UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

 

Investment Company Act file number

811-21751

 

Lazard World Dividend & Income Fund, Inc.

(Exact name of Registrant as specified in charter)

30 Rockefeller Plaza New York, New York  10112

(Address of principal executive offices)        (Zip code)

Nathan A. Paul, 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:	3/31/2014

FORM N-Q

 

Item 1.            Schedule of Investments.

 

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments

March 31, 2014 (unaudited)

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

Lazard World Dividend & Income Fund, Inc. 

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

Forward Currency Purchase Contracts open at March 31, 2014:

Currency		Counterparty		Expiration Date		Foreign Currency Amount				US $ Cost on Origination Date				US $ Current Value				Unrealized Appreciation				Unrealized Depreciation
AMD		JPM		10/28/14			111,741,000			$	255,000			$	258,871			$	3,871			$	—
BRL		BRC		04/02/14			1,129,548				486,246				497,818				11,572				—
BRL		BRC		04/02/14			1,131,027				483,614				498,470				14,856				—
CLP		BNP		05/16/14			360,625,000				625,000				654,590				29,590				—
CLP		CIT		04/28/14			204,419,000				367,000				371,732				4,732				—
CLP		UBS		04/21/14			241,988,750				437,000				440,383				3,383				—
CLP		UBS		04/25/14			206,152,000				365,000				375,005				10,005				—
CNY		BRC		05/19/14			3,160,421				513,639				507,811				—				5,828
CNY		HSB		04/22/14			6,467,924				1,054,000				1,039,753				—				14,247
COP		CIT		04/10/14			1,066,747,100				519,984				540,689				20,705				—
COP		UBS		04/16/14			2,001,617,200				1,034,000				1,014,150				—				19,850
COP		UBS		05/23/14			966,220,750				473,000				488,203				15,203				—
CZK		JPM		04/04/14			9,889,560				484,404				496,313				11,909				—
CZK		JPM		04/22/14			10,831,986				541,905				543,660				1,755				—
CZK		JPM		05/05/14			9,820,746				492,852				492,941				89				—
EUR		CIT		04/07/14			192,000				267,043				264,506				—				2,537
EUR		CIT		04/07/14			200,000				274,610				275,527				917				—
EUR		CIT		06/23/14			1,266,358				1,763,234				1,744,390				—				18,844
EUR		JPM		04/04/14			360,407				496,533				496,512				—				21
EUR		JPM		05/06/14			409,939				553,742				564,713				10,971				—
EUR		JPM		05/06/14			434,029				601,500				597,898				—				3,602
EUR		JPM		05/06/14			510,378				695,958				703,073				7,115				—
EUR		JPM		05/06/14			586,290				798,067				807,645				9,578				—
GHS		CIT		04/04/14			942,000				353,205				349,623				—				3,582
GHS		CIT		04/15/14			1,637,000				611,963				603,780				—				8,183
HUF		BNP		04/15/14			89,210,950				408,389				399,642				—				8,747
HUF		BNP		04/15/14			110,819,240				489,743				496,442				6,699				—
HUF		JPM		04/10/14			23,281,688				103,256				104,326				1,070				—
HUF		JPM		04/10/14			244,676,790				1,070,614				1,096,396				25,782				—
IDR		JPM		04/28/14			6,758,676,000				591,000				592,243				1,243				—
IDR		SCB		04/17/14			5,103,723,000				446,559				448,088				1,529				—
INR		BRC		04/21/14			45,485,440				721,419				758,150				36,731				—
INR		SCB		04/10/14			52,939,460				854,000				884,852				30,852				—
KRW		BRC		04/24/14			1,138,822,350				1,062,979				1,068,691				5,712				—
KRW		SCB		04/24/14			827,641,200				764,000				776,673				12,673				—
KZT		CIT		09/12/14			59,783,000				313,000				314,771				1,771				—
KZT		CIT		11/14/14			55,390,000				290,000				287,761				—				2,239
KZT		CIT		02/13/15			63,050,000				325,000				321,559				—				3,441
KZT		HSB		06/16/14			39,330,400				211,000				211,117				117				—
KZT		HSB		06/16/14			51,424,800				324,140				276,037				—				48,103
KZT		HSB		06/16/14			79,207,200				498,849				425,167				—				73,682
KZT		HSB		09/11/14			59,783,000				313,000				314,837				1,837				—
MXN		CIT		04/30/14			15,523,200				1,176,000				1,186,450				10,450				—
MYR		BRC		04/10/14			1,271,204				388,000				389,061				1,061				—
MYR		BRC		05/21/14			2,789,852				848,160				851,406				3,246				—
MYR		JPM		04/21/14			2,845,186				854,000				870,105				16,105				—
NGN		BRC		04/22/14			75,727,200				454,000				455,959				1,959				—

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

Forward Currency Purchase Contracts open at March 31, 2014 (continued):

Currency		Counterparty		Expiration Date		Foreign Currency Amount				US $ Cost on Origination Date				US $ Current Value				Unrealized Appreciation				Unrealized Depreciation
NGN		BRC		06/18/14			20,851,000			$	116,000			$	122,928			$	6,928			$	—
NGN		CIT		04/04/14			22,165,600				134,158				134,212				54				—
NGN		CIT		04/11/14			22,165,600				133,689				133,919				230				—
NGN		CIT		04/29/14			30,516,400				184,000				183,342				—				658
NGN		JPM		06/17/14			23,400,000				130,000				138,012				8,012				—
PEN		CIT		04/10/14			1,682,174				598,000				597,704				—				296
PEN		CIT		05/14/14			1,725,228				609,729				610,247				518				—
PEN		JPM		04/28/14			975,893				346,000				345,895				—				105
PHP		HSB		04/14/14			46,081,035				1,023,000				1,027,245				4,245				—
PHP		JPM		05/13/14			23,608,850				530,000				525,934				—				4,066
PLN		BNP		04/14/14			2,013,254				654,000				665,289				11,289				—
PLN		BRC		04/14/14			2,655,374				871,000				877,480				6,480				—
PLN		JPM		04/28/14			2,433,074				799,302				803,297				3,995				—
RON		JPM		04/07/14			855,698				260,796				264,150				3,354				—
RON		JPM		04/07/14			1,196,605				369,163				369,386				223				—
RON		JPM		04/07/14			3,066,771				933,000				946,697				13,697				—
RSD		CIT		04/07/14			133,910,100				1,595,782				1,595,704				—				78
SGD		HSB		04/14/14			1,084,180				855,723				861,902				6,179				—
THB		BNP		04/10/14			2,272,170				70,213				70,017				—				196
THB		SCB		04/24/14			18,262,359				567,101				562,411				—				4,690
TRY		CIT		05/12/14			835,275				370,000				385,614				15,614				—
TRY		JPM		04/21/14			123,275				55,662				57,265				1,603				—
TRY		JPM		04/21/14			442,550				213,000				205,577				—				7,423
TRY		JPM		04/21/14			576,689				263,000				267,889				4,889				—
TWD		HSB		04/14/14			15,641,010				518,000				513,806				—				4,194
TWD		SCB		06/18/14			15,659,930				517,000				515,422				—				1,578
UGX		CIT		04/11/14			554,917,000				219,032				217,322				—				1,710
UGX		CIT		05/02/14			338,045,500				131,000				131,615				615				—
UGX		CIT		05/02/14			370,080,000				144,000				144,087				87				—
UGX		CIT		05/02/14			650,463,000				253,000				253,251				251				—
UGX		CIT		05/02/14			659,706,000				258,000				256,850				—				1,150
UGX		CIT		05/20/14			115,740,000				45,000				44,855				—				145
UYU		HSB		04/30/14			4,667,000				202,561				205,053				2,492				—
UYU		JPM		04/07/14			4,809,240				212,586				212,735				149				—
UYU		JPM		04/14/14			8,725,000				388,252				385,153				—				3,099
UYU		JPM		04/24/14			14,047,924				611,843				618,306				6,463				—
ZAR		CIT		04/24/14			3,710,736				337,980				351,277				13,297				—
ZAR		JPM		04/24/14			1,102,513				102,000				104,369				2,369				—
ZMW		CIT		04/11/14			948,260				155,657				153,602				—				2,055
ZMW		JPM		04/08/14			400,000				67,522				64,875				—				2,647
ZMW		SCB		04/08/14			3,590,000				557,627				582,256				24,629				—

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

Forward Currency Purchase Contracts open at March 31, 2014 (concluded):

Currency		Counterparty		Expiration Date		Foreign Currency Amount				US $ Cost on Origination Date				US $ Current Value				Unrealized Appreciation				Unrealized Depreciation
ZMW		SCB		04/09/14			3,590,000			$	557,366			$	582,008			$	24,642			$	—
Total Forward Currency Purchase Contracts										$	44,016,351			$	44,246,747			$	477,392			$	246,996

 

Forward Currency Sale Contracts open at March 31, 2014:

Currency		Counterparty		Expiration Date		Foreign Currency Amount				US $ Cost on Origination Date				US $ Current Value				Unrealized Appreciation				Unrealized Depreciation
BRL		BRC		04/02/14			1,048,928			$	444,000			$	462,286			$	—			$	18,286
BRL		BRC		05/05/14			1,193,987				510,000				521,719				—				11,719
BRL		UBS		04/02/14			1,211,648				512,000				534,001				—				22,001
CNY		HSB		04/22/14			372,741				61,000				59,920				1,080				—
CZK		JPM		04/04/14			9,889,560				496,532				496,312				220				—
EUR		BNP		04/15/14			297,023				408,390				409,182				—				792
EUR		BNP		04/15/14			356,000				489,743				490,429				—				686
EUR		BNP		04/24/14			1,710,314				2,320,110				2,356,101				—				35,991
EUR		CIT		04/07/14			1,146,000				1,595,782				1,578,769				17,013				—
EUR		HSB		04/22/14			814,549				1,134,601				1,122,114				12,487				—
EUR		JPM		04/04/14			360,000				484,404				495,952				—				11,548
EUR		JPM		04/07/14			189,000				260,796				260,373				423				—
EUR		JPM		04/07/14			265,735				369,163				366,086				3,077				—
EUR		JPM		04/10/14			75,000				103,256				103,322				—				66
EUR		JPM		04/10/14			789,000				1,070,615				1,086,947				—				16,332
EUR		JPM		04/22/14			395,718				541,905				545,136				—				3,231
EUR		JPM		04/28/14			579,000				799,302				797,614				1,688				—
EUR		JPM		05/05/14			358,000				492,852				493,164				—				312
EUR		JPM		05/06/14			3,021				4,168				4,161				7				—
EUR		JPM		05/06/14			661,000				907,884				910,562				—				2,678
EUR		JPM		05/06/14			812,175				1,096,501				1,118,813				—				22,312
EUR		UBS		06/23/14			554,887				763,958				764,349				—				391
JPY		CIT		06/16/14			83,792,347				816,000				812,144				3,856				—
JPY		SCB		04/25/14			77,789,422				760,557				753,758				6,799				—
JPY		SCB		04/25/14			78,220,612				764,000				757,937				6,063				—
KZT		BRC		06/16/14			9,544,650				51,000				51,234				—				234
NGN		BRC		06/18/14			20,851,000				124,521				122,928				1,593				—
RSD		CIT		04/07/14			22,379,520				267,043				266,680				363				—
RSD		CIT		04/07/14			23,410,000				274,610				278,959				—				4,349
RUB		CIT		04/30/14			16,801,560				470,000				475,740				—				5,740
SGD		HSB		04/14/14			1,084,180				848,540				861,902				—				13,362
TRY		CIT		05/12/14			287,931				127,504				132,927				—				5,423
TRY		JPM		04/21/14			694,639				333,528				322,680				10,848				—
ZAR		CIT		04/24/14			6,131,786				561,001				580,466				—				19,465
ZAR		JPM		04/24/14			5,222,582				483,000				494,396				—				11,396
Total Forward Currency Sale Contracts										$	20,748,266			$	20,889,063				65,517				206,314
Gross unrealized appreciation/depreciation on Forward Currency Purchase and Sale Contracts																		$	542,909			$	453,310

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

 

Currency Abbreviations:
AMD		— Armenian Dram
BRL		— Brazilian Real
CLP		— Chilean Peso
CNY		— Chinese Renminbi
COP		— Colombian Peso
CZK		— Czech Koruna
EUR		— Euro
GHS		— Ghanaian Cedi
HUF		— Hungarian Forint
IDR		— Indonesian Rupiah
INR		— Indian Rupee
JPY		— Japanese Yen
KRW		— South Korean Won
KZT		— Kazakhstan Tenge
MXN		— Mexican New Peso
MYR		— Malaysian Ringgit
NGN		— Nigerian Naira
PEN		— Peruvian New Sol
PHP		— Philippine Peso
PLN		— Polish Zloty
RON		— New Romanian Leu
RSD		— Serbian Dinar
RUB		— Russian Ruble
SGD		— Singapore Dollar
THB		— Thai Baht
TRY		— New Turkish Lira
TWD		— New Taiwan Dollar
UGX		— Ugandan Shilling
UYU		— Uruguayan Peso
ZAR		— South African Rand
ZMW		— Zambian Kwacha

 

Counterparty Abbreviations:
BNP		— BNP Paribas SA
BRC		— Barclays Bank PLC
CIT		— Citibank NA
HSB		— HSBC Bank USA
JPM		— JPMorgan Chase Bank
SCB		— Standard Chartered Bank
UBS		— UBS AG

Lazard World Dividend & Income Fund, Inc. 

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

(a)		Pursuant to Rule 144A under the Securities Act of 1933, the security may only be traded among “qualified institutional buyers.” At March 31, 2014, this security amounted to 0.5% of net assets of Lazard World Dividend & Income Fund, Inc. (the “Fund”), and is considered to be liquid.
(b)		Security valued using Level 2 inputs, based on reference to a similar security from the same issuer which was trading on an active market, under accounting principles generally accepted in the United States of America (“GAAP”) hierarchy.
(c)		Principal amount denominated in respective country’s currency.
(d)		For federal income tax purposes, the aggregate cost was $107,334,307, aggregate gross unrealized appreciation was $11,904,122, aggregate gross unrealized depreciation was $5,649,130, and the net unrealized appreciation was $6,254,992.
(e)		The Fund, 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
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

 

Portfolio holdings by industry (as a percentage of net assets):
Apparel & Textiles				0.5	%
Automotive				2.0
Banking				9.0
Cable Television				1.9
Commercial Services				1.5
Computer Software				1.1
Construction & Engineering				1.2
Consumer Products				1.3
Electric				4.2
Energy				0.9
Energy Integrated				8.7
Energy Services				3.2
Financial Services				6.0
Food & Beverages				0.7
Forest & Paper Products				1.6
Household & Personal Products				0.8
Housing				1.5
Insurance				10.9
Leisure & Entertainment				6.6
Manufacturing				0.3
Pharmaceutical & Biotechnology				1.2
Real Estate				5.0
Retail				1.6
Semiconductors & Components				6.8
Technology Hardware				3.1
Telecommunications				10.6
Transportation				6.3
Subtotal				98.5
Foreign Government Obligations				6.3
Short-Term Investment				1.0
Total Investments				105.8	%

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (continued)

March 31, 2014 (unaudited)

 

Valuation of Investments:

 

Net asset value per share is determined by State Street Bank and Trust Company for the Fund on each day the New York Stock Exchange (“NYSE”) is open for business. Market values for securities listed on the NYSE, NASDAQ national market or other US or foreign exchanges or markets are generally based on the last reported sales price on the exchange or market on which the security is principally traded, generally as of the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time) on each valuation date; securities not traded on the valuation date are valued at the most recent quoted bid price. The Fund values NASDAQ-traded securities at the NASDAQ Official Closing Price, which may not be the last reported sales price in certain instances. Forward currency contracts are valued using quotations from an independent pricing service. Investments in money market funds are valued at the fund’s net asset value.

 

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 primarily on institutional trading in similar groups of securities, or by using brokers’ quotations or a matrix system which considers such factors as other security prices, yields and maturities. Debt securities maturing in 60 days or less are valued at amortized cost, except where to do so would not accurately reflect their fair value, in which case such securities are valued at fair value as determined by, or in accordance with procedures approved by, the Board of Directors (the “Board”).

 

The Valuation Committee of Lazard Asset Management LLC (the “Investment Manager”), which meets periodically under the direction of 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 the Fund’s net asset value 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 Fund is not open for business, thus affecting the value of the Fund’s assets on days when Fund stockholders may not be able to buy or sell Fund shares.

 

The effect of using fair value pricing is that the net asset value of the Fund 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’ net asset values.

 

Fair Value Measurements:

 

Fair value is defined as the price that the Fund 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. Each investment’s fair value measurement level

Lazard World Dividend & Income Fund, Inc.

Portfolio of Investments (concluded)

March 31, 2014 (unaudited)

 

within the fair value hierarchy 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 investments

·

Level 2 – other significant observable inputs (including unadjusted quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

·

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

 

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 Fund’s investments by each fair value hierarchy level as of March 31, 2014:

 

Description		Unadjusted Quoted Prices in Active Markets for Identical Investments (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Balance as of March 31, 2014
Assets:
Common Stocks
France		$	1,246,875			$	7,466,378			$	—			$	8,713,253
Russia			2,110,693				2,487,233				—				4,597,926
Switzerland			1,540,990				3,806,961				—				5,347,951
Other			35,898,256				48,556,217				—				84,454,473
Preferred Stocks			2,615,124				—				—				2,615,124
Foreign Government Obligations			—				6,799,164				—				6,799,164
Short-Term Investment			1,061,408				—				—				1,061,408
Other Financial Instruments*
Forward Currency Contracts			—				542,909				—				542,909
Total		$	44,473,346			$	69,658,862			$	—			$	114,132,208
Liabilities:
Other Financial Instruments*
Forward Currency Contracts		$	—			$	(453,310	)		$	—			$	(453,310	)

*	Other financial instruments are derivative instruments which are valued at their respective unrealized appreciation/depreciation.

 

Certain common stocks (See footnote (b)) included in Level 2 were valued based on reference to similar securities from the same issuers which were trading on active markets. The foreign government obligations included in Level 2 were valued on the basis of prices provided by independent pricing services. The forward currency contracts included in Level 2 were valued using quotations provided by an independent pricing service.

 

In connection with the periodic implementation of fair value pricing procedures with respect to non-US securities, certain equity securities (other than those securities described in footnote (b)) can transfer from Level 1 to Level 2 as a result of fair value pricing procedure triggers being met and would revert to Level 1 when the fair value pricing procedure triggers are no longer met. As of March 31, 2014, securities valued at $55,801,060 were transferred from Level 1 to Level 2. There were no other transfers into or out of Levels 1, 2 or 3 during the period ended March 31, 2014. Transfers between levels are recognized at the beginning of the reporting period.

Item 2.            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-Q 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-Q 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 Registrant’s most recent 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 3.            Exhibits.

 

Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940 are attached as Exhibit 99.CERT.

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.

 

Lazard World Dividend & Income Fund, Inc.

 

By:	/s/ Charles L. Carroll
	Charles L. Carroll
	Chief Executive Officer
Date:	May 30, 2014

 

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/ Charles L. Carroll
	Charles L. Carroll
	Chief Executive Officer
Date:	May 30, 2014
By:	/s/ Stephen St. Clair
	Stephen St. Clair
	Chief Financial Officer
Date:	May 30, 2014