increase (decrease) in net assets from capital stock transactions | 663,219 | (17,701,947 | ) | |||||||
Total increase (decrease) in net assets | (262,474 | ) | (17,030,918 | ) | ||||||
Net assets at beginning of period | 2,899,165 | �� | 19,930,083 | |||||||
Net assets at end of period | $ | 2,636,691 | $ | 2,899,165 | ||||||
Shares issued and redeemed | ||||||||||
Institutional Shares | ||||||||||
Shares outstanding at beginning of period | 1,190,583 | 2,065,337 | ||||||||
Shares sold | 43,028 | 946 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 334,204 | 974,961 | ||||||||
Shares redeemed | (36,977 | ) | (1,850,661 | ) | ||||||
Net increase (decrease) | 340,255 | (874,754 | ) | |||||||
Shares outstanding at end of period | 1,530,838 | 1,190,583 | ||||||||
Open Shares | ||||||||||
Shares outstanding at beginning of period | 64,619 | 11,910 | ||||||||
Shares sold | 2,964 | 3,688 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 18,057 | 50,340 | ||||||||
Shares redeemed | (4,862 | ) | (1,319 | ) | ||||||
Net increase (decrease) | 16,159 | 52,709 | ||||||||
Shares outstanding at end of period | 80,778 | 64,619 |
(c) | The Portfolio commenced operations on December 31, 2018. |
The accompanying notes are an integral part of these financial statements.
196 Annual Report
Lazard International Compounders Portfolio | Lazard International Equity Advantage Portfolio | |||||||||||||
Period Ended December 31, 2018 (c) | Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||||||
$ | — | $ | 57,409 | $ | 44,930 | |||||||||
— | 76,385 | 138,984 | ||||||||||||
(295 | ) | (562,157 | ) | 338,439 | ||||||||||
(295 | ) | (428,363 | ) | 522,353 | ||||||||||
— | (102,427 | ) | (48,334 | ) | ||||||||||
— | (4,439 | ) | (1,892 | ) | ||||||||||
— | (106,866 | ) | (50,226 | ) | ||||||||||
149,000 | 500 | 50,001 | ||||||||||||
1,000 | 11 | — | ||||||||||||
— | 102,427 | 48,334 | ||||||||||||
— | 4,439 | 1,892 | ||||||||||||
— | (47,991 | ) | (9,922 | ) | ||||||||||
— | (11 | ) | — | |||||||||||
150,000 | 59,375 | 90,305 | ||||||||||||
149,705 | (475,854 | ) | 562,432 | |||||||||||
— | 2,623,916 | 2,061,484 | ||||||||||||
$ | 149,705 | $ | 2,148,062 | $ | 2,623,916 | |||||||||
— | 229,680 | 221,034 | ||||||||||||
14,900 | 45 | 5,171 | ||||||||||||
— | 11,722 | 4,442 | ||||||||||||
— | (5,542 | ) | (967 | ) | ||||||||||
14,900 | 6,225 | 8,646 | ||||||||||||
14,900 | 235,905 | 229,680 | ||||||||||||
— | 10,599 | 10,425 | ||||||||||||
100 | 1 | — | ||||||||||||
— | 507 | 174 | ||||||||||||
— | (1 | ) | — | |||||||||||
100 | 507 | 174 | ||||||||||||
100 | 11,106 | 10,599 |
Annual Report 197
Lazard International Equity Concentrated Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Increase (Decrease) in Net Assets | ||||||||||
Operations | ||||||||||
Net investment income (loss) | $ | 1,030,116 | $ | 625,838 | ||||||
Net realized gain (loss) on investments and foreign currency transactions | (539,632 | ) | 1,615,858 | |||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (12,702,020 | ) | 6,674,505 | |||||||
Net increase (decrease) in net assets resulting from operations | (12,211,536 | ) | 8,916,201 | |||||||
Distributions to shareholders (Note 2(e)) | ||||||||||
Net investment income and net realized gains | ||||||||||
Institutional Shares | (2,385,665 | ) | (638,073 | ) | ||||||
Open Shares | (17,538 | ) | (1,420 | ) | ||||||
R6 Shares | — | — | ||||||||
Return of capital | ||||||||||
Institutional Shares | — | — | ||||||||
Open Shares | — | — | ||||||||
Net decrease in net assets resulting from distributions | (2,403,203 | ) | (639,493 | ) | ||||||
Capital stock transactions | ||||||||||
Net proceeds from sales | ||||||||||
Institutional Shares | 15,603,350 | 51,698,119 | ||||||||
Open Shares | 267,250 | 146,561 | ||||||||
R6 Shares | — | — | ||||||||
Net proceeds from reinvestment of distributions | ||||||||||
Institutional Shares | 2,339,572 | 633,613 | ||||||||
Open Shares | 17,538 | 1,420 | ||||||||
R6 Shares | — | — | ||||||||
Cost of shares redeemed | ||||||||||
Institutional Shares | (23,748,931 | ) | (6,607,152 | ) | ||||||
Open Shares | (19,451 | ) | (76,575 | ) | ||||||
R6 Shares | — | — | ||||||||
Net increase (decrease) in net assets from capital stock transactions | (5,540,672 | ) | 45,795,986 | |||||||
Total increase (decrease) in net assets | (20,155,411 | ) | 54,072,694 | |||||||
Net assets at beginning of period | 69,659,624 | 15,586,930 | ||||||||
Net assets at end of period | $ | 49,504,213 | $ | 69,659,624 |
The accompanying notes are an integral part of these financial statements.
198 Annual Report
Lazard International Equity Portfolio | Lazard International Equity Select Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 62,190,848 | $ | 52,708,694 | $ | 1,333,945 | $ | 572,633 | |||||||||
132,220,543 | 4,883,307 | 338,398 | 967,480 | |||||||||||||
(625,076,980 | ) | 643,178,411 | (14,665,490 | ) | 9,382,645 | |||||||||||
(430,665,589 | ) | 700,770,412 | (12,993,147 | ) | 10,922,758 | |||||||||||
(162,037,288 | ) | (37,101,517 | ) | (1,895,320 | ) | (326,389 | ) | |||||||||
(16,140,086 | ) | (6,787,026 | ) | (30,210 | ) | (10,427 | ) | |||||||||
(9,585,071 | ) | (9,812,446 | ) | — | — | |||||||||||
— | — | — | — | |||||||||||||
— | — | — | — | |||||||||||||
(187,762,445 | ) | (53,700,989 | ) | (1,925,530 | ) | (336,816 | ) | |||||||||
692,426,011 | 1,609,287,090 | 65,277,340 | 27,547,397 | |||||||||||||
71,811,533 | 279,622,992 | 1,202,007 | 427,893 | |||||||||||||
51,158,456 | 619,962,012 | — | — | |||||||||||||
135,295,299 | 31,790,226 | 1,746,591 | 266,756 | |||||||||||||
14,706,387 | 6,454,617 | 30,210 | 9,239 | |||||||||||||
9,585,071 | 9,812,446 | — | — | |||||||||||||
(1,024,041,994 | ) | (715,965,738 | ) | (31,783,405 | ) | (12,174,649 | ) | |||||||||
(80,776,096 | ) | (1,233,044,805 | ) | (2,229,497 | ) | (293,819 | ) | |||||||||
(619,023,756 | ) | (115,088,363 | ) | — | — | |||||||||||
(748,859,089 | ) | 492,830,477 | 34,243,246 | 15,782,817 | ||||||||||||
(1,367,287,123 | ) | 1,139,899,900 | 19,324,569 | 26,368,759 | ||||||||||||
3,804,020,354 | 2,664,120,454 | 56,759,749 | 30,390,990 | |||||||||||||
$ | 2,436,733,231 | $ | 3,804,020,354 | $ | 76,084,318 | $ | 56,759,749 |
Annual Report 199
Lazard International Equity Concentrated Portfolio | ||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||
Shares issued and redeemed | ||||||||||
Institutional Shares | ||||||||||
Shares outstanding at beginning of period | 6,658,885 | 1,811,118 | ||||||||
Shares sold | 1,557,217 | 5,480,279 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 286,268 | 61,515 | ||||||||
Shares redeemed | (2,614,119 | ) | (694,027 | ) | ||||||
Net increase (decrease) | (770,634 | ) | 4,847,767 | |||||||
Shares outstanding at end of period | 5,888,251 | 6,658,885 | ||||||||
Open Shares | ||||||||||
Shares outstanding at beginning of period | 21,011 | 13,327 | ||||||||
Shares sold | 26,848 | 15,550 | ||||||||
Shares issued to shareholders from reinvestment of distributions | 2,144 | 138 | ||||||||
Shares redeemed | (2,234 | ) | (8,004 | ) | ||||||
Net increase (decrease) | 26,758 | 7,684 | ||||||||
Shares outstanding at end of period | 47,769 | 21,011 | ||||||||
R6 Shares | ||||||||||
Shares outstanding at beginning of period | — | — | ||||||||
Shares sold | — | — | ||||||||
Shares issued to shareholders from reinvestment of distributions | — | — | ||||||||
Shares redeemed | — | — | ||||||||
Net increase (decrease) | — | — | ||||||||
Shares outstanding at end of period | — | — |
The accompanying notes are an integral part of these financial statements.
200 Annual Report
Lazard International Equity Portfolio | Lazard International Equity Select Portfolio | ||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||||||
144,593,511 | 93,319,210 | 4,895,525 | 3,271,065 | ||||||||||||
36,738,628 | 88,541,076 | 6,149,590 | 2,854,325 | ||||||||||||
8,719,524 | 1,648,820 | 187,099 | 26,307 | ||||||||||||
(55,923,190 | ) | (38,915,595 | ) | (3,059,643 | ) | (1,256,172 | ) | ||||||||
(10,465,038 | ) | 51,274,301 | 3,277,046 | 1,624,460 | |||||||||||
134,128,473 | 144,593,511 | 8,172,571 | 4,895,525 | ||||||||||||
13,869,285 | 65,536,029 | 256,624 | 241,443 | ||||||||||||
3,733,499 | 14,688,275 | 113,077 | 43,876 | ||||||||||||
936,334 | 339,995 | 3,261 | 908 | ||||||||||||
(4,202,818 | ) | (66,695,014 | ) | (209,201 | ) | (29,603 | ) | ||||||||
467,015 | (51,666,744 | ) | (92,863 | ) | 15,181 | ||||||||||
14,336,300 | 13,869,285 | 163,761 | 256,624 | ||||||||||||
35,418,952 | 4,890,072 | — | — | ||||||||||||
2,684,577 | 36,289,913 | — | — | ||||||||||||
618,559 | 511,373 | — | — | ||||||||||||
(31,918,706 | ) | (6,272,406 | ) | — | — | ||||||||||
(28,615,570 | ) | 30,528,880 | — | — | |||||||||||
6,803,382 | 35,418,952 | — | — |
Annual Report 201
Lazard International Equity Value Portfolio | |||||
Period Ended December 31, 2018 (d) | |||||
Increase (Decrease) in Net Assets | |||||
Operations | |||||
Net investment income (loss) | $ | 28,960 | |||
Net realized gain (loss) on investments and foreign currency transactions | (696,490 | ) | |||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (1,462,526 | ) | |||
Net increase (decrease) in net assets resulting from operations | (2,130,056 | ) | |||
Distributions to shareholders (Note 2(e)) | |||||
Institutional Shares | (26,179 | ) | |||
Open Shares | (36 | ) | |||
R6 Shares | — | ||||
Net decrease in net assets resulting from distributions | (26,215 | ) | |||
Capital stock transactions | |||||
Net proceeds from sales | |||||
Institutional Shares | 25,094,341 | ||||
Open Shares | 94,078 | ||||
R6 Shares | — | ||||
Net proceeds from reinvestment of distributions | |||||
Institutional Shares | 26,179 | ||||
Open Shares | 36 | ||||
R6 Shares | — | ||||
Cost of shares redeemed | |||||
Institutional Shares | (26,571 | ) | |||
Open Shares | (47,885 | ) | |||
R6 Shares | — | ||||
Net increase (decrease) in net assets from capital stock transactions | 25,140,178 | ||||
Total increase (decrease) in net assets | 22,983,907 | ||||
Net assets at beginning of period | — | ||||
Net assets at end of period | $ | 22,983,907 |
The accompanying notes are an integral part of these financial statements.
202 Annual Report
Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | ||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||||||
$ | 676,876 | $ | 581,526 | $ | 89,333,071 | $ | 79,666,900 | ||||||||
7,560,083 | 6,230,274 | 555,754,186 | 322,221,811 | ||||||||||||
(27,323,558 | ) | 17,988,019 | (1,299,655,438 | ) | 1,282,558,739 | ||||||||||
(19,086,599 | ) | 24,799,819 | (654,568,181 | ) | 1,684,447,450 | ||||||||||
(1,675,001 | ) | — | (390,962,878 | ) | (76,161,214 | ) | |||||||||
(844,717 | ) | — | (67,997,086 | ) | (12,527,283 | ) | |||||||||
— | — | (8,298,386 | ) | (1,402,962 | ) | ||||||||||
(2,519,718 | ) | — | (467,258,350 | ) | (90,091,459 | ) | |||||||||
22,184,618 | 7,432,344 | 1,191,814,486 | 987,508,397 | ||||||||||||
5,161,365 | 5,933,441 | 220,196,653 | 222,062,681 | ||||||||||||
— | — | 25,261,981 | 22,635,019 | ||||||||||||
1,671,063 | — | 377,793,204 | 71,783,902 | ||||||||||||
765,533 | — | 62,572,751 | 11,206,995 | ||||||||||||
— | — | 8,184,877 | 1,402,962 | ||||||||||||
(16,237,337 | ) | (15,138,177 | ) | (1,912,545,919 | ) | (1,522,608,879 | ) | ||||||||
(20,181,718 | ) | (20,970,648 | ) | (503,144,624 | ) | (918,633,394 | ) | ||||||||
— | — | (26,460,064 | ) | (32,942,261 | ) | ||||||||||
(6,636,476 | ) | (22,743,040 | ) | (556,326,655 | ) | (1,157,584,578 | ) | ||||||||
(28,242,793 | ) | 2,056,779 | (1,678,153,186 | ) | 436,771,413 | ||||||||||
83,628,992 | 81,572,213 | 7,238,428,668 | 6,801,657,255 | ||||||||||||
$ | 55,386,199 | $ | 83,628,992 | $ | 5,560,275,482 | $ | 7,238,428,668 |
Annual Report 203
Lazard International Equity Value Portfolio | |||||
Period Ended December 31, 2018 (d) | |||||
Shares issued and redeemed | |||||
Institutional Shares | |||||
Shares outstanding at beginning of period | — | ||||
Shares sold | 2,509,986 | ||||
Shares issued to shareholders from reinvestment of distributions | 2,928 | ||||
Shares redeemed | (2,917 | ) | |||
Net increase (decrease) | 2,509,997 | ||||
Shares outstanding at end of period | 2,509,997 | ||||
Open Shares | |||||
Shares outstanding at beginning of period | — | ||||
Shares sold | 9,423 | ||||
Shares issued to shareholders from reinvestment of distributions | 4 | ||||
Shares redeemed | (5,216 | ) | |||
Net increase (decrease) | 4,211 | ||||
Shares outstanding at end of period | 4,211 | ||||
R6 Shares | |||||
Shares outstanding at beginning of period | — | ||||
Shares sold | — | ||||
Shares issued to shareholders from reinvestment of distributions | — | ||||
Shares redeemed | — | ||||
Net increase (decrease) | — | ||||
Shares outstanding at end of period | — |
(d) | The Portfolio commenced operations on October 31, 2018. |
The accompanying notes are an integral part of these financial statements.
204 Annual Report
Lazard International Small Cap Equity Portfolio | Lazard International Strategic Equity Portfolio | ||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||||||
2,993,040 | 3,668,073 | 376,589,551 | 410,970,431 | ||||||||||||
1,656,082 | 612,273 | 76,867,462 | 71,517,376 | ||||||||||||
146,870 | — | 29,898,424 | 4,595,640 | ||||||||||||
(1,266,326 | ) | (1,287,306 | ) | (124,128,251 | ) | (110,493,896 | ) | ||||||||
536,626 | (675,033 | ) | (17,362,365 | ) | (34,380,880 | ) | |||||||||
3,529,666 | 2,993,040 | 359,227,186 | 376,589,551 | ||||||||||||
3,064,171 | 4,385,394 | 76,885,738 | 126,809,001 | ||||||||||||
401,822 | 510,938 | 14,094,427 | 16,084,578 | ||||||||||||
68,202 | — | 4,909,122 | 711,555 | ||||||||||||
(1,502,597 | ) | (1,832,161 | ) | (31,879,534 | ) | (66,719,396 | ) | ||||||||
(1,032,573 | ) | (1,321,223 | ) | (12,875,985 | ) | (49,923,263 | ) | ||||||||
2,031,598 | 3,064,171 | 64,009,753 | 76,885,738 | ||||||||||||
— | — | 7,026,668 | 7,730,925 | ||||||||||||
— | — | 1,599,586 | 1,686,785 | ||||||||||||
— | — | 647,215 | 89,761 | ||||||||||||
— | — | (1,724,194 | ) | (2,480,803 | ) | ||||||||||
— | — | 522,607 | (704,257 | ) | |||||||||||
— | — | 7,549,275 | 7,026,668 |
Annual Report 205
Lazard Managed Equity Volatility Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 315,398 | $ | 55,899 | |||||
Net realized gain (loss) on investments and foreign currency transactions | (294,609 | ) | 208,441 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (1,538,663 | ) | 356,438 | ||||||
Net increase (decrease) in net assets resulting from operations | (1,517,874 | ) | 620,778 | ||||||
Distributions to shareholders (Note 2(e)) | |||||||||
Institutional Shares | (381,378 | ) | (163,261 | ) | |||||
Open Shares | (4,224 | ) | (11,492 | ) | |||||
R6 Shares | — | — | |||||||
Net decrease in net assets resulting from distributions | (385,602 | ) | (174,753 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 20,348,996 | 1,184,556 | |||||||
Open Shares | 30,826 | 103,001 | |||||||
R6 Shares | — | — | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 346,406 | 163,260 | |||||||
Open Shares | 2,739 | 11,493 | |||||||
R6 Shares | — | — | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (2,294,274 | ) | (15,062 | ) | |||||
Open Shares | (134,055 | ) | (1,254 | ) | |||||
R6 Shares | — | — | |||||||
Net increase (decrease) in net assets from capital stock transactions | 18,300,638 | 1,445,994 | |||||||
Total increase (decrease) in net assets | 16,397,162 | 1,892,019 | |||||||
Net assets at beginning of period | 4,494,905 | 2,602,886 | |||||||
Net assets at end of period | $ | 20,892,067 | $ | 4,494,905 |
The accompanying notes are an integral part of these financial statements.
206 Annual Report
Lazard US Equity Concentrated Portfolio | Lazard US Equity Select Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 17,196,730 | $ | 13,875,284 | $ | 915,707 | $ | 932,975 | |||||||||
74,632,752 | 142,271,974 | 7,992,281 | 8,352,420 | |||||||||||||
(172,165,758 | ) | 63,020,970 | (10,904,671 | ) | 5,046,521 | |||||||||||
(80,336,276 | ) | 219,168,228 | (1,996,683 | ) | 14,331,916 | |||||||||||
(126,901,740 | ) | (98,098,518 | ) | (9,488,347 | ) | (7,111,211 | ) | |||||||||
(5,585,479 | ) | (5,450,099 | ) | (132,836 | ) | (97,134 | ) | |||||||||
(158,630 | ) | (22,895 | ) | (1,527,040 | ) | (1,087,991 | ) | |||||||||
(132,645,849 | ) | (103,571,512 | ) | (11,148,223 | ) | (8,296,336 | ) | |||||||||
231,478,214 | 427,187,488 | 2,797,366 | 6,051,046 | |||||||||||||
15,671,466 | 31,985,344 | 54,694 | 152,723 | |||||||||||||
2,047,701 | 217,994 | 3,687,551 | 3,879,821 | |||||||||||||
114,753,886 | 88,099,840 | 9,486,106 | 7,105,793 | |||||||||||||
5,517,497 | 5,378,038 | 132,621 | 94,116 | |||||||||||||
158,630 | 22,896 | 1,527,040 | 1,087,991 | |||||||||||||
(609,674,559 | ) | (344,089,983 | ) | (13,412,997 | ) | (17,326,936 | ) | |||||||||
(49,537,525 | ) | (63,956,675 | ) | (159,494 | ) | (710,616 | ) | |||||||||
(245,106 | ) | (33,244 | ) | (4,765,670 | ) | (7,829,156 | ) | |||||||||
(289,829,796 | ) | 144,811,698 | (652,783 | ) | (7,495,218 | ) | ||||||||||
(502,811,921 | ) | 260,408,414 | (13,797,689 | ) | (1,459,638 | ) | ||||||||||
1,596,544,167 | 1,336,135,753 | 85,364,648 | 86,824,286 | |||||||||||||
$ | 1,093,732,246 | $ | 1,596,544,167 | $ | 71,566,959 | $ | 85,364,648 |
Annual Report 207
Lazard Managed Equity Volatility Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 361,300 | 243,326 | |||||||
Shares sold | 1,790,614 | 105,129 | |||||||
Shares issued to shareholders from reinvestment of distributions | 33,373 | 14,184 | |||||||
Shares redeemed | (221,901 | ) | (1,339 | ) | |||||
Net increase (decrease) | 1,602,086 | 117,974 | |||||||
Shares outstanding at end of period | 1,963,386 | 361,300 | |||||||
Open Shares | |||||||||
Shares outstanding at beginning of period | 27,255 | 17,240 | |||||||
Shares sold | 2,695 | 9,125 | |||||||
Shares issued to shareholders from reinvestment of distributions | 262 | 999 | |||||||
Shares redeemed | (12,808 | ) | (109 | ) | |||||
Net increase (decrease) | (9,851 | ) | 10,015 | ||||||
Shares outstanding at end of period | 17,404 | 27,255 | |||||||
R6 Shares | |||||||||
Shares outstanding at beginning of period | — | — | |||||||
Shares sold | — | — | |||||||
Shares issued to shareholders from reinvestment of distributions | — | — | |||||||
Shares redeemed | — | — | |||||||
Net increase (decrease) | — | — | |||||||
Shares outstanding at end of period | — | — |
The accompanying notes are an integral part of these financial statements.
208 Annual Report
Lazard US Equity Concentrated Portfolio | Lazard US Equity Select Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
98,527,318 | 86,904,349 | 5,870,874 | 6,202,475 | |||||||||||||
14,982,089 | 28,269,097 | 229,810 | 489,330 | |||||||||||||
8,686,899 | 5,739,411 | 915,948 | 572,928 | |||||||||||||
(41,424,176 | ) | (22,385,539 | ) | (1,089,560 | ) | (1,393,859 | ) | |||||||||
(17,755,188 | ) | 11,622,969 | 56,198 | (331,601 | ) | |||||||||||
80,772,130 | 98,527,318 | 5,927,072 | 5,870,874 | |||||||||||||
5,681,791 | 7,411,857 | 81,216 | 117,822 | |||||||||||||
991,563 | 2,116,503 | 4,222 | 12,271 | |||||||||||||
413,698 | 347,869 | 12,734 | 7,567 | |||||||||||||
(3,161,325 | ) | (4,194,438 | ) | (12,410 | ) | (56,444 | ) | |||||||||
(1,756,064 | ) | (1,730,066 | ) | 4,546 | (36,606 | ) | ||||||||||
3,925,727 | 5,681,791 | 85,762 | 81,216 | |||||||||||||
23,498 | 9,872 | 916,579 | 1,143,030 | |||||||||||||
126,703 | 14,283 | 291,908 | 313,440 | |||||||||||||
12,595 | 1,488 | 147,820 | 87,657 | |||||||||||||
(15,698 | ) | (2,145 | ) | (373,560 | ) | (627,548 | ) | |||||||||
123,600 | 13,626 | 66,168 | (226,451 | ) | ||||||||||||
147,098 | 23,498 | 982,747 | 916,579 |
Annual Report 209
Lazard US Realty Equity Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 805,208 | $ | 962,278 | |||||
Net realized gain (loss) on investments | 2,480,557 | 5,407,448 | |||||||
Net change in unrealized appreciation (depreciation) on investments | (9,938,039 | ) | (890,356 | ) | |||||
Net increase (decrease) in net assets resulting from operations | (6,652,274 | ) | 5,479,370 | ||||||
Distributions to shareholders (Note 2(e)) | |||||||||
Institutional Shares | (695,484 | ) | (1,865,431 | ) | |||||
Open Shares | (1,716,582 | ) | (4,676,280 | ) | |||||
Net decrease in net assets resulting from distributions | (2,412,066 | ) | (6,541,711 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 1,624,667 | 3,978,753 | |||||||
Open Shares | 3,032,454 | 3,900,457 | |||||||
Issued in connection with acquisition of US Realty Income Portfolio | |||||||||
Institutional Shares | 10,788,800 | — | |||||||
Open Shares | 11,850,795 | — | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 690,667 | 1,840,386 | |||||||
Open Shares | 1,661,053 | 4,526,431 | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (13,277,642 | ) | (6,377,175 | ) | |||||
Open Shares | (14,180,850 | ) | (19,202,537 | ) | |||||
Net increase (decrease) in net assets from capital stock transactions | 2,189,944 | (11,333,685 | ) | ||||||
Total increase (decrease) in net assets | (6,874,396 | ) | (12,396,026 | ) | |||||
Net assets at beginning of period | 66,535,910 | 78,931,936 | |||||||
Net assets at end of period | $ | 59,661,514 | $ | 66,535,910 | |||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 993,322 | 1,013,228 | |||||||
Shares sold | 91,997 | 199,657 | |||||||
Shares issued in connection with acquisition of US Realty Income Portfolio | 562,426 | — | |||||||
Shares issued to shareholders from reinvestment of distributions | 40,649 | 98,095 | |||||||
Shares redeemed | (746,565 | ) | (317,658 | ) | |||||
Net increase (decrease) | (51,493 | ) | (19,906 | ) | |||||
Shares outstanding at end of period | 941,829 | 993,322 | |||||||
Open Shares | |||||||||
Shares outstanding at beginning of period | 2,524,879 | 3,050,064 | |||||||
Shares sold | 167,884 | 194,919 | |||||||
Shares issued in connection with acquisition of US Realty Income Portfolio | 616,099 | — | �� | ||||||
Shares issued to shareholders from reinvestment of distributions | 97,455 | 240,214 | |||||||
Shares redeemed | (785,245 | ) | (960,318 | ) | |||||
Net increase (decrease) | 96,193 | (525,185 | ) | ||||||
Shares outstanding at end of period | 2,621,072 | 2,524,879 |
The accompanying notes are an integral part of these financial statements.
210 Annual Report
Lazard US Small-Mid Cap Equity Portfolio | ||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||
$ | 597,923 | $ | 727,068 | |||||
15,587,339 | 25,902,875 | |||||||
(36,201,275 | ) | 267,481 | ||||||
(20,016,013 | ) | 26,897,424 | ||||||
(17,695,195 | ) | (20,425,988 | ) | |||||
(2,222,866 | ) | (3,158,573 | ) | |||||
(19,918,061 | ) | (23,584,561 | ) | |||||
21,485,449 | 24,700,686 | |||||||
2,442,537 | 9,096,024 | |||||||
— | — | |||||||
— | — | |||||||
17,320,681 | 20,069,757 | |||||||
2,058,605 | 3,032,378 | |||||||
(66,434,776 | ) | (60,255,552 | ) | |||||
(12,483,878 | ) | (16,933,398 | ) | |||||
(35,611,382 | ) | (20,290,105 | ) | |||||
(75,545,456 | ) | (16,977,242 | ) | |||||
202,948,188 | 219,925,430 | |||||||
$ | 127,402,732 | $ | 202,948,188 | |||||
12,081,329 | 13,078,287 | |||||||
1,436,712 | 1,659,111 | |||||||
— | — | |||||||
1,572,044 | 1,373,469 | |||||||
(4,596,397 | ) | (4,029,538 | ) | |||||
(1,587,641 | ) | (996,958 | ) | |||||
10,493,688 | 12,081,329 | |||||||
1,893,205 | 2,217,138 | |||||||
183,177 | 654,337 | |||||||
— | — | |||||||
201,850 | 221,466 | |||||||
(909,420 | ) | (1,199,736 | ) | |||||
(524,393 | ) | (323,933 | ) | |||||
1,368,812 | 1,893,205 |
Annual Report 211
The Lazard Funds, Inc.Financial Highlights
LAZARD DEVELOPING MARKETS EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 14.48 | $ | 10.28 | $ | 9.04 | $ | 10.43 | $ | 11.81 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.11 | 0.03 | 0.05 | ^ | 0.06 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.08 | ) | 4.20 | 1.29 | (1.40 | ) | (1.30 | ) | |||||||||||||
Total from investment operations | (2.97 | ) | 4.23 | 1.34 | (1.34 | ) | (1.21 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.09 | ) | (0.03 | ) | (0.10 | ) | (0.05 | ) | (0.17 | ) | |||||||||||
Total distributions | (0.09 | ) | (0.03 | ) | (0.10 | ) | (0.05 | ) | (0.17 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 11.42 | $ | 14.48 | $ | 10.28 | $ | 9.04 | $ | 10.43 | |||||||||||
Total Return (c) | –20.58 | % | 41.15 | % | 14.81 | %^ | –12.84 | % | –10.27 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 215,120 | $ | 268,730 | $ | 189,035 | $ | 343,788 | $ | 426,847 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.14 | % | 1.18 | % | 1.21 | %^ | 1.20 | % | 1.19 | % | |||||||||||
Gross expenses | 1.14 | % | 1.18 | % | 1.23 | % | 1.20 | % | 1.19 | % | |||||||||||
Net investment income (loss) | 0.83 | % | 0.24 | % | 0.48 | %^ | 0.55 | % | 0.80 | % | |||||||||||
Portfolio turnover rate | 63 | % | 46 | % | 56 | % | 66 | % | 57 | % |
The accompanying notes are an integral part of these financial statements.
212 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 14.45 | $ | 10.28 | $ | 9.05 | $ | 10.43 | $ | 11.81 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.06 | (0.02 | ) | 0.01 | ^ | 0.01 | 0.08 | ||||||||||||||
Net realized and unrealized gain (loss) | (3.06 | ) | 4.19 | 1.28 | (1.38 | ) | (1.33 | ) | |||||||||||||
Total from investment operations | (3.00 | ) | 4.17 | 1.29 | (1.37 | ) | (1.25 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.09 | ) | — | (0.06 | ) | (0.01 | ) | (0.13 | ) | ||||||||||||
Total distributions | (0.09 | ) | — | (0.06 | ) | (0.01 | ) | (0.13 | ) | ||||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 11.36 | $ | 14.45 | $ | 10.28 | $ | 9.05 | $ | 10.43 | |||||||||||
Total Return (c) | –20.83 | %# | 40.56 | % | 14.31 | %^ | –13.11 | % | –10.57 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 7,263 | $ | 12,569 | $ | 7,272 | $ | 10,903 | $ | 16,029 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.51 | % | 1.58 | % | 1.60 | %^ | 1.57 | % | 1.49 | % | |||||||||||
Gross expenses | 1.51 | % | 1.58 | % | 1.65 | % | 1.57 | % | 1.49 | % | |||||||||||
Net investment income (loss) | 0.42 | % | –0.17 | % | 0.06 | %^ | 0.13 | % | 0.70 | % | |||||||||||
Portfolio turnover rate | 63 | % | 46 | % | 56 | % | 66 | % | 57 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. For Institutional Shares, the impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. For Open Shares, the net expenses and net investment income (loss) ratios of the Portfolio would be unchanged as the change to the period custodian fees was offset against the period expense waivers/reimbursements with no impact to net expenses or net investment income (loss). |
# | The Portfolio received settlement proceeds from a foreign exchange trading class action lawsuit. The proceeds from the settlement represented a realized gain and were recorded in the period received. There was a 0.07% impact on the total return of the Portfolio’s Open Shares. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
Annual Report 213
LAZARD EMERGING MARKETS CORE EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.30 | $ | 8.83 | $ | 8.60 | $ | 9.62 | $ | 9.83 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.16 | 0.11 | 0.08 | 0.03 | 0.03 | ||||||||||||||||
Net realized and unrealized gain (loss) | (2.39 | ) | 3.45 | 0.22 | (1.03 | ) | (0.15 | ) | |||||||||||||
Total from investment operations | (2.23 | ) | 3.56 | 0.30 | (1.00 | ) | (0.12 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.18 | ) | (0.09 | ) | (0.07 | ) | (0.01 | ) | (0.08 | ) | |||||||||||
Return of capital | — | — | — | (0.01 | ) | (0.01 | ) | ||||||||||||||
Total distributions | (0.18 | ) | (0.09 | ) | (0.07 | ) | (0.02 | ) | (0.09 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | ||||||||||||||
Net asset value, end of period | $ | 9.89 | $ | 12.30 | $ | 8.83 | $ | 8.60 | $ | 9.62 | |||||||||||
Total Return (c) | –18.12 | % | 40.35 | % | 3.47 | % | –10.36 | % | –1.25 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 207,955 | $ | 230,343 | $ | 122,995 | $ | 102,421 | $ | 39,832 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.18 | % | 1.20 | % | 1.30 | % | 1.30 | % | 1.30 | % | |||||||||||
Gross expenses | 1.18 | % | 1.20 | % | 1.31 | % | 1.52 | % | 2.28 | % | |||||||||||
Net investment income (loss) | 1.44 | % | 0.98 | % | 0.89 | % | 0.32 | % | 0.28 | % | |||||||||||
Portfolio turnover rate | 30 | % | 15 | % | 62 | % | 46 | % | 45 | % |
The accompanying notes are an integral part of these financial statements.
214 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.27 | $ | 8.81 | $ | 8.58 | $ | 9.62 | $ | 9.83 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.11 | 0.06 | 0.07 | — | (b) | (0.04 | ) | ||||||||||||||
Net realized and unrealized gain (loss) | (2.37 | ) | 3.45 | 0.20 | (1.04 | ) | (0.11 | ) | |||||||||||||
Total from investment operations | (2.26 | ) | 3.51 | 0.27 | (1.04 | ) | (0.15 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.14 | ) | (0.05 | ) | (0.04 | ) | — | (0.05 | ) | ||||||||||||
Return of capital | — | — | — | — | (0.01 | ) | |||||||||||||||
Total distributions | (0.14 | ) | (0.05 | ) | (0.04 | ) | — | (0.06 | ) | ||||||||||||
Redemption fees | — | — | — | — | — | (b) | |||||||||||||||
Net asset value, end of period | $ | 9.87 | $ | 12.27 | $ | 8.81 | $ | 8.58 | $ | 9.62 | |||||||||||
Total Return (c) | –18.43 | % | 39.80 | % | 3.17 | % | –10.81 | % | –1.56 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,853 | $ | 1,828 | $ | 729 | $ | 2,344 | $ | 5,266 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.58 | % | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | |||||||||||
Gross expenses | 2.00 | % | 2.45 | % | 2.14 | % | 2.35 | % | 2.81 | % | |||||||||||
Net investment income (loss) | 1.00 | % | 0.56 | % | 0.85 | % | –0.04 | % | –0.35 | % | |||||||||||
Portfolio turnover rate | 30 | % | 15 | % | 62 | % | 46 | % | 45 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 215
Selected data for a share of capital stock outstanding throughout the period | For the Period 4/6/18* to 12/31/18 | |||||
R6 Shares | ||||||
Net asset value, beginning of period | $ | 12.21 | ||||
Income (Loss) from investment operations: | ||||||
Net investment income (loss) (a) | 0.14 | |||||
Net realized and unrealized gain (loss) | (2.28 | ) | ||||
Total from investment operations | (2.14 | ) | ||||
Less distributions from: | ||||||
Net investment income | (0.18 | ) | ||||
Total distributions | (0.18 | ) | ||||
Net asset value, end of period | $ | 9.89 | ||||
Total Return (c) | –17.52 | % | ||||
Ratios and Supplemental Data: | ||||||
Net assets, end of period (in thousands) | $ | 494 | ||||
Ratios to average net assets (d): | ||||||
Net expenses | 1.16 | % | ||||
Gross expenses | 7.68 | % | ||||
Net investment income (loss) | 1.71 | % | ||||
Portfolio turnover rate | 30 | % |
* | The inception date for the R6 Shares was April 6, 2018. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
216 Annual Report
LAZARD EMERGING MARKETS EQUITY ADVANTAGE PORTFOLIO
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
Institutional Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 12.27 | $ | 8.71 | $ | 8.06 | $ | 10.00 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.19 | 0.12 | 0.12 | 0.08 | |||||||||||||
Net realized and unrealized gain (loss) | (2.19 | ) | 3.58 | 0.67 | (1.88 | ) | |||||||||||
Total from investment operations | (2.00 | ) | 3.70 | 0.79 | (1.80 | ) | |||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.22 | ) | (0.13 | ) | (0.13 | ) | (0.14 | ) | |||||||||
Net realized gains | — | (b) | — | — | — | ||||||||||||
Return of capital | (0.02 | ) | (0.01 | ) | (0.01 | ) | — | ||||||||||
Total distributions | (0.24 | ) | (0.14 | ) | (0.14 | ) | (0.14 | ) | |||||||||
Net asset value, end of period | $ | 10.03 | $ | 12.27 | $ | 8.71 | $ | 8.06 | |||||||||
Total Return (c) | –16.23 | % | 42.52 | % | 9.83 | % | –17.97 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,107 | $ | 4,191 | $ | 2,896 | $ | 2,618 | |||||||||
Ratios to average net assets (d): | |||||||||||||||||
Net expenses | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||
Gross expenses | 5.60 | % | 6.29 | % | 9.57 | % | 11.47 | % | |||||||||
Net investment income (loss) | 1.59 | % | 1.15 | % | 1.41 | % | 1.54 | % | |||||||||
Portfolio turnover rate | 61 | % | 52 | % | 57 | % | 38 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 217
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
Open Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 12.27 | $ | 8.71 | $ | 8.06 | $ | 10.00 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.16 | 0.08 | 0.09 | 0.06 | |||||||||||||
Net realized and unrealized gain (loss) | (2.18 | ) | 3.58 | 0.68 | (1.87 | ) | |||||||||||
Total from investment operations | (2.02 | ) | 3.66 | 0.77 | (1.81 | ) | |||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.19 | ) | (0.09 | ) | (0.11 | ) | (0.13 | ) | |||||||||
Net realized gains | — | (b) | — | — | — | ||||||||||||
Return of capital | (0.02 | ) | (0.01 | ) | (0.01 | ) | — | ||||||||||
Total distributions | (0.21 | ) | (0.10 | ) | (0.12 | ) | (0.13 | ) | |||||||||
Net asset value, end of period | $ | 10.04 | $ | 12.27 | $ | 8.71 | $ | 8.06 | |||||||||
Total Return (c) | –16.40 | % | 42.09 | % | 9.51 | % | –18.13 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 476 | $ | 356 | $ | 120 | $ | 95 | |||||||||
Ratios to average net assets (d): | |||||||||||||||||
Net expenses | 1.40 | % | 1.40 | % | 1.40 | % | 1.40 | % | |||||||||
Gross expenses | 8.09 | % | 12.17 | % | 20.02 | % | 26.37 | % | |||||||||
Net investment income (loss) | 1.35 | % | 0.72 | % | 1.06 | % | 1.18 | % | |||||||||
Portfolio turnover rate | 61 | % | 52 | % | 57 | % | 38 | % |
* | The Portfolio commenced operations on May 29, 2015. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
218 Annual Report
LAZARD EMERGING MARKETS EQUITY BLEND PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.93 | $ | 9.60 | $ | 8.53 | $ | 10.00 | $ | 11.18 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.17 | 0.10 | 0.08 | ^ | 0.12 | 0.15 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.89 | ) | 3.35 | 1.04 | (1.39 | ) | (1.12 | ) | |||||||||||||
Total from investment operations | (2.72 | ) | 3.45 | 1.12 | (1.27 | ) | (0.97 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.19 | ) | (0.12 | ) | (0.05 | ) | (0.19 | ) | (0.21 | ) | |||||||||||
Return of capital | — | — | — | (0.01 | ) | — | (b) | ||||||||||||||
Total distributions | (0.19 | ) | (0.12 | ) | (0.05 | ) | (0.20 | ) | (0.21 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.02 | $ | 12.93 | $ | 9.60 | $ | 8.53 | $ | 10.00 | |||||||||||
Total Return (c) | –21.05 | % | 35.98 | % | 13.12 | %^ | –12.74 | % | –8.66 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 291,404 | $ | 385,492 | $ | 282,473 | $ | 287,857 | $ | 463,043 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.15 | % | 1.21 | % | 1.25 | %^ | 1.20 | % | 1.28 | % | |||||||||||
Gross expenses | 1.15 | % | 1.21 | % | 1.26 | % | 1.20 | % | 1.28 | % | |||||||||||
Net investment income (loss) | 1.39 | % | 0.90 | % | 0.88 | %^ | 1.22 | % | 1.33 | % | |||||||||||
Portfolio turnover rate | 61 | % | 57 | % | 47 | % | 38 | % | 44 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 219
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.95 | $ | 9.62 | $ | 8.55 | $ | 9.99 | $ | 11.17 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.12 | 0.06 | 0.05 | ^ | 0.11 | 0.10 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.89 | ) | 3.34 | 1.04 | (1.38 | ) | (1.10 | ) | |||||||||||||
Total from investment operations | (2.77 | ) | 3.40 | 1.09 | (1.27 | ) | (1.00 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.15 | ) | (0.07 | ) | (0.02 | ) | (0.17 | ) | (0.18 | ) | |||||||||||
Return of capital | — | — | — | — | (b) | — | (b) | ||||||||||||||
Total distributions | (0.15 | ) | (0.07 | ) | (0.02 | ) | (0.17 | ) | (0.18 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.03 | $ | 12.95 | $ | 9.62 | $ | 8.55 | $ | 9.99 | |||||||||||
Total Return (c) | –21.39 | % | 35.38 | % | 12.74 | %^ | –12.77 | % | –8.95 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,200 | $ | 9,728 | $ | 6,804 | $ | 7,107 | $ | 123,756 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.53 | % | 1.60 | % | 1.60 | %^ | 1.54 | % | 1.60 | % | |||||||||||
Gross expenses | 1.53 | % | 1.61 | % | 1.89 | % | 1.54 | % | 1.63 | % | |||||||||||
Net investment income (loss) | 1.01 | % | 0.50 | % | 0.54 | %^ | 1.10 | % | 0.94 | % | |||||||||||
Portfolio turnover rate | 61 | % | 57 | % | 47 | % | 38 | % | 44 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
220 Annual Report
LAZARD EMERGING MARKETS EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 20.02 | $ | 15.96 | $ | 13.44 | $ | 17.19 | $ | 18.67 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.39 | 0.33 | 0.24 | ^ | 0.30 | 0.37 | |||||||||||||||
Net realized and unrealized gain (loss) | (4.01 | ) | 4.13 | 2.52 | (3.76 | ) | (1.13 | ) | |||||||||||||
Total from investment operations | (3.62 | ) | 4.46 | 2.76 | (3.46 | ) | (0.76 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.34 | ) | (0.40 | ) | (0.24 | ) | (0.23 | ) | (0.37 | ) | |||||||||||
Net realized gains | — | — | — | (0.06 | ) | (0.35 | ) | ||||||||||||||
Total distributions | (0.34 | ) | (0.40 | ) | (0.24 | ) | (0.29 | ) | (0.72 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 16.06 | $ | 20.02 | $ | 15.96 | $ | 13.44 | $ | 17.19 | |||||||||||
Total Return (c) | –18.09 | % | 28.02 | % | 20.52 | %^ | –20.16 | % | –4.16 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 7,573,861 | $ | 11,285,358 | $ | 9,311,693 | $ | 8,238,638 | $ | 12,156,645 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.07 | % | 1.08 | % | 1.09 | %^ | 1.10 | % | 1.09 | % | |||||||||||
Gross expenses | 1.07 | % | 1.08 | % | 1.09 | % | 1.10 | % | 1.09 | % | |||||||||||
Net investment income (loss) | 2.12 | % | 1.82 | % | 1.59 | %^ | 1.83 | % | 1.97 | % | |||||||||||
Portfolio turnover rate | 16 | % | 14 | % | 12 | % | 14 | % | 12 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 221
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 20.60 | $ | 16.41 | $ | 13.82 | $ | 17.65 | $ | 19.14 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.35 | 0.29 | 0.21 | ^ | 0.26 | 0.34 | |||||||||||||||
Net realized and unrealized gain (loss) | (4.12 | ) | 4.25 | 2.58 | (3.84 | ) | (1.16 | ) | |||||||||||||
Total from investment operations | (3.77 | ) | 4.54 | 2.79 | (3.58 | ) | (0.82 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.30 | ) | (0.35 | ) | (0.20 | ) | (0.19 | ) | (0.32 | ) | |||||||||||
Net realized gains | — | — | — | (0.06 | ) | (0.35 | ) | ||||||||||||||
Total distributions | (0.30 | ) | (0.35 | ) | (0.20 | ) | (0.25 | ) | (0.67 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 16.53 | $ | 20.60 | $ | 16.41 | $ | 13.82 | $ | 17.65 | |||||||||||
Total Return (c) | –18.32 | % | 27.73 | % | 20.17 | %^ | –20.33 | % | –4.39 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,004,569 | $ | 1,515,715 | $ | 1,287,552 | $ | 832,706 | $ | 1,474,597 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.32 | % | 1.34 | % | 1.35 | %^ | 1.37 | % | 1.37 | % | |||||||||||
Gross expenses | 1.32 | % | 1.34 | % | 1.35 | % | 1.37 | % | 1.37 | % | |||||||||||
Net investment income (loss) | 1.85 | % | 1.55 | % | 1.35 | %^ | 1.58 | % | 1.76 | % | |||||||||||
Portfolio turnover rate | 16 | % | 14 | % | 12 | % | 14 | % | 12 | % |
The accompanying notes are an integral part of these financial statements.
222 Annual Report
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 1/19/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
R6 Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 20.02 | $ | 15.96 | $ | 13.44 | $ | 17.26 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.40 | 0.35 | 0.23 | ^ | 0.27 | ||||||||||||
Net realized and unrealized gain (loss) | (4.02 | ) | 4.11 | 2.53 | (3.80 | ) | |||||||||||
Total from investment operations | (3.62 | ) | 4.46 | 2.76 | (3.53 | ) | |||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.34 | ) | (0.40 | ) | (0.24 | ) | (0.23 | ) | |||||||||
Net realized gains | — | — | — | (0.06 | ) | ||||||||||||
Total distributions | (0.34 | ) | (0.40 | ) | (0.24 | ) | (0.29 | ) | |||||||||
Net asset value, end of period | $ | 16.06 | $ | 20.02 | $ | 15.96 | $ | 13.44 | |||||||||
Total Return (c) | –18.09 | % | 28.02 | % | 20.52 | %^ | –20.50 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 232,507 | $ | 372,568 | $ | 197,959 | $ | 144,626 | |||||||||
Ratios to average net assets (d): | |||||||||||||||||
Net expenses | 1.07 | % | 1.08 | % | 1.09 | %^ | 1.12 | % | |||||||||
Gross expenses | 1.07 | % | 1.08 | % | 1.10 | % | 1.13 | % | |||||||||
Net investment income (loss) | 2.15 | % | 1.91 | % | 1.54 | %^ | 1.79 | % | |||||||||
Portfolio turnover rate | 16 | % | 14 | % | 12 | % | 14 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. |
* | The inception date for the R6 Shares was January 19, 2015. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 223
LAZARD EQUITY FRANCHISE PORTFOLIO
Selected data for a share | For the Period | |||||||||
of capital stock outstanding | Year Ended | 9/29/17* | ||||||||
throughout each period | 12/31/18 | to 12/31/17 | ||||||||
Institutional Shares | ||||||||||
Net asset value, beginning of period | $ | 10.38 | $ | 10.00 | ||||||
Income (Loss) from investment operations: | ||||||||||
Net investment income (loss) (a) | 0.20 | 0.03 | ||||||||
Net realized and unrealized gain (loss) | (0.75 | ) | 0.40 | |||||||
Total from investment operations | (0.55 | ) | 0.43 | |||||||
Less distributions from: | ||||||||||
Net investment income | (0.21 | ) | (0.03 | ) | ||||||
Net realized gains | (0.78 | ) | (0.02 | ) | ||||||
Total distributions | (0.99 | ) | (0.05 | ) | ||||||
Net asset value, end of period | $ | 8.84 | $ | 10.38 | ||||||
Total Return (b) | –5.10 | % | 4.25 | % | ||||||
Ratios and Supplemental Data: | ||||||||||
Net assets, end of period (in thousands) | $ | 8,341 | $ | 5,566 | ||||||
Ratios to average net assets (c): | ||||||||||
Net expenses | 0.95 | % | 0.95 | % | ||||||
Gross expenses | 3.42 | % | 3.21 | % | ||||||
Net investment income (loss) | 1.94 | % | 1.26 | % | ||||||
Portfolio turnover rate | 97 | % | 10 | % |
The accompanying notes are an integral part of these financial statements.
224 Annual Report
Selected data for a share | For the Period | |||||||||||||||||||
of capital stock outstanding | Year Ended | 9/29/17* | ||||||||||||||||||
throughout each period | 12/31/18 | to 12/31/17 | ||||||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 10.38 | $ | 10.00 | ||||||||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.19 | 0.03 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.77 | ) | 0.39 | |||||||||||||||||
Total from investment operations | (0.58 | ) | 0.42 | |||||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.18 | ) | (0.02 | ) | ||||||||||||||||
Net realized gains | (0.78 | ) | (0.02 | ) | ||||||||||||||||
Total distributions | (0.96 | ) | (0.04 | ) | ||||||||||||||||
Net asset value, end of period | $ | 8.84 | $ | 10.38 | ||||||||||||||||
Total Return (b) | –5.34 | % | 4.18 | % | ||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 190 | $ | 111 | ||||||||||||||||
Ratios to average net assets (c): | ||||||||||||||||||||
Net expenses | 1.20 | % | 1.20 | % | ||||||||||||||||
Gross expenses | 10.19 | % | 23.62 | % | ||||||||||||||||
Net investment income (loss) | 1.75 | % | 1.14 | % | ||||||||||||||||
Portfolio turnover rate | 97 | % | 10 | % |
* | The Portfolio commenced operations on September 29, 2017. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(c) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
Annual Report 225
LAZARD GLOBAL EQUITY SELECT PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 13.04 | $ | 10.53 | $ | 10.33 | $ | 10.32 | $ | 10.02 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.09 | 0.07 | 0.09 | 0.04 | 0.07 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.02 | ) | 2.93 | 0.18 | 0.01 | 0.29 | |||||||||||||||
Total from investment operations | (0.93 | ) | 3.00 | 0.27 | 0.05 | 0.36 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.06 | ) | (0.10 | ) | (0.07 | ) | (0.04 | ) | (0.06 | ) | |||||||||||
Net realized gains | (0.32 | ) | (0.39 | ) | — | — | — | ||||||||||||||
Return of capital | (0.01 | ) | — | — | — | — | |||||||||||||||
Total distributions | (0.39 | ) | (0.49 | ) | (0.07 | ) | (0.04 | ) | (0.06 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 11.72 | $ | 13.04 | $ | 10.53 | $ | 10.33 | $ | 10.32 | |||||||||||
Total Return (c) | –7.12 | % | 28.52 | % | 2.66 | % | 0.46 | % | 3.84 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 65,382 | $ | 58,201 | $ | 31,197 | $ | 20,624 | $ | 12,266 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.05 | % | 1.05 | % | 1.07 | % | 1.10 | % | 1.10 | % | |||||||||||
Gross expenses | 1.08 | % | 1.30 | % | 1.75 | % | 2.27 | % | 4.62 | % | |||||||||||
Net investment income (loss) | 0.70 | % | 0.60 | % | 0.86 | % | 0.41 | % | 0.64 | % | |||||||||||
Portfolio turnover rate | 34 | % | 34 | % | 40 | % | 55 | % | 64 | % |
The accompanying notes are an integral part of these financial statements.
226 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 13.04 | $ | 10.54 | $ | 10.34 | $ | 10.32 | $ | 10.01 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.05 | 0.04 | 0.06 | 0.01 | 0.04 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.01 | ) | 2.91 | 0.18 | 0.02 | 0.30 | |||||||||||||||
Total from investment operations | (0.96 | ) | 2.95 | 0.24 | 0.03 | 0.34 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.02 | ) | (0.06 | ) | (0.04 | ) | (0.01 | ) | (0.03 | ) | |||||||||||
Net realized gains | (0.32 | ) | (0.39 | ) | — | — | — | ||||||||||||||
Return of capital | (0.01 | ) | — | — | — | — | |||||||||||||||
Total distributions | (0.35 | ) | (0.45 | ) | (0.04 | ) | (0.01 | ) | (0.03 | ) | |||||||||||
Net asset value, end of period | $ | 11.73 | $ | 13.04 | $ | 10.54 | $ | 10.34 | $ | 10.32 | |||||||||||
Total Return (c) | –7.33 | % | 28.01 | % | 2.35 | % | 0.24 | % | 3.54 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 763 | $ | 711 | $ | 515 | $ | 290 | $ | 201 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.35 | % | 1.35 | % | 1.37 | % | 1.40 | % | 1.40 | % | |||||||||||
Gross expenses | 2.80 | % | 3.70 | % | 5.38 | % | 7.42 | % | 13.34 | % | |||||||||||
Net investment income (loss) | 0.41 | % | 0.32 | % | 0.56 | % | 0.09 | % | 0.35 | % | |||||||||||
Portfolio turnover rate | 34 | % | 34 | % | 40 | % | 55 | % | 64 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
Annual Report 227
LAZARD GLOBAL LISTED INFRASTRUCTURE PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.99 | $ | 14.17 | $ | 13.42 | $ | 13.72 | $ | 13.13 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.41 | 0.39 | 0.31 | ^ | 0.33 | 0.34 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.96 | ) | 2.54 | 0.92 | 0.89 | 2.01 | |||||||||||||||
Total from investment operations | (0.55 | ) | 2.93 | 1.23 | 1.22 | 2.35 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.72 | ) | (0.29 | ) | (0.34 | ) | (1.17 | ) | (1.04 | ) | |||||||||||
Net realized gains | (1.21 | ) | (0.82 | ) | (0.14 | ) | (0.35 | ) | (0.72 | ) | |||||||||||
Total distributions | (1.93 | ) | (1.11 | ) | (0.48 | ) | (1.52 | ) | (1.76 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 13.51 | $ | 15.99 | $ | 14.17 | $ | 13.42 | $ | 13.72 | |||||||||||
Total Return (c) | –3.68 | % | 20.73 | % | 9.30 | %^ | 9.30 | % | 17.95 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,924,359 | $ | 4,778,042 | $ | 2,931,161 | $ | 2,156,325 | $ | 1,372,216 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.95 | % | 0.95 | % | 0.96 | %^ | 0.96 | % | 0.98 | % | |||||||||||
Gross expenses | 0.95 | % | 0.95 | % | 0.96 | % | 0.96 | % | 0.98 | % | |||||||||||
Net investment income (loss) | 2.65 | % | 2.44 | % | 2.29 | %^ | 2.32 | % | 2.35 | % | |||||||||||
Portfolio turnover rate | 49 | % | 33 | % | 35 | % | 34 | % | 41 | % |
The accompanying notes are an integral part of these financial statements.
228 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 16.01 | $ | 14.20 | $ | 13.45 | $ | 13.74 | $ | 13.15 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.37 | 0.35 | 0.29 | ^ | 0.31 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.97 | ) | 2.55 | 0.91 | 0.88 | 2.02 | |||||||||||||||
Total from investment operations | (0.60 | ) | 2.90 | 1.20 | 1.19 | 2.31 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.68 | ) | (0.27 | ) | (0.31 | ) | (1.13 | ) | (1.00 | ) | |||||||||||
Net realized gains | (1.21 | ) | (0.82 | ) | (0.14 | ) | (0.35 | ) | (0.72 | ) | |||||||||||
Total distributions | (1.89 | ) | (1.09 | ) | (0.45 | ) | (1.48 | ) | (1.72 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 13.52 | $ | 16.01 | $ | 14.20 | $ | 13.45 | $ | 13.74 | |||||||||||
Total Return (c) | –3.98 | % | 20.47 | % | 9.01 | %^ | 9.06 | % | 17.61 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 426,749 | $ | 633,243 | $ | 462,613 | $ | 393,786 | $ | 145,901 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.20 | % | 1.21 | % | 1.22 | %^ | 1.23 | % | 1.29 | % | |||||||||||
Gross expenses | 1.20 | % | 1.21 | % | 1.22 | % | 1.23 | % | 1.29 | % | |||||||||||
Net investment income (loss) | 2.36 | % | 2.16 | % | 2.09 | %^ | 2.19 | % | 2.04 | % | |||||||||||
Portfolio turnover rate | 49 | % | 33 | % | 35 | % | 34 | % | 41 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. |
The accompanying notes are an integral part of these financial statements.
Annual Report 229
LAZARD GLOBAL REALTY EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18* | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.52 | $ | 14.16 | $ | 14.19 | $ | 15.17 | $ | 15.49 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.33 | 0.32 | 0.22 | 0.27 | 0.34 | ||||||||||||||||
Net realized and unrealized gain (loss) | (15.54 | ) | 1.75 | 0.19 | (0.24 | ) | 1.29 | ||||||||||||||
Total from investment operations | (15.21 | ) | 2.07 | 0.41 | 0.03 | 1.63 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.23 | ) | (0.47 | ) | (0.44 | ) | (0.56 | ) | (0.61 | ) | |||||||||||
Net realized gains | (0.08 | ) | (0.24 | ) | — | (b) | (0.45 | ) | (1.34 | ) | |||||||||||
Total distributions | (0.31 | ) | (0.71 | ) | (0.44 | ) | (1.01 | ) | (1.95 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | ||||||||||||||
Net asset value, end of period | $ | — | $ | 15.52 | $ | 14.16 | $ | 14.19 | $ | 15.17 | |||||||||||
Total Return (c) | –11.86 | %(d) | 14.69 | % | 2.85 | % | 0.36 | % | 10.35 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | — | $ | 3,831 | $ | 2,443 | $ | 3,549 | $ | 4,779 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.98 | % | 1.00 | % | 1.00 | % | 1.05 | % | 1.13 | % | |||||||||||
Gross expenses | 4.06 | % | 4.67 | % | 5.25 | % | 4.97 | % | 3.79 | % | |||||||||||
Net investment income (loss) | 2.22 | % | 2.12 | % | 1.56 | % | 1.74 | % | 2.04 | % | |||||||||||
Portfolio turnover rate | 91 | % | 82 | % | 38 | % | 56 | % | 84 | % |
The accompanying notes are an integral part of these financial statements.
230 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18* | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.50 | $ | 14.14 | $ | 14.18 | $ | 15.16 | $ | 15.48 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.28 | 0.26 | 0.19 | 0.23 | 0.29 | ||||||||||||||||
Net realized and unrealized gain (loss) | (15.47 | ) | 1.76 | 0.16 | (0.24 | ) | 1.29 | ||||||||||||||
Total from investment operations | (15.19 | ) | 2.02 | 0.35 | (0.01 | ) | 1.58 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.23 | ) | (0.42 | ) | (0.39 | ) | (0.52 | ) | (0.56 | ) | |||||||||||
Net realized gains | (0.08 | ) | (0.24 | ) | — | (b) | (0.45 | ) | (1.34 | ) | |||||||||||
Total distributions | (0.31 | ) | (0.66 | ) | (0.39 | ) | (0.97 | ) | (1.90 | ) | |||||||||||
Net asset value, end of period | $ | — | $ | 15.50 | $ | 14.14 | $ | 14.18 | $ | 15.16 | |||||||||||
Total Return (c) | –12.14 | %(d) | 14.36 | % | 2.47 | % | 0.06 | % | 10.05 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | — | $ | 1,363 | $ | 1,560 | $ | 1,820 | $ | 2,016 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.28 | % | 1.30 | % | 1.30 | % | 1.35 | % | 1.43 | % | |||||||||||
Gross expenses | 4.94 | % | 5.62 | % | 5.96 | % | 5.55 | % | 4.26 | % | |||||||||||
Net investment income (loss) | 1.93 | % | 1.69 | % | 1.28 | % | 1.47 | % | 1.76 | % | |||||||||||
Portfolio turnover rate | 91 | % | 82 | % | 38 | % | 56 | % | 84 | % |
* | The Portfolio was liquidated on December 31, 2018. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
(d) | Based upon December 31, 2018 net asset value effective prior to redemptions. |
The accompanying notes are an integral part of these financial statements.
Annual Report 231
LAZARD GLOBAL STRATEGIC EQUITY PORTFOLIO
Selected data for a share | For the Period | |||||||||||||||||||
of capital stock outstanding | Year Ended | 8/29/14* | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | to 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 2.31 | $ | 9.59 | $ | 9.67 | $ | 9.94 | $ | 10.00 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.01 | 0.08 | 0.07 | 0.06 | — | (b) | ||||||||||||||
Net realized and unrealized gain (loss) | (0.18 | ) | 2.24 | (0.08 | ) | (0.25 | ) | (0.04 | ) | |||||||||||
Total from investment operations | (0.17 | ) | 2.32 | (0.01 | ) | (0.19 | ) | (0.04 | ) | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.01 | ) | (0.20 | ) | (0.07 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Net realized gains | (0.49 | ) | (9.40 | ) | — | — | — | |||||||||||||
Return of capital | — | — | — | — | — | (b) | ||||||||||||||
Total distributions | (0.50 | ) | (9.60 | ) | (0.07 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Net asset value, end of period | $ | 1.64 | $ | 2.31 | $ | 9.59 | $ | 9.67 | $ | 9.94 | ||||||||||
Total Return (c) | –9.16 | % | 24.20 | % | –0.15 | % | –1.85 | % | –0.36 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,505 | $ | 2,750 | $ | 19,816 | $ | 9,254 | $ | 7,112 | ||||||||||
Ratios to average net assets (d): | ||||||||||||||||||||
Net expenses | 1.05 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | ||||||||||
Gross expenses | 6.41 | % | 2.06 | % | 2.03 | % | 3.83 | % | 7.11 | % | ||||||||||
Net investment income (loss) | 0.60 | % | 0.76 | % | 0.76 | % | 0.63 | % | –0.08 | % | ||||||||||
Portfolio turnover rate | 46 | % | 65 | % | 67 | % | 65 | % | 24 | % |
The accompanying notes are an integral part of these financial statements.
232 Annual Report
Selected data for a share | For the Period | ||||||||||||||||||||
of capital stock outstanding | Year Ended | 8/29/14* | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | to 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 2.30 | $ | 9.59 | $ | 9.67 | $ | 9.94 | $ | 10.00 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.01 | 0.03 | 0.04 | 0.03 | (0.01 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | (0.19 | ) | 2.25 | (0.08 | ) | (0.25 | ) | (0.04 | ) | ||||||||||||
Total from investment operations | (0.18 | ) | 2.28 | (0.04 | ) | (0.22 | ) | (0.05 | ) | ||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | — | (b) | (0.17 | ) | (0.04 | ) | (0.05 | ) | (0.01 | ) | |||||||||||
Net realized gains | (0.49 | ) | (9.40 | ) | — | — | — | ||||||||||||||
Return of capital | — | — | — | — | — | (b) | |||||||||||||||
Total distributions | (0.49 | ) | (9.57 | ) | (0.04 | ) | (0.05 | ) | (0.01 | ) | |||||||||||
Net asset value, end of period | $ | 1.63 | $ | 2.30 | $ | 9.59 | $ | 9.67 | $ | 9.94 | |||||||||||
Total Return (c) | –9.39 | % | 23.72 | % | –0.45 | % | –2.16 | % | –0.46 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 131 | $ | 149 | $ | 114 | $ | 114 | $ | 135 | |||||||||||
Ratios to average net assets (d): | |||||||||||||||||||||
Net expenses | 1.35 | % | 1.41 | % | 1.40 | % | 1.40 | % | 1.40 | % | |||||||||||
Gross expenses | 14.05 | % | 12.33 | % | 13.31 | % | 14.12 | % | 24.52 | % | |||||||||||
Net investment income (loss) | 0.29 | % | 0.34 | % | 0.39 | % | 0.30 | % | –0.32 | % | |||||||||||
Portfolio turnover rate | 46 | % | 65 | % | 67 | % | 65 | % | 24 | % |
* | The Portfolio commenced operations on August 29, 2014. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 233
LAZARD INTERNATIONAL COMPOUNDERS PORTFOLIO
Selected data for a share | Period | |||||
of capital stock outstanding | Ended | |||||
throughout the period | 12/31/18* | |||||
Institutional Shares | ||||||
Net asset value, beginning of period | $ | 10.00 | ||||
Income (Loss) from investment operations: | ||||||
Net investment income (loss) | — | |||||
Net realized and unrealized gain (loss) | (0.02 | ) | ||||
Total from investment operations | (0.02 | ) | ||||
Net asset value, end of period | $ | 9.98 | ||||
Total Return (a) | –0.20 | % | ||||
Ratios and Supplemental Data: | ||||||
Net assets, end of period (in thousands) | $ | 149 | ||||
Ratios to average net assets (b): | ||||||
Net expenses | 0.00 | % | ||||
Gross expenses | 8.45 | % | ||||
Net investment income (loss) | 0.00 | % | ||||
Portfolio turnover rate | 0 | % |
The accompanying notes are an integral part of these financial statements.
234 Annual Report
Selected data for a share | Period | |||||
of capital stock outstanding | Ended | |||||
throughout the period | 12/31/18* | |||||
Open Shares | ||||||
Net asset value, beginning of period | $ | 10.00 | ||||
Income (Loss) from investment operations: | ||||||
Net investment income (loss) | — | |||||
Net realized and unrealized gain (loss) | — | (c) | ||||
Total from investment operations | — | (c) | ||||
Net asset value, end of period | $ | 10.00 | ||||
Total Return (a) | 0.00 | % | ||||
Ratios and Supplemental Data: | ||||||
Net assets, end of period (in thousands) | $ | 1 | ||||
Ratios to average net assets (b): | ||||||
Net expenses | 0.00 | % | ||||
Gross expenses | 0.40 | % | ||||
Net investment income (loss) | 0.00 | % | ||||
Portfolio turnover rate | 0 | % |
* | The Portfolio commenced operations on December 31, 2018. |
(a) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(b) | Annualized for a period of less than one year except for non-recurring expenses. |
(c) | Amount is less than $0.01 per share. |
The accompanying notes are an integral part of these financial statements.
Annual Report 235
LAZARD INTERNATIONAL EQUITY ADVANTAGE PORTFOLIO
Selected data for a share | For the Period | |||||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | ||||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 10.92 | $ | 8.91 | $ | 9.21 | $ | 10.00 | ||||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.24 | 0.19 | 0.18 | 0.04 | ||||||||||||||||
Net realized and unrealized gain (loss) | (2.01 | ) | 2.03 | (0.28 | ) | (0.70 | ) | |||||||||||||
Total from investment operations | (1.77 | ) | 2.22 | (0.10 | ) | (0.66 | ) | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.33 | ) | (0.21 | ) | (0.20 | ) | (0.13 | ) | ||||||||||||
Net realized gains | (0.12 | ) | — | — | — | |||||||||||||||
Total distributions | (0.45 | ) | (0.21 | ) | (0.20 | ) | (0.13 | ) | ||||||||||||
Net asset value, end of period | $ | 8.70 | $ | 10.92 | $ | 8.91 | $ | 9.21 | ||||||||||||
Total Return (b) | –16.26 | % | 24.98 | % | –1.13 | % | –6.63 | % | ||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,051 | $ | 2,508 | $ | 1,969 | $ | 1,797 | ||||||||||||
Ratios to average net assets (c): | ||||||||||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Gross expenses | 7.60 | % | 8.91 | % | 13.12 | % | 14.93 | % | ||||||||||||
Net investment income (loss) | 2.29 | % | 1.89 | % | 2.08 | % | 0.77 | % | ||||||||||||
Portfolio turnover rate | 72 | % | 88 | % | 92 | % | 58 | % |
The accompanying notes are an integral part of these financial statements.
236 Annual Report
Selected data for a share | For the Period | |||||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | ||||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 10.92 | $ | 8.91 | $ | 9.21 | $ | 10.00 | ||||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.21 | 0.16 | 0.15 | 0.03 | ||||||||||||||||
Net realized and unrealized gain (loss) | (2.01 | ) | 2.03 | (0.28 | ) | (0.71 | ) | |||||||||||||
Total from investment operations | (1.80 | ) | 2.19 | (0.13 | ) | (0.68 | ) | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.30 | ) | (0.18 | ) | (0.17 | ) | (0.11 | ) | ||||||||||||
Net realized gains | (0.12 | ) | — | — | — | |||||||||||||||
Total distributions | (0.42 | ) | (0.18 | ) | (0.17 | ) | (0.11 | ) | ||||||||||||
Net asset value, end of period | $ | 8.70 | $ | 10.92 | $ | 8.91 | $ | 9.21 | ||||||||||||
Total Return (b) | –16.52 | % | 24.60 | % | –1.42 | % | –6.80 | % | ||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 97 | $ | 116 | $ | 93 | $ | 93 | ||||||||||||
Ratios to average net assets (c): | ||||||||||||||||||||
Net expenses | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | ||||||||||||
Gross expenses | 17.67 | % | 20.85 | % | 25.85 | % | 30.10 | % | ||||||||||||
Net investment income (loss) | 1.99 | % | 1.58 | % | 1.74 | % | 0.47 | % | ||||||||||||
Portfolio turnover rate | 72 | % | 88 | % | 92 | % | 58 | % |
* | The Portfolio commenced operations on May 29, 2015. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(c) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 237
LAZARD INTERNATIONAL EQUITY CONCENTRATED PORTFOLIO
Selected data for a share | For the Period | ||||||||||||||||||||
of capital stock outstanding | Year Ended | 8/29/14* | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | to 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 10.43 | $ | 8.54 | $ | 8.27 | $ | 9.53 | $ | 10.00 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.14 | 0.13 | 0.14 | 0.10 | (0.01 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | (1.84 | ) | 1.86 | 0.25 | (1.25 | ) | (0.45 | ) | |||||||||||||
Total from investment operations | (1.70 | ) | 1.99 | 0.39 | (1.15 | ) | (0.46 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.17 | ) | (0.10 | ) | (0.12 | ) | (0.11 | ) | (0.01 | ) | |||||||||||
Net realized gains | (0.22 | ) | — | — | — | — | (b) | ||||||||||||||
Total distributions | (0.39 | ) | (0.10 | ) | (0.12 | ) | (0.11 | ) | (0.01 | ) | |||||||||||
Redemption fees | — | — | — | — | (b) | — | |||||||||||||||
Net asset value, end of period | $ | 8.34 | $ | 10.43 | $ | 8.54 | $ | 8.27 | $ | 9.53 | |||||||||||
Total Return (c) | –16.20 | % | 23.29 | % | 4.74 | % | –12.06 | % | –4.60 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 49,105 | $ | 69,440 | $ | 15,473 | $ | 13,753 | $ | 9,103 | |||||||||||
Ratios to average net assets (d): | |||||||||||||||||||||
Net expenses | 1.00 | % | 1.05 | % | 1.05 | % | 1.06 | % | 1.15 | % | |||||||||||
Gross expenses | 1.13 | % | 1.34 | % | 2.29 | % | 2.96 | % | 7.40 | % | |||||||||||
Net investment income (loss) | 1.45 | % | 1.35 | % | 1.64 | % | 1.13 | % | –0.41 | % | |||||||||||
Portfolio turnover rate | 76 | % | 81 | % | 92 | % | 91 | % | 45 | % |
The accompanying notes are an integral part of these financial statements.
238 Annual Report
Selected data for a share | For the Period | ||||||||||||||||||||
of capital stock outstanding | Year Ended | 8/29/14* | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | to 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 10.45 | $ | 8.56 | $ | 8.29 | $ | 9.53 | $ | 10.00 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.09 | 0.10 | 0.11 | 0.06 | (0.02 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | (1.82 | ) | 1.86 | 0.26 | (1.22 | ) | (0.45 | ) | |||||||||||||
Total from investment operations | (1.73 | ) | 1.96 | 0.37 | (1.16 | ) | (0.47 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.15 | ) | (0.07 | ) | (0.10 | ) | (0.08 | ) | — | ||||||||||||
Net realized gains | (0.22 | ) | — | — | — | — | (b) | ||||||||||||||
Total distributions | (0.37 | ) | (0.07 | ) | (0.10 | ) | (0.08 | ) | — | (b) | |||||||||||
Redemption fees | — | — | — | — | (b) | — | |||||||||||||||
Net asset value, end of period | $ | 8.35 | $ | 10.45 | $ | 8.56 | $ | 8.29 | $ | 9.53 | |||||||||||
Total Return (c) | –16.47 | % | 22.87 | % | 4.41 | % | –12.18 | % | –4.66 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 399 | $ | 220 | $ | 114 | $ | 55 | $ | 559 | |||||||||||
Ratios to average net assets (d): | |||||||||||||||||||||
Net expenses | 1.29 | % | 1.35 | % | 1.35 | % | 1.39 | % | 1.45 | % | |||||||||||
Gross expenses | 5.24 | % | 8.15 | % | 11.98 | % | 9.93 | % | 12.39 | % | |||||||||||
Net investment income (loss) | 0.96 | % | 1.04 | % | 1.32 | % | 0.60 | % | –0.55 | % | |||||||||||
Portfolio turnover rate | 76 | % | 81 | % | 92 | % | 91 | % | 45 | % |
* | The Portfolio commenced operations on August 29, 2014. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 239
LAZARD INTERNATIONAL EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 19.61 | $ | 16.20 | $ | 17.08 | $ | 16.93 | $ | 17.85 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.37 | 0.26 | 0.27 | ^ | 0.27 | 0.26 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.06 | ) | 3.43 | (0.98 | ) | — | (1.02 | ) | |||||||||||||
Total from investment operations | (2.69 | ) | 3.69 | (0.71 | ) | 0.27 | (0.76 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.42 | ) | (0.28 | ) | (0.17 | ) | (0.12 | ) | (0.16 | ) | |||||||||||
Net realized gains | (0.82 | ) | — | — | — | — | |||||||||||||||
Total distributions | (1.24 | ) | (0.28 | ) | (0.17 | ) | (0.12 | ) | (0.16 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 15.68 | $ | 19.61 | $ | 16.20 | $ | 17.08 | $ | 16.93 | |||||||||||
Total Return (c) | –13.61 | %# | 22.81 | % | –4.18 | %^ | 1.62 | % | –4.29 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,102,735 | $ | 2,835,262 | $ | 1,511,516 | $ | 736,272 | $ | 378,488 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.81 | % | 0.81 | % | 0.82 | %^ | 0.86 | % | 0.90 | % | |||||||||||
Gross expenses | 0.81 | % | 0.81 | % | 0.84 | % | 0.87 | % | 0.90 | % | |||||||||||
Net investment income (loss) | 1.94 | % | 1.44 | % | 1.62 | %^ | 1.50 | % | 1.46 | % | |||||||||||
Portfolio turnover rate | 36 | % | 31 | % | 25 | % | 30 | % | 36 | % |
The accompanying notes are an integral part of these financial statements.
240 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 19.83 | $ | 16.38 | $ | 17.23 | $ | 17.07 | $ | 18.00 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.32 | 0.30 | 0.13 | ^ | 0.23 | 0.27 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.08 | ) | 3.38 | (0.90 | ) | — | (1.09 | ) | |||||||||||||
Total from investment operations | (2.76 | ) | 3.68 | (0.77 | ) | 0.23 | (0.82 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.38 | ) | (0.23 | ) | (0.08 | ) | (0.07 | ) | (0.11 | ) | |||||||||||
Net realized gains | (0.82 | ) | — | — | — | — | |||||||||||||||
Total distributions | (1.20 | ) | (0.23 | ) | (0.08 | ) | (0.07 | ) | (0.11 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 15.87 | $ | 19.83 | $ | 16.38 | $ | 17.23 | $ | 17.07 | |||||||||||
Total Return (c) | –13.83 | %# | 22.50 | % | –4.46 | %^ | 1.36 | % | –4.57 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 227,483 | $ | 275,014 | $ | 1,073,486 | $ | 80,221 | $ | 57,350 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.06 | % | 1.06 | % | 1.07 | %^ | 1.14 | % | 1.17 | % | |||||||||||
Gross expenses | 1.06 | % | 1.06 | % | 1.10 | % | 1.14 | % | 1.17 | % | |||||||||||
Net investment income (loss) | 1.67 | % | 1.69 | % | 0.80 | %^ | 1.29 | % | 1.49 | % | |||||||||||
Portfolio turnover rate | 36 | % | 31 | % | 25 | % | 30 | % | 36 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 241
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 4/1/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
R6 Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 19.59 | $ | 16.18 | $ | 17.07 | $ | 17.94 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.36 | 0.31 | 0.31 | ^ | 0.21 | ||||||||||||
Net realized and unrealized gain (loss) | (3.05 | ) | 3.38 | (1.02 | ) | (0.95 | ) | ||||||||||
Total from investment operations | (2.69 | ) | 3.69 | (0.71 | ) | (0.74 | ) | ||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.42 | ) | (0.28 | ) | (0.18 | ) | (0.13 | ) | |||||||||
Net realized gains | (0.82 | ) | — | — | — | ||||||||||||
Total distributions | (1.24 | ) | (0.28 | ) | (0.18 | ) | (0.13 | ) | |||||||||
Net asset value, end of period | $ | 15.66 | $ | 19.59 | $ | 16.18 | $ | 17.07 | |||||||||
Total Return (c) | –13.62 | %# | 22.85 | % | –4.17 | %^ | –4.10 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 106,516 | $ | 693,744 | $ | 79,119 | $ | 49,387 | |||||||||
Ratios to average net assets (d): | |||||||||||||||||
Net expenses | 0.80 | % | 0.80 | % | 0.80 | %^ | 0.80 | % | |||||||||
Gross expenses | 0.81 | % | 0.81 | % | 0.86 | % | 0.92 | % | |||||||||
Net investment income (loss) | 1.84 | % | 1.68 | % | 1.88 | %^ | 1.55 | % | |||||||||
Portfolio turnover rate | 36 | % | 31 | % | 25 | % | 30 | % |
* | The inception date for the R6 Shares was April 1, 2015. |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. There was a 0.02%, 0.03% and 0.02% impact on the net expenses and net investment income (loss) ratios of the Portfolio’s Institutional, Open and R6 Shares, respectively. |
# | The Portfolio received settlement proceeds from a foreign exchange trading class action lawsuit. The proceeds from the settlement represent a realized gain and were recorded in the period received. There was a 0.16%, 0.16% and 0.33% impact on the total return of the Portfolio’s Institutional, Open and R6 Shares, respectively. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
242 Annual Report
LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 11.02 | $ | 8.65 | $ | 8.80 | $ | 9.24 | $ | 9.76 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.18 | 0.13 | 0.12 | 0.12 | 0.15 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.82 | ) | 2.31 | (0.17 | ) | (0.46 | ) | (0.58 | ) | ||||||||||||
Total from investment operations | (1.64 | ) | 2.44 | (0.05 | ) | (0.34 | ) | (0.43 | ) | ||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.25 | ) | (0.07 | ) | (0.10 | ) | (0.10 | ) | (0.11 | ) | |||||||||||
Total distributions | (0.25 | ) | (0.07 | ) | (0.10 | ) | (0.10 | ) | (0.11 | ) | |||||||||||
Redemption fees | — | — | — | — | (b) | 0.02 | |||||||||||||||
Net asset value, end of period | $ | 9.13 | $ | 11.02 | $ | 8.65 | $ | 8.80 | $ | 9.24 | |||||||||||
Total Return (c) | –14.90 | % | 28.31 | % | –0.63 | % | –3.63 | % | –4.29 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 74,582 | $ | 53,929 | $ | 28,299 | $ | 18,757 | $ | 12,749 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.05 | % | 1.05 | % | 1.05 | % | 1.06 | % | 1.15 | % | |||||||||||
Gross expenses | 1.05 | % | 1.31 | % | 1.79 | % | 2.13 | % | 2.10 | % | |||||||||||
Net investment income (loss) | 1.73 | % | 1.27 | % | 1.36 | % | 1.25 | % | 1.54 | % | |||||||||||
Portfolio turnover rate | 32 | % | 30 | % | 42 | % | 51 | % | 80 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 243
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 11.03 | $ | 8.66 | $ | 8.82 | $ | 9.25 | $ | 9.79 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.15 | 0.10 | 0.10 | 0.11 | 0.11 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.82 | ) | 2.31 | (0.19 | ) | (0.47 | ) | (0.57 | ) | ||||||||||||
Total from investment operations | (1.67 | ) | 2.41 | (0.09 | ) | (0.36 | ) | (0.46 | ) | ||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.19 | ) | (0.04 | ) | (0.07 | ) | (0.07 | ) | (0.08 | ) | |||||||||||
Total distributions | (0.19 | ) | (0.04 | ) | (0.07 | ) | (0.07 | ) | (0.08 | ) | |||||||||||
Redemption fees | — | — | — | — | — | (b) | |||||||||||||||
Net asset value, end of period | $ | 9.17 | $ | 11.03 | $ | 8.66 | $ | 8.82 | $ | 9.25 | |||||||||||
Total Return (c) | –15.16 | % | 27.89 | % | –1.03 | % | –3.85 | % | –4.76 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,502 | $ | 2,831 | $ | 2,092 | $ | 2,184 | $ | 3,048 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.35 | % | 1.35 | % | 1.35 | % | 1.37 | % | 1.45 | % | |||||||||||
Gross expenses | 1.83 | % | 2.07 | % | 2.59 | % | 2.75 | % | 2.70 | % | |||||||||||
Net investment income (loss) | 1.42 | % | 1.01 | % | 1.13 | % | 1.15 | % | 1.11 | % | |||||||||||
Portfolio turnover rate | 32 | % | 30 | % | 42 | % | 51 | % | 80 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
244 Annual Report
LAZARD INTERNATIONAL EQUITY VALUE PORTFOLIO
Selected data for a share | For the Period | ||||
of capital stock outstanding | 10/31/18* to | ||||
throughout the period | 12/31/18 | ||||
Institutional Shares | |||||
Net asset value, beginning of period | $ | 10.00 | |||
Income (Loss) from investment operations: | |||||
Net investment income (loss) (a) | 0.01 | ||||
Net realized and unrealized gain (loss) | (0.86 | ) | |||
Total from investment operations | (0.85 | ) | |||
Less distributions from: | |||||
Net investment income | (0.01 | ) | |||
Total distributions | (0.01 | ) | |||
Net asset value, end of period | $ | 9.14 | |||
Total Return (b) | –8.49 | % | |||
Ratios and Supplemental Data: | |||||
Net assets, end of period (in thousands) | $ | 22,945 | |||
Ratios to average net assets (c): | |||||
Net expenses | 0.95 | % | |||
Gross expenses | 1.34 | % | |||
Net investment income (loss) | 0.72 | % | |||
Portfolio turnover rate | 37 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 245
Selected data for a share | For the Period | ||||
of capital stock outstanding | 10/31/18* to | ||||
throughout the period | 12/31/18 | ||||
Open Shares | |||||
Net asset value, beginning of period | $ | 10.00 | |||
Income (Loss) from investment operations: | |||||
Net investment income (loss) (a) | — | (d) | |||
Net realized and unrealized gain (loss) | (0.86 | ) | |||
Total from investment operations | (0.86 | ) | |||
Less distributions from: | |||||
Net investment income | (0.01 | ) | |||
Total distributions | (0.01 | ) | |||
Net asset value, end of period | $ | 9.13 | |||
Total Return (b) | –8.63 | % | |||
Ratios and Supplemental Data: | |||||
Net assets, end of period (in thousands) | $ | 38 | |||
Ratios to average net assets (c): | |||||
Net expenses | 1.20 | % | |||
Gross expenses | 7.91 | % | |||
Net investment income (loss) | 0.03 | % | |||
Portfolio turnover rate | 37 | % |
* | The Portfolio commenced operations on October 31, 2018. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(c) | Annualized for a period of less than one year except for non-recurring expenses. |
(d) | Amount is less than $0.01 per share. |
The accompanying notes are an integral part of these financial statements.
246 Annual Report
LAZARD INTERNATIONAL SMALL CAP EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 13.79 | $ | 10.10 | $ | 10.90 | $ | 10.01 | $ | 10.54 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.12 | 0.10 | 0.12 | ^ | 0.10 | 0.12 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.51 | ) | 3.59 | (0.62 | ) | 0.87 | (0.40 | ) | |||||||||||||
Total from investment operations | (3.39 | ) | 3.69 | (0.50 | ) | 0.97 | (0.28 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.27 | ) | — | (0.30 | ) | (0.08 | ) | (0.25 | ) | ||||||||||||
Net realized gains | (0.18 | ) | — | — | — | — | |||||||||||||||
Total distributions | (0.45 | ) | — | (0.30 | ) | (0.08 | ) | (0.25 | ) | ||||||||||||
Redemption fees | — | — | — | — | (b) | — | (b) | ||||||||||||||
Net asset value, end of period | $ | 9.95 | $ | 13.79 | $ | 10.10 | $ | 10.90 | $ | 10.01 | |||||||||||
Total Return (c) | –24.88 | %# | 36.53 | % | –4.64 | %^ | 9.71 | % | –2.77 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 35,121 | $ | 41,267 | $ | 37,049 | $ | 51,828 | $ | 46,329 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.08 | % | 1.09 | % | 0.96 | %^ | 1.11 | % | 1.13 | % | |||||||||||
Gross expenses | 1.08 | % | 1.09 | % | 1.06 | % | 1.11 | % | 1.15 | % | |||||||||||
Net investment income (loss) | 0.96 | % | 0.85 | % | 1.14 | %^ | 0.91 | % | 1.13 | % | |||||||||||
Portfolio turnover rate | 59 | % | 35 | % | 63 | % | 48 | % | 48 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 247
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 13.82 | $ | 10.15 | $ | 10.93 | $ | 10.03 | $ | 10.56 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.11 | 0.07 | 0.10 | ^ | 0.07 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss) | (3.54 | ) | 3.60 | (0.63 | ) | 0.88 | (0.40 | ) | |||||||||||||
Total from investment operations | (3.43 | ) | 3.67 | (0.53 | ) | 0.95 | (0.31 | ) | |||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.24 | ) | — | (0.25 | ) | (0.05 | ) | (0.22 | ) | ||||||||||||
Net realized gains | (0.18 | ) | — | — | — | — | |||||||||||||||
Total distributions | (0.42 | ) | — | (0.25 | ) | (0.05 | ) | (0.22 | ) | ||||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 9.97 | $ | 13.82 | $ | 10.15 | $ | 10.93 | $ | 10.03 | |||||||||||
Total Return (c) | –25.09 | %# | 36.16 | % | –4.92 | %^ | 9.49 | % | –3.05 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 20,265 | $ | 42,362 | $ | 44,523 | $ | 55,776 | $ | 19,994 | |||||||||||
Ratios to average net assets: | �� | ||||||||||||||||||||
Net expenses | 1.34 | % | 1.34 | % | 1.21 | %^ | 1.38 | % | 1.43 | % | |||||||||||
Gross expenses | 1.34 | % | 1.34 | % | 1.30 | % | 1.38 | % | 1.44 | % | |||||||||||
Net investment income (loss) | 0.83 | % | 0.61 | % | 0.91 | %^ | 0.63 | % | 0.85 | % | |||||||||||
Portfolio turnover rate | 59 | % | 35 | % | 63 | % | 48 | % | 48 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The impact on the net investment income per share amount was $0.01 per share. There was a 0.10% and 0.09% impact on the total return of the Institutional and Open Shares classes, respectively, of the Portfolio. There was a 0.10% and 0.09% impact on the net expenses and net investment income (loss) ratios of the Portfolio’s Institutional and Open Shares, respectively. |
# | The Portfolio received settlement proceeds from a foreign exchange trading class action lawsuit. The proceeds from the settlement represented a realized gain and were recorded in the period received. There was a 0.46% and 0.53% impact on the total return of the Portfolio’s Institutional and Open Shares, respectively. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
248 Annual Report
LAZARD INTERNATIONAL STRATEGIC EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.70 | $ | 12.44 | $ | 13.33 | $ | 13.72 | $ | 14.46 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.21 | 0.17 | 0.20 | ^ | 0.16 | 0.19 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.85 | ) | 3.29 | (0.89 | ) | (0.40 | ) | (0.39 | ) | ||||||||||||
Total from investment operations | (1.64 | ) | 3.46 | (0.69 | ) | (0.24 | ) | (0.20 | ) | ||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.21 | ) | (0.20 | ) | (0.20 | ) | (0.14 | ) | (0.16 | ) | |||||||||||
Net realized gains | (0.96 | ) | — | — | (0.01 | ) | (0.38 | ) | |||||||||||||
Total distributions | (1.17 | ) | (0.20 | ) | (0.20 | ) | (0.15 | ) | (0.54 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 12.89 | $ | 15.70 | $ | 12.44 | $ | 13.33 | $ | 13.72 | |||||||||||
Total Return (c) | –10.35 | % | 27.85 | % | –5.17 | %^ | –1.70 | % | –1.48 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,630,334 | $ | 5,911,184 | $ | 5,114,357 | $ | 4,923,328 | $ | 3,727,391 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.80 | % | 0.80 | % | 0.81 | %^ | 0.82 | % | 0.84 | % | |||||||||||
Gross expenses | 0.80 | % | 0.80 | % | 0.81 | % | 0.82 | % | 0.84 | % | |||||||||||
Net investment income (loss) | 1.36 | % | 1.20 | % | 1.56 | %^ | 1.15 | % | 1.28 | % | |||||||||||
Portfolio turnover rate | 40 | % | 44 | % | 47 | % | 37 | % | 33 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 249
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.83 | $ | 12.55 | $ | 13.44 | $ | 13.82 | $ | 14.57 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.17 | 0.14 | 0.18 | ^ | 0.13 | 0.16 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.86 | ) | 3.30 | (0.90 | ) | (0.40 | ) | (0.41 | ) | ||||||||||||
Total from investment operations | (1.69 | ) | 3.44 | (0.72 | ) | (0.27 | ) | (0.25 | ) | ||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.17 | ) | (0.16 | ) | (0.17 | ) | (0.10 | ) | (0.12 | ) | |||||||||||
Net realized gains | (0.96 | ) | — | — | (0.01 | ) | (0.38 | ) | |||||||||||||
Total distributions | (1.13 | ) | (0.16 | ) | (0.17 | ) | (0.11 | ) | (0.50 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 13.01 | $ | 15.83 | $ | 12.55 | $ | 13.44 | $ | 13.82 | |||||||||||
Total Return (c) | –10.55 | % | 27.44 | % | –5.37 | %^ | –1.89 | % | –1.78 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 832,548 | $ | 1,216,861 | $ | 1,591,016 | $ | 1,783,529 | $ | 1,574,106 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.05 | % | 1.06 | % | 1.06 | %^ | 1.08 | % | 1.09 | % | |||||||||||
Gross expenses | 1.05 | % | 1.06 | % | 1.06 | % | 1.08 | % | 1.09 | % | |||||||||||
Net investment income (loss) | 1.10 | % | 0.97 | % | 1.34 | %^ | 0.94 | % | 1.06 | % | |||||||||||
Portfolio turnover rate | 40 | % | 44 | % | 47 | % | 37 | % | 33 | % |
The accompanying notes are an integral part of these financial statements.
250 Annual Report
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 1/19/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
R6 Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 15.71 | $ | 12.45 | $ | 13.34 | $ | 13.70 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.21 | 0.16 | 0.19 | ^ | (0.03 | ) | |||||||||||
Net realized and unrealized gain (loss) | (1.85 | ) | 3.30 | (0.88 | ) | (0.21 | ) | ||||||||||
Total from investment operations | (1.64 | ) | 3.46 | (0.69 | ) | (0.24 | ) | ||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.21 | ) | (0.20 | ) | (0.20 | ) | (0.11 | ) | |||||||||
Net realized gains | (0.96 | ) | — | — | (0.01 | ) | |||||||||||
Total distributions | (1.17 | ) | (0.20 | ) | (0.20 | ) | (0.12 | ) | |||||||||
Redemption fees | — | — | — | (b) | — | ||||||||||||
Net asset value, end of period | $ | 12.90 | $ | 15.71 | $ | 12.45 | $ | 13.34 | |||||||||
Total Return (c) | –10.35 | % | 27.82 | % | –5.17 | %^ | –1.73 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 97,394 | $ | 110,383 | $ | 96,284 | $ | 72,362 | |||||||||
Ratios to average net assets (d): | |||||||||||||||||
Net expenses | 0.80 | % | 0.80 | % | 0.81 | %^ | 1.03 | % | |||||||||
Gross expenses | 0.81 | % | 0.82 | % | 0.82 | % | 1.09 | % | |||||||||
Net investment income (loss) | 1.34 | % | 1.15 | % | 1.46 | %^ | –0.22 | % | |||||||||
Portfolio turnover rate | 40 | % | 44 | % | 47 | % | 37 | % |
* | The inception date for the R6 Shares was January 19, 2015. |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 251
LAZARD MANAGED EQUITY VOLATILITY PORTFOLIO
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
Institutional Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 11.57 | $ | 9.99 | $ | 9.59 | $ | 10.00 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.19 | 0.19 | 0.18 | 0.09 | |||||||||||||
Net realized and unrealized gain (loss) | (1.03 | ) | 1.87 | 0.44 | (0.33 | ) | |||||||||||
Total from investment operations | (0.84 | ) | 2.06 | 0.62 | (0.24 | ) | |||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.16 | ) | (0.17 | ) | (0.22 | ) | (0.17 | ) | |||||||||
Net realized gains | (0.02 | ) | (0.31 | ) | — | — | |||||||||||
Total distributions | (0.18 | ) | (0.48 | ) | (0.22 | ) | (0.17 | ) | |||||||||
Net asset value, end of period | $ | 10.55 | $ | 11.57 | $ | 9.99 | $ | 9.59 | |||||||||
Total Return (b) | –7.21 | % | 20.57 | % | 6.45 | % | –2.42 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 20,709 | $ | 4,180 | $ | 2,431 | $ | 2,206 | |||||||||
Ratios to average net assets (c): | |||||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | |||||||||
Gross expenses | 1.64 | % | 6.51 | % | 10.42 | % | 13.51 | % | |||||||||
Net investment income (loss) | 1.66 | % | 1.71 | % | 1.82 | % | 1.64 | % | |||||||||
Portfolio turnover rate | 122 | % | 87 | % | 91 | % | 56 | % |
The accompanying notes are an integral part of these financial statements.
252 Annual Report
Selected data for a share | For the Period | ||||||||||||||||
of capital stock outstanding | Year Ended | 5/29/15* to | |||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |||||||||||||
Open Shares | |||||||||||||||||
Net asset value, beginning of period | $ | 11.56 | $ | 9.99 | $ | 9.59 | $ | 10.00 | |||||||||
Income (Loss) from investment operations: | |||||||||||||||||
Net investment income (loss) (a) | 0.15 | 0.16 | 0.15 | 0.08 | |||||||||||||
Net realized and unrealized gain (loss) | (1.02 | ) | 1.85 | 0.44 | (0.34 | ) | |||||||||||
Total from investment operations | (0.87 | ) | 2.01 | 0.59 | (0.26 | ) | |||||||||||
Less distributions from: | |||||||||||||||||
Net investment income | (0.13 | ) | (0.13 | ) | (0.19 | ) | (0.15 | ) | |||||||||
Net realized gains | (0.02 | ) | (0.31 | ) | — | — | |||||||||||
Total distributions | (0.15 | ) | (0.44 | ) | (0.19 | ) | (0.15 | ) | |||||||||
Net asset value, end of period | $ | 10.54 | $ | 11.56 | $ | 9.99 | $ | 9.59 | |||||||||
Total Return (b) | –7.50 | % | 20.11 | % | 6.14 | % | –2.60 | % | |||||||||
Ratios and Supplemental Data: | |||||||||||||||||
Net assets, end of period (in thousands) | $ | 183 | $ | 315 | $ | 172 | $ | 175 | |||||||||
Ratios to average net assets (c): | |||||||||||||||||
Net expenses | 1.05 | % | 1.05 | % | 1.05 | % | 1.05 | % | |||||||||
Gross expenses | 5.86 | % | 12.07 | % | 17.27 | % | 23.94 | % | |||||||||
Net investment income (loss) | 1.28 | % | 1.42 | % | 1.52 | % | 1.33 | % | |||||||||
Portfolio turnover rate | 122 | % | 87 | % | 91 | % | 56 | % |
* | The Portfolio commenced operations on May 29, 2015. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(c) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 253
LAZARD US EQUITY CONCENTRATED PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.31 | $ | 14.16 | $ | 13.83 | $ | 13.41 | $ | 12.59 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.18 | 0.14 | 0.06 | ^ | 0.05 | 0.11 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.11 | ) | 2.05 | 0.97 | 0.88 | 2.23 | |||||||||||||||
Total from investment operations | (0.93 | ) | 2.19 | 1.03 | 0.93 | 2.34 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.20 | ) | (0.14 | ) | (0.05 | ) | (0.04 | ) | (0.09 | ) | |||||||||||
Net realized gains | (1.29 | ) | (0.90 | ) | (0.65 | ) | (0.47 | ) | (1.43 | ) | |||||||||||
Total distributions | (1.49 | ) | (1.04 | ) | (0.70 | ) | (0.51 | ) | (1.52 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 12.89 | $ | 15.31 | $ | 14.16 | $ | 13.83 | $ | 13.41 | |||||||||||
Total Return (c) | –6.07 | % | 15.49 | % | 7.37 | %^ | 7.00 | % | 18.88 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,040,851 | $ | 1,508,581 | $ | 1,230,377 | $ | 715,766 | $ | 331,074 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.77 | %^ | 0.79 | % | 0.81 | % | |||||||||||
Gross expenses | 0.75 | % | 0.75 | % | 0.77 | % | 0.79 | % | 0.81 | % | |||||||||||
Net investment income (loss) | 1.14 | % | 0.90 | % | 0.39 | %^ | 0.36 | % | 0.79 | % | |||||||||||
Portfolio turnover rate | 69 | % | 86 | % | 84 | % | 74 | % | 63 | % |
The accompanying notes are an integral part of these financial statements.
254 Annual Report
Selected data for a share of capital stock outstanding throughout each period | Year Ended | ||||||||||||||||||||
12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 15.42 | $ | 14.25 | $ | 13.92 | $ | 13.50 | $ | 12.68 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.13 | 0.10 | 0.02 | ^ | 0.01 | 0.05 | |||||||||||||||
Net realized and unrealized gain (loss) | (1.11 | ) | 2.07 | 0.97 | 0.88 | 2.23 | |||||||||||||||
Total from investment operations | (0.98 | ) | 2.17 | 0.99 | 0.89 | 2.28 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.16 | ) | (0.10 | ) | (0.01 | ) | — | (b) | (0.03 | ) | |||||||||||
Net realized gains | (1.29 | ) | (0.90 | ) | (0.65 | ) | (0.47 | ) | (1.43 | ) | |||||||||||
Total distributions | (1.45 | ) | (1.00 | ) | (0.66 | ) | (0.47 | ) | (1.46 | ) | |||||||||||
Redemption fees | — | �� | — | — | (b) | — | (b) | — | (b) | ||||||||||||
Net asset value, end of period | $ | 12.99 | $ | 15.42 | $ | 14.25 | $ | 13.92 | $ | 13.50 | |||||||||||
Total Return (c) | –6.35 | % | 15.22 | % | 7.06 | %^ | 6.67 | % | 18.28 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 50,981 | $ | 87,603 | $ | 105,619 | $ | 114,348 | $ | 8,011 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.03 | % | 1.03 | % | 1.03 | %^ | 1.07 | % | 1.25 | % | |||||||||||
Gross expenses | 1.03 | % | 1.03 | % | 1.03 | % | 1.07 | % | 1.46 | % | |||||||||||
Net investment income (loss) | 0.85 | % | 0.62 | % | 0.17 | %^ | 0.08 | % | 0.37 | % | |||||||||||
Portfolio turnover rate | 69 | % | 86 | % | 84 | % | 74 | % | 63 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 255
Selected data for a share of capital stock outstanding throughout each period | Year Ended | For the Period 11/15/16* to | ||||||||||||||||||
12/31/18 | 12/31/17 | 12/31/16 | ||||||||||||||||||
R6 Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.34 | $ | 14.18 | $ | 14.77 | ||||||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.17 | 0.14 | — | (b)^ | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.10 | ) | 2.06 | 0.03 | ||||||||||||||||
Total from investment operations | (0.93 | ) | 2.20 | 0.03 | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.20 | ) | (0.14 | ) | (0.03 | ) | ||||||||||||||
Net realized gains | (1.29 | ) | (0.90 | ) | (0.59 | ) | ||||||||||||||
Total distributions | (1.49 | ) | (1.04 | ) | (0.62 | ) | ||||||||||||||
Net asset value, end of period | $ | 12.92 | $ | 15.34 | $ | 14.18 | ||||||||||||||
Total Return (c) | –6.08 | % | 15.52 | % | 0.17 | %^ | ||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,900 | $ | 361 | $ | 140 | ||||||||||||||
Ratios to average net assets (d): | ||||||||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.77 | %^ | ||||||||||||||
Gross expenses | 2.16 | % | 8.34 | % | 15.38 | % | ||||||||||||||
Net investment income (loss) | 1.15 | % | 0.91 | % | 0.19 | %^ | ||||||||||||||
Portfolio turnover rate | 69 | % | 86 | % | 84 | % |
* | The inception date for the R6 Shares was November 15, 2016. |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
256 Annual Report
LAZARD US EQUITY SELECT PORTFOLIO
Selected data for a share of capital stock outstanding throughout each period | Year Ended | ||||||||||||||||||||
12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.43 | $ | 11.63 | $ | 10.97 | $ | 12.43 | $ | 12.49 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.14 | 0.14 | 0.12 | 0.09 | 0.14 | ||||||||||||||||
Net realized and unrealized gain (loss) | (0.55 | ) | 1.94 | 0.94 | (0.69 | ) | 1.73 | ||||||||||||||
Total from investment operations | (0.41 | ) | 2.08 | 1.06 | (0.60 | ) | 1.87 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.29 | ) | (0.21 | ) | (0.10 | ) | (0.10 | ) | (0.13 | ) | |||||||||||
Net realized gains | (1.50 | ) | (1.07 | ) | (0.30 | ) | (0.76 | ) | (1.80 | ) | |||||||||||
Total distributions | (1.79 | ) | (1.28 | ) | (0.40 | ) | (0.86 | ) | (1.93 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.23 | $ | 12.43 | $ | 11.63 | $ | 10.97 | $ | 12.43 | |||||||||||
Total Return (c) | –3.12 | % | 18.17 | % | 9.70 | % | –4.75 | % | 15.04 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 60,629 | $ | 72,958 | $ | 72,151 | $ | 110,243 | $ | 119,941 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | |||||||||||
Gross expenses | 0.92 | % | 0.95 | % | 0.94 | % | 0.90 | % | 0.90 | % | |||||||||||
Net investment income (loss) | 1.10 | % | 1.10 | % | 1.08 | % | 0.77 | % | 1.05 | % | |||||||||||
Portfolio turnover rate | 62 | % | 74 | % | 68 | % | 75 | % | 69 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 257
Selected data for a share of capital stock outstanding throughout each period | Year Ended | ||||||||||||||||||||
12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.48 | $ | 11.68 | $ | 11.01 | $ | 12.48 | $ | 12.53 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.10 | 0.10 | 0.09 | 0.06 | 0.10 | ||||||||||||||||
Net realized and unrealized gain (loss) | (0.54 | ) | 1.94 | 0.94 | (0.71 | ) | 1.74 | ||||||||||||||
Total from investment operations | (0.44 | ) | 2.04 | 1.03 | (0.65 | ) | 1.84 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.26 | ) | (0.17 | ) | (0.06 | ) | (0.06 | ) | (0.09 | ) | |||||||||||
Net realized gains | (1.50 | ) | (1.07 | ) | (0.30 | ) | (0.76 | ) | (1.80 | ) | |||||||||||
Total distributions | (1.76 | ) | (1.24 | ) | (0.36 | ) | (0.82 | ) | (1.89 | ) | |||||||||||
Net asset value, end of period | $ | 10.28 | $ | 12.48 | $ | 11.68 | $ | 11.01 | $ | 12.48 | |||||||||||
Total Return (c) | –3.40 | % | 17.75 | % | 9.46 | % | –5.11 | % | 14.77 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 881 | $ | 1,013 | $ | 1,376 | $ | 1,536 | $ | 6,833 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.05 | % | 1.05 | % | 1.05 | % | 1.05 | % | 1.05 | % | |||||||||||
Gross expenses | 2.33 | % | 2.30 | % | 2.13 | % | 1.51 | % | 1.31 | % | |||||||||||
Net investment income (loss) | 0.80 | % | 0.79 | % | 0.80 | % | 0.50 | % | 0.75 | % | |||||||||||
Portfolio turnover rate | 62 | % | 74 | % | 68 | % | 75 | % | 69 | % |
The accompanying notes are an integral part of these financial statements.
258 Annual Report
Selected data for a share | For the Period | ||||||||||||||||||||
of capital stock outstanding | Year Ended | 5/19/14* | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | to 12/31/14 | ||||||||||||||||
R6 Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 12.43 | $ | 11.63 | $ | 10.96 | $ | 12.43 | $ | 12.81 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.14 | 0.14 | 0.14 | 0.10 | 0.09 | ||||||||||||||||
Net realized and unrealized gain (loss) | (0.55 | ) | 1.94 | 0.93 | (0.71 | ) | 1.47 | ||||||||||||||
Total from investment operations | (0.41 | ) | 2.08 | 1.07 | (0.61 | ) | 1.56 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.29 | ) | (0.21 | ) | (0.10 | ) | (0.10 | ) | (0.14 | ) | |||||||||||
Net realized gains | (1.50 | ) | (1.07 | ) | (0.30 | ) | (0.76 | ) | (1.80 | ) | |||||||||||
Total distributions | (1.79 | ) | (1.28 | ) | (0.40 | ) | (0.86 | ) | (1.94 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.23 | $ | 12.43 | $ | 11.63 | $ | 10.96 | $ | 12.43 | |||||||||||
Total Return (c) | –3.13 | % | 18.16 | % | 9.81 | % | –4.78 | % | 12.23 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 10,056 | $ | 11,394 | $ | 13,297 | $ | 12,359 | $ | 14,951 | |||||||||||
Ratios to average net assets (d): | |||||||||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.74 | % | 0.70 | % | 0.70 | % | |||||||||||
Gross expenses | 1.01 | % | 1.05 | % | 1.02 | % | 1.00 | % | 1.06 | % | |||||||||||
Net investment income (loss) | 1.10 | % | 1.12 | % | 1.27 | % | 0.82 | % | 1.14 | % | |||||||||||
Portfolio turnover rate | 62 | % | 74 | % | 68 | % | 75 | % | 69 | % |
* | The inception date for the R6 Shares was May 19, 2014. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year. |
The accompanying notes are an integral part of these financial statements.
Annual Report 259
LAZARD US REALTY EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 18.85 | $ | 19.37 | $ | 18.93 | $ | 19.71 | $ | 16.05 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.28 | 0.31 | 0.29 | 0.33 | 0.28 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.74 | ) | 1.18 | 0.72 | 0.55 | 3.85 | |||||||||||||||
Total from investment operations | (1.46 | ) | 1.49 | 1.01 | 0.88 | 4.13 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.32 | ) | (0.37 | ) | (0.31 | ) | (0.38 | ) | (0.20 | ) | |||||||||||
Net realized gains | (0.38 | ) | (1.64 | ) | (0.26 | ) | (1.28 | ) | (0.27 | ) | |||||||||||
Total distributions | (0.70 | ) | (2.01 | ) | (0.57 | ) | (1.66 | ) | (0.47 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 16.69 | $ | 18.85 | $ | 19.37 | $ | 18.93 | $ | 19.71 | |||||||||||
Total Return (c) | –7.77 | % | 7.93 | % | 5.31 | % | 4.63 | % | 25.70 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 15,715 | $ | 18,724 | $ | 19,625 | $ | 21,143 | $ | 21,806 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.00 | % | 1.02 | % | 1.05 | % | 1.05 | % | 1.05 | % | |||||||||||
Gross expenses | 1.09 | % | 1.09 | % | 1.12 | % | 1.09 | % | 1.18 | % | |||||||||||
Net investment income (loss) | 1.56 | % | 1.55 | % | 1.50 | % | 1.64 | % | 1.50 | % | |||||||||||
Portfolio turnover rate | 52 | % | 32 | % | 41 | % | 51 | % | 43 | % |
The accompanying notes are an integral part of these financial statements.
260 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 18.94 | $ | 19.44 | $ | 19.00 | $ | 19.78 | $ | 16.11 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.23 | 0.25 | 0.23 | 0.26 | 0.19 | ||||||||||||||||
Net realized and unrealized gain (loss) | (1.75 | ) | 1.20 | 0.72 | 0.56 | 3.90 | |||||||||||||||
Total from investment operations | (1.52 | ) | 1.45 | 0.95 | 0.82 | 4.09 | |||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.27 | ) | (0.31 | ) | (0.25 | ) | (0.32 | ) | (0.15 | ) | |||||||||||
Net realized gains | (0.38 | ) | (1.64 | ) | (0.26 | ) | (1.28 | ) | (0.27 | ) | |||||||||||
Total distributions | (0.65 | ) | (1.95 | ) | (0.51 | ) | (1.60 | ) | (0.42 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 16.77 | $ | 18.94 | $ | 19.44 | $ | 19.00 | $ | 19.78 | |||||||||||
Total Return (c) | –8.06 | % | 7.69 | % | 4.99 | % | 4.34 | % | 25.33 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 43,946 | $ | 47,811 | $ | 59,307 | $ | 75,907 | $ | 88,897 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.29 | % | 1.30 | % | 1.34 | % | 1.32 | % | 1.35 | % | |||||||||||
Gross expenses | 1.29 | % | 1.30 | % | 1.34 | % | 1.32 | % | 1.42 | % | |||||||||||
Net investment income (loss) | 1.27 | % | 1.24 | % | 1.17 | % | 1.32 | % | 1.01 | % | |||||||||||
Portfolio turnover rate | 52 | % | 32 | % | 41 | % | 51 | % | 43 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
Annual Report 261
LAZARD US SMALL-MID CAP EQUITY PORTFOLIO
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 14.65 | $ | 14.50 | $ | 12.86 | $ | 14.05 | $ | 15.97 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.05 | 0.06 | 0.11 | ^ | 0.02 | 0.03 | |||||||||||||||
Net realized and unrealized gain (loss) | (2.00 | ) | 1.95 | 1.96 | (0.34 | ) | 1.74 | ||||||||||||||
Total from investment operations | (1.95 | ) | 2.01 | 2.07 | (0.32 | ) | 1.77 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | (0.04 | ) | (0.09 | ) | (0.09 | ) | — | (b) | (0.01 | ) | |||||||||||
Net realized gains | (1.83 | ) | (1.77 | ) | (0.34 | ) | (0.87 | ) | (3.68 | ) | |||||||||||
Total distributions | (1.87 | ) | (1.86 | ) | (0.43 | ) | (0.87 | ) | (3.69 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.83 | $ | 14.65 | $ | 14.50 | $ | 12.86 | $ | 14.05 | |||||||||||
Total Return (c) | –13.27 | % | 14.12 | % | 16.28 | %^ | –2.14 | % | 11.39 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 113,677 | $ | 176,975 | $ | 189,593 | $ | 171,152 | $ | 157,742 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 0.87 | % | 0.87 | % | 0.86 | %^ | 0.91 | % | 0.86 | % | |||||||||||
Gross expenses | 0.87 | % | 0.87 | % | 0.90 | % | 0.91 | % | 0.86 | % | |||||||||||
Net investment income (loss) | 0.35 | % | 0.39 | % | 0.84 | %^ | 0.13 | % | 0.17 | % | |||||||||||
Portfolio turnover rate | 81 | % | 79 | % | 91 | % | 91 | % | 91 | % |
The accompanying notes are an integral part of these financial statements.
262 Annual Report
Selected data for a share | |||||||||||||||||||||
of capital stock outstanding | Year Ended | ||||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | ||||||||||||||||
Open Shares | |||||||||||||||||||||
Net asset value, beginning of period | $ | 13.72 | $ | 13.68 | $ | 12.16 | $ | 13.38 | $ | 15.41 | |||||||||||
Income (Loss) from investment operations: | |||||||||||||||||||||
Net investment income (loss) (a) | 0.01 | 0.01 | 0.06 | ^ | (0.02 | ) | (0.02 | ) | |||||||||||||
Net realized and unrealized gain (loss) | (1.87 | ) | 1.84 | 1.85 | (0.33 | ) | 1.67 | ||||||||||||||
Total from investment operations | (1.86 | ) | 1.85 | 1.91 | (0.35 | ) | 1.65 | ||||||||||||||
Less distributions from: | |||||||||||||||||||||
Net investment income | — | (b) | (0.04 | ) | (0.05 | ) | — | (b) | — | ||||||||||||
Net realized gains | (1.83 | ) | (1.77 | ) | (0.34 | ) | (0.87 | ) | (3.68 | ) | |||||||||||
Total distributions | (1.83 | ) | (1.81 | ) | (0.39 | ) | (0.87 | ) | (3.68 | ) | |||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 10.03 | $ | 13.72 | $ | 13.68 | $ | 12.16 | $ | 13.38 | |||||||||||
Total Return (c) | –13.49 | % | 13.82 | % | 15.92 | %^ | –2.47 | % | 11.01 | % | |||||||||||
Ratios and Supplemental Data: | |||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 13,726 | $ | 25,973 | $ | 30,332 | $ | 36,860 | $ | 15,851 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Net expenses | 1.18 | % | 1.17 | % | 1.16 | %^ | 1.20 | % | 1.20 | % | |||||||||||
Gross expenses | 1.18 | % | 1.17 | % | 1.20 | % | 1.20 | % | 1.20 | % | |||||||||||
Net investment income (loss) | 0.04 | % | 0.09 | % | 0.51 | %^ | –0.13 | % | –0.15 | % | |||||||||||
Portfolio turnover rate | 81 | % | 79 | % | 91 | % | 91 | % | 91 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The impact on the net investment income per share amount was $0.01 per share. There was a 0.08% impact on the total return of the Institutional Shares class of the Portfolio. There was a 0.04% impact on the net expenses and net investment income (loss) ratios of the Portfolio. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. |
The accompanying notes are an integral part of these financial statements.
Annual Report 263
The Lazard Funds, Inc.Notes to Financial Statements
December 31, 2018
1. Organization
The Lazard Funds, Inc. was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of December 31, 2018, the Fund was comprised of thirty-three no-load portfolios (each referred to as a “Portfolio”). This report includes only the financial statements of Developing Markets Equity, Emerging Markets Core Equity, Emerging Markets Equity Advantage, Emerging Markets Equity Blend, Emerging Markets Equity, Equity Franchise, Global Equity Select, Global Listed Infrastructure, Global Realty Equity (liquidated on December 31, 2018), Global Strategic Equity, International Compounders, International Equity Advantage, International Equity Concentrated, International Equity, International Equity Select, International Equity Value, International Small Cap Equity, International Strategic Equity, Managed Equity Volatility, US Equity Concentrated, US Equity Select (formerly, US Strategic Equity), US Realty Equity and US Small-Mid Cap Equity Portfolios. The financial statements of the other ten Portfolios are presented separately.
The Portfolios, other than Equity Franchise, Global Realty Equity, International Equity Concentrated, International Equity Value, US Equity Concentrated and US Realty Equity Portfolios, are operated as “diversified” funds, as defined in the 1940 Act.
Each Portfolio currently offers Institutional Shares and Open Shares, and certain Portfolios offer R6 Shares. Each share class is identical except as to minimum investment requirements; eligibility requirements for R6 Shares; the services offered to, and expenses borne by, each class; and the availability of Service Payments (as defined in the Portfolios’ Prospectus).
2. Significant Accounting Policies
The accompanying financial statements are presented in conformity with US Generally Accepted Accounting Principles (“GAAP”). The Fund is an investment company and therefore applies specialized accounting guidance in accordance with Accounting Standards Codification Topic 946. The following is a summary of
264 Annual Report
significant accounting policies consistently followed by the Fund in the preparation of the financial statements:
(a) Valuation of Investments—Equity securities traded on a securities exchange or market, including exchange-traded option contracts, rights and warrants, are valued at the last reported sales price (for domestic equity securities) or the closing price (for foreign equity securities) on the exchange or market on which the security is principally traded or, for securities trading on the NASDAQ National Market System (“NASDAQ”), the NASDAQ Official Closing Price. If there is no available closing price for a foreign equity security, the last reported sales price is used. If there are no reported sales of a security on the valuation date, the security is valued at the most recent quoted bid price on such date reported by such principal exchange or market. Forward currency contracts generally are valued using quotations from an independent pricing service. Investments in money market funds are valued at the fund’s net asset value (“NAV”) per share.
Calculation of a Portfolio’s NAV may not take place contemporaneously with the determination of the prices of portfolio assets used in such calculation. Trading on Europe, Latin and South America and Far East securities exchanges and in over-the-counter markets ordinarily is completed well before the close of business on each business day in New York (i.e., a day on which the New York Stock Exchange (the “NYSE”) is open). In addition, European or Far Eastern securities trading generally, or in a particular country or countries, may not take place on all business days in New York and on which the NAV of a Portfolio is calculated.
The Valuation Committee of the Investment Manager, which meets periodically under the direction of the Board of Directors (the “Board”), may evaluate a variety of factors to determine the fair value of securities for which market quotations are determined not to be readily available or reliable. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager’s portfolio managers/analysts also will be considered.
Annual Report 265
If a significant event materially affecting the value of securities occurs between the close of the exchange or market on which the security is principally traded and the time when a Portfolio’s NAV is calculated, or when current market quotations otherwise are determined not to be readily available or reliable (including restricted or other illiquid securities such as certain derivative instruments), such securities will be valued at their fair value as determined by, or in accordance with procedures approved by, the Board. The fair value of non-US securities may be determined with the assistance of an independent pricing service using correlations between the movement of prices of such securities and indices of US securities and other appropriate indicators, such as closing market prices of relevant ADRs or futures contracts. Non-US securities may trade on days when a Portfolio is not open for business, thus affecting the value of the Portfolio’s assets on days when Portfolio shareholders may not be able to buy or sell Portfolio shares.
The effect of using fair value pricing is that the NAV of a Portfolio will reflect the affected securities’ values as determined in the judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios’ NAVs.
(b) Portfolio Securities Transactions and Investment Income—Portfolio securities transactions are accounted for on trade date. Realized gain (loss) on sales of investments are recorded on a specific identification basis. Dividend income is recorded on the ex-dividend date except for certain dividends from non-US securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by a Portfolio. Interest income, if any, is accrued daily.
A Portfolio may be subject to taxes imposed by non-US countries in which it invests. Such taxes are generally based upon income earned or capital gains (realized and/or unrealized). An affected Portfolio accrues and applies such taxes to net investment income, net realized gains and net unrealized gains concurrent with the
266 Annual Report
recognition of income earned or capital gains (realized and/or unrealized) from the applicable portfolio securities.
As a result of several court cases in certain countries across the European Union, some Portfolios have filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these claims, and the potential timing of payment, and accordingly no amounts are reflected in the financial statements. Such amounts, if and when recorded, could result in an increase in a Portfolio’s NAV per share.
(c) Foreign Currency Translation and Forward Currency Contracts—The accounting records of the Fund are maintained in US dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into US dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into US dollars at the prevailing exchange rates on the respective transaction dates.
The Portfolios do not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions and forward currency contracts represent net foreign currency gain (loss) from forward currency contracts, disposition of foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of dividends, interest and foreign withholding taxes recorded on the Portfolios’ accounting records and the US dollar equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on foreign currency translations reflects the impact of changes in exchange rates on the value of assets and liabilities, other than investments in securities, during the period.
Annual Report 267
A forward currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the US dollar.
The US dollar value of forward currency contracts is determined using quotations provided by an independent pricing service. Daily fluctuations in the value of such contracts are recorded as unrealized appreciation (depreciation) on forward currency contracts. When the contract is closed, a Portfolio records a realized gain (loss) equal to the difference between the value at the time it was opened and the value at the time it was closed.
During the year ended December 31, 2018, the Global Listed Infrastructure Portfolio traded in forward currency contracts.
(d) Federal Income Taxes—The Fund’s policy is to have each Portfolio qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”) and to distribute all of its taxable income, including any net realized capital gains, to shareholders. Therefore, no federal income tax provision is required.
At December 31, 2018, the following Portfolios had unused realized capital loss carryovers which, for federal income tax purposes, could be used to offset future realized capital gains with no expiration date as follows:
Portfolio | Short-Term | Long-Term | ||||||
Developing Markets Equity | $ | 42,311,826 | $ | 81,496,065 | ||||
Emerging Markets Core Equity | 2,480,814 | — | ||||||
Emerging Markets Equity Blend | 11,274,953 | 38,896,176 | ||||||
Emerging Markets Equity | 95,082,877 | 676,889,120 | ||||||
Global Realty Equity | 360,348 | — | ||||||
International Equity Value | 525,300 | — |
268 Annual Report
During the year ended December 31, 2018, the following Portfolios utilized realized capital loss carryovers from previous years as follows:
Portfolio | Amounts | |||
Developing Markets Equity | $ | 8,872,037 | ||
Emerging Markets Core Equity | 8,534,158 | |||
Emerging Markets Equity Advantage | 221,922 | |||
Emerging Markets Equity Blend | 6,397,508 | |||
Emerging Markets Equity | 121,602,254 | |||
International Equity Advantage | 56,479 | |||
International Equity Concentrated | 590,000 | |||
International Equity | 61,750,127 | |||
International Equity Select | 484,131 | |||
International Small Cap Equity | 4,306,477 | |||
International Strategic Equity | 118,775,721 | |||
US Realty Equity | 233,007 |
Under current tax law, post-October capital losses or certain late-year ordinary losses, as defined by the Code, within the taxable year may be deferred and treated as occurring on the first day of the following tax year. For the tax year ended December 31, 2018, the following Portfolios elected to defer such losses as follows:
Portfolio | Post-October Capital Loss Deferral | Late-Year Ordinary Loss Deferral | |||||||
Emerging Markets Equity Advantage | $ | 66,380 | $ | — | |||||
Global Equity Select | 330,136 | — | |||||||
Global Listed Infrastructure | 5,706,036 | — | |||||||
International Equity Advantage | 28,394 | 2,517 | |||||||
International Equity Concentrated | 1,810,394 | 313 | |||||||
International Equity | 41,680,902 | — | |||||||
International Equity Select | 363,804 | 9,494 | |||||||
International Equity Value | — | 1,770 | |||||||
International Strategic Equity | 1,231,230 | — | |||||||
Managed Equity Volatility | 261,488 | — | |||||||
US Equity Concentrated | 14,024,506 | — | |||||||
US Equity Select | 228,014 | — | |||||||
US Small-Mid Cap Equity | 1,910,623 | — |
Annual Report 269
For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized depreciation and the net unrealized appreciation (depreciation) were as follows:
Portfolio | Aggregate Cost | Aggregate Gross Unrealized Appreciation | Aggregate Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Developing Markets Equity | $ | 228,411,525 | $ | 19,546,668 | $ | 29,768,038 | $ | (10,221,370 | ) | |||||||
Emerging Markets Core Equity | 222,075,191 | 10,916,637 | 21,891,084 | (10,974,447 | ) | |||||||||||
Emerging Markets Equity Advantage | 3,279,324 | 403,548 | 282,044 | 121,504 | ||||||||||||
Emerging Markets Equity Blend | 331,681,502 | 19,352,769 | 53,231,792 | (33,879,023 | ) | |||||||||||
Emerging Markets Equity | 9,117,017,604 | 1,128,108,335 | 1,406,072,181 | (277,963,846 | ) | |||||||||||
Equity Franchise | 9,536,319 | 159,493 | 1,294,671 | (1,135,178 | ) | |||||||||||
Global Equity Select | 63,698,239 | 6,552,853 | 3,772,212 | 2,780,641 | ||||||||||||
Global Listed Infrastructure | 5,678,593,930 | 160,481,505 | 543,389,888 | (382,908,383 | ) | |||||||||||
Global Realty Equity | 4,321,682 | — | — | — | ||||||||||||
Global Strategic Equity | 2,615,149 | 226,306 | 193,460 | 32,846 | ||||||||||||
International Compounders | 129,053 | 45 | 340 | (295 | ) | |||||||||||
International Equity Advantage | 2,421,243 | 76,979 | 310,054 | (233,075 | ) | |||||||||||
International Equity Concentrated | 56,709,340 | 857,182 | 7,440,557 | (6,583,375 | ) | |||||||||||
International Equity | 2,501,553,947 | 141,249,175 | 206,512,965 | (65,263,790 | ) | |||||||||||
International Equity Select | 84,177,150 | 1,894,351 | 8,099,371 | (6,205,020 | ) | |||||||||||
International Equity Value | 24,498,767 | 398,804 | 2,021,402 | (1,622,598 | ) | |||||||||||
International Small Cap Equity | 61,909,332 | 3,024,154 | 10,074,825 | (7,050,671 | ) | |||||||||||
International Strategic Equity | 5,576,739,716 | 411,145,862 | 442,871,437 | (31,725,575 | ) | |||||||||||
Managed Equity Volatility | 22,398,750 | 451,946 | 1,621,719 | (1,169,773 | ) | |||||||||||
US Equity Concentrated | 1,121,031,860 | 76,510,274 | 105,428,635 | (28,918,361 | ) | |||||||||||
US Equity Select | 68,697,640 | 7,492,407 | 4,303,937 | 3,188,470 | ||||||||||||
US Realty Equity | 60,185,444 | 2,940,732 | 3,823,294 | (882,562 | ) | |||||||||||
US Small-Mid Cap Equity | 136,966,384 | 6,767,141 | 17,259,699 | (10,492,558 | ) |
270 Annual Report
Management has analyzed the Portfolios’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns filed for any open tax years (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitations. Each Portfolio files a US federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
(e) Dividends and Distributions—Dividends from net investment income, if any, will be declared and paid annually, except that the Global Listed Infrastructure Portfolio’s dividends from net investment income (if any), will be declared and paid quarterly. During any particular year, net realized gains from investment transactions in excess of available capital loss carryforwards would be taxable to the Portfolios, if not distributed. The Portfolios intend to declare and distribute these amounts, at least annually, to shareholders; however, to avoid taxation, a second distribution may be required. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
The Global Listed Infrastructure, International Small Cap Equity, International Strategic Equity, US Equity Concentrated, US Equity Select and US Small-Mid Cap Equity Portfolios intend, on their 2018 tax returns, to treat as a distribution of investment company taxable income and net capital gain the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’ portion of the Portfolios’ undistributed investment company taxable income and net capital gain. This practice, which involves the use of equalization accounting, will have the effect of reducing the amount of income and gains that the Portfolios would otherwise be required to distribute as dividends to shareholders in order for the Portfolios to avoid federal income and excise taxes. This practice reduces the amount of distributions required to be made to non-redeeming shareholders and defers the recognition of taxable income by such shareholders. However, since the amount of any undistributed income will be reflected in the value of the Portfolios’ shares, the total return on a shareholder’s investment is not affected by the Portfolios’ use of equalization.
Annual Report 271
REIT distributions received by a Portfolio are generally comprised of ordinary income, long-term capital gains and a return of REIT capital. However, as the actual character of such distributions received are not known until after the calendar year end, distributions made by a Portfolio during the year are subject to re-characterization that may result in some portion of the distributions being reclassified as a return of capital distribution to Portfolio shareholders.
Income and capital gains distributions are determined in accordance with federal income tax regulations which may differ from GAAP. These book/tax differences, which may result in distribution reclassifications, are primarily due to differing treatments of foreign currency transactions, wash sales, passive foreign investment companies, expiring capital loss carryovers, certain expenses, foreign capital gains taxes, distributions in excess of current earnings, equalization, non-REIT non-taxable dividend adjustment to income, distributions redesignations, adjustments in relation to merger, return of capital distributions and distributions from real estate investment trusts and partnerships. The book/tax differences relating to shareholder distributions resulted in reclassifications among certain capital accounts as follows:
Portfolio | Paid in Capital | Distributable Earnings (Accumulated Loss) | |||||||
Developing Markets Equity | $ | (3,101 | ) | $ | 3,101 | ||||
Emerging Markets Equity Advantage | (5,633 | ) | 5,633 | ||||||
Emerging Markets Equity Blend | (64,378 | ) | 64,378 | ||||||
Equity Franchise | (58 | ) | 58 | ||||||
Global Equity Select | (55,707 | ) | 55,707 | ||||||
Global Listed Infrastructure | 26,353,123 | (26,353,123 | ) | ||||||
Global Realty Equity | (276,438 | ) | 276,438 | ||||||
International Equity Advantage | (35 | ) | 35 | ||||||
International Equity Concentrated | (5,112 | ) | 5,112 | ||||||
International Equity Select | (1,173,332 | ) | 1,173,332 | ||||||
International Equity Value | (210 | ) | 210 | ||||||
International Small Cap Equity | 535,986 | (535,986 | ) | ||||||
International Strategic Equity | 49,054,329 | (49,054,329 | ) | ||||||
US Equity Concentrated | 8,099,080 | (8,099,080 | ) | ||||||
US Equity Select | 6,708 | (6,708 | ) | ||||||
US Realty Equity | 229,043 | (229,043 | ) | ||||||
US Small-Mid Cap Equity | 1,658,825 | (1,658,825 | ) |
272 Annual Report
In October 2018, the US Securities and Exchange Commission (the “SEC”) adopted amendments to certain disclosure requirements included in Regulation S-X that had become “redundant, duplicative, overlapping, outdated or superseded, in light of the other Commission disclosure requirements, GAAP or changes in the information environment.” The compliance date for the amendments to Regulation S-X was November 5, 2018 (for reporting period end dates of September 30, 2018 or after). The Fund adopted these amendments and such changes are reflected in these financial statements.
Under these amendments, it is no longer required to differentiate distributions from earnings as either net investment income or net realized capital gains or disclose a Portfolio’s undistributed net investment income within a Portfolio’s Statement of Changes in Net Assets. The presentation within the Portfolios’ Statement of Changes in Net Assets for the year ended December 31, 2017 also has been modified accordingly.
Below is the characterization of the Portfolio distributions and undistributed (distributions in excess of) net investment income (loss) for the year ended December 31, 2017 as previously disclosed in the Statement of Changes in Net Assets within the December 31, 2017 Annual Report:
From net investment income | Institutional Shares | Open Shares | R6 Shares | ||||||||||
Developing Markets Equity | $ | 545,028 | $ | — | $ | — | |||||||
Emerging Markets Core Equity | 1,586,481 | 6,719 | — | ||||||||||
Emerging Markets Equity Advantage | 45,503 | 2,873 | — | ||||||||||
Emerging Markets Equity Blend | 3,582,638 | 54,048 | — | ||||||||||
Emerging Markets Equity | 226,996,334 | 25,915,499 | 7,709,553 | ||||||||||
Equity Franchise | 14,403 | 211 | — | ||||||||||
Global Equity Select | 405,342 | 3,136 | — | ||||||||||
Global Listed Infrastructure | 75,970,334 | 11,527,674 | — | ||||||||||
Global Realty Equity | 111,094 | 36,021 | — | ||||||||||
Global Strategic Equity | 97,947 | 2,039 | — | ||||||||||
International Equity Advantage | 48,334 | 1,892 | — | ||||||||||
International Equity Concentrated | 638,073 | 1,420 | — | ||||||||||
International Equity | 37,101,517 | 6,787,026 | 9,812,446 | ||||||||||
International Equity Select | 326,389 | 10,427 | — | ||||||||||
International Strategic Equity | 76,161,214 | 12,527,283 | 1,402,962 |
Annual Report 273
From net investment income | Institutional Shares | Open Shares | R6 Shares | ||||||||||
Managed Equity Volatility | $ | 57,012 | $ | 3,398 | $ | — | |||||||
US Equity Concentrated | 13,325,910 | 524,372 | 3,047 | ||||||||||
US Equity Select | 1,164,831 | 13,451 | 177,827 | ||||||||||
US Realty Equity | 336,557 | 725,168 | — | ||||||||||
US Small-Mid Cap Equity | 929,922 | 68,349 | — | ||||||||||
From net realized gains | Institutional Shares | Open Shares | R6 Shares | ||||||||||
Emerging Markets Equity Advantage | $ | 2,064 | $ | 130 | $ | — | |||||||
Equity Franchise | 9,517 | 183 | — | ||||||||||
Global Equity Select | 1,601,433 | 20,890 | — | ||||||||||
Global Listed Infrastructure | 231,436,916 | 31,852,693 | — | ||||||||||
Global Realty Equity | 56,514 | 20,280 | — | ||||||||||
Global Strategic Equity | 2,232,754 | 115,380 | — | ||||||||||
Managed Equity Volatility | 106,249 | 8,094 | — | ||||||||||
US Equity Concentrated | 84,772,608 | 4,925,727 | 19,848 | ||||||||||
US Equity Select | 5,946,380 | 83,683 | 910,164 | ||||||||||
US Realty Equity | 1,528,874 | 3,951,112 | — | ||||||||||
US Small-Mid Cap Equity | 19,496,066 | 3,090,224 | — |
Undistributed (Distributions in excess of) net investment income (loss) | Amount | ||||||||||||
Developing Markets Equity | $ | (267,663 | ) | ||||||||||
Emerging Markets Core Equity | (20,535 | ) | |||||||||||
Emerging Markets Equity Advantage | (4,234 | ) | |||||||||||
Emerging Markets Equity Blend | (704,294 | ) | |||||||||||
Emerging Markets Equity | 33,735,126 | ||||||||||||
Equity Franchise | (907 | ) | |||||||||||
Global Equity Select | (159,545 | ) | |||||||||||
Global Listed Infrastructure | (39,276,021 | ) | |||||||||||
Global Realty Equity | 21,049 | ||||||||||||
Global Strategic Equity | (36,625 | ) | |||||||||||
International Equity Advantage | (3,505 | ) | |||||||||||
International Equity Concentrated | (37,517 | ) | |||||||||||
International Equity | 12,884,788 | ||||||||||||
International Equity Select | 572,890 | ||||||||||||
International Small Cap Equity | 560,590 | ||||||||||||
International Strategic Equity | (9,161,873 | ) | |||||||||||
Managed Equity Volatility | (844 | ) | |||||||||||
US Equity Concentrated | 29,110 | ||||||||||||
US Equity Select | — | ||||||||||||
US Realty Equity | — | ||||||||||||
US Small-Mid Cap Equity | (191,969 | ) |
274 Annual Report
The tax character of dividends and distributions paid during the years ended December 31, were as follows:
Ordinary Income | Long-Term Capital Gain | |||||||||||||||
Portfolio | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Developing Markets Equity | $ | 1,841,559 | $ | 545,028 | $ | — | $ | — | ||||||||
Emerging Markets Core Equity | 3,790,442 | 1,593,200 | — | — | ||||||||||||
Emerging Markets Equity Advantage* | 78,382 | 48,376 | 488 | — | ||||||||||||
Emerging Markets Equity Blend | 5,413,386 | 3,636,686 | — | — | ||||||||||||
Emerging Markets Equity | 185,398,646 | 260,621,386 | — | — | ||||||||||||
Equity Franchise | 809,383 | 24,314 | 48,488 | — | ||||||||||||
Global Equity Select | 670,326 | 444,442 | 1,373,108 | 1,586,359 | ||||||||||||
Global Listed Infrastructure | 273,617,078 | 88,165,301 | 412,876,525 | 262,622,316 | ||||||||||||
Global Realty Equity | 76,431 | 147,115 | 25,673 | 76,794 | ||||||||||||
Global Strategic Equity | 223,006 | 939,034 | 430,715 | 1,509,086 | ||||||||||||
International Equity Advantage | 78,886 | 50,226 | 27,980 | — | ||||||||||||
International Equity Concentrated | 1,942,491 | 639,493 | 460,712 | — | ||||||||||||
International Equity | 63,804,495 | 53,700,989 | 123,957,950 | — | ||||||||||||
International Equity Select | 1,887,553 | 336,816 | 37,977 | — | ||||||||||||
International Equity Value | 26,215 | N/A | — | N/A | ||||||||||||
International Small Cap Equity | 1,519,694 | — | 1,000,024 | — | ||||||||||||
International Strategic Equity | 80,890,347 | 90,091,459 | 386,368,003 | — | ||||||||||||
Managed Equity Volatility | 360,900 | 101,419 | 24,702 | 73,334 | ||||||||||||
US Equity Concentrated | 42,768,127 | 13,853,329 | 89,877,722 | 89,718,183 | ||||||||||||
US Equity Select | 1,529,090 | 2,270,214 | 9,619,133 | 6,026,122 | ||||||||||||
US Realty Equity | 827,749 | 1,164,385 | 1,584,317 | 5,377,326 | ||||||||||||
US Small-Mid Cap Equity | 5,545,244 | 6,630,713 | 14,372,817 | 16,953,848 |
* | Emerging Markets Equity Advantage and Global Equity Select Portfolios had return of capital distributions of $5,637 and $55,706 in 2018 and $2,194 and $0 in 2017, respectively. |
Annual Report 275
At December 31, 2018, the components of distributable earnings (accumulated loss), on a tax basis, were as follows:
Portfolio | Undistributed Ordinary Income (Deferred Ordinary Losses) | Undistributed Long-Term Capital Gain (Deferred Capital Losses) | Net Unrealized Appreciation (Depreciation) Including Foreign Currency | ||||||||||
Developing Markets Equity | $ | 692,659 | $ | (123,807,891 | ) | $ | (10,246,469 | ) | |||||
Emerging Markets Core Equity | 3,518 | (2,480,814 | ) | (11,037,796 | ) | ||||||||
Emerging Markets Equity Advantage | — | (66,380 | ) | 121,510 | |||||||||
Emerging Markets Equity Blend | — | (50,171,129 | ) | (34,282,897 | ) | ||||||||
Emerging Markets Equity | 76,104,267 | (771,971,997 | ) | (315,639,811 | ) | ||||||||
Equity Franchise | 108,966 | — | (1,203,697 | ) | |||||||||
Global Equity Select | — | (330,136 | ) | 2,768,617 | |||||||||
Global Listed Infrastructure | 73,480,874 | (5,706,036 | ) | (382,935,882 | ) | ||||||||
Global Strategic Equity | — | 16,223 | (51 | ) | |||||||||
International Compounders | — | — | (295 | ) | |||||||||
International Equity Advantage | — | (30,911 | ) | (233,113 | ) | ||||||||
International Equity Concentrated | (313 | ) | (1,810,394 | ) | (6,618,882 | ) | |||||||
International Equity | 10,632,736 | (41,680,902 | ) | (65,224,805 | ) | ||||||||
International Equity Select | — | (373,298 | ) | (6,207,929 | ) | ||||||||
International Equity Value | (1,770 | ) | (525,300 | ) | (1,628,991 | ) | |||||||
International Small Cap Equity | 233,994 | 1,291,846 | (7,051,382 | ) | |||||||||
International Strategic Equity | 10,110,720 | (1,231,230 | ) | (31,769,311 | ) | ||||||||
Managed Equity Volatility | 5,507 | (261,488 | ) | (1,169,993 | ) | ||||||||
US Equity Concentrated | — | (14,024,506 | ) | (28,921,290 | ) | ||||||||
US Equity Select | — | (228,014 | ) | 3,188,470 | |||||||||
US Realty Equity | — | 1,320,824 | (882,561 | ) | |||||||||
US Small-Mid Cap Equity | — | (1,910,623 | ) | (10,492,558 | ) |
(f) Offering and Organizational Costs—Costs incurred by the Fund in connection with the offering of shares of a new Portfolio or share class of a Portfolio are deferred and amortized on a straight line basis over a twelve-month period from the date of commencement of operations of the Portfolio or share class. Organizational costs are expensed as incurred.
(g) Allocation of Expenses—Expenses common to the Fund, Lazard Retirement Series, Inc., Lazard Global Total Return and Income Fund, Inc. and Lazard World Dividend & Income Fund, Inc. (each a “Lazard Fund” and collectively, the “Lazard Fund Com-
276 Annual Report
plex”), each a registered management investment company advised by the Investment Manager, not directly chargeable to one or more specific Lazard Funds are allocated to the Fund and among its Portfolios primarily on the basis of relative net assets. Expenses of the Fund not directly chargeable to one or more Portfolios are similarly allocated among the Portfolios on the basis of relative net assets. Portfolios accrue distribution and service (12b-1) fees to Open Shares. The Portfolios’ income, expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.
(h) Redemption Fee—Until August 15, 2016, the Portfolios imposed a 1.00% redemption fee (short-term trading fee) on Portfolio shares redeemed less than 30 days after such shares were acquired. The fees were retained by the Portfolios and are included as paid in capital on the Statements of Assets and Liabilities. As of August 15, 2016, redemption fees no longer apply to transactions in Portfolio shares.
(i) Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates.
(j) Net Asset Value—NAV per share for each class of each Portfolio is determined each day the NYSE is open for trading as of the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time). The Fund will not treat an intraday unscheduled disruption in NYSE trading as a closure of the NYSE, and will price its shares as of 4:00 p.m., if the particular disruption directly affects only the NYSE. NAV per share is determined by dividing the value of the total assets of the Portfolio represented by such class, less all liabilities, by the total number of Portfolio shares of such class outstanding.
Annual Report 277
3. Investment Management, Administration, Custody, Distribution and Transfer Agency Agreements
The Fund, on behalf of the Portfolios, has entered into a management agreement (the “Management Agreement”) with the Investment Manager. Pursuant to the Management Agreement, the Investment Manager regularly provides each Portfolio with investment research, advice and supervision and furnishes continuously an investment program for each Portfolio consistent with its investment objectives and policies, including the purchase, retention and disposition of securities, and provides the Portfolios with administrative, operational and compliance assistance services. For its services provided to the Portfolios, the Investment Manager earns a management fee, accrued daily as a percentage of each Portfolio’s average daily net assets and payable by each Portfolio monthly, at the annual rate set forth below:
Portfolio | Annual Rate | ||||
Developing Markets Equity | 1.00 | % | |||
Emerging Markets Core Equity | 1.00 | ||||
Emerging Markets Equity Advantage | 0.85 | ||||
Emerging Markets Equity Blend | 1.00 | ||||
Emerging Markets Equity | 1.00 | ||||
Equity Franchise | 0.80 | ||||
Global Equity Select | 0.80 | ||||
Global Listed Infrastructure | 0.90 | ||||
Global Realty Equity (a) | 0.80 | ||||
Global Strategic Equity (a) | 0.75 | ||||
International Compounders | 0.75 | ||||
International Equity Advantage | 0.65 | ||||
International Equity Concentrated (a) | 0.80 | ||||
International Equity | 0.75 | ||||
International Equity Select | 0.75 | ||||
International Equity Value | 0.80 | ||||
International Small Cap Equity | 0.75 | ||||
International Strategic Equity | 0.75 | ||||
Managed Equity Volatility | 0.60 | ||||
US Equity Concentrated | 0.70 | ||||
US Equity Select (a) | 0.65 | ||||
US Realty Equity | 0.75 | ||||
US Small-Mid Cap Equity | 0.75 |
(a) | From January 1, 2018 to June 26, 2018, percentages were 0.85%, 0.85%, 0.90% and 0.70% for Global Realty Equity, Global Strategic Equity, International Equity Concentrated and US Equity Select Portfolios, respectively. |
278 Annual Report
The Investment Manager has voluntarily agreed, until May 1 of the year shown below (except as noted), to waive its fees and, if necessary, reimburse the Portfolios if the aggregate direct expenses of the Portfolios, exclusive of taxes, brokerage, interest on borrowings, fees and expenses of “Acquired Funds” (as defined in Form N-1A) and extraordinary expenses, but including the management fee stated in the Management Agreement between the Investment Manager and the Fund, on behalf of the Portfolios, exceed the percentages of the value of the Portfolio’s average daily net assets set forth opposite the Portfolio’s name on table below. The Fund, on behalf of the Portfolio, may deduct from the payment to be made to the Investment Manager under the Management Agreement, or the Investment Manager will bear, such excess expense.
Portfolio | Institutional Shares | Open Shares | R6 Shares | Year | |||||||||||||
Developing Markets Equity | 1.25 | % | 1.55 | % | N/A | 2019 | (a) | ||||||||||
Emerging Markets Core Equity | 1.25 | 1.55 | 1.20 | % | 2019 | (b) | |||||||||||
Emerging Markets Equity Advantage | 1.10 | 1.40 | N/A | 2019 | |||||||||||||
Emerging Markets Equity Blend | 1.25 | 1.55 | N/A | 2019 | (a) | ||||||||||||
Emerging Markets Equity | 1.20 | 1.50 | 1.15 | 2019 | (b) | ||||||||||||
Equity Franchise | 0.95 | 1.20 | N/A | 2019 | (c) | ||||||||||||
Global Equity Select | 1.05 | 1.35 | N/A | 2019 | |||||||||||||
Global Listed Infrastructure | 1.20 | 1.50 | N/A | 2028 | (d) | ||||||||||||
Global Realty Equity | 0.95 | 1.25 | N/A | 2019 | (e) | ||||||||||||
Global Strategic Equity | 1.00 | 1.30 | N/A | 2019 | (f) | ||||||||||||
International Compounders | 0.85 | 1.10 | N/A | 2020 | (g) | ||||||||||||
International Equity Advantage | 0.90 | 1.20 | N/A | 2019 | |||||||||||||
International Equity Concentrated | 0.95 | 1.25 | N/A | 2019 | (h) | ||||||||||||
International Equity | 0.85 | 1.15 | 0.80 | 2019 | |||||||||||||
International Equity Select | 1.05 | 1.35 | N/A | 2028 | (i) | ||||||||||||
International Equity Value | 0.95 | 1.20 | N/A | 2020 | (j) | ||||||||||||
International Small Cap Equity | 1.13 | 1.43 | N/A | 2019 | |||||||||||||
International Strategic Equity | 1.05 | 1.35 | 1.00 | 2019 | (k) | ||||||||||||
Managed Equity Volatility | 0.75 | 1.05 | N/A | 2019 | |||||||||||||
US Equity Concentrated | 0.90 | 1.20 | 0.85 | 2028 | (l) | ||||||||||||
US Equity Select | 0.75 | 1.05 | 0.75 | 2019 | |||||||||||||
US Realty Equity | 1.00 | 1.30 | N/A | 2028 | (m) | ||||||||||||
US Small-Mid Cap Equity | 1.15 | 1.45 | N/A | 2019 |
(a) | From January 1, 2018 to June 26, 2018, percentages were 1.30% and 1.60%, respectively. |
(b) | From January 1, 2018 to June 26, 2018, percentages were 1.30%, 1.60% and 1.25%, respectively. |
(c) | Agreement is until September 29, 2019. |
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(d) | Agreement is through May 1, 2028. From January 1, 2018 to June 26, 2018, percentages were 1.30% and 1.60%, respectively. |
(e) | From January 1, 2018 to June 26, 2018, percentages were 1.00% and 1.30%, respectively. |
(f) | From January 1, 2018 to June 26, 2018, percentages were 1.10% and 1.40%, respectively. |
(g) | Agreement is until December 31, 2020. |
(h) | From January 1, 2018 to June 26, 2018, percentages were 1.05% and 1.35%, respectively. |
(i) | Agreement extends, from May 1, 2019 through May 1, 2028, at levels of 1.15% and 1.45%, respectively. |
(j) | Agreement is until October 31, 2020. |
(k) | From January 1, 2018 to June 26, 2018, percentages were 1.15%,1.45% and 1.10%, respectively. |
(l) | Agreement extends, from May 1, 2019 through May 1, 2028, at levels of 1.10%, 1.40% and 1.05%, respectively. From January 1, 2018 to June 26, 2018, percentages were 0.95%, 1.25% and 0.90%, respectively. |
(m) | Agreement is through May 1, 2028. |
In addition, until May 1, 2019, to the extent the “Total Annual Fund Operating Expenses” (as used in Form N-1A) of the R6 Shares of a Portfolio exceed the Total Annual Fund Operating Expenses of the Portfolio’s Institutional Shares (in each case, not including management fees, custodial fees or other expenses related to the management of the Portfolio’s assets), the Investment Manager will bear the expenses of the R6 Shares in the amount of such excess.
During the year ended December 31, 2018, the Investment Manager waived its management fees and reimbursed the following Portfolios for other expenses as follows:
Institutional Shares | Open Shares | |||||||||||||||||
Portfolio | Management Fees Waived | Expenses Reimbursed | Management Fees Waived | Expenses Reimbursed | ||||||||||||||
Emerging Markets Core Equity | $ | — | $ | — | $ | — | $ | 8,598 | ||||||||||
Emerging Markets Equity Advantage | 32,459 | 139,163 | 4,072 | 27,979 | ||||||||||||||
Emerging Markets Equity Blend | — | — | — | 215 | ||||||||||||||
Equity Franchise | 63,402 | 129,223 | 1,424 | 11,524 | ||||||||||||||
Global Equity Select | 22,052 | — | 6,345 | 5,163 | ||||||||||||||
Global Realty Equity | 30,124 | 82,663 | 10,402 | 35,742 | ||||||||||||||
Global Strategic Equity | 22,078 | 126,092 | 1,177 | 17,527 | ||||||||||||||
International Compounders | — | 12,595 | — | 4 | ||||||||||||||
International Equity Advantage | 15,698 | 146,029 | 723 | 17,602 | ||||||||||||||
International Equity Concentrated | 88,657 | — | 2,482 | 9,239 | ||||||||||||||
International Equity Select | 2,232 | — | 10,310 | — | ||||||||||||||
International Equity Value | 31,986 | 17,982 | 72 | 609 | ||||||||||||||
Managed Equity Volatility | 112,819 | 54,767 | 1,876 | 13,174 | ||||||||||||||
US Equity Select | 123,978 | — | 6,707 | 6,026 | ||||||||||||||
US Realty Equity | — | 13,590 | — | — |
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R6 Shares | ||||||||||
Portfolio | Management Fees Waived | Expenses Reimbursed | ||||||||
Emerging Markets Core Equity | $ | — | $ | 13,247 | ||||||
Emerging Markets Equity | — | 440 | ||||||||
International Equity | — | 15,452 | ||||||||
International Strategic Equity | — | 19,420 | ||||||||
US Equity Concentrated | — | 11,740 | ||||||||
US Equity Select | 28,151 | — |
The aforementioned waivers and/or reimbursements are not subject to recoupment by the Investment Manager.
State Street provides the Fund with custody and certain fund administration and accounting services.
In December 2015, State Street announced that it had identified inconsistencies in the way in which clients were invoiced for custody out-of-pocket expenses from 1998 until 2015. The difference between what was charged and what should have been charged, plus interest, was recorded as a reimbursement when determined in 2016. Pursuant to the expense limitations described above, certain Portfolios experienced management fee waivers during the year ended December 31, 2016. Accordingly, the reimbursement of out-of-pocket expenses resulted in the reduction in the waiver of management fees for certain Portfolios for the year ended December 31, 2016.
The Fund has a distribution agreement with Lazard Asset Management Securities LLC (the “Distributor”), a wholly-owned subsidiary of the Investment Manager, to serve as the distributor for shares of each Portfolio. The Distributor bears the cost of printing and mailing prospectuses to potential investors and certain expenses in connection with the offering of Portfolio shares.
Under a distribution and servicing plan adopted pursuant to Rule 12b-1 under the 1940 Act, each Portfolio pays a monthly fee to the Distributor, at an annual rate of 0.25% of the average daily net assets of its Open Shares, for distribution and servicing of accounts. The Distributor may make payments to certain financial
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institutions, securities dealers and other industry professionals for providing these services.
DST is the Fund’s transfer and dividend disbursing agent. During the year ended December 31, 2018, DST waived $6,127 and $6,104 of its fees for the Emerging Markets Core Equity and Equity Franchise Portfolios, respectively.
4. Directors’ Compensation
Certain Directors of the Fund are officers of the Investment Manager. For the year ended December 31, 2018, each Director who is not an affiliated person of the Investment Manager or any of its affiliates was paid by all of the funds in the Lazard Fund Complex: (1) an annual retainer of $225,000, (2) an additional annual fee of $32,500 to the lead Independent Director (an “Independent Director” is a Director who is not an “interested person” (as defined in the 1940 Act) of the Fund), and (3) an additional annual fee of $22,500 to the Audit Committee Chair. Effective January 1, 2019, the aggregate compensation for Independent Directors for the Lazard Fund Complex is comprised of: (1) an annual retainer of $232,000, (2) an additional annual fee of $33,000 to the lead Independent Director, and (3) an additional annual fee of $23,000 to the Audit Committee Chair. The Independent Directors may be paid additional compensation for participation on ad hoc committees or other work performed on behalf of the Board. The Independent Directors also are reimbursed for travel and other out-of-pocket expenses for attending Board and committee meetings. The Directors do not receive benefits from the Fund pursuant to any pension, retirement or similar arrangement. Independent Directors’ fees are allocated among the funds in the Lazard Fund Complex at a rate of $5,000 per fund with the remainder allocated based upon each fund’s proportionate share of combined net assets. The Statements of Operations show the Independent Directors’ fees and expenses paid by each Portfolio.
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5. Securities Transactions and Transactions with Affiliates
Purchases and sales of portfolio securities (excluding short-term investments) for the year ended December 31, 2018 were as follows:
Portfolio | Purchases | Sales | |||||||
Developing Markets Equity | $ | 177,700,859 | $ | 169,574,605 | |||||
Emerging Markets Core Equity | 113,849,161 | 77,995,241 | |||||||
Emerging Markets Equity Advantage | 2,561,880 | 2,965,701 | |||||||
Emerging Markets Equity Blend | 216,665,383 | 214,528,746 | |||||||
Emerging Markets Equity | 1,731,497,590 | 3,525,653,805 | |||||||
Equity Franchise | 11,008,557 | 7,442,807 | |||||||
Global Equity Select | 33,332,911 | 21,713,807 | |||||||
Global Listed Infrastructure | 3,200,079,865 | 2,444,124,959 | |||||||
Global Realty Equity | 4,120,908 | 8,414,448 | |||||||
Global Strategic Equity | 1,307,815 | 1,352,991 | |||||||
International Compounders | 129,053 | — | |||||||
International Equity Advantage | 1,880,950 | 1,830,773 | |||||||
International Equity Concentrated | 51,562,006 | 57,125,321 | |||||||
International Equity | 1,142,741,224 | 2,049,381,690 | |||||||
International Equity Select | 55,147,627 | 23,406,231 | |||||||
International Equity Value | 30,986,861 | 8,225,492 | |||||||
International Small Cap Equity | 43,271,305 | 49,651,333 | |||||||
International Strategic Equity | 2,545,379,330 | 3,336,846,197 | |||||||
Managed Equity Volatility | 40,112,034 | 22,157,200 | |||||||
US Equity Concentrated | 981,804,188 | 1,277,330,112 | |||||||
US Equity Select | 50,477,440 | 59,266,973 | |||||||
US Realty Equity | 31,284,418 | 51,587,665 | |||||||
US Small-Mid Cap Equity | 144,795,475 | 194,257,304 |
For the year ended December 31, 2018, the Portfolios did not engage in any cross-trades in accordance with Rule 17a-7 under the 1940 Act, and no brokerage commissions were paid to affiliates of the Investment Manager or other affiliates of the Fund for portfolio transactions executed on behalf of the Fund.
At December 31, 2018, the Investment Manager owned 62.64%, 57.98%, 92.55%, 100.00% and 89.90% of the outstanding shares of the Emerging Markets Equity Advantage, Equity Franchise, Global Strategic Equity, International Compounders and International Equity Advantage Portfolios, respectively.
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Holdings of 5% Voting Securities of Portfolio Companies
The 1940 Act defines “affiliated persons” to include a portfolio company in which a Portfolio owns 5% or more of the outstanding voting securities. Investments in “affiliated persons” for the Emerging Markets Equity Portfolio for the year ended December 31, 2018 were as follows:
Non-Controlled Affiliates | Number of Shares Held at December 31, 2017 | Gross Additions | Gross Reductions | Number of Shares Held at December 31, 2018 | ||||||||||||
Imperial Logistics, Ltd. | 8,640,318 | — | (1,448,844 | ) | 7,191,474 | |||||||||||
Weichai Power Co., Ltd., Class H | 142,098,288 | — | (23,828,000 | ) | 118,270,288 |
Non-Controlled Affiliates | Fair Value at December 31, 2018 | Investment Income | Realized Gain (Loss) | |||||||||
Imperial Logistics, Ltd. | $ | 34,041,858 | $ | 3,772,317 | $ | (11,620,614 | ) | |||||
Weichai Power Co., Ltd., Class H | 134,116,483 | 7,640,978 | (5,622,191 | ) | ||||||||
Total Affiliated Securities (Fair Value is 1.91% of Net Assets) | $ | 168,158,341 | $ | 11,413,295 | $ | (17,242,805 | ) |
6. Line of Credit
The Fund has a $50 million Line of Credit Agreement (the “Agreement”) with State Street, primarily for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest on borrowings is payable at the higher of the Federal Funds rate or One-Month LIBOR rate plus 1.00%, on an annualized basis. Under the Agreement, the Fund has agreed to pay a 0.20% per annum fee on the unused portion of the commitment, payable quarterly in arrears. The Fund has also agreed to pay an upfront fee of 0.05% of the committed line amount. During the year ended December 31, 2018, the following Portfolios had borrowings under the Agreement as follows:
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Portfolio | Average Daily Loan Balance* | Maximum Daily Loan Outstanding | Weighted Average Interest Rate | Number of Days Borrowings were Outstanding | |||||||||||||
Developing Markets Equity | $ | 1,581,500 | $ | 4,980,000 | 3.23 | % | 10 | ||||||||||
Emerging Markets Core Equity | 7,581,153 | 20,600,000 | 3.16 | 6 | |||||||||||||
Emerging Markets Equity Advantage | 47,143 | 77,000 | 2.62 | 7 | |||||||||||||
Emerging Markets Equity | 24,460,000 | 37,610,000 | 3.09 | 2 | |||||||||||||
Equity Franchise | 300,000 | 350,000 | 2.94 | 2 | |||||||||||||
Global Listed Infrastructure | 30,995,261 | 30,995,261 | 3.51 | 2 | |||||||||||||
Global Realty Equity | 80,000 | 80,000 | 2.90 | 4 | |||||||||||||
Global Strategic Equity | 22,556 | 111,000 | 2.57 | 9 | |||||||||||||
International Equity Advantage | 16,929 | 45,000 | 3.11 | 14 | |||||||||||||
International Equity Concentrated | 223,436 | 253,000 | 2.79 | 6 | |||||||||||||
International Equity | 8,038,480 | 15,900,000 | 3.37 | 3 | |||||||||||||
International Equity Select | 188,000 | 317,000 | 2.55 | 2 | |||||||||||||
International Small Cap Equity | 410,533 | 2,000,000 | 2.92 | 15 | |||||||||||||
US Equity Concentrated | 10,348,658 | 18,300,000 | 3.50 | 14 | |||||||||||||
US Equity Select | 239,000 | 450,000 | 2.97 | 5 | |||||||||||||
US Realty Equity | 234,188 | 2,190,000 | 3.11 | 32 | |||||||||||||
US Small-Mid Cap Equity | 900,000 | 900,000 | 3.40 | 3 |
* | For days borrowings were outstanding. |
Management believes that the fair value of the liabilities under the line of credit is equivalent to the recorded amount based on its short-term maturity and interest rate, which fluctuates with LIBOR. A Portfolio’s outstanding balance on the line of credit, if any, would be categorized as Level 2.
7. Investment Risks
(a) Non-US Securities Risk—A Portfolio’s performance will be influenced by political, social and economic factors affecting the non-US countries and companies in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity.
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(b) Emerging Market Risk—Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. The economies of countries with emerging markets may be based predominantly on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme debt burdens or volatile inflation rates. The securities markets of emerging market countries have historically been extremely volatile. These market conditions may continue or worsen. Investments in these countries may be subject to political, economic, legal, market and currency risks. The risks may include less protection of property rights and uncertain political and economic policies, the imposition of capital controls and/or foreign investment limitations by a country, nationalization of businesses and the imposition of sanctions by other countries, such as the US. Significant devaluation of emerging market currencies against the US dollar may occur subsequent to acquisition of investments denominated in emerging market currencies.
(c) Foreign Currency Risk—Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to fluctuations in currency exchange rates. A Portfolio’s currency investments could be adversely affected by delays in, or a refusal to grant, repatriation of funds or conversion of emerging market currencies. For Portfolios other than the Global Listed Infrastructure Portfolio, the Investment Manager generally does not intend to actively hedge the Portfolios’ foreign currency exposure.
(d) Infrastructure Companies Risk—Securities and instruments of infrastructure companies are more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction programs, high leverage, costs associated with environmental and other regulations, the effects of economic slowdown, surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the
286 Annual Report
effects of energy conservation policies and other factors. Infrastructure companies also may be affected by or subject to: regulation by various government authorities, including rate regulation; service interruption due to environmental, operational or other mishaps; the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards; general changes in market sentiment towards infrastructure and utilities assets; difficulty in raising capital in adequate amounts on reasonable terms in periods of high inflation and unsettled capital markets; inexperience with and potential losses resulting from a developing deregulatory environment; and technological innovations that may render existing plants, equipment or products obsolete.
(e) Realty Companies, Real Estate Investments and REITs Risk— Portfolios that invest in Realty Companies, Real Estate Investments and/or REITs could lose money due to the performance of real estate-related securities even if securities markets generally are experiencing positive results. The performance of investments made by a Portfolio may be determined to a great extent by the current status of the real estate industry in general, or by other factors (such as interest rates and the availability of loan capital) that may affect the real estate industry, even if other industries would not be so affected. Consequently, the investment strategies of a Portfolio could lead to securities investment results that may be significantly different from investments in securities of other industries or sectors or in a more broad-based portfolio generally.
The risks related to investments in Realty Companies and Real Estate Investments include, but are not limited to: adverse changes in general economic and local market conditions; adverse developments in employment; changes in supply or demand for similar or competing properties; unfavorable changes in applicable taxes, governmental regulations and interest rates; operating or development expenses; and lack of available financing.
REITS are subject to similar risks as Real Estate Investments and Realty Companies. The risks related to investments in Real Estate Investments and Realty Companies include, but are not limited to: adverse changes in general economic and local market conditions;
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adverse developments in employment; changes in supply or demand for similar or competing properties; unfavorable changes in applicable taxes, governmental regulations and interest rates; operating or development expenses; and lack of available financing. Due to certain special considerations that apply to REITs, investments in REITs may carry additional risks not necessarily present in investments in other securities. REIT securities (including those trading on national exchanges) typically have trading volumes that are less than those of common stocks of other stocks traded on national exchanges, which may affect a Portfolio’s ability to trade or liquidate those securities. An investment in REITs may be adversely affected if the REIT fails to comply with applicable laws and regulations. Failure to qualify with any of these requirements could jeopardize a company’s status as a REIT. A Portfolio generally will have no control over the operations and policies of a REIT, and they generally will have no ability to cause a REIT to take the actions necessary to qualify as a REIT.
(f) Non-Diversification Risk—A Portfolio’s NAV may be more vulnerable to changes in the market value of a single issuer or group of issuers and may be relatively more susceptible to adverse effects from any single corporate, industry, economic, market, political or regulatory occurrence than if the Portfolio’s investments consisted of securities issued by a larger number of issuers.
(g) Derivatives and Hedging Risk—Derivatives transactions, including those entered into for hedging purposes (i.e., seeking to protect Portfolio investments), may increase volatility, reduce returns, limit gains or magnify losses, perhaps substantially, particularly since most derivatives have a leverage component that provides investment exposure in excess of the amount invested. Over-the-counter swap agreements, forward currency contracts, writing or purchasing over-the-counter options on securities (including options on exchange-traded funds and exchange-traded notes), indexes and currencies and other over-the-counter derivatives transactions are subject to the risk of default by the counterparty and can be illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. These derivatives transactions, as well as the
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exchange-traded futures and options in which certain Portfolios may invest, are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related index, commodity, interest rate, currency, security or other reference asset. As such, a small investment could have a potentially large impact on a Portfolio’s performance. Purchasing options will reduce returns by the amount of premiums paid for options that are not exercised. In fact, many derivatives may be subject to greater risks than those associated with investing directly in the underlying or other reference asset. Derivatives transactions incur costs, either explicitly or implicitly, which reduce returns, and costs of engaging in such transactions may outweigh any gains or any losses averted from hedging activities. Successful use of derivatives, whether for hedging or for other investment purposes, is subject to the Investment Manager’s ability to predict correctly movements in the direction of the relevant reference asset or market and, for hedging activities, correlation of the derivative instruments used with the investments seeking to be hedged. Use of derivatives transactions, even when entered into for hedging purposes, may cause a Portfolio to experience losses greater than if the Portfolio had not engaged in such transactions.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnification provisions. A Portfolio’s maximum exposure under these arrangements is unknown. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Fair Value Measurements
Fair value is defined as the price that a Portfolio would receive to sell an asset, or would pay to transfer a liability, in an orderly transaction between market participants at the date of measurement. The Fair Value Measurements and Disclosures provisions of GAAP also establish a framework for measuring fair value, and a three-level hierarchy for fair value measurement that is based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer, broadly, to the assumptions that market participants would use in
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pricing the asset or liability. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The fair value measurement level within the fair value hierarchy for the assets and liabilities of the Fund is based on the lowest level of any input that is significant to the overall fair value measurement. The three-level hierarchy of inputs is summarized below:
· | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities |
· | Level 2 – other significant observable inputs (including unadjusted quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, etc.) |
· | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets and liabilities) |
Changes in valuation technique may result in transfers into or out of the current assigned level within the hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in these securities.
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The following table summarizes the valuation of the Portfolios’ assets and liabilities by each fair value hierarchy level as of December 31, 2018:
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Developing Markets Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Brazil | $ | 1,247,418 | $ | 21,261,856 | $ | — | $ 22,509,274 | ||||||||||
Canada | 3,664,541 | — | — | 3,664,541 | |||||||||||||
China | 20,267,158 | 44,633,853 | — | 64,901,011 | |||||||||||||
Colombia | 4,288,041 | — | — | 4,288,041 | |||||||||||||
Hong Kong | — | 8,500,902 | — | 8,500,902 | |||||||||||||
India | 13,718,548 | 10,868,924 | — | 24,587,472 | |||||||||||||
Indonesia | — | 4,533,555 | — | 4,533,555 | |||||||||||||
Mexico | 1,920,094 | — | — | 1,920,094 | |||||||||||||
Peru | 6,085,950 | — | — | 6,085,950 | |||||||||||||
Philippines | — | 2,977,090 | — | 2,977,090 | |||||||||||||
Portugal | — | 3,359,794 | — | 3,359,794 | |||||||||||||
Russia | 4,344,137 | 7,766,754 | — | 12,110,891 | |||||||||||||
South Africa | — | 9,794,341 | — | 9,794,341 | |||||||||||||
South Korea | — | 19,731,054 | — | 19,731,054 | |||||||||||||
Taiwan | 3,398,595 | 16,842,784 | — | 20,241,379 | |||||||||||||
United Kingdom | — | 3,663,811 | — | 3,663,811 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Brazil | 4,102,233 | — | — | 4,102,233 | |||||||||||||
Short-Term Investments | 1,218,722 | — | — | 1,218,722 | |||||||||||||
Total | $ | 64,255,437 | $ | 153,934,718 | $ | — | $218,190,155 |
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Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Emerging Markets Core Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Argentina | $ | 1,687,441 | $ | — | $ | — | $ 1,687,441 | ||||||||||
Brazil | 4,961,874 | 12,058,264 | — | 17,020,138 | |||||||||||||
Canada | 1,798,835 | — | — | 1,798,835 | |||||||||||||
China | 16,171,720 | 36,370,759 | — | 52,542,479 | |||||||||||||
Colombia | 2,011,680 | — | — | 2,011,680 | |||||||||||||
Hong Kong | — | 2,450,990 | — | 2,450,990 | |||||||||||||
Hungary | — | 2,212,180 | — | 2,212,180 | |||||||||||||
India | 9,566,513 | 13,221,612 | — | 22,788,125 | |||||||||||||
Indonesia | 1,883,451 | 2,994,917 | — | 4,878,368 | |||||||||||||
Luxembourg | 4,210,396 | — | — | 4,210,396 | |||||||||||||
Mexico | 6,771,483 | — | — | 6,771,483 | |||||||||||||
Peru | 2,582,456 | — | — | 2,582,456 | |||||||||||||
Philippines | — | 3,495,035 | — | 3,495,035 | |||||||||||||
Portugal | — | 2,238,786 | — | 2,238,786 | |||||||||||||
Russia | 588,355 | 13,145,584 | — | 13,733,939 | |||||||||||||
South Africa | — | 11,143,846 | — | 11,143,846 | |||||||||||||
South Korea | — | 25,325,336 | — | 25,325,336 | |||||||||||||
Taiwan | 13,465,606 | 8,705,574 | — | 22,171,180 | |||||||||||||
Thailand | — | 3,021,569 | — | 3,021,569 | |||||||||||||
United Arab Emirates | — | 826,480 | — | 826,480 | |||||||||||||
United Kingdom | 3,443,200 | — | — | 3,443,200 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Brazil | 2,199,477 | — | — | 2,199,477 | |||||||||||||
Short-Term Investments | 2,544,384 | — | — | 2,544,384 | |||||||||||||
Total | $ | 73,886,871 | $ | 137,210,932 | $ | — | $211,097,803 |
292 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Emerging Markets Equity Advantage Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Brazil | $ | — | $ | 173,837 | $ | — | $ 173,837 | ||||||||||
Chile | 23,421 | — | — | 23,421 | |||||||||||||
China | 160,902 | 852,823 | — | 1,013,725 | |||||||||||||
Colombia | 10,989 | — | — | 10,989 | |||||||||||||
Egypt | 12,952 | — | — | 12,952 | |||||||||||||
Greece | — | 6,558 | — | 6,558 | |||||||||||||
Hong Kong | — | 33,516 | — | 33,516 | |||||||||||||
Hungary | — | 39,145 | — | 39,145 | |||||||||||||
India | 156,262 | 76,569 | — | 232,831 | |||||||||||||
Indonesia | — | 72,552 | — | 72,552 | |||||||||||||
Malaysia | — | 83,932 | — | 83,932 | |||||||||||||
Mexico | 108,039 | — | — | 108,039 | |||||||||||||
Peru | 8,645 | — | — | 8,645 | |||||||||||||
Philippines | — | 44,280 | — | 44,280 | |||||||||||||
Poland | — | 48,761 | — | 48,761 | |||||||||||||
Russia | 5,586 | 155,297 | — | 160,883 | |||||||||||||
Singapore | — | 13,243 | — | 13,243 | |||||||||||||
South Africa | 4,698 | 140,789 | — | 145,487 | |||||||||||||
South Korea | 50,864 | 475,479 | — | 526,343 | |||||||||||||
Taiwan | 189,496 | 216,066 | — | 405,562 | |||||||||||||
Thailand | 10,557 | 86,224 | — | 96,781 | |||||||||||||
Turkey | 10,728 | 12,705 | — | 23,433 | |||||||||||||
United States | 14,317 | — | — | 14,317 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Brazil | 33,834 | — | — | 33,834 | |||||||||||||
Short-Term Investments | 67,762 | — | — | 67,762 | |||||||||||||
Total | $ | 869,052 | $ | 2,531,776 | $ | — | $3,400,828 |
Annual Report 293
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Emerging Markets Equity Blend Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Argentina | $ | 3,817,869 | $ | — | $ | — | $ 3,817,869 | ||||||||||
Brazil | 4,779,563 | 20,184,969 | — | 24,964,532 | |||||||||||||
Canada | 3,535,638 | — | — | 3,535,638 | |||||||||||||
Chile | 511,603 | — | — | 511,603 | |||||||||||||
China | 33,414,444 | 51,805,167 | — | 85,219,611 | |||||||||||||
Colombia | 4,442,155 | — | — | 4,442,155 | |||||||||||||
Egypt | 200,970 | 2,443,662 | — | 2,644,632 | |||||||||||||
Estonia | — | 292,663 | — | 292,663 | |||||||||||||
Georgia | — | 1,838,384 | — | 1,838,384 | |||||||||||||
Greece | — | 1,343,096 | — | 1,343,096 | |||||||||||||
Hong Kong | — | 11,969,603 | — | 11,969,603 | |||||||||||||
Hungary | — | 3,060,790 | — | 3,060,790 | |||||||||||||
India | 9,726,731 | 27,224,593 | — | 36,951,324 | |||||||||||||
Indonesia | 2,689,932 | 9,849,036 | — | 12,538,968 | |||||||||||||
Kenya | — | 565,299 | — | 565,299 | |||||||||||||
Kuwait | — | 842,098 | — | 842,098 | |||||||||||||
Mexico | 6,217,096 | — | — | 6,217,096 | |||||||||||||
Morocco | — | 221,791 | — | 221,791 | |||||||||||||
Oman | — | 821,031 | — | 821,031 | |||||||||||||
Pakistan | — | 623,417 | — | 623,417 | |||||||||||||
Philippines | 737,653 | — | — | 737,653 | |||||||||||||
Poland | — | 1,037,510 | — | 1,037,510 | |||||||||||||
Russia | 14,242,095 | 3,519,927 | — | 17,762,022 | |||||||||||||
Singapore | — | 1,270,601 | — | 1,270,601 | |||||||||||||
South Africa | — | 3,943,217 | — | 3,943,217 | |||||||||||||
South Korea | — | 34,005,217 | — | 34,005,217 | |||||||||||||
Taiwan | 3,134,359 | 19,644,528 | — | 22,778,887 | |||||||||||||
Thailand | — | 1,372,499 | — | 1,372,499 | |||||||||||||
Turkey | 2,271,284 | — | — | 2,271,284 | |||||||||||||
Ukraine | — | 692,104 | — | 692,104 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Brazil | 3,763,046 | — | — | 3,763,046 | |||||||||||||
Warrants* | |||||||||||||||||
Brazil | 37,437 | — | — | 37,437 | |||||||||||||
Short-Term Investments | 5,709,402 | — | — | 5,709,402 | |||||||||||||
Total | $ | 99,231,277 | $ | 198,571,202 | $ | — | $297,802,479 |
294 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Emerging Markets Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Argentina | $ | 140,643,124 | $ | — | $ | — | $ 140,643,124 | ||||||||||
Brazil | 101,007,973 | 693,160,452 | — | 794,168,425 | |||||||||||||
China | 709,830,455 | 1,062,861,291 | — | 1,772,691,746 | |||||||||||||
Egypt | — | 82,193,853 | — | 82,193,853 | |||||||||||||
Hong Kong | — | 91,311,291 | — | 91,311,291 | |||||||||||||
Hungary | — | 183,217,110 | — | 183,217,110 | |||||||||||||
India | 74,719,167 | 724,491,320 | — | 799,210,487 | |||||||||||||
Indonesia | 144,005,865 | 374,782,611 | — | 518,788,476 | |||||||||||||
Luxembourg | 58,850,956 | — | — | 58,850,956 | |||||||||||||
Malaysia | — | 60,594,729 | — | 60,594,729 | |||||||||||||
Mexico | 278,212,861 | — | — | 278,212,861 | |||||||||||||
Pakistan | — | 102,889,175 | — | 102,889,175 | |||||||||||||
Philippines | 56,836,271 | — | — | 56,836,271 | |||||||||||||
Russia | 111,889,701 | 703,830,008 | — | 815,719,709 | |||||||||||||
South Africa | 43,991,077 | 807,195,285 | — | 851,186,362 | |||||||||||||
South Korea | — | 1,240,226,745 | — | 1,240,226,745 | |||||||||||||
Taiwan | — | 455,228,408 | — | 455,228,408 | |||||||||||||
Thailand | — | 141,559,204 | — | 141,559,204 | |||||||||||||
Turkey | — | 185,794,963 | — | 185,794,963 | |||||||||||||
Short-Term Investments | 209,726,438 | — | — | 209,726,438 | |||||||||||||
Total | $ | 1,929,713,888 | $ | 6,909,336,445 | $ | — | $8,839,050,333 | ||||||||||
Equity Franchise Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 291,396 | $ | — | $ 291,396 | ||||||||||
Belgium | — | 357,318 | — | 357,318 | |||||||||||||
France | — | 176,093 | — | 176,093 | |||||||||||||
Germany | — | 172,069 | — | 172,069 | |||||||||||||
Italy | — | 386,432 | — | 386,432 | |||||||||||||
Luxembourg | — | 525,103 | — | 525,103 | |||||||||||||
United Kingdom | — | 629,878 | — | 629,878 | |||||||||||||
United States | 5,779,487 | — | — | 5,779,487 | |||||||||||||
Short-Term Investments | 83,365 | — | — | 83,365 | |||||||||||||
Total | $ | 5,862,852 | $ | 2,538,289 | $ | — | $ 8,401,141 |
Annual Report 295
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Global Equity Select Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Belgium | $ | — | $ | 595,442 | $ | — | $ 595,442 | ||||||||||
Canada | 2,576,891 | — | — | 2,576,891 | |||||||||||||
China | 472,892 | 793,573 | — | 1,266,465 | |||||||||||||
Finland | — | 1,393,069 | — | 1,393,069 | |||||||||||||
France | — | 840,998 | — | 840,998 | |||||||||||||
Germany | — | 661,174 | — | 661,174 | |||||||||||||
Hong Kong | — | 2,047,843 | — | 2,047,843 | |||||||||||||
India | 550,781 | — | — | 550,781 | |||||||||||||
Israel | — | 726,128 | — | 726,128 | |||||||||||||
Japan | — | 4,326,213 | — | 4,326,213 | |||||||||||||
Netherlands | — | 1,586,644 | — | 1,586,644 | |||||||||||||
Singapore | — | 1,092,420 | — | 1,092,420 | |||||||||||||
South Africa | — | 1,029,999 | — | 1,029,999 | |||||||||||||
Sweden | — | 2,048,614 | — | 2,048,614 | |||||||||||||
Switzerland | — | 1,396,558 | — | 1,396,558 | |||||||||||||
Taiwan | 640,758 | — | — | 640,758 | |||||||||||||
United Kingdom | 883,071 | 7,085,371 | — | 7,968,442 | |||||||||||||
United States | 32,620,792 | — | — | 32,620,792 | |||||||||||||
Short-Term Investments | 3,109,649 | — | — | 3,109,649 | |||||||||||||
Total | $ | 40,854,834 | $ | 25,624,046 | $ | — | $66,478,880 |
296 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Global Listed Infrastructure Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 509,812,552 | $ | — | $ 509,812,552 | ||||||||||
Canada | 49,515,373 | — | — | 49,515,373 | |||||||||||||
France | — | 436,849,228 | — | 436,849,228 | |||||||||||||
Germany | — | 154,333,094 | — | 154,333,094 | |||||||||||||
Italy | — | 1,326,965,931 | — | 1,326,965,931 | |||||||||||||
Luxembourg | — | 303,400,711 | — | 303,400,711 | |||||||||||||
Portugal | — | 57,678,179 | — | 57,678,179 | |||||||||||||
Spain | — | 249,765,419 | — | 249,765,419 | |||||||||||||
United Kingdom | — | 881,321,692 | — | 881,321,692 | |||||||||||||
United States | 1,173,862,169 | — | — | 1,173,862,169 | |||||||||||||
Short-Term Investments | 152,170,295 | — | — | 152,170,295 | |||||||||||||
Other Financial | |||||||||||||||||
Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 11,095,514 | — | 11,095,514 | |||||||||||||
Total | $ | 1,375,547,837 | $ | 3,931,222,320 | $ | — | $5,306,770,157 | ||||||||||
Liabilities: | |||||||||||||||||
Other Financial | |||||||||||||||||
Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (10,159,785 | ) | $ | — | $ (10,159,785 | ) | ||||||||
Global Realty Equity Portfolio | |||||||||||||||||
Short-Term Investments | $ | 4,321,682 | $ | — | $ | — | $ 4,321,682 |
Annual Report 297
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Global Strategic Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Canada | $ | 75,489 | $ | — | $ | — | $ 75,489 | ||||||||||
China | 47,838 | 39,639 | — | 87,477 | |||||||||||||
Denmark | — | 35,889 | — | 35,889 | |||||||||||||
Finland | — | 46,643 | — | 46,643 | |||||||||||||
France | — | 129,989 | — | 129,989 | |||||||||||||
Hong Kong | — | 78,936 | — | 78,936 | |||||||||||||
India | 41,520 | — | — | 41,520 | |||||||||||||
Indonesia | — | 4,101 | — | 4,101 | |||||||||||||
Israel | — | 40,850 | — | 40,850 | |||||||||||||
Japan | — | 85,035 | — | 85,035 | |||||||||||||
Netherlands | — | 38,906 | — | 38,906 | |||||||||||||
New Zealand | — | 34,621 | — | 34,621 | |||||||||||||
South Africa | — | 64,235 | — | 64,235 | |||||||||||||
Switzerland | — | 130,285 | — | 130,285 | |||||||||||||
United Kingdom | — | 245,758 | — | 245,758 | |||||||||||||
United States | 1,405,972 | — | — | 1,405,972 | |||||||||||||
Short-Term Investments | 102,289 | — | — | 102,289 | |||||||||||||
Total | $ | 1,673,108 | $ | 974,887 | $ | — | $2,647,995 | ||||||||||
International Compounders Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | 3,253 | $ | — | $ | — | $ 3,253 | ||||||||||
Canada | 20,197 | — | — | 20,197 | |||||||||||||
China | 8,052 | 3,964 | — | 12,016 | |||||||||||||
Denmark | 6,836 | — | — | 6,836 | |||||||||||||
France | 3,163 | 3,450 | — | 6,613 | |||||||||||||
Germany | 7,157 | — | — | 7,157 | |||||||||||||
India | 6,733 | — | — | 6,733 | |||||||||||||
Israel | 3,388 | — | — | 3,388 | |||||||||||||
Japan | 5,891 | — | — | 5,891 | |||||||||||||
Netherlands | — | 2,986 | — | 2,986 | |||||||||||||
Norway | 2,907 | — | — | 2,907 | |||||||||||||
South Africa | — | 8,446 | — | 8,446 | |||||||||||||
Spain | — | 2,498 | — | 2,498 | |||||||||||||
Sweden | 7,511 | — | — | 7,511 | |||||||||||||
Taiwan | 4,355 | — | — | 4,355 | |||||||||||||
United Kingdom | 6,387 | 13,652 | — | 20,039 | |||||||||||||
United States | 7,932 | — | — | 7,932 | |||||||||||||
Total | $ | 93,762 | $ | 34,996 | $ | — | $ 128,758 |
298 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
International Equity Advantage Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | 4,523 | $ | 145,880 | $ | — | $ 150,403 | ||||||||||
Austria | — | 5,098 | — | 5,098 | |||||||||||||
Belgium | — | 5,625 | — | 5,625 | |||||||||||||
China | — | 28,302 | — | 28,302 | |||||||||||||
Denmark | — | 23,227 | — | 23,227 | |||||||||||||
Finland | — | 10,916 | — | 10,916 | |||||||||||||
France | 7,291 | 233,525 | — | 240,816 | |||||||||||||
Germany | — | 155,615 | — | 155,615 | |||||||||||||
Hong Kong | — | 78,918 | — | 78,918 | |||||||||||||
Israel | 1,968 | 3,301 | — | 5,269 | |||||||||||||
Italy | — | 82,288 | — | 82,288 | |||||||||||||
Japan | 30,019 | 513,450 | — | 543,469 | |||||||||||||
Macau | — | 5,164 | — | 5,164 | |||||||||||||
Netherlands | — | 129,052 | — | 129,052 | |||||||||||||
New Zealand | — | 5,517 | — | 5,517 | |||||||||||||
Norway | — | 53,652 | — | 53,652 | |||||||||||||
Russia | — | 10,290 | — | 10,290 | |||||||||||||
South Africa | — | 2,152 | — | 2,152 | |||||||||||||
Spain | — | 54,565 | — | 54,565 | |||||||||||||
Sweden | — | 25,568 | — | 25,568 | |||||||||||||
Switzerland | — | 209,660 | — | 209,660 | |||||||||||||
United Kingdom | — | 356,400 | — | 356,400 | |||||||||||||
United States | 6,202 | — | — | 6,202 | |||||||||||||
Total | $ | 50,003 | $ | 2,138,165 | $ | — | $ 2,188,168 | ||||||||||
International Equity Concentrated Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 1,345,448 | $ | — | $ 1,345,448 | ||||||||||
Belgium | — | 1,968,062 | — | 1,968,062 | |||||||||||||
Canada | 7,374,570 | — | — | 7,374,570 | |||||||||||||
China | — | 3,207,511 | — | 3,207,511 | |||||||||||||
France | — | 3,783,452 | — | 3,783,452 | |||||||||||||
Germany | — | 2,773,831 | — | 2,773,831 | |||||||||||||
Hong Kong | — | 2,411,458 | — | 2,411,458 | |||||||||||||
Japan | — | 6,907,803 | — | 6,907,803 | |||||||||||||
Netherlands | — | 2,641,167 | — | 2,641,167 | |||||||||||||
South Korea | — | 1,045,840 | — | 1,045,840 | |||||||||||||
United Kingdom | — | 8,403,331 | — | 8,403,331 | |||||||||||||
United States | 4,973,798 | — | — | 4,973,798 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Germany | — | 2,544,544 | — | 2,544,544 | |||||||||||||
Short-Term Investments | 745,150 | — | — | 745,150 | |||||||||||||
Total | $ | 13,093,518 | $ | 37,032,447 | $ | — | $50,125,965 |
Annual Report 299
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
International Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 47,999,922 | $ | — | $ 47,999,922 | ||||||||||
Belgium | — | 44,345,435 | — | 44,345,435 | |||||||||||||
Canada | 149,160,154 | — | — | 149,160,154 | |||||||||||||
Denmark | — | 34,412,326 | — | 34,412,326 | |||||||||||||
Finland | — | 70,483,532 | — | 70,483,532 | |||||||||||||
France | — | 271,687,310 | — | 271,687,310 | |||||||||||||
Germany | — | 90,549,352 | — | 90,549,352 | |||||||||||||
Hong Kong | — | 22,446,326 | — | 22,446,326 | |||||||||||||
India | 34,489,302 | — | — | 34,489,302 | |||||||||||||
Ireland | 33,118,810 | — | — | 33,118,810 | |||||||||||||
Israel | — | 18,782,617 | — | 18,782,617 | |||||||||||||
Japan | — | 315,660,601 | — | 315,660,601 | |||||||||||||
Netherlands | — | 167,658,691 | — | 167,658,691 | |||||||||||||
Norway | — | 78,758,287 | — | 78,758,287 | |||||||||||||
Singapore | — | 65,222,226 | — | 65,222,226 | |||||||||||||
South Korea | — | 17,397,356 | — | 17,397,356 | |||||||||||||
Spain | — | 43,552,157 | — | 43,552,157 | |||||||||||||
Sweden | — | 81,609,073 | — | 81,609,073 | |||||||||||||
Switzerland | — | 180,940,422 | — | 180,940,422 | |||||||||||||
United Kingdom | — | 374,956,433 | — | 374,956,433 | |||||||||||||
United States | 133,625,684 | — | — | 133,625,684 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Germany | — | 45,723,664 | — | 45,723,664 | |||||||||||||
Short-Term Investments | 113,486,251 | — | — | 113,486,251 | |||||||||||||
Total | $ | 463,880,201 | $ | 1,972,185,730 | $ | — | $2,436,065,931 |
300 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
International Equity Select Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 1,821,453 | $ | — | $ 1,821,453 | ||||||||||
Belgium | — | 1,329,999 | — | 1,329,999 | |||||||||||||
Brazil | — | 1,846,851 | — | 1,846,851 | |||||||||||||
Canada | 4,643,338 | — | — | 4,643,338 | |||||||||||||
China | 646,454 | 3,788,432 | — | 4,434,886 | |||||||||||||
Denmark | — | 1,475,021 | — | 1,475,021 | |||||||||||||
Finland | — | 2,535,362 | — | 2,535,362 | |||||||||||||
France | — | 5,814,891 | — | 5,814,891 | |||||||||||||
Germany | — | 2,192,011 | — | 2,192,011 | |||||||||||||
India | 1,627,518 | — | — | 1,627,518 | |||||||||||||
Indonesia | 711,811 | — | — | 711,811 | |||||||||||||
Ireland | 884,402 | — | — | 884,402 | |||||||||||||
Japan | — | 6,760,144 | — | 6,760,144 | |||||||||||||
Netherlands | — | 4,989,063 | — | 4,989,063 | |||||||||||||
Norway | — | 2,231,113 | — | 2,231,113 | |||||||||||||
Russia | 830,209 | — | — | 830,209 | |||||||||||||
Singapore | — | 1,461,676 | — | 1,461,676 | |||||||||||||
South Africa | — | 1,586,030 | — | 1,586,030 | |||||||||||||
South Korea | — | 533,265 | — | 533,265 | |||||||||||||
Spain | — | 1,519,174 | — | 1,519,174 | |||||||||||||
Sweden | — | 1,612,389 | — | 1,612,389 | |||||||||||||
Switzerland | — | 5,282,300 | — | 5,282,300 | |||||||||||||
Taiwan | — | 1,493,531 | — | 1,493,531 | |||||||||||||
Thailand | — | 570,121 | — | 570,121 | |||||||||||||
United Kingdom | — | 6,841,050 | — | 6,841,050 | |||||||||||||
United States | 5,816,357 | — | — | 5,816,357 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Germany | — | 1,419,948 | — | 1,419,948 | |||||||||||||
Short-Term Investments | 5,712,559 | — | — | 5,712,559 | |||||||||||||
Total | $ | 20,872,648 | $ | 57,103,824 | $ | — | $77,976,472 |
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Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
International Equity Value Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Canada | $ | 1,373,113 | $ | 526,362 | $ | — | $ 1,899,475 | ||||||||||
China | — | 779,263 | — | 779,263 | |||||||||||||
France | — | 1,387,739 | — | 1,387,739 | |||||||||||||
Germany | — | 1,453,435 | — | 1,453,435 | |||||||||||||
India | 1,025,913 | — | — | 1,025,913 | |||||||||||||
Ireland | 109,222 | — | — | 109,222 | |||||||||||||
Italy | — | 816,277 | — | 816,277 | |||||||||||||
Japan | — | 2,809,042 | — | 2,809,042 | |||||||||||||
Netherlands | — | 1,618,067 | — | 1,618,067 | |||||||||||||
South Korea | — | 894,995 | — | 894,995 | |||||||||||||
Switzerland | — | 1,668,250 | — | 1,668,250 | |||||||||||||
United Kingdom | — | 4,089,059 | — | 4,089,059 | |||||||||||||
United States | 947,615 | — | — | 947,615 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Germany | — | 1,127,938 | — | 1,127,938 | |||||||||||||
Short-Term Investments | 2,249,879 | — | — | 2,249,879 | |||||||||||||
Total | $ | 5,705,742 | $ | 17,170,427 | $ | — | $22,876,169 | ||||||||||
International Small Cap Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 1,706,899 | $ | — | $ 1,706,899 | ||||||||||
Belgium | — | 2,083,603 | — | 2,083,603 | |||||||||||||
Brazil | — | 553,827 | — | 553,827 | |||||||||||||
Canada | 2,536,358 | — | — | 2,536,358 | |||||||||||||
China | — | 742,196 | — | 742,196 | |||||||||||||
Denmark | — | 839,400 | — | 839,400 | |||||||||||||
Finland | — | 700,928 | — | 700,928 | |||||||||||||
France | — | 1,316,546 | — | 1,316,546 | |||||||||||||
Germany | — | 5,836,902 | — | 5,836,902 | |||||||||||||
Hong Kong | — | 1,267,927 | — | 1,267,927 | |||||||||||||
India | — | 485,776 | — | 485,776 | |||||||||||||
Ireland | — | 1,804,855 | — | 1,804,855 | |||||||||||||
Italy | �� | — | 1,800,672 | — | 1,800,672 | ||||||||||||
Japan | 478,719 | 13,556,686 | — | 14,035,405 | |||||||||||||
Jersey | — | 933,408 | — | 933,408 | |||||||||||||
Luxembourg | 412,064 | 647,746 | — | 1,059,810 | |||||||||||||
Netherlands | — | 1,292,503 | — | 1,292,503 | |||||||||||||
Singapore | — | 456,429 | — | 456,429 | |||||||||||||
Sweden | — | 3,308,554 | — | 3,308,554 | |||||||||||||
Switzerland | — | 681,062 | — | 681,062 | |||||||||||||
Taiwan | — | 182,242 | — | 182,242 | |||||||||||||
United Kingdom | — | 9,537,642 | — | 9,537,642 | |||||||||||||
United States | 355,573 | 489,521 | — | 845,094 | |||||||||||||
Short-Term Investments | 850,623 | — | — | 850,623 | |||||||||||||
Total | $ | 4,633,337 | $ | 50,225,324 | $ | — | $54,858,661 |
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Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
International Strategic Equity Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Canada | $ | 495,045,729 | $ | — | $ | — | $ 495,045,729 | ||||||||||
China | 74,215,181 | 152,609,790 | — | 226,824,971 | |||||||||||||
Denmark | — | 163,696,852 | — | 163,696,852 | |||||||||||||
Finland | — | 163,703,123 | — | 163,703,123 | |||||||||||||
France | — | 444,871,562 | — | 444,871,562 | |||||||||||||
Germany | — | 23,266,046 | — | 23,266,046 | |||||||||||||
Hong Kong | — | 108,216,427 | — | 108,216,427 | |||||||||||||
India | 38,559,717 | 67,981,242 | — | 106,540,959 | |||||||||||||
Ireland | 43,266,283 | 35,575,584 | — | 78,841,867 | |||||||||||||
Israel | — | 39,089,319 | — | 39,089,319 | |||||||||||||
Japan | — | 716,309,371 | — | 716,309,371 | |||||||||||||
Netherlands | — | 246,082,932 | — | 246,082,932 | |||||||||||||
New Zealand | — | 39,607,077 | — | 39,607,077 | |||||||||||||
Norway | — | 87,275,424 | — | 87,275,424 | |||||||||||||
Philippines | — | 45,061,486 | — | 45,061,486 | |||||||||||||
Singapore | — | 120,166,681 | — | 120,166,681 | |||||||||||||
Spain | — | 130,689,272 | — | 130,689,272 | |||||||||||||
Sweden | — | 170,596,997 | — | 170,596,997 | |||||||||||||
Switzerland | — | 310,273,891 | — | 310,273,891 | |||||||||||||
United Kingdom | — | 1,138,875,172 | — | 1,138,875,172 | |||||||||||||
United States | 431,580,241 | — | — | 431,580,241 | |||||||||||||
Preferred Stocks* | |||||||||||||||||
Germany | — | 144,030,123 | — | 144,030,123 | |||||||||||||
Short-Term Investments | 114,430,082 | — | — | 114,430,082 | |||||||||||||
Total | $ | 1,197,097,233 | $ | 4,347,978,371 | $ | — | $5,545,075,604 |
Annual Report 303
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Managed Equity Volatility Portfolio | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 788,218 | $ | — | $ 788,218 | ||||||||||
Belgium | — | 155,549 | — | 155,549 | |||||||||||||
Canada | 1,428,925 | — | — | 1,428,925 | |||||||||||||
China | — | 53,186 | — | 53,186 | |||||||||||||
Denmark | — | 89,658 | — | 89,658 | |||||||||||||
France | 54,763 | 303,344 | — | 358,107 | |||||||||||||
Germany | — | 344,800 | — | 344,800 | |||||||||||||
Hong Kong | — | 371,534 | — | 371,534 | |||||||||||||
Israel | — | 324,468 | — | 324,468 | |||||||||||||
Italy | — | 351,848 | — | 351,848 | |||||||||||||
Japan | — | 1,630,083 | — | 1,630,083 | |||||||||||||
Malta | — | 40,370 | — | 40,370 | |||||||||||||
Netherlands | — | 216,818 | — | 216,818 | |||||||||||||
New Zealand | — | 48,527 | — | 48,527 | |||||||||||||
Norway | — | 567,589 | — | 567,589 | |||||||||||||
Portugal | — | 46,666 | — | 46,666 | |||||||||||||
Singapore | — | 156,890 | — | 156,890 | |||||||||||||
Spain | — | 70,696 | — | 70,696 | |||||||||||||
Sweden | — | 64,405 | — | 64,405 | |||||||||||||
Switzerland | — | 462,500 | — | 462,500 | |||||||||||||
United Kingdom | — | 1,323,480 | — | 1,323,480 | |||||||||||||
United States | 11,387,012 | 44,513 | — | 11,431,525 | |||||||||||||
Short-Term Investments | 903,136 | — | — | 903,136 | |||||||||||||
Total | $ | 13,773,836 | $ | 7,455,142 | $ | — | $ 21,228,978 | ||||||||||
US Equity Concentrated Portfolio | |||||||||||||||||
Common Stocks* | $ | 1,062,366,873 | $ | — | $ | — | $1,062,366,873 | ||||||||||
Short-Term Investments | 29,746,626 | — | — | 29,746,626 | |||||||||||||
Total | $ | 1,092,113,499 | $ | — | $ | — | $1,092,113,499 | ||||||||||
US Equity Select Portfolio | |||||||||||||||||
Common Stocks* | $ | 71,627,460 | $ | — | $ | — | $ 71,627,460 | ||||||||||
Short-Term Investments | 258,650 | — | — | 258,650 | |||||||||||||
Total | $ | 71,886,110 | $ | — | $ | — | $ 71,886,110 | ||||||||||
US Realty Equity Portfolio | |||||||||||||||||
Common Stocks* | $ | 1,962,509 | $ | — | $ | — | $ 1,962,509 | ||||||||||
Real Estate Investment Trusts* | 57,340,373 | — | — | 57,340,373 | |||||||||||||
Total | $ | 59,302,882 | $ | — | $ | — | $ 59,302,882 | ||||||||||
US Small-Mid Cap Equity Portfolio | |||||||||||||||||
Common Stocks* | $ | 126,473,826 | $ | — | $ | — | $ 126,473,826 |
* | Please refer to Portfolios of Investments and Notes to Portfolios of Investments for portfolio holdings by industry. |
† | Other financial instruments are derivative instruments which are valued at their respective unrealized appreciation (depreciation). |
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Certain equity securities to which footnote (‡) in the Notes to Portfolios of Investments applies are included in Level 2 and were valued based on reference to similar securities that were trading on active markets.
10. Derivative Instruments
The Global Listed Infrastructure Portfolio may use derivative instruments, including forward currency contracts.
Forward currency contracts may be used for hedging purposes or to seek to increase returns.
During the year ended December 31, 2018, the approximate average monthly notional exposure for derivative instruments was as follows:
Forward currency contracts: | ||||
Average amounts purchased | $ | 138,800,000 | * | |
Average amounts sold | 4,047,900,000 |
* | Represents average monthly notional exposure for the seven months the derivative instrument was open during the period. |
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Assets – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized appreciation on forward currency contracts | $ | 11,095,514 | |||
Liabilities – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized depreciation on forward currency contracts | $ | 10,159,785 |
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Net Realized Gain (Loss) from: | Total | |||
Forward currency contracts | $ | 233,725,528 |
Net Change in Unrealized Appreciation (Depreciation) on: | Total | |||
Forward currency contracts | $ | 55,621,091 |
Annual Report 305
None of the other Portfolios presented traded in derivative instruments during the year ended December 31, 2018.
As of December 31, 2018, the Global Listed Infrastructure Portfolio held derivative instruments that are eligible for offset in the Statement of Assets and Liabilities and are subject to master netting arrangements. A master netting arrangement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as any cash collateral, through a single payment in the event of default on, or termination of, any one contract.
The required information for the affected Portfolio is presented in the below table, as of December 31, 2018:
Description | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | ||||||||||
Forward Currency Contracts | $ | 11,095,514 | $ | — | $11,095,514 |
Amounts Not Offset in the | ||||||||||||||||
Statement of Assets and Liabilities | ||||||||||||||||
Counterparty | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Received | Net Amounts of Derivative Assets | ||||||||||||
BNP Paribas SA | $ | 2,471,533 | $(1,218,111 | ) | $ | — | $1,253,422 | |||||||||
Citibank NA | 1,391,055 | (1,391,055 | ) | — | — | |||||||||||
HSBC Bank USA NA | 2,123,241 | (1,469,176 | ) | — | 654,065 | |||||||||||
Royal Bank of Canada | 1,595,543 | (1,595,543 | ) | — | — | |||||||||||
Standard Chartered Bank | 1,847,746 | — | — | 1,847,746 | ||||||||||||
State Street Bank and Trust Co. | 1,666,396 | (1,507,054 | ) | — | 159,342 | |||||||||||
Total | $ | 11,095,514 | $(7,180,939 | ) | $ | — | $3,914,575 |
Description | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | ||||||||||
Forward Currency Contracts | $ | 10,159,785 | $ | — | $10,159,785 |
306 Annual Report
Amounts Not Offset in the | ||||||||||||||||
Statement of Assets and Liabilities | ||||||||||||||||
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Pledged | Net Amounts of Derivative Liabilities | ||||||||||||
BNP Paribas SA | $ | 1,218,111 | $ | (1,218,111 | ) | $ | — | $ | — | |||||||
Canadian Imperial Bank of Commerce | 1,962,346 | — | — | 1,962,346 | ||||||||||||
Citibank NA | 1,538,468 | (1,391,055 | ) | — | 147,413 | |||||||||||
HSBC Bank USA NA | 1,469,176 | (1,469,176 | ) | — | — | |||||||||||
Royal Bank of Canada | 1,751,109 | (1,595,543 | ) | — | 155,566 | |||||||||||
State Street Bank and Trust Co. | 1,507,054 | (1,507,054 | ) | — | — | |||||||||||
The Bank of New York Mellon Corp. | 713,521 | — | — | 713,521 | ||||||||||||
Total | $ | 10,159,785 | $ | (7,180,939 | ) | $ | — | $ | 2,978,846 |
11. Reorganization
At a meeting held on February 28, 2018, the Board approved merging US Realty Income Portfolio into US Realty Equity Portfolio in a tax-free reorganization (the “Reorganization”). The Reorganization was approved by the shareholders of US Realty Income Portfolio and was completed on August 17, 2018.
The chart below shows a summary of net assets, shares outstanding, net unrealized appreciation (depreciation), undistributed net investment income and accumulated net realized gain (loss), before and after the Reorganization.
Before Reorganization | After Reorganization | ||||||||||||||||
US Realty Income Portfolio | US Realty Equity Portfolio | US Realty Equity Portfolio | |||||||||||||||
Net Assets: | |||||||||||||||||
Institutional Shares | $ | 10,788,800 | $ | 10,639,008 | $ | 21,427,808 | |||||||||||
Open Shares | 11,850,795 | 41,259,980 | 53,110,775 | ||||||||||||||
Total | $ | 22,639,595 | $ | 51,898,988 | $ | 74,538,583 | |||||||||||
Shares Outstanding: | |||||||||||||||||
Institutional Shares | 1,490,660 | 554,619 | 1,117,045 | ||||||||||||||
Open Shares | 1,641,373 | 2,145,028 | 2,761,127 | ||||||||||||||
Net unrealized appreciation (depreciation) | 1,004,535 | 7,331,350 | 8,335,885 | ||||||||||||||
Undistributed net investment income | 5,823,807 | 2,692,148 | 2,692,148 | ||||||||||||||
Accumulated net realized gain (loss) | (21,283,500 | ) | (1,558,647 | ) | (1,558,647 | ) |
Annual Report 307
Assuming the acquisition of US Realty Income Portfolio had been completed on January 1, 2018, the beginning of the annual reporting period, US Realty Equity Portfolio’s pro forma results of operations for the year ended December 31, 2018, are as follows:
Amount | ||||
Net investment income | $ | 1,721,952 | ||
Net loss on investments | (193,510 | ) | ||
Net increase in net assets resulting from operations | $ | 1,528,442 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the Reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of US Realty Income Portfolio that have been included in US Realty Equity Portfolio’s Statement of Operations since August 17, 2018.
For financial reporting purposes, assets received and shares issued by US Realty Equity Portfolio were recorded at fair value; however, the cost basis of the investments received from US Realty Income Portfolio, in the amount of $21,633,766, was carried forward to align ongoing reporting of US Realty Equity Portfolio’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. US Realty Equity Portfolio acquired capital loss carryovers of $17,542,485, of which, $3,503,021 are short-term and $14,039,464 are long-term. These losses are not subject to expiration, but they may be subject to future annual limitations.
12. Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,which removes, modifies and adds disclosures to Topic 820. The amendments in this ASU apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has evaluated the impact of the amend-
308 Annual Report
ments and has elected to adopt these amendments and incorporate the changes in the current financial statements.
13. Subsequent Events
Global Realty Equity Portfolio was liquidated on December 31, 2018. A liquidation payment of Global Realty Equity Portfolio’s net assets was distributed to shareholders subsequent to liquidation.
Management has evaluated subsequent events affecting the Portfolios through the issuance of the financial statements and has determined that, aside from items previously disclosed, there were no subsequent events that required adjustment or disclosure.
Annual Report 309
The Lazard Funds, Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors of The Lazard Funds, Inc. and Shareholders of Lazard Developing Markets Equity Portfolio, Lazard Emerging Markets Core Equity Portfolio, Lazard Emerging Markets Equity Advantage Portfolio, Lazard Emerging Markets Equity Blend Portfolio, Lazard Emerging Markets Equity Portfolio, Lazard Equity Franchise Portfolio, Lazard Global Equity Select Portfolio, Lazard Global Listed Infrastructure Portfolio, Lazard Global Realty Equity Portfolio, Lazard Global Strategic Equity Portfolio, Lazard International Compounders Portfolio, Lazard International Equity Advantage Portfolio, Lazard International Equity Concentrated Portfolio, Lazard International Equity Portfolio, Lazard International Equity Select Portfolio, Lazard International Equity Value Portfolio, Lazard International Small Cap Equity Portfolio, Lazard International Strategic Equity Portfolio, Lazard Managed Equity Volatility Portfolio, Lazard US Equity Concentrated Portfolio, Lazard US Equity Select Portfolio, Lazard US Realty Equity Portfolio, and Lazard US Small-Mid Cap Equity Portfolio:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Lazard Developing Markets Equity Portfolio, Lazard Emerging Markets Core Equity Portfolio, Lazard Emerging Markets Equity Advantage Portfolio, Lazard Emerging Markets Equity Blend Portfolio, Lazard Emerging Markets Equity Portfolio, Lazard Equity Franchise Portfolio, Lazard Global Equity Select Portfolio, Lazard Global Listed Infrastructure Portfolio, Lazard Global Realty Equity Portfolio, Lazard Global Strategic Equity Portfolio, Lazard International Compounders Portfolio, Lazard International Equity Advantage Portfolio, Lazard International Equity Concentrated Portfolio, Lazard International Equity Portfolio, Lazard International Equity Select Portfolio, Lazard International Equity Value Portfolio, Lazard International Small Cap Equity Portfolio, Lazard International Strategic Equity Portfolio, Lazard Managed Equity Volatility Portfolio, Lazard US Equity Concentrated Portfolio, Lazard US Equity Select Portfolio (formerly Lazard US Strategic Equity Portfolio), Lazard US Realty Equity Portfolio, and Lazard US Small-Mid Cap Equity Portfolio (collectively the “Portfolios”), twenty-three of the portfolios constituting The Lazard Funds, Inc. (the “Fund”), as of December
310 Annual Report
31, 2018, 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, the financial highlights for each of the five years in the period then ended for the Portfolios except for Lazard International Compounders Portfolio, Lazard International Equity Value Portfolio, Lazard Equity Franchise Portfolio, Lazard Emerging Markets Equity Advantage Portfolio, Lazard International Equity Advantage Portfolio, Lazard Managed Equity Volatility Portfolio, Lazard Global Strategic Equity Portfolio, and Lazard International Equity Concentrated Portfolio which are indicated in the table below, and the related notes to the financial statements. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the portfolios listed above constituting the Fund, as of December 31, 2018, and the results of their operations for the year then ended (or for the period listed in the table below), the changes in their net assets for each of the two years in the period then ended (or for the period listed in the table below), and the financial highlights for each of the five years in the period then ended (or for the period listed in the table below), in conformity with accounting principles generally accepted in the United States of America.
Annual Report 311
Portfolio Name | Statements of Operations | Statements of Changes in Net Assets | Financial Highlights |
Lazard International Compounders Portfolio | As of and for the period ended December 31, 2018 (commencement of operations) | ||
Lazard International Equity Value Portfolio | As of and for the period from October 31, 2018 (commencement of operations) through December 31, 2018 | ||
Lazard Equity Franchise Portfolio | For the year ended December 31, 2018 | For the year ended December 31, 2018 and for the period from September 29, 2017 (commencement of operations) through December 31, 2017 | |
Lazard Emerging Markets Equity Advantage Portfolio Lazard International Equity Advantage Portfolio Lazard Managed Equity Volatility Portfolio | For the year ended December 31, 2018 | For the years ended December 31, 2018 and 2017 | For the years ended December 31, 2018, 2017 and 2016 and for the period from May 29, 2015 (commencement of operations) through December 31, 2015 |
Lazard Global Strategic Equity Portfolio Lazard International Equity Concentrated Portfolio | For the year ended December 31, 2018 | For the years ended December 31, 2018 and 2017 | For the years ended December 31, 2018, 2017, 2016 and 2015 and for the period from August 29, 2014 (commencement of operations) through December 31, 2014 |
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on the Portfolios’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Portfolios in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Portfolios are not
312 Annual Report
required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 2019
We have served as the auditor of one or more of the investment companies in the Lazard Fund Complex since 2004.
Annual Report 313
The Lazard Funds, Inc.
Board of Directors and Officers Information (unaudited)
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Independent Directors(3): | |||||
Franci J. Blassberg (1953) | Director (August 2014) | Debevoise & Plimpton LLP, a law firm,Of Counsel(2013 – present)
Cornell Law School,Adjunct Professor(2013 – 2016, 2019)
The Buchmann Faculty of Law, Tel Aviv University,VisitingProfessor(2019)
University of California, Berkeley School of Law,Adjunct Professor (Spring 2017) | |||
Kenneth S. Davidson (1945) | Director (August 1995) | Davidson Capital Management Corporation, an investment manager,President (1978 – present)
Landseer Advisors LLC, an investment manager,Senior Advisor(2012 – 2014) | |||
Nancy A. Eckl (1962) | Director (April 2007) | College Retirement Equities Fund (eight accounts),Trustee (2007 – present)
TIAA-CREF Funds (69 funds) and TIAA-CREF Life Funds (11 funds),Trustee(2007 – present)
TIAA Separate Account VA-1,Member of the ManagementCommittee(2007 – present) | |||
Trevor W. Morrison (1971) | Director (April 2014) | New York University School of Law,Dean and Eric M. and Laurie B.Roth Professor of Law (2013 – present)
Columbia Law School,Professor of Law(2008 – 2013) | |||
Richard Reiss, Jr. (1944) | Director (May 1991) | Georgica Advisors LLC, an investment manager,Chairman(1997 – present)
Resource America, Inc., a real estate asset management company,Director(2016 – 2018) |
314 Annual Report
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Robert M. Solmson (1947) | Director (September 2004) | Fairwood Capital, LLC, a private investment corporation engaged primarily in real estate and hotel investments,Co-Managing Partnerand Managing Director (2008 – present) | |||
Interested Directors(4): | |||||
Ashish Bhutani (1960) | Director (July 2005) | Investment Manager,Chief Executive Officer(2004 – present)
Lazard Ltd,Vice Chairman andDirector(2010 – present) | |||
Nathan A. Paul (1973) | Director (October 2017), Chief Executive Officer and President (February 2017; previously, Vice President and Secretary since April 2002) | Investment Manager,Chief Business Officer (April 2017 – present) andManaging Director (2003 – present)
Investment Manager,General Counsel(2002 – April 2017) |
(1) | The address of each Director of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each Director serves as a Director for each of the funds in the Lazard Fund Complex (comprised of, as of January 31, 2019, 39 active investment portfolios). Each Director serves an indefinite term, until his or her successor is elected, and each Director serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | “Independent Directors” are not “interested persons” (as defined in the 1940 Act) of the Fund. |
(4) | Messrs. Bhutani and Paul are “interested persons” (as defined in the 1940 Act) of the Fund because of their positions with the Investment Manager. |
The Fund’s Statement of Additional Information contains further information about the Directors and is available without charge by calling 800-823-6300, or online, at www.lazardassetmanagement.com.
Annual Report 315
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) During the Past Five Years | |||
Officers(3): | |||||
Mark R. Anderson (1970) | Chief Compliance Officer (September 2014), Vice President and Secretary (February 2017) | Managing Director (since February 2017, previously Director), Chief Compliance Officer (since September 2014) and General Counsel (since April 2017) of the Investment Manager
Senior Vice President, Counsel and Deputy Chief Compliance Officer of AllianceBernstein L.P. (2004 – August 2014) | |||
Christopher Snively (1984) | Chief Financial Officer (March 2016) | Senior Vice President of the Investment Manager (since November 2015)
Assurance Manager at PricewaterhouseCoopers LLP (2008 – November 2015) | |||
Stephen St. Clair (1958) | Treasurer (May 2003) | Vice President of the Investment Manager | |||
Shari L. Soloway (1981) | Assistant Secretary (November 2015) | Head of Legal, North America (since January 2019, previously Senior Vice President, Legal and Compliance (since September 2015)), of the Investment Manager
Vice President and Associate General Counsel of GE Asset Management (July 2011 – September 2015) | |||
Jessica A. Falzone (1989) | Assistant Secretary (January 2019) | Vice President, Legal and Compliance, of the Investment Manager (since March 2018)
Associate at Schulte Roth & Zabel LLP (2014 – March 2018) | |||
Cesar A. Trelles (1975) | Assistant Treasurer (December 2004) | Vice President of the Investment Manager |
(1) | The address of each officer of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each officer serves for an indefinite term, until his or her successor is elected and qualifies or until his or her earlier resignation or removal. Each officer serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | In addition to Nathan A. Paul, Chief Executive Officer and President (since February 2017; previously, Vice President and Secretary since April 2002), whose information is included in the Interested Directors section above. |
316 Annual Report
The Lazard Funds, Inc.Tax and Other Information (unaudited)
Tax Information
Year Ended December 31, 2018
The following tax information represents year end disclosures of the tax benefits passed through to shareholders for 2018:
Of the dividends paid by the Portfolios, the corresponding percentage shown below is qualified dividend income.
Portfolio | Percentage | ||||
Developing Markets Equity | 94.62 | % | |||
Emerging Markets Core Equity | 100.00 | ||||
Emerging Markets Equity Advantage | 100.00 | ||||
Emerging Markets Equity Blend | 100.00 | ||||
Emerging Markets Equity | 100.00 | ||||
Equity Franchise | 30.88 | ||||
Global Equity Select | 100.00 | ||||
Global Listed Infrastructure | 100.00 | ||||
Global Strategic Equity | 6.59 | ||||
International Equity Advantage | 92.56 | ||||
International Compounders | — | ||||
International Equity Concentrated | 100.00 | ||||
International Equity | 100.00 | ||||
International Equity Select | 100.00 | ||||
International Equity Value | 100.00 | ||||
International Small Cap Equity | 8.38 | ||||
International Strategic Equity | 100.00 | ||||
Managed Equity Volatility | 94.84 | ||||
US Equity Concentrated | 86.84 | ||||
US Equity Select | 58.32 | ||||
US Realty Equity | 2.16 | ||||
US Small-Mid Cap Equity | 29.68 |
Annual Report 317
Of the dividends paid by the Portfolios, the corresponding percentage represents the amount of each dividend that qualifies for the dividends received deduction available to corporate shareholders.
Portfolio | Percentage | ||||
Developing Markets Equity | — | % | |||
Emerging Markets Core Equity | — | ||||
Emerging Markets Equity Advantage | 0.16 | ||||
Emerging Markets Equity Blend | — | ||||
Emerging Markets Equity | — | ||||
Equity Franchise | 9.20 | ||||
Global Equity Select | 55.40 | ||||
Global Listed Infrastructure | 5.12 | ||||
Global Realty Equity | 0.52 | ||||
Global Strategic Equity | 14.24 | ||||
International Compounders | — | ||||
International Equity Advantage | — | ||||
International Equity Concentrated | — | ||||
International Equity | — | ||||
International Equity Select | — | ||||
International Equity Value | — | ||||
International Small Cap Equity | — | ||||
International Strategic Equity | — | ||||
Managed Equity Volatility | 47.91 | ||||
US Equity Concentrated | 75.68 | ||||
US Equity Select | 92.10 | ||||
US Realty Equity | 2.62 | ||||
US Small-Mid Cap Equity | 37.99 |
Pursuant to Section 871 of the Code, the Portfolios have no designated qualified short-term gains for purposes of exempting withholding of tax on such distributions to US nonresident shareholders.
Proxy Voting
A description of the policies and procedures used to determine how proxies relating to Fund portfolio securities are voted is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov.
318 Annual Report
The Fund’s proxy voting record for the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov. Information as of June 30 each year will generally be available by the following August 31.
Schedule of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at https://www.sec.gov.
Board Consideration of New Management Agreements
Lazard International Equity Value Portfolio
At a meeting of the Board held on August 21, 2018 the Board considered the approval of the Management Agreement between the Fund, on behalf of the Lazard International Equity Value Portfolio (the “International Equity Value Portfolio”), and the Investment Manager (the “International Equity Value Management Agreement”). The Independent Directors were assisted in their review by independent legal counsel, who advised the Board on relevant legal standards and met with the Independent Directors in executive session separate from representatives of the Investment Manager.
Services Provided
Representatives of the Investment Manager discussed with the Board the Investment Manager’s written presentation provided in advance of the meeting (which also incorporated information provided previously in connection with the renewal of the Management Agreement for other Fund Portfolios) addressing, among other matters, the nature, extent and quality of services that the Investment Manager would provide to the International Equity Value Portfolio, including a discussion of the Investment Manager and its clients (of which the existing Lazard Funds Complex of 41 active funds comprises approximately $32 billion of the approximately $240 billion of total assets under the management of the Investment Manager and its global affiliates as of June 30, 2018).
Annual Report 319
The Board also received a presentation on the International Equity Value Portfolio from members of the International Equity Value Portfolio’s proposed portfolio management team, including the strategies to be employed for the International Equity Value Portfolio and information about the International Equity Value Portfolio’s management team, including professional biographies.
The Board considered the various services to be provided by the Investment Manager including the Investment Manager’s research, portfolio management and trading capabilities and oversight of day-to-day operations, including supervision of fund accounting and administration-related services and assistance in meeting legal and regulatory requirements, as well as regular reporting to, and support of, the Board. Representatives of the Investment Manager stated that the Investment Manager believes that the International Equity Value Portfolio and its shareholders will be able to obtain significant benefits as a result of the resources and support of the Investment Manager’s global research, portfolio management, trading, operations, risk management, technology and legal and compliance infrastructure. The Board also considered information provided by the Investment Manager regarding its personnel, resources, financial condition and experience; the Fund’s distribution channels and the relationships with various intermediaries; and marketing and shareholder servicing activities on behalf of the Fund’s Portfolios, which would include the International Equity Value Portfolio. The Board accepted management’s assertion that the International Equity Value Portfolio would be expected to benefit from the services and infrastructure provided by the Investment Manager and that such services and infrastructure would be greater than those typically provided to a $32 billion fund complex not managed by a large, global firm such as the Investment Manager.
Comparative Fee, Expense Ratio and Performance Information
The Board reviewed information prepared by Strategic Insight, an independent provider of investment company data, comparing the advisory fee and expense ratios of the International Equity Value Portfolio to those of a group of comparison funds selected by Strategic Insight (each, a “Group”). Representatives of the Invest-
320 Annual Report
ment Manager discussed with the Board the methodology used by Strategic Insight in constructing comparison Groups, noting the limitations of the process.
Advisory Fee and Expense Ratios.The Board discussed the proposed management fee to be paid to the Investment Manager (referred to in the Strategic Insight materials as the “advisory fee”) and expense ratios (as limited by the Investment Manager (“net”)) for the International Equity Value Portfolio and the comparisons provided by Strategic Insight, which compared the contractual (gross) advisory fee and net expense ratios for the International Equity Value Portfolio to its respective Groups.1 The proposed contractual advisory fee and net expense ratios for the International Equity Value Portfolio were at and below the medians of the Group, respectively, for Institutional Shares and below the medians of the Group for Open Shares.
The Board also considered fees paid to the Investment Manager by one pooled investment vehicle that utilized the same investment strategy as the International Equity Value Portfolio (the “International Equity Value Account”). The Board discussed the fee to be paid to the Investment Manager by the International Equity Value Portfolio compared to the fee paid to the Investment Manager by the International Equity Value Account. Representatives of the Investment Manager discussed the nature of the International Equity Value Account and the significant differences in services provided by the Investment Manager to the International Equity Value Account as compared to the services to be provided to the International Equity Value Portfolio. The Board considered the relevance of the fee information provided for the International Equity Value Account, in light of the Investment Manager’s discussion of the significant differences in services provided, to evaluate the fees to be paid to the Investment Manager by the International Equity Value Portfolio.
Performance.The Board considered the performance of the International Equity Value Account compared to the MSCI EAFE Index
1 | The International Equity Value Portfolio has two comparison groups, corresponding to Institutional and Open Shares. |
Annual Report 321
and the MSCI EAFE Value Index for various periods commencing in 2012, which showed that the performance of the International Equity Value Account (gross of fees) was above one or both of the Indexes in most of the periods shown, including in the calendar year 2017 and the year-to-date period ended June 30, 2018.
Investment Manager Profitability and Economies of Scale
Representatives of the Investment Manager noted that because the International Equity Value Portfolio is newly formed, has not commenced operations and the eventual aggregate amount of the International Equity Value Portfolio’s assets was uncertain, specific information concerning the cost of services to be provided to the International Equity Value Portfolio and the estimated profitability percentage of the International Equity Value Management Agreement to the Investment Manager and its affiliates from their relationships with the International Equity Value Portfolio and economies of scale would be subject to a number of assumptions and would be speculative and not meaningful. The Investment Manager representatives stated that they did not expect the Investment Manager to realize any current profits on the International Equity Value Portfolio initially, noting the Investment Manager’s agreement to waive its fees and/or reimburse expenses of the International Equity Value Portfolio for at least two years following the International Equity Value Portfolio’s commencement of operations to maintain the expense ratios reflected in the Strategic Insight materials. The Board determined to revisit this issue no later than when it next reviewed the investment management fee in connection with the renewal of the International Equity Value Management Agreement. Representatives of the Investment Manager reviewed with the Board information provided on the Investment Manager’s brokerage and soft dollar practices.
Representatives of the Investment Manager stated that neither the Investment Manager nor its affiliates were expected to receive any other significant indirect benefits from the Investment Manager acting as investment manager to the International Equity Value Portfolio. The representatives of the Investment Manager stated that the Investment Manager intends to support distribution rela-
322 Annual Report
tionships through direct payments from its or its affiliates’ own resources to third parties in connection with distribution and shareholder servicing and/or administrative and recordkeeping services, and noted that the International Equity Value Portfolio would not bear any related costs other than the 0.25% 12b-1 fee pursuant to the Distribution and Servicing Plan adopted for the International Equity Value Portfolio’s Open Shares.
At the conclusion of these discussions, each of the Directors expressed the opinion that he or she had been furnished with such information as may reasonably be necessary to make an informed business decision with respect to the evaluation of the International Equity Value Management Agreement. Based on its discussions and considerations as described above, with the assistance of independent legal counsel and in the exercise of its business judgment, the Board made the following conclusions and determinations.
· | The Board concluded that the nature, extent and quality of the services to be provided by the Investment Manager are adequate and appropriate, noting the benefits of the significant services and infrastructure associated with an approximately $240 billion global asset management business. |
· | The Board concluded that the fee to be paid to the Investment Manager was appropriate under the circumstances and in light of the factors and the totality of the services to be provided as discussed above. |
· | The Board recognized that economies of scale may be realized as the assets of the International Equity Value Portfolio increase and determined that it would continue to consider potential material economies of scale. |
In evaluating the International Equity Value Management Agreement, the Board relied on the information described above as well as other information provided by the Investment Manager. The Board also relied on its previous knowledge of the Fund, gained through meetings and other interactions with the Investment Manager, and the services provided to the Fund by the Investment
Annual Report 323
Manager. The Board considered these conclusions and determinations in their totality and determined to approve the International Equity Value Management Agreement. In deciding whether to vote to approve the International Equity Value Management Agreement, each Director may have accorded different weights to different factors so that each Director may have had a different basis for his or her decision.
Lazard International Compounders Portfolio
At a meeting of the Board held on November 13, 2018 the Board considered the approval of the Management Agreement between the Fund, on behalf of the Lazard International Compounders Portfolio (the “International Compounders Portfolio”), and the Investment Manager (the “International Compounders Management Agreement”). The Independent Directors were assisted in their review by independent legal counsel, who advised the Board on relevant legal standards and met with the Independent Directors in executive session separate from representatives of the Investment Manager.
Services Provided
Representatives of the Investment Manager discussed with the Board the Investment Manager’s written presentation provided in advance of the meeting (which also incorporated information provided previously in connection with the renewal of the Management Agreement for other Fund Portfolios) addressing, among other matters, the nature, extent and quality of services that the Investment Manager would provide to the International Compounders Portfolio, including a discussion of the Investment Manager and its clients (of which the existing Lazard Funds Complex of 39 active funds comprises approximately $31 billion of the approximately $240 billion of total assets under the management of the Investment Manager and its global affiliates as of Septem-ber 30, 2018). The Board also received a presentation on the International Compounders Portfolio from members of the International Compounders Portfolio’s proposed portfolio management team, including the strategies to be employed for the International Compounders Portfolio and information about the
324 Annual Report
International Compounders Portfolio’s management team, including professional biographies.
The Board considered the various services to be provided by the Investment Manager including the Investment Manager’s research, portfolio management and trading capabilities and oversight of day-to-day operations, including supervision of fund accounting and administration-related services and assistance in meeting legal and regulatory requirements, as well as regular reporting to, and support of, the Board. Representatives of the Investment Manager stated that the Investment Manager believes that the International Compounders Portfolio and its shareholders will be able to obtain significant benefits as a result of the resources and support of the Investment Manager’s global research, portfolio management, trading, operations, risk management, technology and legal and compliance infrastructure. The Board also considered information provided by the Investment Manager regarding its personnel, resources, financial condition and experience; the Fund’s distribution channels and the relationships with various intermediaries; and marketing and shareholder servicing activities on behalf of the Fund’s Portfolios, which would include the International Compounders Portfolio. The Board accepted management’s assertion that the International Compounders Portfolio would be expected to benefit from the services and infrastructure provided by the Investment Manager and that such services and infrastructure would be greater than those typically provided to a $31 billion fund complex not managed by a large, global firm such as the Investment Manager.
Comparative Fee, Expense Ratio and Performance Information
The Board reviewed information prepared by Strategic Insight, an independent provider of investment company data, comparing the advisory fee and expense ratios of the International Compounders Portfolio to those of a Group of comparison funds selected by Strategic Insight. Representatives of the Investment Manager discussed with the Board the methodology used by Strategic Insight in constructing comparison Groups, noting the limitations of the process.
Annual Report 325
Advisory Fee and Expense Ratios.The Board discussed the proposed management fee to be paid to the Investment Manager (referred to in the Strategic Insight materials as the “advisory fee”) and expense ratios (as limited by the Investment Manager (“net”)) for the International Compounders Portfolio and the comparisons provided by Strategic Insight, which compared the contractual (gross) advisory fee and net expense ratios for the International Compounders Portfolio to its respective Groups.2 The proposed contractual advisory fee and net expense ratio for the International Compounders Portfolio were below the medians of the Group for each of Institutional Shares and Open Shares.
The Board also considered fees paid to the Investment Manager by one other account that utilized the same investment strategy as the International Compounders Portfolio (the “International Compounders Account”). The Board discussed the fee to be paid to the Investment Manager by the International Compounders Portfolio compared to the fee paid to the Investment Manager by the Similar Account. Representatives of the Investment Manager discussed the nature of the Similar Account and the significant differences in services provided by the Investment Manager to the Similar Account as compared to the services to be provided to the International Compounders Portfolio. The Board considered the relevance of the fee information provided for the Similar Account, in light of the Investment Manager’s discussion of the significant differences in services provided, to evaluate the fees to be paid to the Investment Manager by the International Compounders Portfolio.
Performance. The Board considered the performance of the International Compounders Account compared to the MSCI All Country World ex-US Index (the “Index”) for various periods, which showed that the performance of the Similar Account (gross of fees) was above the Index in most of the periods shown, including the since inception (January 1, 2016) period and the one- and two-year periods ended September 30, 2018.
2 | The International Compounders Portfolio has two comparison groups, corresponding to Institutional and Open Shares. |
326 Annual Report
Investment Manager Profitability and Economies of Scale
Representatives of the Investment Manager noted that because the International Compounders Portfolio is newly formed, has not commenced operations and the eventual aggregate amount of the International Compounders Portfolio’s assets was uncertain, specific information concerning the cost of services to be provided to the International Compounders Portfolio and the estimated profitability percentage of the International Compounders Management Agreement to the Investment Manager and its affiliates from their relationships with the International Compounders Portfolio and economies of scale would be subject to a number of assumptions and would be speculative and not meaningful. Representatives of the Investment Manager stated that they did not expect the Investment Manager to realize any current profits on the International Compounders Portfolio initially, noting the Investment Manager’s agreement to waive its fees and/or reimburse expenses of the International Compounders Portfolio for at least two years following the International Compounders Portfolio’s commencement of operations to maintain the expense ratios reflected in the Strategic Insight materials. The Board determined to revisit this issue no later than when it next reviewed the investment management fee in connection with the renewal of the International Compounders Management Agreement. Representatives of the Investment Manager reviewed with the Board information provided on the Investment Manager’s brokerage and soft dollar practices.
Representatives of the Investment Manager stated that neither the Investment Manager nor its affiliates were expected to receive any other significant indirect benefits from the Investment Manager acting as investment manager to the International Compounders Portfolio. The representatives of the Investment Manager stated that the Investment Manager intends to support distribution relationships through direct payments from its or its affiliates’ own resources to third parties in connection with distribution and shareholder servicing and/or administrative and recordkeeping services, and noted that the International Compounders Portfolio would not bear any related costs other than the 0.25% 12b-1 fee pursuant to the Distribution and Servicing Plan adopted for the International Compounders Portfolio’s Open Shares.
Annual Report 327
At the conclusion of these discussions, each of the Directors expressed the opinion that he or she had been furnished with such information as may reasonably be necessary to make an informed business decision with respect to the evaluation of the International Compounders Management Agreement. Based on its discussions and considerations as described above, with the assistance of independent legal counsel and in the exercise of its business judgment, the Board made the following conclusions and determinations.
· | The Board concluded that the nature, extent and quality of the services to be provided by the Investment Manager are adequate and appropriate, noting the benefits of the significant services and infrastructure associated with an approximately $240 billion global asset management business. |
· | The Board concluded that the fee to be paid to the Investment Manager was appropriate under the circumstances and in light of the factors and the totality of the services to be provided as discussed above. |
· | The Board recognized that economies of scale may be realized as the assets of the International Compounders Portfolio increase and determined that it would continue to consider potential material economies of scale. |
In evaluating the International Compounders Management Agreement, the Board relied on the information described above as well as other information provided by the Investment Manager. The Board also relied on its previous knowledge of the Fund, gained through meetings and other interactions with the Investment Manager, and the services provided to the Fund by the Investment Manager. The Board considered these conclusions and determinations in their totality and determined to approve the International Compounders Management Agreement. In deciding whether to vote to approve the International Compounders Management Agreement, each Director may have accorded different weights to different factors so that each Director may have had a different basis for his or her decision.
328 Annual Report
The Lazard Funds, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
https://www.lazardassetmanagement.com
Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
Distributor
Lazard Asset Management Securities LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Custodian
State Street Bank and Trust Company
One Iron Street
Boston, Massachusetts 02210
Transfer Agent and Dividend Disbursing Agent
DST Asset Manager Solutions, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169
Telephone: 617-483-7000
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, New York 10112-0015
Legal Counsel
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
http://www.proskauer.com
Lazard Asset Management LLC • 30 Rockefeller Plaza • New York, NY 10112 • www.lazardassetmanagement.com | ||
Performance information as of the most recent month end is available online at www.lazardassetmanagement.com. LZDPS020 |
Lazard Funds
Annual Report
December 31, 2018
Fixed Income Funds
Lazard Emerging Markets Debt Portfolio
Lazard Global Fixed Income Portfolio
Lazard US Corporate Income Portfolio
Lazard US Short Duration Fixed Income Portfolio
Important Information on Paperless Delivery
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly with the Fund may elect to receive shareholder reports and other communications from the Fund electronically by signing up for paperless delivery at www.icsdelivery.com/lazardassetmanagement. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by following the instructions included with this disclosure and visiting www.fundreports.com. If you own these shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this disclosure to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or your financial intermediary.
PRIVACY NOTICE
WHAT DOES LAZARD DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information. U.S. federal law gives our clients the right to limit some but not all sharing. U.S. federal and other applicable law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
We do not disclose nonpublic personal information about our clients or former clients to third parties other than as described below.
Personal information we collect.We collect personal information about you in connection with our providing advisory services to you. The legal basis for our collection of your personal information is our contract with you and our legitimate business interest to provide contractual services to you. The collection of this information is necessary for us to be able to provide advisory services to you and the failure to provide such information will result in our inability to provide our services. This information includes your social security number (for U.S. persons) and may include other information such as your:
· | Assets and income; | |
· | Investment experience; | |
· | Transaction history; | |
· | Credit history; and | |
· | Wire transfer instructions. |
How we collect this information.We collect this information from you through various means. For example, when you give us your contact information, enter into an investment advisory contract with us, buy securities (i.e., interests in a fund) from us, direct us to buy or sell securities for your account, tell us where to send money, or make a wire transfer. We also may collect your personal information from other sources, such as our affiliates1or other non-affiliated companies (such as credit bureaus).
1 | Our affiliates are companiesrelated to us by common ownership or control and can include both financial and nonfinancial companies. Non-affiliates are companiesnot related to us by common ownership or control and can include both financial and nonfinancial companies. |
How we use this information.All financial companies need to share customers’ personal information to run their everyday business and we use the personal information we collect from you for our everyday business purposes. These purposes may include for example:
· | To provide advisory services to you; | |
· | To open an account for you; | |
· | To process a transaction for your account; | |
· | To market products and services to you; and/or | |
· | To respond to court orders and legal investigations. |
If you are an investor located within a European Union country, please note that personal information may be collected, shared and/or stored outside of the European Union.
Disclosure to others.We may provide your personal information to our affiliates and to firms that assist us in servicing your account and have a need for such information, such as a broker, counterparty, fund administrator or third party service provider that aggregates data in a central repository for access by a broker, counterparty or fund administrator to provide its services. We may also disclose such information to service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you. We require third party service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you to protect the confidentiality of your information and to use the information only for the purposes for which we disclose the information to them. These sharing practices are consistent with applicable privacy and related laws, and in general, you may not limit our use of your personal information for these purposes under such laws. We note that the U.S. federal privacy laws only give you the right to limit the certain types of information sharing that we do not engage in (e.g., sharing with our affiliates certain information relating to your transaction history or creditworthiness for their use in marketing to you, or sharing any personal information with non-affiliates for them to market to you). We may also share your personal information with non-affiliates (such as a government agency or regulatory authority) as required by applicable law.
How we protect your personal information.To protect your personal information from unauthorized access and use, we use security measures that comply with applicable law. These measures include computer safeguards and secured files and buildings.
How long we keep your personal information.We retain your personal information for the duration of your advisory relationship with us and for a period of time thereafter as required by applicable law.
Your rights with respect to this information.If you are an investor located within a European Union country, you have the following rights with respect to your personal information:
· | The right to request and obtain a copy of your personal information that we maintain; | |
· | The right to correct your personal information that we maintain; | |
· | The right to request the erasure of your personal information from our systems, subject to applicable recordkeeping requirements applicable to us; and | |
· | The right to lodge a complaint with a supervisory authority. |
Who is providing this Privacy Notice.This Privacy Notice relates to the following entities:
· | Lazard Asset Management LLC | |
· | Lazard Asset Management (Canada), Inc.2 | |
· | Lazard Asset Management Securities LLC |
Who to contact with questions.If you have any questions about this Privacy Notice, please call (800) 823-6300 or visit our website at http://www.lazardassetmanagement.com.
2 | Lazard Asset Management (Canada), Inc. does not disclose any non-public personal information about its customers to any third party, except as permitted by or required by any applicable law, including the laws of the United States and Canada. |
The Lazard Funds, Inc.Table of Contents
Please consider a Portfolio’s investment objectives, risks, charges and expenses carefully before investing. For more complete information about The Lazard Funds, Inc. (the “Fund”), you may obtain a prospectus or summary prospectus by calling 800-823-6300, or online, at www.lazardassetmanagement.com. Read the prospectus or each Portfolio’s summary prospectus carefully before you invest. The prospectus and each Portfolio’s summary prospectus contain the investment objectives, risks, charges, expenses and other information about each Portfolio of the Fund, which are not detailed in this report.
Distributed by Lazard Asset Management Securities LLC.
Annual Report 1
The Lazard Funds, Inc.A Message from Lazard (unaudited)
Dear Shareholder,
In 2018, volatility returned to global markets. The economic trajectories of the major economies diverged during the year, with US growth accelerating and non-US growth decelerating. Tighter US monetary policy, declining oil prices, and trade tensions between the United States and China also increased risk aversion. Against this backdrop, almost every major developed and emerging equity market declined during the year. Despite the uptick in global market turbulence, our portfolio management teams remain steadfast in their investment discipline and continue to focus on fundamental research.
The US equity market ended the year down after a severe fourth quarter sell-off. During the quarter, volatility as measured by the CBOE Volatility®Index increased, corporate credit spreads widened, the yield curve flattened, and the yield on the 10-year US Treasury declined. Crude oil prices fell by nearly $29 per barrel on the back of concerns over flagging global demand and elevated supply.
In Europe, political risks increased throughout the year as the Italian election led to a governing coalition of the League and the Five Star Movement. The United Kingdom struggled with finalizing a resolution to exit the European Union (“Brexit”) and German Chancellor Angela Merkel announced she would step down in 2021. The European Central Bank ended its monthly asset purchase program in December, but kept its benchmark interest rate at zero.
Emerging markets equities and debt fell significantly in 2018 as macroeconomic and geopolitical developments weighed on market sentiment. The rising US dollar pressured most emerging markets during the year. In Turkey, uncertainty related to the country’s trade deficit was exacerbated by US sanctions and a diplomatic dispute with the United States over a detained American pastor. Uncertainty about trade and concerns about decelerating Chinese growth rippled through the global economy. Despite these challenges, our emerging markets equity and debt teams believe that many emerging markets still have solid fundamentals, and are well positioned to grow faster than the global growth average.
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We are privileged that you have turned to Lazard for your investment needs and value your continued confidence in our investment management capabilities. Be assured that our specialist investment teams, supported by our global infrastructure, are continuing to strive for the long-term patterns of performance that you expect.
Sincerely,
Lazard Asset Management LLC
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The Lazard Funds, Inc.Investment Overviews (unaudited)
Emerging Markets Debt
Emerging markets debt (as represented by 50% JPMorgan EMBI Global Diversified®Index/50% JPMorgan GBI-EM Global Diversified®Index) (the “Global Diversified Index”) fell 5.15% in 2018, as measured in US dollar terms—the lowest return for the asset class since 2015. The negative performance was driven by declines in both local currency and external debt. Coming off abnormally low volatility in 2017, 2018 may have felt like a roller coaster for emerging markets debt investors, but the volatility was in fact in line with historical averages for the asset class. The decline in local currency debt was mainly driven by spot depreciation in emerging markets currencies, which ended the year down almost 10% versus the US dollar. Meanwhile, external debt posted only the third negative calendar year return for the JPMorgan EMBI Global Diversified Index in the past 20 years, primarily driven by credit spreads, which ended the year 130 basis points (bps) wider at 415 bps, their widest level since 2016.
Global Fixed Income
In January, broad-based global economic momentum and seemingly euphoric sentiment fed into stronger price levels across most financial markets. The tone changed dramatically in February following uncertainty over new trade tariffs and a host of other negative news, especially in the tech sector. Volatility returned to markets as equities and other risky assets tumbled, giving back most of their earlier gains. Contrary to the norm in these “flight to quality” conditions, US yields actually rose slightly during much of the period, possibly due to new US fiscal and deficit-related concerns, in addition to elevated Treasury bill issuance. Jerome Powell succeeded Janet Yellen as US Federal Reserve (“Fed”) Chair during the first quarter. Global bond markets were mixed and volatile during the second quarter. Select core “safe haven” markets rallied in reaction to deteriorating conditions in equities and emerging markets, and new, market-unfriendly political developments in Italy. Softer economic data across Europe and other regions (especially relative to strength in the United States) also began to cast doubt on the continuity of global “synchronous growth.” In an attempt to cap oil prices, OPEC members decided in June to increase production, which added to the bullish tone in bond markets as prices of Brent crude oil
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dropped on the news. Also in June, the Fed tightened interest rates as expected with its seventh rate hike since the Fed began raising rates at the end of 2015, setting a new 2% upper target for the federal funds rate. The 10-year US Treasury yield briefly broke above the closely watched 3.00% level in mid-April, and again in late-May, but closed the second quarter lower at 2.86%. Other global central bank meetings were generally “non-events” as the European Central Bank, Bank of Japan (“BoJ”), and other central banks continued to postpone any rate normalization plans. Italian bonds took the spotlight as their 10-year yields surged to 3.16% in late May from lows of 1.75% in April, finally settling back to 2.67% by quarter-end. In contrast to the developed market central banks, of note was the policy response in Argentina, where the Central Bank of Argentina hiked rates aggressively in an attempt to contain currency outflows.
Global interest rate movements were mixed and volatile during the third quarter, with continued and notable divergence seen between developed and emerging markets. Despite mostly upbeat economic data for the United States, Europe, and other select countries, escalating trade/tariff wars took their toll in other parts of the world, including China. Continued pressure on countries such as Argentina and Turkey spilled over into other emerging markets. US rates edged higher, with the 10-year Treasury rising from 2.87% (as of the end of June) to close September at 3.06%. Overall, US growth was buoyant, supported by fiscal stimulus and higher consumer spending. Housing market data, however, was weaker, perhaps due to the impact of higher mortgage interest rates, which approached 5% levels. Core European yields moved higher on an improvement in growth compared to prior quarters. Unfortunately, for different reasons, the 10-year Italian bond closed the quarter at a yield of 3.15%, 268 bps above a similar maturity German bund. At the end of July, the highly anticipated BoJ meeting produced a widening of the “trading band” for various bond maturities (+/- 20 bps for the 10-year Japanese Government Bond). Investors quickly tested the resolve of the central bank, and rates for longer maturities moved to the higher end of recent ranges.
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Global interest rates stayed within familiar ranges early in the fourth quarter, but they rallied across many markets in November and December, bucking the year-to-date trend, especially in the United States. Growing fears of a global economic slowdown, ongoing political/trade developments, equity market stress, and a collapse in oil prices, all contributed to the rally in “safe haven” bonds. Furthermore, the Fed’s comments tilted away from a more hawkish stance compared to prior communiques, as committee members perhaps weighed financial conditions and the growth outlook, while the core personal consumption expenditures inflation rate was under 2%. Investors appeared to be getting more comfortable with the potential for fewer (or no) US rate hikes in 2019, following the Fed’s fourth 2018 hike in December to 2.50%. The bellwether 10-year Treasury finished the year at 2.68% after topping out near 3.25% in early November. Similar-maturity Japanese and German bonds ended the year at 0.24% and 0.00%, respectively. Rates also rallied strongly in “higher quality” markets such as Australia, Canada, Singapore, and the United Kingdom. In fact, rates in Australia and Poland were top performers for the year, with each market gaining around 5% in local currency terms. In Mexico, the government transition and policy communications negatively impacted bonds and other local assets.
After relative stability in the middle of the year, credit sectors were under pressure at year-end. The sectors came under pressure in sympathy with weaker equity markets and, especially, high-yield bonds, whose spreads continued to widen, even with the drought in new supply/issuance in December. Approximately 16% of the below investment grade universe consists of energy companies, so the sell-off in oil contributed to the negative price action during the period. Investment grade corporates and emerging market debt sectors lagged the government bond rally, also resulting in spread widening across the board. Corporate bonds with the lowest investment grade ratings (BBBs) now represent almost half of the overall investment grade universe, which could potentially lead to an increase in the number of “fallen angels” moving into the high yield arena if there is further deterioration in select sectors. Concern is also mounting over leveraged loans, as the growth of this market has outpaced high yield issuance.
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While US dollar strength persisted for a majority of the year, currency markets were mixed going into year-end. There was some consolidation for the Turkish lira, South African rand, Indian rupee, and other select currencies, which were under severe distress in prior months. A combination of the rally in US rates and a more dovish Fed tone could have been catalysts for these moves, but the collapse in oil prices is also a significant positive driver for countries such as Turkey and India, who are net importers of oil. In contrast, oil producing countries such as Canada and Norway saw their currencies lose about 5% versus the US dollar (in the fourth quarter), which underscores the importance of the price of oil as a factor for currency markets. Overall, the Argentinian peso and Turkish lira dropped over 50% and 28%, respectively, on a year-to-date basis, while the Japanese yen reasserted its safe-haven status and rallied with US rates to gain close to 3% percent versus the US dollar for the year. Conversely, all other G10 currencies depreciated versus the US dollar for the year, with the euro and New Zealand dollar down close to 4.5% and 5.0%, respectively, and the Canadian dollar and Australian dollar down almost 8% and 10%, respectively.
Going forward, we believe that investors will remain focused on the Chinese renminbi and whether the “psychological” exchange rate level of 7 renminbi versus the US dollar will hold, given the trade friction and ongoing trade negotiations between the United States and China. A renminbi weaker than 7 could spur weaker currency movements across other Asian countries that compete on exports. We are skeptical that China is seeking a weaker currency, as we believe that they want to maintain positive sentiment and avoid outflows. In addition, a weak renminbi could hurt some domestic entities who borrow in other currencies, especially the US dollar.
US Corporate Income
The high yield bond market finished down for the year after coming under pressure during the fourth quarter amid worries about slowing growth, the US-China trade war, Fed policy, a fall in oil prices, and fund outflows. Although up 2.49% at the end of the third quarter, the broad-based ICE Bank of America Merrill Lynch High Yield Cash Pay®Index fell 4.64% in the fourth quarter to finish
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the year down 2.26%. Concurrently, the ICE Bank of America Merrill Lynch High Yield Cash Pay Index’s option adjusted spread (“OAS”), which had narrowed 34 bps through the end of the third quarter to 325 bps, widened 205 bps in the volatile fourth quarter to finish 171 bps wider on the year.
Throughout most of the year, lower quality credits outperformed on the upside, but that reversed in the fourth quarter. The ICE Bank of America Merrill Lynch CCC Rated®Index finished the year returning -4.20% after being down -10.42% in the fourth quarter. The ICE Bank of America Merrill Lynch B®Index and ICE Bank of America Merrill Lynch BB®Index gave up positive returns through the third quarter and finished the year in negative territory, registering -1.54% and -2.45% returns for the year after falling -4.86% and -2.99%, respectively, in the fourth quarter.
After several years of strong issuance, the primary market was quieter in 2018. Overall, gross new issuance for 2018 was down 43% year over year, totaling $187.4 billion—of which 60.9% was marked for refinancing, 21.5% for acquisitions/leveraged buyouts, 14.6% for general corporate purposes, and 1.8% to fund dividends. Net of redemptions, issuance was down 39% year over year at $73.3 billion. Alongside the market volatility, new high yield issuance was especially muted during the weak fourth quarter, totaling only $19.1 billion across 36 issues. In December, no deals priced at all. This marked only the second time, and first since November 2008, that no high yield deal priced in a calendar month.
The lack of supply provided the market support in light of the heavy outflows from high yield bond funds and exchange-traded funds (“ETFs”). Investors pulled $45.1 billion from both high yield and mutual funds and ETFs in 2018. This outflow was on the heels of a $20.3 billion overall outflow in 2017.
Default activity continued to be modest during the year. For 2018, the US high yield default rate was 1.87%, which is below the long-term average of 3%. Importantly, the 2018 default rate was skewed higher by the default of iHeartMedia Inc., which accounted for 38% of the year’s high yield and loan default activity. Excluding iHeart-
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Media, the high yield default rate for 2018 was an even more sanguine 1.08%. Also, more than 60% of the year’s defaults occurred across energy, retail, and consumer products, though energy defaults continued to moderate from their levels in 2015 and 2016.
US Short Duration Fixed Income
The US economy is in its second longest expansion in the post-World War II period—currently 114 months and counting. Given the length of the expansion, market participants have increasingly been looking for cues that might indicate an imminent recession. A classic indicator is an inversion of the yield curve, when the level of long-term US Treasury yields falls below short-term yields. Indeed, the yield on the 5-year US Treasury fell below that of the 2-year US Treasury in early December. While this, however, has increased the number of forecasts for negative US growth, we do not believe that the yield curve is currently a reliable indicator of recession.
The yield curve inverted prior to the last nine recessions with an average lead time of 14 months. The recent flattening of the 10-year/3-month spread and inversion of the 5-year/2-year spread has raised investor concerns about a looming recession. While the shape of the yield curve bears an unsettling resemblance to the flattening curves that preceded past inversions, we believe that there is now nothing in the economy’s fundamentals to signal an imminent recession.
Second, the real US federal funds rate today is barely breaching zero, which we believe to be a very accommodative rate. The economy has never gone into a recession with the real fed funds rate at or below zero. In addition, inflation is a classic symptom of late-cycle economic expansion, yet nearly nine years after the global financial crisis, we believe the economy is still not showing the telltale signs of a slowdown. Consider, for example, that capital expenditures are growing alongside corporate earnings, reflecting an upbeat business outlook. At the same time, the declining unemployment rate, while it may have bolstered consumer confidence, has yet to result in wage increases that could broadly force prices higher.
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The absence of fundamental economic factors weighing on the long end of the yield curve provokes investors to ask what is keeping rates abnormally low. Ordinarily, the difference between the yield on 10-year US Treasury bonds and the rate of domestic inflation runs at about 1½%. As of the end of 2018, with the yield at or below 3% and inflation at 2%, the difference is fully a third below historical precedent.
We believe that market technical factors explain the anomaly—and with it, the flattening yield curve. The market crash accompanying the global financial crisis may have happened a decade ago, but to judge from the ongoing demand for long-dated sovereign debt—US Treasury bonds, German bunds, Japan government bonds, and the like—the memory is still fresh. At that time, such sovereign debt managed to come out ahead of the carnage. The protection it provided against an outlier event has made demand for it relatively inelastic. Thus, investors view it first and foremost as a form of portfolio insurance.
Nevertheless, portfolio protection can come on widely divergent terms. The market crash of 2008 illustrates the point. The S&P 500®Index tumbled more than a third and the MSCI All Country World®Index (ex-US) lost nearly half its value. In 2018, an index of G7 sovereign debt (ex-US) gained 9.7%, but 7- to 10-year US Treasuries fared even better as their yields tumbled and prices soared, returning 17.9%.
Lazard Emerging Markets Debt Portfolio
For the year ended December 31, 2018, the Lazard Emerging Markets Debt Portfolio’s Institutional Shares posted a total return of -7.45%, while Open Shares posted a total return of -7.69%, and R6 Shares posted a total return of -7.24%, as compared with the -5.15% blended return for the Global Diversified Index.
The primary driver of underperformance was bottom-up sovereign credit selection. The Portfolio held an overweight position in high yield countries, and several top active risk positions—e.g., Egypt, Kenya, and Ghana—lagged amid the general risk-off environment, weakness in oil prices and, in certain cases, negative idiosyncratic
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developments. The Portfolio’s overweight positions in Venezuela and Argentina sovereign debt also detracted from relative performance. These losses were partially offset by a modest overweight position in the stressed debt of Mozambique due to positive developments in the restructuring process as well as an overweight position in Angola, which outperformed, as President Joao Lourenco pursued structural reforms and initiated discussions with the International Monetary Fund.
In local currency debt, bottom-up duration positioning was beneficial, but it was more than offset by positioning in individual currencies. Specifically, overweight positions in select higher-yielding currencies, including the Russian ruble and the Brazilian real, detracted. The ruble was dragged down mainly by heightened risk of additional US sanctions, while the real underperformed amid uncertainty leading up to the October 2018 presidential election.
From a top-down perspective, the Portfolio’s overall asset allocation between local currency and hard currency debt was beneficial. Given our constructive view on the asset class, we entered 2018 with a significant overweight position in local currency debt. This view proved correct as local debt outperformed hard currency debt by over 6% during the first quarter of 2018, after which we rotated back to a neutral asset allocation position.
The Portfolio management team uses currency forwards and interest rates swaps, both opportunistically, for direct currency and rates exposure, and defensively, for hedging purposes. For the year, the use of derivatives did not materially impact the Portfolio’s relative performance.
Lazard Global Fixed Income Portfolio
For the year ended December 31, 2018, the Lazard Global Fixed Income Portfolio’s Institutional Shares posted a total return of -2.06%, while Open Shares posted a total return of -2.31%, as compared with the -1.20% return for the Bloomberg Barclays Global Aggregate®Index.
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The Portfolio’s underweight exposure to the euro-zone and Japanese government bonds (no exposure) detracted from performance as well as currency exposure to the Australian dollar and Mexican peso. Security selection, through spread product, added value in many global regions, including Norway and Australia, but in the United States, security selection slightly detracted from performance.
The Portfolio’s performance was helped by country allocation, with its overweight exposures to the United States, Australia, New Zealand, and Poland, along with its lack of exposure to Italy (after April). The Portfolio’s overweight exposure to the Japanese yen as well as its tactical allocation to the Canadian dollar also helped performance.
The Portfolio management team utilizes forward currency contracts, both opportunistically and defensively, for hedging purposes. In aggregate, currency positioning (defined as the net currency exposure of underlying bonds plus currency hedges) produced a modest negative contribution to relative performance.
Lazard US Corporate Income Portfolio
For the year ended December 31, 2018, the Lazard US Corporate Income Portfolio’s Institutional Shares posted a total return of -2.73%, while Open Shares posted a total return of -2.78%, and R6 Shares posted a total return of -2.43%, as compared with the -2.01% return for the ICE BofAML BB-B US Cash Pay Non-Distressed High Yield®Index (the “Cash Pay Index”).
Overall, underperformance was driven by the Portfolio’s underweight to B credits and overweight to BB and BBB rated credits. However, the higher-quality bias of the Portfolio contributed to outperformance versus the index in the volatile fourth quarter. Underweights to the energy, industrials, and lending-focused financials sectors, and an overweight to media companies, helped performance for the year. Overweights to automotive, leisure, and technology and electronics companies also hurt performance.
On a security level, a position in oil and gas services provider Weatherford’s 8.25% due 2023 was a detractor, especially in the
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fourth quarter when oil prices fell. Also, a position in auto parts maker Tenneco’s 5% due 2026 was weaker due to softening in the auto market. In contrast, positions in telecom and media provider Cequel Communication Holdings I’s 7.5% due 2028 and media and entertainment company Clear Channel Worldwide Holdings, Inc.’s 6.5% due 2022 helped performance.
The Portfolio maintained an overweight to BB and BBB credits, and a material underweight to B credits versus the index. This overweight to higher-rated credits is reflected in the Portfolio’s 298 bp OAS versus the 427 bp OAS of the index. Yields moved higher as prices fell and the Portfolio finished the year with a current yield of 5.7% versus 6.3% for the index. Strategy duration of 4.1 years remains below the index’s 4.3 years.
Lazard US Short Duration Fixed Income Portfolio
For the year ended December 31, 2018, the Lazard US Short Duration Fixed Income Portfolio’s Institutional Shares posted a total return of 1.08%, while Open Shares posted a total return of 0.88%, as compared with the 1.59% return for the ICE BofAML 1-3 Year US Treasury®Index.
An overweight to short duration corporates was the main detractor for the year.
Underweighting the 2-3 year part of the curve and overweighting consumer asset-backed securities added to returns in 2018.
We maintain a duration positioning that is short relative to the index as we are concerned about the possibility of increasing short-term rates. The Portfolio maintains a significant allocation to credit positions, particularly in BBB corporates. US financials remain a sizable portion of the credit positioning, but we have decreased exposure to industrials. We have also decreased our allocation to agency mortgage-backed securities. We remain significantly underweight US Treasuries, but have been increasing our exposure in recent months.
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Notes to Investment Overviews:
All Portfolios’ total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of a Portfolio may have been waived or reimbursed by Lazard Asset Management LLC, the Fund’s investment manager (the “Investment Manager”), State Street Bank and Trust Company, the Fund’s administrator (“State Street”), or DST Asset Manager Solutions, Inc., the Fund’s transfer and dividend disbursing agent (“DST”); without such waiver/reimbursement of expenses, such Portfolio’s returns would have been lower. Past performance is not indicative, or a guarantee, of future results.
The performance data of the indices and other market data have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged, have no fees or costs and are not available for investment.
The views of the Investment Manager and the securities described in this report are as of December 31, 2018, except as otherwise indicated; these views and portfolio holdings may have changed subsequent to this date. Nothing herein should be construed as a recommendation to buy, sell, or hold a particular security. There is no assurance that the securities discussed herein will remain in a Portfolio at the time you receive this report, or that securities sold will not have been repurchased. The specific securities discussed may, in aggregate, represent only a small percentage of a Portfolio’s holdings. It should not be assumed that securities identified and discussed were, or will be, profitable, or that the investment decisions made in the future will be profitable, or equal the investment performance of the securities discussed herein.
The views and opinions expressed are provided for general information only, and do not constitute specific tax, legal, or investment advice to, or recommendations for, any person. There can be no guarantee as to the accuracy of any outlooks for markets, sectors and securities as discussed herein. You should read the Fund’s prospectus or each Portfolio’s summary prospectus for a more detailed discussion of each Portfolio’s investment objectives, strategies, risks and fees.
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The Lazard Funds, Inc.Performance Overviews (unaudited)
Lazard Emerging Markets Debt Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Emerging Markets Debt Portfolio, JPMorgan EMBI Global Diversified®Index, JPMorgan GBI-EM Global Diversified®Index and Global Diversified Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Since | |||||
Year | Years | Inception | † | ||||
Institutional Shares** | –7.45% | 0.29% | 1.68% | ||||
Open Shares** | –7.69% | –0.01% | 1.38% | ||||
R6 Shares** | –7.24% | N/A | 0.57% | ||||
JPMorgan EMBI Global Diversified Index | –4.26% | 4.80% | 5.44% | ||||
(Institutional and Open Shares) 1.48% (R6 Shares) | |||||||
JPMorgan GBI-EM Global Diversified Index | –6.21% | –0.96% | –0.05% | ||||
(Institutional and Open Shares) 1.87% (R6 Shares) | |||||||
Global Diversified Index | –5.15% | 1.95% | 2.73% | ||||
(Institutional and Open Shares) 1.74% (R6 Shares) |
† | The inception date for the Institutional and Open Shares was February 28, 2011 and for the R6 Shares was July 28, 2016. |
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Lazard Global Fixed Income Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Global Fixed Income Portfolio and Bloomberg Barclays Global Aggregate®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Since | |||||
Year | Years | Inception | † | ||||
Institutional Shares** | –2.06% | 0.34% | 0.11% | ||||
Open Shares** | –2.31% | 0.05% | –0.19% | ||||
Bloomberg Barclays Global Aggregate Index | –1.20% | 1.08% | 0.91% |
† | The inception date for the Portfolio was March 30, 2012. |
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Lazard US Corporate Income Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard US Corporate Income Portfolio and Cash Pay Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Ten | Since | ||||||
Year | Years | Years | Inception | † | |||||
Institutional Shares** | –2.73% | 2.91% | 8.07% | 4.03% | |||||
Open Shares** | –2.78% | 2.66% | 7.77% | 3.53% | |||||
R6 Shares** | –2.43% | N/A | N/A | 1.80% | |||||
Cash Pay Index | –2.01% | 3.96% | 8.74% | 6.12% | |||||
(Institutional Shares) 6.07% | |||||||||
(Open Shares) 2.90% (R6 Shares) |
† | The inception date for the Institutional Shares was January 2, 1998, for the Open Shares was February 24, 1998 and for the R6 Shares was November 3, 2016. |
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Lazard US Short Duration Fixed Income Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard US Short Duration Fixed Income Portfolio and ICE BofAML 1-3 Year US Treasury®Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Since | |||||
Year | Years | Inception | † | ||||
Institutional Shares** | 1.08% | 0.67% | 1.13% | ||||
Open Shares** | 0.88% | 0.61% | 0.98% | ||||
ICE BofAML 1-3 Year US Treasury Index | 1.59% | 0.81% | 0.81% |
† | The inception date for the Portfolio was February 28, 2011. |
Notes to Performance Overviews:
* | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
Performance results do not include adjustments made for financial reporting purposes in accordance with US Generally Accepted Accounting principles, if any, and also exclude one-time adjustments related to reimbursed custodian out-of-pocket expenses (Note 3 in the Notes to Financial Statements) for Lazard Emerging Markets Debt Portfolio and settlement proceeds received from a class action lawsuit (Lazard US Corporate Income Portfolio R6 Shares), and may differ from amounts reported in the financial highlights. |
The performance quoted represents past performance. Current performance may be lower or higher than the performance quoted. Past performance is not indicative, or a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares. |
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. The indices are unmanaged, have no fees or costs and are not available for investment. |
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The JPMorgan EMBI Global Diversified Index is a uniquely weighted version of the EMBI Global. Risks associated with the securities comprising this index include fixed income and emerging markets. The JPMorgan GBI-EM Global Diversified Index is a uniquely weighted version of the GBI-EM Global. Risks include fixed income, emerging markets and derivatives. These indices limit the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in both indices are identical.
The Global Diversified Index is an unmanaged index created by the Investment Manager and is a 50/50 blend of the JPMorgan EMBI Global Diversified Index and the JPMorgan GBI-EM Global Diversified Index.
The Bloomberg Barclays Global Aggregate Index provides a broad-based measure of global investment-grade fixed-income debt markets, including government-related debt, corporate debt, securitized debt and global Treasury.
The Cash Pay Index is the ICE BofAML BB-B US Cash Pay Non-Distressed High Yield® Index. It is constructed to mirror the BB-B non-distressed sector of the public high yield corporate debt market and is a subset of the ICE Bank of America Merrill Lynch High Yield Cash Pay® Index.
The ICE BofAML 1-3 Year US Treasury Index tracks the performance of the direct sovereign debt of the US Government having a maturity of at least one year and less than three years.
** | The performance of Institutional Shares, Open Shares and R6 Shares may vary, primarily based on the differences in fees borne by shareholders investing in different classes. |
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Information About Your Portfolio’s Expenses (unaudited)
Expense Example
As a shareholder in a Portfolio of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (Open Shares only), and other expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the six month period from July 1, 2018 through December 31, 2018 and held for the entire period.
Actual Expenses
For each Share class of the Portfolios, the first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each Share class of the Portfolios, the second line of the table below provides information about hypothetical account values and hypothetical expenses based on the class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds.
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Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
Emerging Markets Debt | |||||||||||
Institutional Shares | |||||||||||
Actual | $1,000.00 | $ | 993.50 | $4.67 | 0.93% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,020.52 | $4.74 | 0.93% | ||||||
Open Shares | |||||||||||
Actual | $1,000.00 | $ | 992.80 | $6.03 | 1.20% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,019.16 | $6.11 | 1.20% | ||||||
R6 Shares | |||||||||||
Actual | $1,000.00 | $ | 993.50 | $4.52 | 0.90% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,020.67 | $4.58 | 0.90% | ||||||
Global Fixed Income | |||||||||||
Institutional Shares | |||||||||||
Actual | $1,000.00 | $ | 1,001.70 | $3.53 | 0.70% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,021.68 | $3.57 | 0.70% | ||||||
Open Shares | |||||||||||
Actual | $1,000.00 | $ | 1,000.50 | $4.74 | 0.94% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,020.47 | $4.79 | 0.94% | ||||||
US Corporate Income | |||||||||||
Institutional Shares | |||||||||||
Actual | $1,000.00 | $ | 986.80 | $2.75 | 0.55% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,022.43 | $2.80 | 0.55% | ||||||
Open Shares | |||||||||||
Actual | $1,000.00 | $ | 987.70 | $4.26 | 0.85% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,020.92 | $4.33 | 0.85% | ||||||
R6 Shares | |||||||||||
Actual | $1,000.00 | $ | 987.30 | $2.75 | 0.55% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,022.43 | $2.80 | 0.55% |
Annual Report 21
Portfolio | Beginning Account Value 7/1/18 | Ending Account Value 12/31/18 | Expenses Paid During Period* 7/1/18 - 12/31/18 | Annualized Expense Ratio During Period 7/1/18 - 12/31/18 | |||||||
US Short Duration Fixed Income | |||||||||||
Institutional Shares | |||||||||||
Actual | $1,000.00 | $ | 1,010.90 | $2.03 | 0.40% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,023.19 | $2.04 | 0.40% | ||||||
Open Shares | |||||||||||
Actual | $1,000.00 | $ | 1,009.40 | $3.49 | 0.69% | ||||||
Hypothetical (5% Return Before Expenses) | $1,000.00 | $ | 1,021.73 | $3.52 | 0.69% |
* | Expenses are equal to the annualized expense ratio, net of expenses waivers and reimbursements, of each Share class multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
22 Annual Report
The Lazard Funds, Inc.Portfolio Holdings Presented by Asset Class/Credit Rating and Region December 31, 2018
Asset Class/S&P Credit Rating* | Lazard Global Fixed Income Portfolio | Lazard US Corporate Income Portfolio | Lazard US Short Duration Fixed Income Portfolio | |||||||||||
Fixed Income | ||||||||||||||
AAA | 16.3 | % | — | % | 2.7 | % | ||||||||
AA+ | 18.7 | — | 57.3 | |||||||||||
AA- | 5.7 | — | — | |||||||||||
A+ | 5.5 | — | — | |||||||||||
A | 5.9 | — | 2.0 | |||||||||||
A- | 6.3 | — | 10.4 | |||||||||||
BBB+ | 7.8 | 0.7 | 19.1 | |||||||||||
BBB | 1.0 | 0.8 | 6.4 | |||||||||||
BBB- | 5.9 | 8.0 | — | |||||||||||
BB+ | 5.3 | 17.3 | — | |||||||||||
BB | — | 23.9 | — | |||||||||||
BB- | — | 25.6 | — | |||||||||||
B+ | — | 11.9 | — | |||||||||||
B | — | 5.4 | — | |||||||||||
B- | — | 3.8 | — | |||||||||||
CCC+ | — | 1.3 | — | |||||||||||
CCC- | — | 0.2 | — | |||||||||||
Not Applicable | 17.6 | 1.1 | 1.6 | |||||||||||
No Rating | 4.0 | — | — | |||||||||||
Short-Term Investments | — | — | 0.5 | |||||||||||
Total Investments | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Asset Class/Region* | Lazard Emerging Markets Debt Portfolio | |||||||||||||
Fixed Income | ||||||||||||||
Africa | 18.3 | % | ||||||||||||
Asia | 16.0 | |||||||||||||
Europe | 19.0 | |||||||||||||
North America | 12.2 | |||||||||||||
South America | 32.0 | |||||||||||||
Short-Term Investments | 2.5 | |||||||||||||
Total Investments | 100.0 | % |
* | Represents percentage of total investments. |
Annual Report 23
The Lazard Funds, Inc.Portfolios of Investments
December 31, 2018
The accompanying notes are an integral part of these financial statements.
24 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
India | 0.4% | ||||||||||
Greenko Dutch BV, 5.250%, 07/24/24 | USD | 525 | $ | 470,531 | ||||||
Neerg Energy, Ltd., 6.000%, 02/13/22 (#) | USD | 200 | 187,250 | |||||||
Vedanta Resources PLC, 6.375%, 07/30/22 (#) | USD | 450 | 402,188 | |||||||
1,059,969 | ||||||||||
Indonesia | 0.2% | ||||||||||
Indonesia Asahan Aluminium Persero PT, 6.530%, 11/15/28 (#) | USD | 400 | 419,500 | |||||||
Israel | 0.2% | ||||||||||
Altice Financing SA, 6.625%, 02/15/23 (#) | USD | 375 | 360,000 | |||||||
Nigeria | 0.3% | ||||||||||
IHS Netherlands Holdco BV, 9.500%, 10/27/21 | USD | 600 | 603,338 | |||||||
Panama | 0.1% | ||||||||||
Sable International Finance, Ltd., 6.875%, 08/01/22 (#) | USD | 217 | 221,882 | |||||||
Peru | 0.5% | ||||||||||
Fondo MIVIVIENDA SA, 7.000%, 02/14/24 | PEN | 960 | 304,947 | |||||||
Hunt Oil Co. of Peru LLC Sucursal Del Peru, 6.375%, 06/01/28 (#) | USD | 650 | 654,388 | |||||||
Inkia Energy, Ltd., 5.875%, 11/09/27 | USD | 400 | 370,000 | |||||||
1,329,335 |
The accompanying notes are an integral part of these financial statements.
Annual Report 25
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
South Africa | 0.2% | ||||||||||
Liquid Telecommunications Financing PLC: | ||||||||||
8.500%, 07/13/22 | USD | 200 | $ | 201,054 | ||||||
8.500%, 07/13/22 (#) | USD | 200 | 201,053 | |||||||
402,107 | ||||||||||
Tanzania | 0.3% | ||||||||||
HTA Group, Ltd., 9.125%, 03/08/22 | USD | 600 | 609,000 | |||||||
Turkey | 0.2% | ||||||||||
Turkiye Is Bankasi AS, 5.500%, 04/21/19 | USD | 590 | 587,050 | |||||||
Zambia | 0.4% | ||||||||||
First Quantum Minerals, Ltd.: | ||||||||||
7.250%, 05/15/22 (#) | USD | 650 | 602,875 | |||||||
7.250%, 04/01/23 (#) | USD | 300 | 264,000 | |||||||
866,875 | ||||||||||
Total Corporate Bonds (Cost $12,471,308) | 11,966,856 | |||||||||
Foreign Government Obligations| 88.9% | ||||||||||
Angola | 2.3% | ||||||||||
Republic of Angola: | ||||||||||
9.500%, 11/12/25 | USD | 4,027 | 4,233,384 | |||||||
8.250%, 05/09/28 | USD | 210 | 197,925 | |||||||
8.250%, 05/09/28 (#) | USD | 740 | 697,450 | |||||||
9.375%, 05/08/48 | USD | 200 | 187,500 | |||||||
9.375%, 05/08/48 (#) | USD | 255 | 239,062 | |||||||
5,555,321 | ||||||||||
Argentina | 3.7% | ||||||||||
Argentina Treasury Bills, 0.000%, 01/31/19 | ARS | 17,800 | 541,090 | |||||||
Provincia de Buenos Aires, 7.875%, 06/15/27 | USD | 225 | 161,727 |
The accompanying notes are an integral part of these financial statements.
26 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Republic of Argentina: | ||||||||||
50.950% (BADLARPP + 2.500%), 03/11/19 (§) | ARS | 1,010 | $ | 26,916 | ||||||
5.625%, 01/26/22 | USD | 1,550 | 1,307,812 | |||||||
4.625%, 01/11/23 | USD | 690 | 544,238 | |||||||
7.500%, 04/22/26 | USD | 1,490 | 1,193,862 | |||||||
15.500%, 10/17/26 | ARS | 7,540 | 152,667 | |||||||
6.875%, 01/26/27 | USD | 1,420 | 1,079,200 | |||||||
5.875%, 01/11/28 | USD | 1,829 | 1,310,021 | |||||||
6.625%, 07/06/28 | USD | 675 | 499,500 | |||||||
7.125%, 07/06/36 | USD | 605 | 431,819 | |||||||
7.625%, 04/22/46 | USD | 1,135 | 820,038 | |||||||
6.875%, 01/11/48 | USD | 235 | 163,031 | |||||||
7.125%, 06/28/2117 | USD | 970 | 693,550 | |||||||
8,925,471 | ||||||||||
Bahrain | 0.2% | ||||||||||
Kingdom of Bahrain, 6.125%, 07/05/22 | USD | 570 | 580,688 | |||||||
Belarus | 0.2% | ||||||||||
Republic of Belarus, 7.625%, 06/29/27 | USD | 425 | 434,031 | |||||||
Belize | 0.0% | ||||||||||
Republic of Belize, 4.938%, 02/20/34 (Ø) | USD | 185 | 103,831 | |||||||
Brazil | 12.4% | ||||||||||
Brazil Letras do Tesouro Nacional: | ||||||||||
0.000%, 07/01/19 | BRL | 26,140 | 6,540,097 | |||||||
0.000%, 01/01/22 | BRL | 20,910 | 4,268,953 | |||||||
Brazil NTN-B: | ||||||||||
6.000%, 05/15/23 | BRL | 3,770 | 3,281,228 | |||||||
6.000%, 08/15/50 | BRL | 1,658 | 1,564,934 |
The accompanying notes are an integral part of these financial statements.
Annual Report 27
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Brazil NTN-F: | ||||||||||
10.000%, 01/01/23 | BRL | 15,170 | $ | 4,100,440 | ||||||
10.000%, 01/01/25 | BRL | 1,750 | 470,936 | |||||||
10.000%, 01/01/27 | BRL | 5,945 | 1,603,486 | |||||||
10.000%, 01/01/29 | BRL | 4,700 | 1,214,160 | |||||||
Federal Republic of Brazil: | ||||||||||
6.000%, 04/07/26 | USD | 2,065 | 2,196,644 | |||||||
4.625%, 01/13/28 | USD | 2,561 | 2,463,311 | |||||||
8.250%, 01/20/34 | USD | 140 | 171,850 | |||||||
5.000%, 01/27/45 | USD | 1,505 | 1,314,618 | |||||||
5.625%, 02/21/47 | USD | 1,020 | 962,370 | |||||||
30,153,027 | ||||||||||
Chile | 1.8% | ||||||||||
Bonos de la Tesoreria de la Republica en pesos: | ||||||||||
4.700%, 09/01/30 (#) | CLP | 515,000 | 759,061 | |||||||
5.000%, 03/01/35 | CLP | 565,000 | 849,152 | |||||||
6.000%, 01/01/43 | CLP | 1,625,000 | 2,751,790 | |||||||
4,360,003 | ||||||||||
Colombia | 4.2% | ||||||||||
Colombian Titulos De Tesoreria: | ||||||||||
7.000%, 05/04/22 | COP | 5,440,000 | 1,740,884 | |||||||
10.000%, 07/24/24 | COP | 5,692,500 | 2,061,483 | |||||||
7.500%, 08/26/26 | COP | 4,094,000 | 1,326,910 | |||||||
6.000%, 04/28/28 | COP | 3,919,000 | 1,143,069 | |||||||
7.000%, 06/30/32 | COP | 5,611,000 | 1,701,139 | |||||||
Republic of Colombia: | ||||||||||
4.500%, 01/28/26 | USD | 590 | 588,967 | |||||||
7.375%, 09/18/37 | USD | 530 | 641,962 | |||||||
5.000%, 06/15/45 | USD | 1,135 | 1,076,831 | |||||||
10,281,245 | ||||||||||
Costa Rica | 1.7% | ||||||||||
Republic of Costa Rica: | ||||||||||
4.250%, 01/26/23 | USD | 255 | 223,699 | |||||||
5.520%, 08/23/23 | USD | 1,140 | 963,220 | |||||||
4.375%, 04/30/25 | USD | 1,655 | 1,397,804 |
The accompanying notes are an integral part of these financial statements.
28 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
5.625%, 04/30/43 | USD | 425 | $ | 322,469 | ||||||
7.000%, 04/04/44 | USD | 205 | 173,584 | |||||||
7.158%, 03/12/45 | USD | 1,320 | 1,130,910 | |||||||
4,211,686 | ||||||||||
Czech Republic | 1.1% | ||||||||||
Czech Republic, 2.500%, 08/25/28 | CZK | 55,650 | 2,608,641 | |||||||
Dominican Republic | 3.4% | ||||||||||
Dominican Republic: | ||||||||||
8.900%, 02/15/23 | DOP | 33,900 | 659,191 | |||||||
6.600%, 01/28/24 | USD | 60 | 62,355 | |||||||
5.500%, 01/27/25 | USD | 1,735 | 1,715,047 | |||||||
6.875%, 01/29/26 | USD | 1,540 | 1,608,915 | |||||||
6.875%, 01/29/26 (#) | USD | 235 | 245,516 | |||||||
5.950%, 01/25/27 | USD | 675 | 670,444 | |||||||
6.000%, 07/19/28 (#) | USD | 770 | 766,343 | |||||||
7.450%, 04/30/44 | USD | 1,070 | 1,107,985 | |||||||
6.850%, 01/27/45 | USD | 355 | 348,344 | |||||||
6.500%, 02/15/48 (#) | USD | 1,235 | 1,163,987 | |||||||
8,348,127 | ||||||||||
Ecuador | 1.7% | ||||||||||
Republic of Ecuador: | ||||||||||
10.500%, 03/24/20 | USD | 650 | 654,062 | |||||||
10.750%, 03/28/22 | USD | 673 | 677,207 | |||||||
10.750%, 03/28/22 (#) | USD | 325 | 327,031 | |||||||
8.750%, 06/02/23 | USD | 460 | 428,835 | |||||||
7.950%, 06/20/24 | USD | 710 | 625,688 | |||||||
9.650%, 12/13/26 | USD | 1,115 | 1,013,256 | |||||||
8.875%, 10/23/27 (#) | USD | 460 | 396,750 | |||||||
4,122,829 | ||||||||||
Egypt | 2.9% | ||||||||||
Arab Republic of Egypt: | ||||||||||
5.577%, 02/21/23 (#) | USD | 520 | 491,400 | |||||||
5.875%, 06/11/25 | USD | 255 | 231,413 | |||||||
7.500%, 01/31/27 | USD | 2,060 | 1,962,150 | |||||||
6.588%, 02/21/28 (#) | USD | 845 | 753,106 |
The accompanying notes are an integral part of these financial statements.
Annual Report 29
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
8.500%, 01/31/47 | USD | 2,350 | $ | 2,117,937 | ||||||
8.500%, 01/31/47 (#) | USD | 1,065 | 959,831 | |||||||
7.903%, 02/21/48 (#) | USD | 710 | 610,600 | |||||||
7,126,437 | ||||||||||
El Salvador | 0.6% | ||||||||||
Republic of El Salvador: | ||||||||||
7.750%, 01/24/23 | USD | 525 | 540,225 | |||||||
5.875%, 01/30/25 | USD | 181 | 165,389 | |||||||
6.375%, 01/18/27 | USD | 180 | 165,150 | |||||||
8.625%, 02/28/29 | USD | 150 | 156,000 | |||||||
8.250%, 04/10/32 | USD | 115 | 115,575 | |||||||
7.650%, 06/15/35 | USD | 65 | 61,498 | |||||||
7.625%, 02/01/41 | USD | 150 | 140,625 | |||||||
1,344,462 | ||||||||||
Gabon | 0.2% | ||||||||||
Gabonese Republic, 6.375%, 12/12/24 | USD | 420 | 375,900 | |||||||
Ghana | 0.9% | ||||||||||
Ghana Government Bonds, 24.500%, 04/22/19 | GHS | 60 | 12,419 | |||||||
Ghana Treasury Notes: | ||||||||||
21.000%, 01/07/19 | GHS | 3,010 | 612,338 | |||||||
19.950%, 05/06/19 | GHS | 150 | 30,668 | |||||||
Republic of Ghana: | ||||||||||
7.875%, 08/07/23 | USD | 350 | 342,563 | |||||||
8.125%, 01/18/26 | USD | 240 | 229,200 | |||||||
7.625%, 05/16/29 (#) | USD | 100 | 89,375 | |||||||
8.627%, 06/16/49 | USD | 545 | 472,787 | |||||||
8.627%, 06/16/49 (#) | USD | 600 | 520,500 | |||||||
2,309,850 | ||||||||||
Guatemala | 0.1% | ||||||||||
Republic of Guatemala, 4.875%, 02/13/28 | USD | 215 | 203,643 |
The accompanying notes are an integral part of these financial statements.
30 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Honduras | 0.3% | ||||||||||
Republic of Honduras: | ||||||||||
8.750%, 12/16/20 | USD | 310 | $ | 328,988 | ||||||
6.250%, 01/19/27 | USD | 350 | 341,687 | |||||||
670,675 | ||||||||||
Hungary | 0.3% | ||||||||||
Hungary Government Bonds, 6.000%, 11/24/23 | HUF | 179,300 | 766,876 | |||||||
Indonesia | 6.0% | ||||||||||
Indonesia Government Bonds: | ||||||||||
8.375%, 03/15/24 | IDR | 7,060,000 | 494,887 | |||||||
8.375%, 09/15/26 | IDR | 8,980,000 | 631,338 | |||||||
7.000%, 05/15/27 | IDR | 2,543,000 | 164,464 | |||||||
9.000%, 03/15/29 | IDR | 8,440,000 | 617,740 | |||||||
8.250%, 05/15/29 | IDR | 12,943,000 | 917,842 | |||||||
8.750%, 05/15/31 | IDR | 35,912,000 | 2,584,765 | |||||||
7.500%, 08/15/32 | IDR | 26,327,000 | 1,704,023 | |||||||
8.375%, 03/15/34 | IDR | 14,838,000 | 1,033,140 | |||||||
8.250%, 05/15/36 | IDR | 12,883,000 | 880,219 | |||||||
Republic of Indonesia: | ||||||||||
4.750%, 01/08/26 | USD | 2,305 | 2,332,633 | |||||||
3.500%, 01/11/28 | USD | 1,730 | 1,595,925 | |||||||
4.100%, 04/24/28 | USD | 595 | 576,406 | |||||||
4.750%, 02/11/29 | USD | 600 | 607,587 | |||||||
5.250%, 01/08/47 | USD | 360 | 360,000 | |||||||
4.350%, 01/11/48 | USD | 215 | 195,720 | |||||||
14,696,689 | ||||||||||
Iraq | 0.3% | ||||||||||
Republic of Iraq: | ||||||||||
6.752%, 03/09/23 | USD | 250 | 237,500 | |||||||
6.752%, 03/09/23 (#) | USD | 125 | 118,750 | |||||||
5.800%, 01/15/28 | USD | 425 | 379,844 | |||||||
736,094 |
The accompanying notes are an integral part of these financial statements.
Annual Report 31
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Ivory Coast | 0.4% | ||||||||||
Ivory Coast: | ||||||||||
5.750%, 12/31/32 (Ø) | USD | 610 | $ | 535,664 | ||||||
6.125%, 06/15/33 | USD | 525 | 434,438 | |||||||
�� | 970,102 | |||||||||
Kenya | 0.6% | ||||||||||
Republic of Kenya: | ||||||||||
6.875%, 06/24/24 | USD | 565 | 528,981 | |||||||
8.250%, 02/28/48 (#) | USD | 1,140 | 969,000 | |||||||
1,497,981 | ||||||||||
Lebanon | 1.1% | ||||||||||
Lebanese Republic: | ||||||||||
6.150%, 06/19/20 | USD | 130 | 122,525 | |||||||
6.000%, 01/27/23 | USD | 775 | 652,937 | |||||||
6.650%, 04/22/24 | USD | 1,060 | 882,450 | |||||||
6.250%, 11/04/24 | USD | 232 | 186,180 | |||||||
6.200%, 02/26/25 | USD | 320 | 254,800 | |||||||
6.600%, 11/27/26 | USD | 819 | 638,820 | |||||||
2,737,712 | ||||||||||
Malaysia | 0.8% | ||||||||||
Malaysia Government Bonds: | ||||||||||
3.759%, 03/15/19 | MYR | 590 | 142,899 | |||||||
3.955%, 09/15/25 | MYR | 3,540 | 852,555 | |||||||
3.844%, 04/15/33 | MYR | 2,150 | 482,534 | |||||||
4.642%, 11/07/33 | MYR | 2,150 | 529,589 | |||||||
�� | 2,007,577 | |||||||||
Mexico | 5.3% | ||||||||||
Mexican Bonos: | ||||||||||
7.250%, 12/09/21 | MXN | 111,550 | 5,488,311 | |||||||
6.500%, 06/09/22 | MXN | 4,260 | 203,836 | |||||||
10.000%, 12/05/24 | MXN | 9,707 | 525,440 | |||||||
8.500%, 05/31/29 | MXN | 14,680 | 735,335 | |||||||
7.750%, 05/29/31 | MXN | 18,020 | 847,335 | |||||||
10.000%, 11/20/36 | MXN | 27,629 | 1,548,721 | |||||||
7.750%, 11/13/42 | MXN | 54,220 | 2,437,441 |
The accompanying notes are an integral part of these financial statements.
32 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
United Mexican States: | ||||||||||
4.150%, 03/28/27 | USD | 520 | $ | 501,150 | ||||||
3.750%, 01/11/28 | USD | 50 | 46,712 | |||||||
5.750%, 10/12/2110 | USD | 590 | 553,862 | |||||||
12,888,143 | ||||||||||
Mongolia | 0.3% | ||||||||||
Mongolia International Bonds: | ||||||||||
10.875%, 04/06/21 | USD | 145 | 159,137 | |||||||
5.125%, 12/05/22 | USD | 285 | 266,972 | |||||||
8.750%, 03/09/24 (#) | USD | 220 | 234,575 | |||||||
660,684 | ||||||||||
Morocco | 0.2% | ||||||||||
Kingdom of Morocco: | ||||||||||
4.250%, 12/11/22 | USD | 235 | 235,000 | |||||||
5.500%, 12/11/42 | USD | 240 | 244,800 | |||||||
479,800 | ||||||||||
Mozambique | 0.9% | ||||||||||
Mozambique International Bonds, | ||||||||||
10.500%, 01/18/23 | USD | 2,268 | 2,120,580 | |||||||
Namibia | 0.0% | ||||||||||
Republic of Namibia, | ||||||||||
5.250%, 10/29/25 | USD | 95 | 85,025 | |||||||
Nigeria | 1.3% | �� | |||||||||
Nigeria Treasury Bills: | ||||||||||
0.000%, 01/03/19 | NGN | 124,140 | 323,330 | |||||||
0.000%, 01/17/19 | NGN | 56,840 | 154,887 | |||||||
Republic of Nigeria: | ||||||||||
6.375%, 07/12/23 | USD | 465 | 445,237 | |||||||
6.500%, 11/28/27 (#) | USD | 800 | 707,000 | |||||||
7.875%, 02/16/32 (#) | USD | 485 | 440,744 | |||||||
7.625%, 11/28/47 | USD | 505 | 424,831 | |||||||
7.625%, 11/28/47 (#) | USD | 695 | 584,669 | |||||||
3,080,698 |
The accompanying notes are an integral part of these financial statements.
Annual Report 33
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Oman | 1.3% | ||||||||||
Oman Government International Bonds: | ||||||||||
3.625%, 06/15/21 | USD | 705 | $ | 667,987 | ||||||
4.125%, 01/17/23 | USD | 405 | 370,575 | |||||||
4.750%, 06/15/26 | USD | 310 | 267,375 | |||||||
5.375%, 03/08/27 | USD | 255 | 222,488 | |||||||
5.625%, 01/17/28 | USD | 1,190 | 1,045,712 | |||||||
6.750%, 01/17/48 | USD | 610 | 501,725 | |||||||
3,075,862 | ||||||||||
Pakistan | 0.8% | ||||||||||
Islamic Republic of Pakistan: | ||||||||||
8.250%, 04/15/24 | USD | 405 | 408,214 | |||||||
8.250%, 09/30/25 | USD | 705 | 704,083 | |||||||
6.875%, 12/05/27 | USD | 1,045 | 941,806 | |||||||
2,054,103 | ||||||||||
Paraguay | 0.5% | ||||||||||
Republic of Paraguay: | ||||||||||
6.100%, 08/11/44 | USD | 460 | 476,100 | |||||||
5.600%, 03/13/48 (#) | USD | 740 | 726,125 | |||||||
1,202,225 | ||||||||||
Peru | 3.7% | ||||||||||
Banco de Credito del Peru, 4.850%, 10/30/20 (#) | PEN | 2,300 | 682,455 | |||||||
Peru Government International Bonds, 5.940%, 02/12/29 (#) | PEN | 700 | 211,735 | |||||||
Republic of Peru: | ||||||||||
5.700%, 08/12/24 | PEN | 2,850 | 874,850 | |||||||
8.200%, 08/12/26 | PEN | 5,500 | 1,914,610 | |||||||
6.350%, 08/12/28 | PEN | 7,320 | 2,277,376 | |||||||
6.950%, 08/12/31 | PEN | 3,690 | 1,197,128 | |||||||
6.900%, 08/12/37 | PEN | 5,450 | 1,739,691 | |||||||
8,897,845 | ||||||||||
Philippines | 0.1% | ||||||||||
Republic of Philippines, 3.625%, 09/09/25 | PHP | 15,300 | 235,178 |
The accompanying notes are an integral part of these financial statements.
34 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Poland | 1.6% | ||||||||||
Poland Government Bonds, 3.250%, 07/25/25 | PLN | 14,070 | $ | 3,934,344 | ||||||
Qatar | 0.2% | ||||||||||
State of Qatar, 4.500%, 04/23/28 | USD | 547 | 569,564 | |||||||
Romania | 0.5% | ||||||||||
Romanian Government Bonds: | ||||||||||
5.850%, 04/26/23 | RON | 1,530 | 398,700 | |||||||
4.250%, 06/28/23 | RON | 1,530 | 374,100 | |||||||
5.800%, 07/26/27 | RON | 1,900 | 504,698 | |||||||
1,277,498 | ||||||||||
Russia | 4.0% | ||||||||||
Russia Foreign Bonds: | ||||||||||
5.250%, 06/23/47 | USD | 1,800 | 1,676,250 | |||||||
5.250%, 06/23/47 (#) | USD | 200 | 186,250 | |||||||
Russia Government Bonds - OFZ: | ||||||||||
7.600%, 04/14/21 | RUB | 34,390 | 490,764 | |||||||
7.500%, 08/18/21 | RUB | 34,520 | 490,043 | |||||||
7.000%, 12/15/21 | RUB | 80,950 | 1,130,024 | |||||||
7.000%, 08/16/23 | RUB | 69,790 | 954,042 | |||||||
7.750%, 09/16/26 | RUB | 130,510 | 1,794,154 | |||||||
7.050%, 01/19/28 | RUB | 193,170 | 2,517,101 | |||||||
8.500%, 09/17/31 | RUB | 41,860 | 596,932 | |||||||
9,835,560 | ||||||||||
Senegal | 0.6% | ||||||||||
Republic of Senegal, 6.250%, 05/23/33 | USD | 1,645 | 1,414,700 | |||||||
South Africa | 6.4% | ||||||||||
Republic of South Africa: | ||||||||||
7.750%, 02/28/23 | ZAR | 65,830 | 4,515,834 | |||||||
10.500%, 12/21/26 | ZAR | 28,590 | 2,166,825 | |||||||
8.250%, 03/31/32 | ZAR | 62,700 | 3,914,879 |
The accompanying notes are an integral part of these financial statements.
Annual Report 35
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
8.500%, 01/31/37 | ZAR | 32,280 | $ | 1,989,763 | ||||||
6.250%, 03/08/41 | USD | 220 | 213,125 | |||||||
5.375%, 07/24/44 | USD | 200 | 175,000 | |||||||
5.650%, 09/27/47 | USD | 850 | 755,438 | |||||||
8.750%, 02/28/48 | ZAR | 19,000 | 1,174,470 | |||||||
6.300%, 06/22/48 | USD | 730 | 691,675 | |||||||
15,597,009 | ||||||||||
Sri Lanka | 1.5% | ||||||||||
Republic of Sri Lanka: | ||||||||||
5.750%, 01/18/22 | USD | 200 | 188,029 | |||||||
5.875%, 07/25/22 | USD | 200 | 186,415 | |||||||
6.125%, 06/03/25 | USD | 660 | 591,525 | |||||||
6.850%, 11/03/25 | USD | 150 | 139,312 | |||||||
6.850%, 11/03/25 (#) | USD | 1,040 | 965,900 | |||||||
6.825%, 07/18/26 | USD | 130 | 119,925 | |||||||
6.750%, 04/18/28 (#) | USD | 1,595 | 1,441,481 | |||||||
3,632,587 | ||||||||||
Suriname | 0.1% | ||||||||||
Republic of Suriname, 9.250%, 10/26/26 | USD | 150 | 143,625 | |||||||
Tajikistan | 0.1% | ||||||||||
Tajikistan International Bonds, 7.125%, 09/14/27 (#) | USD | 190 | 165,775 | |||||||
Thailand | 2.3% | ||||||||||
Thailand Government Bonds: | ||||||||||
3.625%, 06/16/23 | THB | 4,210 | 137,374 | |||||||
3.850%, 12/12/25 | THB | 51,543 | 1,730,472 | |||||||
3.650%, 06/20/31 | THB | 36,620 | 1,225,493 | |||||||
3.775%, 06/25/32 | THB | 29,470 | 993,750 | |||||||
3.400%, 06/17/36 | THB | 34,930 | 1,129,296 | |||||||
3.300%, 06/17/38 | THB | 13,820 | 434,805 | |||||||
5,651,190 |
The accompanying notes are an integral part of these financial statements.
36 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Turkey | 7.3% | ||||||||||
Republic of Turkey: | ||||||||||
5.625%, 03/30/21 | USD | 450 | $ | 450,000 | ||||||
6.250%, 09/26/22 | USD | 1,180 | 1,187,375 | |||||||
7.250%, 12/23/23 | USD | 600 | 615,000 | |||||||
4.250%, 04/14/26 | USD | 650 | 558,188 | |||||||
4.875%, 10/09/26 | USD | 1,155 | 1,022,175 | |||||||
6.000%, 03/25/27 | USD | 3,250 | 3,050,937 | |||||||
6.125%, 10/24/28 | USD | 3,552 | 3,307,800 | |||||||
6.000%, 01/14/41 | USD | 360 | 304,200 | |||||||
4.875%, 04/16/43 | USD | 255 | 188,381 | |||||||
6.625%, 02/17/45 | USD | 1,028 | 931,625 | |||||||
5.750%, 05/11/47 | USD | 805 | 653,056 | |||||||
Turkey Government Bonds: | ||||||||||
10.700%, 02/17/21 | TRY | 14,565 | 2,366,727 | |||||||
9.500%, 01/12/22 | TRY | 860 | 130,808 | |||||||
10.400%, 03/20/24 | TRY | 4,260 | 629,844 | |||||||
8.000%, 03/12/25 | TRY | 9,350 | 1,210,156 | |||||||
10.600%, 02/11/26 | TRY | 4,260 | 623,807 | |||||||
11.000%, 02/24/27 | TRY | 3,630 | 528,811 | |||||||
17,758,890 | ||||||||||
Ukraine | 1.0% | ||||||||||
Ukraine Government Bonds: | ||||||||||
7.750%, 09/01/20 | USD | 585 | 565,256 | |||||||
7.750%, 09/01/21 | USD | 200 | 188,000 | |||||||
7.750%, 09/01/22 | USD | 510 | 468,563 | |||||||
7.750%, 09/01/26 | USD | 200 | 170,500 | |||||||
7.750%, 09/01/27 | USD | 825 | 698,156 | |||||||
7.375%, 09/25/32 (#) | USD | 430 | 341,850 | |||||||
2,432,325 | ||||||||||
Uruguay | 0.2% | ||||||||||
Republica Orient Uruguay: | ||||||||||
5.100%, 06/18/50 | USD | 175 | 172,331 | |||||||
4.975%, 04/20/55 | USD | 435 | 415,317 | |||||||
587,648 |
The accompanying notes are an integral part of these financial statements.
Annual Report 37
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Venezuela | 1.3% | ||||||||||
Republic of Venezuela: | ||||||||||
7.750%, 10/13/19 («) | USD | 245 | $ | 56,820 | ||||||
6.000%, 12/09/20 («) | USD | 121 | 27,157 | |||||||
12.750%, 08/23/22 («) | USD | 1,189 | 281,682 | |||||||
9.000%, 05/07/23 («) | USD | 1,412 | 316,906 | |||||||
8.250%, 10/13/24 («) | USD | 2,618 | 600,635 | |||||||
7.650%, 04/21/25 («) | USD | 2,000 | 450,000 | |||||||
11.750%, 10/21/26 («) | USD | 820 | 198,353 | |||||||
9.250%, 09/15/27 («) | USD | 1,239 | 284,257 | |||||||
9.250%, 05/07/28 («) | USD | 1,021 | 231,001 | |||||||
11.950%, 08/05/31 («) | USD | 930 | 213,365 | |||||||
9.375%, 01/13/34 («) | USD | 715 | 200,200 | |||||||
7.000%, 03/31/38 («) | USD | 1,114 | 250,023 | |||||||
3,110,399 | ||||||||||
Zambia | 0.2% | ||||||||||
Republic of Zambia, 8.500%, 04/14/24 | USD | 705 | 524,344 | |||||||
Total Foreign Government Obligations (Cost $233,228,965) | 216,544,499 | |||||||||
Quasi Government Bonds | 2.1% | ||||||||||
Ecuador | 0.0% | ||||||||||
EP Petroecuador, 8.443% (USD LIBOR 3 Month + 5.630%), 09/24/19 (§) | USD | 91 | 90,681 | |||||||
Mexico | 0.2% | ||||||||||
Petroleos Mexicanos, 6.500%, 03/13/27 | USD | 560 | 526,400 |
The accompanying notes are an integral part of these financial statements.
38 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
South Africa | 1.0% | ||||||||||
Eskom Holdings SOC, Ltd.: | ||||||||||
5.750%, 01/26/21 | USD | 1,265 | $ | 1,191,630 | ||||||
6.750%, 08/06/23 | USD | 685 | 623,350 | |||||||
7.850%, 04/02/26 | ZAR | 9,000 | 556,350 | |||||||
2,371,330 | ||||||||||
Tunisia | 0.1% | ||||||||||
Banque Centrale de Tunisie SA, 5.750%, 01/30/25 | USD | 360 | 302,400 | |||||||
Turkey | 0.1% | ||||||||||
Export Credit Bank of Turkey, 5.375%, 02/08/21 | USD | 305 | 294,706 | |||||||
Ukraine | 0.5% | ||||||||||
Ukreximbank Via Biz Finance PLC: | ||||||||||
9.625%, 04/27/22 | USD | 265 | 259,223 | |||||||
9.750%, 01/22/25 | USD | 925 | 867,188 | |||||||
1,126,411 | ||||||||||
Venezuela | 0.2% | ||||||||||
Petroleos de Venezuela SA: | ||||||||||
8.500%, 10/27/20 («) | USD | 135 | 125,253 | |||||||
9.000%, 11/17/21 («) | USD | 251 | 46,121 | |||||||
12.750%, 02/17/22 («) | USD | 273 | 51,870 | |||||||
6.000%, 05/16/24 («) | USD | 346 | 51,035 | |||||||
6.000%, 11/15/26 («) | USD | 414 | 60,913 | |||||||
5.375%, 04/12/27 («) | USD | 292 | 43,070 | |||||||
9.750%, 05/17/35 («) | USD | 295 | 55,910 | |||||||
5.500%, 04/12/37 («) | USD | 100 | 14,713 | |||||||
448,885 | ||||||||||
Total Quasi Government Bonds (Cost $6,521,507) | 5,160,813 |
The accompanying notes are an integral part of these financial statements.
Annual Report 39
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Emerging Markets Debt Portfolio (continued) | ||||||||||
Supranational Bonds | 1.0% | ||||||||||
European Bank for Reconstruction & Development, 27.500%, 10/02/19 | TRY | 7,980 | $ | 1,546,152 | ||||||
International Bank for Reconstruction & Development, 7.450%, 08/20/21 | IDR | 11,610,000 | 794,134 | |||||||
Total Supranational Bonds (Cost $2,084,177) | 2,340,286 | |||||||||
Description | Shares | Fair Value | ||||||||
Short-Term Investments | 2.4% | ||||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $5,952,735) | 5,952,735 | $ | 5,952,735 | |||||||
Total Investments | 99.3% (Cost $260,258,692) (») | $ | 241,965,189 | ||||||||
Cash and Other Assets in Excess of Liabilities | 0.7% | 1,671,653 | |||||||||
Net Assets | 100.0% | $ | 243,636,842 |
The accompanying notes are an integral part of these financial statements.
40 Annual Report
Lazard Emerging Markets Debt Portfolio (continued)
Forward Currency Contracts open at December 31, 2018:
Currency | Currency | Settlement | Unrealized | Unrealized | ||||||||||||||||
Purchased | Quantity | Sold | Quantity | Counterparty | Date | Appreciation | Depreciation | |||||||||||||
ARS | 31,388,000 | USD | 760,000 | CIT | 02/26/19 | $ | 16,080 | $ | — | |||||||||||
ARS | 20,712,650 | USD | 491,987 | HSB | 02/04/19 | 34,249 | — | |||||||||||||
BRL | 170,033 | USD | 44,156 | BRC | 01/16/19 | — | 326 | |||||||||||||
BRL | 225,884 | USD | 57,396 | BRC | 01/16/19 | 831 | — | |||||||||||||
BRL | 1,203,110 | USD | 310,000 | BRC | 01/16/19 | 130 | — | |||||||||||||
BRL | 1,877,508 | USD | 494,471 | BRC | 01/16/19 | — | 10,499 | |||||||||||||
BRL | 189,303 | USD | 48,079 | CIT | 01/16/19 | 718 | — | |||||||||||||
BRL | 258,227 | USD | 65,641 | GSC | 01/16/19 | 923 | — | |||||||||||||
BRL | 238,663 | USD | 60,536 | HSB | 01/16/19 | 985 | — | |||||||||||||
BRL | 946,744 | USD | 245,844 | JPM | 01/16/19 | — | 1,798 | |||||||||||||
BRL | 1,518,720 | USD | 400,000 | SCB | 01/16/19 | — | 8,513 | |||||||||||||
BRL | 222,722 | USD | 56,554 | UBS | 01/16/19 | 858 | — | |||||||||||||
CLP | 114,325,000 | USD | 170,000 | BRC | 01/18/19 | — | 5,214 | |||||||||||||
CLP | 318,987,000 | USD | 460,000 | BRC | 03/04/19 | 33 | — | |||||||||||||
CLP | 519,697,500 | USD | 750,000 | BRC | 03/04/19 | — | 508 | |||||||||||||
COP | 54,944,584 | USD | 17,216 | BRC | 01/25/19 | — | 316 | |||||||||||||
COP | 837,621,625 | USD | 261,528 | BRC | 01/25/19 | — | 3,888 | |||||||||||||
COP | 983,700,000 | USD | 300,000 | BRC | 01/25/19 | 2,571 | — | |||||||||||||
COP | 3,436,662,298 | USD | 1,073,923 | BRC | 01/25/19 | — | 16,860 | |||||||||||||
COP | 837,621,626 | USD | 261,593 | CIT | 01/25/19 | — | 3,954 | |||||||||||||
COP | 54,944,584 | USD | 17,226 | SCB | 01/25/19 | — | 326 | |||||||||||||
COP | 54,944,584 | USD | 17,216 | UBS | 01/25/19 | — | 316 | |||||||||||||
COP | 837,621,625 | USD | 261,361 | UBS | 01/25/19 | — | 3,721 | |||||||||||||
CZK | 13,248,092 | USD | 584,131 | BOA | 02/20/19 | 6,522 | — | |||||||||||||
CZK | 8,432,489 | USD | 371,606 | BRC | 02/04/19 | 4,172 | — | |||||||||||||
CZK | 13,248,094 | USD | 584,015 | BRC | 02/20/19 | 6,637 | — | |||||||||||||
CZK | 4,736,659 | USD | 210,000 | HSB | 02/20/19 | 1,179 | — | |||||||||||||
CZK | 13,248,094 | USD | 584,492 | SCB | 02/20/19 | 6,161 | — | |||||||||||||
CZK | 13,248,094 | USD | 584,279 | UBS | 02/20/19 | 6,373 | — | |||||||||||||
HUF | 273,040,235 | USD | 962,053 | BOA | 02/20/19 | 15,592 | — | |||||||||||||
HUF | 156,145,934 | USD | 550,517 | BRC | 02/20/19 | 8,577 | — | |||||||||||||
HUF | 244,723,609 | USD | 862,189 | CIT | 02/20/19 | 14,066 | — | |||||||||||||
HUF | 56,005,080 | USD | 200,000 | HSB | 02/20/19 | 531 | — | |||||||||||||
HUF | 292,842,466 | USD | 1,031,971 | HSB | 02/20/19 | 16,577 | — | |||||||||||||
HUF | 256,865,800 | USD | 905,765 | SCB | 02/20/19 | 13,966 | — |
The accompanying notes are an integral part of these financial statements.
Annual Report 41
Lazard Emerging Markets Debt Portfolio (continued)
Currency | Currency | Settlement | Unrealized | Unrealized | ||||||||||||||||
Purchased | Quantity | Sold | Quantity | Counterparty | Date | Appreciation | Depreciation | |||||||||||||
IDR | 6,976,293,593 | USD | 474,513 | BRC | 01/15/19 | $ | 10,049 | $ | — | |||||||||||
IDR | 5,629,411,342 | USD | 363,493 | BRC | 01/29/19 | 26,940 | — | |||||||||||||
IDR | 6,312,400,000 | USD | 430,000 | BRC | 01/29/19 | 7,802 | — | |||||||||||||
IDR | 1,753,800,000 | USD | 120,000 | BRC | 04/04/19 | 709 | — | |||||||||||||
IDR | 6,976,293,592 | USD | 474,255 | JPM | 01/15/19 | 10,307 | — | |||||||||||||
IDR | 11,234,307,053 | USD | 725,684 | JPM | 01/29/19 | 53,482 | — | |||||||||||||
IDR | 6,976,293,593 | USD | 474,255 | SCB | 01/15/19 | 10,307 | — | |||||||||||||
IDR | 8,173,452,590 | USD | 527,660 | SCB | 01/29/19 | 39,217 | — | |||||||||||||
IDR | 6,976,293,593 | USD | 473,830 | UBS | 01/15/19 | 10,733 | — | |||||||||||||
IDR | 15,043,562,307 | USD | 974,653 | UBS | 01/29/19 | 68,707 | — | |||||||||||||
MXN | 29,822,822 | USD | 1,445,759 | BRC | 01/25/19 | 66,841 | — | |||||||||||||
MXN | 4,306,103 | USD | 210,000 | SCB | 01/25/19 | 8,404 | — | |||||||||||||
MYR | 4,887,441 | USD | 1,170,000 | SCB | 01/28/19 | 12,240 | — | |||||||||||||
PHP | 58,998,150 | USD | 1,107,011 | BRC | 01/15/19 | 13,626 | — | |||||||||||||
PHP | 30,000,057 | USD | 567,431 | BRC | 02/11/19 | 1,062 | — | |||||||||||||
PHP | 24,420,963 | USD | 455,700 | BRC | 02/13/19 | 6,979 | — | |||||||||||||
PHP | 24,379,950 | USD | 455,700 | BRC | 02/15/19 | 6,112 | — | |||||||||||||
PHP | 9,415,561 | USD | 177,921 | BRC | 02/20/19 | 344 | — | |||||||||||||
PHP | 11,146,800 | USD | 210,000 | BRC | 03/11/19 | 734 | — | |||||||||||||
PHP | 79,592,505 | USD | 1,496,944 | CIT | 01/15/19 | 14,871 | — | |||||||||||||
PHP | 63,931,972 | USD | 1,202,429 | SCB | 01/15/19 | 11,922 | — | |||||||||||||
PHP | 32,762,925 | USD | 617,469 | SCB | 02/11/19 | 3,379 | — | |||||||||||||
PHP | 10,635,887 | USD | 201,300 | SCB | 02/20/19 | 69 | — | |||||||||||||
PHP | 10,656,995 | USD | 201,379 | SCB | 02/20/19 | 389 | — | |||||||||||||
PHP | 21,279,924 | USD | 402,800 | SCB | 02/20/19 | 93 | — | |||||||||||||
PHP | 14,792,400 | USD | 280,000 | SCB | 03/11/19 | — | 345 | |||||||||||||
PHP | 62,486,296 | USD | 1,175,197 | UBS | 01/15/19 | 11,695 | — | |||||||||||||
PLN | 3,010,687 | USD | 808,216 | BOA | 02/14/19 | — | 3,045 | |||||||||||||
PLN | 1,165,507 | USD | 310,000 | BRC | 02/14/19 | 1,701 | — | |||||||||||||
PLN | 1,996,194 | USD | 535,848 | BRC | 02/14/19 | — | 1,990 | |||||||||||||
PLN | 2,101,701 | USD | 555,196 | BRC | 02/19/19 | 6,951 | — | |||||||||||||
PLN | 5,847,904 | USD | 1,570,050 | CIT | 02/14/19 | — | 6,099 | |||||||||||||
PLN | 2,101,701 | USD | 555,491 | BOA | 02/19/19 | 6,656 | — | |||||||||||||
PLN | 2,101,703 | USD | 555,394 | CIT | 02/19/19 | 6,753 | — | |||||||||||||
PLN | 3,870,803 | USD | 1,039,170 | HSB | 02/14/19 | — | 3,970 |
The accompanying notes are an integral part of these financial statements.
42 Annual Report
Lazard Emerging Markets Debt Portfolio (continued)
Currency | Currency | Settlement | Unrealized | Unrealized | ||||||||||||||||
Purchased | Quantity | Sold | Quantity | Counterparty | Date | Appreciation | Depreciation | |||||||||||||
PLN | 2,101,701 | USD | 555,264 | JPM | 02/19/19 | $ | 6,883 | $ | — | |||||||||||
PLN | 3,353,011 | USD | 900,137 | SCB | 02/14/19 | — | 3,415 | |||||||||||||
PLN | 2,101,701 | USD | 555,278 | SCB | 02/19/19 | 6,869 | — | |||||||||||||
RON | 1,909,272 | USD | 466,267 | BRC | 01/22/19 | 3,544 | — | |||||||||||||
RON | 1,909,272 | USD | 467,180 | BOA | 01/22/19 | 2,631 | — | |||||||||||||
RON | 1,909,272 | USD | 466,575 | CIT | 01/22/19 | 3,236 | — | |||||||||||||
RON | 938,134 | USD | 230,000 | HSB | 01/22/19 | 845 | — | |||||||||||||
RON | 1,909,272 | USD | 466,723 | SCB | 01/22/19 | 3,088 | — | |||||||||||||
RON | 1,909,272 | USD | 466,543 | UBS | 01/22/19 | 3,269 | — | |||||||||||||
RUB | 22,551,886 | USD | 339,300 | SCB | 01/22/19 | — | 16,207 | |||||||||||||
THB | 11,709,000 | USD | 360,000 | BRC | 01/22/19 | — | 321 | |||||||||||||
THB | 27,238,410 | USD | 833,234 | BOA | 01/22/19 | 3,480 | — | |||||||||||||
THB | 27,238,410 | USD | 833,833 | CIT | 01/22/19 | 2,881 | — | |||||||||||||
THB | 27,238,410 | USD | 833,616 | JPM | 01/22/19 | 3,097 | — | |||||||||||||
THB | 27,238,410 | USD | 833,616 | JPM | 01/22/19 | 3,097 | — | |||||||||||||
THB | 27,238,409 | USD | 834,152 | SCB | 01/22/19 | 2,561 | — | |||||||||||||
TRY | 2,774,650 | USD | 500,000 | BRC | 01/22/19 | 18,512 | — | |||||||||||||
TRY | 3,915,863 | USD | 710,000 | BRC | 01/22/19 | 21,776 | — | |||||||||||||
TWD | 27,444,323 | USD | 897,049 | BRC | 01/14/19 | — | 3,330 | |||||||||||||
TWD | 19,056,689 | USD | 622,951 | JPM | 01/14/19 | — | 2,373 | |||||||||||||
USD | 140,301 | ARS | 5,934,721 | HSB | 02/04/19 | — | 10,480 | |||||||||||||
USD | 493,069 | BRL | 1,877,508 | SCB | 01/16/19 | 9,096 | — | |||||||||||||
USD | 493,172 | BRL | 1,877,508 | SCB | 01/16/19 | 9,200 | — | |||||||||||||
USD | 689,786 | BRL | 2,625,118 | SCB | 01/16/19 | 13,099 | — | |||||||||||||
USD | 879,094 | BRL | 3,348,643 | SCB | 01/16/19 | 15,901 | — | |||||||||||||
USD | 902,857 | BRL | 3,419,752 | SCB | 01/16/19 | 21,334 | — | |||||||||||||
USD | 1,503,318 | BRL | 5,709,303 | SCB | 01/16/19 | 31,609 | — | |||||||||||||
USD | 1,938,867 | BRL | 7,339,968 | SCB | 01/16/19 | 46,814 | — | |||||||||||||
USD | 248,856 | CLP | 167,815,765 | BRC | 01/18/19 | 6,969 | — | |||||||||||||
USD | 514,577 | CLP | 355,547,033 | BRC | 01/18/19 | 2,098 | — | |||||||||||||
USD | 146,267 | HUF | 41,507,665 | BOA | 02/20/19 | — | 2,355 | |||||||||||||
USD | 454,657 | HUF | 128,299,562 | BRC | 02/20/19 | — | 4,731 | |||||||||||||
USD | 154,948 | HUF | 44,012,438 | UBS | 02/20/19 | — | 2,643 | |||||||||||||
USD | 530,000 | IDR | 7,682,350,000 | BRC | 01/15/19 | — | 3,604 | |||||||||||||
USD | 320,000 | IDR | 4,603,200,000 | BRC | 01/29/19 | 741 | — |
The accompanying notes are an integral part of these financial statements.
Annual Report 43
Lazard Emerging Markets Debt Portfolio (concluded)
Currency | Currency | Settlement | Unrealized | Unrealized | ||||||||||||||||
Purchased | Quantity | Sold | Quantity | Counterparty | Date | Appreciation | Depreciation | |||||||||||||
USD | 620,000 | IDR | 8,975,492,000 | SCB | 01/15/19 | $ | — | $ | 3,424 | |||||||||||
USD | 695,792 | MXN | 14,202,165 | BRC | 01/25/19 | — | 24,535 | |||||||||||||
USD | 660,000 | MXN | 13,042,029 | SCB | 01/25/19 | — | 1,486 | |||||||||||||
USD | 1,132,377 | MYR | 4,757,907 | SCB | 01/28/19 | — | 18,529 | |||||||||||||
USD | 530,321 | PEN | 1,794,608 | BRC | 01/10/19 | — | 2,282 | |||||||||||||
USD | 250,556 | PEN | 840,113 | BRC | 02/26/19 | 1,666 | — | |||||||||||||
USD | 350,000 | PEN | 1,181,705 | BRC | 03/04/19 | — | 5 | |||||||||||||
USD | 560,000 | PEN | 1,890,035 | BRC | 03/04/19 | 197 | — | |||||||||||||
USD | 569,444 | PEN | 1,909,632 | SCB | 02/26/19 | 3,702 | — | |||||||||||||
USD | 121,011 | PEN | 409,803 | UBS | 03/04/19 | — | 367 | |||||||||||||
USD | 6,890 | RON | 28,333 | JPM | 01/22/19 | — | 82 | |||||||||||||
USD | 612,565 | TRY | 3,310,299 | BRC | 01/22/19 | — | 6,046 | |||||||||||||
USD | 260,000 | TRY | 1,398,722 | SCB | 01/22/19 | — | 1,386 | |||||||||||||
USD | 320,000 | TRY | 1,727,888 | SCB | 01/22/19 | — | 2,898 | |||||||||||||
USD | 567,431 | TWD | 17,252,728 | BRC | 02/13/19 | 4,164 | — | |||||||||||||
USD | 455,700 | TWD | 13,953,534 | BRC | 02/14/19 | 112 | — | |||||||||||||
USD | 455,700 | TWD | 13,948,977 | BRC | 02/19/19 | 93 | — | |||||||||||||
USD | 177,921 | TWD | 5,445,262 | BRC | 02/21/19 | 39 | — | |||||||||||||
USD | 1,393,056 | TWD | 42,488,223 | JPM | 01/14/19 | 9,435 | — | |||||||||||||
USD | 617,469 | TWD | 18,777,244 | SCB | 02/13/19 | 4,430 | — | |||||||||||||
USD | 201,300 | TWD | 6,173,871 | SCB | 02/21/19 | — | 383 | |||||||||||||
USD | 201,379 | TWD | 6,164,222 | SCB | 02/21/19 | 12 | — | |||||||||||||
USD | 402,800 | TWD | 12,341,792 | SCB | 02/21/19 | — | 372 | |||||||||||||
USD | 1,160,642 | TWD | 35,415,795 | UBS | 01/14/19 | 7,332 | — | |||||||||||||
USD | 1,160,793 | TWD | 35,415,794 | BOA | 01/14/19 | 7,484 | — | |||||||||||||
USD | 1,161,326 | TWD | 35,415,795 | UBS | 01/14/19 | 8,017 | — | |||||||||||||
USD | 1,225,966 | ZAR | 17,665,186 | BRC | 02/19/19 | 5,077 | — | |||||||||||||
USD | 1,226,425 | ZAR | 17,665,184 | BOA | 02/19/19 | 5,537 | — | |||||||||||||
USD | 462,174 | ZAR | 6,686,683 | SCB | 02/19/19 | 39 | — | |||||||||||||
USD | 1,225,966 | ZAR | 17,665,186 | SCB | 02/19/19 | 5,077 | — | |||||||||||||
USD | 1,225,947 | ZAR | 17,665,186 | UBS | 02/19/19 | 5,058 | — | |||||||||||||
UYU | 12,260,000 | USD | 376,374 | HSB | 03/13/19 | — | 3,071 | |||||||||||||
ZAR | 11,234,158 | USD | 770,000 | HSB | 02/19/19 | 6,423 | — | |||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 893,329 | $ | 186,013 |
The accompanying notes are an integral part of these financial statements.
44 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 45
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
United Kingdom | 1.8% | ||||||||||
Unilever Capital Corp., 3.250%, 03/07/24 | USD | 100 | $ | 99,358 | ||||||
United States | 21.2% | ||||||||||
Amazon.com, Inc., 3.800%, 12/05/24 | USD | 60 | 61,405 | |||||||
Apple, Inc., 3.850%, 05/04/43 | USD | 102 | 97,089 | |||||||
Ball Corp., 4.000%, 11/15/23 | USD | 30 | 29,175 | |||||||
Bank of America Corp., 3.499%, 05/17/22 (§) | USD | 60 | 60,007 | |||||||
Caterpillar Financial Services Corp., 2.550%, 11/29/22 | USD | 40 | 38,851 | |||||||
Citigroup, Inc., 3.480% (BBSW 3 Month + 1.550%), 05/04/21 (§) | AUD | 90 | 64,096 | |||||||
Constellation Brands, Inc., 4.250%, 05/01/23 | USD | 55 | 55,452 | |||||||
HCA, Inc.: | ||||||||||
6.500%, 02/15/20 | USD | 15 | 15,375 | |||||||
5.000%, 03/15/24 | USD | 30 | 29,700 | |||||||
John Deere Canada Funding, Inc., 2.050%, 09/17/20 | CAD | 70 | 50,719 | |||||||
Johnson & Johnson, 3.625%, 03/03/37 | USD | 70 | 67,409 | |||||||
JPMorgan Chase & Co., 4.500%, 01/24/22 | USD | 80 | 82,427 | |||||||
Microsoft Corp., 4.450%, 11/03/45 | USD | 92 | 97,715 | |||||||
Morgan Stanley, 3.625%, 01/20/27 | USD | 75 | 71,318 | |||||||
Nestle Holdings, Inc., 2.750%, 04/15/20 | NOK | 340 | 39,983 | |||||||
NIKE, Inc., 2.375%, 11/01/26 | USD | 75 | 68,739 |
The accompanying notes are an integral part of these financial statements.
46 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
Sealed Air Corp., 4.875%, 12/01/22 | USD | 30 | $ | 29,700 | ||||||
Starbucks Corp., 3.100%, 03/01/23 | USD | 37 | 36,441 | |||||||
The Goldman Sachs Group, Inc., 3.625%, 01/22/23 | USD | 55 | 54,132 | |||||||
The Home Depot, Inc., 3.750%, 02/15/24 | USD | 55 | 56,233 | |||||||
United Parcel Service, Inc., 2.350%, 05/16/22 | USD | 37 | 36,098 | |||||||
United Rentals North America, Inc., 4.625%, 07/15/23 | USD | 30 | 29,437 | |||||||
1,171,501 | ||||||||||
Total Corporate Bonds (Cost $1,859,178) | 1,792,106 | |||||||||
Foreign Government Obligations | 41.5% | ||||||||||
Australia | 3.1% | ||||||||||
Queensland Treasury Corp.: | ||||||||||
3.000%, 03/22/24 | AUD | 79 | 57,293 | |||||||
2.750%, 08/20/27 | AUD | 80 | 56,156 | |||||||
Western Australian Treasury Corp., 6.000%, 10/16/23 | AUD | 72 | 59,097 | |||||||
172,546 | ||||||||||
Bahamas | 2.3% | ||||||||||
Commonwealth of Bahamas, 6.950%, 11/20/29 | USD | 118 | 126,260 | |||||||
Canada | 2.6% | ||||||||||
City of Vancouver, 2.900%, 11/20/25 | CAD | 50 | 36,845 | |||||||
Province of British Columbia, 4.700%, 06/18/37 | CAD | 70 | 63,038 | |||||||
Province of Quebec, 1.650%, 03/03/22 | CAD | 60 | 43,224 | |||||||
143,107 |
The accompanying notes are an integral part of these financial statements.
Annual Report 47
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
Cayman Islands | 1.8% | ||||||||||
Cayman Islands Government Bonds, 5.950%, 11/24/19 | USD | 100 | $ | 102,550 | ||||||
Chile | 2.9% | ||||||||||
Bonos de la Tesoreria de la Republica en pesos: | ||||||||||
4.500%, 03/01/26 | CLP | 75,000 | 110,004 | |||||||
5.000%, 03/01/35 | CLP | 35,000 | 52,602 | |||||||
162,606 | ||||||||||
Croatia | 1.9% | ||||||||||
Croatia Government International Bonds, 6.625%, 07/14/20 | USD | 100 | 104,000 | |||||||
Czech Republic | 2.1% | ||||||||||
Czech Republic, 2.500%, 08/25/28 | CZK | 2,470 | 115,783 | |||||||
France | 1.0% | ||||||||||
Government of France, 1.750%, 06/25/39 | EUR | 46 | 56,480 | |||||||
Hungary | 2.1% | ||||||||||
Hungary Government Bonds: | ||||||||||
3.000%, 06/26/24 | HUF | 15,600 | 57,773 | |||||||
3.000%, 10/27/27 | HUF | 16,590 | 59,068 | |||||||
116,841 | ||||||||||
Ireland | 1.0% | ||||||||||
Ireland Government Bonds, 1.700%, 05/15/37 | EUR | 48 | 56,026 | |||||||
Mexico | 2.6% | ||||||||||
Mexican Bonos, 6.500%, 06/09/22 | MXN | 1,170 | 55,983 | |||||||
United Mexican States, 6.750%, 02/06/24 | GBP | 58 | 87,234 | |||||||
143,217 |
The accompanying notes are an integral part of these financial statements.
48 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
New Zealand | 2.3% | ||||||||||
New Zealand Government Bonds: | ||||||||||
6.000%, 05/15/21 | NZD | 75 | $ | 54,709 | ||||||
4.500%, 04/15/27 | NZD | 95 | 69,966 | |||||||
124,675 | ||||||||||
Norway | 2.2% | ||||||||||
Oslo Kommune, 3.550%, 02/12/21 | NOK | 1,000 | 120,040 | |||||||
Philippines | 1.8% | ||||||||||
Philippine Government Bonds, 4.250%, 04/11/20 | PHP | 5,460 | 100,440 | |||||||
Poland | 2.4% | ||||||||||
Poland Government Bonds, 2.500%, 07/25/26 | PLN | 495 | 131,101 | |||||||
Romania | 3.3% | ||||||||||
Romanian Government Bonds: | ||||||||||
4.750%, 02/24/25 | RON | 505 | 126,306 | |||||||
2.375%, 04/19/27 | EUR | 50 | 57,001 | |||||||
183,307 | ||||||||||
Singapore | 2.8% | ||||||||||
Singapore Government Bonds, 3.000%, 09/01/24 | SGD | 200 | 155,281 | |||||||
Spain | 1.2% | ||||||||||
Spain Government Bonds, 1.600%, 04/30/25 | EUR | 55 | 66,359 | |||||||
United Kingdom | 2.1% | ||||||||||
United Kingdom Gilt: | ||||||||||
1.750%, 09/07/37 | GBP | 47 | 59,788 | |||||||
1.500%, 07/22/47 | GBP | 46 | 54,237 | |||||||
114,025 | ||||||||||
Total Foreign Government Obligations (Cost $2,426,724) | 2,294,644 |
The accompanying notes are an integral part of these financial statements.
Annual Report 49
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
Quasi Government Bonds | 1.0% | ||||||||||
Canada | 1.0% | ||||||||||
Export Development Canada, 1.800%, 09/01/22 (Cost $56,535) | CAD | 75 | $ | 54,271 | ||||||
Supranational Bonds | 11.1% | ||||||||||
African Development Bank, 2.375%, 09/23/21 | USD | 75 | 74,509 | |||||||
Asian Development Bank: | ||||||||||
1.000%, 12/15/22 | GBP | 45 | 56,868 | |||||||
2.125%, 03/19/25 | USD | 67 | 64,578 | |||||||
European Bank for Reconstruction & Development, 7.375%, 04/15/19 | IDR | 310,000 | 21,471 | |||||||
European Investment Bank: | ||||||||||
7.200%, 07/09/19 | IDR | 170,000 | 11,676 | |||||||
1.125%, 09/16/21 (#) | CAD | 75 | 53,402 | |||||||
International Bank for Reconstruction & Development: | ||||||||||
5.750%, 10/28/19 | INR | 1,500 | 21,043 | |||||||
3.500%, 01/22/21 | NZD | 40 | 27,518 | |||||||
2.500%, 08/03/23 | CAD | 115 | 85,071 | |||||||
2.900%, 11/26/25 | AUD | 40 | 28,528 | |||||||
International Finance Corp.: | ||||||||||
3.625%, 05/20/20 | NZD | 70 | 47,918 | |||||||
2.125%, 04/07/26 | USD | 125 | 119,916 | |||||||
Total Supranational Bonds (Cost $633,220) | 612,498 |
The accompanying notes are an integral part of these financial statements.
50 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Fixed Income Portfolio (continued) | ||||||||||
US Municipal Bonds | 1.8% | ||||||||||
California | 1.8% | ||||||||||
California State Build America Bonds, 7.500%, 04/01/34 | USD | 50 | $ | 68,137 | ||||||
State of California, 4.500%, 04/01/33 | USD | 30 | 31,405 | |||||||
Total US Municipal Bonds (Cost $104,842) | 99,542 | |||||||||
US Treasury Securities | 11.5% | ||||||||||
Treasury Inflation Protected Security, 0.125%, 04/15/20 | USD | 59 | 58,055 | |||||||
US Treasury Notes: | ||||||||||
1.750%, 10/31/20 | USD | 55 | 54,239 | |||||||
2.125%, 05/15/25 | USD | 145 | 141,138 | |||||||
2.875%, 08/15/28 | USD | 156 | 158,523 | |||||||
3.125%, 11/15/41 | USD | 218 | 223,579 | |||||||
Total US Treasury Securities (Cost $629,616) | 635,534 | |||||||||
Total Investments | 99.3% (Cost $5,710,115) (») | $ | 5,488,595 | ||||||||
Cash and Other Assets in Excess of Liabilities | 0.7% | 39,478 | |||||||||
Net Assets | 100.0% | $ | 5,528,073 |
The accompanying notes are an integral part of these financial statements.
Annual Report 51
Lazard Global Fixed Income Portfolio (concluded)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||
AUD | 30,677 | USD | 22,600 | CIT | 02/14/19 | $ | — | $ | 976 | |||||||||||
CHF | 39,121 | USD | 39,261 | HSB | 02/14/19 | 694 | — | |||||||||||||
EUR | 4,010 | USD | 4,614 | CIT | 01/10/19 | — | 17 | |||||||||||||
EUR | 11,289 | USD | 12,872 | HSB | 01/10/19 | 70 | — | |||||||||||||
EUR | 46,366 | USD | 53,000 | HSB | 01/10/19 | 155 | — | |||||||||||||
EUR | 57,869 | USD | 66,300 | HSB | 01/10/19 | 41 | — | |||||||||||||
EUR | 841,683 | USD | 968,516 | HSB | 01/10/19 | — | 3,603 | |||||||||||||
JPY | 46,571,444 | USD | 416,147 | CIT | 02/14/19 | 10,036 | — | |||||||||||||
JPY | 77,156,708 | USD | 689,481 | HSB | 02/14/19 | 16,593 | — | |||||||||||||
MXN | 1,550,549 | USD | 75,783 | CIT | 02/14/19 | 2,611 | — | |||||||||||||
NZD | 37,631 | USD | 25,800 | HSB | 02/14/19 | — | 523 | |||||||||||||
USD | 29,091 | AUD | 39,856 | CIT | 02/14/19 | 996 | — | |||||||||||||
USD | 125,161 | AUD | 173,278 | CIT | 02/14/19 | 3,015 | — | |||||||||||||
USD | 66,253 | AUD | 91,747 | HSB | 02/14/19 | 1,579 | — | |||||||||||||
USD | 57,422 | CAD | 75,891 | CIT | 02/14/19 | 1,773 | — | |||||||||||||
USD | 222,978 | CAD | 294,647 | HSB | 02/14/19 | 6,922 | — | |||||||||||||
USD | 20,244 | CAD | 26,746 | JPM | 02/14/19 | 631 | — | |||||||||||||
USD | 160,539 | CLP | 111,084,615 | CIT | 01/31/19 | 347 | — | |||||||||||||
USD | 45,287 | CZK | 1,030,335 | HSB | 01/29/19 | — | 619 | |||||||||||||
USD | 62,492 | CZK | 1,421,814 | JPM | 01/29/19 | — | 858 | |||||||||||||
USD | 84,400 | EUR | 74,518 | HSB | 01/10/19 | — | 1,028 | |||||||||||||
USD | 48,977 | GBP | 38,010 | HSB | 02/14/19 | 430 | — | |||||||||||||
USD | 52,404 | HUF | 14,746,967 | JPM | 05/08/19 | — | 690 | |||||||||||||
USD | 57,379 | HUF | 15,940,127 | JPM | 05/08/19 | — | 11 | |||||||||||||
USD | 16,362 | IDR | 246,333,337 | HSB | 02/15/19 | — | 692 | |||||||||||||
USD | 19,065 | INR | 1,414,348 | CIT | 01/28/19 | — | 1,137 | |||||||||||||
USD | 29,800 | JPY | 3,344,708 | CIT | 02/14/19 | — | 808 | |||||||||||||
USD | 54,100 | JPY | 6,095,507 | HSB | 02/14/19 | — | 1,681 | |||||||||||||
USD | 96,946 | MXN | 1,983,212 | HSB | 02/14/19 | — | 3,323 | |||||||||||||
USD | 19,946 | MXN | 408,092 | JPM | 02/14/19 | — | 687 | |||||||||||||
USD | 165,913 | NOK | 1,394,054 | HSB | 02/14/19 | 4,376 | — | |||||||||||||
USD | 202,604 | NZD | 298,166 | HSB | 02/14/19 | 2,325 | — | |||||||||||||
USD | 103,134 | PHP | 5,488,806 | HSB | 01/28/19 | — | 1,009 | |||||||||||||
USD | 116,235 | PLN | 438,369 | HSB | 02/14/19 | — | 1,001 | |||||||||||||
USD | 126,923 | RON | 519,907 | HSB | 01/28/19 | — | 998 | |||||||||||||
USD | 10,362 | SGD | 14,193 | HSB | 02/14/19 | — | 60 | |||||||||||||
USD | 129,841 | SGD | 177,854 | JPM | 02/14/19 | — | 770 | |||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 52,594 | $ | 20,491 |
The accompanying notes are an integral part of these financial statements.
52 Annual Report
The accompanying notes are an integral part of these financial statements.
Annual Report 53
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Chemicals | 3.5% | ||||||||
CF Industries, Inc., 3.450%, 06/01/23 | $ | 1,975 | $ | 1,836,750 | ||||
Huntsman International LLC, 4.875%, 11/15/20 | 1,600 | 1,604,000 | ||||||
Mosaic Global Holdings, Inc., 7.300%, 01/15/28 | 775 | 910,405 | ||||||
NOVA Chemicals Corp., 5.250%, 08/01/23 (#) | 1,800 | 1,701,000 | ||||||
Platform Specialty Products Corp., 6.500%, 02/01/22 (#) | 1,700 | 1,700,000 | ||||||
Valvoline, Inc., 4.375%, 08/15/25 | 1,500 | 1,380,000 | ||||||
WR Grace & Co-Conn, 5.125%, 10/01/21 (#) | 1,700 | 1,683,000 | ||||||
10,815,155 | ||||||||
Commercial Services & Supplies | 3.5% | ||||||||
ACCO Brands Corp., 5.250%, 12/15/24 (#) | 1,800 | 1,611,000 | ||||||
Aramark Services, Inc., 5.000%, 04/01/25 (#) | 2,500 | 2,443,750 | ||||||
Ashtead Capital, Inc., 4.375%, 08/15/27 (#) | 1,900 | 1,710,000 | ||||||
KAR Auction Services, Inc., 5.125%, 06/01/25 (#) | 1,800 | 1,624,500 | ||||||
Multi-Color Corp., 4.875%, 11/01/25 (#) | 2,000 | 1,710,000 | ||||||
The ADT Security Corp.: | ||||||||
6.250%, 10/15/21 | 1,400 | 1,419,250 | ||||||
4.125%, 06/15/23 | 500 | 457,500 | ||||||
10,976,000 | ||||||||
Communications Equipment | 1.0% | ||||||||
CommScope, Inc., 5.000%, 06/15/21 (#) | 1,500 | 1,485,000 | ||||||
Plantronics, Inc., 5.500%, 05/31/23 (#) | 1,750 | 1,627,500 | ||||||
3,112,500 |
The accompanying notes are an integral part of these financial statements.
54 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Construction Materials | 1.0% | ||||||||
James Hardie International Finance DAC, 5.000%, 01/15/28 (#) | $ | 1,760 | $ | 1,504,800 | ||||
Standard Industries, Inc., 5.375%, 11/15/24 (#) | 1,750 | 1,642,813 | ||||||
3,147,613 | ||||||||
Containers & Packaging | 4.0% | ||||||||
Ball Corp., 4.000%, 11/15/23 | 2,400 | 2,334,000 | ||||||
Cascades, Inc., 5.500%, 07/15/22 (#) | 1,500 | 1,462,500 | ||||||
Crown Americas LLC: | ||||||||
4.500%, 01/15/23 | 1,800 | 1,757,250 | ||||||
4.250%, 09/30/26 | 500 | 448,750 | ||||||
Owens-Brockway Glass Container, Inc., 5.000%, 01/15/22 (#) | 2,392 | 2,368,080 | ||||||
Reynolds Group Issuer, Inc., 5.750%, 10/15/20 | 1,454 | 1,450,027 | ||||||
Sealed Air Corp., 4.875%, 12/01/22 (#) | 1,700 | 1,683,000 | ||||||
Smurfit Kappa Treasury Funding DAC, 7.500%, 11/20/25 | 750 | 855,750 | ||||||
12,359,357 | ||||||||
Diversified Consumer Services | 1.1% | ||||||||
Service Corp. International, 4.625%, 12/15/27 | 2,000 | 1,880,000 | ||||||
The ServiceMaster Co. LLC, 5.125%, 11/15/24 (#) | 1,800 | 1,701,000 | ||||||
3,581,000 | ||||||||
Diversified Financial Services | 1.9% | ||||||||
Herc Rentals, Inc., 7.750%, 06/01/24 (#) | 1,189 | 1,239,533 | ||||||
INEOS Group Holdings SA, 5.625%, 08/01/24 (#) | 1,700 | 1,506,200 | ||||||
Level 3 Financing, Inc., 5.125%, 05/01/23 | 1,800 | 1,737,000 |
The accompanying notes are an integral part of these financial statements.
Annual Report 55
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Travelport Corporate Finance PLC, 6.000%, 03/15/26 (#) | $ | 1,500 | $ | 1,515,000 | ||||
5,997,733 | ||||||||
Diversified Telecommunication Services | 3.3% | ||||||||
CenturyLink, Inc., 5.625%, 04/01/20 | 1,800 | 1,791,000 | ||||||
CyrusOne LP, 5.000%, 03/15/24 | 2,300 | 2,254,000 | ||||||
Hughes Satellite Systems Corp., 5.250%, 08/01/26 | 2,391 | 2,190,754 | ||||||
SBA Communications Corp., 4.875%, 09/01/24 | 2,300 | 2,162,000 | ||||||
Zayo Group LLC, 5.750%, 01/15/27 (#) | 2,250 | 2,008,125 | ||||||
10,405,879 | ||||||||
Energy Equipment & Services | 1.2% | ||||||||
Precision Drilling Corp., 5.250%, 11/15/24 | 1,500 | 1,245,000 | ||||||
Transocean, Inc., 9.000%, 07/15/23 (#) | 1,750 | 1,741,250 | ||||||
Weatherford International, Ltd., 8.250%, 06/15/23 | 1,250 | 753,125 | ||||||
3,739,375 | ||||||||
Entertainment | 1.2% | ||||||||
Live Nation Entertainment, Inc., 4.875%, 11/01/24 (#) | 1,800 | 1,710,000 | ||||||
Netflix, Inc.: | ||||||||
5.375%, 02/01/21 | 1,550 | 1,569,375 | ||||||
4.375%, 11/15/26 | 500 | 453,750 | ||||||
3,733,125 | ||||||||
Equity Real Estate Investment Trusts (REITs) | 3.6% | ||||||||
Equinix, Inc., 5.375%, 05/15/27 | 2,700 | 2,639,250 | ||||||
ESH Hospitality, Inc., 5.250%, 05/01/25 (#) | 2,300 | 2,139,000 |
The accompanying notes are an integral part of these financial statements.
56 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Iron Mountain, Inc., 6.000%, 08/15/23 | $ | 1,700 | $ | 1,721,250 | ||||
MGM Growth Properties Operating Partnership LP, 4.500%, 09/01/26 | 1,800 | 1,629,000 | ||||||
RHP Hotel Properties LP, 5.000%, 04/15/23 | 1,775 | 1,730,625 | ||||||
Uniti Group LP, 6.000%, 04/15/23 (#) | 1,700 | 1,538,500 | ||||||
11,397,625 | ||||||||
Food & Staples Retailing | 1.6% | ||||||||
Albertsons Cos. LLC, 6.625%, 06/15/24 | 1,750 | 1,623,125 | ||||||
Ingles Markets, Inc., 5.750%, 06/15/23 | 1,750 | 1,728,125 | ||||||
Performance Food Group, Inc., 5.500%, 06/01/24 (#) | 1,805 | 1,746,338 | ||||||
5,097,588 | ||||||||
Food Products | 2.4% | ||||||||
B&G Foods, Inc., 4.625%, 06/01/21 | 1,500 | 1,462,500 | ||||||
Darling Ingredients, Inc., 5.375%, 01/15/22 | 850 | 843,625 | ||||||
Lamb Weston Holdings, Inc., 4.625%, 11/01/24 (#) | 2,300 | 2,236,750 | ||||||
Post Holdings, Inc., 5.000%, 08/15/26 (#) | 1,800 | 1,638,000 | ||||||
TreeHouse Foods, Inc., 4.875%, 03/15/22 | 1,500 | 1,473,750 | ||||||
7,654,625 | ||||||||
Gas Utilities | 1.1% | ||||||||
AmeriGas Partners LP, 5.625%, 05/20/24 | 1,800 | 1,701,000 | ||||||
Suburban Propane Partners LP, 5.500%, 06/01/24 | 1,800 | 1,674,000 | ||||||
3,375,000 |
The accompanying notes are an integral part of these financial statements.
Annual Report 57
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Health Care Equipment & Supplies | 1.2% | ||||||||
Hill-Rom Holdings, Inc., 5.750%, 09/01/23 (#) | $ | 1,800 | $ | 1,800,000 | ||||
Hologic, Inc., 4.625%, 02/01/28 (#) | 2,300 | 2,070,000 | ||||||
3,870,000 | ||||||||
Health Care Providers & Services | 3.6% | ||||||||
Centene Corp.: | ||||||||
6.125%, 02/15/24 | 1,750 | 1,791,562 | ||||||
4.750%, 01/15/25 | 500 | 477,500 | ||||||
DaVita, Inc., 5.125%, 07/15/24 | 2,300 | 2,156,250 | ||||||
Encompass Health Corp., 5.125%, 03/15/23 | 1,801 | 1,764,980 | ||||||
HCA, Inc., 6.500%, 02/15/20 | 1,600 | 1,640,000 | ||||||
Molina Healthcare, Inc., 5.375%, 11/15/22 | 1,700 | 1,640,500 | ||||||
Tenet Healthcare Corp.: | ||||||||
4.750%, 06/01/20 | 700 | 698,320 | ||||||
4.375%, 10/01/21 | 1,250 | 1,209,375 | ||||||
11,378,487 | ||||||||
Hotels, Restaurants & Leisure | 9.5% | ||||||||
1011778 BC ULC, 4.625%, 01/15/22 (#) | 1,800 | 1,741,500 | ||||||
Boyd Gaming Corp.: | ||||||||
6.875%, 05/15/23 | 1,700 | 1,717,000 | ||||||
6.375%, 04/01/26 | 750 | 725,625 | ||||||
Brinker International, Inc., 5.000%, 10/01/24 (#) | 2,000 | 1,880,000 | ||||||
Cedar Fair LP, 5.375%, 04/15/27 | 1,800 | 1,701,000 | ||||||
Cinemark USA, Inc., 4.875%, 06/01/23 | 1,800 | 1,728,000 | ||||||
Diamond Resorts International, Inc., 7.750%, 09/01/23 (#) | 1,500 | 1,440,000 |
The accompanying notes are an integral part of these financial statements.
58 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
GLP Capital LP, 4.875%, 11/01/20 | $ | 1,500 | $ | 1,512,750 | ||||
Golden Nugget, Inc., 6.750%, 10/15/24 (#) | 1,622 | 1,528,735 | ||||||
Hilton Worldwide Finance LLC, 4.625%, 04/01/25 | 2,315 | 2,193,462 | ||||||
International Game Technology PLC, 6.250%, 02/15/22 (#) | 1,450 | 1,453,625 | ||||||
KFC Holding Co., 5.250%, 06/01/26 (#) | 2,900 | 2,805,837 | ||||||
MGM Resorts International: | ||||||||
6.625%, 12/15/21 | 1,000 | 1,025,000 | ||||||
4.625%, 09/01/26 | 800 | 718,000 | ||||||
Scientific Games International, Inc., 5.000%, 10/15/25 (#) | 2,000 | 1,785,000 | ||||||
Six Flags Entertainment Corp., 4.875%, 07/31/24 (#) | 2,150 | 2,026,375 | ||||||
Station Casinos LLC, 5.000%, 10/01/25 (#) | 1,700 | 1,538,500 | ||||||
Wynn Las Vegas LLC, 5.500%, 03/01/25 (#) | 2,300 | 2,144,750 | ||||||
29,665,159 | ||||||||
Household Durables | 0.5% | ||||||||
Tempur Sealy International, Inc., 5.625%, 10/15/23 | 1,750 | 1,688,750 | ||||||
Household Products | 1.1% | ||||||||
Energizer Holdings, Inc., 5.500%, 06/15/25 (#) | 1,750 | 1,579,375 | ||||||
Spectrum Brands, Inc., 5.750%, 07/15/25 | 1,800 | 1,709,460 | ||||||
3,288,835 | ||||||||
Independent Power & Renewable Electricity Producers | 1.6% | ||||||||
AES Corp., 5.125%, 09/01/27 | 2,000 | 1,920,000 |
The accompanying notes are an integral part of these financial statements.
Annual Report 59
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Calpine Corp., 6.000%, 01/15/22 (#) | $ | 1,500 | $ | 1,488,750 | ||||
NextEra Energy Operating Partners LP, 4.500%, 09/15/27 (#) | 1,750 | 1,557,500 | ||||||
4,966,250 | ||||||||
IT Services | 1.2% | ||||||||
First Data Corp.: | ||||||||
5.375%, 08/15/23 (#) | 1,600 | 1,572,000 | ||||||
5.000%, 01/15/24 (#) | 500 | 481,250 | ||||||
VeriSign, Inc., 4.625%, 05/01/23 | 1,800 | 1,773,000 | ||||||
3,826,250 | ||||||||
Machinery | 3.4% | ||||||||
Allison Transmission, Inc., 4.750%, 10/01/27 (#) | 1,795 | 1,597,550 | ||||||
Amsted Industries, Inc., 5.000%, 03/15/22 (#) | 1,700 | 1,653,250 | ||||||
Meritor, Inc., 6.250%, 02/15/24 | 2,000 | 1,910,000 | ||||||
Mueller Water Products, Inc., 5.500%, 06/15/26 (#) | 2,050 | 1,988,500 | ||||||
SPX FLOW, Inc., 5.625%, 08/15/24 (#) | 1,750 | 1,653,750 | ||||||
Terex Corp., 5.625%, 02/01/25 (#) | 1,790 | 1,666,937 | ||||||
10,469,987 | ||||||||
Media | 13.2% | ||||||||
AMC Networks, Inc., 4.750%, 12/15/22 | 1,500 | 1,466,250 | ||||||
Cable One, Inc., 5.750%, 06/15/22 (#) | 1,750 | 1,758,750 | ||||||
CBS Radio, Inc., 7.250%, 11/01/24 (#) | 1,500 | 1,395,000 | ||||||
CCO Holdings LLC: | ||||||||
5.250%, 03/15/21 | 1,950 | 1,951,219 | ||||||
5.125%, 05/01/27 (#) | 500 | 465,700 |
The accompanying notes are an integral part of these financial statements.
60 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Clear Channel Worldwide Holdings, Inc., 6.500%, 11/15/22 | $ | 1,750 | $ | 1,750,000 | ||||
CSC Holdings LLC: | ||||||||
5.500%, 05/15/26 (#) | 1,000 | 942,500 | ||||||
7.500%, 04/01/28 (#) | 1,690 | 1,685,775 | ||||||
DISH DBS Corp., 5.125%, 05/01/20 | 1,600 | 1,580,000 | ||||||
Lamar Media Corp., 5.750%, 02/01/26 | 2,026 | 2,051,325 | ||||||
Mediacom Broadband LLC, 5.500%, 04/15/21 | 1,500 | 1,494,375 | ||||||
Meredith Corp., 6.875%, 02/01/26 (#) | 2,000 | 1,955,000 | ||||||
Nexstar Broadcasting Inc., 5.875%, 11/15/22 | 1,750 | 1,745,625 | ||||||
Outfront Media Capital LLC, 5.250%, 02/15/22 | 1,500 | 1,492,500 | ||||||
Sinclair Television Group, Inc., 5.375%, 04/01/21 | 1,900 | 1,895,250 | ||||||
Sirius XM Radio, Inc.: | ||||||||
5.375%, 04/15/25 (#) | 400 | 379,000 | ||||||
5.000%, 08/01/27 (#) | 2,000 | 1,827,500 | ||||||
TEGNA, Inc., 6.375%, 10/15/23 | 1,900 | 1,904,750 | ||||||
The EW Scripps Co., 5.125%, 05/15/25 (#) | 1,800 | 1,651,500 | ||||||
Tribune Media Co., 5.875%, 07/15/22 | 1,800 | 1,809,000 | ||||||
Unitymedia Hessen GmbH & Co. KG, 5.000%, 01/15/25 (#) | 1,700 | 1,660,900 | ||||||
Univision Communications, Inc., 5.125%, 02/15/25 (#) | 2,300 | 2,018,250 | ||||||
Videotron, Ltd.: | ||||||||
5.000%, 07/15/22 | 1,808 | 1,798,960 | ||||||
5.125%, 04/15/27 (#) | 500 | 472,500 |
The accompanying notes are an integral part of these financial statements.
Annual Report 61
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Virgin Media Secured Finance PLC, 5.250%, 01/15/26 (#) | $ | 2,400 | $ | 2,199,000 | ||||
WMG Acquisition Corp., 4.875%, 11/01/24 (#) | 1,850 | 1,752,875 | ||||||
41,103,504 | ||||||||
Metals & Mining | 3.5% | ||||||||
Alcoa Nederland Holding BV, 6.750%, 09/30/24 (#) | 2,300 | 2,334,500 | ||||||
Anglo American Capital PLC, 4.875%, 05/14/25 (#) | 1,900 | 1,861,338 | ||||||
Freeport-McMoRan, Inc., 4.550%, 11/14/24 | 2,700 | 2,490,750 | ||||||
Glencore Funding LLC, 4.625%, 04/29/24 (#) | 2,000 | 1,982,480 | ||||||
Steel Dynamics, Inc.: | ||||||||
4.125%, 09/15/25 | 500 | 459,375 | ||||||
5.000%, 12/15/26 | 1,800 | 1,705,500 | ||||||
10,833,943 | ||||||||
Oil, Gas & Consumable Fuels | 10.4% | ||||||||
Andeavor Logistics LP, 4.250%, 12/01/27 | 1,500 | 1,416,815 | ||||||
Antero Resources Corp., 5.125%, 12/01/22 | 1,850 | 1,739,000 | ||||||
Cenovus Energy, Inc., 3.800%, 09/15/23 | 2,500 | 2,411,577 | ||||||
Cheniere Energy Partners LP, 5.250%, 10/01/25 | 1,250 | 1,165,625 | ||||||
Diamondback Energy, Inc., 4.750%, 11/01/24 | 1,800 | 1,737,000 | ||||||
Energy Transfer Equity LP: | ||||||||
7.500%, 10/15/20 | 1,250 | 1,300,000 | ||||||
5.875%, 01/15/24 | 750 | 765,660 | ||||||
Gulfport Energy Corp., 6.000%, 10/15/24 | 1,700 | 1,504,500 | ||||||
Holly Energy Partners LP, 6.000%, 08/01/24 (#) | 2,340 | 2,293,200 |
The accompanying notes are an integral part of these financial statements.
62 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Murphy Oil Corp., 6.875%, 08/15/24 | $ | 1,500 | $ | 1,491,791 | ||||
Newfield Exploration Co., 5.625%, 07/01/24 | 1,900 | 1,923,750 | ||||||
Parsley Energy LLC, 5.625%, 10/15/27 (#) | 2,000 | 1,817,500 | ||||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 1,400 | 1,337,000 | ||||||
Range Resources Corp., 5.000%, 08/15/22 | 1,700 | 1,521,500 | ||||||
Southwestern Energy Co., 6.200%, 01/23/25 | 1,800 | 1,608,750 | ||||||
Sunoco LP, 5.500%, 02/15/26 | 2,000 | 1,895,000 | ||||||
Tallgrass Energy Partners LP, 5.500%, 01/15/28 (#) | 1,250 | 1,200,000 | ||||||
Targa Resources Partners LP, 5.250%, 05/01/23 | 1,800 | 1,764,000 | ||||||
Whiting Petroleum Corp.: | ||||||||
5.750%, 03/15/21 | 900 | 855,000 | ||||||
6.625%, 01/15/26 | 1,000 | 857,500 | ||||||
WPX Energy, Inc.: | ||||||||
6.000%, 01/15/22 | 900 | 875,250 | ||||||
5.750%, 06/01/26 | 1,000 | 905,000 | ||||||
32,385,418 | ||||||||
Personal Products | 0.5% | ||||||||
First Quality Finance Co., Inc., 4.625%, 05/15/21 (#) | 1,500 | 1,451,250 | ||||||
Pharmaceuticals | 0.9% | ||||||||
Endo Finance LLC, 5.750%, 01/15/22 (#) | 1,600 | 1,332,000 | ||||||
Mallinckrodt International Finance SA, 5.750%, 08/01/22 (#) | 1,700 | 1,466,250 | ||||||
2,798,250 |
The accompanying notes are an integral part of these financial statements.
Annual Report 63
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (continued) | ||||||||
Professional Services | 1.1% | ||||||||
IHS Markit, Ltd., 5.000%, 11/01/22 (#) | $ | 1,750 | $ | 1,767,500 | ||||
Nielsen Finance LLC, 5.000%, 04/15/22 (#) | 1,800 | 1,719,000 | ||||||
3,486,500 | ||||||||
Road & Rail | 0.4% | ||||||||
The Hertz Corp., 5.500%, 10/15/24 (#) | 1,800 | 1,314,000 | ||||||
Semiconductors & Semiconductor Equipment | 0.3% | ||||||||
Qorvo, Inc., 5.500%, 07/15/26 (#) | 1,000 | 955,000 | ||||||
Software | 1.6% | ||||||||
j2 Cloud Services LLC, 6.000%, 07/15/25 (#) | 1,800 | 1,759,500 | ||||||
Nuance Communications, Inc.: | ||||||||
5.375%, 08/15/20 (#) | 392 | 391,510 | ||||||
5.625%, 12/15/26 | 1,500 | 1,425,000 | ||||||
Rackspace Hosting, Inc., 8.625%, 11/15/24 (#) | 2,000 | 1,560,000 | ||||||
5,136,010 | ||||||||
Specialty Retail | 1.1% | ||||||||
Group 1 Automotive, Inc., 5.000%, 06/01/22 | 1,912 | 1,807,853 | ||||||
Penske Automotive Group, Inc., 5.500%, 05/15/26 | 1,800 | 1,674,000 | ||||||
3,481,853 | ||||||||
Technology Hardware, Storage & Peripherals | 2.2% | ||||||||
Dell International LLC, 7.125%, 06/15/24 (#) | 1,775 | 1,806,063 | ||||||
NCR Corp., 4.625%, 02/15/21 | 1,568 | 1,528,800 | ||||||
Seagate HDD Cayman, 4.750%, 01/01/25 | 1,900 | 1,684,925 |
The accompanying notes are an integral part of these financial statements.
64 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Corporate Income Portfolio (concluded) | ||||||||
Western Digital Corp., 4.750%, 02/15/26 | $ | 2,000 | $ | 1,735,000 | ||||
6,754,788 | ||||||||
Textiles, Apparel & Luxury Goods | 0.5% | ||||||||
Hanesbrands, Inc., 4.625%, 05/15/24 (#) | 1,750 | 1,640,625 | ||||||
Trading Companies & Distributors | 2.5% | ||||||||
Aircastle, Ltd., 5.125%, 03/15/21 | 1,500 | 1,524,379 | ||||||
HD Supply, Inc., 5.375%, 10/15/26 (#) | 2,000 | 1,937,180 | ||||||
United Rentals North America, Inc.: | ||||||||
4.625%, 07/15/23 | 1,100 | 1,079,375 | ||||||
5.750%, 11/15/24 | 1,650 | 1,588,125 | ||||||
WESCO Distribution, Inc., 5.375%, 12/15/21 | 1,600 | 1,580,000 | ||||||
7,709,059 | ||||||||
Wireless Telecommunication Services | 1.9% | ||||||||
Inmarsat Finance PLC, 4.875%, 05/15/22 (#) | 1,750 | 1,647,118 | ||||||
Sprint Capital Corp., 6.900%, 05/01/19 | 1,475 | 1,482,375 | ||||||
Sprint Corp., 7.125%, 06/15/24 | 500 | 495,530 | ||||||
T-Mobile USA, Inc., 6.500%, 01/15/26 | 2,300 | 2,346,000 | ||||||
5,971,023 | ||||||||
Total Corporate Bonds (Cost $327,221,574) | 308,845,646 | |||||||
Total Investments | 98.8% (Cost $327,221,574) | $ | 308,845,646 | ||||||
Cash and Other Assets in Excess of Liabilities | 1.2% | 3,754,149 | |||||||
Net Assets | 100.0% | $ | 312,599,795 |
The accompanying notes are an integral part of these financial statements.
Annual Report 65
The accompanying notes are an integral part of these financial statements.
66 Annual Report
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Short Duration Fixed Income Portfolio (continued) | ||||||||
Electronic Equipment, Instruments & Components | 2.5% | ||||||||
Amphenol Corp.: | ||||||||
2.550%, 01/30/19 | $ | 1,825 | $ | 1,823,801 | ||||
2.200%, 04/01/20 | 1,115 | 1,098,354 | ||||||
2,922,155 | ||||||||
Food & Staples Retailing | 2.1% | ||||||||
The Kroger Co., 2.300%, 01/15/19 | 2,395 | 2,394,172 | ||||||
Internet & Direct Marketing Retail | 1.0% | ||||||||
eBay, Inc., 3.250%, 10/15/20 | 1,129 | 1,127,743 | ||||||
IT Services | 2.1% | ||||||||
Fiserv, Inc., 2.700%, 06/01/20 | 2,510 | 2,490,971 | ||||||
Media | 1.9% | ||||||||
21st Century Fox America, Inc., 6.900%, 03/01/19 | 2,197 | 2,209,605 | ||||||
Oil, Gas & Consumable Fuels | 4.3% | ||||||||
Enterprise Products Operating LLC, 2.550%, 10/15/19 | 2,525 | 2,511,648 | ||||||
Valero Energy Corp., 6.125%, 02/01/20 | 2,375 | 2,444,115 | ||||||
4,955,763 | ||||||||
Total Corporate Bonds (Cost $43,829,778) | 43,570,598 |
The accompanying notes are an integral part of these financial statements.
Annual Report 67
Description | Principal Amount (000) | Fair Value | ||||||
Lazard US Short Duration Fixed Income Portfolio (continued) | ||||||||
US Government Securities | 8.8% | ||||||||
Mortgage-Backed Securities | 8.8% | ||||||||
Federal Home Loan Mortgage Corp.: | ||||||||
Pool# 848138, 4.322%, 07/01/38 (§) | $ | 535 | $ | 563,590 | ||||
Pool# 848514, 4.439%, 03/01/32 (§) | 1,203 | 1,264,291 | ||||||
Pool# 848517, 4.456%, 12/01/34 (§) | 700 | 735,546 | ||||||
Pool# 849414, 4.367%, 07/01/35 (§) | 912 | 958,938 | ||||||
Pool# G13867, 5.000%, 06/01/25 | 217 | 224,854 | ||||||
Federal National Mortgage Association: | ||||||||
Pool# 725296, 3.654%, 03/01/34 (§) | 472 | 492,473 | ||||||
Pool# 995609, 4.541%, 04/01/35 (§) | 490 | 513,993 | ||||||
Pool# AD0701, 4.107%, 02/01/37 (§) | 531 | 553,152 | ||||||
Pool# AE0149, 4.123%, 12/01/36 (§) | 491 | 517,547 | ||||||
Pool# AE0315, 4.500%, 02/01/21 | 7 | 7,519 | ||||||
Pool# AL0345, 4.364%, 11/01/35 (§) | 378 | 395,841 | ||||||
Pool# AL3739, 4.178%, 07/01/38 (§) | 154 | 161,633 | ||||||
Pool# AL3746, 4.216%, 01/01/37 (§) | 587 | 618,265 | ||||||
Pool# AL3941, 6.000%, 03/01/24 | 133 | 136,598 | ||||||
Pool# AL4118, 4.536%, 05/01/35 (§) | 363 | 379,315 | ||||||
Pool# AL4545, 4.321%, 05/01/39 (§) | 386 | 404,664 | ||||||
Pool# AL4660, 4.133%, 11/01/41 (§) | 463 | 482,073 | ||||||
Pool# AL5574, 4.217%, 12/01/40 (§) | 821 | 865,108 | ||||||
Pool# AL5642, 4.251%, 05/01/39 (§) | 965 | 1,016,568 | ||||||
Total US Government Securities (Cost $10,321,759) | 10,291,968 | |||||||
US Treasury Securities | 48.0% | ||||||||
US Treasury Notes: | ||||||||
1.500%, 10/31/19 | 9,105 | 9,019,959 | ||||||
1.625%, 12/31/19 | 20,005 | 19,805,714 | ||||||
1.500%, 04/15/20 | 10,585 | 10,443,574 | ||||||
1.625%, 07/31/20 | 16,745 | 16,505,908 |
The accompanying notes are an integral part of these financial statements.
68 Annual Report
Description | Shares | Fair Value | ||||||
Lazard US Short Duration Fixed Income Portfolio (concluded) | ||||||||
Total US Treasury Securities (Cost $55,711,113) | $ | 55,775,155 | ||||||
Short-Term Investments | 0.5% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $597,499) | 597,499 | 597,499 | ||||||
Total Investments | 99.1% (Cost $115,484,925) | $ | 115,255,338 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.9% | 1,057,167 | |||||||
Net Assets | 100.0% | $ | 116,312,505 |
The accompanying notes are an integral part of these financial statements.
Annual Report 69
The Lazard Funds, Inc.Notes to Portfolios of Investments December 31, 2018
(#) | Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.” At December 31, 2018, the percentage of net assets for each Portfolio was as follows: |
Portfolio | Percentage of Net Assets | |||
Emerging Markets Debt | 8.3 | % | ||
Global Fixed Income | 1.0 | |||
US Corporate Income | 45.4 |
(§) | Variable and floating rate securities are securities for which interest rate changes are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2018. |
(Ø) | Step up bonds are securities which increase the interest payment rate at a specified point in time. Rate shown reflects rate in effect at December 31, 2018 which may step up at a future date. |
(«) | Issue in default. |
(») | The Portfolio, at all times, maintains portfolio securities in sufficient amount to cover its obligations related to investments in forward currency contracts. |
Security Abbreviations:
BADLARPP | — Argentina Deposit Rates Badlar Private Banks |
BBSW | — Bank Bill Swap Reference Rate |
LIBOR | — London Interbank Offered Rate |
NTN-B | — Brazil Sovereign “Nota do Tesouro Nacional” Series B |
NTN-F | — Brazil Sovereign “Nota do Tesouro Nacional” Series F |
Currency Abbreviations:
ARS | — | Argentine Peso | MYR | — | Malaysian Ringgit |
AUD | — | Australian Dollar | NGN | — | Nigerian Naira |
BRL | — | Brazilian Real | NOK | — | Norwegian Krone |
CAD | — | Canadian Dollar | NZD | — | New Zealand Dollar |
CHF | — | Swiss Franc | PEN | — | Peruvian Nuevo Sol |
CLP | — | Chilean Peso | PHP | — | Philippine Peso |
COP | — | Colombian Peso | PLN | — | Polish Zloty |
CZK | — | Czech Koruna | RON | — | New Romanian Leu |
DOP | — | Dominican Republic Peso | RUB | — | Russian Ruble |
EUR | — | Euro | SGD | — | Singapore Dollar |
GBP | — | British Pound Sterling | THB | — | Thai Baht |
GHS | — | Ghanaian Cedi | TRY | — | New Turkish Lira |
HUF | — | Hungarian Forint | TWD | — | Taiwan Dollar |
IDR | — | Indonesian Rupiah | USD | — | United States Dollar |
INR | — | Indian Rupee | UYU | — | Uruguayan Peso |
JPY | — | Japanese Yen | ZAR | — | South African Rand |
MXN | — | Mexican New Peso |
Counterparty Abbreviations:
BOA | — | Bank of America NA | HSB | — | HSBC Bank USA NA |
BRC | — | Barclays Bank PLC | JPM | — | JPMorgan Chase Bank NA |
CIT | — | Citibank NA | SCB | — | Standard Chartered Bank |
GSC | — | Goldman Sachs International | UBS | — | UBS AG |
The accompanying notes are an integral part of these financial statements.
70 Annual Report
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country:
Industry† | Lazard Emerging Markets Debt Portfolio | Lazard Global Fixed Income Portfolio | |||||||
Corporate & Quasi Government Bonds | |||||||||
Air Freight & Logistics | — | % | 0.6 | % | |||||
Automobiles | — | 1.0 | |||||||
Banks | 0.9 | 5.3 | |||||||
Beverages | — | 1.6 | |||||||
Capital Markets | — | 2.3 | |||||||
Communications Equipment | 0.2 | — | |||||||
Consumer Finance | — | 0.7 | |||||||
Containers & Packaging | — | 1.1 | |||||||
Diversified Financial Services | 0.1 | 1.8 | |||||||
Diversified Telecommunication Services | 0.3 | 0.9 | |||||||
Electric Utilities | 2.0 | 2.1 | |||||||
Electrical Equipment | — | 1.1 | |||||||
Energy Equipment & Services | 0.1 | — | |||||||
Food Products | — | 0.7 | |||||||
Health Care Providers & Services | — | 2.2 | |||||||
Hotels, Restaurants & Leisure | — | 0.7 | |||||||
Independent Power & Renewable Electricity Producers | 0.9 | — | |||||||
Internet & Direct Marketing Retail | — | 1.1 | |||||||
Machinery | — | 0.9 | |||||||
Media | 0.1 | — | |||||||
Metals & Mining | 0.9 | — | |||||||
Oil, Gas & Consumable Fuels | 1.0 | — | |||||||
Personal Products | — | 1.8 | |||||||
Pharmaceuticals | — | 1.2 | |||||||
Software | — | 1.8 | |||||||
Specialty Retail | — | 1.0 | |||||||
Technology Hardware, Storage & Peripherals | — | 1.8 | |||||||
Textiles, Apparel & Luxury Goods | — | 1.2 | |||||||
Thrifts & Mortgage Finance | 0.1 | — | |||||||
Trading Companies & Distributors | — | 0.5 | |||||||
Wireless Telecommunication Services | 0.4 | — | |||||||
Subtotal | 7.0 | 33.4 | |||||||
Foreign Government Obligations | 88.9 | 41.5 | |||||||
Supranational Bonds | 1.0 | 11.1 | |||||||
US Municipal Bonds | — | 1.8 | |||||||
US Treasury Securities | — | 11.5 | |||||||
Short-Term Investments | 2.4 | — | |||||||
Total Investments | 99.3 | % | 99.3 | % |
† | Industry classifications may be different than those used for compliance monitoring purposes. |
The accompanying notes are an integral part of these financial statements.
Annual Report 71
The Lazard Funds, Inc.Statements of Assets and Liabilities
December 31, 2018 | Lazard Emerging Markets Debt Portfolio | Lazard Global Fixed Income Portfolio | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 241,965,189 | $ | 5,488,595 | ||||||
Cash | — | — | ||||||||
Foreign currency, at fair value | 1,104,872 | 10 | ||||||||
Receivables for: | ||||||||||
Dividends and interest | 4,515,885 | 60,464 | ||||||||
Investments sold | 600,937 | — | ||||||||
Capital stock sold | 25,825 | — | ||||||||
Amount due from Investment Manager (Note 3) | — | 12,573 | ||||||||
Gross unrealized appreciation on forward currency contracts | 893,329 | 52,594 | ||||||||
Total assets | 249,106,037 | 5,614,236 | ||||||||
LIABILITIES | ||||||||||
Due to custodian | 937,878 | 28,109 | ||||||||
Cash collateral due to broker on forward currency contracts | 560,000 | — | ||||||||
Payables for: | ||||||||||
Management fees | 154,136 | — | ||||||||
Accrued professional services | 40,436 | 26,681 | ||||||||
Accrued custodian fees | 36,418 | 7,853 | ||||||||
Accrued distribution fees | 142 | — | ||||||||
Investments purchased | 3,402,121 | — | ||||||||
Capital stock redeemed | 123,788 | 138 | ||||||||
Dividends | 3,352 | — | ||||||||
Gross unrealized depreciation on forward currency contracts | 186,013 | 20,491 | ||||||||
Line of credit outstanding | — | — | ||||||||
Other accrued expenses and payables | 24,911 | 2,891 | ||||||||
Total liabilities | 5,469,195 | 86,163 | ||||||||
Net assets | $ | 243,636,842 | $ | 5,528,073 | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 305,756,735 | $ | 5,817,658 | ||||||
Distributable earnings (Accumulated loss) | (62,119,893 | ) | (289,585 | ) | ||||||
Net assets | $ | 243,636,842 | $ | 5,528,073 |
The accompanying notes are an integral part of these financial statements.
72 Annual Report
Lazard US Corporate Income Portfolio | Lazard US Short Duration Fixed Income Portfolio | |||||||
$ | 308,845,646 | $ | 115,255,338 | |||||
2,350 | 282,336 | |||||||
— | — | |||||||
4,544,268 | 861,743 | |||||||
— | — | |||||||
457,280 | 13,343 | |||||||
— | — | |||||||
— | — | |||||||
313,849,544 | 116,412,760 | |||||||
— | — | |||||||
— | — | |||||||
130,039 | 23,766 | |||||||
28,860 | 28,282 | |||||||
18,404 | 7,676 | |||||||
1,052 | — | |||||||
— | — | |||||||
203,472 | 21,304 | |||||||
65,564 | 14,147 | |||||||
— | — | |||||||
790,000 | — | |||||||
12,358 | 5,080 | |||||||
1,249,749 | 100,255 | |||||||
$ | 312,599,795 | $ | 116,312,505 | |||||
$ | 337,285,223 | $ | 118,208,858 | |||||
(24,685,428 | ) | (1,896,353 | ) | |||||
$ | 312,599,795 | $ | 116,312,505 |
Annual Report 73
December 31, 2018 | Lazard Emerging Markets Debt Portfolio | Lazard Global Fixed Income Portfolio | ||||||||
Institutional Shares | ||||||||||
Net assets | $ | 143,014,914 | $ | 5,495,303 | ||||||
Shares of capital stock outstanding* | 19,428,100 | 635,449 | ||||||||
Net asset value, offering and redemption price per share | $ | 7.36 | $ | 8.65 | ||||||
Open Shares | ||||||||||
Net assets | $ | 670,186 | $ | 32,770 | ||||||
Shares of capital stock outstanding* | 90,147 | 3,789 | ||||||||
Net asset value, offering and redemption price per share | $ | 7.43 | $ | 8.65 | ||||||
R6 Shares | ||||||||||
Net assets | $ | 99,951,742 | — | |||||||
Shares of capital stock outstanding* | 12,683,587 | — | ||||||||
Net asset value, offering and redemption price per share | $ | 7.88 | — | |||||||
Cost of investments in securities | $ | 260,258,692 | $ | 5,710,115 | ||||||
Cost of foreign currency | $ | 1,098,638 | $ | 10 |
* | $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total. |
The accompanying notes are an integral part of these financial statements.
74 Annual Report
Lazard US Corporate Income Portfolio | Lazard US Short Duration Fixed Income Portfolio | |||||||
$ | 308,285,139 | $ | 116,275,720 | |||||
67,838,982 | 11,984,211 | |||||||
$ | 4.54 | $ | 9.70 | |||||
$ | 4,313,614 | $ | 36,785 | |||||
944,746 | 3,789 | |||||||
$ | 4.57 | $ | 9.71 | |||||
$ | 1,042 | — | ||||||
223 | — | |||||||
$ | 4.67 | — | ||||||
$ | 327,221,574 | $ | 115,484,925 | |||||
$ | — | $ | — |
Annual Report 75
The Lazard Funds, Inc.Statements of Operations
For the Year Ended December 31, 2018 | Lazard Emerging Markets Debt Portfolio | Lazard Global Fixed Income Portfolio | |||||||||
Investment Income (Loss) | |||||||||||
Income | |||||||||||
Interest* | $ | 16,839,461 | $ | 165,784 | |||||||
Expenses | |||||||||||
Management fees (Note 3) | 1,868,732 | 27,300 | |||||||||
Custodian fees | 231,924 | 49,999 | |||||||||
Professional services | 70,842 | 42,235 | |||||||||
Administration fees | 43,970 | 10,507 | |||||||||
Registration fees | 42,334 | 37,781 | |||||||||
Shareholders’ services | 37,469 | 23,791 | |||||||||
Directors’ fees and expenses | 14,143 | 5,185 | |||||||||
Shareholders’ reports | 12,323 | 6,479 | |||||||||
Distribution fees (Open Shares) | 6,502 | 82 | |||||||||
Other^ | 10,180 | 5,223 | |||||||||
Total gross expenses | 2,338,419 | 208,582 | |||||||||
Management fees waived and expenses reimbursed | (38,405 | ) | (170,124 | ) | |||||||
Total net expenses | 2,300,014 | 38,458 | |||||||||
Net investment income (loss) | 14,539,447 | 127,326 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions, Forward Currency Contracts and Swap Agreements | |||||||||||
Net realized gain (loss) on: | |||||||||||
Investments** | (10,371,606 | ) | (38,726 | ) | |||||||
Foreign currency transactions | 2,049,317 | (896 | ) | ||||||||
Forward currency contracts | (411,030 | ) | (41,569 | ) | |||||||
Swap agreements | (2,287,060 | ) | — | ||||||||
Total net realized gain (loss) on investments, foreign currency transactions, forward currency contracts and swap agreements | (11,020,379 | ) | (81,191 | ) | |||||||
Net change in unrealized appreciation (depreciation) on: | |||||||||||
Investments† | (22,258,207 | ) | (245,230 | ) | |||||||
Foreign currency translations | 2,552 | (1,388 | ) | ||||||||
Forward currency contracts | 744,115 | 57,838 | |||||||||
Swap agreements | 59,623 | — | |||||||||
Total net change in unrealized appreciation (depreciation) on investments, foreign currency translations, forward currency contracts and swap agreements | (21,451,917 | ) | (188,780 | ) | |||||||
Net realized and unrealized gain (loss) on investments, foreign currency transactions, forward currency contracts and swap agreements | (32,472,296 | ) | (269,971 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | (17,932,849 | ) | $ | (142,645 | ) | |||||
* | Net of foreign withholding taxes of | $ | 195,760 | $ | 1,250 | ||||||
** | Net of foreign capital gains taxes of | $ | 54,706 | $ | — | ||||||
† | Includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of | $ | 141,621 | $ | — | ||||||
^ | Includes interest on line of credit of | $ | 1,631 | $ | 126 |
The accompanying notes are an integral part of these financial statements.
76 Annual Report
Lazard US Corporate Income Portfolio | Lazard US Short Duration Fixed Income Portfolio | |||||||
$ | 18,013,003 | $ | 2,646,662 | |||||
1,906,163 | 275,310 | |||||||
110,377 | 49,584 | |||||||
54,398 | 47,251 | |||||||
56,147 | 23,590 | |||||||
40,293 | 38,148 | |||||||
43,362 | 24,393 | |||||||
17,240 | 8,860 | |||||||
16,578 | 7,462 | |||||||
14,589 | 77 | |||||||
10,572 | 5,383 | |||||||
2,269,719 | 480,058 | |||||||
(344,584 | ) | (39,038 | ) | |||||
1,925,135 | 441,020 | |||||||
16,087,868 | 2,205,642 | |||||||
588,674 | (1,149,097 | ) | ||||||
— | — | |||||||
— | — | |||||||
— | — | |||||||
588,674 | (1,149,097 | ) | ||||||
(25,354,375 | ) | 237,332 | ||||||
— | — | |||||||
— | — | |||||||
— | — | |||||||
(25,354,375 | ) | 237,332 | ||||||
(24,765,701 | ) | (911,765 | ) | |||||
$ | (8,677,833 | ) | $ | 1,293,877 | ||||
$ | — | $ | — | |||||
$ | — | $ | — | |||||
$ | — | $ | — | |||||
$ | 77 | $ | — |
Annual Report 77
The Lazard Funds, Inc.Statements of Changes in Net Assets
Lazard Emerging Markets Debt Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 14,539,447 | $ | 15,179,241 | |||||
Net realized gain (loss) on investments, foreign currency transactions, forward currency contracts and swap agreements | (11,020,379 | ) | 2,771,528 | ||||||
Net change in unrealized appreciation (depreciation) on investments, foreign currency translations, forward currency contracts and swap agreements | (21,451,917 | ) | 14,280,735 | ||||||
Net increase (decrease) in net assets resulting from operations | (17,932,849 | ) | 32,231,504 | ||||||
Distributions to shareholders (Note 2(f)) | |||||||||
Net investment income and net realized gains | |||||||||
Institutional Shares | (4,701,379 | ) | (13,803,686 | ) | |||||
Open Shares | (68,347 | ) | (387,708 | ) | |||||
R6 Shares | (2,107,177 | ) | (2,026 | ) | |||||
Return of capital | |||||||||
Institutional Shares | (5,201,496 | ) | (878,881 | ) | |||||
Open Shares | (75,617 | ) | (24,685 | ) | |||||
R6 Shares | (2,331,332 | ) | (129 | ) | |||||
Net decrease in net assets resulting from distributions | (14,485,348 | ) | (15,097,115 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 53,729,663 | 45,172,035 | |||||||
Open Shares | 2,519,684 | 3,209,100 | |||||||
R6 Shares | 110,381,409 | 1,000 | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 9,761,506 | 14,640,287 | |||||||
Open Shares | 142,468 | 412,234 | |||||||
R6 Shares | 4,438,509 | — | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (183,928,083 | ) | (36,381,779 | ) | |||||
Open Shares | (8,319,029 | ) | (4,477,834 | ) | |||||
R6 Shares | — | (1,158,913 | ) | ||||||
Net increase (decrease) in net assets from capital stock transactions | (11,273,873 | ) | 21,416,130 | ||||||
Total increase (decrease) in net assets | (43,692,070 | ) | 38,550,519 | ||||||
Net assets at beginning of period | 287,328,912 | 248,778,393 | |||||||
Net assets at end of period | $ | 243,636,842 | $ | 287,328,912 |
The accompanying notes are an integral part of these financial statements.
78 Annual Report
Lazard Global Fixed Income Portfolio | Lazard US Corporate Income Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 127,326 | $ | 104,221 | $ | 16,087,868 | $ | 15,216,486 | |||||||||
(81,191 | ) | (139,517 | ) | 588,674 | (484,262 | ) | ||||||||||
(188,780 | ) | 384,081 | (25,354,375 | ) | 1,388,881 | |||||||||||
(142,645 | ) | 348,785 | (8,677,833 | ) | 16,121,105 | |||||||||||
(59,363 | ) | — | (15,821,900 | ) | (14,816,506 | ) | ||||||||||
(319 | ) | — | (253,454 | ) | (281,890 | ) | ||||||||||
— | — | (13,162 | ) | (79,722 | ) | |||||||||||
(67,280 | ) | (103,547 | ) | — | — | |||||||||||
(362 | ) | (657 | ) | — | — | |||||||||||
— | — | — | — | |||||||||||||
(127,324 | ) | (104,204 | ) | (16,088,516 | ) | (15,178,118 | ) | |||||||||
2,654,185 | 1,192,523 | 49,765,025 | 69,937,224 | |||||||||||||
— | 838 | 2,569,673 | 1,908,682 | |||||||||||||
— | — | 24,665 | — | |||||||||||||
126,631 | 103,537 | 14,673,547 | 13,419,461 | |||||||||||||
681 | 656 | 120,865 | 146,462 | |||||||||||||
— | — | 6,762 | 79,723 | |||||||||||||
(1,722,437 | ) | (1,099,616 | ) | (76,329,156 | ) | (42,747,420 | ) | |||||||||
(9 | ) | (3,659 | ) | (3,681,834 | ) | (3,999,689 | ) | |||||||||
— | — | (1,782,867 | ) | — | ||||||||||||
1,059,051 | 194,279 | (14,633,320 | ) | 38,744,443 | ||||||||||||
789,082 | 438,860 | (39,399,669 | ) | 39,687,430 | ||||||||||||
4,738,991 | 4,300,131 | 351,999,464 | 312,312,034 | |||||||||||||
$ | 5,528,073 | $ | 4,738,991 | $ | 312,599,795 | $ | 351,999,464 |
Annual Report 79
Lazard Emerging Markets Debt Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 33,323,876 | 30,470,656 | |||||||
Shares sold | 6,920,539 | 5,492,748 | |||||||
Shares issued to shareholders from reinvestment of distributions | 1,230,443 | 1,756,827 | |||||||
Shares redeemed | (22,046,758 | ) | (4,396,355 | ) | |||||
Net increase (decrease) | (13,895,776 | ) | 2,853,220 | ||||||
Shares outstanding at end of period | 19,428,100 | 33,323,876 | |||||||
Open Shares | |||||||||
Shares outstanding at beginning of period | 766,577 | 852,546 | |||||||
Shares sold | 298,747 | 390,174 | |||||||
Shares issued to shareholders from reinvestment of distributions | 17,024 | 49,030 | |||||||
Shares redeemed | (992,201 | ) | (525,173 | ) | |||||
Net increase (decrease) | (676,430 | ) | (85,969 | ) | |||||
Shares outstanding at end of period | 90,147 | 766,577 | |||||||
R6 Shares | |||||||||
Shares outstanding at beginning of period | 125 | 144,864 | |||||||
Shares sold | 12,137,545 | 125 | |||||||
Shares issued to shareholders from reinvestment of distributions | 545,917 | — | |||||||
Shares redeemed | — | (144,864 | ) | ||||||
Net increase (decrease) | 12,683,462 | (144,739 | ) | ||||||
Shares outstanding at end of period | 12,683,587 | 125 |
The accompanying notes are an integral part of these financial statements.
80 Annual Report
Lazard Global Fixed Income Portfoalio | Lazard US Corporate Income Portfolio | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
520,489 | 497,927 | 70,514,409 | 62,254,314 | |||||||||||||
294,722 | 136,255 | 10,487,599 | 14,251,620 | |||||||||||||
14,452 | 11,602 | 3,108,656 | 2,733,088 | |||||||||||||
(194,214 | ) | (125,295 | ) | (16,271,682 | ) | (8,724,613 | ) | |||||||||
114,960 | 22,562 | (2,675,427 | ) | 8,260,095 | ||||||||||||
635,449 | 520,489 | 67,838,982 | 70,514,409 | |||||||||||||
3,712 | 3,958 | 1,162,735 | 1,557,470 | |||||||||||||
— | 96 | 539,630 | 387,438 | |||||||||||||
78 | 74 | 25,492 | 29,704 | |||||||||||||
(1 | ) | (416 | ) | (783,111 | ) | (811,877 | ) | |||||||||
77 | (246 | ) | (217,989 | ) | (394,735 | ) | ||||||||||
3,789 | 3,712 | 944,746 | 1,162,735 | |||||||||||||
— | — | 364,469 | 348,256 | |||||||||||||
— | — | 5,023 | — | |||||||||||||
— | — | 1,389 | 16,213 | |||||||||||||
— | — | (370,658 | ) | — | ||||||||||||
— | — | (364,246 | ) | 16,213 | ||||||||||||
— | — | 223 | 364,469 |
Annual Report 81
Lazard US Short Duration Fixed Income Portfolio | ||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 2,205,642 | $ | 1,604,721 | ||||
Net realized gain (loss) on investments | (1,149,097 | ) | (800,974 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 237,332 | (30,628 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 1,293,877 | 773,119 | ||||||
Distributions to shareholders (Note 2(f)) | ||||||||
Net investment income and net realized gains | ||||||||
Institutional Shares | (1,976,743 | ) | (1,300,615 | ) | ||||
Open Shares | (464 | ) | (360 | ) | ||||
Return of capital | ||||||||
Institutional Shares | (228,383 | ) | (303,662 | ) | ||||
Open Shares | (54 | ) | (84 | ) | ||||
Net decrease in net assets resulting from distributions | (2,205,644 | ) | (1,604,721 | ) | ||||
Capital stock transactions | ||||||||
Net proceeds from sales | ||||||||
Institutional Shares | 40,433,005 | 38,713,952 | ||||||
Open Shares | 47,508 | 48,365 | ||||||
Net proceeds from reinvestment of distributions | ||||||||
Institutional Shares | 2,000,809 | 1,472,734 | ||||||
Open Shares | 514 | 441 | ||||||
Cost of shares redeemed | ||||||||
Institutional Shares | (25,637,022 | ) | (42,139,581 | ) | ||||
Open Shares | (35,952 | ) | (66,952 | ) | ||||
Net increase (decrease) in net assets from capital stock transactions | 16,808,862 | (1,971,041 | ) | |||||
Total increase (decrease) in net assets | 15,897,095 | (2,802,643 | ) | |||||
Net assets at beginning of period | 100,415,410 | 103,218,053 | ||||||
Net assets at end of period | $ | 116,312,505 | $ | 100,415,410 | ||||
Shares issued and redeemed | ||||||||
Institutional Shares | ||||||||
Shares outstanding at beginning of period | 10,259,235 | 10,468,785 | ||||||
Shares sold | 4,157,165 | 3,930,176 | ||||||
Shares issued to shareholders from reinvestment of distributions | 206,126 | 149,733 | ||||||
Shares redeemed | (2,638,315 | ) | (4,289,459 | ) | ||||
Net increase (decrease) | 1,724,976 | (209,550 | ) | |||||
Shares outstanding at end of period | 11,984,211 | 10,259,235 | ||||||
Open Shares | ||||||||
Shares outstanding at beginning of period | 2,561 | 4,412 | ||||||
Shares sold | 4,869 | 4,916 | ||||||
Shares issued to shareholders from reinvestment of distributions | 53 | 45 | ||||||
Shares redeemed | (3,694 | ) | (6,812 | ) | ||||
Net increase (decrease) | 1,228 | (1,851 | ) | |||||
Shares outstanding at end of period | 3,789 | 2,561 |
The accompanying notes are an integral part of these financial statements.
82 Annual Report
The Lazard Funds, Inc.Financial Highlights
LAZARD EMERGING MARKETS DEBT PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 8.43 | $ | 7.90 | $ | 7.71 | $ | 8.84 | $ | 9.53 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.46 | 0.46 | 0.48 | ^ | 0.39 | 0.49 | ||||||||||||||
Net realized and unrealized gain (loss) | (1.07 | ) | 0.53 | 0.19 | (1.13 | ) | (0.66 | ) | ||||||||||||
Total from investment operations | (0.61 | ) | 0.99 | 0.67 | (0.74 | ) | (0.17 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.22 | ) | (0.43 | ) | (0.19 | ) | — | (b) | (0.15 | ) | ||||||||||
Return of capital | (0.24 | ) | (0.03 | ) | (0.29 | ) | (0.39 | ) | (0.37 | ) | ||||||||||
Total distributions | (0.46 | ) | (0.46 | ) | (0.48 | ) | (0.39 | ) | (0.52 | ) | ||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | ||||||||||||
Net asset value, end of period | $ | 7.36 | $ | 8.43 | $ | 7.90 | $ | 7.71 | $ | 8.84 | ||||||||||
Total Return (c) | –7.45 | % | 12.69 | % | 8.64 | %^ | –8.55 | % | –2.07 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 143,015 | $ | 280,808 | $ | 240,833 | $ | 258,517 | $ | 326,165 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.93 | % | 0.93 | % | 0.96 | %^ | 0.96 | % | 0.96 | % | ||||||||||
Gross expenses | 0.93 | % | 0.93 | % | 0.96 | % | 0.96 | % | 0.96 | % | ||||||||||
Net investment income (loss) | 5.78 | % | 5.52 | % | 5.90 | %^ | 4.69 | % | 5.14 | % | ||||||||||
Portfolio turnover rate | 97 | % | 88 | % | 118 | % | 162 | % | 204 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 83
Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 8.50 | $ | 7.98 | $ | 7.79 | $ | 8.91 | $ | 9.59 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.47 | 0.44 | 0.46 | ^ | 0.36 | 0.46 | ||||||||||||||
Net realized and unrealized gain (loss) | (1.10 | ) | 0.51 | 0.19 | (1.11 | ) | (0.68 | ) | ||||||||||||
Total from investment operations | (0.63 | ) | 0.95 | 0.65 | (0.75 | ) | (0.22 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.20 | ) | (0.40 | ) | (0.18 | ) | — | (b) | (0.09 | ) | ||||||||||
Return of capital | (0.24 | ) | (0.03 | ) | (0.28 | ) | (0.37 | ) | (0.37 | ) | ||||||||||
Total distributions | (0.44 | ) | (0.43 | ) | (0.46 | ) | (0.37 | ) | (0.46 | ) | ||||||||||
Redemption fees | — | — | — | — | (b) | — | (b) | |||||||||||||
Net asset value, end of period | $ | 7.43 | $ | 8.50 | $ | 7.98 | $ | 7.79 | $ | 8.91 | ||||||||||
Total Return (c) | –7.59 | % | 12.16 | % | 8.27 | %^ | –8.64 | % | –2.53 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 670 | $ | 6,520 | $ | 6,801 | $ | 6,910 | $ | 1,107 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 1.20 | % | 1.22 | % | 1.28 | %^ | 1.30 | % | 1.30 | % | ||||||||||
Gross expenses | 1.62 | % | 1.36 | % | 1.40 | % | 1.75 | % | 1.71 | % | ||||||||||
Net investment income (loss) | 5.49 | % | 5.21 | % | 5.59 | %^ | 4.54 | % | 4.80 | % | ||||||||||
Portfolio turnover rate | 97 | % | 88 | % | 118 | % | 162 | % | 204 | % |
The accompanying notes are an integral part of these financial statements.
84 Annual Report
Selected data for a share | For the Period | |||||||||||||
of capital stock outstanding | Year Ended | 7/28/16* to | ||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | |||||||||||
R6 Shares | ||||||||||||||
Net asset value, beginning of period | $ | 8.88 | $ | 7.90 | $ | 8.34 | ||||||||
Income (Loss) from investment operations: | ||||||||||||||
Net investment income (loss) (a) | 0.48 | 0.45 | 0.20 | ^ | ||||||||||
Net realized and unrealized gain (loss) | (1.12 | ) | 0.54 | (0.44 | ) | |||||||||
Total from investment operations | (0.64 | ) | 0.99 | (0.24 | ) | |||||||||
Less distributions from: | ||||||||||||||
Net investment income | (0.11 | ) | (0.01 | ) | (0.08 | ) | ||||||||
Return of capital | (0.25 | ) | — | (b) | (0.12 | ) | ||||||||
Total distributions | (0.36 | ) | (0.01 | ) | (0.20 | ) | ||||||||
Net asset value, end of period | $ | 7.88 | $ | 8.88 | $ | 7.90 | ||||||||
Total Return (c) | –7.24 | % | 12.61 | % | –2.93 | %^ | ||||||||
Ratios and Supplemental Data: | ||||||||||||||
Net assets, end of period (in thousands) | $ | 99,952 | $ | 1 | $ | 1,145 | ||||||||
Ratios to average net assets (d): | ||||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | %^ | ||||||||
Gross expenses | 0.94 | % | 43.88 | % | 2.21 | % | ||||||||
Net investment income (loss) | 5.97 | % | 5.71 | % | 5.73 | %^ | ||||||||
Portfolio turnover rate | 97 | % | 88 | % | 118 | % |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. For Institutional Shares, there was a 0.14% impact on the total return and the impact on net expenses and net investment income (loss) ratios of the Portfolio was less than 0.005%. For Open and R6 Shares, there was no impact on the total return and the net expenses and net investment income (loss) ratios of the Portfolio would be unchanged as the change to the period custodian fees was offset against the period expense waivers/ reimbursements with no impact to net expenses or net investment income (loss). |
* | The inception date for the R6 Shares was July 28, 2016. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
Annual Report 85
LAZARD GLOBAL FIXED INCOME PORTFOLIO
Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.04 | $ | 8.57 | $ | 8.74 | $ | 9.30 | $ | 9.51 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.20 | 0.20 | 0.20 | 0.19 | 0.22 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.38 | ) | 0.47 | (0.17 | ) | (0.56 | ) | (0.21 | ) | |||||||||||
Total from investment operations | (0.18 | ) | 0.67 | 0.03 | (0.37 | ) | 0.01 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.10 | ) | — | (0.12 | ) | — | (0.17 | ) | ||||||||||||
Return of capital | (0.11 | ) | (0.20 | ) | (0.08 | ) | (0.19 | ) | (0.05 | ) | ||||||||||
Total distributions | (0.21 | ) | (0.20 | ) | (0.20 | ) | (0.19 | ) | (0.22 | ) | ||||||||||
Redemption fees | — | — | — | — | (b) | — | ||||||||||||||
Net asset value, end of period | $ | 8.65 | $ | 9.04 | $ | 8.57 | $ | 8.74 | $ | 9.30 | ||||||||||
Total Return (c) | –2.06 | % | 7.87 | % | 0.22 | % | –4.03 | % | 0.08 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,495 | $ | 4,705 | $ | 4,266 | $ | 5,795 | $ | 6,497 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.70 | % | 0.72 | % | 0.75 | % | 0.76 | % | 0.80 | % | ||||||||||
Gross expenses | 3.61 | % | 4.39 | % | 4.70 | % | 4.26 | % | 4.12 | % | ||||||||||
Net investment income (loss) | 2.33 | % | 2.23 | % | 2.18 | % | 2.08 | % | 2.28 | % | ||||||||||
Portfolio turnover rate | 60 | % | 42 | % | 47 | % | 60 | % | 78 | % |
The accompanying notes are an integral part of these financial statements.
86 Annual Report
Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.04 | $ | 8.57 | $ | 8.74 | $ | 9.30 | $ | 9.51 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.18 | 0.17 | 0.17 | 0.16 | 0.19 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.39 | ) | 0.47 | (0.17 | ) | (0.56 | ) | (0.21 | ) | |||||||||||
Total from investment operations | (0.21 | ) | 0.64 | — | (b) | (0.40 | ) | (0.02 | ) | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.08 | ) | — | (0.10 | ) | — | (0.14 | ) | ||||||||||||
Return of capital | (0.10 | ) | (0.17 | ) | (0.07 | ) | (0.16 | ) | (0.05 | ) | ||||||||||
Total distributions | (0.18 | ) | (0.17 | ) | (0.17 | ) | (0.16 | ) | (0.19 | ) | ||||||||||
Redemption fees | — | — | — | — | — | (b) | ||||||||||||||
Net asset value, end of period | $ | 8.65 | $ | 9.04 | $ | 8.57 | $ | 8.74 | $ | 9.30 | ||||||||||
Total Return (c) | –2.31 | % | 7.55 | % | –0.07 | % | –4.31 | % | –0.22 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 33 | $ | 34 | $ | 34 | $ | 56 | $ | 56 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.98 | % | 1.02 | % | 1.05 | % | 1.06 | % | 1.10 | % | ||||||||||
Gross expenses | 38.42 | % | 42.88 | % | 27.52 | % | 27.72 | % | 20.84 | % | ||||||||||
Net investment income (loss) | 2.08 | % | 1.95 | % | 1.88 | % | 1.80 | % | 2.01 | % | ||||||||||
Portfolio turnover rate | 60 | % | 42 | % | 47 | % | 60 | % | 78 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
Annual Report 87
LAZARD US CORPORATE INCOME PORTFOLIO
Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.89 | $ | 4.87 | $ | 4.64 | $ | 4.91 | $ | 5.01 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.22 | 0.22 | 0.23 | 0.24 | 0.26 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.35 | ) | 0.02 | 0.23 | (0.27 | ) | (0.09 | ) | ||||||||||||
Total from investment operations | (0.13 | ) | 0.24 | 0.46 | (0.03 | ) | 0.17 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.22 | ) | (0.22 | ) | (0.23 | ) | (0.24 | ) | (0.27 | ) | ||||||||||
Return of capital | — | — | — | — | (b) | — | ||||||||||||||
Total distributions | (0.22 | ) | (0.22 | ) | (0.23 | ) | (0.24 | ) | (0.27 | ) | ||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | ||||||||||||
Net asset value, end of period | $ | 4.54 | $ | 4.89 | $ | 4.87 | $ | 4.64 | $ | 4.91 | ||||||||||
Total Return (c) | –2.73 | % | 5.09 | % | 10.09 | % | –0.71 | % | 3.31 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 308,285 | $ | 344,508 | $ | 302,997 | $ | 243,712 | $ | 185,959 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.55 | % | 0.55 | % | 0.55 | % | 0.55 | % | 0.55 | % | ||||||||||
Gross expenses | 0.64 | % | 0.67 | % | 0.69 | % | 0.69 | % | 0.71 | % | ||||||||||
Net investment income (loss) | 4.65 | % | 4.57 | % | 4.78 | % | 4.94 | % | 5.28 | % | ||||||||||
Portfolio turnover rate | 16 | % | 21 | % | 14 | % | 17 | % | 28 | % |
The accompanying notes are an integral part of these financial statements.
88 Annual Report
Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.91 | $ | 4.89 | $ | 4.66 | $ | 4.93 | $ | 5.03 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.21 | 0.21 | 0.21 | 0.23 | 0.25 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.34 | ) | 0.02 | 0.24 | (0.27 | ) | (0.10 | ) | ||||||||||||
Total from investment operations | (0.13 | ) | 0.23 | 0.45 | (0.04 | ) | 0.15 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.21 | ) | (0.21 | ) | (0.22 | ) | (0.23 | ) | (0.25 | ) | ||||||||||
Return of capital | — | — | — | — | (b) | — | ||||||||||||||
Total distributions | (0.21 | ) | (0.21 | ) | (0.22 | ) | (0.23 | ) | (0.25 | ) | ||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | |||||||||||||
Net asset value, end of period | $ | 4.57 | $ | 4.91 | $ | 4.89 | $ | 4.66 | $ | 4.93 | ||||||||||
Total Return (c) | –2.78 | % | 4.77 | % | 9.74 | % | –0.98 | % | 3.01 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,314 | $ | 5,708 | $ | 7,618 | $ | 1,968 | $ | 1,811 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||
Gross expenses | 1.11 | % | 1.13 | % | 1.18 | % | 1.69 | % | 1.55 | % | ||||||||||
Net investment income (loss) | 4.34 | % | 4.28 | % | 4.44 | % | 4.65 | % | 5.00 | % | ||||||||||
Portfolio turnover rate | 16 | % | 21 | % | 14 | % | 17 | % | 28 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 89
Selected data for a share | For the Period | |||||||||||||||||||
of capital stock outstanding | Year Ended | 11/3/16* | ||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | to 12/31/16 | |||||||||||||||||
R6 Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.89 | $ | 4.87 | $ | 4.84 | ||||||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.23 | 0.22 | 0.04 | |||||||||||||||||
Net realized and unrealized gain (loss) | (0.35 | ) | 0.02 | 0.03 | ||||||||||||||||
Total from investment operations | (0.12 | ) | 0.24 | 0.07 | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.10 | ) | (0.22 | ) | (0.04 | ) | ||||||||||||||
Total distributions | (0.10 | ) | (0.22 | ) | (0.04 | ) | ||||||||||||||
Net asset value, end of period | $ | 4.67 | $ | 4.89 | $ | 4.87 | ||||||||||||||
Total Return (c) | –2.43 | %# | 5.09 | % | 1.37 | % | ||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1 | $ | 1,783 | $ | 1,697 | ||||||||||||||
Ratios to average net assets (d): | ||||||||||||||||||||
Net expenses | 0.55 | % | 0.55 | % | 0.55 | % | ||||||||||||||
Gross expenses | 4.62 | % | 1.69 | % | 1.73 | % | ||||||||||||||
Net investment income (loss) | 4.61 | % | 4.58 | % | 4.71 | % | ||||||||||||||
Portfolio turnover rate | 16 | % | 21 | % | 14 | % |
* | The inception date for the R6 Shares was November 3, 2016. |
# | The Portfolio received settlement proceeds from a foreign exchange trading class action lawsuit. The proceeds from the settlement represented a realized gain and were recorded in the period received. There was a 0.62% impact on the total return of the Portfolio’s R6 Shares. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
90 Annual Report
LAZARD US SHORT DURATION FIXED INCOME PORTFOLIO
Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.79 | $ | 9.86 | $ | 9.89 | $ | 9.99 | $ | 10.03 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.19 | 0.14 | 0.13 | 0.10 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.09 | ) | (0.07 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | ||||||||||
Total from investment operations | 0.10 | 0.07 | 0.10 | 0.01 | 0.05 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.17 | ) | (0.11 | ) | (0.09 | ) | (0.06 | ) | (0.05 | ) | ||||||||||
Return of capital | (0.02 | ) | (0.03 | ) | (0.04 | ) | (0.05 | ) | (0.04 | ) | ||||||||||
Total distributions | (0.19 | ) | (0.14 | ) | (0.13 | ) | (0.11 | ) | (0.09 | ) | ||||||||||
Redemption fees | — | — | — | — | (b) | — | ||||||||||||||
Net asset value, end of period | $ | 9.70 | $ | 9.79 | $ | 9.86 | $ | 9.89 | $ | 9.99 | ||||||||||
Total Return (c) | 1.08 | % | 0.72 | % | 1.00 | % | 0.05 | % | 0.49 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 116,276 | $ | 100,390 | $ | 103,175 | $ | 103,150 | $ | 114,705 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.40 | % | 0.40 | % | 0.40 | % | 0.40 | % | 0.40 | % | ||||||||||
Gross expenses | 0.43 | % | 0.43 | % | 0.50 | % | 0.48 | % | 0.52 | % | ||||||||||
Net investment income (loss) | 2.00 | % | 1.43 | % | 1.30 | % | 1.05 | % | 0.87 | % | ||||||||||
Portfolio turnover rate | 170 | % | 108 | % | 157 | % | 57 | % | 46 | % |
The accompanying notes are an integral part of these financial statements.
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Selected data for a share | ||||||||||||||||||||
of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 9.79 | $ | 9.87 | $ | 9.90 | $ | 10.01 | $ | 10.03 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.16 | 0.11 | 0.10 | 0.17 | 0.06 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.08 | ) | (0.08 | ) | (0.03 | ) | (0.09 | ) | (0.02 | ) | ||||||||||
Total from investment operations | 0.08 | 0.03 | 0.07 | 0.08 | 0.04 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.14 | ) | (0.09 | ) | (0.07 | ) | (0.14 | ) | (0.02 | ) | ||||||||||
Return of capital | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.05 | ) | (0.04 | ) | ||||||||||
Total distributions | (0.16 | ) | (0.11 | ) | (0.10 | ) | (0.19 | ) | (0.06 | ) | ||||||||||
Redemption fees | — | — | — | — | (b) | — | ||||||||||||||
Net asset value, end of period | $ | 9.71 | $ | 9.79 | $ | 9.87 | $ | 9.90 | $ | 10.01 | ||||||||||
Total Return (c) | 0.88 | % | 0.32 | % | 0.70 | % | 0.77 | % | 0.38 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 37 | $ | 25 | $ | 44 | $ | 27 | $ | 36 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | ||||||||||
Gross expenses | 38.00 | % | 33.88 | % | 31.22 | % | 42.51 | % | 17.62 | % | ||||||||||
Net investment income (loss) | 1.68 | % | 1.13 | % | 1.00 | % | 1.68 | % | 0.60 | % | ||||||||||
Portfolio turnover rate | 170 | % | 108 | % | 157 | % | 57 | % | 46 | % |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
The accompanying notes are an integral part of these financial statements.
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The Lazard Funds, Inc.Notes to Financial Statements December 31, 2018
1. Organization
The Lazard Funds, Inc. was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of December 31, 2018, the Fund was comprised of thirty-three no-load portfolios (each referred to as a “Portfolio”). This report includes only the financial statements of Emerging Markets Debt, Global Fixed Income, US Corporate Income and US Short Duration Fixed Income Portfolios. The financial statements of the other twenty-nine Portfolios are presented separately.
The Portfolios, other than Emerging Markets Debt Portfolio, are operated as “diversified” funds, as defined in the 1940 Act.
Each Portfolio currently offers Institutional Shares and Open Shares, and certain Portfolios offer R6 Shares. Each share class is identical except as to minimum investment requirements; eligibility requirements for R6 Shares; the services offered to, and expenses borne by, each class; and the availability of Service Payments (as defined in the Portfolios’ Prospectus).
2. Significant Accounting Policies
The accompanying financial statements are presented in conformity with US Generally Accepted Accounting Principles (“GAAP”). The Fund is an investment company and therefore applies specialized accounting guidance in accordance with Accounting Standards Codification Topic 946. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements:
(a) Valuation of Investments—Bonds and other fixed-income securities that are not exchange-traded are valued on the basis of prices provided by independent pricing services which are based on, among other things, trading in securities with similar characteristics, brokers’ quotations and/or a matrix system which considers such factors as other security prices, yields and maturities. Swap agreements, such as credit default, interest rate and total return swap agreements, generally are valued by an independent pricing service. Forward currency contracts generally are valued using
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quotations from an independent pricing service. Investments in money market funds are valued at the fund’s net asset value (“NAV”) per share.
Calculation of a Portfolio’s NAV may not take place contemporaneously with the determination of the prices of portfolio assets used in such calculation. Trading on Europe, Latin and South America and Far East securities exchanges and in over-the-counter markets ordinarily is completed well before the close of business on each business day in New York (i.e., a day on which the New York Stock Exchange (the “NYSE”) is open). In addition, European or Far Eastern securities trading generally, or in a particular country or countries, may not take place on all business days in New York and on which the NAV of a Portfolio is calculated.
The Valuation Committee of the Investment Manager, which meets periodically under the direction of the Board of Directors (the “Board”), may evaluate a variety of factors to determine the fair value of securities for which market quotations are determined not to be readily available or reliable. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager’s portfolio managers/analysts also will be considered.
If a significant event materially affecting the value of securities occurs between the close of the exchange or market on which the security is principally traded and the time when a Portfolio’s NAV is calculated, or when current market quotations otherwise are determined not to be readily available or reliable (including restricted or other illiquid securities such as certain derivative instruments), such securities will be valued at their fair value as determined by, or in accordance with procedures approved by, the Board. Non-US securities may trade on days when a Portfolio is not open for business, thus affecting the value of the Portfolio’s assets on days when Portfolio shareholders may not be able to buy or sell Portfolio shares.
The effect of using fair value pricing is that the NAV of a Portfolio will reflect the affected securities’ values as determined in the judgment of the Board or its designee instead of being deter-
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mined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios’ NAVs.
(b) Portfolio Securities Transactions and Investment Income—Portfolio securities transactions are accounted for on trade date. Realized gain (loss) on sales of investments are recorded on a specific identification basis. Interest income is accrued daily. A Portfolio amortizes premiums and accretes discounts on fixed-income securities using the effective yield method and mortgage-backed securities using the level yield method.
A Portfolio may be subject to taxes imposed by non-US countries in which it invests. Such taxes are generally based upon income earned or capital gains (realized and/or unrealized). An affected Portfolio accrues and applies such taxes to net investment income, net realized gains and net unrealized gains concurrent with the recognition of income earned or capital gains (realized and/or unrealized) from the applicable portfolio securities.
(c) Foreign Currency Translation and Forward Currency Contracts—The accounting records of the Fund are maintained in US dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into US dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into US dollars at the prevailing exchange rates on the respective transaction dates.
The Portfolios do not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions and forward currency contracts represent net foreign currency gain (loss) from forward currency contracts, disposition of foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of interest and foreign withholding taxes recorded on the Portfolios’ accounting records and the US dollar equivalent amounts actually
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received or paid. Net change in unrealized appreciation (depreciation) on foreign currency translations reflects the impact of changes in exchange rates on the value of assets and liabilities, other than investments in securities, during the period.
A forward currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the US dollar.
The US dollar value of forward currency contracts is determined using quotations provided by an independent pricing service. Daily fluctuations in the value of such contracts are recorded as unrealized appreciation (depreciation) on forward currency contracts. When the contract is closed, a Portfolio records a realized gain (loss) equal to the difference between the value at the time it was opened and the value at the time it was closed.
During the year ended December 31, 2018, the Emerging Markets Debt and Global Fixed Income Portfolios traded in forward currency contracts.
(d) Swap Agreements—Interest rate swap agreements involve the exchange by a Portfolio with another party of their respective commitments to pay or receive interest with respect to the notional amount of principal. Certain forms of interest rate swap agreements may include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap,” (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor,” (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels, (iv) callable interest rate swaps, under which the counterparty may terminate the swap transaction in whole at zero cost by a predetermined date and time prior to the maturity date, (v) spread locks, which allow
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the interest rate swap users to lock in the forward differential (or spread) between the interest rate swap rate and specified benchmark, or (vi) basis swaps, under which two parties can exchange variable interest rates based on different money markets.
Swap agreements generally are valued by an independent pricing service, and the change in value, if any, is recorded as unrealized appreciation (depreciation) on swap agreements in a Portfolio’s accompanying Statement of Assets and Liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain (loss) on swap agreements in a Portfolio’s accompanying Statement of Operations, in addition to any realized gain (loss) recorded upon the termination of swap agreements.
During the year ended December 31, 2018, the Emerging Markets Debt Portfolio traded in swap agreements.
(e) Federal Income Taxes—The Fund’s policy is to have each Portfolio qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”) and to distribute all of its taxable income, including any net realized capital gains, to shareholders. Therefore, no federal income tax provision is required.
At December 31, 2018, the following Portfolios had unused realized capital loss carryovers which, for federal income tax purposes, could be used to offset future realized capital gains with no expiration date as follows:
Portfolio | Short-Term | Long-Term | ||||||
Emerging Markets Debt | $ | 26,228,591 | $ | 14,492,603 | ||||
Global Fixed Income | 21,530 | 20,133 | ||||||
US Corporate Income | 3,242,094 | 3,076,895 | ||||||
US Short Duration Fixed Income | 1,194,698 | 348,713 |
During the year ended December 31, 2018, the US Corporate Income Portfolio utilized $588,674 of realized capital loss carryovers from previous years.
Under current tax law, post-October capital losses or certain late-year ordinary losses, as defined by the Code, within the taxable year may be deferred and treated as occurring on the first day of
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the following tax year. For the tax year ended December 31, 2018, the following Portfolio elected to defer such losses as follows:
Post-October | Late-Year | |||||||
Capital Loss | Ordinary Loss | |||||||
Portfolio | Deferral | Deferral | ||||||
US Short Duration Fixed Income | $ | — | $27,635 |
For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized depreciation and the net unrealized appreciation (depreciation) were as follows:
Aggregate | Aggregate | Net | ||||||||||||||
Gross | Gross | Unrealized | ||||||||||||||
Aggregate | Unrealized | Unrealized | Appreciation | |||||||||||||
Portfolio | Cost | Appreciation | Depreciation | (Depreciation) | ||||||||||||
Emerging Markets Debt | $262,631,718 | $1,720,281 | $23,079,694 | $(21,359,413 | ) | |||||||||||
Global Fixed Income | 5,712,278 | 6,915 | 245,173 | (238,258 | ) | |||||||||||
US Corporate Income | 327,221,574 | 1,092,450 | 19,468,378 | (18,375,928 | ) | |||||||||||
US Short Duration Fixed Income | 115,542,057 | 138,389 | 425,108 | (286,719 | ) |
Management has analyzed the Portfolios’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns filed for any open tax years (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitations. Each Portfolio files a US federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
(f) Dividends and Distributions—Emerging Markets Debt Portfolio intends to declare dividends from net investment income, if any, daily and to pay such dividends monthly. Dividends from net investment income, if any, on the other Portfolios will be declared and paid monthly. During any particular year, net realized gains from investment transactions in excess of available capital loss carryfor-wards would be taxable to the Portfolios, if not distributed.The Portfolios intend to declare and distribute these amounts, at least
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annually, to shareholders; however, to avoid taxation, a second distribution may be required. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
Income and capital gains distributions are determined in accordance with federal income tax regulations which may differ from GAAP. These book/tax differences, which may result in distribution reclassifications, are primarily due to differing treatments of foreign currency and fixed-income transactions, certain fixed-income securities and expenses, derivatives, wash sales, return of capital distributions, currency straddles and paydown gain/loss. The book/tax differences relating to shareholder distributions resulted in reclassifications among certain capital accounts as follows:
Distributable | ||||||||
Earnings | ||||||||
(Accumulated | ||||||||
Portfolio | Paid in Capital | Loss) | ||||||
Emerging Markets Debt | $(7,608,444 | ) | $7,608,444 | |||||
Global Fixed Income | (67,640 | ) | 67,640 | |||||
US Short Duration Fixed Income | (228,437 | ) | 228,437 |
In October 2018, the US Securities and Exchange Commission (the “SEC”) adopted amendments to certain disclosure requirements included in Regulation S-X that had become “redundant, duplicative, overlapping, outdated or superseded, in light of the other Commission disclosure requirements, GAAP or changes in the information environment.” The compliance date for the amendments to Regulation S-X was November 5, 2018 (for reporting period end dates of September 30, 2018 or after). The Fund adopted these amendments and such changes are reflected in these financial statements.
Under these amendments, it is no longer required to differentiate distributions from earnings as either net investment income or net realized capital gains or disclose a Portfolio’s undistributed net investment income within a Portfolio’s Statement of Changes in Net Assets. The presentation within the Portfolios’ Statement of Changes in Net Assets for the year ended December 31, 2017 also has been modified accordingly.
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Below is the characterization of the Portfolio distributions and undistributed (distributions in excess of) net investment income (loss) for the year ended December 31, 2017 as previously disclosed in the Statement of Changes in Net Assets within the December 31, 2017 Annual Report:
Institutional | Open | R6 | ||||||||||
From net investment income | Shares | Shares | Shares | |||||||||
Emerging Markets Debt | $ | 13,803,686 | $ | 387,708 | $ | 2,026 | ||||||
US Corporate Income | 14,816,506 | 281,890 | 79,722 | |||||||||
US Short Duration Fixed Income | 1,300,615 | 360 | N/A |
Undistributed (Distributions in excess of) net investment income (loss) | Amount | |||
Emerging Markets Debt | $ | (6,656,272 | ) | |
Global Fixed Income | (67,058 | ) | ||
US Corporate Income | 10,137 | |||
US Short Duration Fixed Income | (84,231 | ) |
The tax character of dividends and distributions paid during the years ended December 31, were as follows:
Ordinary Income | Long-Term Capital Gain | |||||||||||||||
Portfolio | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Emerging Markets Debt* | $ | 6,876,903 | $ | 14,193,420 | $ | — | $ | — | ||||||||
Global Fixed Income* | 59,682 | — | — | — | ||||||||||||
US Corporate Income | 16,088,516 | 15,178,118 | — | — | ||||||||||||
US Short Duration Fixed Income* | 1,977,207 | 1,300,975 | — | — |
* | Emerging Markets Debt, Global Fixed Income and US Short Duration Fixed Income Portfolios had return of capital distributions of $7,608,445, $67,642 and $228,437 in 2018, and $903,695, $104,204 and $303,746 in 2017, respectively. |
At December 31, 2018, the components of distributable earnings (accumulated loss), on a tax basis, were as follows:
Undistributed | Undistributed | Net Unrealized | ||||||||||
Ordinary Income | Long-Term | Appreciation | ||||||||||
(Deferred | Capital Gain | (Depreciation) | ||||||||||
Ordinary | (Deferred | Including | ||||||||||
Portfolio | Losses) | Capital Losses) | Foreign Currency | |||||||||
Emerging Markets Debt | $ | — | $ | (40,721,194 | ) | $ | (21,398,699 | ) | ||||
Global Fixed Income | — | (41,663 | ) | (247,922 | ) | |||||||
US Corporate Income | 75,053 | (6,318,989 | ) | (18,441,492 | ) | |||||||
US Short Duration Fixed Income | (27,635 | ) | (1,543,411 | ) | (325,307 | ) |
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(g) Allocation of Expenses—Expenses common to the Fund, Lazard Retirement Series, Inc., Lazard Global Total Return and Income Fund, Inc. and Lazard World Dividend & Income Fund, Inc. (each a “Lazard Fund” and collectively, the “Lazard Fund Complex”), each a registered management investment company advised by the Investment Manager, not directly chargeable to one or more specific Lazard Funds are allocated to the Fund and among its Portfolios primarily on the basis of relative net assets. Expenses of the Fund not directly chargeable to one or more Portfolios are similarly allocated among the Portfolios on the basis of relative net assets. Portfolios accrue distribution and service (12b-1) fees to Open Shares. The Portfolios’ income, expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.
(h) Redemption Fee—Until August 15, 2016, the Portfolios, other than the US Short Duration Fixed Income Portfolio, imposed a 1.00% redemption fee (short-term trading fee) on Portfolio shares redeemed less than 30 days after such shares were acquired. The fees were retained by the Portfolios and are included as paid in capital on the Statements of Assets and Liabilities. As of August 15, 2016, redemption fees no longer apply to transactions in Portfolio shares.
(i) Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates.
(j) Net Asset Value—NAV per share for each class of each Portfolio is determined each day the NYSE is open for trading as of the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time). The Fund will not treat an intraday unscheduled disruption in NYSE trading as a closure of the NYSE, and will price its shares as of 4:00 p.m., if the particular disruption directly affects only the NYSE.
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NAV per share is determined by dividing the value of the total assets of the Portfolio represented by such class, less all liabilities, by the total number of Portfolio shares of such class outstanding.
3. Investment Management, Administration, Custody, Distribution and Transfer Agency Agreements
The Fund, on behalf of the Portfolios, has entered into a management agreement (the “Management Agreement”) with the Investment Manager. Pursuant to the Management Agreement, the Investment Manager regularly provides each Portfolio with investment research, advice and supervision and furnishes continuously an investment program for each Portfolio consistent with its investment objectives and policies, including the purchase, retention and disposition of securities, and provides the Portfolios with administrative, operational and compliance assistance services. For its services provided to the Portfolios, the Investment Manager earns a management fee, accrued daily as a percentage of each Portfolio’s average daily net assets and payable by each Portfolio monthly, at the annual rate set forth below:
Portfolio | Annual Rate | |||
Emerging Markets Debt | 0.75 | % | ||
Global Fixed Income | 0.50 | |||
US Corporate Income | 0.55 | |||
US Short Duration Fixed Income | 0.25 |
The Investment Manager has voluntarily agreed, until May 1 of the year shown below (except as noted), to waive its fees and, if necessary, reimburse the Portfolios if the aggregate direct expenses of the Portfolios, exclusive of taxes, brokerage, interest on borrowings, fees and expenses of “Acquired Funds” (as defined in Form N-1A) and extraordinary expenses, but including the management fee stated in the Management Agreement between the Investment Manager and the Fund, on behalf of the Portfolios, exceed the percentages of the value of the Portfolio’s average daily net assets set forth opposite the Portfolio’s name on table below. The Fund, on behalf of the Portfolio, may deduct from the payment to be made to the Investment Manager under the Management Agreement, or the Investment Manager will bear, such excess expense.
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Portfolio | Institutional Shares | Open Shares | R6 Shares | Year | ||||||||||||
Emerging Markets Debt | 0.95 | % | 1.15 | % | 0.90 | % | 2028 | (a) | ||||||||
Global Fixed Income | 0.70 | 0.95 | N/A | 2019 | (b) | |||||||||||
US Corporate Income | 0.55 | 0.85 | 0.55 | 2019 | ||||||||||||
US Short Duration Fixed Income | 0.40 | 0.70 | N/A | 2019 |
(a) | From January 1, 2018 to June 26, 2018, percentage for the Open Shares was 1.20%. Agreement extends, from May 1, 2019 through May 1, 2028, at levels of 1.10%, 1.35% and 1.05%, respectively. |
(b) | From January 1, 2018 to June 26, 2018, percentage for the Open Shares was 1.00%. |
In addition, until May 1, 2019, to the extent the “Total Annual Fund Operating Expenses” (as used in Form N-1A) of the R6 Shares of a Portfolio exceed the Total Annual Fund Operating Expenses of the Portfolio’s Institutional Shares (in each case, not including management fees, custodial fees or other expenses related to the management of the Portfolio’s assets), the Investment Manager will bear the expenses of the R6 Shares in the amount of such excess.
During the year ended December 31, 2018, the Investment Manager waived its management fees and reimbursed the following Portfolios for other expenses as follows:
Institutional Shares | Open Shares | |||||||||||||||
Management | Expenses | Management | Expenses | |||||||||||||
Portfolio | Fees Waived | Reimbursed | Fees Waived | Reimbursed | ||||||||||||
Emerging Markets Debt | $ — | $ — | $ — | $11,241 | ||||||||||||
Global Fixed Income | 27,135 | 130,650 | 165 | 12,174 | ||||||||||||
US Corporate Income | 317,981 | — | 14,952 | — | ||||||||||||
US Short Duration Fixed Income | 27,555 | — | 78 | 11,405 |
R6 Shares | ||||||||
Management | Expenses | |||||||
Portfolio | Fees Waived | Reimbursed | ||||||
Emerging Markets Debt | $ — | $27,164 | ||||||
US Corporate Income | 1,575 | 10,076 |
The aforementioned waivers and/or reimbursements are not subject to recoupment by the Investment Manager.
State Street provides the Fund with custody and certain fund administration and accounting services.
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In December 2015, State Street announced that it had identified inconsistencies in the way in which clients were invoiced for custody out-of-pocket expenses from 1998 until 2015. The difference between what was charged and what should have been charged, plus interest, was recorded as a reimbursement when determined in 2016. Pursuant to the expense limitations described above, certain Portfolios experienced management fee waivers during the year ended December 31, 2016. Accordingly, the reimbursement of out-of-pocket expenses resulted in the reduction in the waiver of management fees for certain Portfolios for the year ended December 31, 2016.
The Fund has a distribution agreement with Lazard Asset Management Securities LLC (the “Distributor”), a wholly-owned subsidiary of the Investment Manager, to serve as the distributor for shares of each Portfolio. The Distributor bears the cost of printing and mailing prospectuses to potential investors and certain expenses in connection with the offering of Portfolio shares.
Under a distribution and servicing plan adopted pursuant to Rule 12b-1 under the 1940 Act, each Portfolio pays a monthly fee to the Distributor, at an annual rate of 0.25% of the average daily net assets of its Open Shares, for distribution and servicing of accounts. The Distributor may make payments to certain financial institutions, securities dealers and other industry professionals for providing these services.
DST is the Fund’s transfer and dividend disbursing agent.
4. Directors’ Compensation
Certain Directors of the Fund are officers of the Investment Manager. For the year ended December 31, 2018, each Director who is not an affiliated person of the Investment Manager or any of its affiliates was paid by all of the funds in the Lazard Fund Complex: (1) an annual retainer of $225,000, (2) an additional annual fee of $32,500 to the lead Independent Director (an “Independent Director” is a Director who is not an “interested person” (as defined in the 1940 Act) of the Fund), and (3) an additional annual fee of $22,500 to the Audit Committee Chair. Effective January 1, 2019,
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the aggregate compensation for Independent Directors for the Lazard Fund Complex is comprised of: (1) an annual retainer of $232,000, (2) an additional annual fee of $33,000 to the lead Independent Director, and (3) an additional annual fee of $23,000 to the Audit Committee Chair. The Independent Directors may be paid additional compensation for participation on ad hoc committees or other work performed on behalf of the Board. The Independent Directors also are reimbursed for travel and other out-of-pocket expenses for attending Board and committee meetings. The Directors do not receive benefits from the Fund pursuant to any pension, retirement or similar arrangement. Independent Directors’ fees are allocated among the funds in the Lazard Fund Complex at a rate of $5,000 per fund with the remainder allocated based upon each fund’s proportionate share of combined net assets. The Statements of Operations show the Independent Directors’ fees and expenses paid by each Portfolio.
5. Securities Transactions and Transactions with Affiliates
Purchases and sales of portfolio securities (excluding short-term investments) for the year ended December 31, 2018 were as follows:
Portfolio | Purchases | Sales | ||||||
Emerging Markets Debt | $221,111,008 | $236,456,937 | ||||||
Global Fixed Income | 3,322,185 | 2,409,455 | ||||||
US Corporate Income | 52,501,868 | 54,323,926 | ||||||
US Short Duration Fixed Income | 31,303,750 | 38,409,681 |
US Government and Treasury Securities | ||||||||
Portfolio | Purchases | Sales | ||||||
Global Fixed Income | $ 973,272 | $ 761,540 | ||||||
US Short Duration Fixed Income | 160,377,811 | 137,757,841 |
For the year ended December 31, 2018, the Portfolios did not engage in any cross-trades in accordance with Rule 17a-7 under the 1940 Act, and no brokerage commissions were paid to affiliates of the Investment Manager or other affiliates of the Fund for portfolio transactions executed on behalf of the Fund.
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6. Line of Credit
The Fund has a $50 million Line of Credit Agreement (the “Agreement”) with State Street, primarily for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest on borrowings is payable at the higher of the Federal Funds rate or One-Month LIBOR rate plus 1.00%, on an annualized basis. Under the Agreement, the Fund has agreed to pay a 0.20% per annum fee on the unused portion of the commitment, payable quarterly in arrears. The Fund has also agreed to pay an upfront fee of 0.05% of the committed line amount. During the year ended December 31, 2018, the following Portfolios had borrowings under the Agreement as follows:
Weighted | Number of | |||||||||||||||
Average | Maximum | Average | Days | |||||||||||||
Daily Loan | Daily Loan | Interest | Borrowings | |||||||||||||
Portfolio | Balance | * | Outstanding | Rate | were Outstanding | |||||||||||
Emerging Markets Debt | $3,919,556 | $7,875,000 | 2.70 | % | 9 | |||||||||||
Global Fixed Income | 180,000 | 270,000 | 2.81 | 9 | ||||||||||||
US Corporate Income | 790,000 | 790,000 | 3.50 | 1 |
* | For days borrowings were outstanding. |
Management believes that the fair value of the liabilities under the line of credit is equivalent to the recorded amount based on its short-term maturity and interest rate, which fluctuates with LIBOR. A Portfolio’s outstanding balance on the line of credit, if any, would be categorized as Level 2.
7. Investment Risks
(a) Non-US Securities Risk—A Portfolio’s performance will be influenced by political, social and economic factors affecting the non-US countries and companies in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity.
(b) Emerging Market Risk—Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed
106 Annual Report
countries. The economies of countries with emerging markets may be based predominantly on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme debt burdens or volatile inflation rates. The securities markets of emerging market countries have historically been extremely volatile. These market conditions may continue or worsen. Investments in these countries may be subject to political, economic, legal, market and currency risks. The risks may include less protection of property rights and uncertain political and economic policies, the imposition of capital controls and/or foreign investment limitations by a country, nationalization of businesses and the imposition of sanctions by other countries, such as the US. Significant devaluation of emerging market currencies against the US dollar may occur subsequent to acquisition of investments denominated in emerging market currencies.
(c) Foreign Currency Risk—Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to fluctuations in currency exchange rates. A Portfolio’s currency investments could be adversely affected by delays in, or a refusal to grant, repatriation of funds or conversion of emerging market currencies. The Investment Manager generally does not intend to actively hedge the Portfolio’s foreign currency exposure.
(d) Fixed-Income and Debt Securities Risk—The market value of a debt security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The debt securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening.
Prices of bonds and other debt securities tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect debt securities and, accordingly, will cause the value of a Portfolio’s investments in these securities to decline.
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Interest rate risk is usually greater for fixed-income securities with longer maturities or durations. A rise in interest rates (or the expectation of a rise in interest rates) may result in periods of volatility, decreased liquidity and increased redemptions, and, as a result, the Portfolio may have to liquidate portfolio securities at disadvantageous prices. During periods of reduced market liquidity, a Portfolio may not be able to readily sell debt securities at prices at or near their perceived value. An unexpected increase in Portfolio redemption requests, including requests from shareholders who may own a significant percentage of a Portfolio’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the Portfolio to sell its holdings at a loss or at undesirable prices and adversely affect the Portfolio’s share price and increase the Portfolio’s liquidity risk, Portfolio expenses and/or taxable distributions. Economic and other developments can adversely affect debt securities markets.
A Portfolio’s investments in lower-rated, higher-yielding securities (“junk bonds”) are subject to greater credit risk than its higher-rated investments. Credit risk is the risk that the issuer will not make interest or principal payments, or will not make payments on a timely basis. Non-investment grade securities tend to be more volatile, less liquid and are considered speculative. If there is a decline, or perceived decline, in the credit quality of a debt security (or any guarantor of payment on such security), the security’s value could fall, potentially lowering a Portfolio’s share price. The prices of non-investment grade securities, unlike investment grade debt securities, may fluctuate unpredictably and not necessarily inversely with changes in interest rates. The prices of high yield securities can fall in response to negative news about the issuer or its industry, or the economy in general to a greater extent than those of higher-rated securities. The market for these securities may be less liquid and therefore these securities may be harder to value or sell at an acceptable price, especially during times of market volatility or decline.
Some fixed-income securities may give the issuer the option to call, or redeem, the securities before their maturity. If securities held by a Portfolio are called during a time of declining interest
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rates (which is typically the case when issuers exercise options to call outstanding securities), the Portfolio may have to reinvest the proceeds in an investment offering a lower yield (and the Portfolio may not fully benefit from any increase in the value of its portfolio holdings as a result of declining interest rates).
Adjustable rate securities provide a Portfolio with a certain degree of protection against rises in interest rates, although such securities will participate in any declines in interest rates as well. Certain adjustable rate securities, such as those with interest rates that fluctuate directly or indirectly based on multiples of a stated index, are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme reductions of yield and possibly loss of principal. Certain fixed-income securities may be issued at a discount from their face value (such as zero coupon securities) or purchased at a price less than their stated face amount or at a price less than their issue price plus the portion of “original issue discount” previously accrued thereon,i.e., purchased at a “market discount.” The amount of original issue discount and/or market discount on certain obligations may be significant, and accretion of market discount together with original issue discount will cause a Portfolio to realize income prior to the receipt of cash payments with respect to these securities.
(e) Mortgage-Related and Asset-Backed Securities Risk—Mortgage-related securities are complex instruments, subject to both credit and prepayment risk, and may be more volatile and less liquid, and more difficult to price accurately, than more traditional debt securities. Although certain mortgage-related securities are guaranteed by a third party (such as a US Government agency or instrumentality with respect to government-related mortgage-backed securities) or otherwise similarly secured, the market value of the security, which may fluctuate, is not secured. Mortgage-related securities generally are subject to credit risks associated with the performance of the underlying mortgage properties. Prepayment risk can lead to fluctuations in value of the mortgage-related security which may be pronounced. As with other interest-bearing securities, the prices of certain mortgage-related securities are inversely affected by changes in interest rates. How-
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ever, although the value of a mortgage-related security may decline when interest rates rise, the converse is not necessarily true, since during periods of declining interest rates the mortgages underlying the security are more likely to be prepaid.
The risks of asset-backed securities are similar to those of mortgage-related securities. However, asset-backed securities present certain risks that are not presented by mortgage-related securities. Primarily, these securities may provide a Portfolio with a less effective security interest in the related collateral than do mortgage-related securities.
(f) Derivatives and Hedging Risk—Derivatives transactions, including those entered into for hedging purposes (i.e., seeking to protect Portfolio investments), may increase volatility, reduce returns, limit gains or magnify losses, perhaps substantially, particularly since most derivatives have a leverage component that provides investment exposure in excess of the amount invested. Over-the-counter swap agreements, forward currency contracts, writing or purchasing over-the-counter options on securities (including options on exchange-traded funds and exchange-traded notes), indexes and currencies and other over-the-counter derivatives transactions are subject to the risk of default by the counterparty and can be illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. These derivatives transactions, as well as the exchange-traded futures and options in which certain Portfolios may invest, are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related index, commodity, interest rate, currency, security or other reference asset. As such, a small investment could have a potentially large impact on a Portfolio’s performance. Purchasing options will reduce returns by the amount of premiums paid for options that are not exercised. In fact, many derivatives may be subject to greater risks than those associated with investing directly in the underlying or other reference asset. Derivatives transactions incur costs, either explicitly or implicitly, which reduce returns, and costs of engaging in such transactions may outweigh any gains or any losses averted from hedging activities. Successful use of derivatives, whether for
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hedging or for other investment purposes, is subject to the Investment Manager’s ability to predict correctly movements in the direction of the relevant reference asset or market and, for hedging activities, correlation of the derivative instruments used with the investments seeking to be hedged. Use of derivatives transactions, even when entered into for hedging purposes, may cause a Portfolio to experience losses greater than if the Portfolio had not engaged in such transactions.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnification provisions. A Portfolio’s maximum exposure under these arrangements is unknown. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Fair Value Measurements
Fair value is defined as the price that a Portfolio would receive to sell an asset, or would pay to transfer a liability, in an orderly transaction between market participants at the date of measurement. The Fair Value Measurements and Disclosures provisions of GAAP also establish a framework for measuring fair value, and a three-level hierarchy for fair value measurement that is based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer, broadly, to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The fair value measurement level within the fair value hierarchy for the assets and liabilities of the Fund is based on the lowest level of any input that is significant to the overall fair value measurement. The three-level hierarchy of inputs is summarized below:
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• | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities |
• | Level 2 – other significant observable inputs (including unadjusted quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets and liabilities) |
Changes in valuation technique may result in transfers into or out of the current assigned level within the hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in these securities.
The following table summarizes the valuation of the Portfolios’ assets and liabilities by each fair value hierarchy level as of December 31, 2018:
Unadjusted | |||||||||||||||||
Quoted Prices in | |||||||||||||||||
Active Markets | Significant | ||||||||||||||||
for Identical | Other | Significant | |||||||||||||||
Assets | Observable | Unobservable | |||||||||||||||
and Liabilities | Inputs | Inputs | Balance as of | ||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | December 31, 2018 | |||||||||||||
Emerging Markets Debt Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Corporate Bonds* | $ | — | $ | 11,966,856 | $ | — | $ | 11,966,856 | |||||||||
Foreign Government Obligations* | — | 216,544,499 | — | 216,544,499 | |||||||||||||
Quasi Government Bonds* | — | 5,160,813 | — | 5,160,813 | |||||||||||||
Supranational Bonds | — | 2,340,286 | — | 2,340,286 | |||||||||||||
Short-Term Investments | 5,952,735 | — | — | 5,952,735 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 893,329 | — | 893,329 | |||||||||||||
Total | $ | 5,952,735 | $ | 236,905,783 | $ | — | $ | 242,858,518 | |||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (186,013 | ) | $ | — | $ | (186,013 | ) |
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Unadjusted | |||||||||||||||||
Quoted Prices in | |||||||||||||||||
Active Markets | Significant | ||||||||||||||||
for Identical | Other | Significant | |||||||||||||||
Assets | Observable | Unobservable | |||||||||||||||
and Liabilities | Inputs | Inputs | Balance as of | ||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | December 31, 2018 | |||||||||||||
Global Fixed Income Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Corporate Bonds* | $ | — | $ | 1,792,106 | $ | — | $ | 1,792,106 | |||||||||
Foreign Government Obligations* | — | 2,294,644 | — | 2,294,644 | |||||||||||||
Quasi Government Bonds* | — | 54,271 | — | 54,271 | |||||||||||||
Supranational Bonds | — | 612,498 | — | 612,498 | |||||||||||||
US Municipal Bonds | — | 99,542 | — | 99,542 | |||||||||||||
US Treasury Securities | — | 635,534 | — | 635,534 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 52,594 | — | 52,594 | |||||||||||||
Total | $ | — | $ | 5,541,189 | $ | — | $ | 5,541,189 | |||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (20,491 | ) | $ | — | $ | (20,491 | ) | |||||||
US Corporate Income Portfolio | |||||||||||||||||
Corporate Bonds* | $ | — | $ | 308,845,646 | $ | — | $ | 308,845,646 | |||||||||
US Short Duration Fixed Income Portfolio | |||||||||||||||||
Asset-Backed Securities* | $ | — | $ | 5,020,118 | $ | — | $ | 5,020,118 | |||||||||
Corporate Bonds* | — | 43,570,598 | — | 43,570,598 | |||||||||||||
US Government Securities | — | 10,291,968 | — | 10,291,968 | |||||||||||||
US Treasury Securities | — | 55,775,155 | — | 55,775,155 | |||||||||||||
Short-Term Investments | 597,499 | — | — | 597,499 | |||||||||||||
Total | $ | 597,499 | $ | 114,657,839 | $ | — | $ | 115,255,338 |
* | Please refer to Portfolios of Investments and Notes to Portfolios of Investments for portfolio holdings by country and industry. |
† | Other financial instruments are derivative instruments which are valued at their respective unrealized appreciation (depreciation). |
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10. Derivative Instruments
Certain Portfolios may use derivative instruments, including forward currency contracts or swap agreements.
Forward currency contracts may be used for hedging purposes or to seek to increase returns.
A Portfolio enters into swap agreements in an attempt to obtain a particular exposure when it is considered desirable to do so, possibly at a lower cost to such Portfolio than if it had invested directly in the asset that yielded the desired exposure.
During the year ended December 31, 2018, the approximate average monthly notional exposure for derivative instruments was as follows:
Derivative Instruments | Emerging Markets Debt Portfolio | Global Fixed Income Portfolio | ||||||
Forward currency contracts: | ||||||||
Average amounts purchased | $77,700,000 | $2,700,000 | ||||||
Average amounts sold | 56,800,000 | 2,400,000 | ||||||
Interest rate swap agreements: | ||||||||
Average notional value – receives fixed rate | 12,500,000 | # | — |
# | Represents average monthly notional exposure for the 11 months the derivative instrument was open during the period. |
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Assets – Derivative Financial Instruments | Emerging Markets Debt Portfolio | Global Fixed Income Portfolio | ||||||||
Forward currency contracts | Unrealized appreciation on forward currency contracts | $ | 893,329 | $52,594 |
Liabilities – Derivative Financial Instruments | Emerging Markets Debt Portfolio | Global Fixed Income Portfolio | ||||||||
Forward currency contracts | Unrealized depreciation on forward currency contracts | $ | 186,013 | $20,491 |
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The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Emerging Markets Debt Portfolio
Net Realized Gain (Loss) from: | Foreign Currency Contracts | Interest Rate Contracts | Total | |||||||||
Forward currency contracts | $ | (411,030 | ) | $ | – | $ | (411,030 | ) | ||||
Swap agreements | – | (2,287,060 | ) | (2,287,060 | ) | |||||||
Total | $ | (411,030 | ) | $ | (2,287,060 | ) | $ | (2,698,090 | ) |
Net Change in Unrealized Appreciation (Depreciation) on: | Foreign Currency Contracts | Interest Rate Contracts | Total | |||||||||
Forward currency contracts | $ | 744,115 | $ | – | $ | 744,115 | ||||||
Swap agreements | – | 59,623 | 59,623 | |||||||||
Total | $ | 744,115 | $ | 59,623 | $ | 803,738 |
Global Fixed Income Portfolio
Net Realized Gain (Loss) from: | Total | |||
Forward currency contracts | $ | (41,569 | ) |
Net Change in Unrealized Appreciation (Depreciation) on: | Total | |||
Forward currency contracts | $ | 57,838 |
None of the other Portfolios presented traded in derivative instruments during the year ended December 31, 2018.
As of December 31, 2018, the Emerging Markets Debt and Global Fixed Income Portfolios held derivative instruments that are eligible for offset in the Statements of Assets and Liabilities and are subject to master netting arrangements. A master netting arrangement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as any cash collateral, through a single payment in the event of default on, or termination of, any one contract.
The required information for the affected Portfolios are presented in the below table, as of December 31, 2018:
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Emerging Markets Debt Portfolio
Description | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | |||||||||||
Forward Currency Contracts | $ | 893,329 | $ | — | $ | 893,329 |
Amounts Not Offset in the Statement of Assets and Liabilities | ||||||||||||||||||
Counterparty | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Received (a) | Net Amounts of Derivative Assets | ||||||||||||||
Bank of America NA | $ | 47,902 | $ | (5,400 | ) | $ | — | $ | 42,502 | |||||||||
Barclays Bank PLC | 237,789 | (84,455 | ) | — | 153,334 | |||||||||||||
Citibank NA | 58,605 | (10,053 | ) | — | 48,552 | |||||||||||||
Goldman Sachs International | 923 | — | — | 923 | ||||||||||||||
HSBC Bank USA NA | 60,789 | (17,521 | ) | — | 43,268 | |||||||||||||
JPMorgan Chase Bank NA | 86,301 | (4,253 | ) | (82,048 | ) | — | ||||||||||||
Standard Chartered Bank | 278,978 | (57,284 | ) | (221,694 | ) | — | ||||||||||||
UBS AG | 122,042 | (7,047 | ) | — | 114,995 | |||||||||||||
Total | $ | 893,329 | $ | (186,013 | ) | $ | (303,742 | ) | $ | 403,574 |
Description | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | |||||||||||
Forward Currency Contracts | $ | 186,013 | $ | — | $ | 186,013 |
Amounts Not Offset in the Statement of Assets and Liabilities | ||||||||||||||||||
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Pledged | Net Amounts of Derivative Liabilities | ||||||||||||||
Bank of America NA | $ | 5,400 | $ | (5,400 | ) | $ | — | $ | — | |||||||||
Barclays Bank PLC | 84,455 | (84,455 | ) | — | — | |||||||||||||
Citibank NA | 10,053 | (10,053 | ) | — | — | |||||||||||||
HSBC Bank USA NA | 17,521 | (17,521 | ) | — | — | |||||||||||||
JPMorgan Chase Bank NA | 4,253 | (4,253 | ) | — | — | |||||||||||||
Standard Chartered Bank | 57,284 | (57,284 | ) | — | — | |||||||||||||
UBS AG | 7,047 | (7,047 | ) | — | — | |||||||||||||
Total | $ | 186,013 | $ | (186,013 | ) | $ | — | $ | — |
(a) | Collateral amounts disclosed in the table above may be adjusted due to the requirement to limit collateral amounts to avoid the effect of over-collateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein. |
116 Annual Report
Global Fixed Income Portfolio
Description | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | |||||||||||
Forward Currency Contracts | $ | 52,594 | $ | — | $ | 52,594 |
Amounts Not Offset in the Statement of Assets and Liabilities | ||||||||||||||||||
Counterparty | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Received | Net Amounts of Derivative Assets | ||||||||||||||
Citibank NA | $ | 18,778 | $ | (2,938 | ) | $ | — | $ | 15,840 | |||||||||
HSBC Bank USA NA | 33,185 | (14,537 | ) | — | 18,648 | |||||||||||||
JPMorgan Chase Bank NA | 631 | (631 | ) | — | — | |||||||||||||
Total | $ | 52,594 | $ | (18,106 | ) | $ | — | $ | 34,488 |
Description | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | |||||||||||
Forward Currency Contracts | $ | 20,491 | $ | — | $ | 20,491 |
Amounts Not Offset in the Statement of Assets and Liabilities | ||||||||||||||||||
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Pledged | Net Amounts of Derivative Liabilities | ||||||||||||||
Citibank NA | $ | 2,938 | $ | (2,938 | ) | $ | — | $ | — | |||||||||
HSBC Bank USA NA | 14,537 | (14,537 | ) | — | — | |||||||||||||
JPMorgan Chase Bank NA | 3,016 | (631 | ) | — | 2,385 | |||||||||||||
Total | $ | 20,491 | $ | (18,106 | ) | $ | — | $ | 2,385 |
11. Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08,Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,which amends the amortization period for certain purchased callable debt securities. Management is currently evaluating the impact that the adoption
Annual Report 117
of the amendment will have on the Fund’s financial statements and related disclosures. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, modifies and adds disclosures to Topic 820. The amendments in this ASU apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has evaluated the impact of the amendments and has elected to adopt these amendments and incorporate the changes in the current financial statements.
12. Subsequent Events
Management has evaluated subsequent events affecting the Portfolios through the issuance of the financial statements and has determined that there were no subsequent events that required adjustment or disclosure.
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The Lazard Funds, Inc.Report of Independent Registered Public Accounting Firm
To the Board of Directors of The Lazard Funds, Inc. and Shareholders of Lazard Emerging Markets Debt Portfolio, Lazard Global Fixed Income Portfolio, Lazard US Corporate Income Portfolio and Lazard US Short Duration Fixed Income Portfolio:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments of Lazard Emerging Markets Debt Portfolio, Lazard Global Fixed Income Portfolio, Lazard US Corporate Income Portfolio and Lazard US Short Duration Fixed Income Portfolio (collectively the “Portfolios”), four of the portfolios constituting The Lazard Funds, Inc. (the “Fund”) as of December 31, 2018, 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, the financial highlights for each of the five years in the period then ended, and the related notes to the financial statements. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the portfolios constituting The Lazard Funds, Inc. as of December 31, 2018, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on the Portfolios’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Portfolios in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
Annual Report 119
audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Portfolios are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 2019
We have served as the auditor of one or more of the investment companies in the Lazard Fund Complex since 2004.
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The Lazard Funds, Inc.Board of Directors and Officers Information (unaudited)
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Independent Directors(3): | |||||
Franci J. Blassberg (1953) | Director (August 2014) | Debevoise & Plimpton LLP, a law firm,Of Counsel(2013 – present) | |||
Cornell Law School,AdjunctProfessor(2013 – 2016, 2019) | |||||
The Buchmann Faculty of Law, Tel Aviv University,Visiting Professor(2019) | |||||
University of California, Berkeley School of Law,Adjunct Professor(Spring 2017) | |||||
Kenneth S. Davidson (1945) | Director (August 1995) | Davidson Capital Management Corporation, an investment manager,President(1978 – present) | |||
Landseer Advisors LLC, an investment manager,Senior Advisor(2012 – 2014) | |||||
Nancy A. Eckl (1962) | Director (April 2007) | College Retirement Equities Fund (eight accounts),Trustee (2007 – present) | |||
TIAA-CREF Funds (69 funds) and TIAA-CREF Life Funds (11 funds),Trustee(2007 – present) | |||||
TIAA Separate Account VA-1,Member of the ManagementCommittee(2007 – present) | |||||
Trevor W. Morrison (1971) | Director (April 2014) | New York University School of Law,Dean and Eric M. and Laurie B.Roth Professor of Law (2013 – present) | |||
Columbia Law School,Professorof Law(2008 – 2013) | |||||
Richard Reiss, Jr. (1944) | Director (May 1991) | Georgica Advisors LLC, an investment manager,Chairman (1997 – present) | |||
Resource America, Inc., a real estate asset management company,Director(2016 – 2018) |
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Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Robert M. Solmson (1947) | Director (September 2004) | Fairwood Capital, LLC, a private investment corporation engaged primarily in real estate and hotel investments,Co-Managing Partnerand Managing Director (2008 – present) | |||
Interested Directors(4): | |||||
Ashish Bhutani (1960) | Director (July 2005) | Investment Manager,ChiefExecutive Officer(2004 – present) | |||
Lazard Ltd,Vice Chairman andDirector(2010 – present) | |||||
Nathan A. Paul (1973) | Director (October 2017), Chief Executive Officer and President (February 2017; previously, Vice President and Secretary since April 2002) | Investment Manager,ChiefBusiness Officer(April 2017 – present) andManaging Director (2003 – present)
Investment Manager,GeneralCounsel(2002 – April 2017)
|
(1) | The address of each Director of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each Director serves as a Director for each of the funds in the Lazard Fund Complex (comprised of, as of January 31, 2019, 39 active investment portfolios). Each Director serves an indefinite term, until his or her successor is elected, and each Director serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | “Independent Directors” are not “interested persons” (as defined in the 1940 Act) of the Fund. |
(4) | Messrs. Bhutani and Paul are “interested persons” (as defined in the 1940 Act) of the Fund because of their positions with the Investment Manager. |
The Fund’s Statement of Additional Information contains further information about the Directors and is available without charge by calling 800-823-6300, or online, at www.lazardassetmanagement.com.
122 Annual Report
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) During the Past Five Years | |||
Officers(3): | |||||
Mark R. Anderson (1970) | Chief Compliance Officer (September 2014), Vice President and Secretary (February 2017) | Managing Director (since February 2017, previously Director), Chief Compliance Officer (since September 2014) and General Counsel (since April 2017) of the Investment Manager | |||
Senior Vice President, Counsel and Deputy Chief Compliance Officer of AllianceBernstein L.P. (2004 – August 2014) | |||||
Christopher Snively (1984) | Chief Financial Officer (March 2016) | Senior Vice President of the Investment Manager (since November 2015) | |||
Assurance Manager at PricewaterhouseCoopers LLP (2008 – November 2015) | |||||
Stephen St. Clair (1958) | Treasurer (May 2003) | Vice President of the Investment Manager | |||
Shari L. Soloway (1981) | Assistant Secretary (November 2015) | Head of Legal, North America (since January 2019, previously Senior Vice President, Legal and Compliance (since September 2015)), of the Investment Manager | |||
Vice President and Associate General Counsel of GE Asset Management (July 2011 – September 2015) | |||||
Jessica A. Falzone (1989) | Assistant Secretary (January 2019) | Vice President, Legal and Compliance, of the Investment Manager (since March 2018) | |||
Associate at Schulte Roth & Zabel LLP (2014 – March 2018) | |||||
Cesar A. Trelles (1975) | Assistant Treasurer (December 2004) | Vice President of the Investment Manager |
(1) | The address of each officer of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each officer serves for an indefinite term, until his or her successor is elected and qualifies or until his or her earlier resignation or removal. Each officer serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | In addition to Nathan A. Paul, Chief Executive Officer and President (since February 2017; previously, Vice President and Secretary since April 2002), whose information is included in the Interested Directors section above. |
Annual Report 123
The Lazard Funds, Inc.Tax and Other Information (unaudited)
Tax Information
Year Ended December 31, 2018
The following tax information represents year end disclosures of the tax benefits passed through to shareholders for 2018:
Of the dividends paid by the Portfolios, none are qualified dividend income.
Of the dividends paid by the Portfolios, no dividends qualify for the dividends received deduction available to corporate shareholders.
Pursuant to Section 871 of the Code, the Portfolios have no designated qualified short-term gains for purposes of exempting withholding of tax on such distributions to US nonresident shareholders.
Proxy Voting
A description of the policies and procedures used to determine how proxies relating to Fund portfolio securities are voted is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC website at https://www.sec.gov.
The Fund’s proxy voting record for the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov. Information as of June 30 each year will generally be available by the following August 31.
Schedule of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at https://www.sec.gov.
124 Annual Report
The Lazard Funds, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
https://www.lazardassetmanagement.com
Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
Distributor
Lazard Asset Management Securities LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Custodian
State Street Bank and Trust Company
One Iron Street
Boston, Massachusetts 02210
Transfer Agent and Dividend Disbursing Agent
DST Asset Manager Solutions, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169
Telephone: 617-483-7000
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, New York 10112-0015
Legal Counsel
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
http://www.proskauer.com
Lazard Asset Management LLC • 30 Rockefeller Plaza • New York, NY 10112 • www. lazardassetmanagement.com | ||
Performance information as of the most recent month end is available online at www. lazardassetmanagement.com. LZDPS026 |
Lazard Funds
Annual Report
December 31, 2018
Multi-Asset Funds
Lazard Global Dynamic Multi-Asset Portfolio
Lazard Opportunistic Strategies Portfolio
Lazard Real Assets and Pricing Opportunities Portfolio
Important Information on Paperless Delivery
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly with the Fund may elect to receive shareholder reports and other communications from the Fund electronically by signing up for paperless delivery at www.icsdelivery.com/lazardassetmanagement. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by following the instructions included with this disclosure and visiting www.fundreports.com. If you own these shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this disclosure to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or your financial intermediary.
PRIVACY NOTICE
WHAT DOES LAZARD DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information. U.S. federal law gives our clients the right to limit some but not all sharing. U.S. federal and other applicable law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
We do not disclose nonpublic personal information about our clients or former clients to third parties other than as described below.
Personal information we collect.We collect personal information about you in connection with our providing advisory services to you. The legal basis for our collection of your personal information is our contract with you and our legitimate business interest to provide contractual services to you. The collection of this information is necessary for us to be able to provide advisory services to you and the failure to provide such information will result in our inability to provide our services. This information includes your social security number (for U.S. persons) and may include other information such as your:
· | Assets and income; | |
· | Investment experience; | |
· | Transaction history; | |
· | Credit history; and | |
· | Wire transfer instructions. |
How we collect this information.We collect this information from you through various means. For example, when you give us your contact information, enter into an investment advisory contract with us, buy securities (i.e., interests in a fund) from us, direct us to buy or sell securities for your account, tell us where to send money, or make a wire transfer. We also may collect your personal information from other sources, such as our affiliates1or other non-affiliated companies (such as credit bureaus).
1 | Our affiliates are companiesrelated to us by common ownership or control and can include both financial and nonfinancial companies. Non-affiliates are companiesnot related to us by common ownership or control and can include both financial and nonfinancial companies. |
How we use this information.All financial companies need to share customers’ personal information to run their everyday business and we use the personal information we collect from you for our everyday business purposes. These purposes may include for example:
· | To provide advisory services to you; | |
· | To open an account for you; | |
· | To process a transaction for your account; | |
· | To market products and services to you; and/or | |
· | To respond to court orders and legal investigations. |
If you are an investor located within a European Union country, please note that personal information may be collected, shared and/or stored outside of the European Union.
Disclosure to others.We may provide your personal information to our affiliates and to firms that assist us in servicing your account and have a need for such information, such as a broker, counterparty, fund administrator or third party service provider that aggregates data in a central repository for access by a broker, counterparty or fund administrator to provide its services. We may also disclose such information to service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you. We require third party service providers and financial institutions with which we have a formal agreement to provide services relating to our arrangements with you to protect the confidentiality of your information and to use the information only for the purposes for which we disclose the information to them. These sharing practices are consistent with applicable privacy and related laws, and in general, you may not limit our use of your personal information for these purposes under such laws. We note that the U.S. federal privacy laws only give you the right to limit the certain types of information sharing that we do not engage in (e.g., sharing with our affiliates certain information relating to your transaction history or creditworthiness for their use in marketing to you, or sharing any personal information with non-affiliates for them to market to you). We may also share your personal information with non-affiliates (such as a government agency or regulatory authority) as required by applicable law.
How we protect your personal information.To protect your personal information from unauthorized access and use, we use security measures that comply with applicable law. These measures include computer safeguards and secured files and buildings.
How long we keep your personal information.We retain your personal information for the duration of your advisory relationship with us and for a period of time thereafter as required by applicable law.
Your rights with respect to this information.If you are an investor located within a European Union country, you have the following rights with respect to your personal information:
· | The right to request and obtain a copy of your personal information that we maintain; | |
· | The right to correct your personal information that we maintain; | |
· | The right to request the erasure of your personal information from our systems, subject to applicable recordkeeping requirements applicable to us; and | |
· | The right to lodge a complaint with a supervisory authority. |
Who is providing this Privacy Notice.This Privacy Notice relates to the following entities:
· | Lazard Asset Management LLC | |
· | Lazard Asset Management (Canada), Inc.2 | |
· | Lazard Asset Management Securities LLC |
Who to contact with questions.If you have any questions about this Privacy Notice, please call (800) 823-6300 or visit our website at http://www.lazardassetmanagement.com.
2 | Lazard Asset Management (Canada), Inc. does not disclose any non-public personal information about its customers to any third party, except as permitted by or required by any applicable law, including the laws of the United States and Canada. |
The Lazard Funds, Inc.Table of Contents
Please consider a Portfolio’s investment objectives, risks, charges and expenses carefully before investing. For more complete information about The Lazard Funds, Inc. (the “Fund”), you may obtain a prospectus or summary prospectus by calling 800-823-6300, or online, at www.lazardassetmanagement.com. Read the prospectus or each Portfolio’s summary prospectus carefully before you invest. The prospectus and each Portfolio’s summary prospectus contain the investment objectives, risks, charges, expenses and other information about each Portfolio of the Fund, which are not detailed in this report.
Distributed by Lazard Asset Management Securities LLC.
Annual Report 1
The Lazard Funds, Inc.A Message from Lazard (unaudited)
Dear Shareholder,
In 2018, volatility returned to global markets. The economic trajectories of the major economies diverged during the year, with US growth accelerating and non-US growth decelerating. Tighter US monetary policy, declining oil prices, and trade tensions between the United States and China also increased risk aversion. Against this backdrop, almost every major developed and emerging equity market declined during the year. Despite the uptick in global market turbulence, our portfolio management teams remain steadfast in their investment discipline and continue to focus on fundamental research.
The US equity market ended the year down after a severe fourth quarter sell-off. During the quarter, volatility as measured by the CBOE Volatility®Index increased, corporate credit spreads widened, the yield curve flattened, and the yield on the 10-year US Treasury declined. Crude oil prices fell by nearly $29 per barrel on the back of concerns over flagging global demand and elevated supply.
In Europe, political risks increased throughout the year as the Italian election led to a governing coalition of the League and the Five Star Movement. The United Kingdom struggled with finalizing a resolution to exit the European Union (“Brexit”) and German Chancellor Angela Merkel announced she would step down in 2021. The European Central Bank ended its monthly asset purchase program in December, but kept its benchmark interest rate at zero.
Emerging markets equities and debt fell significantly in 2018 as macroeconomic and geopolitical developments weighed on market sentiment. The rising US dollar pressured most emerging markets during the year. In Turkey, uncertainty related to the country’s trade deficit was exacerbated by US sanctions and a diplomatic dispute with the United States over a detained American pastor. Uncertainty about trade and concerns about decelerating Chinese growth rippled through the global economy. Despite these challenges, our emerging markets equity and debt teams believe that many emerging markets still have solid fundamentals, and are well positioned to grow faster than the global growth average.
2 Annual Report
We are privileged that you have turned to Lazard for your investment needs and value your continued confidence in our investment management capabilities. Be assured that our specialist investment teams, supported by our global infrastructure, are continuing to strive for the long-term patterns of performance that you expect.
Sincerely,
Lazard Asset Management LLC
Annual Report 3
The Lazard Funds, Inc.Investment Overviews (unaudited)
Multi-Asset
Global developed equity markets suffered a steep fall in 2018 as the MSCI World®Index closed 8.7% lower, in US dollar terms. A surge in January culminated with a steep drawdown in early February as rising US yields generated speculation and higher volatility. After that, markets were generally in an uptrend until the fourth quarter, where volatility took over and a sharp drawdown occurred. Investor sentiment turned negative late in the year, as markets fell sharply during December and investors shunned risk assets.
Interest rate and oil price trends affected stock returns in financials and energy. Both sectors lost more than 15% during the year as rates generally trended upward and oil prices collapsed in the fourth quarter. Despite negative news flow and a tech-focused sell-off in the fourth quarter, the information technology sector managed to end the year essentially flat. In this environment, utilities and health care—historically defensive sectors—had positive returns. US equities had the best performance across the major regions while Japan, the United Kingdom, and Europe had significantly steeper losses. The MSCI Emerging Markets®Index fell 14.6% for the year, as equities in these markets were affected by global trade concerns and a stronger US dollar.
In fixed income, the bellwether US 10-year Treasury closed the year at 2.68% after topping out near 3.25% in early November. Similar-maturity Japanese and German bonds ended the year at 0.24% and 0.00%, respectively. Rates also rallied strongly late in the year in “higher quality” markets such as Australia, Canada, Singapore, and the United Kingdom. Credit markets were under pressure late in the year in sympathy with weaker equity markets, especially high-yield bonds, whose spreads continued to widen, even with the drought in new supply/issuance for this asset class in December. Investment grade spreads and emerging markets external debt spreads also widened during the year. Currency markets were largely dominated by US dollar strength, where the safe-haven status of the Japanese yen was re-asserted, as it was one of the few currencies to gain value versus the US dollar.
4 Annual Report
Commodity performance was negative for the year as the Bloomberg Commodity Index Total Return lost 11%.The energy sub-index was performing well up until the oil price free fall in the fourth quarter of 2018. In this setting, sub-indices for agriculture, industrial metals, and precious metals were also negative, with precious metals staging a late-year rally.
Lazard Global Dynamic Multi-Asset Portfolio
For the year ended December 31, 2018, the Lazard Global Dynamic Multi-Asset Portfolio’s Institutional Shares posted a total return of -6.35%, while Open Shares posted a total return of -6.64%, as compared with the -8.71% return for the MSCI World Index and -4.79% return of its blended benchmark, which is a 50/50 blend of the MSCI World Index and Bloomberg Barclays Global Aggregate®Index (the “GDMA Index”).
In terms of asset allocation, our average overweight to equities versus fixed income hurt performance for the year.
Within equities, stock selection in the consumer staples, financials, and health care sectors added value. By country, stock selection in Australia, Netherlands, Norway, and the United States helped performance. In contrast, stock selection in the consumer discretionary, materials, real estate, and utilities sectors hurt performance as did stock selection in Denmark, Finland, and Germany.
Within fixed income, country allocation such as our overweight exposure to bonds in Australia, New Zealand, and Poland helped the Portfolio, as did security selection in Norway and avoiding exposure to Italy. In terms of currency allocation, overweight exposure to the Japanese yen and Canadian dollar added value. In contrast, underweight exposure to bonds in core Europe and Japan hurt performance, as did tactical overweight exposure to the Mexican peso, Australian dollar, and New Zealand dollar.
The Portfolio uses currency forwards opportunistically and for hedging purposes. The impact of these instruments was positive over the year.
Annual Report 5
Lazard Opportunistic Strategies Portfolio
For the year ended December 31, 2018, the Lazard Opportunistic Strategies Portfolio’s Institutional Shares posted a total return of -12.72%, while Open Shares posted a total return of -13.05%, as compared with the -8.71% return for the MSCI World Index and -4.99% return for the Global Asset Allocation Blended Index.1
Trending investments, which represented 45% of the Portfolio at the end of the period, underperformed both indices. Exposure to US small cap, financials, industrials, and materials detracted from performance. We held part of our industrials exposure through a basket of short-cycle industrials companies using a swap position, which was sold during the period.
Diversifying investments, which represented 38% of the Portfolio at year-end, underperformed the broad US fixed income market (as measured by the Bloomberg Barclays US Aggregate®Index), but outperformed both indices mentioned above. Positions in US utilities, US consumer staples, and US Treasuries helped while positions in US health care and pharmaceuticals hurt the Portfolio.
Contrarian investments, which represented 16% of the Portfolio at the end of the period, underperformed both indices. Exposure to oil and gas services added value. Exposure to European and Japanese equities detracted from performance. A portion of the Japanese equity exposure was held via a basket of Japanese chemical companies through a swap position, which was sold during the period.
The Portfolio may use total return swaps for exposure to custom baskets of securities. The aggregate impact of these positions was negative during the period.
Lazard Real Assets and Pricing Opportunities Portfolio
For the year ended December 31, 2018, the Lazard Real Assets and Pricing Opportunities Portfolio’s Institutional Shares posted a total return of -7.55%, while Open Shares posted a total return of -7.79%, as compared with the -4.41% return for the blended benchmark of 70% MSCI World Index (USD Hedged)/30% Bloomberg Barclays
6 Annual Report
World Government Inflation-Linked Bond®Index (USD Hedged) (the “Real Assets Index (USD Hedged)”) and -8.71% return for the MSCI World Index.
Our equity allocations contributed negatively in absolute terms. Listed infrastructure stocks detracted from performance. Atlantia, an Italian holding company operating toll motorways and airports, and PG&E, a US utility, were among the largest detractors. Pricing-power stocks detracted from performance, driven mainly by the impact of the financials and industrials sectors. Global real estate securities were also negative contributors to performance. Among the detractors were Weyerhaeuser, a US-based timber REIT, and SOHO China, a Chinese property developer.
Commodity futures and equities were both negative contributors for the period. In commodity-related equities, some of the largest detractors were US chemicals companies, Olin Corporation and Westlake Chemical.
Global inflation-linked bonds contributed positively to performance. Overweight exposure to bonds in Mexico and New Zealand added value. Underweight bond exposure to France and overweight exposure to the United States, as well as currency exposures—including the Mexican peso, Japanese yen, and euro—hurt performance.
The Portfolio uses forward currency contracts opportunistically and for hedging purposes. The impact of these instruments was positive. Within commodities, the Portfolio uses futures and total return swaps to gain exposure to these assets. The impact of these instruments was negative due to weak commodities performance during the year.
Notes to Investment Overviews:
All Portfolios’ total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of a Portfolio may have been waived or reimbursed by Lazard Asset Management LLC, the Fund’s investment manager (the “Investment Manager”), State Street Bank and Trust Company, the Fund’s administrator (“State Street”), or DST Asset Manager Solutions, Inc., the Fund’s transfer and dividend disbursing agent (“DST”);
Annual Report 7
without such waiver/reimbursement of expenses, such Portfolio’s returns would have been lower. Past performance is not indicative, or a guarantee, of future results.
The performance data of the indices and other market data have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged, have no fees or costs and are not available for investment.
The views of the Investment Manager and the securities described in this report are as of December 31, 2018, except as otherwise indicated; these views and portfolio holdings may have changed subsequent to this date. Nothing herein should be construed as a recommendation to buy, sell, or hold a particular security. There is no assurance that the securities discussed herein will remain in a Portfolio at the time you receive this report, or that securities sold will not have been repurchased. The specific securities discussed may, in aggregate, represent only a small percentage of a Portfolio’s holdings. It should not be assumed that securities identified and discussed were, or will be, profitable, or that the investment decisions made in the future will be profitable, or equal the investment performance of the securities discussed herein.
The views and opinions expressed are provided for general information only, and do not constitute specific tax, legal, or investment advice to, or recommendations for, any person. There can be no guarantee as to the accuracy of any outlooks for markets, sectors and securities as discussed herein. You should read the Fund’s prospectus or each Portfolio’s summary prospectus for a more detailed discussion of each Portfolio’s investment objectives, strategies, risks and fees.
1 | The Global Asset Allocation Blended Index is a blended index constructed by the Investment Manager that is comprised of 60% MSCI World Index and 40% Bloomberg Barclays US Aggregate Index and is rebalanced quarterly. |
8 Annual Report
The Lazard Funds, Inc.Performance Overviews (unaudited)
Lazard Global Dynamic Multi-Asset Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Global Dynamic Multi-Asset Portfolio, MSCI®World Index and GDMA Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Since | ||||
Year | Inception | † | |||
Institutional Shares** | –6.35% | 5.04% | |||
Open Shares** | –6.64% | 4.72% | |||
MSCI World Index | –8.71% | 6.52% | |||
GDMA Index | –4.79% | 3.82% |
† | The inception date for the Portfolio was May 27, 2016. |
Lazard Opportunistic Strategies Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Opportunistic Strategies Portfolio, MSCI World Index and Global Asset Allocation Blended Index*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Five | Ten | |||||
Year | Years | Years | |||||
Institutional Shares** | –12.72% | 1.69% | 5.99% | ||||
Open Shares** | –13.05% | 1.28% | 5.60% | ||||
MSCI World Index | –8.71% | 4.56% | 9.67% | ||||
Global Asset Allocation Blended Index | –4.99% | 3.88% | 7.48% |
Annual Report 9
Lazard Real Assets and Pricing Opportunities Portfolio
Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard Real Assets and Pricing Opportunities Portfolio, MSCI World Index and Real Assets Index (USD Hedged)*
Average Annual Total Returns*
Periods Ended December 31, 2018
One | Since | ||||
Year | Inception | † | |||
Institutional Shares** | –7.55% | 0.79% | |||
Open Shares** | –7.79% | 0.39% | |||
MSCI World Index | –8.71% | 5.71% | |||
(Institutional Shares | ) | ||||
4.98% (Open Shares | ) | ||||
Real Assets Index (USD Hedged) | –4.41% | 4.61% | |||
(Institutional Shares | ) | ||||
4.14% (Open Shares | ) |
† | The inception date for the Institutional Shares was December 30, 2016 and for the Open Shares was January 9, 2017. |
Notes to Performance Overviews:
* | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
Performance results do not include adjustments made for financial reporting purposes in accordance with US Generally Accepted Accounting Principles, if any, and may differ from amounts reported in the financial highlights. | |
The performance quoted represents past performance. Current performance may be lower or higher than the performance quoted. Past performance is not indicative, or a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares. |
10 Annual Report
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. The indices are unmanaged, have no fees or costs and are not available for investment. | |
The MSCI World Index is a free-float-adjusted market capitalization index that is designed to measure global developed markets equity performance. The MSCI World Index consists of 23 developed markets country indices. | |
The GDMA Index is a blended index constructed by the Investment Manager that is comprised of 50% MSCI World Index and 50% Bloomberg Barclays Global Aggregate®Index and is rebalanced monthly. The Bloomberg Barclays Global Aggregate Index provides a broad-based measure of global investment-grade fixed-income debt markets, including government-related debt, corporate debt, securitized debt and global Treasury. | |
The Global Asset Allocation Blended Index is a blended index constructed by the Investment Manager that is comprised of 60% MSCI World Index and 40% Bloomberg Barclays US Aggregate Index and is rebalanced quarterly. The Bloomberg Barclays US Aggregate Index covers the investment-grade, US dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities, and commercial mortgage-backed securities, with maturities of no less than one year. | |
The Real Assets Index (USD Hedged) is an unmanaged index created by the Investment Manager, which is the performance of the 70% MSCI World Index (USD Hedged) and the 30% Bloomberg Barclays World Government Inflation-Linked Bond®Index (USD Hedged). The Bloomberg Barclays World Government Inflation-Linked Bond Index (USD Hedged) measures the performance of investment grade, government inflation-linked debt from 12 different developed markets countries. | |
** | The performance of Institutional Shares and Open Shares may vary, primarily based on the differences in fees borne by shareholders investing in different classes. |
Annual Report 11
Information About Your Portfolio’s Expenses (unaudited)
Expense Example
As a shareholder in a Portfolio of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (Open Shares only), and other expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the six month period from July 1, 2018 through December 31, 2018 and held for the entire period.
Actual Expenses
For each Share class of the Portfolios, the first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each Share class of the Portfolios, the second line of the table below provides information about hypothetical account values and hypothetical expenses based on the class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds.
12 Annual Report
Beginning Account | Ending Account | Expenses Paid During Period | * | Annualized Expense Ratio During Period | |||||||||||
Portfolio | Value 7/1/18 | Value 12/31/18 | 7/1/18 - 12/31/18 | 7/1/18 - 12/31/18 | |||||||||||
Global Dynamic Multi-Asset | |||||||||||||||
Institutional Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 941.50 | $ | 4.40 | 0.90% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 | 0.90% | ||||||||
Open Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 940.10 | $ | 5.87 | 1.20% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.16 | $ | 6.11 | 1.20% | ||||||||
Opportunistic Strategies | |||||||||||||||
Institutional Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 895.60 | $ | 4.87 | 1.02% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.06 | $ | 5.19 | 1.02% | ||||||||
Open Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 894.10 | $ | 6.30 | 1.32% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,018.55 | $ | 6.72 | 1.32% | ||||||||
Real Assets and Pricing Opportunities | |||||||||||||||
Institutional Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 933.20 | $ | 4.39 | 0.90% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,020.67 | $ | 4.58 | 0.90% | ||||||||
Open Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 931.90 | $ | 5.60 | 1.15% | ||||||||
Hypothetical (5% Return Before Expenses) | $ | 1,000.00 | $ | 1,019.41 | $ | 5.85 | 1.15% |
* | Expenses are equal to the annualized expense ratio, net of expenses waivers and reimbursements, of each Share class multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
Annual Report 13
Portfolio Holdings Presented by Asset Class/Sector December 31, 2018
Asset Class/Sector* | Lazard Global Dynamic Multi-Asset Portfolio | Lazard Real Assets and Pricing Opportunities Portfolio | ||||||
Equity | ||||||||
Communication Services | 4.5 | % | 2.5 | % | ||||
Consumer Discretionary | 8.4 | 2.8 | ||||||
Consumer Staples | 8.2 | 3.9 | ||||||
Energy | 2.7 | 1.9 | ||||||
Financials | 14.8 | 3.9 | ||||||
Health Care | 9.2 | 3.8 | ||||||
Industrials | 10.6 | 10.8 | ||||||
Information Technology | 9.3 | 1.9 | ||||||
Materials | 1.8 | 2.5 | ||||||
Real Estate | 2.6 | 14.3 | ||||||
Utilities | 3.1 | 10.5 | ||||||
Exchange-Traded Funds | — | 1.5 | ||||||
Sovereign Debt | 16.0 | 8.8 | ||||||
US Government Securities | 0.5 | — | ||||||
US Municipal Bonds | 0.8 | — | ||||||
US Treasury Securities | 4.1 | 15.1 | ||||||
Short-Term Investments | 3.4 | 15.8 | ||||||
Total Investments | 100.0 | % | 100.0 | % | ||||
Asset Class/Sector* | Lazard Opportunistic Strategies Portfolio | |||||||
Equity† | ||||||||
Communication Services | 3.7 | % | ||||||
Consumer Discretionary | 4.4 | |||||||
Consumer Staples | 2.0 | |||||||
Energy | 4.2 | |||||||
Financials | 9.8 | |||||||
Health Care | 9.8 | |||||||
Industrials | 12.8 | |||||||
Information Technology | 15.3 | |||||||
Materials | 4.6 | |||||||
Real Estate | 1.0 | |||||||
Utilities | 0.7 | |||||||
Fixed Income | 23.6 | |||||||
Short-Term Investments | 8.1 | |||||||
Total Investments | 100.0 | % |
* | Represents percentage of total investments. |
† | Equity sector breakdown is based upon the underlying holdings of exchange-traded funds and closed-end management investment companies held by the Portfolio. |
14 Annual Report
The Lazard Funds, Inc.Portfolios of Investments
December 31, 2018
The accompanying notes are an integral part of these financial statements.
Annual Report 15
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Colliers International Group, Inc. | 407 | $ | 22,446 | |||||
Constellation Software, Inc. | 39 | 24,964 | ||||||
National Bank of Canada | 2,779 | 114,095 | ||||||
Northland Power, Inc. | 1,101 | 17,501 | ||||||
Parex Resources, Inc. (*) | 3,074 | 36,815 | ||||||
Rogers Communications, Inc., Class B | 1,330 | 68,156 | ||||||
Royal Bank of Canada | 2,039 | 139,558 | ||||||
Suncor Energy, Inc. | 3,941 | 110,072 | ||||||
Tamarack Valley Energy, Ltd. (*) | 4,864 | 8,408 | ||||||
Teck Resources, Ltd., Class B | 2,016 | 43,400 | ||||||
The Toronto-Dominion Bank | 5,627 | 279,739 | ||||||
1,338,186 | ||||||||
China | 0.1% | ||||||||
Yangzijiang Shipbuilding Holdings, Ltd. | 28,900 | 26,274 | ||||||
Denmark | 0.1% | ||||||||
Carlsberg A/S, Class B | 231 | 24,576 | ||||||
Dfds A/S | 311 | 12,526 | ||||||
H. Lundbeck A/S | 466 | 20,435 | ||||||
57,537 | ||||||||
Finland | 0.5% | ||||||||
Nordea Bank Abp Sponsored ADR | 12,895 | 108,189 | ||||||
Sampo Oyj, A Shares ADR | 4,825 | 106,874 | ||||||
215,063 | ||||||||
France | 1.8% | ||||||||
AXA SA | 928 | 19,994 | ||||||
Electricite de France SA | 1,048 | 16,513 | ||||||
Engie SA | 7,476 | 106,848 | ||||||
Faurecia SA | 109 | 4,091 | ||||||
Hermes International | 45 | 24,887 | ||||||
Ipsen SA | 428 | 55,201 | ||||||
Peugeot SA | 3,362 | 71,467 | ||||||
Total SA | 4,890 | 258,329 | ||||||
Ubisoft Entertainment SA ADR (*) | 8,280 | 133,887 | ||||||
Unibail-Rodamco-Westfield REIT (*) | 348 | 53,987 | ||||||
Veolia Environnement SA | 709 | 14,543 | ||||||
759,747 |
The accompanying notes are an integral part of these financial statements.
16 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Germany | 1.3% | ||||||||
Allianz SE | 737 | $ | 147,891 | |||||
Continental AG | 170 | 23,507 | ||||||
Covestro AG | 1,398 | 69,162 | ||||||
Deutsche Lufthansa AG | 4,055 | 91,449 | ||||||
Deutsche Telekom AG | 785 | 13,335 | ||||||
Rheinmetall AG | 118 | 10,420 | ||||||
RWE AG | 715 | 15,544 | ||||||
SAP SE | 97 | 9,662 | ||||||
Schaeffler AG (Preference Shares) | 5,311 | 45,285 | ||||||
Siltronic AG | 167 | 13,812 | ||||||
Symrise AG ADR | 5,600 | 103,740 | ||||||
543,807 | ||||||||
Hong Kong | 1.2% | ||||||||
AIA Group, Ltd. Sponsored ADR | 5,130 | 168,674 | ||||||
CK Asset Holdings, Ltd. | 7,696 | 55,964 | ||||||
Hang Seng Bank, Ltd. Sponsored ADR | 6,895 | 154,276 | ||||||
Kerry Properties, Ltd. | 9,500 | 32,276 | ||||||
Link Real Estate Investment Trust | 8,000 | 80,565 | ||||||
Swire Pacific, Ltd., Class A | 4,000 | 42,021 | ||||||
533,776 | ||||||||
Israel | 0.6% | ||||||||
Bank Leumi Le-Israel BM | 9,643 | 58,383 | ||||||
Israel Discount Bank, Ltd., ADR | 3,200 | 96,736 | ||||||
Israel Discount Bank, Ltd., Class A | 22,511 | 69,375 | ||||||
Nice, Ltd. (*) | 295 | 31,946 | ||||||
256,440 | ||||||||
Italy | 0.9% | ||||||||
Assicurazioni Generali SpA | 924 | 15,462 | ||||||
Enel SpA | 31,255 | 180,312 | ||||||
Intesa Sanpaolo SpA | 3,823 | 8,473 | ||||||
Italgas SpA | 3,048 | 17,423 | ||||||
Poste Italiane SpA | 7,694 | 61,750 | ||||||
Terna SpA | 14,397 | 81,726 | ||||||
UniCredit SpA | 1,361 | 15,439 | ||||||
380,585 |
The accompanying notes are an integral part of these financial statements.
Annual Report 17
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Japan | 5.9% | ||||||||
Amano Corp. | 1,195 | $ | 22,934 | |||||
Astellas Pharma, Inc. | 2,900 | 36,906 | ||||||
Canon, Inc. | 400 | 11,022 | ||||||
Capcom Co., Ltd. | 800 | 15,947 | ||||||
Cosmo Energy Holdings Co., Ltd. | 400 | 8,142 | ||||||
Daito Trust Construction Co., Ltd. | 255 | 34,829 | ||||||
Daiwa House Industry Co., Ltd. | 2,300 | 73,047 | ||||||
Daiwa House Industry Co., Ltd. ADR | 4,365 | 138,807 | ||||||
DMG Mori Co., Ltd. | 3,400 | 37,947 | ||||||
East Japan Railway Co. | 2,500 | 222,209 | ||||||
Fukuoka Financial Group, Inc. | 1,800 | 36,298 | ||||||
Japan Post Holdings Co., Ltd. | 9,800 | 112,675 | ||||||
JFE Holdings, Inc. | 3,000 | 47,732 | ||||||
Juki Corp. | 700 | 7,156 | ||||||
Kamigumi Co., Ltd. | 1,000 | 20,405 | ||||||
Kao Corp. ADR | 8,325 | 124,042 | ||||||
KDDI Corp. | 1,410 | 33,600 | ||||||
Kinden Corp. | 700 | 11,260 | ||||||
Kobe Bussan Co., Ltd. | 400 | 11,780 | ||||||
Kyushu Electric Power Co., Inc. | 1,300 | 15,458 | ||||||
Marvelous, Inc. | 1,700 | 12,060 | ||||||
McDonald’s Holdings Co. Japan, Ltd. | 1,200 | 51,126 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 6,577 | 32,432 | ||||||
MS&AD Insurance Group Holdings, Inc. | 2,154 | 61,142 | ||||||
Nishimatsu Construction Co., Ltd. | 1,600 | 36,110 | ||||||
Nissan Motor Co., Ltd. | 1,700 | 13,702 | ||||||
Nomura Holdings, Inc. | 3,900 | 14,870 | ||||||
NTT DOCOMO, Inc. | 8,318 | 186,781 | ||||||
ORIX Corp. | 1,313 | 19,077 | ||||||
Ryohin Keikaku Co., Ltd. ADR | 2,575 | 123,896 | ||||||
SAMTY Co., Ltd. | 1,900 | 21,771 | ||||||
Seven & I Holdings Co., Ltd. | 2,000 | 87,085 | ||||||
Shikoku Electric Power Co., Inc. | 3,500 | 42,261 | ||||||
Shin-Etsu Chemical Co., Ltd. | 500 | 38,520 | ||||||
Shionogi & Co., Ltd. | 300 | 17,011 |
The accompanying notes are an integral part of these financial statements.
18 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Sompo Holdings, Inc. | 1,404 | $ | 47,391 | |||||
Stanley Electric Co., Ltd. | 400 | 11,155 | ||||||
Sumitomo Heavy Industries, Ltd. | 800 | 23,584 | ||||||
Sumitomo Mitsui Construction Co., Ltd. | 5,400 | 32,730 | ||||||
Sumitomo Mitsui Trust Holdings, Inc. | 700 | 25,479 | ||||||
Taisei Corp. | 700 | 29,761 | ||||||
Takeuchi Manufacturing Co., Ltd. | 2,113 | 32,231 | ||||||
TechnoPro Holdings Inc., ADR | 12,600 | 100,926 | ||||||
Teijin, Ltd. | 695 | 11,064 | ||||||
The 77 Bank, Ltd. | 600 | 10,343 | ||||||
The Chiba Bank, Ltd. | 2,500 | 13,863 | ||||||
The Chugoku Electric Power Co., Inc. | 931 | 12,071 | ||||||
The Dai-ichi Life Insurance Co., Ltd. | 2,300 | 35,639 | ||||||
The Gunma Bank, Ltd. | 8,600 | 35,724 | ||||||
Tokyo Electron, Ltd. | 200 | 22,946 | ||||||
Tokyo Gas Co., Ltd. | 4,127 | 104,370 | ||||||
Tokyu Fudosan Holdings Corp. | 2,400 | 11,914 | ||||||
Topcon Corp. | 2,600 | 34,113 | ||||||
Tosoh Corp. | 3,200 | 41,405 | ||||||
Yamaha Corp. Sponsored ADR | 2,640 | 110,376 | ||||||
2,527,125 | ||||||||
Malta | 0.0% | ||||||||
Kindred Group PLC | 2,189 | 20,208 | ||||||
Netherlands | 1.0% | ||||||||
Euronext NV | 571 | 32,793 | ||||||
Koninklijke Ahold Delhaize NV | 1,775 | 44,779 | ||||||
Royal Dutch Shell PLC, A Shares | 2,695 | 79,100 | ||||||
Wolters Kluwer NV | 158 | 9,330 | ||||||
Wolters Kluwer NV Sponsored ADR | 4,195 | 246,163 | ||||||
412,165 | ||||||||
New Zealand | 0.1% | ||||||||
Spark New Zealand, Ltd. | 8,573 | 23,811 |
The accompanying notes are an integral part of these financial statements.
Annual Report 19
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Norway | 1.1% | ||||||||
DNO ASA | 21,947 | $ | 32,005 | |||||
Equinor ASA | 12,148 | 259,071 | ||||||
Leroy Seafood Group ASA | 3,807 | 29,152 | ||||||
Marine Harvest ASA | 903 | 19,009 | ||||||
Salmar ASA | 915 | 45,255 | ||||||
Telenor ASA | 4,136 | 79,841 | ||||||
TGS NOPEC Geophysical Co. ASA | 435 | 10,548 | ||||||
474,881 | ||||||||
Portugal | 0.1% | ||||||||
Galp Energia SGPS SA | 1,446 | 22,898 | ||||||
Singapore | 0.7% | ||||||||
Best World International, Ltd. | 11,000 | 21,247 | ||||||
Oversea-Chinese Banking Corp., Ltd. | 2,100 | 17,249 | ||||||
Oversea-Chinese Banking Corp., Ltd. ADR | 10,295 | 171,051 | ||||||
Singapore Technologies Engineering, Ltd. | 21,500 | 54,831 | ||||||
UOL Group, Ltd. | 4,900 | 22,171 | ||||||
286,549 | ||||||||
Spain | 0.2% | ||||||||
Amadeus IT Group SA | 581 | 40,455 | ||||||
Banco Bilbao Vizcaya Argentaria SA | 5,714 | 30,141 | ||||||
CIE Automotive SA | 569 | 13,984 | ||||||
Corporacion Financiera Alba SA | 204 | 9,924 | ||||||
94,504 | ||||||||
Sweden | 0.9% | ||||||||
Assa Abloy AB ADR | 9,710 | 86,128 | ||||||
Axfood AB | 1,880 | 32,220 | ||||||
Boliden AB | 575 | 12,506 | ||||||
Epiroc AB ADR (*) | 13,420 | 126,416 | ||||||
Hexagon AB ADR | 2,420 | 113,256 | ||||||
Swedish Orphan Biovitrum AB (*) | 735 | 15,984 | ||||||
386,510 | ||||||||
Switzerland | 1.3% | ||||||||
Garrett Motion, Inc. (*) | 2,361 | 29,135 | ||||||
Julius Baer Group, Ltd. ADR | 7,865 | 55,527 |
The accompanying notes are an integral part of these financial statements.
20 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Novartis AG Sponsored ADR | 1,865 | $ | 160,036 | |||||
Partners Group Holding AG | 79 | 48,019 | ||||||
Roche Holding AG | 1,047 | 258,896 | ||||||
The Swatch Group AG | 336 | 19,476 | ||||||
571,089 | ||||||||
United Kingdom | 5.2% | ||||||||
Admiral Group PLC | 1,638 | 42,580 | ||||||
Anglo American PLC | 1,629 | 36,011 | ||||||
Associated British Foods PLC | 470 | 12,224 | ||||||
Bunzl PLC Sponsored ADR | 4,740 | 145,613 | ||||||
Cineworld Group PLC | 23,616 | 79,037 | ||||||
Coca-Cola European Partners PLC | 3,045 | 139,613 | ||||||
Compass Group PLC | 3,724 | 78,184 | ||||||
Compass Group PLC Sponsored ADR | 6,482 | 135,474 | ||||||
Diageo PLC Sponsored ADR | 1,995 | 282,891 | ||||||
Fiat Chrysler Automobiles NV (*) | 2,477 | 36,013 | ||||||
GlaxoSmithKline PLC | 2,159 | 40,977 | ||||||
Hargreaves Lansdown PLC | 928 | 21,865 | ||||||
Howden Joinery Group PLC | 6,891 | 38,111 | ||||||
Imperial Brands PLC | 2,581 | 78,049 | ||||||
International Consolidated Airlines Group SA | 8,809 | 69,628 | ||||||
Lloyds Banking Group PLC | 89,696 | 59,269 | ||||||
National Grid PLC | 9,773 | 94,510 | ||||||
Pearson PLC | 3,307 | 39,424 | ||||||
Prudential PLC ADR | 2,860 | 101,158 | ||||||
RELX PLC Sponsored ADR | 9,400 | 192,888 | ||||||
Rio Tinto, Ltd. | 483 | 26,714 | ||||||
Royal Bank of Scotland Group PLC | 4,469 | 12,288 | ||||||
RSA Insurance Group PLC ADR | 13,090 | 87,703 | ||||||
SSP Group PLC | 1,589 | 13,090 | ||||||
Tate & Lyle PLC | 2,933 | 24,624 | ||||||
Taylor Wimpey PLC | 8,440 | 14,599 | ||||||
The Weir Group PLC Sponsored ADR | 6,865 | 55,744 | ||||||
Unilever PLC Sponsored ADR | 4,120 | 215,270 | ||||||
WH Smith PLC | 932 | 20,358 | ||||||
Wm Morrison Supermarkets PLC | 18,685 | 50,644 | ||||||
2,244,553 |
The accompanying notes are an integral part of these financial statements.
Annual Report 21
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
United States | 37.4% | ||||||||
Accenture PLC, Class A | 1,345 | $ | 189,658 | |||||
Adobe, Inc. (*) | 625 | 141,400 | ||||||
Aflac, Inc. | 963 | 43,874 | ||||||
Air Lease Corp. | 252 | 7,613 | ||||||
Ally Financial, Inc. | 943 | 21,368 | ||||||
Alphabet, Inc., Class A (*) | 258 | 269,600 | ||||||
Alphabet, Inc., Class C (*) | 23 | 23,819 | ||||||
Amazon.com, Inc. (*) | 89 | 133,675 | ||||||
American Electric Power Co., Inc. | 1,384 | 103,440 | ||||||
American Express Co. | 610 | 58,145 | ||||||
Ameriprise Financial, Inc. | 156 | 16,282 | ||||||
Amgen, Inc. | 378 | 73,585 | ||||||
Anthem, Inc. | 142 | 37,293 | ||||||
Aon PLC | 2,698 | 392,181 | ||||||
Apple, Inc. | 895 | 141,177 | ||||||
Applied Materials, Inc. | 356 | 11,655 | ||||||
Atmos Energy Corp. | 1,188 | 110,151 | ||||||
Avnet, Inc. | 1,391 | 50,215 | ||||||
Bank of America Corp. | 3,010 | 74,166 | ||||||
Baxter International, Inc. | 178 | 11,716 | ||||||
Best Buy Co., Inc. | 620 | 32,835 | ||||||
BGC Partners, Inc., Class A | 2,557 | 13,220 | ||||||
Biogen, Inc. (*) | 735 | 221,176 | ||||||
Booking Holdings, Inc. (*) | 13 | 22,391 | ||||||
BorgWarner, Inc. | 423 | 14,695 | ||||||
Boston Scientific Corp. (*) | 4,365 | 154,259 | ||||||
Bristol-Myers Squibb Co. | 1,407 | 73,136 | ||||||
Broadridge Financial Solutions, Inc. | 811 | 78,059 | ||||||
Brunswick Corp. | 452 | 20,995 | ||||||
Burlington Stores, Inc. (*) | 405 | 65,881 | ||||||
Cadence Design Systems, Inc. (*) | 462 | 20,088 | ||||||
Carnival PLC | 648 | 31,082 | ||||||
Cboe Global Markets, Inc. | 268 | 26,218 | ||||||
CBRE Group, Inc., Class A (*) | 2,230 | 89,289 | ||||||
Celgene Corp. (*) | 431 | 27,623 |
The accompanying notes are an integral part of these financial statements.
22 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Centene Corp. (*) | 343 | $ | 39,548 | |||||
Cerner Corp. (*) | 452 | 23,703 | ||||||
Cigna Corp. | 1,291 | 245,115 | ||||||
Cisco Systems, Inc. | 3,120 | 135,190 | ||||||
Citigroup, Inc. | 689 | 35,869 | ||||||
Citizens Financial Group, Inc. | 1,912 | 56,844 | ||||||
Comcast Corp., Class A | 4,895 | 166,675 | ||||||
Comerica, Inc. | 2,135 | 146,653 | ||||||
ConocoPhillips | 451 | 28,120 | ||||||
Copart, Inc. (*) | 537 | 25,658 | ||||||
Costco Wholesale Corp. | 146 | 29,742 | ||||||
Cracker Barrel Old Country Store, Inc. | 206 | 32,931 | ||||||
CVS Health Corp. | 400 | 26,208 | ||||||
Darden Restaurants, Inc. | 704 | 70,301 | ||||||
Diamondback Energy, Inc. | 116 | 10,753 | ||||||
Discovery, Inc., Class A (*) | 929 | 22,983 | ||||||
Eastman Chemical Co. | 1,014 | 74,134 | ||||||
Eaton Corp. PLC | 1,185 | 81,362 | ||||||
eBay, Inc. (*) | 2,870 | 80,561 | ||||||
Eli Lilly & Co. | 2,109 | 244,054 | ||||||
Encompass Health Corp. | 815 | 50,286 | ||||||
Exelon Corp. | 2,004 | 90,380 | ||||||
F5 Networks, Inc. (*) | 734 | 118,930 | ||||||
Facebook, Inc., Class A (*) | 217 | 28,447 | ||||||
FactSet Research Systems, Inc. | 231 | 46,230 | ||||||
Fifth Third Bancorp | 1,157 | 27,224 | ||||||
Fiserv, Inc. (*) | 1,231 | 90,466 | ||||||
Graco, Inc. | 1,072 | 44,863 | ||||||
Grand Canyon Education, Inc. (*) | 228 | 21,920 | ||||||
H&R Block, Inc. | 924 | 23,442 | ||||||
HollyFrontier Corp. | 272 | 13,905 | ||||||
Honeywell International, Inc. | 1,711 | 226,057 | ||||||
HP, Inc. | 2,406 | 49,227 | ||||||
Humana, Inc. | 537 | 153,840 | ||||||
Huntsman Corp. | 2,050 | 39,545 | ||||||
Ingredion, Inc. | 258 | 23,581 |
The accompanying notes are an integral part of these financial statements.
Annual Report 23
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Insperity, Inc. | 390 | $ | 36,410 | |||||
Intel Corp. | 3,905 | 183,262 | ||||||
Intercontinental Exchange, Inc. | 3,371 | 253,937 | ||||||
Intuit, Inc. | 488 | 96,063 | ||||||
IQVIA Holdings, Inc. (*) | 2,310 | 268,353 | ||||||
j2 Global, Inc. | 457 | 31,707 | ||||||
Johnson & Johnson | 3,387 | 437,092 | ||||||
Jones Lang LaSalle, Inc. | 373 | 47,222 | ||||||
JPMorgan Chase & Co. | 1,651 | 161,171 | ||||||
KAR Auction Services, Inc. | 630 | 30,064 | ||||||
Kimberly-Clark Corp. | 1,085 | 123,625 | ||||||
Kohl’s Corp. | 249 | 16,519 | ||||||
Lamb Weston Holdings, Inc. | 1,426 | 104,897 | ||||||
Lockheed Martin Corp. | 583 | 152,653 | ||||||
Lowe’s Cos., Inc. | 2,349 | 216,954 | ||||||
LPL Financial Holdings, Inc. | 415 | 25,348 | ||||||
Lululemon Athletica, Inc. (*) | 170 | 20,674 | ||||||
Marathon Petroleum Corp. | 424 | 25,020 | ||||||
MasterCard, Inc., Class A | 1,735 | 327,308 | ||||||
Maxim Integrated Products, Inc. | 246 | 12,509 | ||||||
McDonald’s Corp. | 870 | 154,486 | ||||||
McGrath RentCorp | 480 | 24,710 | ||||||
Merck & Co., Inc. | 450 | 34,385 | ||||||
MetLife, Inc. | 731 | 30,015 | ||||||
Micron Technology, Inc. (*) | 707 | 22,433 | ||||||
Microsoft Corp. | 4,236 | 430,251 | ||||||
Moody’s Corp. | 168 | 23,527 | ||||||
Morgan Stanley | 1,480 | 58,682 | ||||||
Motorola Solutions, Inc. | 1,165 | 134,022 | ||||||
NetApp, Inc. | 778 | 46,423 | ||||||
Newfield Exploration Co. (*) | 1,328 | 19,468 | ||||||
Newmark Group, Inc., Class A | 1,186 | 9,512 | ||||||
NIKE, Inc., Class B | 2,655 | 196,842 | ||||||
Nordstrom, Inc. | 340 | 15,847 | ||||||
Northern Trust Corp. | 249 | 20,814 | ||||||
NRG Energy, Inc. | 877 | 34,729 |
The accompanying notes are an integral part of these financial statements.
24 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
NVIDIA Corp. | 112 | $ | 14,952 | |||||
NVR, Inc. (*) | 4 | 9,748 | ||||||
Occidental Petroleum Corp. | 956 | 58,679 | ||||||
Omnicom Group, Inc. | 1,654 | 121,139 | ||||||
Paychex, Inc. | 1,341 | 87,366 | ||||||
PayPal Holdings, Inc. (*) | 153 | 12,866 | ||||||
PBF Energy, Inc., Class A | 318 | 10,389 | ||||||
PepsiCo, Inc. | 1,507 | 166,493 | ||||||
Philip Morris International, Inc. | 1,391 | 92,863 | ||||||
Phillips 66 | 410 | 35,322 | ||||||
Pinnacle West Capital Corp. | 264 | 22,493 | ||||||
PotlatchDeltic Corp. REIT | 402 | 12,719 | ||||||
Prudential Financial, Inc. | 96 | 7,829 | ||||||
Radian Group, Inc. | 605 | 9,898 | ||||||
Ralph Lauren Corp. | 301 | 31,141 | ||||||
Raytheon Co. | 550 | 84,343 | ||||||
Red Hat, Inc. (*) | 191 | 33,547 | ||||||
Regions Financial Corp. | 1,038 | 13,888 | ||||||
Renewable Energy Group, Inc. (*) | 1,411 | 36,263 | ||||||
Republic Services, Inc. | 2,135 | 153,912 | ||||||
Resideo Technologies, Inc. (*) | 81 | 1,665 | ||||||
Rockwell Automation, Inc. | 826 | 124,296 | ||||||
Ross Stores, Inc. | 3,660 | 304,512 | ||||||
Royal Caribbean Cruises, Ltd. | 247 | 24,154 | ||||||
Ryman Hospitality Properties, Inc. REIT | 372 | 24,809 | ||||||
S&P Global, Inc. | 850 | 144,449 | ||||||
Schlumberger, Ltd. | 2,200 | 79,376 | ||||||
Seagate Technology PLC | 388 | 14,973 | ||||||
Simon Property Group, Inc. REIT | 1,922 | 322,877 | ||||||
Skyworks Solutions, Inc. | 215 | 14,409 | ||||||
Starbucks Corp. | 3,860 | 248,584 | ||||||
Synchrony Financial | 1,841 | 43,190 | ||||||
Sysco Corp. | 4,119 | 258,097 | ||||||
T-Mobile US, Inc. (*) | 132 | 8,397 | ||||||
Take-Two Interactive Software, Inc. (*) | 372 | 38,294 | ||||||
TE Connectivity, Ltd. | 147 | 11,118 |
The accompanying notes are an integral part of these financial statements.
Annual Report 25
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Teradyne, Inc. | 446 | $ | 13,995 | |||||
Texas Instruments, Inc. | 2,425 | 229,163 | ||||||
The Boeing Co. | 963 | 310,568 | ||||||
The Charles Schwab Corp. | 3,170 | 131,650 | ||||||
The Chemours Co. | 1,300 | 36,686 | ||||||
The Coca-Cola Co. | 5,360 | 253,796 | ||||||
The Estee Lauder Cos., Inc., Class A | 1,052 | 136,865 | ||||||
The Gap, Inc. | 604 | 15,559 | ||||||
The Procter & Gamble Co. | 3,816 | 350,767 | ||||||
The Southern Co. | 591 | 25,957 | ||||||
The TJX Cos., Inc. | 5,389 | 241,104 | ||||||
The Toro Co. | 851 | 47,554 | ||||||
The Walt Disney Co. | 377 | 41,338 | ||||||
Thermo Fisher Scientific, Inc. | 1,165 | 260,715 | ||||||
Tyson Foods, Inc., Class A | 721 | 38,501 | ||||||
United Continental Holdings, Inc. (*) | 185 | 15,490 | ||||||
United Rentals, Inc. (*) | 378 | 38,756 | ||||||
United States Cellular Corp. (*) | 593 | 30,818 | ||||||
United Technologies Corp. | 680 | 72,406 | ||||||
UnitedHealth Group, Inc. | 954 | 237,660 | ||||||
Unum Group | 1,277 | 37,518 | ||||||
USANA Health Sciences, Inc. (*) | 245 | 28,844 | ||||||
Verizon Communications, Inc. | 6,512 | 366,105 | ||||||
Vertex Pharmaceuticals, Inc. (*) | 92 | 15,245 | ||||||
Viacom, Inc., Class B | 485 | 12,465 | ||||||
Visa, Inc., Class A | 1,845 | 243,429 | ||||||
Walgreens Boots Alliance, Inc. | 782 | 53,434 | ||||||
Waste Management, Inc. | 1,176 | 104,652 | ||||||
Welbilt, Inc. (*) | 3,980 | 44,218 | ||||||
Worldpay, Inc., Class A (*) | 2,430 | 185,725 | ||||||
WW Grainger, Inc. | 417 | 117,744 | ||||||
Xcel Energy, Inc. | 685 | 33,750 | ||||||
Zions BanCorp. | 290 | 11,815 | ||||||
Zoetis, Inc. | 3,589 | 307,003 | ||||||
16,023,986 | ||||||||
Total Common Stocks (Cost $29,473,503) | 28,051,726 |
The accompanying notes are an integral part of these financial statements.
26 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
Corporate Bonds | 9.2% | ||||||||||
Australia | 0.2% | ||||||||||
Telstra Corp., Ltd., 4.000%, 09/16/22 | AUD | 90 | $ | 65,348 | ||||||
Belgium | 0.1% | ||||||||||
Anheuser-Busch InBev Finance, Inc., 2.650%, 02/01/21 | USD | 52 | 51,111 | |||||||
Canada | 0.3% | ||||||||||
Canadian Imperial Bank of Commerce, 2.900%, 09/14/21 | CAD | 185 | 135,889 | |||||||
Denmark | 0.3% | ||||||||||
Carlsberg Breweries A/S, 2.500%, 05/28/24 | EUR | 100 | 123,128 | |||||||
France | 0.3% | ||||||||||
Schneider Electric SE, 2.950%, 09/27/22 | USD | 150 | 147,378 | |||||||
Germany | 0.3% | ||||||||||
BMW Finance NV, 0.875%, 08/16/22 | GBP | 110 | 134,735 | |||||||
Netherlands | 0.6% | ||||||||||
BNG Bank NV, 5.000%, 09/16/20 | NZD | 103 | 72,024 | |||||||
Nederlandse Waterschapsbank NV, 3.125%, 12/05/22 (#) | USD | 200 | 202,116 | |||||||
274,140 | ||||||||||
New Zealand | 0.2% | ||||||||||
Fonterra Cooperative Group, Ltd., 5.500%, 02/26/24 | AUD | 100 | 77,962 |
The accompanying notes are an integral part of these financial statements.
Annual Report 27
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
Spain | 0.3% | ||||||||||
Iberdrola International BV, 1.125%, 04/21/26 | EUR | 100 | $ | 113,389 | ||||||
Switzerland | 0.3% | ||||||||||
ABB Finance USA, Inc., 3.375%, 04/03/23 | USD | 127 | 126,856 | |||||||
United Kingdom | 0.9% | ||||||||||
Ashtead Capital, Inc., 4.125%, 08/15/25 | USD | 200 | 183,000 | |||||||
Unilever Capital Corp., 3.250%, 03/07/24 | USD | 200 | 198,717 | |||||||
381,717 | ||||||||||
United States | 5.4% | ||||||||||
Amazon.com, Inc., 3.800%, 12/05/24 | USD | 170 | 173,980 | |||||||
Apple, Inc.: | ||||||||||
2.850%, 02/23/23 | USD | 10 | 9,877 | |||||||
3.850%, 05/04/43 | USD | 195 | 185,612 | |||||||
Bank of America Corp., 3.499%, 05/17/22 (§) | USD | 140 | 140,016 | |||||||
Caterpillar Financial Services Corp., 2.550%, 11/29/22 | USD | 245 | 237,960 | |||||||
Citigroup, Inc., 3.480% (BBSW 3 Month + 1.550%), 05/04/21 (§) | AUD | 158 | 112,524 | |||||||
John Deere Canada Funding, Inc., 2.050%, 09/17/20 | CAD | 210 | 152,156 | |||||||
Johnson & Johnson, 3.625%, 03/03/37 | USD | 155 | 149,262 | |||||||
JPMorgan Chase & Co., 4.500%, 01/24/22 | USD | 125 | 128,793 | |||||||
Microsoft Corp., 4.450%, 11/03/45 | USD | 202 | 214,549 |
The accompanying notes are an integral part of these financial statements.
28 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
Morgan Stanley, 3.625%, 01/20/27 | USD | 160 | $ | 152,145 | ||||||
NIKE, Inc., 2.375%, 11/01/26 | USD | 170 | 155,809 | |||||||
Starbucks Corp., 3.100%, 03/01/23 | USD | 70 | 68,943 | |||||||
The Goldman Sachs Group, Inc., 3.625%, 01/22/23 | USD | 135 | 132,868 | |||||||
The Home Depot, Inc., 3.750%, 02/15/24 | USD | 135 | 138,026 | |||||||
United Parcel Service, Inc., 2.350%, 05/16/22 | USD | 85 | 82,927 | |||||||
Wells Fargo Canada Corp., 3.040%, 01/29/21 | CAD | 85 | 62,484 | |||||||
2,297,931 | ||||||||||
Total Corporate Bonds (Cost $3,996,473) | 3,929,584 | |||||||||
Foreign Government Obligations | 13.0% | ||||||||||
Australia | 1.0% | ||||||||||
Queensland Treasury Corp.: | ||||||||||
3.000%, 03/22/24 | AUD | 190 | 137,792 | |||||||
2.750%, 08/20/27 | AUD | 210 | 147,409 | |||||||
Western Australian Treasury Corp., 6.000%, 10/16/23 | AUD | 180 | 147,744 | |||||||
432,945 | ||||||||||
Bermuda | 0.5% | ||||||||||
Government of Bermuda, 4.854%, 02/06/24 | USD | 200 | 207,750 | |||||||
Canada | 2.2% | ||||||||||
City of Vancouver, 2.900%, 11/20/25 | CAD | 95 | 70,005 | |||||||
Province of British Columbia, 4.700%, 06/18/37 | CAD | 155 | 139,585 |
The accompanying notes are an integral part of these financial statements.
Annual Report 29
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
Province of Ontario, 2.450%, 06/29/22 | USD | 80 | $ | 78,827 | ||||||
Province of Quebec: | ||||||||||
3.500%, 07/29/20 | USD | 225 | 227,827 | |||||||
1.650%, 03/03/22 | CAD | 95 | 68,438 | |||||||
3.000%, 09/01/23 | CAD | 335 | 251,307 | |||||||
2.500%, 04/20/26 | USD | 120 | 116,142 | |||||||
952,131 | ||||||||||
Chile | 0.8% | ||||||||||
Bonos de la Tesoreria de la Republica en pesos, 4.500%, 03/01/26 | CLP | 90,000 | 132,004 | |||||||
Republic of Chile, 3.125%, 01/21/26 | USD | 200 | 193,500 | |||||||
325,504 | ||||||||||
Czech Republic | 0.7% | ||||||||||
Czech Republic, 2.500%, 08/25/28 | CZK | 6,240 | 292,505 | |||||||
France | 0.3% | ||||||||||
Government of France, 1.750%, 06/25/39 | EUR | 111 | 136,289 | |||||||
Hungary | 0.9% | ||||||||||
Hungary, 6.375%, 03/29/21 | USD | 94 | 99,147 | |||||||
Hungary Government Bonds: | ||||||||||
3.000%, 06/26/24 | HUF | 39,980 | 148,061 | |||||||
3.000%, 10/27/27 | HUF | 41,700 | 148,471 | |||||||
395,679 | ||||||||||
Ireland | 0.3% | ||||||||||
Ireland Government Bonds, 1.700%, 05/15/37 | EUR | 120 | 140,065 | |||||||
Japan | 0.4% | ||||||||||
Japan International Cooperation Agency, 2.125%, 10/20/26 | USD | 200 | 186,279 |
The accompanying notes are an integral part of these financial statements.
30 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
Mexico | 0.3% | ||||||||||
United Mexican States, 6.750%, 02/06/24 | GBP | 70 | $ | 105,282 | ||||||
New Zealand | 0.8% | ||||||||||
New Zealand Government Bonds: | ||||||||||
6.000%, 05/15/21 | NZD | 295 | 215,189 | |||||||
4.500%, 04/15/27 | NZD | 155 | 114,156 | |||||||
329,345 | ||||||||||
Norway | 1.6% | ||||||||||
Kommunalbanken AS, 1.375%, 10/26/20 (#) | USD | 200 | 195,317 | |||||||
Oslo Kommune: | ||||||||||
3.300%, 11/25/21 | NOK | 1,000 | 120,329 | |||||||
2.300%, 03/14/24 | NOK | 2,000 | 234,274 | |||||||
2.350%, 09/04/24 | NOK | 1,000 | 116,071 | |||||||
665,991 | ||||||||||
Panama | 0.5% | ||||||||||
Republic of Panama, 4.000%, 09/22/24 | USD | 200 | 201,650 | |||||||
Poland | 0.7% | ||||||||||
Poland Government Bonds, 2.500%, 07/25/26 | PLN | 1,110 | 293,983 | |||||||
Singapore | 0.6% | ||||||||||
Singapore Government Bonds, 3.000%, 09/01/24 | SGD | 356 | 276,401 | |||||||
Spain | 0.3% | ||||||||||
Spain Government Bonds, 1.600%, 04/30/25 | EUR | 121 | 145,990 | |||||||
Sweden | 0.5% | ||||||||||
Kommuninvest I Sverige AB, 1.500%, 04/23/19 | USD | 200 | 199,395 |
The accompanying notes are an integral part of these financial statements.
Annual Report 31
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
United Kingdom | 0.6% | ||||||||||
United Kingdom Gilt: | ||||||||||
1.750%, 09/07/37 | GBP | 107 | $ | 136,112 | ||||||
1.500%, 07/22/47 | GBP | 118 | 139,130 | |||||||
275,242 | ||||||||||
Total Foreign Government Obligations (Cost $5,664,014) | 5,562,426 | |||||||||
Quasi Government Bonds | 0.7% | ||||||||||
Canada | 0.4% | ||||||||||
Export Development Canada, 1.800%, 09/01/22 | CAD | 195 | 141,104 | |||||||
Germany | 0.3% | ||||||||||
KFW, 1.125%, 12/23/19 | GBP | 110 | 140,408 | |||||||
Total Quasi Government Bonds (Cost $283,853) | 281,512 | |||||||||
Supranational Bonds | 2.6% | ||||||||||
African Development Bank, 2.375%, 09/23/21 | USD | 169 | 167,894 | |||||||
Asian Development Bank: | ||||||||||
1.875%, 04/12/19 | USD | 75 | 74,844 | |||||||
1.000%, 12/15/22 | GBP | 130 | 164,286 | |||||||
2.125%, 03/19/25 | USD | 110 | 106,024 | |||||||
European Investment Bank, 1.125%, 09/16/21 (#) | CAD | 195 | 138,845 | |||||||
International Bank for Reconstruction & Development: | ||||||||||
3.500%, 01/22/21 | NZD | 115 | 79,115 | |||||||
2.500%, 08/03/23 | CAD | 285 | 210,827 | |||||||
2.900%, 11/26/25 | AUD | 95 | 67,753 |
The accompanying notes are an integral part of these financial statements.
32 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||||
International Finance Corp., 3.625%, 05/20/20 | NZD | 165 | $ | 112,948 | ||||||
Total Supranational Bonds (Cost $1,151,118) | 1,122,536 | |||||||||
US Government Securities | 0.5% | ||||||||||
Federal National Mortgage Association, 2.625%, 09/06/24 (Cost $202,100) | USD | 205 | 204,270 | |||||||
US Municipal Bonds | 0.8% | ||||||||||
California | 0.6% | ||||||||||
California State Build America Bonds, 7.500%, 04/01/34 | USD | 120 | 163,528 | |||||||
State of California, 4.500%, 04/01/33 | USD | 80 | 83,747 | |||||||
247,275 | ||||||||||
Georgia | 0.2% | ||||||||||
Georgia State Build America Bonds Series B, 2.380%, 02/01/27 | USD | 100 | 94,549 | |||||||
Total US Municipal Bonds (Cost $354,847) | 341,824 | |||||||||
US Treasury Securities | 4.1% | ||||||||||
Treasury Inflation Protected Security, 0.125%, 04/15/20 | USD | 146 | 142,498 | |||||||
US Treasury Notes: | ||||||||||
1.750%, 10/31/20 | USD | 35 | 34,516 | |||||||
2.125%, 05/15/25 | USD | 510 | 496,415 | |||||||
2.875%, 08/15/28 | USD | 560 | 569,058 | |||||||
3.125%, 11/15/41 | USD | 515 | 528,180 | |||||||
Total US Treasury Securities (Cost $1,735,790) | 1,770,667 |
The accompanying notes are an integral part of these financial statements.
Annual Report 33
Description | Shares | Fair Value | ||||||
Lazard Global Dynamic Multi-Asset Portfolio (continued) | ||||||||
Short-Term Investments | 3.4% | ||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (Cost $1,464,341) | 1,464,341 | $ | 1,464,341 | |||||
Total Investments | 99.8% (Cost $44,326,039) (») | $ | 42,728,886 | ||||||
Cash and Other Assets in Excess of Liabilities | 0.2% | 73,858 | |||||||
Net Assets | 100.0% | $ | 42,802,744 |
The accompanying notes are an integral part of these financial statements.
34 Annual Report
Lazard Global Dynamic Multi-Asset Portfolio (continued)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
AUD | 61,760 | USD | 45,500 | CIT | 02/14/19 | $ | — | $ | 1,964 | |||||||||||||
AUD | 109,761 | USD | 78,600 | HSB | 02/14/19 | — | 1,227 | |||||||||||||||
CAD | 105,087 | USD | 78,600 | HSB | 02/14/19 | — | 1,543 | |||||||||||||||
CAD | 372,967 | USD | 282,247 | HSB | 02/14/19 | — | 8,762 | |||||||||||||||
CHF | 42,250 | USD | 42,401 | HSB | 02/14/19 | 749 | — | |||||||||||||||
CHF | 42,302 | USD | 43,041 | SSB | 03/28/19 | 341 | — | |||||||||||||||
CZK | 2,738,725 | USD | 120,373 | JPM | 01/29/19 | 1,652 | — | |||||||||||||||
EUR | 698,999 | USD | 804,261 | CIT | 01/10/19 | — | 2,922 | |||||||||||||||
EUR | 114,604 | USD | 131,000 | HSB | 01/10/19 | 383 | — | |||||||||||||||
EUR | 118,268 | USD | 135,500 | HSB | 01/10/19 | 84 | — | |||||||||||||||
EUR | 652,135 | USD | 737,200 | HSB | 01/10/19 | 10,414 | — | |||||||||||||||
EUR | 965,777 | USD | 1,111,310 | HSB | 01/10/19 | — | 4,134 | |||||||||||||||
EUR | 97,555 | USD | 112,247 | JPM | 01/10/19 | — | 409 | |||||||||||||||
EUR | 317,406 | USD | 365,748 | SSB | 03/28/19 | 529 | — | |||||||||||||||
GBP | 129,360 | USD | 162,800 | HSB | 02/14/19 | 2,423 | — | |||||||||||||||
GBP | 149,424 | USD | 192,539 | HSB | 02/14/19 | — | 1,689 | |||||||||||||||
GBP | 166,404 | USD | 213,818 | HSB | 02/14/19 | — | 1,280 | |||||||||||||||
JPY | 100,792,291 | USD | 900,647 | CIT | 02/14/19 | 21,720 | — | |||||||||||||||
JPY | 69,359,503 | USD | 613,600 | HSB | 02/14/19 | 21,120 | — | |||||||||||||||
JPY | 144,678,583 | USD | 1,292,864 | HSB | 02/14/19 | 31,113 | — | |||||||||||||||
JPY | 3,026,139 | USD | 27,392 | SSB | 03/28/19 | 399 | — | |||||||||||||||
MXN | 2,241,269 | USD | 108,721 | HSB | 02/14/19 | 4,595 | — | |||||||||||||||
MXN | 5,069,698 | USD | 247,823 | HSB | 02/14/19 | 8,494 | — | |||||||||||||||
NZD | 64,034 | USD | 43,500 | HSB | 02/14/19 | — | 489 | |||||||||||||||
NZD | 72,491 | USD | 49,700 | HSB | 02/14/19 | — | 1,008 | |||||||||||||||
NZD | 370,708 | USD | 251,896 | HSB | 02/14/19 | — | 2,891 | |||||||||||||||
PLN | 233,945 | USD | 62,031 | HSB | 02/14/19 | 534 | — | |||||||||||||||
SGD | 129,144 | USD | 94,282 | CIT | 02/14/19 | 558 | — | |||||||||||||||
USD | 54,545 | AUD | 74,729 | CIT | 02/14/19 | 1,868 | — | |||||||||||||||
USD | 103,178 | AUD | 142,843 | CIT | 02/14/19 | 2,485 | — | |||||||||||||||
USD | 18,167 | AUD | 25,427 | HSB | 02/14/19 | 243 | — | |||||||||||||||
USD | 60,101 | AUD | 83,227 | HSB | 02/14/19 | 1,432 | — | |||||||||||||||
USD | 135,809 | AUD | 189,657 | HSB | 02/14/19 | 2,117 | — | |||||||||||||||
USD | 200,215 | AUD | 277,228 | JPM | 02/14/19 | 4,793 | — | |||||||||||||||
USD | 102,800 | AUD | 144,634 | SSB | 03/28/19 | 781 | — |
The accompanying notes are an integral part of these financial statements.
Annual Report 35
Lazard Global Dynamic Multi-Asset Portfolio (continued)
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
USD | 32,687 | CAD | 43,707 | HSB | 02/14/19 | $ | 638 | $ | — | |||||||||||||
USD | 33,242 | CAD | 44,682 | HSB | 02/14/19 | 478 | — | |||||||||||||||
USD | 361,854 | CAD | 483,853 | HSB | 02/14/19 | 7,060 | — | |||||||||||||||
USD | 624,834 | CAD | 825,668 | HSB | 02/14/19 | 19,397 | — | |||||||||||||||
USD | 328,702 | CAD | 434,290 | JPM | 02/14/19 | 10,251 | — | |||||||||||||||
USD | 375,138 | CAD | 506,241 | SSB | 03/28/19 | 3,591 | — | |||||||||||||||
USD | 29,935 | CLP | 20,442,724 | CIT | 01/31/19 | 455 | — | |||||||||||||||
USD | 102,028 | CLP | 70,598,603 | CIT | 01/31/19 | 221 | — | |||||||||||||||
USD | 118,232 | CZK | 2,690,099 | CIT | 01/29/19 | — | 1,626 | |||||||||||||||
USD | 64,915 | CZK | 1,480,189 | HSB | 02/14/19 | — | 1,067 | |||||||||||||||
USD | 210,597 | CZK | 4,791,516 | JPM | 01/29/19 | — | 2,890 | |||||||||||||||
USD | 36,040 | EUR | 31,885 | HSB | 01/10/19 | — | 513 | |||||||||||||||
USD | 41,874 | EUR | 36,724 | HSB | 01/10/19 | — | 227 | |||||||||||||||
USD | 152,700 | EUR | 134,821 | HSB | 01/10/19 | — | 1,860 | |||||||||||||||
USD | 180,444 | GBP | 143,406 | HSB | 02/14/19 | — | 2,719 | |||||||||||||||
USD | 494,604 | GBP | 383,848 | HSB | 02/14/19 | 4,340 | — | |||||||||||||||
USD | 32,408 | GBP | 25,150 | JPM | 02/14/19 | 286 | — | |||||||||||||||
USD | 49,621 | GBP | 39,041 | SSB | 03/28/19 | — | 346 | |||||||||||||||
USD | 63,565 | HKD | 496,661 | SSB | 03/28/19 | — | 21 | |||||||||||||||
USD | 65,395 | HUF | 18,712,232 | HSB | 02/14/19 | — | 1,577 | |||||||||||||||
USD | 113,875 | HUF | 31,635,021 | JPM | 05/08/19 | — | 22 | |||||||||||||||
USD | 115,926 | HUF | 32,622,793 | JPM | 05/08/19 | — | 1,527 | |||||||||||||||
USD | 58,705 | ILS | 219,857 | SSB | 03/28/19 | — | 482 | |||||||||||||||
USD | 81,400 | JPY | 9,136,215 | CIT | 02/14/19 | — | 2,207 | |||||||||||||||
USD | 106,300 | JPY | 11,976,938 | HSB | 02/14/19 | — | 3,303 | |||||||||||||||
USD | 263,377 | MXN | 5,387,869 | HSB | 02/14/19 | — | 9,027 | |||||||||||||||
USD | 66,675 | MXN | 1,364,175 | JPM | 02/14/19 | — | 2,296 | |||||||||||||||
USD | 131,596 | NOK | 1,106,265 | CIT | 02/14/19 | 3,406 | — | |||||||||||||||
USD | 118,566 | NOK | 1,020,481 | HSB | 02/14/19 | 317 | — | |||||||||||||||
USD | 229,641 | NOK | 1,929,510 | HSB | 02/14/19 | 6,057 | — | |||||||||||||||
USD | 281,453 | NOK | 2,437,561 | SSB | 03/28/19 | — | 1,511 | |||||||||||||||
USD | 44,143 | NZD | 65,011 | HSB | 02/14/19 | 474 | — | |||||||||||||||
USD | 55,998 | NZD | 82,463 | HSB | 02/14/19 | 608 | — | |||||||||||||||
USD | 582,361 | NZD | 857,043 | HSB | 02/14/19 | 6,684 | — | |||||||||||||||
USD | 108,381 | NZD | 159,484 | JPM | 02/14/19 | 1,255 | — |
The accompanying notes are an integral part of these financial statements.
36 Annual Report
Lazard Global Dynamic Multi-Asset Portfolio (concluded)
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||
USD | 65,207 | PLN | 248,083 | HSB | 02/14/19 | $ | — | $ | 1,140 | |||||||||||||
USD | 264,698 | PLN | 998,278 | HSB | 02/14/19 | — | 2,280 | |||||||||||||||
USD | 342,049 | SGD | 468,488 | HSB | 02/14/19 | — | 1,995 | |||||||||||||||
USD | 55,684 | SGD | 76,163 | SSB | 03/28/19 | — | 306 | |||||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 184,345 | $ | 67,260 |
The accompanying notes are an integral part of these financial statements.
Annual Report 37
The accompanying notes are an integral part of these financial statements.
38 Annual Report
Description | Fair Value | |||||||
Lazard Opportunistic Strategies Portfolio (concluded) | ||||||||
Total Investments | 100.2% (Cost $107,061,230) | $ | 103,232,522 | ||||||
Liabilities in Excess of Cash and Other Assets | (0.2)% | (163,703 | ) | ||||||
Net Assets | 100.0% | $ | 103,068,819 |
The accompanying notes are an integral part of these financial statements.
Annual Report 39
The accompanying notes are an integral part of these financial statements.
40 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Royal Bank of Canada | 1,010 | $ | 69,129 | |||||
Sun Life Financial, Inc. | 261 | 8,659 | ||||||
TELUS Corp. | 479 | 15,877 | ||||||
The Bank of Nova Scotia | 318 | 15,851 | ||||||
The Toronto-Dominion Bank | 1,281 | 63,675 | ||||||
TransAlta Corp. | 2,366 | 9,688 | ||||||
637,465 | ||||||||
China | 0.4% | ||||||||
China Vanke Co., Ltd., Class H | 18,200 | 61,271 | ||||||
Denmark | 0.1% | ||||||||
Novo Nordisk A/S, Class B | 202 | 9,285 | ||||||
Scandinavian Tobacco Group A/S | 852 | 10,265 | ||||||
19,550 | ||||||||
Faeroe Islands | 0.1% | ||||||||
Bakkafrost P/F | 172 | 8,415 | ||||||
Finland | 0.1% | ||||||||
Cramo Oyj | 593 | 10,115 | ||||||
France | 2.5% | ||||||||
Air Liquide SA | 195 | 24,142 | ||||||
AXA SA | 513 | 11,053 | ||||||
Engie SA | 1,460 | 20,867 | ||||||
Eutelsat Communications SA | 5,647 | 111,674 | ||||||
L’Oreal SA | 195 | 44,763 | ||||||
Unibail-Rodamco-Westfield | 259 | 40,007 | ||||||
Vinci SA | 1,892 | 155,480 | ||||||
407,986 | ||||||||
Germany | 1.6% | ||||||||
ADO Properties SA | 1,459 | 76,284 | ||||||
Allianz SE | 67 | 13,445 | ||||||
Aroundtown SA | 3,114 | 25,844 | ||||||
Deutsche Lufthansa AG | 993 | 22,395 | ||||||
Fraport AG | 1,109 | 79,269 | ||||||
Vonovia SE | 1,114 | 50,560 | ||||||
267,797 |
The accompanying notes are an integral part of these financial statements.
Annual Report 41
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Hong Kong | 1.8% | ||||||||
Dairy Farm International Holdings, Ltd. | 3,900 | $ | 35,222 | |||||
Jardine Matheson Holdings, Ltd. | 272 | 18,939 | ||||||
Link Real Estate Investment Trust | 9,500 | 95,671 | ||||||
Sun Hung Kai Properties, Ltd. | 5,000 | 70,895 | ||||||
Wharf Real Estate Investment Co., Ltd. | 11,000 | 65,387 | ||||||
286,114 | ||||||||
Ireland | 0.2% | ||||||||
AerCap Holdings NV (*) | 173 | 6,851 | ||||||
CRH PLC | 806 | 21,246 | ||||||
Ryanair Holdings PLC Sponsored ADR (*) | 112 | 7,990 | ||||||
36,087 | ||||||||
Italy | 4.2% | ||||||||
ASTM SpA | 1,057 | 21,131 | ||||||
Atlantia SpA (*) | 7,889 | 163,366 | ||||||
Hera SpA | 10,527 | 32,064 | ||||||
Italgas SpA | 21,874 | 125,034 | ||||||
Poste Italiane SpA | 1,701 | 13,652 | ||||||
Snam SpA | 34,345 | 150,335 | ||||||
Societa Iniziative Autostradali e Servizi SpA | 1,009 | 13,915 | ||||||
Terna SpA | 27,487 | 156,033 | ||||||
675,530 | ||||||||
Japan | 2.5% | ||||||||
East Japan Railway Co. | 200 | 17,777 | ||||||
GLP J-Reit | 76 | 77,632 | ||||||
KDDI Corp. | 500 | 11,915 | ||||||
Mitsubishi Estate Co., Ltd. | 5,500 | 86,190 | ||||||
Mitsui Fudosan Co., Ltd. | 3,500 | 77,551 | ||||||
MS&AD Insurance Group Holdings, Inc. | 300 | 8,516 | ||||||
Nippon Prologis REIT, Inc. | 19 | 40,109 | ||||||
NTT DOCOMO, Inc. | 1,300 | 29,192 | ||||||
Sompo Holdings, Inc. | 300 | 10,126 | ||||||
Sumitomo Metal Mining Co., Ltd. | 600 | 15,958 | ||||||
Tokio Marine Holdings, Inc. | 300 | 14,261 | ||||||
West Japan Railway Co. | 300 | 21,187 | ||||||
410,414 |
The accompanying notes are an integral part of these financial statements.
42 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Luxembourg | 0.9% | ||||||||
SES SA | 7,679 | $ | 147,082 | |||||
Mexico | 0.3% | ||||||||
Alpek SAB de CV (*) | 16,755 | 20,505 | ||||||
Corp Inmobiliaria Vesta SAB de CV | 20,100 | 27,442 | ||||||
47,947 | ||||||||
Netherlands | 0.3% | ||||||||
Aegon NV | 1,579 | 7,340 | ||||||
Akzo Nobel NV | 254 | 20,417 | ||||||
Intertrust NV | 595 | 9,991 | ||||||
NN Group NV | 347 | 13,785 | ||||||
51,533 | ||||||||
New Zealand | 0.1% | ||||||||
Air New Zealand, Ltd. | 3,628 | 7,555 | ||||||
Spark New Zealand, Ltd. | 5,097 | 14,157 | ||||||
21,712 | ||||||||
Norway | 0.2% | ||||||||
Equinor ASA | 836 | 17,829 | ||||||
Salmar ASA | 220 | 10,881 | ||||||
28,710 | ||||||||
Philippines | 0.3% | ||||||||
Megaworld Corp. | 497,000 | 44,889 | ||||||
Singapore | 0.6% | ||||||||
CapitaLand Mall Trust REIT | 34,400 | 56,916 | ||||||
DBS Group Holdings, Ltd. | 459 | 7,930 | ||||||
Sheng Siong Group, Ltd. | 12,700 | 9,880 | ||||||
Singapore Airlines, Ltd. | 1,100 | 7,574 | ||||||
Singapore Technologies Engineering, Ltd. | 3,800 | 9,691 | ||||||
91,991 | ||||||||
South Korea | 0.1% | ||||||||
S-Oil Corp. | 242 | 21,115 |
The accompanying notes are an integral part of these financial statements.
Annual Report 43
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Spain | 1.2% | ||||||||
Merlin Properties Socimi SA REIT | 3,733 | $ | 46,123 | |||||
Red Electrica Corporacion SA | 6,484 | 144,429 | ||||||
190,552 | ||||||||
Sweden | 0.0% | ||||||||
Swedish Match AB | 196 | 7,727 | ||||||
Switzerland | 0.6% | ||||||||
Ferguson PLC | 440 | 28,180 | ||||||
Roche Holding AG | 256 | 63,302 | ||||||
91,482 | ||||||||
United Arab Emirates | 0.3% | ||||||||
Emaar Properties PJSC | 38,243 | 43,021 | ||||||
United Kingdom | 5.7% | ||||||||
Admiral Group PLC | 1,374 | 35,717 | ||||||
Ashtead Group PLC | 461 | 9,551 | ||||||
BP PLC | 4,676 | 29,503 | ||||||
Derwent London PLC REIT | 683 | 24,789 | ||||||
Great Portland Estates PLC REIT | 4,672 | 39,152 | ||||||
Hargreaves Lansdown PLC | 784 | 18,472 | ||||||
Howden Joinery Group PLC | 4,404 | 24,357 | ||||||
Imperial Brands PLC | 1,643 | 49,684 | ||||||
International Consolidated Airlines Group SA | 3,513 | 27,694 | ||||||
National Grid PLC | 17,936 | 173,451 | ||||||
Pennon Group PLC | 10,815 | 95,369 | ||||||
Segro PLC REIT | 7,517 | 56,385 | ||||||
Severn Trent PLC | 6,104 | 141,024 | ||||||
Unilever NV | 459 | 24,940 | ||||||
United Utilities Group PLC | 17,756 | 166,270 | ||||||
916,358 | ||||||||
United States | 26.5% | ||||||||
Agilent Technologies, Inc. | 156 | 10,524 | ||||||
Alexandria Real Estate Equities, Inc. REIT | 498 | 57,390 | ||||||
American Electric Power Co., Inc. | 2,000 | 149,480 | ||||||
American Express Co. | 94 | 8,960 |
The accompanying notes are an integral part of these financial statements.
44 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
American Homes 4 Rent, Class A REIT | 3,493 | $ | 69,336 | |||||
American Tower Corp. REIT | 603 | 95,389 | ||||||
Americold Realty Trust REIT | 3,629 | 92,685 | ||||||
Amgen, Inc. | 48 | 9,344 | ||||||
Aon PLC | 472 | 68,610 | ||||||
Apple, Inc. | 183 | 28,866 | ||||||
Bank of America Corp. | 491 | 12,098 | ||||||
Best Buy Co., Inc. | 128 | 6,779 | ||||||
Biogen, Inc. (*) | 32 | 9,629 | ||||||
Boston Properties, Inc. REIT | 559 | 62,915 | ||||||
Bristol-Myers Squibb Co. | 250 | 12,995 | ||||||
Broadridge Financial Solutions, Inc. | 86 | 8,278 | ||||||
Burlington Stores, Inc. (*) | 57 | 9,272 | ||||||
Campbell Soup Co. | 546 | 18,013 | ||||||
Cboe Global Markets, Inc. | 82 | 8,022 | ||||||
CF Industries Holdings, Inc. N Ap | 360 | 15,664 | ||||||
Charles River Laboratories International, Inc. (*) | 127 | 14,374 | ||||||
Church & Dwight Co., Inc. | 216 | 14,204 | ||||||
Cigna Corp. | 205 | 38,934 | ||||||
Cisco Systems, Inc. | 267 | 11,569 | ||||||
Conagra Brands, Inc. | 277 | 5,917 | ||||||
Consolidated Edison, Inc. | 770 | 58,874 | ||||||
Copart, Inc. (*) | 421 | 20,115 | ||||||
CoreSite Realty Corp. REIT | 490 | 42,743 | ||||||
Costco Wholesale Corp. | 162 | 33,001 | ||||||
Cracker Barrel Old Country Store, Inc. | 83 | 13,268 | ||||||
CSX Corp. | 919 | 57,097 | ||||||
Darden Restaurants, Inc. | 223 | 22,269 | ||||||
Deere & Co. | 232 | 34,607 | ||||||
DowDuPont, Inc. | 338 | 18,076 | ||||||
Edison International | 2,173 | 123,361 | ||||||
Eli Lilly & Co. | 527 | 60,984 | ||||||
EOG Resources, Inc. | 358 | 31,221 | ||||||
Equinix, Inc. REIT | 242 | 85,320 | ||||||
Equity Lifestyle Properties, Inc. REIT | 586 | 56,918 | ||||||
Essential Properties Realty Trust, Inc. | 2,818 | 39,001 |
The accompanying notes are an integral part of these financial statements.
Annual Report 45
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Essex Property Trust, Inc. REIT | 360 | $ | 88,276 | |||||
Exelon Corp. | 398 | 17,950 | ||||||
Extra Space Storage, Inc. REIT | 730 | 66,050 | ||||||
F5 Networks, Inc. (*) | 207 | 33,540 | ||||||
Fortune Brands Home & Security, Inc. | 236 | 8,966 | ||||||
H&R Block, Inc. | 677 | 17,176 | ||||||
HCA Healthcare, Inc. | 65 | 8,089 | ||||||
Hilton Worldwide Holdings, Inc. | 1,220 | 87,596 | ||||||
Honeywell International, Inc. | 53 | 7,002 | ||||||
Hudson Pacific Properties, Inc. REIT | 1,927 | 55,999 | ||||||
Humana, Inc. | 86 | 24,637 | ||||||
Intel Corp. | 1,162 | 54,533 | ||||||
Intercontinental Exchange, Inc. | 290 | 21,846 | ||||||
IQVIA Holdings, Inc. (*) | 183 | 21,259 | ||||||
Johnson & Johnson | 549 | 70,848 | ||||||
JPMorgan Chase & Co. | 248 | 24,210 | ||||||
Kansas City Southern | 800 | 76,360 | ||||||
KAR Auction Services, Inc. | 178 | 8,494 | ||||||
Kimberly-Clark Corp. | 363 | 41,360 | ||||||
Lamb Weston Holdings, Inc. | 256 | 18,831 | ||||||
Lockheed Martin Corp. | 212 | 55,510 | ||||||
Lowe’s Cos., Inc. | 143 | 13,208 | ||||||
Marathon Petroleum Corp. | 449 | 26,496 | ||||||
Marsh & McLennan Cos., Inc. | 254 | 20,257 | ||||||
MasterCard, Inc., Class A | 354 | 66,782 | ||||||
McDonald’s Corp. | 121 | 21,486 | ||||||
Merck & Co., Inc. | 339 | 25,903 | ||||||
MetLife, Inc. | 204 | 8,376 | ||||||
Mettler-Toledo International, Inc. (*) | 61 | 34,500 | ||||||
Newmont Mining Corp. | 820 | 28,413 | ||||||
NIKE, Inc., Class B | 348 | 25,801 | ||||||
Norfolk Southern Corp. | 1,019 | 152,381 | ||||||
Northrop Grumman Corp. | 149 | 36,490 | ||||||
Occidental Petroleum Corp. | 470 | 28,849 | ||||||
Olin Corp. | 987 | 19,849 | ||||||
Owens Corning | 283 | 12,446 |
The accompanying notes are an integral part of these financial statements.
46 Annual Report
Description | Shares | Fair Value | ||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||
Paychex, Inc. | 555 | $ | 36,158 | |||||
Pfizer, Inc. | 233 | 10,170 | ||||||
PG&E Corp. (*) | 5,264 | 125,020 | ||||||
Prologis, Inc. | 1,329 | 78,039 | ||||||
Quest Diagnostics, Inc. | 81 | 6,745 | ||||||
Raytheon Co. | 167 | 25,609 | ||||||
Republic Services, Inc. | 989 | 71,297 | ||||||
Ross Stores, Inc. | 325 | 27,040 | ||||||
Simon Property Group, Inc. REIT | 645 | 108,354 | ||||||
Skyworks Solutions, Inc. | 161 | 10,790 | ||||||
Starbucks Corp. | 868 | 55,899 | ||||||
Synchrony Financial | 341 | 8,000 | ||||||
Synovus Financial Corp. | 291 | 9,309 | ||||||
Sysco Corp. | 1,114 | 69,803 | ||||||
Target Corp. | 231 | 15,267 | ||||||
Texas Instruments, Inc. | 217 | 20,507 | ||||||
The Allstate Corp. | 324 | 26,772 | ||||||
The Boeing Co. | 196 | 63,210 | ||||||
The Estee Lauder Cos., Inc., Class A | 64 | 8,326 | ||||||
The Hershey Co. | 102 | 10,932 | ||||||
The Home Depot, Inc. | 133 | 22,852 | ||||||
The Macerich Co. REIT | 1,399 | 60,549 | ||||||
The Procter & Gamble Co. | 930 | 85,486 | ||||||
The TJX Cos., Inc. | 1,018 | 45,545 | ||||||
The Toro Co. | 184 | 10,282 | ||||||
The Travelers Cos., Inc. | 71 | 8,502 | ||||||
Thermo Fisher Scientific, Inc. | 244 | 54,605 | ||||||
Tyson Foods, Inc., Class A | 165 | 8,811 | ||||||
UnitedHealth Group, Inc. | 216 | 53,810 | ||||||
Visa, Inc., Class A | 308 | 40,638 | ||||||
Vulcan Materials Co. | 228 | 22,526 | ||||||
Walgreens Boots Alliance, Inc. | 194 | 13,256 | ||||||
Walmart, Inc. | 245 | 22,822 | ||||||
Waste Connections, Inc. | 238 | 17,672 | ||||||
Waste Management, Inc. | 784 | 69,768 | ||||||
Waters Corp. (*) | 106 | 19,997 |
The accompanying notes are an integral part of these financial statements.
Annual Report 47
Description | Shares | Fair Value | ||||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||||
Westlake Chemical Corp. | 361 | $ | 23,887 | |||||||
Weyerhaeuser Co. REIT | 1,913 | 41,818 | ||||||||
WW Grainger, Inc. | 62 | 17,506 | ||||||||
Zoetis, Inc. | 107 | 9,153 | ||||||||
4,302,603 | ||||||||||
Total Common Stocks (Cost $10,024,269) | 9,478,988 | |||||||||
Exchange-Traded Funds | 1.5% | ||||||||||
SPDR Gold Shares (*), (∆) (Cost $229,112) | 1,961 | 237,771 | ||||||||
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Foreign Government Obligations | 8.7% | ||||||||||
Australia | 0.3% | ||||||||||
Australia Government Bonds, 3.000%, 09/20/25 | AUD | 46 | $ | 45,736 | ||||||
Canada | 0.4% | ||||||||||
Canadian Government Real Return Bonds, 2.000%, 12/01/41 | CAD | 75 | 68,570 | |||||||
Denmark | 0.8% | ||||||||||
Denmark Inflation Linked Government Bonds, 0.100%, 11/15/23 | DKK | 801 | 130,179 | |||||||
France | 1.3% | ||||||||||
Government of France, 1.850%, 07/25/27 | EUR | 150 | 208,815 |
The accompanying notes are an integral part of these financial statements.
48 Annual Report
Description | Security Currency | Principal Amount (000) | Fair Value | |||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||||
Italy | 1.4% | ||||||||||
Italy Buoni Poliennali Del Tesoro: | ||||||||||
0.100%, 05/15/22 | EUR | 131 | $ | 146,268 | ||||||
2.350%, 09/15/24 | EUR | 68 | 82,196 | |||||||
228,464 | ||||||||||
New Zealand | 0.9% | ||||||||||
New Zealand Government Bonds, 3.000%, 09/20/30 | NZD | 175 | 146,548 | |||||||
Spain | 1.4% | ||||||||||
Spain Government Inflation Linked Bonds: | ||||||||||
0.300%, 11/30/21 | EUR | 119 | 141,261 | |||||||
1.800%, 11/30/24 | EUR | 69 | 89,255 | |||||||
230,516 | ||||||||||
Sweden | 0.3% | ||||||||||
Sweden Inflation Linked Bonds, 3.500%, 12/01/28 | SEK | 190 | 42,135 | |||||||
United Kingdom | 1.9% | ||||||||||
United Kingdom Gilt Inflation Linked: | ||||||||||
2.500%, 04/16/20 | GBP | 40 | 182,924 | |||||||
0.750%, 03/22/34 | GBP | 72 | 131,873 | |||||||
314,797 | ||||||||||
Total Foreign Government Obligations (Cost $1,404,220) | 1,415,760 | |||||||||
US Treasury Securities | 15.0% | ||||||||||
Treasury Inflation Protected Securities: | ||||||||||
0.125%, 04/15/20 | USD | 788 | 770,547 | |||||||
1.125%, 01/15/21 | USD | 875 | 871,101 | |||||||
2.375%, 01/15/25 | USD | 224 | 242,248 | |||||||
2.500%, 01/15/29 | USD | 479 | 545,625 | |||||||
Total US Treasury Securities (Cost $2,495,535) | 2,429,521 |
The accompanying notes are an integral part of these financial statements.
Annual Report 49
Description | Shares | Fair Value | ||||||||
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued) | ||||||||||
Short-Term Investments | 15.7% | ||||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24% (7 day yield) (∆) (Cost $2,539,959) | 2,539,959 | $ | 2,539,959 | |||||||
Total Investments | 99.4% (Cost $16,693,095) (») | $ | 16,101,999 | ||||||||
Cash and Other Assets in Excess of Liabilities | 0.6% | 104,384 | |||||||||
Net Assets | 100.0% | $ | 16,206,383 |
The accompanying notes are an integral part of these financial statements.
50 Annual Report
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued)
Forward Currency Contracts open at December 31, 2018:
Currency Purchased | Quantity | Currency Sold | Quantity | Counterparty | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||
AUD | 22,804 | USD | 16,800 | CIT | 02/14/19 | $ | — | $ | 718 | |||||||||||
AUD | 20,793 | USD | 14,696 | SSB | 03/28/19 | — | 24 | |||||||||||||
EUR | 4,151 | USD | 4,777 | HSB | 01/10/19 | — | 18 | |||||||||||||
EUR | 46,908 | USD | 54,109 | SSB | 03/28/19 | 18 | — | |||||||||||||
JPY | 4,364,268 | USD | 38,998 | CIT | 02/14/19 | 908 | — | |||||||||||||
JPY | 8,871,752 | USD | 79,279 | HSB | 02/14/19 | 1,841 | — | |||||||||||||
MXN | 2,665,663 | USD | 130,306 | HSB | 02/14/19 | 4,559 | — | |||||||||||||
NZD | 23,337 | USD | 16,000 | HSB | 02/14/19 | — | 330 | |||||||||||||
USD | 25,655 | AUD | 35,527 | HSB | 02/14/19 | 601 | — | |||||||||||||
USD | 401,217 | AUD | 558,106 | SSB | 03/28/19 | 7,389 | — | |||||||||||||
USD | 24,388 | CAD | 32,232 | CIT | 02/14/19 | 742 | — | |||||||||||||
USD | 31,319 | CAD | 41,974 | CIT | 03/28/19 | 498 | — | |||||||||||||
USD | 46,859 | CAD | 61,920 | HSB | 02/14/19 | 1,434 | — | |||||||||||||
USD | 12,372 | CHF | 12,164 | CIT | 03/28/19 | — | 99 | |||||||||||||
USD | 6,602 | CHF | 6,486 | SSB | 03/28/19 | — | 47 | |||||||||||||
USD | 134,033 | DKK | 870,195 | CIT | 02/14/19 | 9 | — | |||||||||||||
USD | 915,122 | EUR | 794,563 | CIT | 03/28/19 | — | 1,718 | |||||||||||||
USD | 81,091 | EUR | 71,741 | HSB | 01/10/19 | — | 1,146 | |||||||||||||
USD | 607,376 | EUR | 527,837 | HSB | 01/10/19 | 2,312 | — | |||||||||||||
USD | 434,253 | EUR | 376,957 | SSB | 03/28/19 | — | 715 | |||||||||||||
USD | 87,712 | GBP | 68,061 | CIT | 02/14/19 | 683 | — | |||||||||||||
USD | 229,047 | GBP | 177,757 | HSB | 02/14/19 | 1,751 | — | |||||||||||||
USD | 554,856 | GBP | 436,261 | SSB | 03/28/19 | — | 4,138 | |||||||||||||
USD | 39,900 | JPY | 4,495,577 | HSB | 02/14/19 | — | 1,206 | |||||||||||||
USD | 131,006 | MXN | 2,679,967 | HSB | 02/14/19 | — | 4,584 | |||||||||||||
USD | 100,964 | NZD | 148,343 | CIT | 02/14/19 | 1,359 | — | |||||||||||||
USD | 26,533 | NZD | 39,048 | HSB | 02/14/19 | 314 | — | |||||||||||||
USD | 54,047 | SEK | 483,252 | HSB | 02/14/19 | — | 613 | |||||||||||||
Total gross unrealized appreciation/depreciation on Forward Currency Contracts | $ | 24,418 | $ | 15,356 |
The accompanying notes are an integral part of these financial statements.
Annual Report 51
Lazard Real Assets and Pricing Opportunities Portfolio (•) (continued)
Futures Contracts open at December 31, 2018 (∆):
Type | Number of Contracts | Notional Amount | Expiration Date | Notional Cost | Fair Value | Unrealized Depreciation | ||||||||||||||||
Lean Hogs | 2 | $80,000 | 02/14/19 | $ | 53,512 | $ | 48,780 | $ | 4,732 | |||||||||||||
Natural Gas | 4 | 40,000 | 02/26/19 | 130,734 | 114,040 | 16,694 | ||||||||||||||||
Total gross unrealized depreciation on Futures Contracts | $ | 21,426 |
Total Return Swap Agreements open at December 31, 2018 (∆):
Pay | Currency | Counterparty | Notional Amount | Expiration Date | Receive | Payment Frequency | Unrealized Depreciation | |||||||||||||
0.00% | USD | GSC | $2,449,142 | 10/24/19 | Appreciation, and dividends paid, on commodities in a custom momentum basket | Upon Maturity | $282,655 |
The accompanying notes are an integral part of these financial statements.
52 Annual Report
Lazard Real Assets and Pricing Opportunities Portfolio (•) (concluded)
The following table represents the commodity exposure expressed as a percentage of the notional amount of the individual commodity underlying the custom total return basket swap agreements with GSC, as of December 31, 2018:
Commodity | Commodity Index Ticker Symbol | Commodity Exposure Expressed as a Percentage of Notional Amount | ||||
Aluminum | BCOMAL | 5.74 | % | |||
Bean Oil | BCOMBO | 1.31 | ||||
Brent Crude | BCOMCO | 10.25 | ||||
Coffee | BCOMKC | 1.45 | ||||
Copper | BCOMHG | 10.63 | ||||
Corn | BCOMCN | 7.69 | ||||
Cotton | BCOMCT | 3.15 | ||||
Crude Oil | BCOMCO | 9.83 | ||||
Gasoline (RBOB) | BCOMRB | 0.91 | ||||
Gold | BCOMGC | 3.29 | ||||
Heating Oil | BCOMHO | 2.18 | ||||
Kansas Wheat | BCOMKW | 1.13 | ||||
Lean Hogs | BCOMLH | 1.57 | ||||
Live Cattle | BCOMLC | 3.78 | ||||
Natural Gas | BCOMNG | 9.73 | ||||
Nickel | BCOMNI | 2.77 | ||||
Silver | �� | BCOMSI | 3.91 | |||
Soy Meal | BCOMSM | 2.59 | ||||
Soybeans | BCOMSY | 7.80 | ||||
Sugar | BCOMSB | 1.79 | ||||
Wheat | BCOMWH | 5.16 | ||||
Zinc | BCOMZS | 3.34 | ||||
Total | 100.00 | % |
The accompanying notes are an integral part of these financial statements.
Annual Report 53
The Lazard Funds, Inc.Notes to Portfolios of Investments
December 31, 2018
(*) | Non-income producing security. |
(#) | Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.” At December 31, 2018, these securities amounted to 1.3% of net assets of Lazard Global Dynamic Multi-Asset Portfolio. |
(§) | Variable and floating rate securities are securities for which interest rate changes are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2018. |
(») | The Portfolio, at all times, maintains portfolio securities in sufficient amount to cover its obligations related to investments in forward currency contracts. |
(•) | Lazard Real Assets and Pricing Opportunities Portfolio’s Portfolio of Investments and accompanying notes are presented on a consolidated basis. |
(∆) | The security is owned by Lazard Real Assets and Pricing Opportunities Portfolio, Ltd., a wholly-owned subsidiary of Lazard Real Assets and Pricing Opportunities Portfolio. See Note 1 in the Notes to Financial Statements. |
Security Abbreviations:
ADR | — | American Depositary Receipt | |||
BBSW | — | Bank Bill Swap Reference Rate | |||
ETF | — | Exchange-Traded Fund | |||
PJSC | — | Public Joint Stock Company | |||
REIT | — | Real Estate Investment Trust | |||
Currency Abbreviations: | |||||
AUD | — | Australian Dollar | ILS | — | Israeli Shekel |
CAD | — | Canadian Dollar | JPY | — | Japanese Yen |
CHF | — | Swiss Franc | MXN | — | Mexican New Peso |
CLP | — | Chilean Peso | NOK | — | Norwegian Krone |
CZK | — | Czech Koruna | NZD | — | New Zealand Dollar |
DKK | — | Danish Krone | PLN | — | Polish Zloty |
EUR | — | Euro | SEK | — | Swedish Krona |
GBP | — | British Pound Sterling | SGD | — | Singapore Dollar |
HKD | — | Hong Kong Dollar | USD | — | United States Dollar |
HUF | — | Hungarian Forint | |||
Counterparty Abbreviations: | |||||
CIT | — | Citibank NA | |||
GSC | — | Goldman Sachs International | |||
HSB | — | HSBC Bank USA NA | |||
JPM | — | JPMorgan Chase Bank NA | |||
SSB | — | State Street Bank and Trust Co. |
The accompanying notes are an integral part of these financial statements.
54 Annual Report
Portfolio holdings by industry (as a percentage of net assets), for those Portfolios previously presented by country:
Industry† | Lazard Global Dynamic Multi-Asset Portfolio | Lazard Real Assets and Pricing Opportunities Portfolio | |||||||
Common Stocks and Corporate & Quasi Government Bonds | |||||||||
Aerospace & Defense | 1.9 | % | 1.2 | % | |||||
Air Freight & Logistics | 0.2 | — | |||||||
Airlines | 0.6 | 0.4 | |||||||
Auto Components | 0.3 | 0.2 | |||||||
Automobiles | 0.6 | — | |||||||
Banks | 6.9 | 1.5 | |||||||
Beverages | 2.7 | — | |||||||
Biotechnology | 1.2 | 0.4 | |||||||
Building Products | 0.2 | 0.1 | |||||||
Capital Markets | 2.9 | 0.5 | |||||||
Chemicals | 1.0 | 1.0 | |||||||
Commercial Services & Suppliers | 1.2 | 1.2 | |||||||
Communications Equipment | 0.9 | 0.3 | |||||||
Construction & Engineering | 0.4 | 0.9 | |||||||
Construction Materials | — | 0.3 | |||||||
Consumer Finance | 0.8 | 0.1 | |||||||
Diversified Consumer Services | 0.1 | 0.1 | |||||||
Diversified Financial Services | 0.8 | — | |||||||
Diversified Telecommunication Services | 1.4 | 0.5 | |||||||
Electric Utilities | 1.7 | 4.9 | |||||||
Electrical Equipment | 0.8 | — | |||||||
Electronic Equipment, Instruments & Components | 0.5 | — | |||||||
Energy Equipment & Services | 0.2 | — | |||||||
Entertainment | 0.8 | — | |||||||
Equity Real Estate Investment Trusts (REITs) | 1.2 | 10.3 | |||||||
Food & Staples Retailing | 1.5 | 1.7 | |||||||
Food Products | 0.9 | 0.5 | |||||||
Gas Utilities | 0.5 | 0.8 | |||||||
Health Care Equipment & Supplies | 0.4 | — | |||||||
Health Care Providers & Services | 1.8 | 0.8 | |||||||
Health Care Technology | 0.1 | — | |||||||
Hotels, Restaurants & Leisure | 2.2 | 1.2 | |||||||
Household Durables | 0.1 | — | |||||||
Household Products | 1.1 | 0.9 | |||||||
Independent Power & Renewable Electricity Producers | 0.1 | 0.3 | |||||||
Industrial Conglomerates | 0.6 | 0.1 |
The accompanying notes are an integral part of these financial statements.
Annual Report 55
Industry† | Lazard Global Dynamic Multi-Asset Portfolio | Lazard Real Assets and Pricing Opportunities Portfolio | |||||||
Insurance | 3.6 | % | 1.7 | % | |||||
Interactive Media & Services | 0.8 | — | |||||||
Internet & Direct Marketing Retail | 1.0 | — | |||||||
IT Services | 3.0 | 0.9 | |||||||
Leisure Products | 0.4 | 0.1 | |||||||
Life Sciences Tools & Services | 1.2 | 0.9 | |||||||
Machinery | 1.4 | 0.3 | |||||||
Media | 0.9 | 1.6 | |||||||
Metals & Mining | 0.8 | 1.2 | |||||||
Multiline Retail | 0.4 | 0.2 | |||||||
Multi-Utilities | 0.7 | 2.0 | |||||||
Oil, Gas & Consumable Fuels | 2.5 | 1.9 | |||||||
Personal Products | 1.7 | 0.5 | |||||||
Pharmaceuticals | 4.4 | 1.6 | |||||||
Professional Services | 1.4 | 0.1 | |||||||
Real Estate Management & Development | 1.4 | 3.9 | |||||||
Road & Rail | 1.0 | 2.2 | |||||||
Semiconductors & Semiconductor Equipment | 1.3 | 0.5 | |||||||
Software | 2.4 | — | |||||||
Specialty Retail | 2.4 | 0.8 | |||||||
Technology Hardware, Storage & Peripherals | 1.1 | 0.2 | |||||||
Textiles, Apparel & Luxury Goods | 1.0 | 0.2 | |||||||
Tobacco | 0.4 | 0.4 | |||||||
Trading Companies & Distributors | 0.8 | 0.6 | |||||||
Transportation Infrastructure | — | 3.6 | |||||||
Water Utilities | — | 2.5 | |||||||
Wireless Telecommunication Services | 0.8 | 0.4 | |||||||
Subtotal | 75.4 | 58.5 | |||||||
Exchange-Traded Funds | — | 1.5 | |||||||
Foreign Government Obligations | 13.0 | 8.7 | |||||||
Supranational Bonds | 2.6 | — | |||||||
US Government Securities | 0.5 | — | |||||||
US Municipal Bonds | 0.8 | — | |||||||
US Treasury Securities | 4.1 | 15.0 | |||||||
Short-Term Investments | 3.4 | 15.7 | |||||||
Total Investments | 99.8 | % | 99.4 | % |
† | Industry classifications may be different than those used for compliance monitoring purposes. |
The accompanying notes are an integral part of these financial statements.
56 Annual Report
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Annual Report 57
The Lazard Funds, Inc.Statements of Assets and Liabilities
December 31, 2018 | Lazard Global Dynamic Multi-Asset Portfolio | Lazard Opportunistic Strategies Portfolio | ||||||||
ASSETS | ||||||||||
Investments in securities, at fair value | $ | 42,728,886 | $ | 103,232,522 | ||||||
Cash | 94,784 | — | ||||||||
Cash collateral due from broker on futures contracts and swap agreements | — | — | ||||||||
Foreign currency, at fair value | 37,205 | 222 | ||||||||
Receivables for: | ||||||||||
Dividends and interest | 170,886 | 97,995 | ||||||||
Capital stock sold | 179 | 11,993 | ||||||||
Investments sold | 2,275 | — | ||||||||
Amount due from Investment Manager (Note 3) | — | — | ||||||||
Gross unrealized appreciation on forward currency contracts | 184,345 | — | ||||||||
Prepaid expenses | — | — | ||||||||
Total assets | 43,218,560 | 103,342,732 | ||||||||
LIABILITIES | ||||||||||
Foreign currency due to custodian | — | — | ||||||||
Payables for: | ||||||||||
Management fees | 16,242 | 93,295 | ||||||||
Accrued professional services | 32,235 | 29,514 | ||||||||
Accrued custodian fees | 25,509 | 6,207 | ||||||||
Capital stock redeemed | 15,000 | 138,706 | ||||||||
Investments purchased | 255,738 | — | ||||||||
Variation margin on open futures contracts | — | — | ||||||||
Gross unrealized depreciation on: | ||||||||||
Forward currency contracts | 67,260 | — | ||||||||
Swap agreements | — | — | ||||||||
Other accrued expenses and payables | 3,832 | 6,191 | ||||||||
Total liabilities | 415,816 | 273,913 | ||||||||
Net assets | $ | 42,802,744 | $ | 103,068,819 | ||||||
NET ASSETS | ||||||||||
Paid in capital | $ | 44,644,159 | $ | 109,823,670 | ||||||
Distributable earnings (Accumulated loss) | (1,841,415 | ) | (6,754,851 | ) | ||||||
Net assets | $ | 42,802,744 | $ | 103,068,819 | ||||||
Institutional Shares | ||||||||||
Net assets | $ | 42,577,373 | $ | 102,782,962 | ||||||
Shares of capital stock outstanding* | 4,593,006 | 11,766,647 | ||||||||
Net asset value, offering and redemption price per share | $ | 9.27 | $ | 8.74 | ||||||
Open Shares | ||||||||||
Net assets | $ | 225,371 | $ | 285,857 | ||||||
Shares of capital stock outstanding* | 24,305 | 32,902 | ||||||||
Net asset value, offering and redemption price per share | $ | 9.27 | $ | 8.69 | ||||||
Cost of investments in securities | $ | 44,326,039 | $ | 107,061,230 | ||||||
Cost of foreign currency | $ | 37,152 | $ | 219 |
(a) Consolidated Statement of Assets and Liabilities.
* $0.001 par value, 6,900,000,000 shares authorized for the Portfolios in total.
The accompanying notes are an integral part of these financial statements.
58 Annual Report
Lazard Real Assets and Pricing Opportunities Portfolio (a) | ||||
$ | 16,101,999 | |||
— | ||||
377,940 | ||||
— | ||||
51,887 | ||||
— | ||||
15,238 | ||||
7,996 | ||||
24,418 | ||||
13,996 | ||||
16,593,474 | ||||
4,931 | ||||
— | ||||
39,773 | ||||
15,564 | ||||
596 | ||||
14,581 | ||||
11,606 | ||||
15,356 | ||||
282,655 | ||||
2,029 | ||||
387,091 | ||||
$ | 16,206,383 | |||
$ | 17,258,160 | |||
(1,051,777 | ) | |||
$ | 16,206,383 | |||
$ | 16,163,794 | |||
1,715,687 | ||||
$ | 9.42 | |||
$ | 42,589 | |||
4,528 | ||||
$ | 9.41 | |||
$ | 16,693,095 | |||
$ | (4,869 | ) |
Annual Report 59
The Lazard Funds, Inc.Statements of Operations
For the Year Ended December 31, 2018 | Lazard Global Dynamic Multi-Asset Portfolio | Lazard Opportunistic Strategies Portfolio | ||||||||
Investment Income (Loss) | ||||||||||
Income | ||||||||||
Dividends | $ | 886,955 | $ | 2,659,677 | ||||||
Interest | 333,563 | 406,079 | ||||||||
Total investment income* | 1,220,518 | 3,065,756 | ||||||||
Expenses | ||||||||||
Management fees (Note 3) | 431,101 | 1,310,982 | ||||||||
Professional services | 48,197 | 50,354 | ||||||||
Custodian fees | 159,970 | 42,256 | ||||||||
Registration fees | 35,477 | 37,716 | ||||||||
Administration fees | 16,561 | 26,212 | ||||||||
Shareholders’ services | 23,059 | 24,230 | ||||||||
Shareholders’ reports | 4,909 | 13,977 | ||||||||
Directors’ fees and expenses | 7,078 | 9,916 | ||||||||
Distribution fees (Open Shares) | 1,101 | 1,025 | ||||||||
Other^ | 6,641 | 8,736 | ||||||||
Total gross expenses | 734,094 | 1,525,404 | ||||||||
Management fees waived and expenses reimbursed | (247,578 | ) | (186,444 | ) | ||||||
Total net expenses | 486,516 | 1,338,960 | ||||||||
Net investment income (loss) | 734,002 | 1,726,796 | ||||||||
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions, Forward Currency Contracts, Futures Contracts and Swap Agreements | ||||||||||
Net realized gain (loss) on: | ||||||||||
Investments | 5,390,531 | 517,428 | ||||||||
Foreign currency transactions | 6,491 | (22,514 | ) | |||||||
Forward currency contracts | (24,710 | ) | — | |||||||
Futures contracts | — | — | ||||||||
Swap agreements | — | (1,067,563 | ) | |||||||
Total net realized gain (loss) on investments, foreign currency transactions, forward currency contracts, futures contracts and swap agreements | 5,372,312 | (572,649 | ) | |||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||
Investments | (9,211,294 | ) | (16,605,150 | ) | ||||||
Foreign currency translations | (1,638 | ) | (6 | ) | ||||||
Forward currency contracts | 186,804 | — | ||||||||
Futures contracts | — | — | ||||||||
Swap agreements | — | (339,094 | ) | |||||||
Total net change in unrealized appreciation (depreciation) on investments, foreign currency translations, forward currency contracts, futures contracts and swap agreements | (9,026,128 | ) | (16,944,250 | ) | ||||||
Net realized and unrealized gain (loss) on investments, foreign currency transactions, forward currency contracts, futures contracts and swap agreements | (3,653,816 | ) | (17,516,899 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | $ | (2,919,814 | ) | $ | (15,790,103 | ) | ||||
* Net of foreign withholding taxes of | $ | 52,991 | $ | — | ||||||
^ Includes interest on line of credit of | $ | — | $ | — |
(a) Consolidated Statement of Operations.
The accompanying notes are an integral part of these financial statements.
60 Annual Report
Lazard Real Assets and Pricing Opportunities Portfolio (a) | ||||
$ | 328,720 | |||
104,533 | ||||
433,253 | ||||
124,538 | ||||
56,366 | ||||
106,330 | ||||
23,312 | ||||
12,049 | ||||
22,175 | ||||
3,384 | ||||
15,621 | ||||
240 | ||||
9,805 | ||||
373,820 | ||||
(213,357 | ) | |||
160,463 | ||||
272,790 | ||||
424,072 | ||||
(6,509 | ) | |||
180,580 | ||||
(2,795 | ) | |||
(53,662 | ) | |||
541,686 | ||||
(1,878,564 | ) | |||
234 | ||||
96,825 | ||||
(29,485 | ) | |||
(323,973 | ) | |||
(2,134,963 | ) | |||
(1,593,277 | ) | |||
$ | (1,320,487 | ) | ||
$ | 22,154 | |||
$ | 30 |
Annual Report 61
The Lazard Funds, Inc.Statements of Changes in Net Assets
Lazard Global Dynamic Multi-Asset Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Increase (Decrease) in Net Assets | |||||||||
Operations | |||||||||
Net investment income (loss) | $ | 734,002 | $ | 825,699 | |||||
Net realized gain (loss) on investments, foreign currency transactions, forward currency contracts, futures contracts and swap agreements | 5,372,312 | 2,467,833 | |||||||
Net change in unrealized appreciation (depreciation) on investments, foreign currency translations, forward currency contracts, futures contracts and swap agreements | (9,026,128 | ) | 7,699,622 | ||||||
Net increase (decrease) in net assets resulting from operations | (2,919,814 | ) | 10,993,154 | ||||||
Distributions to shareholders (Note 2(g)) | |||||||||
Net investment income and net realized gains | |||||||||
Institutional Shares | (5,801,393 | ) | (3,287,008 | ) | |||||
Open Shares | (57,021 | ) | (18,447 | ) | |||||
Return of capital | |||||||||
Institutional Shares | — | — | |||||||
Open Shares | — | — | |||||||
Net decrease in net assets resulting from distributions | (5,858,414 | ) | (3,305,455 | ) | |||||
Capital stock transactions | |||||||||
Net proceeds from sales | |||||||||
Institutional Shares | 4,837,074 | 9,364,602 | |||||||
Open Shares | 64,758 | 267,652 | |||||||
Net proceeds from reinvestment of distributions | |||||||||
Institutional Shares | 5,801,393 | 3,280,747 | |||||||
Open Shares | 57,021 | 18,447 | |||||||
Cost of shares redeemed | |||||||||
Institutional Shares | (28,135,810 | ) | (77,323 | ) | |||||
Open Shares | (218,269 | ) | (121,195 | ) | |||||
Net increase (decrease) in net assets from capital stock transactions | (17,593,833 | ) | 12,732,930 | ||||||
Total increase (decrease) in net assets | (26,372,061 | ) | 20,420,629 | ||||||
Net assets at beginning of period | 69,174,805 | 48,754,176 | |||||||
Net assets at end of period | $ | 42,802,744 | $ | 69,174,805 |
The accompanying notes are an integral part of these financial statements.
62 Annual Report
Lazard Opportunistic Strategies Portfolio | Lazard Real Assets and Pricing Opportunities Portfolio (a) | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
$ | 1,726,796 | $ | 1,502,302 | $ | 272,790 | $ | 279,707 | |||||||||
(572,649 | ) | 13,854,303 | 541,686 | (72,726 | ) | |||||||||||
(16,944,250 | ) | 9,439,570 | (2,134,963 | ) | 1,254,421 | |||||||||||
(15,790,103 | ) | 24,796,175 | (1,320,487 | ) | 1,461,402 | |||||||||||
(6,028,662 | ) | (11,066,751 | ) | (831,453 | ) | (402,671 | ) | |||||||||
(17,872 | ) | (29,962 | ) | (2,339 | ) | (2,642 | ) | |||||||||
(262,110 | ) | — | — | — | ||||||||||||
(777 | ) | — | — | — | ||||||||||||
(6,309,421 | ) | (11,096,713 | ) | (833,792 | ) | (405,313 | ) | |||||||||
18,043,749 | 35,317,474 | 439,718 | 3,538,199 | |||||||||||||
96,400 | 49,791 | 3,168 | 164,978 | |||||||||||||
5,917,185 | 10,077,754 | 831,453 | 402,671 | |||||||||||||
18,147 | 29,181 | 2,339 | 2,641 | |||||||||||||
(50,917,387 | ) | (48,762,309 | ) | (771,616 | ) | (272,334 | ) | |||||||||
(184,943 | ) | (533,355 | ) | (91,095 | ) | (35,527 | ) | |||||||||
(27,026,849 | ) | (3,821,464 | ) | 413,967 | 3,800,628 | |||||||||||
(49,126,373 | ) | 9,877,998 | (1,740,312 | ) | 4,856,717 | |||||||||||
152,195,192 | 142,317,194 | 17,946,695 | 13,089,978 | |||||||||||||
$ | 103,068,819 | $ | 152,195,192 | $ | 16,206,383 | $ | 17,946,695 |
Annual Report 63
Lazard Global Dynamic Multi-Asset Portfolio | |||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||||
Shares issued and redeemed | |||||||||
Institutional Shares | |||||||||
Shares outstanding at beginning of period | 5,986,168 | 4,855,126 | |||||||
Shares sold | 419,838 | 850,861 | |||||||
Shares issued to shareholders from reinvestment of distributions | 636,322 | 286,980 | |||||||
Shares redeemed | (2,449,322 | ) | (6,799 | ) | |||||
Net increase (decrease) | (1,393,162 | ) | 1,131,042 | ||||||
Shares outstanding at end of period | 4,593,006 | 5,986,168 | |||||||
Open Shares† | |||||||||
Shares outstanding at beginning of period | 36,012 | 21,043 | |||||||
Shares sold | 5,633 | 24,809 | |||||||
Shares issued to shareholders from reinvestment of distributions | 6,247 | 1,613 | |||||||
Shares redeemed | (23,587 | ) | (11,453 | ) | |||||
Net increase (decrease) | (11,707 | ) | 14,969 | ||||||
Shares outstanding at end of period | 24,305 | 36,012 |
(a) | Consolidated Statements of Changes in Net Assets. |
† | The inception date for the Lazard Real Assets and Pricing Opportunities Portfolio Open Shares was January 9, 2017. |
The accompanying notes are an integral part of these financial statements.
64 Annual Report
Lazard Opportunistic Strategies Portfolio | Lazard Real Assets and Pricing Opportunities Portfolio (a) | |||||||||||||||
Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||||
14,316,598 | 14,593,661 | 1,662,975 | 1,309,562 | |||||||||||||
1,734,091 | 3,454,939 | 42,171 | 341,080 | |||||||||||||
648,666 | 953,430 | 86,381 | 38,062 | |||||||||||||
(4,932,708 | ) | (4,685,432 | ) | (75,840 | ) | (25,729 | ) | |||||||||
(2,549,951 | ) | (277,063 | ) | 52,712 | 353,413 | |||||||||||
11,766,647 | 14,316,598 | 1,715,687 | 1,662,975 | |||||||||||||
40,563 | 85,313 | 12,627 | — | |||||||||||||
9,206 | 4,746 | 299 | 15,804 | |||||||||||||
1,980 | 2,774 | 242 | 249 | |||||||||||||
(18,847 | ) | (52,270 | ) | (8,640 | ) | (3,426 | ) | |||||||||
(7,661 | ) | (44,750 | ) | (8,099 | ) | 12,627 | ||||||||||
32,902 | 40,563 | 4,528 | 12,627 |
Annual Report 65
The Lazard Funds, Inc.Financial Highlights
LAZARD GLOBAL DYNAMIC MULTI-ASSET PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | For the Period 5/27/16* to | |||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | ||||||||||
Institutional Shares | |||||||||||||
Net asset value, beginning of period | $ | 11.49 | $ | 10.00 | $ | 10.00 | |||||||
Income (Loss) from investment operations: | |||||||||||||
Net investment income (loss) (a) | 0.16 | 0.15 | 0.06 | ||||||||||
Net realized and unrealized gain (loss) | (0.92 | ) | 1.92 | (0.01 | ) | ||||||||
Total from investment operations | (0.76 | ) | 2.07 | 0.05 | |||||||||
Less distributions from: | |||||||||||||
Net investment income | (0.20 | ) | (0.14 | ) | (0.05 | ) | |||||||
Net realized gains | (1.26 | ) | (0.44 | ) | — | (b) | |||||||
Total distributions | (1.46 | ) | (0.58 | ) | (0.05 | ) | |||||||
Net asset value, end of period | $ | 9.27 | $ | 11.49 | $ | 10.00 | |||||||
Total Return (c) | –6.35 | % | 20.69 | % | 0.53 | % | |||||||
Ratios and Supplemental Data: | |||||||||||||
Net assets, end of period (in thousands) | $ | 42,577 | $ | 68,761 | $ | 48,544 | |||||||
Ratios to average net assets (d): | |||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | |||||||
Gross expenses | 1.34 | % | 1.42 | % | 2.14 | % | |||||||
Net investment income (loss) | 1.36 | % | 1.40 | % | 0.95 | % | |||||||
Portfolio turnover rate | 120 | % | 102 | % | 67 | % |
The accompanying notes are an integral part of these financial statements.
66 Annual Report
Selected data for a share of capital stock outstanding | Year Ended | For the Period 5/27/16* to | |||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | ||||||||||
Open Shares | |||||||||||||
Net asset value, beginning of period | $ | 11.49 | $ | 10.00 | $ | 10.00 | |||||||
Income (Loss) from investment operations: | |||||||||||||
Net investment income (loss) (a) | 0.12 | 0.12 | 0.04 | ||||||||||
Net realized and unrealized gain (loss) | (0.91 | ) | 1.91 | (0.01 | ) | ||||||||
Total from investment operations | (0.79 | ) | 2.03 | 0.03 | |||||||||
Less distributions from: | |||||||||||||
Net investment income | (0.17 | ) | (0.10 | ) | (0.03 | ) | |||||||
Net realized gains | (1.26 | ) | (0.44 | ) | — | (b) | |||||||
Total distributions | (1.43 | ) | (0.54 | ) | (0.03 | ) | |||||||
Net asset value, end of period | $ | 9.27 | $ | 11.49 | $ | 10.00 | |||||||
Total Return (c) | –6.64 | % | 20.33 | % | 0.35 | % | |||||||
Ratios and Supplemental Data: | |||||||||||||
Net assets, end of period (in thousands) | $ | 225 | $ | 414 | $ | 210 | |||||||
Ratios to average net assets (d): | |||||||||||||
Net expenses | 1.20 | % | 1.20 | % | 1.20 | % | |||||||
Gross expenses | 4.20 | % | 5.79 | % | 9.43 | % | |||||||
Net investment income (loss) | 1.07 | % | 1.09 | % | 0.72 | % | |||||||
Portfolio turnover rate | 120 | % | 102 | % | 67 | % |
* | The Portfolio commenced operations on May 27, 2016. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
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LAZARD OPPORTUNISTIC STRATEGIES PORTFOLIO
Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Institutional Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 10.60 | $ | 9.70 | $ | 9.36 | $ | 10.02 | $ | 10.24 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.14 | 0.10 | 0.16 | ^ | 0.07 | 0.04 | ||||||||||||||
Net realized and unrealized gain (loss) | (1.48 | ) | 1.62 | 0.34 | (0.46 | ) | 0.41 | |||||||||||||
Total from investment operations | (1.34 | ) | 1.72 | 0.50 | (0.39 | ) | 0.45 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.02 | ) | (0.14 | ) | (0.14 | ) | (0.03 | ) | (0.28 | ) | ||||||||||
Net realized gains | (0.48 | ) | (0.68 | ) | — | (0.24 | ) | (0.39 | ) | |||||||||||
Return of capital | (0.02 | ) | — | (0.02 | ) | — | (b) | — | ||||||||||||
Total distributions | (0.52 | ) | (0.82 | ) | (0.16 | ) | (0.27 | ) | (0.67 | ) | ||||||||||
Redemption fees | — | — | — | (b) | — | (b) | — | (b) | ||||||||||||
Net asset value, end of period | $ | 8.74 | $ | 10.60 | $ | 9.70 | $ | 9.36 | $ | 10.02 | ||||||||||
Total Return (c) | –12.72 | % | 17.74 | % | 5.36 | %^ | –3.80 | % | 4.40 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 102,783 | $ | 151,767 | $ | 141,494 | $ | 170,626 | $ | 185,489 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 1.02 | % | 1.05 | % | 1.02 | %^ | 1.02 | % | 1.02 | % | ||||||||||
Gross expenses | 1.15 | % | 1.18 | % | 1.19 | % | 1.18 | % | 1.15 | % | ||||||||||
Gross expenses, excluding expenses on securities sold short | 1.15 | %† | 1.15 | % | 1.19 | % | 1.18 | % | 1.15 | % | ||||||||||
Net investment income (loss) | 1.32 | % | 0.99 | % | 1.72 | %^ | 0.66 | % | 0.35 | % | ||||||||||
Portfolio turnover rate: | ||||||||||||||||||||
Excluding securities sold short | 227 | % | 142 | % | 238 | % | 255 | % | 265 | % | ||||||||||
Including securities sold short | N/A | † | 153 | % | N/A | N/A | N/A |
The accompanying notes are an integral part of these financial statements.
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Selected data for a share of capital stock outstanding | Year Ended | |||||||||||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | 12/31/14 | |||||||||||||||
Open Shares | ||||||||||||||||||||
Net asset value, beginning of period | $ | 10.55 | $ | 9.65 | $ | 9.32 | $ | 10.02 | $ | 10.24 | ||||||||||
Income (Loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (a) | 0.10 | 0.05 | 0.13 | ^ | 0.01 | 0.01 | ||||||||||||||
Net realized and unrealized gain (loss) | (1.46 | ) | 1.64 | 0.33 | (0.47 | ) | 0.41 | |||||||||||||
Total from investment operations | (1.36 | ) | 1.69 | 0.46 | (0.46 | ) | 0.42 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (0.11 | ) | (0.11 | ) | — | (b) | (0.25 | ) | |||||||||||
Net realized gains | (0.48 | ) | (0.68 | ) | — | (0.24 | ) | (0.39 | ) | |||||||||||
Return of capital | (0.02 | ) | — | (0.02 | ) | — | (b) | — | ||||||||||||
Total distributions | (0.50 | ) | (0.79 | ) | (0.13 | ) | (0.24 | ) | (0.64 | ) | ||||||||||
Redemption fees | — | — | — | — | — | (b) | ||||||||||||||
Net asset value, end of period | $ | 8.69 | $ | 10.55 | $ | 9.65 | $ | 9.32 | $ | 10.02 | ||||||||||
Total Return (c) | –13.05 | % | 17.48 | % | 4.97 | %^ | –4.51 | % | 4.10 | % | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 286 | $ | 428 | $ | 823 | $ | 725 | $ | 3,950 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net expenses | 1.32 | % | 1.34 | % | 1.32 | %^ | 1.32 | % | 1.32 | % | ||||||||||
Gross expenses | 4.22 | % | 3.87 | % | 3.31 | % | 1.66 | % | 1.81 | % | ||||||||||
Gross expenses, excluding expenses on securities sold short | 4.22 | %† | 3.85 | % | 3.31 | % | 1.66 | % | 1.81 | % | ||||||||||
Net investment income (loss) | 1.00 | % | 0.53 | % | 1.43 | %^ | 0.15 | % | 0.14 | % | ||||||||||
Portfolio turnover rate: | ||||||||||||||||||||
Excluding securities sold short | 227 | % | 142 | % | 238 | % | 255 | % | 265 | % | ||||||||||
Including securities sold short | N/A | † | 153 | % | N/A | N/A | N/A |
^ | Refer to Note 3 in the Notes to Financial Statements for discussion of prior period custodian out-of-pocket expenses that were reimbursed to the Portfolio in the period. The amount of the reimbursement was less than $0.005 per share. There was no impact on the total return of the Portfolio. The net expenses and net investment income (loss) ratios of the Portfolio would be unchanged as the change to the period custodian fees was offset against the period expense waivers/reimbursements with no impact to net expenses or net investment income (loss). |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. |
† | No securities sold short in current year. |
The accompanying notes are an integral part of these financial statements.
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LAZARD REAL ASSETS AND PRICING OPPORTUNITIES PORTFOLIO^
Selected data for a share of capital stock outstanding | Year Ended | For the Period 12/30/16* to | |||||||||||
throughout each period | 12/31/18 | 12/31/17 | 12/31/16 | ||||||||||
Institutional Shares | |||||||||||||
Net asset value, beginning of period | $ | 10.71 | $ | 10.00 | $ | 10.00 | |||||||
Income (Loss) from investment operations: | |||||||||||||
Net investment income (loss) (a) | 0.16 | 0.19 | — | ||||||||||
Net realized and unrealized gain (loss) | (0.96 | ) | 0.78 | — | (b) | ||||||||
Total from investment operations | (0.80 | ) | 0.97 | — | (b) | ||||||||
Less distributions from: | |||||||||||||
Net investment income | (0.25 | ) | (0.13 | ) | — | ||||||||
Net realized gains | (0.24 | ) | (0.13 | ) | — | ||||||||
Total distributions | (0.49 | ) | (0.26 | ) | — | ||||||||
Net asset value, end of period | $ | 9.42 | $ | 10.71 | $ | 10.00 | |||||||
Total Return (c) | –7.47 | % | 9.80 | % | 0.00 | % | |||||||
Ratios and Supplemental Data: | |||||||||||||
Net assets, end of period (in thousands) | $ | 16,164 | $ | 17,812 | $ | 13,090 | |||||||
Ratios to average net assets (d): | |||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.00 | % | |||||||
Gross expenses | 2.04 | % | 3.13 | % | 3.49 | % | |||||||
Net investment income (loss) | 1.53 | % | 1.79 | % | 0.00 | % | |||||||
Portfolio turnover rate | 72 | % | 76 | % | 0 | % |
The accompanying notes are an integral part of these financial statements.
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Selected data for a share of capital stock outstanding throughout each period | Year Ended 12/31/18 | For the Period 1/9/17* to 12/31/17 | |||||||
Open Shares | |||||||||
Net asset value, beginning of period | $ | 10.70 | $ | 10.03 | |||||
Income (Loss) from investment operations: | |||||||||
Net investment income (loss) (a) | 0.14 | 0.18 | |||||||
Net realized and unrealized gain (loss) | (0.96 | ) | 0.74 | ||||||
Total from investment operations | (0.82 | ) | 0.92 | ||||||
Less distributions from: | |||||||||
Net investment income | (0.23 | ) | (0.12 | ) | |||||
Net realized gains | (0.24 | ) | (0.13 | ) | |||||
Total distributions | (0.47 | ) | (0.25 | ) | |||||
Net asset value, end of period | $ | 9.41 | $ | 10.70 | |||||
Total Return (c) | –7.70 | % | 9.17 | % | |||||
Ratios and Supplemental Data: | |||||||||
Net assets, end of period (in thousands) | $ | 43 | $ | 135 | |||||
Ratios to average net assets (d): | |||||||||
Net expenses | 1.15 | % | 1.15 | % | |||||
Gross expenses | 13.72 | % | 20.65 | % | |||||
Net investment income (loss) | 1.29 | % | 1.69 | % | |||||
Portfolio turnover rate | 72 | % | 76 | % |
^ | Consolidated Financial Highlights. |
* | The inception date for the Institutional Shares was December 30, 2016 and for the Open Shares was January 9, 2017. |
(a) | Net investment income (loss) has been computed using the average shares method. |
(b) | Amount is less than $0.01 per share. |
(c) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio may have been waived or reimbursed by the Investment Manager, State Street or DST; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Returns for a period of less than one year are not annualized. |
(d) | Annualized for a period of less than one year except for non-recurring expenses. |
The accompanying notes are an integral part of these financial statements.
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The Lazard Funds, Inc.Notes to Financial Statements December 31, 2018
1. Organization
The Lazard Funds, Inc. was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. As of December 31, 2018, the Fund was comprised of thirty-three no-load portfolios (each referred to as a “Portfolio”). This report includes only the financial statements of Global Dynamic Multi-Asset, Opportunistic Strategies (formerly, Capital Allocator Opportunistic Strategies) and Real Assets and Pricing Opportunities Portfolios. The financial statements of the other thirty Portfolios are presented separately.
The Portfolios are operated as “diversified” funds, as defined in the 1940 Act.
Each Portfolio currently offers Institutional Shares and Open Shares, and certain Portfolios offer R6 Shares. Each share class is identical except as to minimum investment requirements; eligibility requirements for R6 Shares; the services offered to, and expenses borne by, each class; and the availability of Service Payments (as defined in the Portfolios’ Prospectus).
Lazard Real Assets and Pricing Opportunities Portfolio commenced investment operations and issued Institutional Shares on December 30, 2016. Lazard Real Assets and Pricing Opportunities Portfolio, Ltd. (the “Subsidiary”), organized under the laws of the Cayman Islands, was incorporated on October 7, 2016 and commenced operations on December 30, 2016. The Subsidiary acts as an investment vehicle for the Portfolio in order to effect certain investments on behalf of the Portfolio, consistent with its investment objectives and policies as described in its prospectus. The Portfolio expects that it will achieve a significant portion of its exposure to commodities and commodities-related investments through investment in the Subsidiary. The Portfolio may invest up to 25% of its total assets in the Subsidiary. The financial statements of the Portfolio have been consolidated and include the accounts of both the Portfolio and the Subsidiary. All inter-company balances and transactions have been eliminated in consolidation. As of December 31, 2018, net assets of the Portfolio were $16,206,383, of
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which $2,521,420, or 15.56%, represented the Portfolio’s ownership of all issued shares and voting rights of the Subsidiary.
2. Significant Accounting Policies
The accompanying financial statements are presented in conformity with US Generally Accepted Accounting Principles (“GAAP”). The Fund is an investment company and therefore applies specialized accounting guidance in accordance with Accounting Standards Codification Topic 946. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements:
(a) Valuation of Investments—Equity securities traded on a securities exchange or market, including exchange-traded option contracts, rights and warrants, are valued at the last reported sales price (for domestic equity securities) or the closing price (for foreign equity securities) on the exchange or market on which the security is principally traded or, for securities trading on the NASDAQ National Market System (“NASDAQ”), the NASDAQ Official Closing Price. If there is no available closing price for a foreign equity security, the last reported sales price is used. If there are no reported sales of a security on the valuation date, the security is valued at the most recent quoted bid price on such date reported by such principal exchange or market. Exchange-traded futures contracts are valued at the settlement price on the exchange on which the contract is principally traded. Swap agreements, such as credit default, interest rate and total return swap agreements, generally are valued by an independent pricing service. Forward currency contracts generally are valued using quotations from an independent pricing service. Investments in money market funds are valued at the fund’s net asset value (“NAV”) per share.
Bonds and other fixed-income securities that are not exchange-traded are valued on the basis of prices provided by independent pricing services which are based on, among other things, trading in securities with similar characteristics, brokers’ quotations and/or a matrix system which considers such factors as other security prices, yields and maturities.
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Calculation of a Portfolio’s NAV may not take place contemporaneously with the determination of the prices of portfolio assets used in such calculation. Trading on Europe, Latin and South America and Far East securities exchanges and in over-the-counter markets ordinarily is completed well before the close of business on each business day in New York (i.e., a day on which the New York Stock Exchange (the “NYSE”) is open). In addition, European or Far Eastern securities trading generally, or in a particular country or countries, may not take place on all business days in New York and on which the NAV of a Portfolio is calculated.
The Valuation Committee of the Investment Manager, which meets periodically under the direction of the Board of Directors (the “Board”), may evaluate a variety of factors to determine the fair value of securities for which market quotations are determined not to be readily available or reliable. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager’s portfolio managers/analysts also will be considered.
If a significant event materially affecting the value of securities occurs between the close of the exchange or market on which the security is principally traded and the time when a Portfolio’s NAV is calculated, or when current market quotations otherwise are determined not to be readily available or reliable (including restricted or other illiquid securities such as certain derivative instruments), such securities will be valued at their fair value as determined by, or in accordance with procedures approved by, the Board. The fair value of non-US securities may be determined with the assistance of an independent pricing service using correlations between the movement of prices of such securities and indices of US securities and other appropriate indicators, such as closing market prices of relevant ADRs or futures contracts. Non-US securities may trade on days when a Portfolio is not open for business, thus affecting the value of the Portfolio’s assets on days when Portfolio shareholders may not be able to buy or sell Portfolio shares.
The effect of using fair value pricing is that the NAV of a Portfolio will reflect the affected securities’ values as determined in the
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judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios’ NAVs.
(b) Portfolio Securities Transactions and Investment Income—Portfolio securities transactions are accounted for on trade date. Realized gain (loss) on sales of investments are recorded on a specific identification basis. Dividend income is recorded on the ex-dividend date except for certain dividends from non-US securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by a Portfolio. Interest income, if any, is accrued daily. A Portfolio amortizes premiums and accretes discounts on fixed-income securities using the effective yield method.
A Portfolio may be subject to taxes imposed by non-US countries in which it invests. Such taxes are generally based upon income earned or capital gains (realized and/or unrealized). An affected Portfolio accrues and applies such taxes to net investment income, net realized gains and net unrealized gains concurrent with the recognition of income earned or capital gains (realized and/or unrealized) from the applicable portfolio securities.
(c) Foreign Currency Translation and Forward Currency Contracts—The accounting records of the Fund are maintained in US dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into US dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into US dollars at the prevailing exchange rates on the respective transaction dates.
The Portfolios do not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions and forward currency contracts represent net foreign currency gain (loss) from forward currency contracts, disposition of
Annual Report 75
foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of dividends, interest and foreign withholding taxes recorded on the Portfolios’ accounting records and the US dollar equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on foreign currency translations reflects the impact of changes in exchange rates on the value of assets and liabilities, other than investments in securities, during the period.
A forward currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the US dollar.
The US dollar value of forward currency contracts is determined using quotations provided by an independent pricing service. Daily fluctuations in the value of such contracts are recorded as unrealized appreciation (depreciation) on forward currency contracts. When the contract is closed, a Portfolio records a realized gain (loss) equal to the difference between the value at the time it was opened and the value at the time it was closed.
During the year ended December 31, 2018, the Global Dynamic Multi-Asset and Real Assets and Pricing Opportunities Portfolios traded in forward currency contracts.
(d) Futures Contracts—For hedging and investment purposes, certain Portfolios may enter into futures contracts in US domestic markets, or exchanges located outside the United States.
Foreign markets may offer advantages such as trading opportunities or arbitrage possibilities not available in the United States. Foreign markets, however, may have greater risk potential than domestic markets. For example, some foreign exchanges are principal markets so that no common clearing facility exists and an investor may look only to the broker for performance of the contract. In addition, any profits a Portfolio might realize in trading
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could be eliminated by adverse changes in the currency exchange rate, or the Portfolio could incur losses as a result of those changes. Transactions on foreign exchanges may include both commodities which are traded on domestic exchanges and those which are not. Unlike trading on domestic commodity exchanges, trading on foreign commodity exchanges is not regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Portfolio which could adversely affect the value of the Portfolio’s net assets. Although each of these Portfolios intends to purchase or sell futures contracts only if there is an active market for such contracts, no assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially subjecting the Portfolio to substantial losses.
During the year ended December 31, 2018, the Real Assets and Pricing Opportunities Portfolio traded in futures contracts.
(e) Swap Agreements—Swap agreements on equity securities involve commitments to pay interest in exchange for a market linked return based on a notional amount. The counterparty pays out the total return of the equity security or basket of equity securities and, in return, receives a regular stream of payments, based on an agreed-upon interest rate. To the extent the total return of the security or basket of securities underlying the transaction exceeds (or falls short of) the offsetting interest rate obligation, a Portfolio will receive a payment from (or make a payment to) the counterparty.
Commodity-linked swap agreements involve commitments to pay interest in exchange for a commodity-linked return based on a
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notional amount. To the extent the return of the reference commodity or commodity index or basket of reference commodities or commodity indexes underlying the transaction exceeds (or falls short of) the offsetting interest rate obligation, a Portfolio will receive a payment from (or make a payment to) the counterparty.
Swap agreements generally are valued by an independent pricing service, and the change in value, if any, is recorded as unrealized appreciation (depreciation) on swap agreements in a Portfolio’s accompanying Statement of Assets and Liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain (loss) on swap agreements in a Portfolio’s accompanying Statement of Operations, in addition to any realized gain (loss) recorded upon the termination of swap agreements.
During the year ended December 31, 2018, the Opportunistic Strategies and Real Assets and Pricing Opportunities Portfolios traded in swap agreements.
(f) Federal Income Taxes—The Fund’s policy is to have each Portfolio qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the “Code”) and to distribute all of its taxable income, including any net realized capital gains, to shareholders. Therefore, no federal income tax provision is required.
At December 31, 2018, the Portfolios had no unused realized capital loss carryovers which, for federal income tax purposes, could be used to offset future realized capital gains.
Under current tax law, post-October capital losses or certain late-year ordinary losses, as defined by the Code, within the taxable year may be deferred and treated as occurring on the first day of the following tax year. For the tax year ended December 31, 2018, the following Portfolios elected to defer such losses as follows:
Portfolio | Post-October Capital Loss Deferral | Late-Year Ordinary Loss Deferral | ||||||
Opportunistic Strategies | $2,780,060 | $50 | ||||||
Real Assets and Pricing Opportunities | 43,215 | — |
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For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized depreciation and the net unrealized appreciation (depreciation) were as follows:
Portfolio | Aggregate Cost | Aggregate Gross Unrealized Appreciation | Aggregate Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Global Dynamic Multi-Asset | $ | 44,651,867 | $1,076,461 | $3,025,222 | $(1,948,761 | ) | ||||||||||
Opportunistic Strategies | 107,195,069 | 771,298 | 4,733,845 | (3,962,547 | ) | |||||||||||
Real Assets and Pricing Opportunities | 16,753,545 | 341,631 | 1,353,995 | (1,012,364 | ) |
Management has analyzed the Portfolios’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns filed for any open tax years (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitations. Each Portfolio files a US federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
(g) Dividends and Distributions—Dividends from net investment income, if any, will be declared and paid annually, except that the Real Assets and Pricing Opportunities Portfolio’s dividends from net investment income (if any), will be declared and paid quarterly. During any particular year, net realized gains from investment transactions in excess of available capital loss carryforwards would be taxable to the Portfolios, if not distributed. The Portfolios intend to declare and distribute these amounts, at least annually, to shareholders; however, to avoid taxation, a second distribution may be required. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will
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generally not be available to offset the Real Assets and Pricing Opportunities Portfolio’s ordinary income and/or capital gains for that year, or any future tax year.
The Global Dynamic Multi-Asset Portfolio intends, on its 2018 tax returns, to treat as a distribution of investment company taxable income and net capital gain the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’ portion of the Portfolio’s undistributed investment company taxable income and net capital gain. This practice, which involves the use of equalization accounting, will have the effect of reducing the amount of income and gains that the Portfolio would otherwise be required to distribute as dividends to shareholders in order for the Portfolio to avoid federal income and excise taxes. This practice reduces the amount of distributions required to be made to non-redeeming shareholders and defers the recognition of taxable income by such shareholders. However, since the amount of any undistributed income will be reflected in the value of the Portfolio’s shares, the total return on a shareholder’s investment is not affected by the Portfolio’s use of equalization.
Income and capital gains distributions are determined in accordance with federal income tax regulations which may differ from GAAP. These book/tax differences, which may result in distribution reclassifications, are primarily due to differing treatments of foreign currency transactions, wash sales, passive foreign investment companies, certain fixed-income securities, expenses, derivatives and distributions from real estate investment trusts. The book/tax differences relating to shareholder distributions resulted in reclassifications among certain capital accounts as follows:
Portfolio | Paid in Capital | Distributable Earnings (Accumulated Loss) | ||||||
Global Dynamic Multi-Asset | $ | 489,582 | $(489,582 | ) | ||||
Opportunistic Strategies | (262,887 | ) | 262,887 | |||||
Real Assets and Pricing Opportunities | (14,664 | ) | 14,664 |
In October 2018, the US Securities and Exchange Commission (the “SEC”) adopted amendments to certain disclosure requirements
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included in Regulation S-X that had become “redundant, duplicative, overlapping, outdated or superseded, in light of the other Commission disclosure requirements, GAAP or changes in the information environment.” The compliance date for the amendments to Regulation S-X was November 5, 2018 (for reporting period end dates of September 30, 2018 or after). The Fund adopted these amendments and such changes are reflected in these financial statements.
Under these amendments, it is no longer required to differentiate distributions from earnings as either net investment income or net realized capital gains or disclose a Portfolio’s undistributed net investment income within a Portfolio’s Statement of Changes in Net Assets. The presentation within the Portfolio’s Statement of Changes in Net Assets for the year ended December 31, 2017 also has been modified accordingly.
Below is the characterization of the Portfolio distributions and undistributed (distributions in excess of) net investment income (loss) for the year ended December 31, 2017 as previously disclosed in the Statement of Changes in Net Assets within the December 31, 2017 Annual Report:
From net investment income | Institutional Shares | Open Shares | ||||||
Global Dynamic Multi-Asset | $ | 788,919 | $ | 3,510 | ||||
Opportunistic Strategies | 1,886,787 | 4,028 | ||||||
Real Assets and Pricing Opportunities | 200,932 | 1,078 | ||||||
From net realized gains | Institutional Shares | Open Shares | ||||||
Global Dynamic Multi-Asset | $ | 2,498,089 | $ | 14,937 | ||||
Opportunistic Strategies | 9,179,964 | 25,934 | ||||||
Real Assets and Pricing Opportunities | 201,739 | 1,564 | ||||||
Undistributed (Distributions in excess of) net investment income (loss) | Amount | |||||||
Global Dynamic Multi-Asset | $(119,957 | ) | ||||||
Opportunistic Strategies | (354,162 | ) | ||||||
Real Assets and Pricing Opportunities | (161,431 | ) |
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The tax character of dividends and distributions paid during the years ended December 31, were as follows:
Ordinary Income | Long-Term Capital Gain | ||||||||||||||||
Portfolio | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Global Dynamic Multi-Asset | $ | 2,449,223 | $ | 3,113,472 | $ | 3,409,191 | $ | 191,983 | |||||||||
Opportunistic Strategies* | 1,243,851 | 10,390,559 | 4,802,683 | 706,154 | |||||||||||||
Real Assets and Pricing Opportunities | 429,050 | 401,034 | 404,742 | 4,279 |
* | Opportunistic Strategies Portfolio had return of capital distribution of $262,887 in 2018. |
At December 31, 2018, the components of distributable earnings (accumulated loss), on a tax basis, were as follows:
Portfolio | Undistributed Ordinary Income (Deferred Ordinary Losses) | Undistributed Long-Term Capital Gain (Deferred Capital Losses) | Net Unrealized Appreciation (Depreciation) Including Foreign Currency | |||||||||
Global Dynamic Multi-Asset | $154,887 | $ | — | $ | (1,996,302 | ) | ||||||
Opportunistic Strategies | (50 | ) | (2,780,060 | ) | (3,974,741 | ) | ||||||
Real Assets and Pricing Opportunities | 33,818 | (43,215 | ) | (1,042,380 | ) |
(h) Allocation of Expenses—Expenses common to the Fund, Lazard Retirement Series, Inc., Lazard Global Total Return and Income Fund, Inc. and Lazard World Dividend & Income Fund, Inc. (each a “Lazard Fund” and collectively, the “Lazard Fund Complex”), each a registered management investment company advised by the Investment Manager, not directly chargeable to one or more specific Lazard Funds are allocated to the Fund and among its Portfolios primarily on the basis of relative net assets. Expenses of the Fund not directly chargeable to one or more Portfolios are similarly allocated among the Portfolios on the basis of relative net assets. Portfolios accrue distribution and service (12b-1) fees to Open Shares. The Portfolios’ income, expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.
(i) Redemption Fee—Until August 15, 2016, the Portfolios imposed a 1.00% redemption fee (short-term trading fee) on Portfolio shares
82 Annual Report
redeemed less than 30 days after such shares were acquired. The fees were retained by the Portfolios and are included as paid in capital on the Statements of Assets and Liabilities. As of August 15, 2016, redemption fees no longer apply to transactions in Portfolio shares.
(j) Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates.
(k) Net Asset Value—NAV per share for each class of each Portfolio is determined each day the NYSE is open for trading as of the close of regular trading on the NYSE (generally 4:00 p.m. Eastern time). The Fund will not treat an intraday unscheduled disruption in NYSE trading as a closure of the NYSE, and will price its shares as of 4:00 p.m., if the particular disruption directly affects only the NYSE. NAV per share is determined by dividing the value of the total assets of the Portfolio represented by such class, less all liabilities, by the total number of Portfolio shares of such class outstanding.
3. Investment Management, Administration, Custody, Distribution and Transfer Agency Agreements
The Fund, on behalf of the Portfolios, has entered into a management agreement (the “Management Agreement”) with the Investment Manager. Pursuant to the Management Agreement, the Investment Manager regularly provides each Portfolio with investment research, advice and supervision and furnishes continuously an investment program for each Portfolio consistent with its investment objectives and policies, including the purchase, retention and disposition of securities, and provides the Portfolios with administrative, operational and compliance assistance services. For its services provided to the Portfolios, the Investment Manager earns a management fee, accrued daily as a percentage of each Portfolio’s average daily net assets and payable by each Portfolio monthly, at the annual rate set forth below:
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Portfolio | Annual Rate | ||||
Global Dynamic Multi-Asset | 0.80 | % | |||
Opportunistic Strategies | 1.00 | ||||
Real Assets and Pricing Opportunities | 0.70 |
The Investment Manager provides investment management and other services to the Subsidiary. The Investment Manager does not receive separate compensation from the Subsidiary for providing such services. However, the Real Assets and Pricing Opportunities Portfolio pays the Investment Manager based on its net assets, which include the assets of the Subsidiary.
The Investment Manager has voluntarily agreed to waive its fees and, if necessary, reimburse the Portfolios until May 1, 2019 if the aggregate direct expenses of the Portfolios, exclusive of taxes, brokerage, interest on borrowings, fees and expenses of “Acquired Funds” (as defined in Form N-1A) and extraordinary expenses, but including the management fee stated in the Management Agreement between the Investment Manager and the Fund, on behalf of the Portfolios, exceed the percentages of the value of the Portfolio’s average daily net assets set forth opposite the Portfolio’s name on table below. The Fund, on behalf of the Portfolio, may deduct from the payment to be made to the Investment Manager under the Management Agreement, or the Investment Manager will bear, such excess expense.
Portfolio | Institutional Shares | Open Shares | |||||||
Global Dynamic Multi-Asset | 0.90 | % | 1.20 | % | |||||
Opportunistic Strategies | 1.02 | 1.32 | |||||||
Real Assets and Pricing Opportunities | 0.90 | 1.15 |
During the year ended December 31, 2018, the Investment Manager waived its management fees and reimbursed the following Portfolios for other expenses as follows:
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Institutional Shares | Open Shares | ||||||||||||||||
Portfolio | Management Fees Waived | Expenses Reimbursed | Management Fees Waived | Expenses Reimbursed | |||||||||||||
Global Dynamic Multi-Asset | $ | 234,375 | $ | — | $ | 3,518 | $ | 9,685 | |||||||||
Opportunistic Strategies | 174,559 | — | 4,101 | 7,784 | |||||||||||||
Real Assets and Pricing Opportunities | 123,863 | 77,375 | 675 | 11,444 |
The aforementioned waivers and/or reimbursements are not subject to recoupment by the Investment Manager.
State Street provides the Fund with custody and certain fund administration and accounting services.
In December 2015, State Street announced that it had identified inconsistencies in the way in which clients were invoiced for custody out-of-pocket expenses from 1998 until 2015. The difference between what was charged and what should have been charged, plus interest, was recorded as a reimbursement when determined in 2016. Pursuant to the expense limitations described above, certain Portfolios experienced management fee waivers during the year ended December 31, 2016. Accordingly, the reimbursement of out-of-pocket expenses resulted in the reduction in the waiver of management fees for certain Portfolios for the year ended December 31, 2016.
The Fund has a distribution agreement with Lazard Asset Management Securities LLC (the “Distributor”), a wholly-owned subsidiary of the Investment Manager, to serve as the distributor for shares of each Portfolio. The Distributor bears the cost of printing and mailing prospectuses to potential investors and certain expenses in connection with the offering of Portfolio shares.
Under a distribution and servicing plan adopted pursuant to Rule 12b-1 under the 1940 Act, each Portfolio pays a monthly fee to the Distributor, at an annual rate of 0.25% of the average daily net assets of its Open Shares, for distribution and servicing of accounts. The Distributor may make payments to certain financial institutions, securities dealers and other industry professionals for providing these services.
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DST is the Fund’s transfer and dividend disbursing agent.
4. Directors’ Compensation
Certain Directors of the Fund are officers of the Investment Manager. For the year ended December 31, 2018, each Director who is not an affiliated person of the Investment Manager or any of its affiliates was paid by all of the funds in the Lazard Fund Complex: (1) an annual retainer of $225,000, (2) an additional annual fee of $32,500 to the lead Independent Director (an “Independent Director” is a Director who is not an “interested person” (as defined in the 1940 Act) of the Fund), and (3) an additional annual fee of $22,500 to the Audit Committee Chair. Effective January 1, 2019, the aggregate compensation for Independent Directors for the Lazard Fund Complex is comprised of: (1) an annual retainer of $232,000, (2) an additional annual fee of $33,000 to the lead Independent Director, and (3) an additional annual fee of $23,000 to the Audit Committee Chair. The Independent Directors may be paid additional compensation for participation on ad hoc committees or other work performed on behalf of the Board. The Independent Directors also are reimbursed for travel and other out-of-pocket expenses for attending Board and committee meetings. The Directors do not receive benefits from the Fund pursuant to any pension, retirement or similar arrangement. Independent Directors’ fees are allocated among the funds in the Lazard Fund Complex at a rate of $5,000 per fund with the remainder allocated based upon each fund’s proportionate share of combined net assets. The Statements of Operations show the Independent Directors’ fees and expenses paid by each Portfolio.
5. Securities Transactions and Transactions with Affiliates
Purchases and sales of portfolio securities (excluding short-term investments) for the year ended December 31, 2018 were as follows:
Portfolio | Purchases | Sales | ||||||
Global Dynamic Multi-Asset | $ 59,207,385 | $ 83,595,744 | ||||||
Opportunistic Strategies | 240,902,288 | 250,869,759 | ||||||
Real Assets and Pricing Opportunities | 10,519,782 | 10,641,943 |
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US Treasury Securities | ||||||||
Portfolio | Purchases | Sales | ||||||
Global Dynamic Multi-Asset | $3,268,252 | $2,116,303 | ||||||
Real Assets and Pricing Opportunities | 114,569 | 654,939 |
For the year ended December 31, 2018, the Portfolios did not engage in any cross-trades in accordance with Rule 17a-7 under the 1940 Act, and no brokerage commissions were paid to affiliates of the Investment Manager or other affiliates of the Fund for portfolio transactions executed on behalf of the Fund.
At December 31, 2018, the Investment Manager owned 13.27% of the outstanding shares of the Global Dynamic Multi-Asset Portfolio.
6. Line of Credit
The Fund has a $50 million Line of Credit Agreement (the “Agreement”) with State Street, primarily for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest on borrowings is payable at the higher of the Federal Funds rate or One-Month LIBOR rate plus 1.00%, on an annualized basis. Under the Agreement, the Fund has agreed to pay a 0.20% per annum fee on the unused portion of the commitment, payable quarterly in arrears. The Fund has also agreed to pay an upfront fee of 0.05% of the committed line amount. During the year ended December 31, 2018, the following Portfolio had borrowings under the Agreement as follows:
Portfolio | Average Daily Loan Balance* | Maximum Daily Loan Outstanding | Weighted Rate | Number Borrowings were Outstanding | ||||||||||||
` | ||||||||||||||||
Real Assets and Pricing Opportunities | $ | 87,500 | $ | 100,000 | 3.05 | % | 4 |
* | For days borrowings were outstanding. |
Management believes that the fair value of the liability under the line of credit is equivalent to the recorded amount based on its short-term maturity and interest rate, which fluctuates with LIBOR.
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A Portfolio’s outstanding balance on the line of credit, if any, would be categorized as Level 2.
7. Investment Risks
(a) Non-US Securities Risk—A Portfolio’s performance will be influenced by political, social and economic factors affecting the non-US countries and companies in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity.
(b) Emerging Market Risk—Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. The economies of countries with emerging markets may be based predominantly on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme debt burdens or volatile inflation rates. The securities markets of emerging market countries have historically been extremely volatile. These market conditions may continue or worsen. Investments in these countries may be subject to political, economic, legal, market and currency risks. The risks may include less protection of property rights and uncertain political and economic policies, the imposition of capital controls and/or foreign investment limitations by a country, nationalization of businesses and the imposition of sanctions by other countries, such as the US. Significant devaluation of emerging market currencies against the US dollar may occur subsequent to acquisition of investments denominated in emerging market currencies.
(c) Foreign Currency Risk—Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to fluctuations in currency exchange rates. A Portfolio’s currency investments could be adversely affected by delays in, or a refusal to grant, repatriation of funds or conversion of emerging market currencies. The Investment Manager generally does not intend to actively hedge the Portfolio’s foreign currency exposure.
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(d) Realty Companies, Real Estate Investments and REITs Risk—Portfolios that invest in Realty Companies, Real Estate Investments and/or REITs could lose money due to the performance of real estate-related securities even if securities markets generally are experiencing positive results. The performance of investments made by a Portfolio may be determined to a great extent by the current status of the real estate industry in general, or by other factors (such as interest rates and the availability of loan capital) that may affect the real estate industry, even if other industries would not be so affected. Consequently, the investment strategies of a Portfolio could lead to securities investment results that may be significantly different from investments in securities of other industries or sectors or in a more broad-based portfolio generally.
The risks related to investments in Realty Companies and Real Estate Investments include, but are not limited to: adverse changes in general economic and local market conditions; adverse developments in employment; changes in supply or demand for similar or competing properties; unfavorable changes in applicable taxes, governmental regulations and interest rates; operating or development expenses; and lack of available financing.
REITs are subject to similar risks as Real Estate Investments and Realty Companies. The risks related to investments in Real Estate Investments and Realty Companies include, but are not limited to: adverse changes in general economic and local market conditions; adverse developments in employment; changes in supply or demand for similar or competing properties; unfavorable changes in applicable taxes, governmental regulations and interest rates; operating or development expenses; and lack of available financing. Due to certain special considerations that apply to REITs, investments in REITs may carry additional risks not necessarily present in investments in other securities. REIT securities (including those trading on national exchanges) typically have trading volumes that are less than those of common stocks of other stocks traded on national exchanges, which may affect a Portfolio’s ability to trade or liquidate those securities. An investment in REITs may be adversely affected if the REIT fails to comply with applicable laws and regulations. Failure to qualify with any of these require-
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ments could jeopardize a company’s status as a REIT. A Portfolio generally will have no control over the operations and policies of a REIT, and they generally will have no ability to cause a REIT to take the actions necessary to qualify as a REIT.
(e) Subsidiary Risk—The Real Assets and Pricing Opportunities Portfolio invests in the Subsidiary, which is not registered as an investment company under the 1940 Act. A regulatory change in the US or the Cayman Islands, under which the Portfolio and the Subsidiary, respectively, are organized, that impacts the Subsidiary or how the Portfolio invests in the Subsidiary, such as a change in tax law, could adversely affect the Portfolio. By investing in the Subsidiary, the Portfolio is exposed to the risks associated with the Subsidiary’s investments, which generally include the risks of investing in commodity-related derivative instruments.
(f) Tax Status Risk—Income and gains from commodities or certain commodity-linked derivative instruments do not constitute “qualifying income” to the Real Assets and Pricing Opportunities Portfolio for purposes of qualification as a “regulated investment company” for federal income tax purposes. Without such qualification, the Portfolio could be subject to tax. The tax treatment of some of the Portfolio’s investments in the Subsidiary and commodity-linked derivatives may be adversely affected by future legislation, regulations of the US Treasury Department or guidance issued by the Internal Revenue Service, or otherwise affect the character, timing and/or amount of the Portfolio’s taxable income or any gains and distributions made by the Portfolio.
(g) Fixed-Income and Debt Securities Risk—The market value of a debt security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The debt securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening.
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Prices of bonds and other debt securities tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect debt securities and, accordingly, will cause the value of a Portfolio’s investments in these securities to decline. Interest rate risk is usually greater for fixed-income securities with longer maturities or durations. A rise in interest rates (or the expectation of a rise in interest rates) may result in periods of volatility, decreased liquidity and increased redemptions, and, as a result, the Portfolio may have to liquidate portfolio securities at disadvantageous prices. During periods of reduced market liquidity, a Portfolio may not be able to readily sell debt securities at prices at or near their perceived value. An unexpected increase in Portfolio redemption requests, including requests from shareholders who may own a significant percentage of a Portfolio’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the Portfolio to sell its holdings at a loss or at undesirable prices and adversely affect the Portfolio’s share price and increase the Portfolio’s liquidity risk, Portfolio expenses and/or taxable distributions. Economic and other developments can adversely affect debt securities markets.
A Portfolio’s investments in lower-rated, higher-yielding securities (“junk bonds”) are subject to greater credit risk than its higher-rated investments. Credit risk is the risk that the issuer will not make interest or principal payments, or will not make payments on a timely basis. Non-investment grade securities tend to be more volatile, less liquid and are considered speculative. If there is a decline, or perceived decline, in the credit quality of a debt security (or any guarantor of payment on such security), the security’s value could fall, potentially lowering a Portfolio’s share price. The prices of non-investment grade securities, unlike investment grade debt securities, may fluctuate unpredictably and not necessarily inversely with changes in interest rates. The prices of high yield securities can fall in response to negative news about the issuer or its industry, or the economy in general to a greater extent than those of higher-rated securities. The market for these securities may be less liquid and therefore these securities may be harder to value or sell at an acceptable price, especially during times of market volatility or decline.
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Some fixed-income securities may give the issuer the option to call, or redeem, the securities before their maturity. If securities held by a Portfolio are called during a time of declining interest rates (which is typically the case when issuers exercise options to call outstanding securities), the Portfolio may have to reinvest the proceeds in an investment offering a lower yield (and the Portfolio may not fully benefit from any increase in the value of its portfolio holdings as a result of declining interest rates).
Adjustable rate securities provide a Portfolio with a certain degree of protection against rises in interest rates, although such securities will participate in any declines in interest rates as well. Certain adjustable rate securities, such as those with interest rates that fluctuate directly or indirectly based on multiples of a stated index, are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme reductions of yield and possibly loss of principal.
(h) Underlying Funds Risk—Shares of ETFs, closed-end funds and exchange-traded notes (“ETNs” and collectively with ETFs and closed-end funds, “Underlying Funds”) in which certain Portfolios invest may trade at prices that vary from their NAVs, sometimes significantly. The shares of ETFs and closed-end funds may trade at prices at, below or above their most recent NAV. Shares of closed-end funds, in particular, frequently trade at persistent discounts to their NAV. In addition, the performance of an ETF pursuing a passive index-based strategy may diverge from the performance of the index. ETNs may not trade in the secondary market, but typically are redeemable by the issuer. A Portfolio’s investments in Underlying Funds are subject to the risks of Underlying Funds’ investments, as well as to the general risks of investing in Underlying Funds. Portfolio shares will bear not only the Portfolio’s management fees and operating expenses, but also their proportional share of the management fees and operating expenses of the ETFs and closed-end funds in which the Portfolio invests. While ETNs do not have management fees, they are subject to certain investor fees. ETNs are debt securities that, like ETFs, typically are listed on exchanges and their terms generally provide for a return that tracks specified market indexes. However,
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unlike ETFs and closed-end funds, ETNs are not registered investment companies and thus are not registered under the 1940 Act. In addition, as debt securities, ETNs are subject to the additional risk of the creditworthiness of the issuer. ETNs typically do not make periodic interest payments.
These Portfolios may be limited by the 1940 Act in the amount of their assets that may be invested in ETFs and closed-end funds unless an ETF or a closed-end fund has received an exemptive order from the SEC on which the Portfolios may rely or an exemption is available.
Many ETFs have received an exemptive order from the SEC providing an exemption from the 1940 Act limits on the amount of assets that may be invested in ETFs and closed-end funds, and a Portfolio’s reliance on an order is conditioned on compliance with certain conditions of the order. If an exemptive order has not been received and an exemption is not available under the 1940 Act, the Portfolio will be limited in the amount it can invest in Underlying Funds that are registered investment companies to: (1) 3% or less of an Underlying Fund’s voting shares, (2) an Underlying Fund’s shares in value equal to or less than 5% of the Portfolio’s assets and (3) shares of Underlying Funds in the aggregate in value equal to or less than 10% of the Portfolio’s total assets.
(i) Natural Resources Risk—Investments related to natural resources may be affected by numerous factors, including events occurring in nature, inflationary pressures and domestic and international politics. For example, events occurring in nature (such as earthquakes or fires in prime natural resource areas) and political events (such as coups or military confrontations) can affect the overall supply of a natural resource and the value of companies involved in such natural resource. Political risks and other risks to which non-US companies are subject also may affect US companies if they have significant operations or investments in non-US countries. In addition, interest rates, prices of raw materials and other commodities, international economic developments, energy conservation, tax and other government regulations (both US and non-US) may affect the supply of and demand for natural
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resources, which can affect the profitability and value of securities issued by companies in the natural resources category. Securities of companies within specific natural resources sub-categories can perform differently than the overall market. This may be due to changes in such things as the regulatory or competitive environment or to changes in investor perceptions.
(j) Commodities-Related Investments Risk—Exposure to the commodities markets may subject the Real Assets and Pricing Opportunities Portfolio and the Subsidiary to greater volatility than other types of investments. The values of commodities and commodity-linked derivative instruments are affected by events that may have less impact on the values of equity and fixed income securities. Investments linked to the prices of commodities are considered speculative. Because the value of a commodity-linked derivative instrument, such as a futures contract on a physical commodity, typically is based upon the price movements of the underlying reference asset, index or rate, the value of these instruments will rise or fall in response to changes in the underlying reference asset, index or rate. Prices of commodities and commodity-linked investments may fluctuate significantly over short periods for a variety of factors, including: changes in supply and demand relationships; weather; agricultural or livestock markets; agricultural or livestock disease or pestilence; trade relationships; fiscal, monetary and exchange control programs; and embargoes, tariffs, terrorism and international economic, political, military and regulatory developments. The commodity markets are subject to temporary distortions or other disruptions due to a variety of factors, including the lack of liquidity in the markets, the participation of speculators and government regulation and intervention. United States futures exchanges and some foreign exchanges have regulations that limit the amount of fluctuation in futures contract prices, which may occur during a single business day. These limits are generally referred to as “daily price fluctuation limits” and the maximum or minimum price of a contract on any given day as a result of these limits is referred to as a “limit price.” Once the limit price has been reached in a particular contract, no trades may be made at a different price. Limit prices have the effect of precluding trading in a particular contract or forcing the liquidation of contracts at disad-
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vantageous times or prices. These circumstances could adversely affect the value of the commodity-linked investments.
(k) Inflation-Indexed Security Risk—Interest payments on inflation-indexed securities can be unpredictable and will vary as the principal and/or interest is periodically adjusted based on the rate of inflation. If the index measuring inflation falls, the interest payable on these securities will be reduced. The US Treasury has guaranteed that, in the event of a drop in prices, it would repay the par amount of its inflation-indexed securities. Inflation-indexed securities issued by corporations generally do not guarantee repayment of principal. Any increase in the principal amount of an inflation-indexed security will be considered taxable ordinary income, even though investors do not receive their principal until maturity. As a result, a Portfolio may be required to make annual distributions to shareholders that exceed the cash the Portfolio received, which may cause the Portfolio to liquidate certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-indexed security is adjusted downward due to deflation, amounts previously distributed may be characterized in some circumstances as a return of capital.
(l) Derivatives and Hedging Risk—Derivatives transactions, including those entered into for hedging purposes (i.e., seeking to protect Portfolio investments), may increase volatility, reduce returns, limit gains or magnify losses, perhaps substantially, particularly since most derivatives have a leverage component that provides investment exposure in excess of the amount invested. Over-the-counter swap agreements, forward currency contracts, writing or purchasing over-the-counter options on securities (including options on ETFs and ETNs), indexes and currencies and other over-the-counter derivatives transactions are subject to the risk of default by the counterparty and can be illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. These derivatives transactions, as well as the exchange-traded futures and options in which certain Portfolios may invest, are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related index, commodity, interest rate, currency, security or other reference asset.
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As such, a small investment could have a potentially large impact on a Portfolio’s performance. Purchasing options will reduce returns by the amount of premiums paid for options that are not exercised. In fact, many derivatives may be subject to greater risks than those associated with investing directly in the underlying or other reference asset. Derivatives transactions incur costs, either explicitly or implicitly, which reduce returns, and costs of engaging in such transactions may outweigh any gains or any losses averted from hedging activities. Successful use of derivatives, whether for hedging or for other investment purposes, is subject to the Investment Manager’s ability to predict correctly movements in the direction of the relevant reference asset or market and, for hedging activities, correlation of the derivative instruments used with the investments seeking to be hedged. Use of derivatives transactions, even when entered into for hedging purposes, may cause a Portfolio to experience losses greater than if the Portfolio had not engaged in such transactions.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnification provisions. A Portfolio’s maximum exposure under these arrangements is unknown. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Fair Value Measurements
Fair value is defined as the price that a Portfolio would receive to sell an asset, or would pay to transfer a liability, in an orderly transaction between market participants at the date of measurement. The Fair Value Measurements and Disclosures provisions of GAAP also establish a framework for measuring fair value, and a three-level hierarchy for fair value measurement that is based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer, broadly, to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions
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about the assumptions that market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The fair value measurement level within the fair value hierarchy for the assets and liabilities of the Fund is based on the lowest level of any input that is significant to the overall fair value measurement. The three-level hierarchy of inputs is summarized below:
• | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities |
• | Level 2 – other significant observable inputs (including unadjusted quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets and liabilities) |
Changes in valuation technique may result in transfers into or out of the current assigned level within the hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in these securities.
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The following table summarizes the valuation of the Portfolios’ assets and liabilities by each fair value hierarchy level as of December 31, 2018:
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Global Dynamic Multi-Asset Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | 26,908 | $ | 614,861 | $ | — | $ | 641,769 | |||||||||
Austria | — | 17,393 | — | 17,393 | |||||||||||||
Belgium | 92,134 | 100,736 | — | 192,870 | |||||||||||||
Canada | 1,338,186 | — | — | 1,338,186 | |||||||||||||
China | — | 26,274 | — | 26,274 | |||||||||||||
Denmark | — | 57,537 | — | 57,537 | |||||||||||||
Finland | 215,063 | — | — | 215,063 | |||||||||||||
France | 187,874 | 571,873 | — | 759,747 | |||||||||||||
Germany | 103,740 | 440,067 | — | 543,807 | |||||||||||||
Hong Kong | 322,950 | 210,826 | — | 533,776 | |||||||||||||
Israel | 96,736 | 159,704 | — | 256,440 | |||||||||||||
Italy | — | 380,585 | — | 380,585 | |||||||||||||
Japan | 598,047 | 1,929,078 | — | 2,527,125 | |||||||||||||
Malta | — | 20,208 | — | 20,208 | |||||||||||||
Netherlands | 246,163 | 166,002 | — | 412,165 | |||||||||||||
New Zealand | — | 23,811 | — | 23,811 | |||||||||||||
Norway | — | 474,881 | — | 474,881 | |||||||||||||
Portugal | — | 22,898 | — | 22,898 | |||||||||||||
Singapore | 171,051 | 115,498 | — | 286,549 | |||||||||||||
Spain | — | 94,504 | — | 94,504 | |||||||||||||
Sweden | 325,800 | 60,710 | — | 386,510 | |||||||||||||
Switzerland | 244,698 | 326,391 | — | 571,089 | |||||||||||||
United Kingdom | 1,356,354 | 888,199 | — | 2,244,553 | |||||||||||||
United States | 15,992,904 | 31,082 | — | 16,023,986 | |||||||||||||
Corporate Bonds* | — | 3,929,584 | — | 3,929,584 | |||||||||||||
Foreign Government Obligations* | — | 5,562,426 | — | 5,562,426 | |||||||||||||
Quasi Government Bonds* | — | 281,512 | — | 281,512 | |||||||||||||
Supranational Bonds | — | 1,122,536 | — | 1,122,536 | |||||||||||||
US Government Securities | — | 204,270 | — | 204,270 | |||||||||||||
US Municipal Bonds | — | 341,824 | — | 341,824 | |||||||||||||
US Treasury Securities | — | 1,770,667 | — | 1,770,667 | |||||||||||||
Short-Term Investments | 1,464,341 | — | — | 1,464,341 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 184,345 | — | 184,345 | |||||||||||||
Total | $ | 22,782,949 | $ | 20,130,282 | $ | — | $ | 42,913,231 | |||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (67,260 | ) | $ | — | $ | (67,260 | ) |
98 Annual Report
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Opportunistic Strategies Portfolio | |||||||||||||||||
Exchange-Traded Funds | $ | 90,121,847 | $ | — | $ | — | $ | 90,121,847 | |||||||||
Closed-End Management Investment Companies | 4,763,660 | — | — | 4,763,660 | |||||||||||||
Short-Term Investments | 8,347,015 | — | — | 8,347,015 | |||||||||||||
Total | $ | 103,232,522 | $ | — | $ | — | $ | 103,232,522 | |||||||||
Real Assets and Pricing Opportunities Portfolio | |||||||||||||||||
Assets: | |||||||||||||||||
Common Stocks* | |||||||||||||||||
Australia | $ | — | $ | 651,522 | $ | — | $ | 651,522 | |||||||||
Canada | 637,465 | — | — | 637,465 | |||||||||||||
China | — | 61,271 | — | 61,271 | |||||||||||||
Denmark | — | 19,550 | — | 19,550 | |||||||||||||
Faeroe Islands | — | 8,415 | — | 8,415 | |||||||||||||
Finland | — | 10,115 | — | 10,115 | |||||||||||||
France | — | 407,986 | — | 407,986 | |||||||||||||
Germany | — | 267,797 | — | 267,797 | |||||||||||||
Hong Kong | — | 286,114 | — | 286,114 | |||||||||||||
Ireland | 14,841 | 21,246 | — | 36,087 | |||||||||||||
Italy | — | 675,530 | — | 675,530 | |||||||||||||
Japan | — | 410,414 | — | 410,414 | |||||||||||||
Luxembourg | — | 147,082 | — | 147,082 | |||||||||||||
Mexico | 47,947 | — | — | 47,947 | |||||||||||||
Netherlands | — | 51,533 | — | 51,533 | |||||||||||||
New Zealand | — | 21,712 | — | 21,712 | |||||||||||||
Norway | — | 28,710 | — | 28,710 | |||||||||||||
Philippines | — | 44,889 | — | 44,889 | |||||||||||||
Singapore | — | 91,991 | — | 91,991 | |||||||||||||
South Korea | — | 21,115 | — | 21,115 | |||||||||||||
Spain | — | 190,552 | — | 190,552 | |||||||||||||
Sweden | — | 7,727 | — | 7,727 | |||||||||||||
Switzerland | — | 91,482 | — | 91,482 | |||||||||||||
United Arab Emirates | — | 43,021 | — | 43,021 | |||||||||||||
United Kingdom | — | 916,358 | — | 916,358 | |||||||||||||
United States | 4,302,603 | — | — | 4,302,603 | |||||||||||||
Exchange-Traded Funds | 237,771 | — | — | 237,771 | |||||||||||||
Foreign Government Obligations* | — | 1,415,760 | — | 1,415,760 | |||||||||||||
US Treasury Securities | — | 2,429,521 | �� | — | 2,429,521 | ||||||||||||
Short-Term Investments | 2,539,959 | — | — | 2,539,959 | |||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | — | 24,418 | — | 24,418 | |||||||||||||
Total | $ | 7,780,586 | $ | 8,345,831 | $ | — | $ | 16,126,417 |
Annual Report 99
Description | Unadjusted Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2018 | |||||||||||||
Liabilities: | |||||||||||||||||
Other Financial Instruments† | |||||||||||||||||
Forward Currency Contracts | $ | — | $ | (15,356 | ) | $ | — | $ | (15,356 | ) | |||||||
Futures Contracts | (21,426 | ) | — | — | (21,426 | ) | |||||||||||
Swap Agreements | — | (282,655 | ) | — | (282,655 | ) | |||||||||||
Total | $ | (21,426 | ) | $ | (298,011 | ) | $ | — | $ | (319,437 | ) |
* | Please refer to Portfolios of Investments and Notes to Portfolios of Investments for portfolio holdings by country and industry. |
† | Other financial instruments are derivative instruments which are valued at their respective unrealized appreciation (depreciation). |
10. Derivative Instruments
Certain Portfolios may use derivative instruments, including forward currency contracts, futures contracts or swap agreements.
Forward currency contracts may be used for hedging purposes or to seek to increase returns.
A Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and/or currency exchange rates, to increase total return, or to otherwise gain access or attain exposure to certain markets or other underliers.
A Portfolio enters into swap agreements in an attempt to obtain a particular exposure when it is considered desirable to do so, possibly at a lower cost to such Portfolio than if it had invested directly in the asset that yielded the desired exposure.
100 Annual Report
During the year ended December 31, 2018, the approximate average monthly notional exposure for derivative instruments was as follows:
Global | Real Assets | |||||||||||
Dynamic | Opportunistic | and Pricing | ||||||||||
Multi-Asset | Strategies | Opportunities | ||||||||||
Derivative Instruments | Portfolio | Portfolio | Portfolio | |||||||||
Forward currency contracts: | ||||||||||||
Average amounts purchased | $8,300,000 | $ | — | $ | 500,000 | |||||||
Average amounts sold | 8,300,000 | — | 5,000,000 | |||||||||
Futures contracts: | ||||||||||||
Average notional value of contracts – long | — | — | 100,000 | |||||||||
Average notional value of contracts – short | — | — | 100,000 | † | ||||||||
Total return swap agreements: | ||||||||||||
Average notional value | — | 13,800,000 | # | 2,300,000 |
† | Represents average monthly notional exposure for the one month the derivative instrument was open during the period. |
# | Represents average monthly notional exposure for the eight months the derivative instrument was open during the period. |
Global Dynamic Multi-Asset Portfolio
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Assets – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized appreciation on forward currency contracts | $ | 184,345 | |||
Liabilities – Derivative Financial Instruments | Total | |||||
Forward currency contracts | Unrealized depreciation on forward currency contracts | $ | 67,260 |
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Net Realized Gain (Loss) from: | Total | |||
Forward currency contracts | $ | (24,710 | ) | |
Net Change in Unrealized Appreciation (Depreciation) on: | Total | |||
Forward currency contracts | $ | 186,804 |
Annual Report 101
Opportunistic Strategies Portfolio
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Net Realized Gain (Loss) from: | Equity Contracts | |||
Swap agreements | $ | (1,067,563 | ) | |
Net Change in Unrealized Appreciation (Depreciation) on: | Equity Contracts | |||
Swap agreements | $ | (339,094 | ) |
Real Assets and Pricing Opportunities Portfolio
The following table summarizes the fair value of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2018:
Foreign | ||||||||||||||||
Commodity | Equity | Currency | ||||||||||||||
Assets – Derivative Financial Instruments | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | ||||||||||||||||
Unrealized appreciation on forward currency contracts | $ | — | $ | — | $ | 24,418 | $ | 24,418 | ||||||||
Foreign | ||||||||||||||||
Commodity | Equity | Currency | ||||||||||||||
Liabilities – Derivative Financial Instruments | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | ||||||||||||||||
Unrealized depreciation on forward currency contracts | $ | — | $ | — | $ | 15,356 | $ | 15,356 | ||||||||
Futures contracts | ||||||||||||||||
Unrealized depreciation on futures contracts | 21,426 | — | — | 21,426 | ||||||||||||
Swap agreements | ||||||||||||||||
Unrealized depreciation on swap agreements | — | 282,655 | — | 282,655 | ||||||||||||
Total | $ | 21,426 | $ | 282,655 | $ | 15,356 | $ | 319,437 |
102 Annual Report
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2018 was:
Foreign | ||||||||||||||||
Commodity | Equity | Currency | ||||||||||||||
Net Realized Gain (Loss) from: | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | $ | — | $ | — | $ | 180,580 | $ | 180,580 | ||||||||
Futures contracts | (2,795 | ) | — | — | (2,795 | ) | ||||||||||
Swap agreements | — | (53,662 | ) | — | (53,662 | ) | ||||||||||
Total | $ | (2,795 | ) | $ | (53,662 | ) | $ | 180,580 | $ | 124,123 | ||||||
Foreign | ||||||||||||||||
Commodity | Equity | Currency | ||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on: | Contracts | Contracts | Contracts | Total | ||||||||||||
Forward currency contracts | $ | — | $ | — | $ | 96,825 | $ | 96,825 | ||||||||
Futures contracts | (29,485 | ) | — | — | (29,485 | ) | ||||||||||
Swap agreements | — | (323,973 | ) | — | (323,973 | ) | ||||||||||
Total | $ | (29,485 | ) | $ | (323,973 | ) | $ | 96,825 | $ | (256,633 | ) |
As of December 31, 2018, the Global Dynamic Multi-Asset and Real Assets and Pricing Opportunities Portfolios held derivative instruments that are eligible for offset in the Statements of Assets and Liabilities and are subject to master netting arrangements. A master netting arrangement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as any cash collateral, through a single payment in the event of default on, or termination of, any one contract.
Annual Report 103
The required information for the affected Portfolios are presented in the below table, as of December 31, 2018:
Global Dynamic Multi-Asset Portfolio
Net Amounts of | ||||||||||||
Gross Amounts Offset | Assets Presented | |||||||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||||||
Description | Recognized Assets | Assets and Liabilities | Assets and Liabilities | |||||||||
Forward Currency Contracts | $ | 184,345 | $ | — | $ | 184,345 |
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Assets Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Received | Derivative Assets | ||||||||||||
Citibank NA | $ | 30,713 | $ | (8,719 | ) | $ | — | $ | 21,994 | |||||||
HSBC Bank USA NA | 129,754 | (48,731 | ) | — | 81,023 | |||||||||||
JPMorgan Chase Bank NA | 18,237 | (7,144 | ) | — | 11,093 | |||||||||||
State Street Bank and Trust Co. | 5,641 | (2,666 | ) | — | 2,975 | |||||||||||
Total | $ | 184,345 | $ | (67,260 | ) | $ | — | $ | 117,085 |
Net Amounts of | ||||||||||||
Gross Amounts Offset | Liabilities Presented | |||||||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||||||
Description | Recognized Liabilities | Assets and Liabilities | Assets and Liabilities | |||||||||
Forward Currency Contracts | $ | 67,260 | $ | — | $ | 67,260 |
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Liabilities Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Pledged | Derivative Liabilities | ||||||||||||
Citibank NA | $ | 8,719 | $ | (8,719 | ) | $ | — | $ | — | |||||||
HSBC Bank USA NA | 48,731 | (48,731 | ) | — | — | |||||||||||
JPMorgan Chase Bank NA | 7,144 | (7,144 | ) | — | — | |||||||||||
State Street Bank and Trust Co. | 2,666 | (2,666 | ) | — | — | |||||||||||
Total | $ | 67,260 | $ | (67,260 | ) | $ | — | $ | — |
104 Annual Report
Real Assets and Pricing Opportunities Portfolio
Net Amounts of | ||||||||||||
Gross Amounts Offset | Assets Presented | |||||||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||||||
Description | Recognized Assets | Assets and Liabilities | Assets and Liabilities | |||||||||
Forward Currency Contracts | $ | 24,418 | $ | — | $ | 24,418 |
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Assets Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Received | Derivative Assets | ||||||||||||
Citibank NA | $ | 4,199 | $ | (2,535 | ) | $ | — | $ | 1,664 | |||||||
HSBC Bank USA NA | 12,812 | (7,897 | ) | — | 4,915 | |||||||||||
State Street Bank and Trust Co. | 7,407 | (4,924 | ) | — | 2,483 | |||||||||||
Total | $ | 24,418 | $ | (15,356 | ) | $ | — | $ | 9,062 |
Net Amounts of | ||||||||||||
Gross Amounts Offset | Liabilities Presented | |||||||||||
Gross Amounts of | in the Statement of | in the Statement of | ||||||||||
Description | Recognized Liabilities | Assets and Liabilities | Assets and Liabilities | |||||||||
Forward Currency Contracts | $ | 15,356 | $ | — | $ | 15,356 | ||||||
Swap Agreements | 282,655 | — | 282,655 | |||||||||
Total | $ | 298,011 | $ | — | $ | 298,011 |
Amounts Not Offset | ||||||||||||||||
in the Statement of | ||||||||||||||||
Assets and Liabilities | ||||||||||||||||
Net Amounts of | ||||||||||||||||
Liabilities Presented | ||||||||||||||||
in the Statement of | Financial | Collateral | Net Amounts of | |||||||||||||
Counterparty | Assets and Liabilities | Instruments | Pledged (a) | Derivative Liabilities | ||||||||||||
Citibank NA | $ | 2,535 | $ | (2,535 | ) | $ | — | $ | — | |||||||
Goldman Sachs International | 282,655 | — | (282,655 | ) | — | |||||||||||
HSBC Bank USA NA | 7,897 | (7,897 | ) | — | — | |||||||||||
State Street Bank and Trust Co. | 4,924 | (4,924 | ) | — | — | |||||||||||
Total | $ | 298,011 | $ | (15,356 | ) | $ | (282,655 | ) | $ | — |
(a) | Collateral amounts disclosed in the table above may be adjusted due to the requirement to limit collateral amounts to avoid the effect of over-collateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein. |
Annual Report 105
11. Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08,Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization of Purchased Callable Debt Securities,which amends the amortization period for certain purchased callable debt securities. Management is currently evaluating the impact that the adoption of the amendment will have on the Fund’s financial statements and related disclosures. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, modifies and adds disclosures to Topic 820. The amendments in this ASU apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has evaluated the impact of the amendments and has elected to adopt these amendments and incorporate the changes in the current financial statements.
12. Subsequent Events
Management has evaluated subsequent events affecting the Portfolios through the issuance of the financial statements and has determined that there were no subsequent events that required adjustment or disclosure.
106 Annual Report
The Lazard Funds, Inc. Report of Independent Registered Public Accounting Firm
To the Board of Directors of The Lazard Funds, Inc. and Shareholders of Lazard Global Dynamic Multi-Asset Portfolio, Lazard Opportunistic Strategies Portfolio and Lazard Real Assets and Pricing Opportunities Portfolio:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Lazard Global Dynamic Multi-Asset Portfolio and Lazard Opportunistic Strategies Portfolio (formerly Lazard Capital Allocator Opportunistic Strategies Portfolio) (collectively the “Portfolios”), two of the portfolios constituting The Lazard Funds, Inc. (the “Fund”) as of December 31, 2018, 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, the financial highlights for each of the five years in the period then ended for the Portfolios except for Lazard Global Dynamic Multi-Asset Portfolio which is indicated in the table below, and the related notes to the financial statements. We have also audited the accompanying consolidated statement of assets and liabilities, including the consolidated portfolio of investments, of Lazard Real Assets and Pricing Opportunities Portfolio (collectively, with the Portfolios mentioned above, the “Portfolios”), one of the portfolios constituting the Fund, as of December 31, 2018, the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the periods indicated in the table below, and the related notes to the financial statements. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Lazard Global Dynamic Multi-Asset Portfolio and Lazard Opportunistic Strategies Portfolio, as of December 31, 2018, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended (or for the period listed in the table below), and the consolidated financial position of Lazard Real Assets and Pricing Opportunities Portfolio, as of December 31, 2018, and the consolidated results of its operations
Annual Report 107
for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended and the consolidated financial highlights for period listed in the table below, in conformity with accounting principles generally accepted in the United States of America.
Portfolio Name | Financial Highlights |
Lazard Global Dynamic Multi-Asset Portfolio | For the years ended December 31, 2018, 2017 and for the period from May 27, 2016 (commencement of operations) through December 31, 2016 |
Lazard Real Assets and Pricing Opportunities Portfolio | For the years ended December 31, 2018, 2017 and for period from December 30, 2016 (commencement of operations) through December 31, 2016 |
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on the Portfolios’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Portfolios in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Portfolios are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial
108 Annual Report
highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 2019
We have served as the auditor of one or more of the investment companies in the Lazard Fund Complex since 2004.
Annual Report 109
The Lazard Funds, Inc. Board of Directors and Officers Information (unaudited)
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Independent Directors(3): | |||||
Franci J. Blassberg (1953) | Director (August 2014) | Debevoise & Plimpton LLP, a law firm,Of Counsel(2013 – present) | |||
Cornell Law School,AdjunctProfessor(2013 – 2016, 2019) | |||||
The Buchmann Faculty of Law, Tel Aviv University,Visiting Professor(2019) | |||||
University of California, Berkeley School of Law,Adjunct Professor(Spring 2017) | |||||
Kenneth S. Davidson (1945) | Director (August 1995) | Davidson Capital Management Corporation, an investment manager,President(1978 – present) | |||
Landseer Advisors LLC, an investment manager,Senior Advisor(2012 – 2014) | |||||
Nancy A. Eckl (1962) | Director (April 2007) | College Retirement Equities Fund (eight accounts),Trustee (2007 – present) | |||
TIAA-CREF Funds (69 funds) and TIAA-CREF Life Funds (11 funds),Trustee(2007 – present) | |||||
TIAA Separate Account VA-1,Member of the ManagementCommittee(2007 – present) | |||||
Trevor W. Morrison (1971) | Director (April 2014) | New York University School of Law,Dean and Eric M. and Laurie B.Roth Professor of Law (2013 – present) | |||
Columbia Law School,Professorof Law(2008 – 2013) | |||||
Richard Reiss, Jr. (1944) | Director (May 1991) | Georgica Advisors LLC, an investment manager,Chairman (1997 – present) | |||
Resource America, Inc., a real estate asset management company,Director(2016 – 2018) |
110 Annual Report
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) and Other Public Company Directorships Held During the Past Five Years(2) | |||
Robert M. Solmson (1947) | Director (September 2004) | Fairwood Capital, LLC, a private investment corporation engaged primarily in real estate and hotel investments,Co-Managing Partnerand Managing Director (2008 – present) | |||
Interested Directors(4): | |||||
Ashish Bhutani (1960) | Director (July 2005) | Investment Manager,ChiefExecutive Officer(2004 – present) | |||
Lazard Ltd,Vice Chairman andDirector(2010 – present) | |||||
Nathan A. Paul (1973) | Director (October 2017), Chief Executive Officer and President (February 2017; previously, Vice President and Secretary since April 2002) | Investment Manager,ChiefBusiness Officer(April 2017 – present) andManaging Director (2003 – present)
Investment Manager,GeneralCounsel(2002 – April 2017)
|
(1) | The address of each Director of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each Director serves as a Director for each of the funds in the Lazard Fund Complex (comprised of, as of January 31, 2019, 39 active investment portfolios). Each Director serves an indefinite term, until his or her successor is elected, and each Director serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | “Independent Directors” are not “interested persons” (as defined in the 1940 Act) of the Fund. |
(4) | Messrs. Bhutani and Paul are “interested persons” (as defined in the 1940 Act) of the Fund because of their positions with the Investment Manager. |
The Fund’s Statement of Additional Information contains further information about the Directors and is available without charge by calling 800-823-6300, or online, at www.lazardassetmanagement.com.
Annual Report 111
Name (Year of Birth) Address(1) | Position(s) with the Fund (Since) and Term(2) | Principal Occupation(s) During the Past Five Years | |||
Officers(3): | |||||
Mark R. Anderson (1970) | Chief Compliance Officer (September 2014), Vice President and Secretary (February 2017) | Managing Director (since February 2017, previously Director), Chief Compliance Officer (since September 2014) and General Counsel (since April 2017) of the Investment Manager | |||
Senior Vice President, Counsel and Deputy Chief Compliance Officer of AllianceBernstein L.P. (2004 – August 2014) | |||||
Christopher Snively (1984) | Chief Financial Officer (March 2016) | Senior Vice President of the Investment Manager (since November 2015) | |||
Assurance Manager at PricewaterhouseCoopers LLP (2008 – November 2015) | |||||
Stephen St. Clair (1958) | Treasurer (May 2003) | Vice President of the Investment Manager | |||
Shari L. Soloway (1981) | Assistant Secretary (November 2015) | Head of Legal, North America (since January 2019, previously Senior Vice President, Legal and Compliance (since September 2015)) of the Investment Manager | |||
Vice President and Associate General Counsel of GE Asset Management (July 2011 – September 2015) | |||||
Jessica A. Falzone (1989) | Assistant Secretary (January 2019) | Vice President, Legal and Compliance, of the Investment Manager (since March 2018) | |||
Associate at Schulte Roth & Zabel LLP (2014 – March 2018) | |||||
Cesar A. Trelles (1975) | Assistant Treasurer (December 2004) | Vice President of the Investment Manager |
(1) | The address of each officer of the Fund is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300. |
(2) | Each officer serves for an indefinite term, until his or her successor is elected and qualifies or until his or her earlier resignation or removal. Each officer serves in the same capacity for the other funds in the Lazard Fund Complex. |
(3) | In addition to Nathan A. Paul, Chief Executive Officer and President (since February 2017; previously, Vice President and Secretary since April 2002), whose information is included in the Interested Directors section above. |
112 Annual Report
The Lazard Funds, Inc.Tax and Other Information (unaudited)
Tax Information
Year Ended December 31, 2018
The following tax information represents year end disclosures of the tax benefits passed through to shareholders for 2018:
Of the dividends paid by the Portfolios, the corresponding percentage shown below is qualified dividend income.
Portfolio | Percentage | |||
Global Dynamic Multi-Asset | 34.61 | % | ||
Opportunistic Strategies | — | |||
Real Assets and Pricing Opportunities | 50.97 |
Of the dividends paid by the Portfolios, the corresponding percentage represents the amount of each dividend that qualifies for the dividends received deduction available to corporate shareholders.
Portfolio | Percentage | |||
Global Dynamic Multi-Asset | 14.09 | % | ||
Opportunistic Strategies | 4.75 | |||
Real Assets and Pricing Opportunities | 12.39 |
Pursuant to Section 871 of the Code, the Portfolios have no designated qualified short-term gains for purposes of exempting withholding of tax on such distributions to US nonresident shareholders.
Proxy Voting
A description of the policies and procedures used to determine how proxies relating to Fund portfolio securities are voted is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov.
The Fund’s proxy voting record for the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at https://www.sec.gov. Information as of June 30 each year will generally be available by the following August 31.
Annual Report 113
Schedule of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at https://www.sec.gov.
114 Annual Report
The Lazard Funds, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
https://www.lazardassetmanagement.com
Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
Distributor
Lazard Asset Management Securities LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Custodian
State Street Bank and Trust Company
One Iron Street
Boston, Massachusetts 02210
Transfer Agent and Dividend Disbursing Agent
DST Asset Manager Solutions, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169
Telephone: 617-483-7000
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, New York 10112-0015
Legal Counsel
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
http://www.proskauer.com
Lazard Asset Management LLC • 30 Rockefeller Plaza • New York, NY 10112 • www.lazardassetmanagement.com | ||
Performance information as of the most recent month end is available online at www.lazardassetmanagement.com. LZDPS030 |
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant’s Board of Directors (the “Board”) has determined that Robert M. Solmson and Nancy A. Eckl, members of the Audit Committee of the Board, are audit committee financial experts as defined by the Securities and Exchange Commission (the “SEC”). Mr. Solmson and Ms. Eckl are “independent” as defined by the SEC for purposes of audit committee financial expert determinations.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $1,560,778 in 2017 and $1,623,737 in 2018 (plus expenses in each case).
(b) Audit-Related Fees. There were no fees billed in the Reporting Periods by the Auditor to the Registrant for assurance and related services that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services provided by the Auditor to Lazard Asset Management LLC, the Registrant’s investment manager (“Lazard”) and any entity controlling, controlled by or under common control with Lazard that provides ongoing services to the Registrant (“Service Affiliates”) that were reasonably related to the performance of the annual audit of the Service Affiliate which required preapproval by the Audit Committee were $175,000 in 2017 and $267,330 in 2018.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods by the Auditor to the Registrant for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $418,721 in 2017 and $372,793 in 2018. These Tax Services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S.
federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments; and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held. This includes the aggregate fees billed related to European Union tax reclaim filing services rendered by the Auditor of $209,208 in 2017 and $123,718 in 2018.
The aggregate fees billed in the Reporting Periods for Tax Services provided by the Auditor to Service Affiliates which required preapproval by the Audit Committee were $0 in 2017 and $0 in 2018.
(d) All Other Fees. There were no fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) above.
There were no fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) above, which required preapproval by the Audit Committee.
(e) Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval of the Auditor's engagements for services to the Registrant and Service Affiliates. The Policy states that the Registrant's Audit Committee or the Chair of the Audit Committee (pursuant to delegated authority from the Audit Committee) pre-approves the Auditor's engagements for audit and non-audit services to the Registrant and, as required, non-audit services to Service Affiliates on a case by-case basis. Preapproval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. The Audit Committee Chair must report any pre-approval decisions he or she makes at the next scheduled Audit Committee meeting. There were no services provided by the Auditor to either the Registrant or Service Affiliates that were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during the Reporting Periods.
(f) None.
(g) Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant and Service Affiliates for the Reporting Periods were $938,003 in 2017 and $1,234,762 in 2018.
(h) Auditor Independence. The Audit Committee considered whether provision of non-audit services to Service Affiliates that were not required to be preapproved is compatible with maintaining the Auditor’s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board during the period covered by this report.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant’s principal executive and principal financial officers have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certifications of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Lazard Funds, Inc.
By | /s/ Nathan A. Paul |
Nathan A. Paul | |
Chief Executive Officer | |
Date | March 8, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | /s/ Nathan A. Paul |
Nathan A. Paul | |
Chief Executive Officer | |
Date | March 8, 2019 |
By | /s/ Christopher Snively |
Christopher Snively | |
Chief Financial Officer | |
Date | March 8, 2019 |