Lazard Developing Markets Equity PortfolioMost investors today have not kept up with the structural changes occurring in emerging markets. Worse, their out-of-date views may be causing them to overlook a significant long-term investing opportunity. Emerging markets companies are traditionally seen as conglomerates or state-owned enterprises in an “old-world industry,” but the asset class is being populated by newer, more entrepreneurial companies in a number of burgeoning fields. We believe the implications of these changes are wide-ranging and may necessitate a different approach to investing in emerging markets.

From Followers to Leaders: The New Emerging Markets

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Emerging InnovatorsInformation technology accounted for 2.3% of the MSCI Emerging Markets Index's total capitalization weight in 1995, but it represented nearly 30% of the index at its recent peak. The total, which includes the communication services sector that MSCI spun out to accommodate the explosive growth of the internet, surpassed financials as the index�s largest constituent. In contrast, traditional industries such as telecom services, utilities, and materials have fallen substantially.

From Smokestacks to Computer Chips

25

20

15

10

5

0

Financials Consumer Discretionary

InformationTechnology

Energy ConsumerStaples

Industrials RealEstate

HealthCare

MaterialsComm.Services

Utilities

December 1995

March 2019

Total Market Capa (%)

As of 31 March 2019a MSCI Emerging Markets IndexSource: Bloomberg, MSCI

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The driver of this trend has been a concerted effort by emerging nations to focus on research and development (R&D) and innovation. R&D spending in China, by some estimates, already exceeds that of the United States, and China has graduated five times as many engineers per year than has the United States. R&D in Asia (ex-Japan) may outpace that of the United States and Europe combined by 2022. Korea just surpassed Israel to be the global leader in R&D as a percentage of GDP. While these trends are most visible in North Asia, we see some pockets of innovation elsewhere in emerging markets as well, such as Russia, South Africa, and Brazil. Increasingly, the intellectual property behind this innovation is housed within the emerging world, which is reflected in the sharp rise in patents out of China and other emerging nations.

The emerging markets currently host three of the world’s top four mobile handset manufacturers, dominate semiconductor memory and fabrication, and are global leaders in fields such as solar and wind power. We are also seeing rapid investment in newer technologies, such as artificial intelligence (AI), big data, facial recognition, and language translation. In terms of funding, KOSDAQ in Korea and the Shenzhen (A-share) market in China are becoming to Asia what NASDAQ is to Silicon Valley.

A Focus on Innovation

R&D Expendituresa Number of Patents Fileda

0

250

500

750

United States

European Union

China

20202015201020052000

0

250

500

750

1000

Asia (ex-Japan)

EU + US

20202015201020052000

0

25

50

75

100

United Kingdom

Germany

China

20202015201020052000

($ billions) (thousands)($ billions)

As of 31 December 2017a 2016–2021 data are forecast numbers based on the 5-year growth rate.Source: OECD, UBS

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Emerging Markets—Things Have Changed Newer emerging markets companies could also challenge some preconceived investor notions about environmental issues in the asset class. Heavy industry, and the larger environmental footprint and labor issues that go with it, are playing a diminishing role in the emerging markets universe. Increasingly, emerging markets workers are becoming well-paid engineers operating in clean rooms.

We also believe governance will remain a crucial issue for investors, though this is changing. Fewer state-run enterprises are making irrational investment decisions at the expense of shareholders. We are encountering, however, the challenges of working with a strong-willed entrepreneur, with priorities and a time horizon that may be different from our own. For global investors with holdings in Oracle or Facebook, these issues are familiar.

Carbon Footprint—New vs. Old Industries

Tons Emitted by Sectors in the MSCI EM Index

0

50,000

100,000

150,000

HealthCare

FinancialsComm.Services

RealEstate

ConsumerStaples

ConsumerDiscretionary

InformationTechnology

IndustrialsEnergyUtilitiesMaterials

“OLD” INDUSTRIES “NEW” INDUSTRIES OTHER INDUSTRIES

As of 31 March 2019Source: Lazard, FactSet, MSCI

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New Emerging Markets, Same Old ValuationsDespite these dramatic changes to the asset class, valuations have not moved. As of March 2019, the price to earnings ratio (P/E) for emerging markets is about 12.3x forward estimates, comfortably within its historic range. Despite impressive year-to-date share price performance, the rerating has been limited by a strong rebound in earnings. Even in technology, multiples are hardly elevated.

Emerging Markets Valuations Are Well within Their Historic Range

5

10

15

20

25

30

20182014201020062002199819941990

(P/E)

-2 Standard Deviations

+2 Standard Deviations

-1 Standard Deviation

+1 Standard Deviation

Long-Term Average (13.0x)MSCI EM Index(12.3x at 31 Mar ‘19)

MSCI World Index (15.8x at 31 Mar ‘19)

As of 31 March 2019Data shown on a forward 12-month basis.Forecasted or estimated results do not represent a promise or guarantee of future results and are subject to change.Source: FactSet, IBES, Morgan Stanley Research, MSCI

Emerging Markets Information Technology— Valuations Appear to Be Fair despite YTD Outperformance

Information Technology Forward 12-month Price to Earnings Ratio

(P/E)

0

20

40

60

80

20192017201520132011200920072005

As of 31 March 2019Investment characteristics are based upon the MSCI Emerging Markets Index.Source: Bloomberg, MSCI

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Potential Ways to Benefit from These TrendsWhile traditional emerging markets investing has tended to take a top-down approach, we expect, going forward, a key to outperformance will be to focus on earnings growth. Simply stated, innovative companies could be able to grow their earnings at an above-average rate, and we believe that, over time, share prices follow earnings. The Lazard Developing Markets Equity Portfolio is designed to take advantage of these opportunities. With our focus on earnings growth and outperformance during rising markets, we aim to identify the next generation of emerging markets leaders in order to help drive performance.

Our Focus on Earnings Growth Drives Long-Term Performance

Lazard Developing Markets Equity Portfolio

(%; Net of fees; USD)

Annualized

3 Months YTD 1 Year 3 Years 5 Years 10 Years

Since Inception (1 October

2008)

Institutional (LDMIX) 1.60 16.81 2.00 10.99 2.41 5.77 5.16

Open (LDMOX) 1.46 16.55 1.63 10.55 2.02 5.40 4.81

MSCI Emerging Markets Index 0.61 10.58 1.21 10.66 2.49 5.81 5.24

As of 30 June 2019

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.lazardassetmanagement.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 ratios would have been higher.Total Expense Ratio: Institutional Shares – 1.14%, Open Shares – 1.51%Source: Lazard

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Important InformationPublished on 6 August 2019.

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 30 June 2019 and are subject to change.

Different share classes have different performance returns and investment minimums.

The securities mentioned are not necessarily held by the Portfolio, and their mention 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.

Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy. 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. Emerging markets securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging markets countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in these countries.

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 26 emerging markets country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. The index is unmanaged and has no fees. One cannot invest directly in an index.

The MSCI World Index is a free-float-adjusted market capitalization index that is designed to measure global developed market equity performance. The MSCI World Index consists of 23 developed market country indices. The MSCI Emerging Markets and MSCI World indices are unmanaged and have no fees. One cannot invest directly in an index.

Certain information included herein is derived by Lazard in part from an MSCI index or indices (the “Index Data”). However, MSCI has not reviewed this product or report, and does not endorse or express any opinion regarding this product or report or any analysis or other information contained herein or the author or source of any such information or analysis. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any Index Data or data derived therefrom. The MSCI Index Data may not be further redistributed or used as a basis for other indices or any securities or financial products.

The Portfolio invests in stocks believed by Lazard to have the potential for growth, but that may not realize such perceived potential for extended periods of time or may never realize such perceived growth potential. Such stocks may be more volatile than other stocks because they can be more sensitive to investor perceptions of the issuing company’s growth potential. The stocks in which the Portfolio invests may respond differently to market and other developments than other types of stocks.

Please consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. For more com-plete 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.lazardassetmanagement.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 doc-ument. The Lazard Funds are distributed by Lazard Asset Management Securities LLC.

HB29374-A