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Lazard
US Equity Concentrated Portfolio
Institutional
Open
Ticker
LEVIX
LEVOX
Benchmark
S&P 500 Index1
4Q
2013
2014
The Lazard US Equity Concentrated Portfolio is designed to leverage the best collection of ideas
from the firm’s US Equity platform. The portfolio management team employs intensive fundamental
analysis and accounting validation to construct a high-conviction, all-capitalization portfolio with the aim
of outperforming any broad-based market benchmark.2
Proven, Established
Approach
1
Concentrated portfolios
have historically
outperformed more
diversified peers, and by
their nature result in high
active share.
Stable Experienced
Stewardship
Moderated Volatility
2
Investments with
diverse cash flow
streams are selected
in an effort to mitigate
much of the inherent
risk of a concentrated
portfolio.
3
US Equity platform
comprising 24 investment
professionals, averaging
18 years of industry
experience and 12 years
at Lazard.
Concentrated Managers Outperformed Diversified Managers over the Last 15 Years
(%)
9
Average 3-Year Rolling Returns
Average 5-Year Rolling Returns
6
3
0
Concentrated Managers
Diversified Managers
S&P 500
For the 15 years ended December 2013
Past performance does not guarantee future results. Data comprise 22 concentrated managers, defined as those with 30 holdings or less, and 267 diversified, defined as those with more
than 30 holdings. This information is for illustrative purposes only and does not represent any product managed by Lazard, including the Portfolio.
Source: eVestment, Lazard
Morningstar Category3
Large Blend
L
L
M
M
Morningstar
S
3
V Style
B G
L
S
V
B
M
S
Benchmark
1
S&P 500
Index
V B
G
G
Performance Review1 (%; net of fees.
L 2014.)
L As of December 31,
24
V
16
B
L
M
M
M
S
S
S
G
V
B
G
V
B
Minimum Initial Investment
Institutional: $100,000
Open: $2,500
G
Net Assets
Institutional: $330.0 million
Open: $8.0 million
Total: $338.0 million
8
0
L
L
L
M
M
M
Total Annual Operating Expense Ratio
Institutional: 0.85%
Open: 1.87%
S Equity Concentrated Portfolio
S
S
Lazard US Equity Concentrated Portfolio
(Institutional)
Lazard US
(Open)
V
B
Annualized
G
V
B
G
V
3 Months
1 Year
3 Years
5 Years
Since Inception
9/30/2005
Institutional
8.66
18.88
21.64
14.71
7.91
Open
8.49
18.28
21.21
14.32
7.59
Benchmark
4.93
13.69
19.68
14.73
6.92
B
Net Expense Ratio
G
Institutional: 0.85%
Open: 1.25%
The performance quoted represents past performance. Past performance does not guarantee future results. The
current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end online at www.LazardNet.com. The investment return and
principal value of the Portfolio will fluctuate; an investor’s shares, when redeemed, may be worth more or less than
their original cost. Returns reflect reimbursement of expenses as described in the prospectus. Had expenses not
been reimbursed, returns would have been lower, and the expense ratio would have been higher.
Characteristics
Sector Allocationa
36
Lazard (%)
Benchmark (%)
Consumer Discretionary
32.5
12.1
Information Technology
22.3
19.7
Health Care
17.5
14.2
Consumer Staples
8.6
9.8
Financials
1.9
16.7
Energy
0.0
8.4
Industrials
0.0
10.4
Materials
0.0
3.2
Telecom Services
0.0
2.3
Utilities
0.0
3.2
17.2
0.0
Cash & Equivalents
Source: Lazard, Standard & Poor’s
a Allocations and security selection are subject to change. The information provided should
not be considered a recommendation or solicitation to purchase or sell these securities.
It should not be assumed that any investment in these securities was, or will prove to
be, profitable, or that the investment decisions we make in the future will be profitable
or equal to the investment performance of securities referenced herein. There is no
assurance that any securities referenced herein are currently held in the Portfolio or that
securities sold have not been repurchased. The securities mentioned may not represent
the entire Portfolio.
b As of December 31, 2014. The value added analysis is provided for illustrative purposes
only, as values are calculated based on returns gross of fees. Performance would have
been lower if fees and expenses were included. Sector breakdowns may not sum to total
due to rounding. “Stock Selection” represents the value added by the ability of the manager to select better performing stocks. “Sector Allocation” represents the value added
by the manager’s underweight and overweight positions to the various sectors. “Total”
is the sum of the “Stock Selection” and “Sector Allocation” effects. The performance
shown represents past performance. Past performance does not guarantee future
results. Allocations are subject to change.
2
The net expenses reflect a contractual
agreement by Lazard to waive its fee and,
if necessary, to reimburse the Portfolio
through April 30, 2015, to the extent the
Total Annual Operating Expense Ratio
exceeds 0.95% and 1.25% of the average daily net assets of the Portfolio’s
Institutional and Open Shares, respectively
and from May 1, 2015 through April 30,
2024, to the extent Total Annual Portfolio
Operating Expenses exceed 1.10% and
1.40% of the average daily net assets of
the Portfolio’s Institutional Shares and
Open Shares, respectively.
Lazard
Benchmark
29.7
27
18.7
18
14.6
11.1
11.3
10.6
9
3.1
2.7
0
Price/Book
Price/
Cash Flow
Price/
Earnings
ROE (%)
Lazard
Benchmark
20
502
Weighted Average Market Cap ($B)
71.5
132.0
Active Share (%)
93.5
N/A
Number of Holdings
Beta (3-year)
Standard Deviation
(%; 3-year)
Institutional
1.02
Open
1.03
Institutional
9.78
Open
9.80
Turnover Rate (%; 1-year)
56.1
N/A
8.92
N/A
Source: Lazard, Standard & Poor’s, I/B/E/S
Beta is a relative measure of the sensitivity of a fund’s return to changes in the
benchmark’s return. The beta of the fund versus its benchmark is the amount
(and direction) the fund has historically moved when the benchmark moved by
one unit.
Standard deviation measures the dispersion or “spread” of individual observations around their mean. Standard deviation of returns measures a fund’s
historical volatility, where a higher number is evidence of greater volatility (i.e.,
higher risk).
Lazard US Equity Concentrated Portfolio
Top Ten Holdingsa
Lazard (%)
Sector
Advance Auto Parts
9.2
Consumer Discretionary
Pfizer
6.4
Health Care
Houghton Mifflin Harcourt
6.2
Consumer Discretionary
Zoetis
5.6
Health Care
Cisco Systems
5.6
Information Technology
Baxter International
5.1
Health Care
Orbitz Worldwide
5.1
Consumer Discretionary
Sysco
4.9
Consumer Staples
EMC
4.7
Information Technology
Xerox
4.7
Information Technology
For a complete list of holdings, please visit www.LazardNet.com.
Value Added Analysisb (October 1 to December 31, 2014)
(%)
2
1
0
-1
Consumer
Discretionary Health Care
Energy
Information
Technology
Materials
Telecom
Services
Industrials
Financials
Utilities
Consumer
Staples
Cash
Total
-0.20
-0.31
-0.24
0.03
-0.51
1.46
Sector Allocation (%)
0.75
0.22
1.20
0.08
0.20
0.23
Stock Selection (%)
1.24
1.57
-0.50
0.51
0.15
0.00
0.00
0.08
0.00
-0.47
Total (%)
1.98
1.79
0.69
0.59
0.35
0.23
-0.20
-0.22
-0.24
-0.44
2.57
-0.51
4.02
Stock Highlights by Sectora,b
Consumer Discretionary
Health Care
Consumer Staples
1.98% Attribution Effect
1.79% Attribution Effect
-0.44% Attribution Effect
Stock selection and an overweight position in the consumer discretionary sector
contributed to performance. Shares of
Advance Auto Parts (9.2% of the Portfolio)
rose after several competitors posted
strong store sales. Additionally, investors
anticipated deal synergies from the company’s acquisition of General Parts to help
2015 results.
Stock selection in the health care sector
also helped returns. Shares of medicaldevice maker CareFusion (which was
sold during the period) rose after Becton
Dickinson announced plans to acquire the
company for $12.2 billion. We sold our
position after the announcement as the
stock approached our target valuation.
In contrast, stock selection in the consumer
staples sector detracted from performance.
Following strong year-to-date performance,
shares of brewer Molson Coors (3.8% of
the Portfolio) lagged peers after the company reported quarterly earnings that were
below expectations, as weak demand in
Europe hurt results.
3
Lazard US Equity Concentrated Portfolio
US Equity Concentrated Portfolio Management Team
Christopher H. Blake
Portfolio Manager/Analyst
19 Years of
Investment Experience
Martin Flood
Andrew D. Lacey
Portfolio Manager/
Analyst
21 Years of
Investment Experience
Deputy Chairman
19 Years of
Investment Experience
As Deputy Chairman of the Investment
Manager, Mr. Lacey is ultimately responsible for overseeing this portfolio. In addition
to his oversight responsibility, Mr. Lacey is a
member of the portfolio management team.
Understanding Investment Risk
The Portfolio invests in stocks believed by Lazard to be undervalued, but that may not realize their perceived value for extended periods of time or may
never realize their perceived value. The stocks in which the Portfolio invests may respond differently to market and other developments than other
types of stocks.
Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Small- and mid-capitalization stocks
may be subject to higher degrees of risk, their earnings may be less predictable, their prices more volatile, and their liquidity less than that of large-capitalization or more established companies’ securities.
Because the Portfolio may invest in a smaller number of issuers than other, more diversified investment portfolios, the Portfolio’s net asset value 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.
Notes
1 As of May 31, 2012, the Portfolio changed its name from “Lazard US Equity Value Portfolio” to “Lazard US Equity Concentrated Portfolio,” adopted the Portfolio’s current investment strategies, and compares its performance to the S&P 500 Index. Prior to May 31, 2012, the Portfolio was a “diversified” fund, as such term is defined in the Investment Company Act of 1940, as
amended. As such, the Portfolio compares its past performance to a linked index, (“Linked Index”), composed of the Russell 1000 Value Index through May 30, 2012 and the S&P 500 Index
from May 31, 2012 to the present.
2 Such as the S&P 500 Index, Russell 1000 Index, or Russell 3000 Index.
3 As of December 31, 2014. © 2015 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied
or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar not its content providers are responsible for any damages or losses arising from any use of this
information.
Important Information
Published on January 21, 2015.
Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of December 31, 2014 and are subject to change.
Indices are unmanaged and have no fees. One cannot invest directly in an index.
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 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 1,000 of the largest securities based on a combination of their market cap and current index
membership.)
Not a deposit. May lose value. Not guaranteed by any bank. Not FDIC insured. Not insured by any government agency.
Please consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. For more complete information
about The Lazard Funds, Inc. and current performance, you may obtain a prospectus or summary prospectus by calling 800-823-6300 or
going to www.LazardNet.com. Read the prospectus or summary prospectus carefully before you invest. The prospectus and summary
prospectus contain investment objectives, risks, charges, expenses, and other information about the Portfolio and The Lazard Funds that
may not be detailed in this document. The Lazard Funds are distributed by Lazard Asset Management Securities LLC.
Lazard Asset Management LLC • 30 Rockefeller Plaza • New York, NY 10112 • www.lazardnet.com
MF23598