Lazard Global Total
Return & Income
Fund, Inc.
Third Quarter Report
S E P T E M B E R 3 0 , 2 0 0 7
Investment Overview
Dear Shareholder,
We are pleased to present the Third Quarter Report for Lazard Global Total Return & Income Fund, Inc. (“LGI” or the “Fund”), for the period ended September 30, 2007. LGI is a diversified, closed-end management investment company that began trading on the New York Stock Exchange (“NYSE”) on April 28, 2004. Its ticker symbol is “LGI.”
The Fund has been in operation for almost three and a half years, and we are pleased with LGI’s performance for the third quarter of 2007 and since its inception. We believe that the Fund has provided investors with an attractive yield and diversification, backed by the extensive experience, commitment, and professional management of Lazard Asset Management LLC (the “Investment Manager” or “Lazard”).
Portfolio Update (as of September 30, 2007)
For the third quarter of 2007, the Fund’s Net Asset Value (“NAV”) performance rose 3.6%, outperforming the Morgan Stanley Capital International (MSCI®) World® Index (the “Index”) return of 2.4%. For the year-to-date through September 30, 2007, the Fund’s NAV return of 10.8% trailed the Index return of 11.7%. However, the Fund’s since inception annualized NAV return of 16.2% has outperformed the Index return of 15.4%. Shares of LGI ended the third quarter of 2007 with a market price of $22.26, representing an 11.6% discount to the Fund’s NAV of $25.19. The Fund’s net assets were $242.0 million as of September 30, 2007, with total leveraged assets of $341.4 million, representing 29.1% leverage.
We believe that LGI’s investment thesis remains sound as demonstrated by the Fund’s favorable NAV performance since the Fund’s inception. Third quarter performance benefited from stock selection in the technology, telecom services, industrials and consumer staples sectors, while returns were hurt by stock selection in the financials and materials sectors. Returns for the smaller, short-duration1 emerging market currency and debt portion of the Fund were very strong throughout the third quarter and have been a
meaningful positive contributor to performance for the year-to-date and since inception periods.
As of September 30, 2007, 66.8% of the Fund’s total leveraged assets consisted of global equities and 32.6% consisted of emerging market currency and debt instruments, while the remaining 0.6% consisted of cash and other assets.
Declaration of Dividends
Pursuant to LGI’s level distribution policy, the Fund’s Board of Directors has declared a monthly dividend distribution of $0.1042 per share on the Fund’s outstanding stock each month since inception. The Fund continues to maintain this distribution level. Furthermore, the Fund has made additional distributions of accumulated income and net realized capital gains, twice in 2006, as well as in September 2007. The cumulative distributions for the last 12 months ended September 30, 2007 totaled $2.4145 per share, representing a market yield of 10.9% (including capital gains), based on the share price of $22.26 at the close of NYSE trading on September 30, 2007. The Fund has not returned capital to investors since its inception.
Additional Information
Please note that available on www.LazardNet.com are frequent updates on the Fund’s performance, press releases, and a monthly fact sheet that provides information about the Fund’s major holdings, sector weightings, regional exposures, and other characteristics. You may also reach Lazard by phone at 1-800-828-5548.
On behalf of Lazard, we thank you for your investment in Lazard Global Total Return & Income Fund, Inc. and look forward to continuing to serve your investment needs in the future.
Message from the Portfolio Managers
Global Equity
Portfolio
(66.8% of total leveraged assets)
The Fund’s global equity portfolio is invested primarily in equity securities of large, well-known global companies
Investment Overview (continued)
with strong financial productivity at attractive valuations. Examples include GlaxoSmithKline, a global research-based pharmaceutical company based in the United Kingdom; Bank of America, a holding company that provides banking and non-banking financial services and products in the United States and internationally; Nokia Corp., a Finland-based manufacturer of mobile telephones; and Total SA, a French energy supplier that explores for, produces, refines, transports, and markets oil and natural gas.
Companies held in the global equity portfolio are all based in developed-market regions around the world. As of September 30, 2007, 46.1% of these stocks were based in North America, 26.5% were based in Continental Europe (not including the United Kingdom), 19.6% were from the United Kingdom, and 7.8% were from Japan. The global equity portfolio is similarly well diversified across a number of industry sectors. The top two sectors, by weight, at September 30, were financials (24.4%), which includes banks, insurance companies, and financial services companies, and information technology (17.6%), a sector that encompasses industries involved in the design, development, installation, and implementation of information systems and applications, including hardware, software, IT services, and media-related companies. Other sectors in the portfolio include consumer discretionary, consumer staples, energy, health care, industrials, telecommunication services, materials, and utilities. The average dividend yield on the global equity portfolio was approximately 2.2% as of September 30, 2007.
Global Equity Markets Review
Turmoil in the global credit markets
triggered significant volatility in global equities during the quarter, with
stocks falling sharply mid-quarter before rebounding and ending with only
modest losses in local currency terms. After an extended period of easily
available credit, increasing defaults among subprime U.S. mortgages led to
a sharp rise in the yield spreads above Treasuries among a wide variety of
debt instruments, including the LIBOR rates at which banks make
loans to one another. This higher cost of short-term financing had a significant impact on banks that were reliant on this form of financing, with U.K. mortgage lender Northern Rock being bailed out by the Bank of England amid lines of customers seeking to withdraw their deposits. Stocks rallied late in the quarter, as the credit environment improved somewhat, and the U.S. Federal Reserve (the “Fed”) lowered interest rates by a greater-than-expected 50 basis points to 4.75%. Financial stocks were particularly hard hit in the decline, based on concerns that they would suffer losses in their investment portfolios and reduced fee income due to a slowdown in new security issuance. In addition, investment banks that had extended financing to fund recent mergers faced losses due to their inability to resell the loans profitably in a more risk-adverse environment. Energy and materials stocks performed well, and technology stocks outperformed amid the volatility. Conversely, financial stocks under-performed, and consumer discretionary stocks were also weak, based on concerns that consumer spending would be hurt by declining housing prices. Regionally, U.S. and European markets performed roughly in line with the broad global market, while Australasia and the Far East, outside of Japan, outperformed. The U.K. and Japan markets underperformed.
What Helped and What Hurt
LGI
During the third quarter
of 2007, the Fund’s global equity performance benefited from stock
selection in the technology sector, as investors began to appreciate
the consistent cash flow that large-cap, high-quality technology companies
have generated in recent years. Shares of Nokia rose as the company continued
to gain market share in global handsets, and holdings in IBM performed
well, after the company reported solid earnings with strong revenue growth,
particularly in software and services. IBM continues to drive profitability
by driving more of its overall revenue to higher margin segments. Shares
of Cisco also posted gains after the company reported solid earnings
driven by strong revenue growth across all geographies and products.
Holdings in Oracle also rose. Stock selection in telecom services aided
returns, driven by the broad
2
Investment Overview (continued)
strength across this sector. Shares of Singapore Telecommunications rose, as the company continued to experience strong growth in developing markets and a moderation of competitive pressures in Australia. Holdings in Vodafone also performed well, based on good subscriber growth across the company’s emerging markets businesses as well as the robust elasticity of demand driving European volumes at a time of forced price cuts. Performance also benefited from stock selection in the industrials and consumer staples sectors. Conversely, stock selection in financials detracted from performance, as Japanese financial holdings, such as Mitsubishi UFJ, Nomura, and Sumitomo Mitsui declined. Turmoil in the global credit markets may deter the Bank of Japan from raising interest rates, limiting the potential for these companies to increase their net interest income. However, we believe that the profitability of these companies has already improved dramatically, as the Japanese economy emerges from extended weakness. We would expect this improvement in profitability to persist as Japan’s economy continues to normalize. In the materials sector, a lack of exposure to mining companies hurt returns as these stocks performed well amid buoyant commodity prices. However, we believe that valuations in this group discount an extended period of very high commodity prices. In addition, shares of CRH, a cement/aggregates producer, were hurt by weakness in cement volumes due to the U.S. housing slowdown.
Emerging Market Currency
and Debt Portfolio
(32.6% of total leveraged assets)
The Fund also seeks enhanced income through investing in high-yielding, short-duration (typically, under one year) emerging market forward currency contracts and local currency debt instruments. As of September 30, 2007, this portfolio consisted primarily of forward currency contracts (71.7%) and a smaller allocation to sovereign debt obligations (23.9%) and structured notes (4.4%). The average duration of the emerging market currency and debt portfolio was approximately 8.5 months, as of September 30, with an average yield of 8.0%.2
Emerging Market Currency
and Debt Market Review
The third quarter saw the meltdown in the U.S. housing market spill over
into the financial markets. The lack of transparency surrounding the true
quality of debt assets held in funds as well as in other structured investment
vehicles, which are essentially off-balance sheet entities set up by banks,
led to widespread fears about the extent of the liabilities that would have
to be absorbed back onto the banks’ balance sheets. This resulted in
a drastic decline in inter-bank lending and a scarcity of funds, even for
overnight tenors. The Fed responded by easing rates, and market risk appetite
sharply rebounded, as belief took hold that the Fed recognized the seriousness
of the situation and would act preemptively. Surprisingly, central banks
in a number of emerging countries hiked rates in the face of the inter-bank
credit squeeze and Fed’s easing, as the theme of energy and food price
inflation continued. Official policy rates moved upward in such diverse countries
as Peru, Chile, the Czech Republic, Poland, South Africa, Colombia, Israel,
China, and Taiwan. Other emerging market central banks permitted currency
strength/appreciation as their monetary tightening instrument of choice,
by reducing their currency market intervention to buy U.S. dollars. Notable
currency appreciation occurred in such diverse markets as Kuwait, Nigeria,
Mauritius, Egypt, India, Russia, and the Philippines. Importantly, with strong
balance of payments within these countries, and rising inflationary risks
in many emerging economies, continued monetary tightening outside of the
U.S further enhances emerging market central bank credibility, as country-specific
issues dictate policy response, more than global liquidity concerns.
We retain a positioning bias in fundamentally sound countries and low correlated frontier markets that we believe will outperform under such conditions. Our exposure to sovereign credit risk remains low, as we are capturing similar levels of compensation in the currency forward market, while incurring considerably fewer (duration, convertibility, liquidity, credit, regulatory, etc.) risks.
3
Investment Overview (continued)
What Helped and What Hurt
LGI
Nearly every position in the Fund’s
emerging market currency and debt portfolio contributed to its strong positive
performance in the third quarter. Holdings in the Middle East were strong
contributors, particularly those in Turkey and Israel. In addition, the portfolio
benefited from timely positioning ahead of the Kuwaiti dinar’s 2.0%
revaluation in July. In Europe, the portfolio took profits as the Slovakia
koruna experienced near-record strength in July. Returns also benefited from
the portfolio’s lack of exposure to Romania, as the leu depreciated
by nearly 10.0% in the third quarter. Latin America was a strong contributor
to performance, due to the portfolio’s heavy Brazilian exposure.
In the Commonwealth of Independent States and Baltic region, returns were boosted by holdings in Russia, Ukraine, and Kazakhstan. In Russia, where the portfolio has sizeable exposure, current and capital account surpluses as well as EUR/$ strength within the central bank’s dual-currency basket management led to strong performance. In Africa, holdings in uncorrelated countries, such as Tanzania, Nigeria, and Egypt helped to insulate the emerging market currency and debt portfolio during the jittery global market environment in July and August. Uganda detracted from performance as the unexpected cancellation of two T-bill auctions prompted shilling depreciation due to the resultant excess money market liquidity.
Notes to Investment Overview:
| 1 |
A measure of the average cash weighted term-to-maturity of the investment holdings. Duration is a measure of the price sensitivity of a bond to interest rate movements. Duration for a forward currency contract is equal to its term-to-maturity. |
|
|
| 2 |
The quoted yield does not account for the implicit cost of borrowing on the forward currency contracts, which would reduce the yield shown. |
All returns reflect reinvestment of all dividends and distributions. Past performance is not indicative, nor a guarantee, of future results.
The performance data of the Index 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. The Index represents market value-weighted average returns of selected securities listed on the stock exchanges of Europe, Australasia and the Far East, New Zealand, Canada, and the United States. The Index is unmanaged, has no fees or costs and is not available for investment.
The views of the Fund’s management and the portfolio holdings described in this report are as of September 30, 2007; 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 investment. There is no assurance that the portfolio holdings discussed herein will remain in the Fund at the time you receive this report, or that portfolio holdings sold will not have been repurchased. The specific portfolio holdings discussed may in aggregate represent only a small percentage of the Fund’s holdings. It should not be assumed that investments identified and discussed were, or will be, profitable, or that the investment decisions we make in the future will be profitable, or equal the performance of the investments 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 the outlooks for markets, sectors and securities as discussed herein. You should read the Fund’s prospectus for a more detailed discussion of the Fund’s investment objective, strategies, risks and fees.
Please consider the Fund’s investment objective, risks, charges and expenses carefully before investing. For more complete information about the Fund, you may obtain the prospectus by calling 800-828-5548, or online, at www.LazardNet.com. Read the prospectus carefully before you invest. The prospectus contains investment objective, risks, charges, expenses and other information about the Fund, which may not be detailed in this report.
4
Investment Overview (continued)
Comparison of Changes in Value of $10,000 Investment in
LGI and MSCI World Index* (unaudited)
 |
LGI at Market Price | $14,407 |
 |
LGI at Net Asset Value | 16,730 |
 |
MSCI World Index | 16,326 |
Average Annual Total Returns*
Periods Ended September 30, 2007
(unaudited)
| One | Since |
|||||
| Year | Inception** | |||||
| Market Price | 17.27 | % | 11.24 | % | ||
| Net Asset Value | 20.24 | 16.20 | ||||
| MSCI World Index | 21.09 | 15.38 | ||||
|
|
| * | All returns reflect reinvestment of all dividends and distributions. The performance quoted represents past performance. Current performance may be lower or higher than the performance quoted. Past performance is not indicative, nor a guarantee, of future results; the investment return, market price and net asset value of the Fund will fluctuate, so that an investor’s shares in the Fund, when sold, may be worth more or less than their original cost. The returns do not reflect the deduction of taxes that a stockholder would pay on the Fund’s distributions or on the sale of Fund shares. |
The performance data of the Index has been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to its accuracy. The Index represents market value-weighted average returns of selected securities listed on the stock exchanges of Europe, Australasia and the Far East, New Zealand, Canada, and the United States. The Index is unmanaged, has no fees or costs and is not available for investment. |
|
| ** | The Fund’s inception date was April 28, 2004. |
5
Investment Overview (concluded)
Ten Largest Equity Holdings
September 30, 2007 (unaudited)
| Percentage of | ||||
| Security | Value | Net Assets | ||
| Exxon Mobil Corp. | $9,728,056 | 4.02 | % | |
| Microsoft Corp. | 9,615,744 | 3.97 | ||
| International Business Machines Corp. | 9,506,460 | 3.93 | ||
| Diageo PLC Sponsored ADR | 8,869,503 | 3.67 | ||
| Oracle Corp. | 8,653,505 | 3.58 | ||
| Heineken NV ADR | 7,354,560 | 3.04 | ||
| Nokia Oyj Sponsored ADR | 7,312,904 | 3.02 | ||
| Cisco Systems, Inc. | 7,297,444 | 3.02 | ||
| HSBC Holdings PLC Sponsored ADR | 7,065,380 | 2.92 | ||
| Vodafone Group PLC Sponsored ADR | 6,959,145 | 2.88 | ||
6
Portfolio of Investments
September 30, 2007 (unaudited)
| Description | Shares | Value |
|||
| Common Stocks—94.2% | |||||
| Finland—3.0% | |||||
| Nokia Oyj Sponsored ADR (c) | 192,800 | $ | 7,312,904 | ||
| France—6.9% | |||||
| Sanofi-Aventis ADR | 105,200 | 4,462,584 | |||
| Societe Generale Sponsored ADR | 72,000 | 2,412,000 | |||
| Suez SA Sponsored ADR (d) | 79,600 | 4,656,600 | |||
| Total SA Sponsored ADR | 64,000 | 5,185,920 | |||
| Total France | 16,717,104 | ||||
| Ireland—1.6% | |||||
| CRH PLC Sponsored ADR (d) | 98,300 | 3,940,847 | |||
| Italy—1.1% | |||||
| Eni SpA Sponsored ADR | 36,350 | 2,681,176 | |||
| Japan—7.3% | |||||
| Canon, Inc. Sponsored ADR | 44,700 | 2,426,763 | |||
| Hoya Corp. Sponsored ADR (d) | 73,500 | 2,506,350 | |||
| Mitsubishi UFJ Financial Group, | |||||
| Inc. ADR | 528,000 | 4,794,240 | |||
| Nomura Holdings, Inc. ADR (d) | 332,600 | 5,537,790 | |||
| Sumitomo Mitsui Financial Group, | |||||
| Inc. ADR | 321,200 | 2,473,240 | |||
| Total Japan | 17,738,383 | ||||
| Netherlands—3.1% | |||||
| Heineken NV ADR | 225,600 | 7,354,560 | |||
| Singapore—2.4% | |||||
| Singapore Telecommunications, Ltd. | |||||
| ADR (d) | 217,400 | 5,804,580 | |||
| Sweden—1.0% | |||||
| Telefonaktiebolaget LM Ericsson | |||||
| Sponsored ADR | 61,900 | 2,463,620 | |||
| Switzerland—9.9% | |||||
| Credit Suisse Group Sponsored | |||||
| ADR | 73,400 | 4,868,622 | |||
| Nestle SA Sponsored ADR | 34,400 | 3,849,360 | |||
| Novartis AG ADR | 78,900 | 4,336,344 | |||
| Description | Shares | Value |
|||
| Roche Holding AG Sponsored ADR | 46,200 | $ | 4,158,000 | ||
| UBS AG (c) | 75,900 | 4,041,675 | |||
| Zurich Financial Services AG ADR | 92,500 | 2,761,125 | |||
| Total Switzerland | 24,015,126 | ||||
| United Kingdom—18.5% | |||||
| Barclays PLC Sponsored ADR | 67,800 | 3,296,436 | |||
| BP PLC Sponsored ADR (d) | 69,600 | 4,826,760 | |||
| Cadbury Schweppes PLC Sponsored | |||||
| ADR (d) | 112,700 | 5,242,804 | |||
| Diageo PLC Sponsored ADR (c) | 101,100 | 8,869,503 | |||
| GlaxoSmithKline PLC Sponsored | |||||
| ADR (d) | 80,200 | 4,266,640 | |||
| HSBC Holdings PLC Sponsored | |||||
| ADR (d) | 76,300 | 7,065,380 | |||
| Tesco PLC Sponsored ADR (d) | 153,200 | 4,121,080 | |||
| Vodafone Group PLC Sponsored | |||||
| ADR | 191,712 | 6,959,145 | |||
| Total United Kingdom | 44,647,748 | ||||
| United States—39.4% | |||||
| Bank of America Corp. (c) | 138,200 | 6,947,314 | |||
| Bank of New York Mellon Corp. | 103,600 | 4,572,904 | |||
| Bristol-Myers Squibb Co. | 92,600 | 2,668,732 | |||
| Cisco Systems, Inc. (a), (c) | 220,400 | 7,297,444 | |||
| ConocoPhillips | 32,900 | 2,887,633 | |||
| Exxon Mobil Corp. (c) | 105,100 | 9,728,056 | |||
| General Electric Co. (c) | 116,300 | 4,814,820 | |||
| International Business Machines | |||||
| Corp. | 80,700 | 9,506,460 | |||
| Johnson & Johnson | 104,300 | 6,852,510 | |||
| JPMorgan Chase & Co. (c) | 148,896 | 6,822,415 | |||
| Microsoft Corp. (c) | 326,400 | 9,615,744 | |||
| Oracle Corp. (a), (c) | 399,700 | 8,653,505 | |||
| The Home Depot, Inc. (c) | 165,500 | 5,368,820 | |||
| United Technologies Corp. (c) | 68,900 | 5,545,072 | |||
| Wyeth | 88,900 | 3,960,495 | |||
| Total United States | 95,241,924 | ||||
| Total Common Stocks | |||||
| (Identified cost $175,918,523) | 227,917,972 | ||||
See Notes to Portfolio of Investments.
7
Portfolio of Investments (continued)
September 30, 2007 (unaudited)
| Principal | |||||
| Amount | |||||
| Description | (000) (e) | Value | |||
| Foreign Government | |||||
| Obligations—11.0% | |||||
Costa
Rica—0.7% |
|||||
| Costa Rican Bono de Estabilizacion | |||||
| Monetaria, | |||||
0.00%,
10/10/07 |
464,500 | $ | 894,040 | ||
| Costa Rican Titulos de Propiedad, | |||||
0.00%,
10/10/07 |
460,000 | 885,378 | |||
Total
Costa Rica |
1,779,418 | ||||
| Egypt—2.4% | |||||
Egypt
Treasury Bills: |
|||||
0.00%,
10/23/07 |
22,900 | 4,077,860 | |||
0.00%,
10/30/07 |
2,650 | 471,228 | |||
0.00%,
12/18/07 |
7,225 | 1,272,259 | |||
| Total Egypt | 5,821,347 | ||||
| Ghana—0.2% | |||||
| Ghanaian Government Bond, | |||||
| 13.50%, 03/30/10 | 420 | 442,339 | |||
Hungary—2.0% |
|||||
| Hungarian Government Bonds: | |||||
9.50%,
02/12/09 |
401,090 | 2,338,314 | |||
6.50%,
08/12/09 |
205,770 | 1,151,050 | |||
6.25%,
08/24/10 |
236,010 | 1,307,885 | |||
Total
Hungary |
4,797,249 | ||||
| Israel—0.9% | |||||
| Israeli Government Bonds: | |||||
6.00%,
01/31/10 |
4,020 | 1,025,085 | |||
5.50%,
02/28/17 |
4,790 | 1,168,228 | |||
| Total Israel | 2,193,313 | ||||
Mexico—0.5% |
|||||
| Mexican Bonos, | |||||
9.00%,
12/20/12 |
13,145 | 1,264,533 | |||
Principal |
|||||
Amount |
|||||
| Description | (000)
(e) |
Value |
|||
| Turkey—4.3% | |||||
| Turkish Government Bonds: | |||||
| 0.00%, 08/13/08 | 1,700 | $ | 1,220,301 | ||
| 0.00%, 11/26/08 | 2,516 | 1,729,054 | |||
| 0.00%, 02/04/09 | 3,581 | 2,389,607 | |||
| 14.00%, 01/19/11 | 6,170 | 4,943,036 | |||
| Total Turkey | 10,281,998 | ||||
| Total Foreign Government | |||||
| Obligations | |||||
| (Identified cost $24,959,370) | 26,580,197 | ||||
| Structured Notes—2.0% | |||||
| Brazil—1.8% | |||||
| Citibank Brazil Inflation-Linked | |||||
| Bond NTN-B: | |||||
| 6.90%, 05/18/09 (f) | 927 | 1,240,881 | |||
| 7.00%, 08/17/10 (f) | 1,029 | 1,364,837 | |||
| 6.80%, 05/18/15 (f) | 365 | 417,676 | |||
| 6.80%, 05/18/15 (f) | 989 | 1,333,011 | |||
| Total Brazil | 4,356,405 | ||||
| Colombia—0.2% | |||||
| Citibank Colombia TES Credit | |||||
| Linked Unsecured Note, | |||||
| 10.55%, 04/27/12 (f) | 397 | 487,676 | |||
| Total Structured Notes | |||||
| (Identified cost $3,686,989) | 4,844,081 | ||||
| Description | Shares | Value |
|||
| Short-Term | |||||
| Investments—14.0% | |||||
| Collateral for Securities | |||||
| on Loan—13.9% | |||||
| State Street Navigator Securities | |||||
| Lending Prime Portfolio, | |||||
| 5.30% (g), (h) | 33,655,499 | 33,655,499 | |||
See Notes to Portfolio of Investments.
8
Portfolio of Investments (continued)
September 30, 2007 (unaudited)
| Principal | |||||
| Amount | |||||
| Description | (000) |
Value |
|||
Repurchase
Agreement—0.1% |
|||||
| State Street Bank and Trust Co., | |||||
| 3.45%, 10/01/07 | |||||
| (Dated 09/28/07, collateralized by | |||||
| $140,000 United States Treasury | |||||
| Bond, 7.25%, 08/15/22, with a | |||||
| value of $176,575) | |||||
| Proceeds of $168,048 (c) | $168 | $ | 168,000 |
| Description | Value |
|||
| Total Short-Term Investments | ||||
| (Identified cost $33,823,499) | $ |
33,823,499 | ||
| Total Investments—121.2% | ||||
| (Identified cost $238,388,381) (b) | $ |
293,165,749 | ||
| Liabilities in Excess of Cash and | ||||
| Other Assets—(21.2)% | (51,186,440 | ) | ||
| Net Assets—100.0% | $ |
241,979,309 | ||
See Notes to Portfolio of Investments.
9
Portfolio of Investments (continued)
September 30, 2007 (unaudited)
Forward Currency Purchase Contracts open at September 30, 2007:
|
U.S. $ Cost |
U.S. $ |
|||||||||||||||
| Forward Currency | Expiration | Foreign |
on Origination |
Current |
Unrealized |
Unrealized |
||||||||||
| Purchase Contracts | Date | Currency | Date |
Value |
Appreciation |
Depreciation |
||||||||||
| AED | 10/25/07 | 3,982,000 | $ | 1,085,015 | $ | 1,085,251 | $ |
236 | $ |
— | ||||||
| AED | 01/23/08 | 4,667,936 | 1,274,001 | 1,274,543 | 542 | — | ||||||||||
| ARS | 10/04/07 | 576,275 | 185,001 | 182,916 | — | 2,085 | ||||||||||
| ARS | 10/24/07 | 1,759,210 | 568,001 | 556,853 | — | 11,148 | ||||||||||
| ARS | 10/29/07 | 1,803,219 | 583,001 | 570,390 | — | 12,611 | ||||||||||
| ARS | 10/30/07 | 2,519,737 | 814,001 | 796,928 | — | 17,073 | ||||||||||
| ARS | 10/31/07 | 2,519,737 | 814,001 | 796,818 | — | 17,183 | ||||||||||
| ARS | 01/16/08 | 4,115,318 | 1,305,001 | 1,283,324 | — | 21,677 | ||||||||||
| ARS | 01/28/08 | 1,738,490 | 559,001 | 540,840 | — | 18,161 | ||||||||||
| BRL | 10/05/07 | 993,450 | 444,001 | 539,625 | 95,624 | — | ||||||||||
| BRL | 10/30/07 | 1,305,901 | 586,000 | 707,422 | 121,422 | — | ||||||||||
| BRL | 12/19/07 | 3,576,290 | 1,853,000 | 1,926,760 | 73,760 | — | ||||||||||
| COP | 12/21/07 | 1,772,904,000 | 854,000 | 869,283 | 15,283 | — | ||||||||||
| COP | 01/23/08 | 3,935,772,000 | 2,006,000 | 1,922,284 | — | 83,716 | ||||||||||
| COP | 01/31/08 | 2,246,442,000 | 1,111,000 | 1,096,187 | — | 14,813 | ||||||||||
| EGP | 10/12/07 | 6,372,338 | 1,125,000 | 1,139,027 | 14,027 | — | ||||||||||
| EUR | 10/04/07 | 1,320,222 | 1,799,794 | 1,877,744 | 77,950 | — | ||||||||||
| GHC | 10/11/07 | 205,000 | 217,184 | 215,786 | — | 1,398 | ||||||||||
| GHC | 10/22/07 | 780,918 | 829,000 | 820,896 | — | 8,104 | ||||||||||
| GHC | 12/18/07 | 252,168 | 266,000 | 263,237 | — | 2,763 | ||||||||||
| GHC | 01/14/08 | 332,362 | 351,000 | 345,634 | — | 5,366 | ||||||||||
| GHC | 03/13/08 | 449,000 | 466,935 | 462,828 | — | 4,107 | ||||||||||
| GHC | 03/20/08 | 472,000 | 489,830 | 486,030 | — | 3,800 | ||||||||||
| GHC | 03/27/08 | 450,000 | 464,828 | 462,851 | — | 1,977 | ||||||||||
| GHC | 03/28/08 | 450,000 | 464,828 | 462,738 | — | 2,090 | ||||||||||
| GHC | 07/21/08 | 702,563 | 718,000 | 702,827 | — | 15,173 | ||||||||||
| HUF | 10/17/07 | 512,496,900 | 2,799,000 | 2,897,673 | 98,673 | — | ||||||||||
| HUF | 02/29/08 | 207,754,546 | 1,151,537 | 1,165,664 | 14,127 | — | ||||||||||
| IDR | 10/10/07 | 4,733,860,000 | 502,000 | 517,143 | 15,143 | — | ||||||||||
| IDR | 10/17/07 | 27,452,233,000 | 2,909,000 | 2,996,942 | 87,942 | — | ||||||||||
| IDR | 10/22/07 | 7,302,160,000 | 776,000 | 796,786 | 20,786 | — | ||||||||||
| IDR | 10/22/07 | 6,141,420,000 | 669,000 | 670,130 | 1,130 | — | ||||||||||
| IDR | 12/13/07 | 5,441,655,000 | 597,000 | 591,588 | — | 5,412 | ||||||||||
| IDR | 12/21/07 | 5,088,340,000 | 566,000 | 552,867 | — | 13,133 | ||||||||||
| IDR | 01/17/08 | 8,344,260,000 | 921,000 | 905,045 | — | 15,955 | ||||||||||
| ILS | 03/11/08 | 4,837,117 | 1,177,000 | 1,207,603 | 30,603 | — | ||||||||||
| ILS | 06/11/08 | 4,726,500 | 1,150,000 | 1,179,116 | 29,116 | — | ||||||||||
| ILS | 07/07/08 | 5,290,992 | 1,267,000 | 1,319,361 | 52,361 | — | ||||||||||
| INR | 11/23/07 | 49,663,080 | 1,206,000 | 1,244,985 | 38,985 | — | ||||||||||
| INR | 12/07/07 | 27,859,570 | 683,000 | 698,150 | 15,150 | — | ||||||||||
| INR | 12/12/07 | 46,883,700 | 1,130,000 | 1,174,733 | 44,733 | — | ||||||||||
| KWD | 10/31/07 | 695,984 | 2,409,000 | 2,491,263 | 82,263 | — | ||||||||||
| KZT | 10/01/07 | 72,325,440 | 568,529 | 597,864 | 29,335 | — | ||||||||||
See Notes to Portfolio of Investments.
10
Portfolio of Investments (continued)
September 30, 2007 (unaudited)
Forward Currency Purchase Contracts open at September 30, 2007 (continued):
U.S. $ Cost |
U.S. $ |
|||||||||||||||
| Forward Currency | Expiration | Foreign | on
Origination |
Current |
Unrealized |
Unrealized |
||||||||||
| Purchase Contracts | Date | Currency | Date |
Value |
Appreciation |
Depreciation |
||||||||||
| KZT | 10/05/07 | 84,923,000 | $ |
674,474 | $ | 701,464 | $ | 26,990 | $ |
— | ||||||
| KZT | 10/10/07 | 126,988,020 | 1,026,000 | 1,047,923 | 21,923 | — | ||||||||||
| KZT | 10/10/07 | 93,453,000 | 759,225 | 771,187 | 11,962 | — | ||||||||||
| KZT | 10/11/07 | 68,641,200 | 558,831 | 566,329 | 7,498 | — | ||||||||||
| KZT | 10/30/07 | 27,387,000 | 224,852 | 225,144 | 292 | — | ||||||||||
| KZT | 12/24/07 | 62,765,550 | 513,000 | 512,277 | — | 723 | ||||||||||
| MUR | 11/30/07 | 20,422,857 | 637,000 | 668,594 | 31,594 | — | ||||||||||
| MUR | 01/03/08 | 10,966,640 | 342,000 | 356,920 | 14,920 | — | ||||||||||
| MXN | 02/29/08 | 4,469,248 | 406,000 | 404,371 | — | 1,629 | ||||||||||
| MXN | 03/31/08 | 4,261,246 | 376,000 | 384,617 | 8,617 | — | ||||||||||
| MYR | 10/09/07 | 1,367,095 | 395,000 | 401,351 | 6,351 | — | ||||||||||
| MYR | 11/05/07 | 3,057,776 | 892,000 | 898,714 | 6,714 | — | ||||||||||
| MYR | 11/13/07 | 3,345,688 | 995,000 | 983,685 | — | 11,315 | ||||||||||
| MYR | 11/14/07 | 3,065,099 | 914,000 | 901,228 | — | 12,772 | ||||||||||
| MYR | 11/19/07 | 3,050,022 | 881,000 | 896,995 | 15,995 | — | ||||||||||
| MYR | 12/28/07 | 2,083,015 | 605,000 | 613,581 | 8,581 | — | ||||||||||
| MYR | 01/11/08 | 2,170,683 | 639,000 | 639,735 | 735 | — | ||||||||||
| MYR | 03/28/08 | 2,071,520 | 605,000 | 612,220 | 7,220 | — | ||||||||||
| NGN | 10/05/07 | 170,564,000 | 1,313,739 | 1,361,078 | 47,339 | — | ||||||||||
| NGN | 12/05/07 | 59,552,000 | 461,005 | 467,349 | 6,344 | — | ||||||||||
| NGN | 12/13/07 | 155,028,519 | 1,217,000 | 1,216,625 | — | 375 | ||||||||||
| NGN | 01/10/08 | 131,114,000 | 1,027,417 | 1,019,341 | — | 8,076 | ||||||||||
| NGN | 01/14/08 | 162,902,000 | 1,276,356 | 1,266,476 | — | 9,880 | ||||||||||
| NGN | 03/07/08 | 161,723,776 | 1,280,000 | 1,257,316 | — | 22,684 | ||||||||||
| PHP | 10/11/07 | 42,728,400 | 913,000 | 948,033 | 35,033 | — | ||||||||||
| PHP | 01/22/08 | 40,887,240 | 908,000 | 904,054 | — | 3,946 | ||||||||||
| PHP | 01/25/08 | 78,682,690 | 1,763,000 | 1,739,558 | — | 23,442 | ||||||||||
| PHP | 01/30/08 | 47,721,270 | 1,039,000 | 1,054,856 | 15,856 | — | ||||||||||
| PHP | 02/11/08 | 46,092,200 | 1,022,000 | 1,018,404 | — | 3,596 | ||||||||||
| PHP | 02/13/08 | 11,048,568 | 240,000 | 244,100 | 4,100 | — | ||||||||||
| PLN | 10/31/07 | 2,638,564 | 941,000 | 995,903 | 54,903 | — | ||||||||||
| PLN | 11/13/07 | 3,393,761 | 1,229,000 | 1,281,117 | 52,117 | — | ||||||||||
| PLN | 02/22/08 | 3,607,628 | 1,287,000 | 1,361,848 | 74,848 | — | ||||||||||
| RUB | 11/07/07 | 46,639,980 | 1,739,000 | 1,868,127 | 129,127 | — | ||||||||||
| RUB | 12/10/07 | 34,228,320 | 1,336,000 | 1,367,778 | 31,778 | — | ||||||||||
| RUB | 02/01/08 | 11,541,000 | 434,768 | 460,666 | 25,898 | — | ||||||||||
| RUB | 02/26/08 | 93,798,230 | 3,637,000 | 3,744,297 | 107,297 | — | ||||||||||
| RUB | 05/23/08 | 58,377,000 | 2,277,238 | 2,327,781 | 50,543 | — | ||||||||||
| RUB | 09/19/08 | 21,264,250 | 725,000 | 844,753 | 119,753 | — | ||||||||||
| SGD | 10/10/07 | 1,319,394 | 866,000 | 889,458 | 23,458 | — | ||||||||||
| SGD | 10/23/07 | 683,228 | 455,000 | 461,029 | 6,029 | — | ||||||||||
| SGD | 10/24/07 | 1,511,147 | 993,000 | 1,019,766 | 26,766 | — | ||||||||||
| SKK | 10/09/07 | 24,050,114 | 979,000 | 1,009,978 | 30,978 | — | ||||||||||
See Notes to Portfolio of Investments.
11
Portfolio of Investments (continued)
September 30, 2007 (unaudited)
Forward Currency Purchase Contracts open at September 30, 2007 (concluded):
U.S. $ Cost |
U.S. $ |
|||||||||||||||
| Forward Currency | Expiration | Foreign | on
Origination |
Current |
Unrealized |
Unrealized |
||||||||||
| Purchase Contracts | Date | Currency | Date |
Value |
Appreciation |
Depreciation |
||||||||||
| SKK | 10/04/07 | 44,453,208 | $ | 1,802,016 | $ | 1,866,509 | $ | 64,493 | $ |
— | ||||||
| SKK | 10/15/07 | 23,589,474 | 971,000 | 990,818 | 19,818 | — | ||||||||||
| SKK | 10/29/07 | 28,405,529 | 1,151,000 | 1,193,626 | 42,626 | — | ||||||||||
| SKK | 10/29/07 | 9,785,610 | 405,000 | 411,200 | 6,200 | — | ||||||||||
| TZS | 10/16/07 | 503,740,750 | 383,000 | 406,800 | 23,800 | — | ||||||||||
| TZS | 11/02/07 | 440,525,000 | 335,000 | 354,547 | 19,547 | — | ||||||||||
| TZS | 11/07/07 | 460,863,000 | 351,000 | 370,618 | 19,618 | — | ||||||||||
| TZS | 01/18/08 | 320,348,000 | 238,000 | 254,876 | 16,876 | — | ||||||||||
| TZS | 01/22/08 | 324,000,000 | 240,000 | 257,581 | 17,581 | — | ||||||||||
| TZS | 02/05/08 | 385,792,000 | 274,000 | 305,874 | 31,874 | — | ||||||||||
| TZS | 02/06/08 | 516,304,000 | 368,000 | 409,271 | 41,271 | — | ||||||||||
| TZS | 04/16/08 | 722,085,000 | 529,000 | 564,166 | 35,166 | — | ||||||||||
| TZS | 04/21/08 | 554,182,000 | 401,000 | 432,467 | 31,467 | — | ||||||||||
| TZS | 04/30/08 | 745,327,886 | 547,230 | 580,386 | 33,156 | — | ||||||||||
| TZS | 06/11/08 | 440,778,720 | 323,000 | 339,838 | 16,838 | — | ||||||||||
| UAH | 10/16/07 | 2,935,288 | 583,000 | 584,106 | 1,106 | — | ||||||||||
| UAH | 10/22/07 | 2,847,600 | 565,000 | 566,602 | 1,602 | — | ||||||||||
| UAH | 10/24/07 | 2,746,255 | 545,000 | 546,420 | 1,420 | — | ||||||||||
| UAH | 10/25/07 | 2,646,724 | 524,000 | 526,608 | 2,608 | — | ||||||||||
| UGX | 10/10/07 | 450,225,000 | 261,000 | 256,919 | — | 4,081 | ||||||||||
| UGX | 11/16/07 | 801,453,000 | 463,000 | 454,932 | — | 8,068 | ||||||||||
| UGX | 12/07/07 | 627,104,500 | 353,000 | 354,831 | 1,831 | — | ||||||||||
| UGX | 12/17/07 | 613,651,500 | 363,000 | 346,761 | — | 16,239 | ||||||||||
| UGX | 12/20/07 | 364,230,000 | 213,000 | 205,737 | — | 7,263 | ||||||||||
| UGX | 01/11/08 | 745,554,000 | 411,000 | 419,715 | 8,715 | — | ||||||||||
| UGX | 02/29/08 | 403,326,000 | 231,000 | 225,260 | — | 5,740 | ||||||||||
| UGX | 03/04/08 | 830,656,050 | 461,732 | 463,628 | 1,896 | — | ||||||||||
| UGX | 05/30/08 | 410,025,000 | 231,000 | 226,138 | — | 4,862 | ||||||||||
|
Total Forward Currency Purchase Contracts |
$ | 96,040,372 | $ | 98,028,195 | $ | 2,410,259 | $ |
422,436 | ||||||||
See Notes to Portfolio of Investments.
12
Portfolio of Investments (concluded)
September 30, 2007 (unaudited)
Forward Currency Sale Contracts open at September 30, 2007:
U.S. $ Cost |
U.S. $ |
|||||||||||||||
| Forward Currency | Expiration | Foreign | on
Origination |
Current |
Unrealized |
Unrealized |
||||||||||
| Sale Contracts | Date | Currency | Date |
Value |
Appreciation |
Depreciation |
||||||||||
| BRL | 10/30/07 | 518,466 | $ | 276,000 | $ | 280,859 | $ |
— | $ | 4,859 | ||||||
| EUR | 10/04/07 | 1,317,913 | 1,802,016 | 1,874,460 | — | 72,444 | ||||||||||
| HUF | 02/29/08 | 207,754,546 | 1,090,747 | 1,165,664 | — | 74,917 | ||||||||||
| IDR | 10/22/07 | 10,009,925,000 | 1,091,000 | 1,092,248 | — | 1,248 | ||||||||||
| ILS | 10/22/07 | 4,514,000 | 1,110,674 | 1,124,230 | — | 13,556 | ||||||||||
| INR | 10/09/07 | 29,545,700 | 718,000 | 741,361 | — | 23,361 | ||||||||||
| KZT | 10/01/07 | 72,325,440 | 597,929 | 597,864 | 65 | — | ||||||||||
| MXN | 02/29/08 | 4,469,248 | 409,126 | 404,371 | 4,755 | — | ||||||||||
| MXN | 03/31/08 | 4,261,246 | 389,322 | 384,617 | 4,705 | — | ||||||||||
| RUB | 11/07/07 | 17,626,894 | 689,000 | 706,031 | — | 17,031 | ||||||||||
| RUB | 11/07/07 | 29,115,000 | 1,161,209 | 1,166,178 | — | 4,969 | ||||||||||
| RUB | 05/23/08 | 40,012,433 | 1,577,000 | 1,595,494 | — | 18,494 | ||||||||||
| SKK | 10/04/07 | 44,453,208 | 1,799,794 | 1,866,509 | — | 66,715 | ||||||||||
| TRY | 10/19/07 | 2,783,355 | 2,188,000 | 2,283,325 | — | 95,325 | ||||||||||
| TZS | 10/16/07 | 394,807,650 | 317,000 | 318,830 | — | 1,830 | ||||||||||
| TZS | 10/16/07 | 409,016,000 | 328,000 | 330,304 | — | 2,304 | ||||||||||
| TZS | 11/02/07 | 440,525,000 | 352,491 | 354,547 | — | 2,056 | ||||||||||
| TZS | 11/02/07 | 256,264,000 | 206,000 | 206,249 | — | 249 | ||||||||||
| TZS | 11/07/07 | 460,863,000 | 369,119 | 370,618 | — | 1,499 | ||||||||||
| TZS | 06/11/08 | 440,778,720 | 333,936 | 339,838 | — | 5,902 | ||||||||||
| Total Forward Currency Sale Contracts | $ | 16,806,363 | $ | 17,203,597 | 9,525 | 406,759 | ||||||||||
|
Gross unrealized appreciation/depreciation on Forward Currency Contracts |
$ |
2,419,784 | $ | 829,195 | ||||||||||||
See Notes to Portfolio of Investments.
13
Notes to Portfolio of Investments
September 30, 2007 (unaudited)
| (a) |
Non-income producing security. |
| (b) |
For federal income tax purposes, the aggregate cost was $238,388,381, aggregate gross unrealized appreciation was $59,172,547, aggregate gross unrealized depreciation was $4,395,179, and the net unrealized appreciation was $54,777,368. |
| (c) |
Segregated security for forward currency contracts. |
| (d) |
Security or portion thereof is out on loan. |
| (e) |
Principal amount denominated in respective country's currency unless otherwise specified. |
| (f) |
Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.” At September 30, 2007, these securities amounted to 2.0% of net assets and are not considered to be liquid. Principal amount denominated in U.S. dollars. Interest rate shown reflects current yield as of September 30, 2007. |
| (g) |
Rate shown reflects 7 day yield as of September 30, 2007. |
| (h) |
Represents security purchased with cash collateral received for securities on loan. |
Security Abbreviations:
ADR—American Depositary Receipt
NTN-B—Brazil Sovereign “Nota do Tesouro Nacional”
TES—Titulos de Tesoreria
| Currency Abbreviations: | ||||
| AED | — United Arab Emirates Dirham | MUR | — Mauritian Rupee | |
| ARS | — Argentine Peso | MXN | — Mexican Peso | |
| BRL | — Brazilian Real | MYR | — Malaysian Ringgit | |
| COP | — Colombian Peso | NGN | — Nigerian Naira | |
| EGP | — Egyptian Pound | PHP | — Philippine Peso | |
| EUR | — Euro | PLN | — Polish Zloty | |
| GHC | — Ghanaian Cedi | RUB | — Russian Ruble | |
| HUF | — Hungarian Forint | SGD | — Singapore Dollar | |
| IDR | — Indonesian Rupiah | SKK | — Slovenska Koruna | |
| ILS | — Israeli Shekel | TRY | — New Turkish Lira | |
| INR | — Indian Rupee | TZS | — Tanzanian Shilling | |
| KWD | — Kuwaiti Dinar | UAH | — Ukranian Hryvnia | |
| KZT | — Kazak Tenge | UGX | — Ugandan Shilling | |
14
Notes to Portfolio of Investments (concluded)
September 30, 2007 (unaudited)
Portfolio holdings by industry (as percentage of net assets):
| Industry | |||
| Alcohol & Tobacco | 6.7 | % | |
| Banking | 15.1 | ||
| Building & Construction | 1.6 | ||
| Computer Software | 7.5 | ||
| Drugs | 9.9 | ||
| Electric | 1.9 | ||
| Energy Integrated | 10.5 | ||
| Financial Services | 6.8 | ||
| Food & Beverages | 3.8 | ||
| Insurance | 1.1 | ||
| Manufacturing | 4.3 | ||
| Medical Products | 2.8 | ||
| Retail | 3.9 | ||
| Semiconductors & Components | 2.0 | ||
| Technology | 3.9 | ||
| Technology Hardware | 7.1 | ||
| Telecommunications | 5.3 | ||
|
Subtotal |
94.2 | ||
| Foreign Government Obligations | 11.0 | ||
| Structured Notes | 2.0 | ||
| Collateral for Securities on Loan | 13.9 | ||
| Repurchase Agreement | 0.1 | ||
|
Total Investments |
121.2 | % |
15
Dividend Reinvestment Plan
(unaudited)
Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain distributions, on your Common Stock will be automatically reinvested by Computershare, Inc., as dividend disbursing agent (the “Plan Agent”), in additional Common Stock under the Fund’s Dividend Reinvestment Plan (the “Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all distributions in cash, paid by check mailed directly to you by the Plan Agent.
Under the Plan, the number of shares of Common Stock you will receive will be determined on the dividend or distribution payment date, as follows:
| (1) | If the Common Stock is trading at or above net asset value at the time of valuation, the Fund will issue new shares at a price equal to the greater of (i) net asset value per Common Share on that date or (ii) 95% of the Common Stock’s market price on that date. |
| (2) | If the Common Stock is trading below net asset value at the time of valuation, the Plan Agent will receive the dividend or distribution in cash and will purchase Common Stock in the open market, on the NYSE or elsewhere, for the participants’ accounts. It is possible that the market price for the Common Stock may increase before the Plan Agent has completed its purchases. Therefore, the average purchase price per share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of fewer shares than if the dividend or distribution had been paid in Common Stock issued by the Fund. The Plan Agent will use all dividends and distributions received in cash to purchase Common Stock in the open market within 30 days of the valuation date. Interest will not be paid on any uninvested cash payments. |
You may withdraw from the Plan at any time by giving written notice to the Plan Agent. If you withdraw or the Plan is terminated, you will receive whole shares in
your account under the Plan and you will receive a cash payment for any fraction of a share in your account. If you wish, the Plan Agent will sell your shares and send you the proceeds, minus an initial $15 service fee plus $0.12 per share being liquidated (for processing and brokerage expenses).
The Plan Agent maintains all stockholders’ accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Shares of Common Stock in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all Common Stock you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions in newly-issued shares of Common Stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions.
If you hold your Common Stock with a brokerage firm that does not participate in the Plan, you will not be able to participate in the Plan and any dividend reinvestment may be effected on different terms than those described above. Consult your financial advisor for more information.
The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. There is no direct service charge to participants in the Plan (other than the service charge when you direct the Plan Agent to sell your Common Stock held in a dividend reinvestment account); however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan may be obtained from the Plan Agent at P.O. Box 43010, Providence, Rhode Island 02940-3010.
16
Board of Directors and Officers Information
(unaudited)
| Position(s) | Principal Occupation(s) During Past 5 Years | |
| Name (Age) | with the Fund(1) | and Other Directorships Held |
| Board of Directors: | ||
| Class I — Directors with Term Expiring in 2009 | ||
| Independent Directors: | ||
| Leon M. Pollack (66) | Director | Former Managing Director, Donaldson, Lufkin & Jenrette; |
| Chairman of the Board of Trustees, Adelphi University; Director, | ||
| J.B. Hanauer & Co. (broker-dealer). | ||
| Robert M. Solmson (60) | Director | Director, Colonial Williamsburg Co.; Former Chief Executive Officer |
| and Chairman, RFS Hotel Investors, Inc.; Former Director, Morgan | ||
| Keegan & Co., Inc.; Former Director, Independent Bank, Memphis. | ||
| Interested Director: | ||
| Charles Carroll (47) | Chief Executive Officer, | Deputy Chairman and Head of Global Marketing of the |
| President and Director | Investment Manager. | |
| Class II — Directors with Term Expiring in 2010 | ||
| Independent Directors: | ||
| Kenneth S. Davidson (62) | Director | President, Davidson Capital Management Corporation; President, |
| Aquiline Advisors LLC; Trustee, The Juilliard School; Chairman of | ||
| the Board, Bridgehampton Chamber Music Festival; Trustee, | ||
| American Friends of the National Gallery, London. | ||
| Nancy A. Eckl (45) | Director | Former Vice President, Trust Invesments, American Beacon |
| Advisors, Inc. (“American Beacon”) and Vice President of certain | ||
| funds advised by American Beacon; Trustee, College Retirement | ||
| Equities Fund. | ||
| Lester Z. Lieberman (77) | Director | Private Investor; Chairman, Healthcare Foundation of New Jersey; |
| Director, Cives Steel Co.; Director, Northside Power Transmission | ||
| Co.; Advisory Trustee, New Jersey Medical School; Director, | ||
| Public Health Research Institute; Trustee Emeritus, Clarkson | ||
| University; Council of Trustees, New Jersey Performing Arts Center. | ||
| Class III — Directors with Term Expiring in 2008 | ||
| Independent Director: | ||
| Richard Reiss, Jr. (63) | Director | Chairman, Georgica Advisors LLC, an investment manager; |
| Director, O’Charley’s, Inc., a restaurant chain. | ||
| Interested Director: | ||
| Ashish Bhutani (47) | Director | Chief Executive Officer of the Investment Manager; from 2001 |
| to December 2002, Co-Chief Executive Officer North America | ||
| of Dresdner Kleinwort Wasserstein and member of its Global | ||
| Corporate and Markets Board and the Global Executive Committee. | ||
| (1) |
Each Director also serves as a Director for The Lazard Funds, Inc., Lazard Retirement Series, Inc. and Lazard World Dividend & Income Fund, Inc. (collectively, the “Lazard Funds”). All of the Independent Directors, except Mr. Lieberman, are also board members of Lazard Alternative Strategies Fund, LLC, a privately-offered fund registered under the Investment Company Act of 1940 and advised by an affiliate of the Investment Manager. |
17
Board of Directors and Officers Information (concluded)
(unaudited)
| Position(s) | ||
| Name (Age) | with the Fund(1) | Principal Occupation(s) During Past 5 Years |
| Officers: | ||
| Nathan A. Paul (34) | Vice President | Managing Director and General Counsel of the Investment |
| and Secretary | Manager. | |
| Stephen St. Clair (49) | Treasurer | Vice President of the Investment Manager. |
| Brian Kawakami (57) | Chief Compliance Officer | Senior Vice President and Chief Compliance Officer of the |
| Investment Manager; Chief Compliance Officer at INVESCO, | ||
| from July 2002 to April 2006. | ||
| Brian D. Simon (45) | Assistant Secretary | Director of the Investment Manager. |
| David A. Kurzweil (33) | Assistant Secretary | Vice President of the Investment Manager; Associate at |
| Kirkpatrick & Lockhart LLP, a law firm, from August 1999 to | ||
| January 2003. | ||
| Cesar A. Trelles (32) | Assistant Treasurer | Fund Administration Manager of the Investment Manager; |
| Manager for Mutual Fund Finance Group at UBS Global Asset | ||
| Management, from August 1998 to August 2004. |
(1) Each officer also serves as an officer for each of the Lazard Funds.
18
Lazard Global Total Return & Income Fund, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-828-5548
http://www.LazardNet.com
Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
Transfer Agent and Registrar
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, Rhode Island 02940-3010
Dividend Disbursing Agent
Computershare, Inc.
P.O. Box 43010
Providence, Rhode Island 02940-3010
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Legal Counsel
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
http://www.stroock.com
30 Rockefeller Plaza
New York, NY 10112-6300
www.LazardNet.com
