UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM N-CSR

              CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

                              INVESTMENT COMPANIES

             Investment Company Act file number          811-06312

                             THE LAZARD FUNDS, INC.
               (Exact name of Registrant as specified in charter)


                              30 Rockefeller Plaza
                            New York, New York 10112
               (Address of principal executive offices) (Zip code)

                              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:   12/31/03

Item 1. Reports to Stockholders

Lazard Funds

Lazard Funds
Annual Report

D E C E M B E R   3 1 ,   2 0 0 3

The Lazard Funds, Inc.
Table of Contents	Page
Investment Overviews	2
Performance Overviews	9
Portfolios of Investments
Lazard Equity Portfolio	20
Lazard Mid Cap Portfolio	22
Lazard Small Cap Portfolio	24
Lazard International Equity Portfolio	27
Lazard International Equity Select Portfolio	29
Lazard International Small Cap Portfolio	30
Lazard Emerging Markets Portfolio	32
Lazard Bond Portfolio	34
Lazard High Yield Portfolio	37
Lazard Global High Yield Portfolio	42
Lazard Mortgage Portfolio	47
Notes to Portfolios of Investments	48
Statements of
Assets and Liabilities	52
Operations	54
Changes in Net Assets	56
Financial Highlights	62
Notes to Financial Statements	73
Report of Independent Auditors	79
Board of Directors and Officers Information (unaudited)	80
Tax Information (unaudited)	82

The views of the Fund’s management and the portfolio holdings described in this report are as of December 31, 2003; these views and portfolio holdings may have changed subsequent to this date. Information provided in this report should not be considered a recommendation to purchase or sell securities.

The Lazard Funds, Inc.
Investment Overviews

A Message From Lazard

Crosscurrents characterized the market environment in 2003 as the year began with little evidence to suggest that the prolonged bear market would end. Investors believed that the world economy might follow Japan’s lead into deflation, with the outbreak of the second Gulf War undermining confidence even further. By mid-March, however, investors’ fears subsided as signs of a global recovery began to appear. The markets rose sharply, taking many investors by surprise while rewarding those who were willing to take risk. The equities that benefited from this change in sentiment included highly leveraged and economically sensitive companies. Gains were widespread, in the U. S. and abroad, particularly in small cap equities and emerging markets. Other signs of optimism became evident. Corporate profits began to bounce back significantly in the second half of the year, allowing companies to increase their business investments and, coupled with the new, more favorable tax treatment of dividend income, pay out more dividends. Interest rates were as favorable as they had been in the past 40 years. Mortgage-backed bonds generated a 3% total return, while the Merrill Lynch High Yield Master II^® Index soared 28% for the year. And, although the U.S. dollar weakened versus the euro, the British pound and the Japanese yen, U.S. dollar-based investors holding global and international securities enjoyed higher returns. Overall, 2003 was a reversal of 2002 in that most sectors of the S&P 500^® Index and the Morgan Stanley Capital International (MSCI^®) World^® Index rose in 2003, unlike the across-the-board declines of 2002.

In our view, the overriding lesson from the markets’ fluctuations during the long bear market of the past three years followed by the recent turnaround in 2003 is this: the best way to realize investment goals is to maintain a diversified portfolio and a long-term investment focus. Diversification spreads the risk around the different asset classes, thereby helping to reduce fluctuations in a portfolio’s market value regardless of economic conditions. These tenets have once again proved themselves; consider what a drag on performance emerging markets had been from 1997 to 1999 and what a productive asset it was in 2003.

Though we cannot guarantee strong performance from a diversified portfolio every year, we are pleased to report that the Portfolios participated in the 2003 rally, posting strong, double-digit gains for the year ended December 31, 2003. As bottom-up stock pickers, we remained focused on stock selection and evaluating the fundamentals of the companies we follow. Analysts continue to focus on identifying and taking advantage of pricing anomalies and discovering hidden opportunities to uncover value.

The following Investment Overviews should provide you with more detailed thoughts about the current market environment and provide insights on the Portfolios and their recent performance.

Equity Markets Overview

2003 can be characterized as the year when the bear market, that started in the United States in March 2000 and spread through most parts of the world, had clearly ended. U.S. and global stocks rebounded in mid-March, with the rally continuing through October. By year-end, the S&P 500 Index registered a 28.7% gain, the MSCI Europe, Australasia and Far East (EAFE^®) Index returned 38.6%, and the MSCI World Index climbed to 33.1%. For the global economy as a whole, real growth was positive in all four quarters, with even Japan experiencing a solid growth rate of 2.4%. Investors rotated into stocks that stood to gain the most from an improving economy, which included highly leveraged and economically sensitive companies. In addition, the technology sector, which led 2002’s decline, proved to be 2003’s strongest performer. Late in the year, however, there were signs that the rebound in lower-quality stocks had begun to fade, as investors began to focus once again on individual companies’ fundamentals.

The gains in developed markets outside the United States were mixed, both regionally and on a sector basis. For the European economy as a whole, there was incremental growth of just 0.5% over the year. In contrast, the euro soared to its highest-ever rate against the U.S. dollar, though European policymak-ers are concerned that the euro’s rise is hurting overseas trade and stalling growth. The U.K. enjoyed the longest spell of uninterrupted growth since the end of the Second World War. The fuel behind growth activity there has been a boom in household spending. Latin America, with the exception of Venezuela, also recorded strong gains in 2003. Even Argentina performed well, aided by signs of possible resolutions of its debt situation, after it had defaulted in

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The Lazard Funds, Inc.
Investment Overviews (continued)

2002. In Mexico, returns were more muted, as investors continued to be under-whelmed by political and economic leadership. In spite of this generally encouraging climate, European and Latin American markets made little real progress during the year.

Most emerging markets, however, benefited from the somewhat stronger economic environment, rising more than 50% over the year. Asian emerging markets increased significantly, helped by strong economic results in China, India and, especially, Thailand. Regional laggards included Russia, Taiwan and the Mid East, although most countries’ markets finished with respectable rises. All Eastern European markets increased during the last two quarters of the year. Turkish shares recorded particularly strong gains, as investors began to anticipate improved macroeconomic conditions. The South African, Egyptian, and Czech markets rallied in the second half of the year following the effects of the Iraq war. A strong fourth-quarter finish helped make emerging markets one of the best performing asset classes in 2003.

Evidence suggests that the global recovery will continue in 2004, but not at the accelerated pace that occurred in a relatively short period of time in 2003. The principal reason is that last year’s high performing stocks were less proven, lower-quality companies—many of which, we believe, may face difficulties going forward. Our discipline, as always, emphasizes the very highest quality companies that are capable of generating strong returns for investors over time. Our research suggests that these companies will produce sustainable gains for investors in a variety of economic environments.

Fixed-Income Markets Overview

A resumption of global growth and geopolitical tensions would normally dominate the fixed-income markets. And at times in the past year, they did dominate. But the defining aspect of the U.S. bond market in 2003 was investor appetite to own credit regardless of the direction of rates, shift in the yield curve, deflation risk, or the possibility of a terrorist act driving the economy back into recession. BBB credits reached an 11.8% total return for the year, compared with 6.2% for A credits and 2.2% for Treasuries. The appetite for risk extended to the U.S. high yield market, which returned 27.2%, as well as to emerging market debt, which returned 33.7%.

The rush for credit occurred against a backdrop that would seem to run in opposition to the notion that the most leveraged firms would have the most attractive debt. Aside from the geopolitical risks that dominated the first half of the year, there was the ongoing issue of deflation. The possibility of falling price levels was considered great enough for the Federal Reserve to drop the Federal funds rate another 25 basis points at the end of June, to 1%, as insurance that the nascent recovery took hold and returned pricing power to the corporate sector. Market participants reflected the possibility of a zero inflation future by rallying 10-year Treasury yields from over 4.10% in March to a low of 3.07% on June 16. Following that low, market participants sensed that the Bush tax cuts would spur growth and that the re-emergence of structural Federal budget deficits and easy monetary policy would guarantee future inflation. In response, the 10-year yield sold off at a record pace and reached 4.61% by August 1.

From August to year’s end, the market was in a battle of attrition against its well-worn predisposition to price debt on the idea that a growing economy meant that the Fed would tighten, all yields would rise and the curve would flatten. But this time the economy and policy were different. The Federal Open Market Committee joined Chairman Greenspan in extolling the central bank’s new policy that the U.S. economy could grow at a quite rapid pace for an extended period before the Fed would tighten. It has been difficult for the market to accept this shift from the pre-emptive disinflation doctrine that had been in place since October 1979. The market, in grudging acceptance of the policy shift, edged yields lower for the rest of the year, to the point where they ended 2003 pretty much where they were when the year began.

In last year’s Investment Overview, we noted that the unimpeded flow of global capital alters the dynamics between domestic capital market valuations and the domestic economy. This alteration was, and still is, quite obvious in the impact that Asian central banks have in holding down U.S. interest rates as they purchase inordinate amounts of Treasuries and Agencies as part of foreign exchange interventions to keep the dollar from devaluing. Adding to the supply of capital were U.S. commercial banks building their securities portfolio because of a lack of commercial & industrial loan demand. In the end, any interest

3

The Lazard Funds, Inc.
Investment Overviews (continued)

rate is the market-clearing price of money as determined by the intersection of the supply and demand for capital. At present, supply is overwhelming demand. The critical issue is how much longer this will persist. Like anything else, nothing is forever.

Lazard Equity Portfolio

For the year ended December 31, 2003, Lazard Equity Portfolio’s Institutional Shares posted a total return of 25.37%, while Open Shares posted a total return of 25.06%, trailing the 28.69% return of the S&P 500 Index.

During the year, the Portfolio benefited from stock selection in the process sector, where Alcoa reported above-the-consensus third-quarter earnings. Price increases and tight cost controls drove results, and more than offset weak auto production and continued weak demand in Europe. In addition, Praxair’s third-quarter profits rose 15 percent as the company benefited from improving demand and increased prices. Demand in China fueled a jump in Asian sales, while higher prices countered higher energy and raw material costs. Stock selection in finance was helped by Citigroup, whose first-quarter earnings rose as credit card and mortgage lending grew and the provision for loan losses declined. The company is also benefiting from its diversification: by virtue of its presence in over 100 countries, and its products (ranging from consumer cards to global investment banking), Citigroup can generate less volatile revenue and net income than can its peers. Conversely, the Portfolio’s returns suffered somewhat due both to its underweight and its stock selection in the technology sector. In technology, Lazard has focused on companies that were able to maintain profitability even in the adverse environment of recent years, while the positive market sentiment of 2003 led to rotation into more volatile and cyclical technology companies, such as semiconductor equipment makers. Stock selection in producer manufacturing was also a negative, as many of the more inconsistently profitable and economically sensitive stocks in the index rose significantly, while holdings such as Lockheed Martin, whose fortunes are more a function of the U.S. defense budget than the economy, failed to fully participate in the rally.

Lazard Mid Cap Portfolio

For the year ended December 31, 2003, Lazard Mid Cap Portfolio’s Institutional Shares posted a total return of 29.03%, while Open Shares posted a total return of 28.74%, trailing the 40.06% return of the Russell Midcap^® Index.

During the year, the Portfolio benefited from stock selection in the consumer staples sector. For instance, Pepsi Bottling Group, which manufactures and distributes Pepsi Cola products, is benefiting from an improving pricing environment and new product introductions. Conversely, the Portfolio was hurt by stock selection in the technology sector: BMC Software, Inc. reported disappointing results, and the company anticipates some layoffs and restructuring to improve financial performance. We sold our position, based on concerns about the health and visibility of future cash flows as a result of the increased securitization of receivables. Stock selection in the producer manufacturing sector has also detracted from returns. Although our holdings rose strongly, many of the more inconsistently profitable and economically sensitive stocks in the index rose dramatically on optimism over a robust economic recovery.

Lazard Small Cap Portfolio

For the year ended December 31, 2003, Lazard Small Cap Portfolio’s Institutional Shares posted a total return of 38.92%, while Open Shares posted a total return of 38.56%, trailing the 47.25% return of the Russell 2000^® Index.

During the year, the Portfolio was helped by stock selection in technology. For example, Microsemi performed well. The company is in transition from being a legacy military/aerospace integrated circuit provider to pursuing leading-edge opportunities in the consumer, communications and auto markets. Microsemi has assembled a portfolio of key technologies that will enable it to leverage its existing competency into new, higher-growth markets. The Portfolio also benefited from stock selection in health care, where aaiPharma continues to benefit from its transition to a specialty pharmaceutical company. Its R&D platform has provided value added product formulation and drug life cycle management programs to many of the major pharmaceutical companies for the past 20 years, and R&D is still the engine that is driving product

4

The Lazard Funds, Inc.
Investment Overviews (continued)

extensions through new formulations, dosing, etc. Conversely, the Portfolio was hurt by stock selection in commercial services. Tier Technologies saw its shares fall after the company reduced profit and revenue forecasts at the beginning of 2003. Our overweight position in the energy sector also detracted from returns, as did stock selection in the group: Lone Star Technologies shares declined, as the company was hurt by weaker-than-expected sales and higher steel costs.

Lazard International Equity Portfolio

For the year ended December 31, 2003, Lazard International Equity Portfolio’s Institutional Shares posted a total return of 29.51%, while Open Shares posted a total return of 29.29%, trailing the 38.59% return of the MSCI EAFE Index.

During the year, the Portfolio’s performance was helped by stock selection in the consumer discretionary sector, where Nissan Motor Co. benefited from new model introductions and strong U.S. demand. With the leadership of CEO Carlos Ghosn, it has steadily gained market-share, improved its marketing efforts, rolled out new models and implemented good capital discipline. Luxury goods manufacturer Richemont also performed well, as the improving economy has led to a rebound in demand for luxury items, which had been hurt by the decline in travel related to SARS and fears of terrorism. Conversely, the Portfolio was hurt by stock selection in the financial sector, as we avoided unprofitable Japanese financial stocks such as Sumitomo Mitsui, Mizuho, UFJ Holdings and Resona, which significantly outperformed the sector and the market. Stock selection in the technology sector posed a similar problem: unprofitable companies such as Ericsson and Alcatel also significantly outperformed their peers and the overall market, while companies with consistently high return on capital, such as Nokia, failed to fully participate in the rally.

Lazard International Equity Select Portfolio

For the year ended December 31, 2003, Lazard International Equity Select Portfolio’s Institutional Shares posted a total return of 29.80%, while Open Shares posted a total return of 29.49%, trailing the 38.59% return of the MSCI EAFE Index.

The Portfolio generated strong gains in the financial sector, as capital markets-oriented companies benefited from rising markets and the fading of the research scandals of 2002. The Portfolio’s energy holdings also performed well, as oil prices have remained at historically high levels. In addition, the weakness in the U.S. dollar versus most major currencies bolstered returns for the dollar-based investor, in contrast to recent years when currency movements depressed the returns of investments outside the U.S. The Portfolio’s sole industrial holding rose strongly, but the relatively low weight in this economically sensitive group detracted from returns versus the index. In addition, the Portfolio’s substantial allocation to the consumer staples sector (which had added significant value throughout the bear market) hurt returns in 2003, as investors sought out more economically sensitive companies amid expectations for a robust recovery.

Lazard International Small Cap Portfolio

For the year ended December 31, 2003, Lazard International Small Cap Portfolio’s Institutional Shares posted a total return of 42.21%, while Open Shares posted a total return of 41.71%, trailing the 61.35% return of the MSCI EAFE Small Cap Index.

The reason for our underperformance was the market’s strong desire for risk and leverage. Companies that were more leveraged, both operationally and financially, showed the strongest performance, particularly in the second and third quarters. As such, stocks with the lowest, or even negative, returns on equity and stocks with the highest P/Es outperformed the higher ROE, lower valuation stocks which we hold in our Portfolio. As a result, the underweight position in technology and telecommunications clearly impacted our relative performance. Although we benefited from an overweighting in consumer discretionary, our stock selection in this sector was poor, due to investors’ desire to own highly leveraged companies versus our typical holding, which has generated solid returns and cash flows all through the downturn. We remain extremely confident that our Portfolio is well-positioned to outperform going forward, as the market returns to focusing on valuation and financial productivity. Our overweight positions in industrials and consumer discretionary sectors will allow us to participate in a gradually improving economic environment while

5

The Lazard Funds, Inc.
Investment Overviews (continued)

the cash flow characteristics and valuations of our typical holding should allow us to defend better if the fragile recovery were to fall apart.

A strong performer for the year was Tietoenator, the Finland-based IT services company. Despite the continuation of the very tough market for IT services, Tietoenator remains one of the most profitable IT companies in Europe. Another top performer has been Techem, the German manufacturer and service provider for water metering devices. Conversely, one of our worst performers was IHC Caland, the Dutch engineering company. The company issued a profit warning late in the year due to cost overruns in one specific project in their offshore division, as well as continued weakness at one of their shipbuilding yards. We are confident that the problems in the offshore division are confined to one specific problem and have not affected the lease portfolio, which is the main value driver of that division.

Lazard Emerging Markets Portfolio

For the year ended December 31, 2003, Lazard Emerging Markets Portfolio’s Institutional Shares posted a total return of 54.45%, while Open Shares posted a total return of 54.29%, trailing the 55.82% return of the MSCI Emerging Markets Free (EMF^®) Index.

While the emerging markets asset class recorded a rise of more than 55% and all of countries within the MSCI Index market ended the year higher, the largest rises, despite newfound investor interest in Asia and, particularly, China, were in Latin American and Eastern European equities. Asian emerging markets also performed respectably, and all industrial sectors across Emerging Markets experienced increases over the full year. The Portfolio benefited from very strong share price increases in: PTT (Thailand), on higher gas prices, Caemi (Brazil), from robust demand for iron ore, and State Bank of India (India), from decent credit growth. The Portfolio was adversely affected by positions in: Egis (Hungary), after one of its molecules was removed from clinical trials, and SK Telecom and Korea Telecom (both in South Korea), which suffered from corporate governance and number portability issues, respectively. The Portfolio experienced good stock selection in energy, materials, industrials and financial sectors. The effective underweight exposure in Russia and overweighting in Brazil and India also added value.

Lazard Bond Portfolio

For the year ended December 31, 2003, Lazard Bond Portfolio’s Institutional Shares posted a total return of 2.21%, while Open Shares posted a total return of 2.13%, trailing the 4.31% return of the Lehman Intermediate Government/Credit Bond^® Index.

The Portfolio maintained significant allocations to mortgages early in the year and to asset-backed bonds throughout the year. Asset-backed positions focused on credit card and auto loan bonds. The mortgage positions caused performance to lag early in the year as durations for all coupons shortened to essentially money-market levels. When interest rates rose sharply during the summer, pass-thrus extended into a steep yield curve and, as a result, did not offer the type of performance protection mortgages usually provide in a rising rate environment.

In general, however, the Portfolio lagged as a result of an underweight in BBB credits. For the year, intermediate BBB bonds registered a total return of 10.43% compared to 6.24% for A rated corporates and 2.11% for intermediate Treasuries. While the Portfolio ended the year holding an effectively neutral position in BBB credits versus the benchmark, we believed that chasing these issues during a year fraught with economic risk ran counter to managing a conservative fixed-income portfolio. Instead, we added names when we felt the yield spread to like-maturity Treasuries offered an opportunity.

Lazard High Yield Portfolio

For the year ended December 31, 2003, Lazard High Yield Portfolio’s Institutional Shares posted a total return of 24.58%, while Open Shares posted a total return of 24.41%, trailing the 28.15% return of the Merrill Lynch High Yield Master II Index.

Throughout 2003, the high yield market continued the rally that started in November 2002. Strong mutual fund inflows and the improving economy helped to push the market to a banner year. The lowest quality tiers (rated CCC and less) performed the best, returning a whopping 61.0%. In keeping with our style, the Portfolio is of higher quality and is underweight CCC’s, accounting for the majority of underperformance. To put performance by quality sector in perspective, the Merrill Lynch BB Index returned 19.4% for 2003. Portfolio performance was positively affected by several holdings that per-

6

The Lazard Funds, Inc.
Investment Overviews (continued)

formed exceptionally well, including Alamosa, Calpine, and Foamex.

Market technicals rebounded in 2003 and helped drive performance. Mutual fund inflows rose to $28 billion, up from about $11 billion in 2002, and new issuance topped $120 billion, the second best showing since 1998. Most new issues were used to refinance outstanding securities or bank debt. Market credit spreads tightened about 450 basis points over the year from the inordinately wide levels of 2002. Market spreads are now close to their long-term average, implying fair value. The economic outlook remains favorable for credit sensitive sectors and should lead to incremental credit spread tightening as the economy strengthens.

Long-term trends in high yield support our focus on the better quality, upper-tier of high yield. While upper tier credits have lagged in this rally, they have materially outperformed over the long-term. Over the past ten years, according to Merrill Lynch data, the BB quality sector has outperformed the CCC sector by approximately 300 basis points, annualized. Thus, the exceptionally strong returns seen in today’s broad high yield market should not discourage upper-tier investors from entering or remaining in the market.

Lazard Global High Yield Portfolio

For the year ended December 31, 2003, Lazard Global High Yield Portfolio’s Institutional Shares posted a total return of 14.88%, while Open Shares posted a total return of 13.97%, as compared with the 15.11% return of the Global High Yield Blended Index, the 30.71% return of the Merrill Lynch Global High Yield Index and the 1.23% return of the One Month London Interbank Offered Rate (LIBOR) USD Fixed Index.

In 2003, returns were predominately driven by the momentum of the U.S. high yield sector, which rallied as investors sought higher yielding assets and as company fundamentals improved with the economy. The Portfolio performed well, even though it was underweighted in the lowest tier credits that outperformed. The U.S. high yield sector performance was helped by overweighting autos and energy, sectors that performed well, and was hurt by underweightings in telecommunications and utilities, sectors that outperformed. Several specific securities added to performance, including Pegasus. The U.S. economic outlook remains favorable for credit sensitive sectors and should lead to incremental credit spread tightening as the economy strengthens. The portfolio’s average quality is now BB-/B+ with less than 10% in CCC-rated debt. The intent is to maintain a strong current yield while reducing volatility caused by credit disappointments.

The other sectors in which the Portfolio is invested (including local currency emerging markets and European high yield) also posted strong positive gains. In early January 2004 the allocation to European high yield was raised to 15% from 5% and the allocation to U.S. high yield was lowered to 65% from 75%. The allocation to short term emerging market debt remains at 20%. We expect European high yield to perform well in 2004, as those economies tend to lag the U.S. The emerging market sector posted 15% plus returns for the year. Higher yielding currencies such as the Turkish Lira, Brazilian Real and the South African Rand performed extremely well along with most currencies in Eastern Europe. Our off-the-run investments continued to add value, particularly Slovenia, Zambia, and Uganda.

Lazard Mortgage Portfolio

For the year ended December 31, 2003, Lazard Mortgage Portfolio posted a total return of 2.47%, trailing the 3.07% return of the Lehman Fixed-Rate Mortgage-Backed Securities^® (MBS) Index.

The U.S. Mortgage market had a lackluster year in terms of total return, marked by extraordinary volatility from month to month. The volatility resulted from the record levels of prepayments. This drove mortgage yields and durations to essentially money-market levels by mid-June, when yields troughed at 40-year lows. The rebound in rates in July markedly extended mortgage durations. As a result, mortgages failed to perform as a defensive instrument. Once July ended, however, the mortgage regained favor, as it became increasingly obvious to market participants that interest rates were destined to remain range-bound. In that type of environment, owning mortgages is attractive because you are, effectively, selling market volatility.

Looking forward, we believe that prepayment activity will continue to dominate the market and, at times, prevent mortgages from being a stable, high-yielding investment.

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The Lazard Funds, Inc.
Investment Overviews (concluded)

Notes to Investment Overviews:

All returns are for the year ended December 31, 2003 and assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolios have been waived or reimbursed by the Fund’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolios’ returns would have been lower.

The performance data of the indices and other market data have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. These indices are unmanaged, have no fees or costs and are not available for investment.

The Global High Yield Blended Index is an index created by the Fund’s Investment Manager, which blends the performance of the Merrill Lynch Global High Yield Index for all periods after April 30, 2003 and the performance of the One Month LIBOR USD Fixed Index for all periods prior to May 1, 2003.

Past performance is not indicative, nor a guarantee, of future results.

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The Lazard Funds, Inc.
Performance Overviews

Lazard Equity Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Equity Portfolio and S&P 500^® Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years		Year		Years		Inception†
Equity Portfolio**	25.37	%	(0.09	)%	9.66	%	25.06	%	(0.38	)%	4.61	%
S&P 500 Index	28.69		(0.57	)	11.06		28.69		(0.57	)	7.27

_____________
*	All returns assume reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The S&P 500 Index is a market capitalization-weighted index of 500 common stocks, designed to measure performance of the broad domestic economy through changes in the aggregate market value of these stocks, which represent all major industries.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was February 5, 1997.

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The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard Mid Cap Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Mid Cap Portfolio and Russell Midcap^® Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	One		Five		Since
	Year		Years		Inception†
Mid Cap Portfolio**
Institutional Shares	29.03	%	9.74	%	8.95	%
Open Shares	28.74		9.38		8.61
Russell Midcap Index	40.06		7.23		8.03

_____________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000® Index (which consists of the 1,000 largest U.S. companies by capitalization).
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for the Portfolio was November 4, 1997.

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The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard Small Cap Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of Lazard
Small Cap Portfolio and Russell 2000^® Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years		Year		Years		Inception†
Small Cap Portfolio**	38.92	%	9.67	%	10.56	%	38.56	%	9.47	%	8.16	%
Russell 2000 Index	47.25		7.13		9.47		47.25		7.13		7.50

______________
*	All returns assume reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The Russell 2000 Index is comprised of the 2,000 smallest U.S. companies included in the Russell 3000® Index (which consists of the 3,000 largest U.S. companies by capitalization).
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was January 30, 1997.

11

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard International Equity Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard International Equity Portfolio and Morgan Stanley Capital International (MSCI^®)
Europe, Australasia and Far East (EAFE^®) Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years		Year		Years		Inception†
International Equity Portfolio**	29.51	%	(0.66	)%	5.11	%	29.29	%	(0.92	)%	3.40	%
MSCI EAFE Index	38.59		(0.05	)	4.47		38.59		(0.05	)	3.39

_______________
*	All returns assume reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The MSCI EAFE Index is a broadly diversified international index comprised of equity securities of approximately 1,000 companies located outside the United States.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was January 23, 1997.

12

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard International Equity Select Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard International Equity Select Portfolio and MSCI EAFE Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	One		Since
	Year		Inception†
International Equity Select Portfolio**
Institutional Shares	29.80	%	0.80	%
Open Shares	29.49		0.60
MSCI EAFE Index	38.59		1.07

______________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The MSCI EAFE Index is a broadly diversified international index comprised of equity securities of approximately 1,000 companies located outside the United States.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for the Portfolio was May 31, 2001.

13

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard International Small Cap Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard International Small Cap Portfolio and MSCI EAFE Small Cap Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years		Year		Years		Inception†
International Small Cap Portfolio**	42.21	%	9.13	%	6.51	%	41.71	%	8.64	%	6.77	%
MSCI EAFE Small Cap Index	61.35		6.80		1.59		61.35		6.80		1.84

______________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The MSCI EAFE Small Cap Index is an arithmetic, market value-weighted average of the performance of securities of small cap companies listed on the stock exchanges of EAFE Index countries.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was February 13, 1997.

14

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard Emerging Markets Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Emerging Markets Portfolio and MSCI Emerging Markets Free (EMF^®) Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Since		One		Five		Since
	Year		Years		Inception†		Year		Years		Inception†
Emerging Markets Portfolio**	54.45	%	10.35	%	2.77	%	54.29	%	10.02	%	1.22	%
MSCI EMF Index	55.82		10.39		0.95		55.82		10.39		0.97

_______________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The MSCI EMF Index is comprised of emerging market securities in countries open to non-local investors.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Institutional Shares was July 15, 1994 and for Open Shares was January 8, 1997.

15

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard Bond Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Bond Portfolio and Lehman Intermediate Government/Credit Bond^® Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years		Year		Years		Inception†
Bond Portfolio**	2.21	%	4.83	%	5.37	%	2.13	%	4.60	%	5.22	%
Lehman Intermediate Gov’t/Credit
Bond Index	4.31		6.65		6.62		4.31		6.65		7.19

_____________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The Lehman Intermediate Government/Credit Bond Index is comprised of U.S. Government and corporate bonds in the intermediate maturity range calculated by Lehman Brothers.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was March 5, 1997.

16

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard High Yield Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard High Yield Portfolio and Merrill Lynch High Yield Master II^® Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Since		One		Five		Since
	Year		Years		Inception†		Year		Years		Inception†
High Yield Portfolio**	24.58	%	(0.28	)%	0.24	%	24.41	%	(0.53	)%	(0.84	)%
Merrill Lynch High Yield
Master II Index	28.15		5.02		4.68		28.15		5.02		4.42

____________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The Merrill Lynch High Yield Master II Index provides a broad-based measure of the performance of the non-investment grade U.S. domestic bond market.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Institutional Shares was January 2, 1998 and for Open Shares was February 24, 1998.

17

The Lazard Funds, Inc.
Performance Overviews (continued)

Lazard Global High Yield Portfolio

Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Global High Yield Portfolio, Global High Yield Blended Index, Merrill Lynch Global High Yield Index
and One Month London Interbank Offered Rate (LIBOR) USD Fixed Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares						Open Shares
	One		Five		Ten		One		Five		Since
	Year		Years		Years†		Year		Years		Inception†
Global High Yield Portfolio**	14.88	%	4.45	%	5.22	%	13.97	%	3.89	%	3.39	%
Global High Yield Blended Index	15.11		6.43		5.92		15.11		6.43		6.21
Merrill Lynch Global High Yield Index	30.71		5.20		N/A		30.71		5.20		N/A
One Month LIBOR USD Fixed Index	1.23		3.73		4.56		1.23		3.73		4.26

______________
*	All returns assume reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the indices have been prepared from sources and data that the Investment Manager believes to be reliable, but no representation is made as to their accuracy. The indices are unmanaged, have no fees or costs and are not available for investment. The Global High Yield Blended Index is an index created by the Portfolio’s Investment Manager, which blends the performance of the Merrill Lynch Global High Yield Index for all periods after April 30, 2003 and the performance of the One Month LIBOR USD Fixed Index for all periods prior to May 1, 2003. The Merrill Lynch Global High Yield Index tracks the performance of below investment grade bonds of corporate issuers domiciled in countries having an investment grade foreign currency long term debt rating. The One Month LIBOR USD Fixed Index is an average derived from sixteen quotations of the rate that banks dealing in Eurodollars charge each other for large loans, as provided by banks determined by the British Bankers Association.
	Before May 1, 2003, the Portfolio was known as Lazard Strategic Yield Portfolio.
	The dollar values shown above for the Merrill Lynch Global High Yield Index represent the hypothetical return on a $13,285 investment made on January 1, 1998. The $13,285 represents the value, on January 1, 1998, of $10,000 invested in the Institutional Shares of Global High Yield Portfolio on December 31, 1993.
**	The performance of Institutional Shares may be greater than or less than the performance of Open Shares, based on the differences in fees borne by shareholders investing in different classes.
†	The inception date for Open Shares was January 23, 1997 and for Merrill Lynch Global High Yield Index was January 1, 1998.

18

The Lazard Funds, Inc.
Performance Overviews (concluded)

Lazard Mortgage Portfolio

     Comparison of Changes in Value of $10,000 Investment in the Institutional Shares of
Lazard Mortgage Portfolio and Lehman Fixed-Rate Mortgage-Backed Securities^® (MBS) Index*

Average Annual Total Returns*
Periods Ended December 31, 2003
	Institutional Shares
	One		Since
	Year		Inception**
Mortgage Portfolio	2.47	%	6.06	%
Lehman Fixed-Rate MBS Index	3.07		6.67

______________
*	All returns assume reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principal value of the Portfolio will fluctuate, so that an investor’s shares in the Portfolio, when redeemed, may be worth more or less than their original cost. Within the longer periods illustrated there may have been short-term fluctuations, counter to the overall trend of investment results, and no single period of any length may be taken as typical of what may be expected in future periods. The graph and table above do not reflect the deduction of taxes that a shareholder would pay on the Portfolio’s distributions or the redemption of Portfolio shares.
	The performance data of the 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 is unmanaged, has no fees or costs and is not available for investment. The Lehman Fixed-Rate MBS Index is an index of U.S. mortgage-backed securities in the intermediate maturity range calculated by Lehman Brothers.
**	The inception date for the Portfolio was December 29, 2000.

19

The Lazard Funds, Inc.
Portfolios of Investments
December 31, 2003

Description	Shares	Value
Lazard Equity Portfolio
Common Stocks—97.8%
Aerospace & Defense—2.9%
Lockheed Martin Corp	42,800		$        2,199,920
United Technologies Corp	17,900		1,696,383
	3,896,303
Apparel & Textiles—1.2%
NIKE, Inc., Class B	23,600		1,615,656
Banking—11.5%
Bank of America Corp	34,850		2,802,986
Bank One Corp	64,800		2,954,232
Golden West Financial Corp	13,800		1,424,022
HSBC Holdings PLC Sponsored ADR	11,200		882,784
National City Corp	53,800		1,825,972
Northern Trust Corp	28,500		1,322,970
SouthTrust Corp	49,000		1,603,770
Wells Fargo & Co	43,800		2,579,382
	15,396,118
Business Services & Supplies—6.4%
Accenture, Ltd., Class A (a)	93,400		2,458,288
Automatic Data Processing, Inc	35,300		1,398,233
Avery Dennison Corp	23,800		1,333,276
First Data Corp	41,100		1,688,799
Pitney Bowes, Inc	40,900		1,661,358
	8,539,954
Cable & Broadcasting—1.2%
Comcast Corp., Class A (a)	53,100		1,660,968
Chemicals—3.6%
Du Pont (E.I.) de Nemours & Co	32,900		1,509,781
Praxair, Inc	43,400		1,657,880
Rohm & Haas Co	37,300		1,593,083
	4,760,744
Computer Software—3.6%
Microsoft Corp	123,700		3,406,698
Oracle Corp. (a)	108,100		1,426,920
	4,833,618
Computers & Business Equipment—4.8%
Apple Computer, Inc. (a)	33,600		718,032
Cisco Systems, Inc. (a)	49,700		1,207,213
Hewlett-Packard Co	77,200		1,773,284
International Business Machines
Corp	28,900		2,678,452
	6,376,981

Cosmetics & Toiletries—0.9%
Colgate-Palmolive Co	24,800	1,241,240
Diversified—5.2%
3M Co	24,500	2,083,235
Emerson Electric Co	34,600	2,240,350
General Electric Co	87,300	2,704,554
	7,028,139
Drugs & Health Care—5.9%
Anthem, Inc. (a)	19,400	1,455,000
HCA, Inc	27,700	1,189,992
Pfizer, Inc	79,700	2,815,801
Schering-Plough Corp	75,200	1,307,728
Wyeth	27,400	1,163,130
	7,931,651
Financial Services—7.8%
American Express Co	49,900	2,406,677
Citigroup, Inc	75,497	3,664,624
Lehman Brothers Holdings, Inc	22,000	1,698,840
Merrill Lynch & Co., Inc	21,700	1,272,705
Morgan Stanley	25,200	1,458,324
	10,501,170
Food & Beverages—4.3%
H.J. Heinz Co	36,800	1,340,624
PepsiCo, Inc	29,340	1,367,831
The Coca-Cola Co	38,800	1,969,100
The Pepsi Bottling Group, Inc	42,900	1,037,322
	5,714,877
Insurance—9.3%
American International Group, Inc	44,769	2,967,289
Berkshire Hathaway, Inc., Class A (a)	17	1,432,250
Jefferson-Pilot Corp	32,600	1,651,190
Marsh & McLennan Cos., Inc	41,700	1,997,013
MetLife, Inc	45,000	1,515,150
The Hartford Financial Services
Group, Inc	24,300	1,434,429
XL Capital, Ltd., Class A	18,800	1,457,940
	12,455,261
Leisure & Entertainment—1.1%
Mattel, Inc	77,900	1,501,133
Medical Products & Services—2.0%
Johnson & Johnson	52,800	2,727,648
Metals & Mining—1.6%
Alcoa, Inc	54,900	2,086,200

The accompanying notes are an integral part of these financial statements.

20

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Equity Portfolio (concluded)
Multimedia—1.3%
Viacom, Inc., Class B	38,100		$         1,690,878
Oil & Gas—8.6%
Baker Hughes, Inc	40,800		1,312,128
Burlington Resources, Inc	25,400		1,406,652
ChevronTexaco Corp	17,829		1,540,247
ConocoPhillips	23,680		1,552,698
Exxon Mobil Corp	99,128		4,064,248
Schlumberger, Ltd	13,200		722,304
Unocal Corp	25,100		924,433
	11,522,710
Restaurants—0.5%
Yum! Brands, Inc. (a)	20,400		701,760
Retail—3.3%
Target Corp	36,700		1,409,280
The Home Depot, Inc	64,900		2,303,301
Wal-Mart Stores, Inc	13,000		689,650
	4,402,231
Semiconductors & Components—1.3%
Intel Corp	21,600		695,520
Texas Instruments, Inc	36,500		1,072,370
	1,767,890
Telecommunications—3.4%
BellSouth Corp	69,100		1,955,530
Verizon Communications, Inc	75,800		2,659,064
	4,614,594
Telecommunications Equipment—1.1%
Nokia Oyj Sponsored ADR	83,300		1,416,100

Utilities—5.0%
Ameren Corp	29,700			1,366,200
Duke Energy Corp	22,000			449,900
Entergy Corp	27,000			1,542,510
KeySpan Corp	36,700			1,350,560
NiSource, Inc	31,000			680,140
The Southern Co	45,000		1,361,250
			6,750,560
Total Common Stocks
(Identified cost $113,162,868)			131,134,384
Preferred Stock—2.6%
Multimedia—2.6%
The News Corp., Ltd.
Sponsored ADR
(Identified cost $3,993,404)	116,400		3,521,100
	Principal
	Amount
	(000)
Repurchase Agreement—0.5%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$470,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $669,897)
(Identified cost $655,000)	$655		655,000
Total Investments
(Identified cost $117,811,272) (b)	100.9	%	$135,310,484
Liabilities in Excess of Cash
and Other Assets	(0.9	)	(1,196,638		)
Net Assets	100.0	%	$134,113,846

The accompanying notes are an integral part of these financial statements.

21

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Mid Cap Portfolio
Common Stocks—97.0%
Aerospace & Defense—2.2%
Alliant Techsystems, Inc. (a)	20,400		$          1,178,303
Apparel & Textiles—3.6%
NIKE, Inc., Class B	13,300		910,518
Polo Ralph Lauren Corp	36,500	1,051,200
		1,961,718
Automotive—1.2%
Lear Corp. (a)	11,000	674,630
Banking—4.4%
City National Corp	10,800		670,896
Mercantile Bankshares Corp	21,200		966,296
SouthTrust Corp	22,600	739,698
		2,376,890
Business Services & Supplies—10.5%
ARAMARK Corp., Class B	43,600		1,195,512
Arbitron, Inc. (a)	3,400		141,848
Avery Dennison Corp	13,900		778,678
CDW Corp	13,400		773,984
D&B Corp. (a)	11,100		562,881
Iron Mountain, Inc. (a)	16,800		664,272
Pitney Bowes, Inc	23,800		966,756
WebMD Corp. (a)	70,600	634,694
		5,718,625
Chemicals—3.3%
Ashland, Inc	15,200		669,712
Rohm & Haas Co	26,200	1,119,002
		1,788,714
Computer Software—2.9%
PeopleSoft, Inc. (a)	39,200		893,760
Storage Technology Corp. (a)	26,500	682,375
		1,576,135
Computers & Business Equipment—3.4%
Apple Computer, Inc. (a)	41,900		895,403
Lexmark International, Inc. (a)	12,300	967,272
		1,862,675
Containers—1.5%
Ball Corp	14,100	839,937
Diversified—2.1%
ITT Industries, Inc	15,800	1,172,518

Drugs & Health Care—3.5%
AmerisourceBergen Corp	14,150		794,523
Anthem, Inc. (a)	8,200		615,000
Barr Pharmaceuticals, Inc. (a)	6,500	500,175
		1,909,698
Environmental—2.0%
Republic Services, Inc	43,300	1,109,779
Financial Services—5.5%
Charter One Financial, Inc	17,400		601,170
Federated Investors, Inc., Class B	28,900		848,504
SEI Investments Co	28,100		856,207
The Student Loan Corp	4,900	715,400
		3,021,281
Food & Beverages—3.2%
The Pepsi Bottling Group, Inc	71,400	1,726,452
Household Products &
Home Furnishings—2.3%
Mohawk Industries, Inc. (a)	6,600		465,564
The Black & Decker Corp	16,300	803,916
		1,269,480
Insurance—6.7%
CIGNA Corp	14,900		856,750
Jefferson-Pilot Corp	15,100		764,815
Principal Financial Group, Inc	16,700		552,269
Protective Life Corp	26,500		896,760
XL Capital, Ltd., Class A	7,600	589,380
		3,659,974
Leisure & Entertainment—5.0%
Mandalay Resort Group	33,100		1,480,232
Mattel, Inc	65,600	1,264,112
		2,744,344
Manufacturing—1.0%
American Standard Cos., Inc. (a)	5,300	533,710
Medical Products & Services—5.7%
DaVita, Inc. (a)	14,800		577,200
Edwards Lifesciences Corp. (a)	18,500		556,480
Laboratory Corp. of America
Holdings (a)	34,000		1,256,300
STERIS Corp. (a)	33,000	745,800
		3,135,780

The accompanying notes are an integral part of these financial statements.

22

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Mid Cap Portfolio (concluded)
Oil & Gas—6.5%
Baker Hughes, Inc	21,600		$          694,656
Cooper Cameron Corp. (a)	14,500		675,700
GlobalSantaFe Corp	34,500		856,635
Unocal Corp	17,400		640,842
Valero Energy Corp	14,200	658,028
		3,525,861
Real Estate—4.9%
AMB Property Corp	25,100		825,288
Archstone-Smith Trust	37,300		1,043,654
Health Care Property Investors, Inc	16,300	828,040
		2,696,982
Restaurants—2.0%
Yum! Brands, Inc. (a)	31,050	1,068,120
Retail—7.3%
Abercrombie & Fitch Co., Class A (a)	21,500		531,265
NBTY, Inc. (a)	40,300		1,082,458
Safeway, Inc. (a)	35,800		784,378
The TJX Cos., Inc	44,700		985,635
Toys “R” Us, Inc. (a)	48,800	616,832
		4,000,568
Semiconductors & Components—1.3%
AMIS Holdings, Inc	38,600	705,608
Telecommunications—0.9%
MCI, Inc. (a)	20,500	482,775
Transportation—1.3%
Swift Transportation Co., Inc. (a)	33,000	693,660
Utilities—2.8%
KeySpan Corp	21,600		794,880
NiSource, Inc	33,000	724,020
		1,518,900
Total Common Stocks
(Identified cost $44,839,249)		52,953,117

	Principal
	Amount
	(000)
Short-Term Investments—3.9%
Repurchase Agreement—3.4%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$1,320,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $1,881,412)	$	1,841		1,841,000
Collateral for Securities on Loan—0.5%
State Street Navigator Securities
Lending Prime Portfolio,
1.0554% (d)		304		304,325
Total Short-Term Investments
(Identified cost $2,145,325)				2,145,325
Total Investments
(Identified cost $46,984,574) (b)	100.9		%		$55,098,442
Liabilities in Excess of Cash and
Other Assets		(0.9	)		(495,779	)
Net Assets	100.0		%		$54,602,663

The accompanying notes are an integral part of these financial statements.

23

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Small Cap Portfolio
Common Stocks—98.1%
Aerospace & Defense—2.1%
DRS Technologies, Inc. (a)	294,100		$         8,170,098
The Titan Corp. (a)	117,800		2,569,218
	10,739,316
Agriculture—1.0%
Delta & Pine Land Co	212,000		5,384,800
Apparel & Textiles—2.5%
The Gymboree Corp. (a)	195,700		3,371,911
The Timberland Co., Class A (a)	91,200		4,748,784
The Warnaco Group, Inc. (a)	309,500		4,936,525
	13,057,220
Automotive—0.7%
Monaco Coach Corp. (a)	140,000		3,332,000
Banking—7.7%
Chittenden Corp	79,900		2,687,836
Community First Bankshares, Inc	183,700		5,316,278
East West Bancorp, Inc	28,400		1,524,512
First Community Bancorp	99,300		3,588,702
First Midwest Bancorp, Inc	189,900		6,154,659
Hudson United Bancorp	112,900		4,171,655
Sterling Bancshares, Inc	427,500		5,698,575
United Bankshares, Inc	164,700		5,138,640
W Holding Co., Inc	163,251		3,038,101
Westamerica Bancorp	47,400		2,355,780
	39,674,738
Building & Construction—1.8%
Chicago Bridge & Iron Co. NV,
NY Shares	142,200		4,109,580
Florida Rock Industries, Inc	34,900		1,914,265
The Shaw Group, Inc. (a)	242,000		3,296,040
	9,319,885
Business Services & Supplies—5.4%
ADVO, Inc	78,150		2,482,044
BearingPoint, Inc. (a)	531,200		5,359,808
FTI Consulting, Inc. (a)	176,600		4,127,142
Herman Miller, Inc	247,700		6,011,679
PEC Solutions, Inc. (a)	94,000		1,593,300
ProQuest Co. (a)	140,700		4,143,615
Watson Wyatt & Co. Holdings (a)	180,800		4,366,320
	28,083,908

Chemicals—3.4%
Ferro Corp	173,700	4,726,377
Olin Corp	165,700	3,323,942
PolyOne Corp. (a)	704,600	4,502,394
Spartech Corp	208,600	5,139,904
	17,692,617
Computer Software—3.4%
Activision, Inc. (a)	233,300	4,246,060
Borland Software Corp. (a)	528,200	5,139,386
Mentor Graphics Corp. (a)	281,000	4,085,740
Verity, Inc. (a)	257,400	4,296,006
	17,767,192
Computers & Business Equipment—2.7%
Advanced Digital Information
Corp. (a)	197,400	2,763,600
Extreme Networks, Inc. (a)	454,500	3,276,945
Maxtor Corp. (a)	339,400	3,767,340
ScanSource, Inc. (a)	84,450	3,852,609
	13,660,494
Consumer Products—2.2%
The Scotts Co., Class A (a)	79,900	4,726,884
The Toro Co	89,000	4,129,600
The Yankee Candle Co., Inc. (a)	88,000	2,405,040
	11,261,524
Cosmetics & Toiletries—0.7%
Elizabeth Arden, Inc. (a)	181,100	3,607,512
Diversified—2.4%
Fisher Scientific International, Inc. (a)	166,300	6,879,831
The Liberty Corp	122,000	5,513,180
	12,393,011
Drugs & Health Care—7.9%
aaiPharma, Inc. (a)	269,600	6,772,352
Able Laboratories, Inc. (a)	220,400	3,982,628
Andrx Corp. (a)	258,300	6,209,532
Celgene Corp. (a)	109,000	4,907,180
Kindred Healthcare, Inc. (a)	58,400	3,035,632
LifePoint Hospitals, Inc. (a)	208,000	6,125,600
Manor Care, Inc	73,200	2,530,524
MIM Corp. (a)	605,200	4,254,556
NeighborCare, Inc. (a)	156,800	3,096,800
	40,914,804

The accompanying notes are an integral part of these financial statements.

24

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Small Cap Portfolio (continued)
Education—2.1%
Learning Tree International, Inc. (a)	287,700		$        5,003,103
Scholastic Corp. (a)	165,800		5,643,832
	10,646,935
Electrical Equipment—1.7%
Coherent, Inc. (a)	227,600		5,416,880
GrafTech International, Ltd. (a)	217,400		2,934,900
Zygo Corp. (a)	37,800		623,322
	8,975,102
Electronics—2.1%
Electro Scientific Industries, Inc. (a)	258,300		6,147,540
FLIR Systems, Inc. (a)	130,700		4,770,550
	10,918,090
Environmental—1.1%
Waste Connections, Inc. (a)	150,800		5,695,716
Financial Services—2.8%
Financial Federal Corp. (a)	161,700		4,939,935
IndyMac Bancorp, Inc	180,800		5,386,032
The South Financial Group, Inc	88,600		2,468,396
W.P. Stewart & Co., Ltd	78,900		1,698,717
	14,493,080
Food & Beverages—1.9%
American Italian Pasta Co.,
Class A (a)	144,600		6,058,740
The Robert Mondavi Corp.,
Class A (a)	92,000		3,573,280
	9,632,020
Forest & Paper Products—0.7%
Packaging Corp. of America	169,600		3,707,456
Household Products &
Home Furnishings—0.8%
Tempur-Pedic International, Inc. (a)	281,200		4,358,600
Industrial & Machinery—1.5%
Nordson Corp	121,200		4,185,036
Roper Industries, Inc	72,300		3,561,498
	7,746,534
Insurance—3.6%
HCC Insurance Holdings, Inc	185,500		5,898,900
Max Re Capital, Ltd	195,000		4,375,800
Reinsurance Group of America, Inc	75,600		2,921,940
RLI Corp	77,300		2,895,658
StanCorp Financial Group, Inc	38,700		2,433,456
	18,525,754

Leisure & Entertainment—1.6%
AMC Entertainment, Inc. (a)	284,700	4,330,287
Brunswick Corp	118,300	3,765,489
	8,095,776
Manufacturing—1.8%
Federal Signal Corp	262,100	4,591,992
Plexus Corp. (a)	270,300	4,641,051
	9,233,043
Medical Products & Services—2.7%
Covance, Inc. (a)	173,700	4,655,160
INAMED Corp. (a)	50,550	2,429,433
Inveresk Research Group, Inc. (a)	154,500	3,820,785
Varian, Inc. (a)	74,600	3,113,058
	14,018,436
Oil & Gas—5.6%
Cal Dive International, Inc. (a)	234,200	5,646,562
Helmerich & Payne, Inc	177,220	4,949,754
Key Energy Services, Inc. (a)	510,300	5,261,193
Kinder Morgan Management, LLC (a)	116,273	4,995,088
Newfield Exploration Co. (a)	128,300	5,714,482
Western Gas Resources, Inc	44,500	2,102,625
	28,669,704
Printing & Publishing—2.4%
Journal Register Co. (a)	253,900	5,255,730
Pulitzer, Inc	59,800	3,229,200
R. H. Donnelley Corp. (a)	91,800	3,657,312
	12,142,242
Real Estate—5.8%
Alexandria Real Estate Equities, Inc	43,000	2,489,700
Camden Property Trust	82,600	3,659,180
CarrAmerica Realty Corp	112,000	3,335,360
Catellus Development Corp	227,131	5,478,400
Healthcare Realty Trust, Inc	121,700	4,350,775
Maguire Properties, Inc	208,300	5,061,690
The Mills Corp	126,000	5,544,000
	29,919,105
Restaurants—1.6%
Jack in the Box, Inc. (a)	203,600	4,348,896
Sonic Corp. (a)	130,700	4,002,034
	8,350,930
Retail—0.7%
Guitar Center, Inc. (a)	109,100	3,554,478
Security Services—1.0%
Kroll, Inc. (a)	201,800	5,246,800

The accompanying notes are an integral part of these financial statements.

25

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Small Cap Portfolio (concluded)
Semiconductors & Components—4.9%
Actel Corp. (a)	161,500		$         3,892,150
AMIS Holdings, Inc	246,400		4,504,192
Exar Corp. (a)	301,800		5,154,744
Lattice Semiconductor Corp. (a)	390,800		3,782,944
Microsemi Corp. (a)	174,900		4,299,042
Zoran Corp. (a)	222,200		3,864,058
	25,497,130
Telecommunications—3.0%
C-COR.net Corp. (a)	551,800		6,141,534
CommScope, Inc. (a)	20,900		341,297
Powerwave Technologies, Inc. (a)	570,700		4,365,855
TALK America Holdings, Inc. (a)	387,300		4,461,696
	15,310,382
Transportation—3.3%
EGL, Inc. (a)	180,700		3,173,092
Forward Air Corp. (a)	111,500		3,066,250
Genesee & Wyoming, Inc., Class A (a)	131,000		4,126,500
Swift Transportation Co., Inc. (a)	199,200		4,187,184
USF Corp	77,500		2,649,725
	17,202,751
Utilities—1.5%
AGL Resources, Inc	89,600		2,607,360
Energen Corp	39,500		1,620,685
MDU Resources Group, Inc	137,100		3,264,351
	7,492,396
Total Common Stocks
(Identified cost $399,550,515)	506,321,481

	Principal
	Amount
	(000)
Convertible Bond—0.0%
Manufacturing—0.0%
TIMCO Aviation Services, Inc.,
8.00%, 01/02/07
(Identified cost $108)		$             1		0
Repurchase Agreement—2.0%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$9,390,000 United States Treasury
Bond, 10.375%, 11/15/09, with a
value of $10,246,838)
(Identified cost $10,045,000)	10,045			10,045,000
Total Investments
(Identified cost $409,595,623) (b)	100.1		%		$516,366,481
Liabilities in Excess of Cash and
Other Assets	(0.1		)		(288,585	)
Net Assets	100.0		%		$516,077,896

The accompanying notes are an integral part of these financial statements.

26

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard International Equity Portfolio
Common Stocks—98.1%
Australia—1.5%
BHP Billiton, Ltd	3,692,466		$         33,913,661
Belgium—1.6%
Fortis	1,706,360		34,307,952
Denmark—0.5%
Novo Nordisk A/S, B Shares	287,400		11,708,952
Finland—2.9%
Nokia Oyj	3,682,000		63,673,255
France—10.9%
Aventis SA	513,200		33,919,836
BNP Paribas SA	554,404		34,908,947
Carrefour SA	246,200		13,514,897
Credit Agricole SA	1,559,814		37,244,250
Lagardere SCA	493,130		28,469,389
Schneider Electric SA	268,800		17,596,749
Total SA	397,725		73,946,255
Total France	239,600,323
Germany—3.9%
Bayerische Motoren Werke AG	304,600		14,119,622
Deutsche Telekom AG (a)	2,230,400		40,821,220
Muenchener Rueckver AG	99,100		12,014,985
Siemens AG	238,700		19,118,858
Total Germany	86,074,685
Hong Kong—1.5%
CLP Holdings, Ltd	4,438,000		21,093,183
Hong Kong & China Gas Co., Ltd	7,728,000		11,795,434
Total Hong Kong	32,888,617
Ireland—4.0%
Allied Irish Banks PLC	1,378,857		22,088,120
Bank of Ireland	2,661,600		36,325,020
CRH PLC	1,410,479		28,963,887
Total Ireland	87,377,027
Italy—3.1%
Eni SpA	2,585,400		48,785,993
Snam Rete Gas SpA	4,889,900		20,724,071
Total Italy	69,510,064
Japan—17.3%
ACOM Co., Ltd	686,350		31,124,951
Canon, Inc	958,000		44,605,953
East Japan Railway Co	5,574		26,265,466

Fanuc, Ltd	371,800	22,272,614
Funai Electric Co., Ltd	47,100	6,464,878
Honda Motor Co., Ltd	686,000	30,468,975
Japan Tobacco, Inc	962	7,046,468
Kao Corp	675,000	13,730,522
NEC Electronics Corp	148,100	10,834,226
Nissan Motor Co., Ltd	3,224,900	36,831,927
Nomura Holdings, Inc	2,496,000	42,504,432
NTT DoCoMo, Inc	13,050	29,589,904
Rohm Co., Ltd	100,500	11,778,296
Shin-Etsu Chemical Co., Ltd	288,000	11,770,458
Takeda Chemical Industries, Ltd	956,900	37,947,420
Tokyo Gas Co., Ltd	5,363,000	19,116,040
Total Japan	382,352,530
Netherlands—7.8%
ABN AMRO Holding NV	664,160	15,540,051
Heineken NV	810,281	30,855,641
Koninklijke (Royal) KPN NV (a)	5,629,600	43,457,503
Koninklijke (Royal) Philips
Electronics NV	1,578,825	46,102,110
Royal Dutch Petroleum Co	672,066	35,434,313
Total Netherlands	171,389,618
Norway—0.6%
Statoil ASA	1,208,900	13,583,044
Singapore—2.1%
Oversea-Chinese Banking
Corp., Ltd	3,797,850	27,058,815
United Overseas Bank, Ltd	2,466,897	19,173,903
Total Singapore	46,232,718
Spain—2.7%
Altadis SA	779,200	22,113,998
Endesa SA	1,929,131	37,107,985
Total Spain	59,221,983
Sweden—0.5%
Sandvik AB	327,400	11,284,477
Switzerland—9.2%
Compagnie Financiere
Richemont AG, A Shares	1,195,500	28,709,400
Credit Suisse Group	1,404,100	51,372,973
Roche Holding AG	378,100	38,138,650
Swiss Re	593,900	40,097,554
UBS AG	664,096	45,481,246
Total Switzerland	203,799,823

The accompanying notes are an integral part of these financial statements.

27

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard International Equity Portfolio (concluded)
United Kingdom—28.0%
Barclays PLC	5,138,300		$        45,830,701
Boots Group PLC	1,716,300		21,230,537
BP PLC	5,704,900		46,263,233
Cadbury Schweppes PLC	4,401,770		32,327,020
Diageo PLC	2,902,342		38,187,890
GlaxoSmithKline PLC	2,699,201		61,849,321
HSBC Holdings PLC	5,343,169		83,981,411
Imperial Tobacco Group PLC	788,740		15,531,603
Kesa Electricals PLC	1,626,419		7,489,927
Rentokil Initial PLC	8,714,900		29,641,880
Rio Tinto PLC	999,500		27,608,224
Royal Bank of Scotland
Group PLC	1,687,500		49,723,690
Smiths Group PLC	1,737,500		20,559,664
Tesco PLC	5,816,500		26,838,000
Unilever PLC	2,314,600		21,577,194
Vodafone Group PLC	36,463,500		90,406,127
Total United Kingdom	619,046,422
Total Common Stocks
(Identified cost $1,780,492,582)	2,165,965,151
Preferred Stock—0.6%
Germany—0.6%
Porsche AG
(Identified cost $10,755,542)	22,800		13,531,587

	Principal
	Amount
	(000)
Repurchase Agreement—1.3%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$4,140,000 United States Treasury
Bond, 10.375%, 11/15/09, with a
value of $4,517,775 and
$24,700,000 United States Treasury
Note, 7.25%, 05/15/04, with a
value of $25,502,750)
(Identified cost $29,429,000)		$      29,429		29,429,000
Total Investments
(Identified cost $1,820,677,124) (b)	100.0		%		$2,208,925,738
Cash and Other Assets in Excess
of Liabilities		—			10,661
Net Assets	100.0		%		$2,208,936,399

The accompanying notes are an integral part of these financial statements.

28

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard International Equity Select Portfolio
Common Stocks—97.0%
Denmark—2.1%
Danske Bank A/S Sponsored ADR	15,300		$        358,969
Finland—3.6%
Nokia Oyj Sponsored ADR	35,700	606,900
France—11.7%
Aventis SA Sponsored ADR	5,600		371,056
Axa Sponsored ADR	16,650		357,475
Societe Generale Sponsored ADR	31,000		547,426
Total SA Sponsored ADR	7,800	721,578
Total France		1,997,535
Germany—2.1%
Siemens AG Sponsored ADR	4,600	367,724
Ireland—3.0%
Allied Irish Banks PLC
Sponsored ADR	16,000	508,000
Italy—5.2%
Eni SpA Sponsored ADR	5,600		531,888
Sanpaolo IMI SpA Sponsored ADR	13,500	350,055
Total Italy		881,943
Japan—5.2%
Canon, Inc. Sponsored ADR	9,500		452,580
Kao Corp. Unsponsored ADR	2,100	427,172
Total Japan		879,752
Netherlands—9.3%
ABN AMRO Holding NV
Sponsored ADR	17,400		408,552
Heineken NV ADR	16,600		632,131
Royal Dutch Petroleum Co.,
NY Shares	10,500	550,095
Total Netherlands		1,590,778
Spain—3.2%
Endesa SA Sponsored ADR	29,000	553,900
Switzerland—18.7%
Compagnie Financiere Richemont AG
Sponsored ADR	13,900		333,803
Credit Suisse Group Sponsored ADR	9,000		326,970
Nestle SA Sponsored ADR	10,000		624,621
Novartis AG ADR	11,400		523,146
Roche Holding AG Sponsored ADR	3,700		373,216
Swiss Re Sponsored ADR	5,000		337,578
UBS AG	10,000	679,900
Total Switzerland		3,199,234

United Kingdom—32.9%
Barclays PLC Sponsored ADR	18,100				657,935
BP PLC Sponsored ADR	10,700				528,045
Cadbury Schweppes PLC
Sponsored ADR	23,600				705,404
Diageo PLC Sponsored ADR	13,100				692,466
GlaxoSmithKline PLC ADR	13,900				648,018
HSBC Holdings PLC Sponsored ADR	8,300				654,206
Tesco PLC Sponsored ADR	25,000				346,060
Unilever PLC Sponsored ADR	17,600				661,760
Vodafone Group PLC
Sponsored ADR	28,600			716,144
Total United Kingdom				5,610,038
Total Common Stocks
(Identified cost $14,071,001)				16,554,773
	Principal
	Amount
	(000)
Repurchase Agreement—2.9%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$360,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $513,112)
(Identified cost $497,000)		$        497		497,000
Total Investments
(Identified cost $14,568,001) (b)	99.9		%	$17,051,773
Cash and Other Assets in Excess
of Liabilities	0.1				15,158
Net Assets	100.0		%	$17,066,931

The accompanying notes are an integral part of these financial statements.

29

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard International Small Cap Portfolio
Common Stocks—96.5%
Australia—4.2%
John Fairfax Holdings, Ltd	2,899,196		$         7,689,086
Macquarie Infrastructure Group	5,397,656		13,827,338
TABCORP Holdings, Ltd	769,400		6,510,081
Total Australia	28,026,505
Austria—1.7%
Erste Bank der Oesterreichischen
Sparkassen AG	92,900		11,480,073
Belgium—0.7%
Solvus SA (a)	290,709		4,213,222
Canada—1.1%
Intrawest Corp	382,300		7,070,590
Finland—5.2%
Amer Group, Ltd	339,500		14,709,650
Sampo Oyj, A Shares	1,097,600		11,352,559
Tietoenator Oyj	314,600		8,611,013
Total Finland	34,673,222
France—3.5%
Carbone Lorraine SA	160,800		5,912,354
Neopost SA	345,300		17,421,774
Total France	23,334,128
Germany—7.1%
Fielmann AG	146,700		6,792,823
Medion AG	204,800		8,008,062
MG Technologies AG	511,100		7,155,907
Puma AG	70,400		12,431,871
Stada Arzneimittel AG	125,300		7,772,763
Techem AG (a)	257,846		4,992,345
Total Germany	47,153,771
Greece—1.6%
OPAP SA	725,650		10,507,633
Hong Kong—2.9%
Esprit Holdings, Ltd	4,710,065		15,652,188
Shaw Brothers (Hong Kong), Ltd	3,245,500		3,532,375
Total Hong Kong	19,184,563
Ireland—4.1%
Anglo Irish Bank Corp. PLC	879,830		13,883,274
DCC PLC	768,000		10,481,520
Waterford Wedgwood PLC	10,256,613		2,846,181
Total Ireland	27,210,975

Italy—2.6%
Davide Campari-Milano SpA	255,900	12,427,015
Interpump Group SpA	1,038,200	4,648,846
Total Italy	17,075,861
Japan—10.9%
Daito Trust Construction Co., Ltd	337,000	9,999,627
Hisamitsu Pharmaceutical Co., Inc	432,000	5,103,219
Nichii Gakkan Co	118,690	6,733,556
Nissin Kogyo Co., Ltd	358,800	7,934,646
Sammy Corp	277,500	6,848,815
Secom Techno Service Co., Ltd	114,000	3,074,181
The Suruga Bank, Ltd	1,170,000	7,521,974
Uniden Corp	524,000	9,617,505
USS Co., Ltd	147,800	10,453,709
Yoshinoya D&C Co., Ltd	3,317	4,828,329
Total Japan	72,115,561
Netherlands—9.8%
Euronext NV	321,000	8,126,213
Fugro NV	247,827	12,753,947
Holdingmaatschappij De
Telegraaf NV	453,400	10,236,945
Hunter Douglas NV	383,893	17,969,540
IHC Caland NV	147,402	7,994,801
Koninklijke Boskalis Westminster NV	312,136	8,232,537
Total Netherlands	65,313,983
Norway—1.2%
DnB NOR ASA	1,228,400	8,198,196
Spain—9.1%
Abengoa SA	638,000	4,643,359
Aldeasa SA	268,500	6,773,453
Altadis SA	418,200	11,868,678
Banco Pastor SA	258,369	7,932,257
Corporacion Mapfre SA	1,031,800	14,615,413
Indra Sistemas SA (a)	536,800	6,886,036
Prosegur SA, Compania de Seguridad	477,800	7,774,486
Total Spain	60,493,682
Sweden—7.5%
Alfa Laval AB	737,400	11,221,951
Autoliv, Inc. (a)	176,300	6,689,075
D. Carnegie & Co. AB	452,100	4,461,121
Eniro AB	748,800	7,180,687
Swedish Match AB	2,006,500	20,496,400
Total Sweden	50,049,234

The accompanying notes are an integral part of these financial statements.

30

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard International Small Cap Portfolio (concluded)
Switzerland—3.1%
Edipresse SA	21,860		$      10,605,215
Kaba Holding AG, B Shares	50,501		10,208,409
Total Switzerland	20,813,624
United Kingdom—20.2%
Bunzl PLC	1,104,019		8,434,121
Carpetright PLC	674,800		10,008,231
Cattles PLC	1,187,700		7,106,699
Euromoney Institutional Investor PLC	244,676		1,715,893
Intertek Group PLC	970,200		8,006,670
Kidde PLC	6,751,700		12,872,191
Luminar PLC	535,100		3,898,694
Man Group PLC	522,227		13,658,383
Northgate PLC	843,400		7,851,031
Reckitt Benckiser PLC	434,965		9,842,176
Signet Group PLC Sponsored ADR	290,012		16,226,171
Singer & Friedlander Group PLC	1,572,816		5,863,442
Trinity Mirror PLC	1,255,800		12,701,607
William Hill PLC	1,415,200		10,817,712
Wood Group (John) PLC	2,225,200		5,367,692
Total United Kingdom	134,370,713
Total Common Stocks
(Identified cost $466,816,872)	641,285,536
Warrant—0.0%
Japan—0.0%
Belluna Co., Ltd. Right,
09/29/06
(Identified cost $20,894) (a), (e)	21,850		0

	Principal
	Amount
	(000)
Short-Term Investments—12.3%
Repurchase Agreement—3.4%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$16,130,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $22,990,283)		$   22,533		22,533,000
Collateral for Securities on Loan—8.9%
State Street Navigator Securities
Lending Prime Portfolio,
1.0554% (d)		59,090		59,090,297
Total Short-Term Investments
(Identified cost $81,623,297)				81,623,297
Total Investments
(Identified cost $548,461,063) (b)	108.8		%		$722,908,833
Liabilities in Excess of Cash and
Other Assets		(8.8	)		(58,544,286	)
Net Assets	100.0		%		$664,364,547

The accompanying notes are an integral part of these financial statements.

31

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Emerging Markets Portfolio
Common Stocks—90.4%
Argentina—0.8%
Tenaris SA ADR	156,942		$        5,229,307
Brazil—7.3%
Brasil Telecom Participacoes SA ADR	111,800		4,226,040
Companhia Vale do Rio Doce ADR	206,400		12,074,400
Empresa Brasileira de
Aeronautica SA ADR	319,000		11,174,570
Petroleo Brasileiro SA ADR	321,000		9,386,040
Souza Cruz SA	707,600		7,424,281
Total Brazil	44,285,331
Chile—1.7%
Administradora de Fondos de Pensiones
Provida SA Sponsored ADR	363,600		10,257,156
China—1.0%
Beijing Capital Land Ltd., H Shares	1,750,100		462,110
Sinotrans, Ltd	12,062,000		5,437,707
Total China	5,899,817
Croatia—1.4%
Pliva d.d. GDR (c)	541,250		8,750,768
Czech Republic—0.8%
Cesky Telecom AS	459,200		5,222,074
Egypt—1.3%
Commercial International Bank	1,042,682		3,720,844
MobiNil	352,254		4,314,469
Total Egypt	8,035,313
Hong Kong—2.9%
China Mobile (Hong Kong), Ltd.
Sponsored ADR	567,900		8,819,487
China Resources Power
Holdings Co., Ltd	1,848,000		856,905
CNOOC, Ltd. ADR	197,800		7,896,176
Total Hong Kong	17,572,568
Hungary—2.5%
Gedeon Richter Rt	130,890		15,495,396
India—9.2%
Hero Honda Motors, Ltd	398,400		3,919,383
Hindalco Industries, Ltd	259,847		8,020,658
Hindustan Lever, Ltd	941,600		4,224,560
Reliance Industries, Ltd	998,900		12,545,089
Satyam Computer Services, Ltd	1,296,500		10,438,779
State Bank of India	1,449,900		17,112,792
Total India	56,261,261

Indonesia—3.9%
PT Bank Mandiri	16,868,500	2,002,790
PT Hanjaya Mandala
Sampoerna Tbk	17,755,300	9,433,656
PT Telekomunikasi Indonesia Tbk	2,665,000	2,135,797
PT Telekomunikasi Indonesia Tbk
Sponsored ADR	638,000	10,475,960
Total Indonesia	24,048,203
Israel—2.4%
Bank Hapoalim, Ltd	2,431,100	5,974,034
Koor Industries, Ltd. (a)	218,457	8,499,696
Total Israel	14,473,730
Mexico—7.5%
America Telecom SA de CV,
Series A1 Shares (a)	5,179,900	6,729,987
Cemex SA de CV Sponsored ADR	168,085	4,403,827
Fomento Economico Mexicano SA
de CV Sponsored ADR	112,400	4,145,312
Grupo Financiero Banorte SA de CV,
Series O Shares	1,407,200	4,883,828
Grupo Televisa SA Sponsored ADR	135,300	5,393,058
Kimberly-Clark de Mexico SA de CV,
Series A Shares	1,558,200	3,993,518
Telefonos de Mexico SA de CV,
Series L Shares Sponsored ADR	494,200	16,323,426
Total Mexico	45,872,956
Peru—0.9%
Credicorp, Ltd	392,400	5,238,540
Philippines—0.9%
Philippine Long Distance Telephone Co.
Sponsored ADR (a)	305,800	5,327,036
Russia—2.4%
LUKOIL Sponsored ADR	84,800	7,894,880
Wimm-Bill-Dann Foods OJSC
ADR (a)	287,900	4,894,300
YUKOS ADR	46,800	1,965,600
Total Russia	14,754,780
South Africa—11.2%
ABSA Group, Ltd	1,861,423	11,751,366
Impala Platinum Holdings, Ltd	90,700	7,881,049
Iscor, Ltd	3,010,027	12,987,083
Kumba Resources, Ltd	900,600	4,958,359
Old Mutual PLC	3,655,000	6,019,563
Sanlam, Ltd	3,436,500	4,530,517
Sappi, Ltd	358,000	4,880,599
Sasol, Ltd	541,500	7,706,741

The accompanying notes are an integral part of these financial statements.

32

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Description	Shares	Value
Lazard Emerging Markets Portfolio (concluded)
Steinhoff International
Holdings, Ltd	6,570,932		$        7,530,731
Total South Africa	68,246,008
South Korea—19.7%
Daewoo Shipbuilding & Marine
Engineering Co., Ltd. GDR (c)	267,630		6,784,421
Hite Brewery Co., Ltd	64,900		4,760,604
Kookmin Bank	564,683		21,160,802
KT Corp. Sponsored ADR	644,236		12,285,581
LG Electronics, Inc	86,700		4,264,054
LG Household & Health Care, Ltd	159,400		4,160,587
POSCO	52,000		7,113,722
POSCO ADR	96,700		3,284,899
Samsung Electronics Co., Ltd	58,781		22,249,460
Samsung Fire & Marine
Insurance Co., Ltd	120,538		6,929,797
Samsung SDI Co., Ltd	53,500		6,308,645
SK Corp	262,000		6,025,010
SK Telecom Co., Ltd	90,030		15,036,483
Total South Korea	120,364,065
Taiwan—6.7%
Advantech Co., Ltd	3,496,640		6,025,138
Ambit Microsystems Corp	2,011,500		5,302,776
Chinatrust Financial Holding Co., Ltd	5,562,965		5,587,544
Chunghwa Telecom Co., Ltd. ADR	126,300		1,831,350
Compal Electronics, Inc	1,952,700		2,674,538
Compal Electronics, Inc. GDR	348,214		2,420,087
Fubon Financial Holding Co., Ltd	8,201,000		7,850,736
United Microelectronics Corp. (a)	6,615,522		5,670,447
United Microelectronics Corp.
ADR (a)	720,710		3,567,515
Total Taiwan	40,930,131
Thailand—3.9%
Delta Electronics (Thailand) PCL	5,781,800		3,866,937
PTT PCL (c)	3,604,100		14,553,751
Thai Union Frozen Products PCL	6,337,100		5,117,981
Total Thailand	23,538,669
Turkey—0.9%
Turkiye Garanti Bankasi AS ADR
(a), (c)	1,818,740		5,307,265
Venezuela—1.1%
Compania Anonima Nacional
Telefonos de Venezuela ADR	430,873		6,575,122
Total Common Stocks
(Identified cost $390,117,356)	551,685,496

Preferred Stocks—5.9%
Brazil—5.9%
Caemi Mineracao e
Metalurgica SA (a)	30,079,900			13,241,412
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar Sponsored ADR	164,900			4,147,235
Companhia de Bebidas das
Americas ADR	287,791			7,341,548
Companhia Paranaense de Energia-
Copel Sponsored ADR (a)	1,239,299			5,911,456
Telemar Norte Leste SA	259,600,000		5,183,002
Total Preferred Stocks
(Identified cost $25,985,778)			35,824,653
	Principal
	Amount
	(000)
Short-Term Investments—12.7%
Repurchase Agreement—6.0%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$8,055,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $11,480,888 and
$24,700,000 United States Treasury
Note, 7.25%, 05/15/04, with a
value of $25,502,750)	$    36,254		36,254,000
Collateral for Securities on Loan—6.7%
State Street Navigator Securities
Lending Prime Portfolio,
1.0554% (d)	41,065		41,065,473
Total Short-Term Investments
(Identified cost $77,319,473)			77,319,473
Total Investments
(Identified cost $493,422,607) (b)	109.0	%	$664,829,622
Liabilities in Excess of Cash and
Other Assets	(9.0	)	(54,666,628		)
Net Assets	100.0	%	$610,162,994

The accompanying notes are an integral part of these financial statements.

33

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard Bond Portfolio
Asset-Backed Securities—12.0%
Bank One Issuance Trust:
Series 2002-B1, Class B1,
1.5425%, 12/15/09 (f)	$	640	$	642,725
Series 2002-A2, Class A2,
4.16%, 01/15/08		600		619,488
Chase Credit Card Master Trust,
Series 2002-1, Class B,
1.5525%, 06/15/09 (f)		675		678,014
Citibank Credit Card Issuance Trust:
Series 2002-A9, Class A9,
1.21%, 12/17/07 (f)		675		675,194
Series 2000-C1, Class C1,
7.45%, 09/15/07		495		534,318
Fleet Credit Card Master Trust II,
Series 2003-A, Class A,
2.40%, 07/15/08		585		587,170
Ford Credit Auto Owner Trust,
Series 2001-B, Class A5,
5.36%, 06/15/05		460		465,508
Harley-Davidson Motorcycle Trust:
Series 2003-4, Class A1,
1.47%, 04/15/08		470		470,300
Series 2003-1, Class A2,
2.63%, 11/15/10		450		452,548
MBNA Credit Card Master Note Trust,
Series 2001-C3, Class C3,
6.55%, 12/15/08		550		592,922
MBNA Master Credit Card Trust,
Series 2000-D, Class A,
1.3625%, 09/15/09 (f)		640		643,153
Total Asset-Backed Securities
(Identified cost $6,400,136)		6,361,340
Commercial Mortgage-Backed Securities—5.0%
Bear Stearns Commercial Mortgage
Securities, Inc., Series 2003-T10,
Class A2,
4.74%, 03/13/40		625		623,727
First Union Commercial Mortgage Trust,
Series 1999-C1, Class A2,
6.07%, 10/15/35		625		686,068
First Union-Lehman Brothers-Bank of
America, Series 1998-C2, Class A2,
6.56%, 11/18/35		650		724,536

GMAC Commercial Mortgage Securities,
Inc., Series 1999-C1, Class A2,
6.175%, 05/15/33	530		584,431
Total Commercial Mortgage-Backed
Securities
(Identified cost $2,605,943)		2,618,762
Corporate Bonds—46.6%
Aerospace & Defense—1.2%
Boeing Capital Corp.,
5.75%, 02/15/07	570	611,683
Automotive—2.3%
Ford Motor Credit Co.,
7.00%, 10/01/13	570		597,677
General Motors Acceptance Corp.,
6.875%, 09/15/11	570		613,330
Venture Holdings Co. LLC,
12.00%, 06/01/09 (a), (g)	50	5
		1,211,012
Banking—5.7%
Bank of America Corp.,
7.40%, 01/15/11	450		526,999
Bank One Corp.,
6.00%, 08/01/08	550		604,153
Sovereign Bank,
5.125%, 03/15/13	290		287,503
U. S. Bancorp,
3.125%, 03/15/08	625		616,444
Wachovia Corp.,
4.95%, 11/01/06	450		477,235
Wells Fargo & Co.,
5.90%, 05/21/06	485	523,759
		3,036,093
Brewery—0.6%
Anheuser-Busch Cos., Inc.,
7.50%, 03/15/12	250	299,385
Cable & Broadcasting—1.1%
AT&T Broadband Corp.,
8.375%, 03/15/13	470	574,806
Computers & Business Equipment—1.0%
Hewlett-Packard Co.,
5.50%, 07/01/07	475	509,415

The accompanying notes are an integral part of these financial statements.

34

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard Bond Portfolio (continued)
Consumer Products—0.7%
Fortune Brands, Inc.,
2.875%, 12/01/06	$	375	$	375,932
Diversified—0.5%
Emerson Electric Co.,
5.75%, 11/01/11		235	253,154
Energy—3.1%
Baker Hughes, Inc.,
6.00%, 02/15/09		495		546,111
Conoco Funding Co.,
6.35%, 10/15/11		430		480,757
USX Corp.,
6.65%, 02/01/06		570	617,181
			1,644,049
Financial Services—10.3%
American Express Co.,
3.75%, 11/20/07		515		523,433
American General Finance Corp.,
5.375%, 10/01/12		545		561,517
Bear Stearns Cos., Inc.,
4.00%, 01/31/08		555		564,886
CIT Group, Inc.,
4.125%, 02/21/06		545		563,020
Citigroup, Inc.,
5.00%, 03/06/07		500		530,164
General Electric Capital Corp.,
5.35%, 03/30/06		565		602,604
Goldman Sachs Group, Inc.,
6.60%, 01/15/12		425		473,627
Household Finance Corp.,
5.75%, 01/30/07		520		561,194
MBNA America Bank NA,
7.125%, 11/15/12		225		256,948
MBNA Corp.,
5.625%, 11/30/07		265		283,351
SLM Corp.,
4.00%, 01/15/09		530	533,641
			5,454,385
Food & Beverages—2.3%
General Mills, Inc.,
2.625%, 10/24/06		505		502,268
PepsiAmericas, Inc.,
3.875%, 09/12/07		205		208,220
Sara Lee Corp.,
6.25%, 09/15/11		475	524,907
			1,235,395

Forest & Paper Products—0.1%
Smurfit Capital Funding PLC,
7.50%, 11/20/25	70		68,162
Insurance—1.9%
Allstate Corp.,
7.50%, 06/15/13	455		541,263
MetLife, Inc.,
5.00%, 11/24/13	490	486,467
		1,027,730
Medical Products & Services—0.5%
Becton, Dickinson & Co.,
4.55%, 04/15/13	275	267,808
Multimedia—2.4%
AOL Time Warner, Inc.,
6.875%, 05/01/12	640		719,379
Viacom, Inc.,
7.75%, 06/01/05	485	524,906
		1,244,285
Printing & Publishing—1.3%
Times Mirror Co.,
7.25%, 03/01/13	575	676,443
Real Estate—0.5%
Rouse Co.,
5.375%, 11/26/13	250	246,810
Retail—1.0%
Wal-Mart Stores, Inc.:
4.55%, 05/01/13	300		294,991
8.00%, 09/15/06	205	233,701
		528,692
Telecommunications—3.0%
AT&T Wireless Services, Inc.,
8.125%, 05/01/12	470		551,090
SBC Communications, Inc.,
5.75%, 05/02/06	460		493,952
Verizon Global Funding Corp.,
6.125%, 06/15/07	500	548,408
		1,593,450
Utilities—7.1%
Alabama Power Co.,
2.65%, 02/15/06	545		548,550
American Electric Power Co., Inc.,
Series A,
6.125%, 05/15/06	310		333,879
Georgia Power Co., Series J,
4.875%, 07/15/07	150		157,992

The accompanying notes are an integral part of these financial statements.

35

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard Bond Portfolio (concluded)
MidAmerican Energy Co.,
6.375%, 06/15/06	$	454	$	493,909
Peco Energy Co.,
3.50%, 05/01/08		590		589,348
Public Service Electric & Gas Co.,
6.375%, 05/01/08		500		552,383
Virginia Electric & Power Co., Series A,
5.375%, 02/01/07		575		612,892
Wisconsin Electric Power Co.,
4.50%, 05/15/13		500	488,281
			3,777,234
Total Corporate Bonds
(Identified cost $24,354,290)			24,635,923
Mortgage Pass-Through Security—5.0%
Government National Mortgage
Association, Pool#595273,
6.00%, 12/15/32
(Identified cost $2,659,792)		2,520	2,624,827
U.S. Government Securities—9.3%
Federal Home Loan Mortgage Corp.,
3.625%, 09/15/08		1,550		1,557,812
Federal National Mortgage Association:
1.875%, 09/15/05		1,815		1,816,851
4.625%, 10/15/13		1,565	1,552,605
Total U.S. Government Securities
(Identified cost $4,940,866)			4,927,268

U.S. Treasury Securities—14.7%
United States Treasury Bill,
0.9053%, 01/15/04		310			309,899
United States Treasury Notes:
2.25%, 07/31/04		3,610			3,634,548
3.125%, 09/15/08		2,850			2,848,091
4.25%, 11/15/13		1,000		998,920
Total U.S. Treasury Securities
(Identified cost $7,796,085)				7,791,458
Repurchase Agreement—3.0%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$1,130,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $1,610,603)
(Identified cost $1,577,000)		1,577		1,577,000
Total Investments
(Identified cost $50,334,112) (b)	95.6		%	$	50,536,578
Cash and Other Assets in Excess
of Liabilities		4.4		2,301,303
Net Assets	100.0		%	$	52,837,881

The accompanying notes are an integral part of these financial statements.

36

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio
Corporate Bonds—95.2%
Aerospace & Defense—1.3%
Armor Holdings, Inc.,
8.25%, 08/15/13 (c)	$	600	$	642,000
Sequa Corp., Series B,
8.875%, 04/01/08		1,025		1,112,125
		1,754,125
Agriculture—0.6%
Hines Nurseries, Inc.,
10.25%, 10/01/11 (c)		775		844,750
Apparel & Textiles—0.6%
Foamex LP,
9.875%, 06/15/07		930		739,350
Automotive—4.3%
Dana Corp.,
9.00%, 08/15/11		825		994,125
General Motors Corp.,
7.125%, 07/15/13		850		930,096
HLI Operating Co., Inc.,
10.50%, 06/15/10		475		546,844
Sonic Automotive, Inc., Series B,
8.625%, 08/15/13		1,155		1,218,525
TRW Automotive, Inc.:
9.375%, 02/15/13		700		799,750
11.00%, 02/15/13		350		412,125
United Components, Inc.,
9.375%, 06/15/13		700		764,750
Venture Holdings Co. LLC,
12.00%, 06/01/09 (a), (g)		1,930		193
		5,666,408
Building & Construction—2.0%
KB Home,
7.75%, 02/01/10		1,050		1,113,000
Nortek, Inc., Series B,
9.875%, 06/15/11		690		760,725
WCI Communities, Inc.,
7.875%, 10/01/13 (c)		650		685,750
		2,559,475
Building Materials—2.2%
Legrand SA,
8.50%, 02/15/25		1,150		1,214,688
Texas Industries, Inc.,
10.25%, 06/15/11 (c)		525		593,250
Thomas & Betts Corp.,
7.25%, 06/01/13		1,000		1,030,000
		2,837,938

Cable Television—4.9%
Charter Communications Holdings LLC,
10.75%, 10/01/09	1,000	917,500
CSC Holdings, Inc., Series B,
7.625%, 04/01/11	1,190	1,252,475
EchoStar DBS Corp.:
5.75%, 10/01/08 (c)	250	252,813
9.125%, 01/15/09	195	218,156
10.375%, 10/01/07	490	537,162
Mediacom Broadband LLC,
11.00%, 07/15/13	750	841,875
Mediacom LLC, Series B,
8.50%, 04/15/08	375	382,500
Pegasus Communications Corp.,
Series B,
12.50%, 08/01/07	1,110	1,048,950
Shaw Communications, Inc.,
7.25%, 04/06/11	900	973,125
	6,424,556
Chemicals—3.6%
Acetex Corp.,
10.875%, 08/01/09 (c)	1,000	1,110,000
ARCO Chemical Co.,
9.80%, 02/01/20	1,015	1,020,075
Huntsman ICI Chemicals,
10.125%, 07/01/09	825	849,750
Lyondell Chemical Co., Series A,
9.625%, 05/01/07	500	530,000
Rhodia SA,
7.625%, 06/01/10 (c)	475	456,000
Westlake Chemical Corp.,
8.75%, 07/15/11 (c)	725	793,875
	4,759,700
Consumer Products—0.9%
Icon Health & Fitness, Inc.,
11.25%, 04/01/12	465	506,850
Sola International, Inc.,
6.875%, 03/15/08	685	692,706
	1,199,556
Containers—1.6%
Crown Euro Holdings SA:
9.50%, 03/01/11	850	962,625
10.875%, 03/01/13	500	588,125
Owens-Brockway Glass Container,
8.75%, 11/15/12	500	556,875
	2,107,625

The accompanying notes are an integral part of these financial statements.

37

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

             

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio (continued)
Diversified—2.6%
AMSTED Industries, Inc.,
10.25%, 10/15/11 (c)	$	1,430	$	1,580,150
Sensus Metering Systems, Inc.,
8.625%, 12/15/13 (c)		500		513,125
Tyco International Group SA,
6.375%, 02/15/06		1,180		1,256,700
		3,349,975
Electronics—0.6%
PerkinElmer, Inc.,
8.875%, 01/15/13		650		744,250
Energy—8.9%
ANR Pipeline, Inc.,
8.875%, 03/15/10		500		562,500
Chesapeake Energy Corp.,
9.00%, 08/15/12		535		615,250
CITGO Petroleum Corp.,
11.375%, 02/01/11		925		1,073,000
Compton Petroleum Corp.,
9.90%, 05/15/09		245		267,050
El Paso Natural Gas Co., Series A,
7.625%, 08/01/10		975		1,001,813
El Paso Production Holding Co.,
7.75%, 06/01/13 (c)		1,055		1,039,175
Energy Partners, Ltd.,
8.75%, 08/01/10		1,230		1,279,200
Northwest Pipelines Corp.,
8.125%, 03/01/10		850		943,500
Premcor Refining Group, Inc.,
7.50%, 06/15/15		1,025		1,050,625
Southern Natural Gas Co.,
8.875%, 03/15/10		500		562,500
Tesoro Petroleum Corp.:
8.00%, 04/15/08		250		265,625
9.625%, 04/01/12		635		695,325
Tom Brown, Inc.,
7.25%, 09/15/13		650		687,375
Williams Cos., Inc.:
6.50%, 08/01/06		275		284,625
6.625%, 11/15/04		470		481,750
8.625%, 06/01/10		465		521,962
Williams Holdings of Delaware,
6.25%, 02/01/06		295		302,375
		11,633,650

Environmental—1.6%
Allied Waste North America, Inc.,
Series B:
8.875%, 04/01/08	230	257,600
10.00%, 08/01/09	995	1,074,600
Browning-Ferris Industries, Inc.,
7.40%, 09/15/35	775	734,313
	2,066,513
Equipment Rental—3.0%
H&E Equipment Services LLC,
11.125%, 06/15/12	780	783,900
Mobile Mini, Inc.,
9.50%, 07/01/13	350	385,000
NationsRent, Inc.,
9.50%, 10/15/10 (c)	525	564,375
United Rentals, Inc., Series B,
10.75%, 04/15/08	1,100	1,237,500
Williams Scotsman, Inc.,
9.875%, 06/01/07	950	961,875
	3,932,650
Financial Services—0.8%
WMC Finance Co.,
11.75%, 12/15/08 (c)	1,000	997,500
Food & Beverages—3.5%
Burns Philp Capital Property, Ltd.,
9.75%, 07/15/12 (c)	1,325	1,417,750
Chiquita Brands International, Inc.,
10.56%, 03/15/09	1,055	1,168,413
Le-Natures, Inc.,
9.00%, 06/15/13 (c)	675	712,125
Merisant Co.,
9.50%, 07/15/13 (c)	1,015	1,080,975
Reddy Ice Group, Inc.,
8.875%, 08/01/11 (c)	250	265,000
	4,644,263
Forest & Paper Products—4.6%
Blue Ridge Paper Product, Inc.,
9.50%, 12/15/08 (c)	300	300,000
Bowater, Inc.,
6.50%, 06/15/13	1,300	1,261,659
Caraustar Industries, Inc.,
9.875%, 04/01/11	1,055	1,139,400
Georgia-Pacific Corp.,
9.50%, 12/01/11	500	580,000

The accompanying notes are an integral part of these financial statements.

38

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio (continued)
Kappa Beheer BV,
10.625%, 07/15/09	$	870	$	930,900
Smurfit Capital Funding PLC,
7.50%, 11/20/25		1,055		1,027,306
Tembec Industries, Inc.,
8.50%, 02/01/11		750		776,250
		6,015,515
Gaming—4.4%
Majestic Star Casino LLC,
9.50%, 10/15/10 (c)		1,000		1,025,000
Mandalay Resort Group:
9.375%, 02/15/10		590		687,350
Series B,
10.25%, 08/01/07		655		756,525
Sun International Hotels, Ltd.,
8.875%, 08/15/11		715		781,138
Venetian Casino Resort LLC,
11.00%, 06/15/10		1,000		1,160,000
Wheeling Island Gaming, Inc.,
10.125%, 12/15/09		305		323,300
Wynn Las Vegas LLC,
12.00%, 11/01/10		825		971,437
		5,704,750
Gas Distribution—1.1%
Ferrellgas Partners LP,
8.75%, 06/15/12		865		951,500
Suburban Propane Partners LP,
6.875%, 12/15/13 (c)		450		454,500
		1,406,000
Health Services—2.4%
Fresenius Medical Capital Trust,
7.875%, 02/01/08		970		1,028,200
Quintiles Transnational Corp.,
10.00%, 10/01/13 (c)		650		702,000
Service Corp. International,
6.875%, 10/01/07		1,360		1,407,600
		3,137,800
Hotels—3.3%
Host Marriott LP, Series G,
9.25%, 10/01/07		1,250		1,396,875
ITT Corp.,
7.375%, 11/15/15		750		802,500
John Q. Hammons Hotels, Series B,
8.875%, 05/15/12		810		893,025
La Quinta Properties, Inc.,
8.875%, 03/15/11		500		553,125

MeriStar Hospitality Corp.:
9.00%, 01/15/08	295	308,275
9.125%, 01/15/11	375	397,500
	4,351,300
Insurance—1.4%
Crum & Forster Holdings Corp.,
10.375%, 06/15/13 (c)	825	916,781
Leucadia National Corp.,
7.00%, 08/15/13 (c)	950	950,000
	1,866,781
Leisure—0.6%
Intrawest Corp.,
7.50%, 10/15/13 (c)	775	806,000
Medical Products & Services—1.8%
Medquest, Inc., Series B,
11.875%, 08/15/12	635	693,738
NDCHealth Corp.,
10.50%, 12/01/12	760	855,000
Sybron Dental Specialties, Inc.,
8.125%, 06/15/12	715	777,562
	2,326,300
Metals & Mining—1.9%
Arch Western Resources LLC,
6.75%, 07/01/13 (c)	675	693,563
Peabody Energy Corp., Series B,
6.875%, 03/15/13	1,000	1,055,000
TriMas Corp.,
9.875%, 06/15/12	140	145,950
Wolverine Tube, Inc.,
7.375%, 08/01/08 (c)	665	615,125
	2,509,638
Media-Diversified—1.7%
Hollinger Participation Trust,
12.125%, 11/15/10 (c), (h)	824	979,325
Vivendi Universal SA,
9.25%, 04/15/10 (c)	1,025	1,214,625
	2,193,950
Office Equipment—1.6%
Xerox Capital Europe PLC,
5.875%, 05/15/04	2,020	2,040,200
Printing & Publishing—5.2%
Dex Media East LLC:
9.875%, 11/15/09	250	286,250
12.125%, 11/15/12	300	369,000
Dex Media West LLC,
8.50%, 08/15/10 (c)	425	473,344

The accompanying notes are an integral part of these financial statements.

39

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio (continued)
Houghton Mifflin Co.,
9.875%, 02/01/13	$	325	$	357,500
Moore North America Finance, Inc.,
7.875%, 01/15/11 (c)		1,065		1,206,112
Phoenix Color Corp.,
10.375%, 02/01/09		515		458,994
PRIMEDIA, Inc.,
7.625%, 04/01/08		565		570,650
RH Donnelley Finance Corp.,
10.875%, 12/15/12 (c)		440		521,950
Vertis, Inc., Series B,
10.875%, 06/15/09		740		786,250
Von Hoffmann Corp.:
10.25%, 03/15/09		765		814,725
10.375%, 05/15/07 (f)		910		917,962
		6,762,737
Real Estate—2.4%
Forest City Enterprises, Inc.,
7.625%, 06/01/15		425		451,031
LNR Property Corp.:
7.25%, 10/15/13 (c)		1,075		1,093,813
7.625%, 07/15/13		250		263,125
Tanger Properties LP:
7.875%, 10/24/04		915		948,169
9.125%, 02/15/08		400		436,000
		3,192,138
Restaurants—0.6%
O’Charley’s, Inc.,
9.00%, 11/01/13 (c)		730		733,650
Retail—4.0%
NBC Acquisition Corp.,
10.75%, 02/15/09 (h)		810		841,387
Rite Aid Corp.,
11.25%, 07/01/08		1,055		1,176,325
Saks, Inc.,
9.875%, 10/01/11		975		1,160,250
ShopKo Stores, Inc.,
9.25%, 03/15/22		910		864,500
Toys “R” Us, Inc.,
7.875%, 04/15/13		1,050		1,125,662
		5,168,124
Shipping—1.3%
CP Ships, Ltd.,
10.375%, 07/15/12		615		713,400
Ship Finance International, Ltd.,
8.50%, 12/15/13 (c)		1,000		990,000
		1,703,400

Steel—0.8%
Armco, Inc.,
9.00%, 09/15/07	200	177,500
United States Steel Corp.,
9.75%, 05/15/10	275	309,375
United States Steel LLC,
10.75%, 08/01/08	435	508,950
	995,825
Support Services—0.5%
Coinmach Corp.,
9.00%, 02/01/10	640	694,400
Telecommunications—4.2%
ACC Escrow Corp.,
10.00%, 08/01/11 (c)	625	696,875
Alamosa Delaware, Inc.,
0.00%, 07/31/09 (h)	1,130	1,017,000
AT&T Wireless Services, Inc.,
8.125%, 05/01/12	830	973,201
FairPoint Communications, Inc.,
11.875%, 03/01/10	500	582,500
Qwest Services Corp.,
13.50%, 12/15/10 (c)	500	607,500
Rogers Wireless, Inc.,
9.625%, 05/01/11	850	1,015,750
Telus Corp.,
8.00%, 06/01/11	500	584,644
	5,477,470
Tobacco—0.8%
DIMON, Inc.,
7.75%, 06/01/13 (c)	1,075	1,107,250
Transportation—1.6%
Kansas City Southern Railway Co.,
7.50%, 06/15/09	1,185	1,214,625
Laidlaw International, Inc.,
10.75%, 06/15/11 (c)	800	904,000
	2,118,625
Utilities—6.0%
AES Corp.:
8.75%, 05/15/13 (c)	500	558,750
8.875%, 02/15/11	485	528,650
9.375%, 09/15/10	195	216,206
Alliant Energy Resources, Inc.,
9.75%, 01/15/13	500	649,203
Calpine Corp.,
7.875%, 04/01/08	1,220	951,600
MSW Energy Holdings LLC:
7.375%, 09/01/10 (c)	150	156,750
8.50%, 09/01/10 (c)	1,195	1,302,550

The accompanying notes are an integral part of these financial statements.

40

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio (concluded)
NRG Energy, Inc.,
8.00%, 12/15/13 (c)	$	550	$	578,187
PG&E Corp.,
6.875%, 07/15/08 (c)		475		514,188
Reliant Energy Resources Corp.,
Series B,
8.125%, 07/15/05		750		801,028
Reliant Resources, Inc.,
9.25%, 07/15/10 (c)		775		821,500
TXU Corp., Series J,
6.375%, 06/15/06		750		793,125
		7,871,737
Total Corporate Bonds
(Identified cost $114,540,651)		124,445,874
Convertible Bond—0.2%
Energy—0.2%
Hanover Compressor Co.,
4.75%, 03/15/08
(Identified cost $304,967)		350		314,006
	Shares
Preferred Stocks—1.5%
Broadcasting—1.2%
Paxson Communications Corp		170		1,568,855
Telecommunications—0.3%
Alamosa Holdings, Inc., Series B (a)		1,422		455,040
Total Preferred Stocks
(Identified cost $1,545,306)		2,023,895

Warrants—0.0%
Cable Television—0.0%
Ono Finance PLC,
05/31/09 (a), (c), (e)		500			5
03/16/11 (a), (c), (e)		470		5
				10
Retail—0.0%
Travelcenters of America, Inc.,
05/01/09 (a), (c), (e)		810			8
05/01/09 (a), (e)		720		7
				15
Total Warrants
(Identified cost $74,226)				25
	Principal
	Amount
	(000)
Repurchase Agreement—0.8%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$725,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $1,033,351)
(Identified cost $1,010,000)	$	1,010		1,010,000
Total Investments
(Identified cost $117,475,150) (b)	97.7		%	$	127,793,800
Cash and Other Assets in Excess
of Liabilities	2.3			2,959,816
Net Assets	100.0		%	$	130,753,616

The accompanying notes are an integral part of these financial statements.

41

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

		Principal
		Amount
Description		(000) (i)	Value
Lazard Global High Yield Portfolio
Currency Denominated Bonds—84.6%
Bahamas—0.8%
Sun International Hotels, Ltd.,
8.875%, 08/15/11	USD	275	$	300,438
Canada—2.8%
Calpine Canada Energy Finance,
8.50%, 05/01/08	USD	375		299,062
CP Ships, Ltd.,
10.375%, 07/15/12	USD	375		435,000
Imax Corp.,
9.625%, 12/01/10 (c)	USD	100		105,125
Rogers Wireless, Inc.,
9.625%, 05/01/11	USD	150	179,250
Total Canada			1,018,437
Colombia—0.5%
Citigroup TES Linked Deposit,
15.00%, 03/15/07		88		95,155
Republic of Colombia,
11.375%, 01/31/08	EUR	71	102,183
Total Colombia			197,338
France—1.7%
Crown Euro Holdings SA,
9.50%, 03/01/11	USD	275		311,437
Legrand SA,
8.50%, 02/15/25	USD	275	290,469
Total France			601,906
Germany—1.2%
Commerzbank AG,
12.00%, 03/29/05	PLN	190		53,989
Messer Griesheim Holding AG,
10.375%, 06/01/11	EUR	250	364,215
Total Germany			418,204
Hungary—0.6%
Hungary Government Bond,
7.00%, 08/12/05		49,040	223,796
Ireland—2.1%
BGB Finance (Ireland) PLC,
6.75%, 04/14/05	CZK	2,050		83,534
Smurfit Capital Funding PLC,
7.50%, 11/20/25	USD	705	686,494
Total Ireland			770,028

Israel—0.4%
Israel Government Bonds:
7.00%, 03/31/06		235	55,481
9.00%, 06/29/07		390	98,436
Total Israel		153,917
Luxembourg—0.9%
Rhiag SA,
10.75%, 06/05/07 (c)	EUR	95	125,820
Tyco International Group SA,
6.00%, 11/15/13 (c)	USD	175	180,250
Total Luxembourg		306,070
Mexico—0.5%
Mexico Bonos Bond Unit,
9.00%, 07/09/09		1,963	187,299
Namibia—0.1%
Government of Namibia,
12.00%, 01/15/10		200	31,010
Netherlands—1.7%
Helaba Finance BV,
13.50%, 03/31/08	ZAR	650	109,770
Kappa Beheer BV:
10.625%, 07/15/09	USD	365	390,550
10.625%, 07/15/09	EUR	80	107,467
Total Netherlands		607,787
Poland—1.4%
Poland Government Bonds:
8.50%, 05/12/06		155	43,563
8.50%, 11/12/06		1,610	454,451
Total Poland		498,014
Slovenia—0.5%
Republic of Slovenia,
7.75%, 02/24/06		31,560	176,972
Thailand—0.0%
Finance One PLC,
0.00%, 01/03/05 (a), (g), (j)		20,000	0
Morgan Guarantee Trust,
0.00%, 07/31/06 (a), (g), (j)		10,569	0
Total Thailand		0
Uganda—0.2%
SCJ Uganda Treasury Bill Linked
Deposit,
19.50%, 03/11/04		120,417	61,412

The accompanying notes are an integral part of these financial statements.

42

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

		Principal
		Amount
Description		(000) (i)	Value
Lazard Global High Yield Portfolio (continued)
United Kingdom—0.3%
Bremer Landesbank Capital
Markets PLC,
8.00%, 03/07/06	SKK	3,800	$	122,209
United States—68.9%
AES Corp.:
8.75%, 05/15/13 (c)		150		167,625
9.375%, 09/15/10		125		138,594
Allied Waste North America, Inc.,
Series B,
10.00%, 08/01/09		350		378,000
AMSTED Industries, Inc.,
10.25%, 10/15/11 (c)		315		348,075
ARCO Chemical Co.,
9.80%, 02/01/20		325		326,625
Armco, Inc.,
9.00%, 09/15/07		250		221,875
Buckeye Technologies, Inc.,
9.25%, 09/15/08		275		278,438
Burns Philp Capital Property, Ltd.,
9.75%, 07/15/12 (c)		310		331,700
Caraustar Industries, Inc.,
9.875%, 04/01/11		275		297,000
CBRE Escrow, Inc.,
9.75%, 05/15/10 (c)		350		388,500
Charter Communications Holdings LLC,
10.75%, 10/01/09		325		298,188
Chiquita Brands International, Inc.,
10.56%, 03/15/09		275		304,562
CITGO Petroleum Corp.,
11.375%, 02/01/11		275		319,000
Crum & Forster Holdings Corp.,
10.375%, 06/15/13 (c)		275		305,594
CSC Holdings, Inc., Series B,
7.625%, 04/01/11		325		342,062
Dana Corp.,
9.00%, 08/15/11		275		331,375
Dayton Superior Corp.,
10.75%, 09/15/08 (c)		275		281,875
Dex Media West LLC,
9.875%, 08/15/13 (c)		100		116,250
DIMON, Inc.,
7.75%, 06/01/13 (c)		350		360,500
Dole Foods Co., Inc.,
8.875%, 03/15/11		275		301,813
El Paso Production Holding Co.,
7.75%, 06/01/13 (c)		225		221,625
Ethyl Corp.,
8.875%, 05/01/10		300		321,000

Evergreen International Aviation, Inc.,
2.00%, 05/15/10 (c)		155	128,844
FairPoint Communications, Inc.,
11.875%, 03/01/10		475	553,375
Fresenius Medical Capital Trust,
7.875%, 02/01/08		150	159,000
General Nutrition Center, Inc.,
8.50%, 12/01/10 (c)		100	102,500
Georgia-Pacific Corp.,
8.875%, 02/01/10		275	313,500
Hard Rock Hotel, Inc.,
8.875%, 06/01/13 (c)		350	372,750
HEALTHSOUTH Corp.,
7.00%, 06/15/08		300	279,750
HLI Operating Co., Inc.,
10.50%, 06/15/10		325	374,156
Hollinger Participation Trust,
12.125%, 11/15/10 (c), (h)		545	647,060
Host Marriott LP, Series G,
9.25%, 10/01/07		285	318,487
Huntsman ICI Chemicals,
10.125%, 07/01/09	EUR	145	178,323
Huntsman International LLC,
9.875%, 03/01/09 (c)		325	355,875
ISP Holdings, Inc., Series B,
10.625%, 12/15/09		774	851,400
John Q. Hammons Hotels, Series B,
8.875%, 05/15/12		275	303,187
Kansas City Southern Railway Co.,
7.50%, 06/15/09		275	281,875
KB Home,
7.75%, 02/01/10		250	265,000
KfW International Finance, Inc.,
14.00%, 07/23/08	ZAR	550	94,427
La Quinta Properties, Inc.,
8.875%, 03/15/11		275	304,219
Laidlaw International, Inc.,
10.75%, 06/15/11 (c)		275	310,750
LNR Property Corp.,
7.25%, 10/15/13 (c)		275	279,813
Mandalay Resort Group,
9.375%, 02/15/10 (k)		445	518,425
Mediacom Broadband LLC,
11.00%, 07/15/13		75	84,188
Mediacom LLC, Series B,
8.50%, 04/15/08		200	204,000
Merisant Co.,
9.50%, 07/15/13 (c)		225	239,625
MeriStar Hospitality Corp.,
9.125%, 01/15/11		275	291,500

The accompanying notes are an integral part of these financial statements.

43

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000) (i)		Value
Lazard Global High Yield Portfolio (continued)
MSW Energy Holdings LLC,
7.375%, 09/01/10 (c)	275	$	287,375
Nalco Co.,
8.875%, 11/15/13 (c)	100		106,000
NBC Acquisition Corp.,
10.75%, 02/15/09 (h)	600		623,250
O’Charley’s, Inc.,
9.00%, 11/01/13 (c)	150		150,750
Owens-Brockway Glass Container,
8.75%, 11/15/12	275		306,281
Pegasus Satellite Television,
12.375%, 08/01/06	375		352,969
Phillips-Van Heusen Corp.,
8.125%, 05/01/13	325		345,312
Quintiles Transnational Corp.,
10.00%, 10/01/13 (c)	125		135,000
Qwest Services Corp.,
13.50%, 12/15/10 (c)	310		376,650
Rite Aid Corp.,
11.25%, 07/01/08	275		306,625
Royal Caribbean Cruises Ltd.,
8.00%, 05/15/10	400		436,000
Saks, Inc.,
9.875%, 10/01/11	275		327,250
Senior Housing Properties Trust,
7.875%, 04/15/15	275		288,750
Sensus Metering Systems, Inc.,
8.625%, 12/15/13 (c)	100		102,625
Sequa Corp., Series B,
8.875%, 04/01/08	275		298,375
Service Corp. International,
6.875%, 10/01/07	275		284,625
Ship Finance International Ltd.,
8.50%, 12/15/13 (c)	225		222,750
Sola International, Inc.,
6.875%, 03/15/08	675		682,594
Tanger Properties LP,
7.875%, 10/24/04	215		222,794
Tenet Healthcare Corp.,
7.375%, 02/01/13	250		251,250
Tesoro Petroleum Corp.,
9.625%, 04/01/12	225		246,375
The Sheridan Group,
10.25%, 08/15/11 (c)	300		318,375
Town Sports International, Inc.,
9.625%, 04/15/11	325		347,750
Toys “R” Us, Inc.,
7.875%, 04/15/13	275		294,816
TRW Automotive, Inc.,
9.375%, 02/15/13	275		314,187

United Rentals, Inc., Series B,
10.75%, 04/15/08	275		309,375
United States Steel Corp.,
9.75%, 05/15/10	75		84,375
United States Steel LLC,
10.75%, 08/01/08	125		146,250
Venetian Casino Resort LLC,
11.00%, 06/15/10	275		319,000
Venture Holdings Co. LLC,
12.00%, 06/01/09 (a), (g)	910		91
Vertis, Inc., Series B,
10.875%, 06/15/09	275		292,188
Von Hoffmann Corp.:
10.25%, 03/15/09	415		441,975
10.375%, 05/15/07 (f)	195		196,706
Wheeling Island Gaming, Inc.,
10.125%, 12/15/09	200		212,000
Williams Cos., Inc., Series A,
6.75%, 01/15/06 (f)	325		336,375
Williams Scotsman, Inc.,
9.875%, 06/01/07	290		293,625
WMC Finance Co.,
11.75%, 12/15/08 (c)	225		224,438
Wolverine Tube, Inc.,
7.375%, 08/01/08 (c)	225	208,125
Total United States		24,885,556
Total Currency Denominated Bonds
(Identified cost $29,670,220)		30,560,393
	Shares
Preferred Stock—0.9%
United States—0.9%
Paxson Communications Corp.
(Identified cost $269,868)	34	317,090
Warrant—0.0%
United States—0.0%
Travelcenters of America, Inc.,
05/01/09
(Identified cost $0) (a), (e)	245	2
	Principal
	Amount
	(000)
U.S. Government Security—12.4%
Federal National Mortgage Association,
1.0525%, 03/01/04
(Identified cost $4,492,125) (k)	$4,500		4,492,125

The accompanying notes are an integral part of these financial statements.

44

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

	Principal
	Amount
Description	(000)			Value
Lazard Global High Yield Portfolio (continued)
Repurchase Agreement—1.8%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$460,000 United States Treasury
Bond, 12.00%, 08/15/13, with a
value of $655,644)
(Identified cost $640,000) (k)	$	640	$	640,000

Total Investments
(Identified cost $35,072,213) (b)	99.7	%	$	36,009,610
Cash and Other Assets in Excess
of Liabilities	0.3		97,120
Net Assets	100.0	%	$	36,106,730

The accompanying notes are an integral part of these financial statements.

45

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2003

Lazard Global High Yield Portfolio (concluded)

Forward Foreign Currency Contracts open at December 31, 2003:

Forward			U.S. $ Cost		U.S. $
Foreign Currency	Expiration	Foreign	on Origination		Current		Unrealized		Unrealized
Purchase Contracts	Date	Currency	Date		Value		Appreciation		Depreciation
ARS	01/22/04	215,100	$	72,000	$	73,076	$	1,076	$	—
BRL	03/08/04	3,606,848		1,162,000		1,210,270		48,270		—
BRL	03/22/04	927,447		307,000		309,427		2,427		—
COP	01/22/04	348,637,000		123,193		124,666		1,473		—
GBP	03/16/04	29,351		51,657		52,235		578		—
IDR	01/20/04	904,050,000		105,000		106,864		1,864		—
IDR	01/20/04	3,326,700,000		390,000		393,235		3,235		—
INR	01/12/04	13,018,720		286,000		285,454		—		546
KRW	01/23/04	82,613,700		69,000		69,087		87		—
KRW	01/23/04	90,272,800		76,000		75,492		—		508
KRW	01/30/04	101,488,600		86,000		84,779		—		1,221
MAD	01/12/04	651,294		70,000		74,059		4,059		—
MAD	03/10/04	335,000		36,973		37,840		867		—
MUR	01/12/04	2,625,000		99,602		99,962		360		—
MXN	01/12/04	301,000		26,666		26,740		74		—
PHP	01/20/04	12,042,000		216,000		215,523		—		477
ROL	01/22/04	10,025,361,000		303,000		304,998		1,998		—
ROL	02/10/04	3,891,580,000		110,000		117,595		7,595		—
RUB	01/27/04	1,176,630		39,000		40,228		1,228		—
RUB	01/27/04	9,509,500		325,000		325,120		120		—
RUB	01/27/04	2,149,850		73,000		73,501		501		—
SIT	02/27/04	53,370,000		264,260		282,151		17,891		—
SKK	02/27/04	6,634,000		198,980		201,805		2,825		—
SKK	04/26/04	7,148,400		185,000		215,829		30,829		—
THB	02/17/04	14,263,000		359,179		360,045		866		—
TRL	04/21/04	23,953,300,000		133,000		158,902		25,902		—
TRL	04/21/04	16,014,000,000		102,000		106,234		4,234		—
TRL	07/21/04	47,482,400,000		280,000		298,932		18,932		—
UGS	03/18/04	166,555,000		82,863		82,845		—		18
ZAR	01/30/04	691,750	100,000		102,939		2,939		—
Total Forward Foreign Currency Purchase Contracts			$	5,732,373	$	5,909,833	$	180,230	$	2,770
Forward			U.S. $ Cost		U.S. $
Foreign Currency	Expiration	Foreign	on Origination		Current		Unrealized		Unrealized
Sale Contracts	Date	Currency	Date		Value		Appreciation		Depreciation
BRL	03/08/04	3,606,848	$	787,521	$	1,210,270	$	—	$	422,749
EUR	03/16/04	175,400		214,953		220,768		—		5,815
EUR	03/16/04	734,000		899,810		923,851		—		24,041
EUR	03/16/04	95,847		118,754		120,638		—		1,884
HUF	01/20/04	23,451,000		107,697		112,344		—		4,647
JPY	03/16/04	49,764,600		462,748		465,474		—		2,726
Total Forward Foreign Currency Sale Contracts			$	2,591,483	$	3,053,345		—		461,862
Gross unrealized appreciation/depreciation from Forward Foreign Currency Contracts							$	180,230	$	464,632

The accompanying notes are an integral part of these financial statements.

46

The Lazard Funds, Inc.
Portfolios of Investments (concluded)
December 31, 2003

	Principal
	Amount
Description	(000)		Value
Lazard Mortgage Portfolio
Collateralized Mortgage
Obligation—3.5%
Federal National Mortgage Association
Grantor Trust, Series 2002-T1, Class A2,
7.00%, 11/25/31
(Identified cost $318,803) (k)	$	302	$	326,485
Mortgage Pass-Through
Securities—89.9%
Federal Home Loan Mortgage Corp.,
Pool#C65976,
7.00%, 04/01/32		890		942,650
Federal National Mortgage Association:
5.50%, TBA	3,150			3,208,859
6.50%, TBA	2,400			2,509,500
Government National Mortgage
Association, Pool#577470,
6.00%, 12/15/32	1,676		1,744,246
Total Mortgage Pass-Through
Securities
(Identified cost $8,354,615)			8,405,255

U.S. Government Securities—56.4%
Federal National Mortgage Association:
0.8724%, 01/20/04		760			759,591
1.2323%, 01/14/04 (k)		4,510		4,508,322
Total U.S. Government Securities
(Identified cost $5,267,913)				5,267,913
Repurchase Agreement—11.0%
State Street Bank and Trust Co.,
0.78%, 01/02/04
(Dated 12/31/03, collateralized by
$990,000 United States Treasury
Bond, 5.50%, 08/15/28, with a
value of $1,051,256)
(Identified cost $1,029,000) (k)		1,029		1,029,000
Total Investments
(Identified cost $14,970,331) (b)	160.8		%	$	15,028,653
Liabilities in Excess of Cash and
Other Assets	(60.8		)	(5,679,729		)
Net Assets	100.0		%	$	9,348,924

The accompanying notes are an integral part of these financial statements.

47

The Lazard Funds, Inc.
Notes to Portfolios of Investments
December 31, 2003

(a)	Non-income producing security.
(b)	For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized depreciation and the net unrealized appreciation is as follows:

			Aggregate		Aggregate
			Gross		Gross		Net
	Aggregate		Unrealized		Unrealized		Unrealized
Portfolio	Cost		Appreciation		Depreciation		Appreciation
Equity	$	119,063,239	$	18,221,738	$	1,974,493	$	16,247,245
Mid Cap		47,004,870		8,263,453		169,881		8,093,572
Small Cap		412,136,332		109,433,384		5,203,235		104,230,149
International Equity		1,839,646,298		381,656,568		12,377,128		369,279,440
International Equity Select		14,622,354		2,477,623		48,204		2,429,419
International Small Cap		548,692,641		191,832,684		17,616,492		174,216,192
Emerging Markets		500,725,127		181,201,200		17,096,705		164,104,495
Bond		50,370,560		441,399		275,381		166,018
High Yield		117,564,828		11,991,122		1,762,150		10,228,972
Global High Yield		35,088,324		2,593,134		1,671,848		921,286
Mortgage		14,970,331		58,322		—		58,322

(c)	Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.”
(d)	Rate shown reflects 7 day yield as of December 31, 2003.
(e)	Date shown is the expiration date.
(f)	Variable rate security. Interest rate shown is the rate in effect at December 31, 2003.
(g)	Issue in default.
(h)	Step up bonds are securities which increase the interest payment rate at a specified point in time. Rate shown reflects rate in effect at December 31, 2003, which may step up at a future date.
(i)	Principal amount denominated in respective country’s currency unless otherwise noted.
(j)	Bankrupt security valued at zero.
(k)	Segregated security for forward foreign currency contracts and/or forward roll transactions.

The accompanying notes are an integral part of these financial statements.

48

The Lazard Funds, Inc.
Notes to Portfolios of Investments (continued)
December 31, 2003

Security Abbreviations:
ADR	— American Depositary Receipt
GDR	— Global Depositary Receipt
SCJ	— Standard Corporate Johannesburg
TBA	— To Be Announced
TES	— Titulos de Tesoreria
Currency Abbreviations:
ARS	— Argentine Peso
BRL	— Brazilian Real
COP	— Colombian Peso
CZK	— Czech Koruna
EUR	— Euro
GBP	— British Pound Sterling
HUF	— Hungarian Forint
IDR	— Indonesian Rupiah
INR	— Indian Rupee
JPY	— Japanese Yen
KRW	— South Korean Won
MAD	— Moroccan Dirham
MUR	— Mauritian Rupee

MXN	— Mexican Peso
PHP	— Philippine Peso
PLN	— Polish Zloty
ROL	— Romanian Leu
RUB	— New Russian Ruble
SIT	— Slovenia Tolar
SKK	— Slovakian Koruna
THB	— Thailand Baht
TRL	— Turkish Lira
UGS	— Ugandan Shilling
USD	— United States Dollar
ZAR	— South African Rand

The accompanying notes are an integral part of these financial statements.

49

The Lazard Funds, Inc.
Notes to Portfolios of Investments (continued)
December 31, 2003

Portfolio holdings by industry, for those Portfolios previously presented by country:

	Lazard		Lazard		Lazard		Lazard
	International		International		International		Emerging
	Equity		Equity Select		Small Cap		Markets
	Portfolio		Portfolio		Portfolio		Portfolio
INDUSTRY
Aerospace & Defense	—	%	—	%	—	%	1.8	%
Apparel & Textiles	—		—		4.2		—
Automotive	4.3		—		5.0		0.6
Banking	19.2		21.0		7.4		10.0
Brewery	1.4		3.7		—		2.7
Broadcasting	—		—		—		0.9
Building & Construction	1.3		—		1.9		0.7
Business Services & Supplies	—		—		9.5		—
Chemicals	0.5		—		—		2.1
Computer Services	—		—		2.3		—
Computers & Business Equipment	—		—		—		4.4
Conglomerates	—		—		—		1.4
Cosmetics & Toiletries	0.6		2.5		—		—
Diversified	5.4		6.0		6.1		—
Drugs & Health Care	7.8		11.2		1.9		4.0
Electronics	5.9		2.6		3.2		7.5
Financial Services	7.0		5.3		9.7		6.5
Food & Beverages	3.2		11.9		1.9		1.6
Forest & Paper Products	—		—		—		1.5
Household Products & Home Furnishings	—		—		4.2		2.6
Industrial & Machinery	0.8		—		2.6		—
Insurance	2.4		4.1		2.2		2.9
Leisure & Entertainment	—		—		6.8		—
Manufacturing	—		—		2.9		—
Medical Products & Services	0.5		—		—		—
Metals & Mining	2.8		—		—		7.6
Oil & Gas	9.9		13.7		—		9.9
Printing & Publishing	—		—		7.5		—
Real Estate	—		—		1.5		0.1
Restaurants	—		—		1.3		—
Retail	4.4		4.0		6.4		0.7
Security Services	—		—		1.6		—
Semiconductor & Components	1.0		—		—		—
Shipping	—		—		—		1.1
Steel	—		—		—		3.8
Telecommunications	12.1		7.8		1.5		17.1
Tobacco	2.0		—		4.9		2.8
Transportation	1.2		—		—		0.9
Utilities	5.0		3.2		—		1.1
Subtotal	98.7		97.0		96.5		96.3
Repurchase Agreements	1.3		2.9		3.4		6.0
Collateral for Securities on Loan	—		—		8.9		6.7
Total Investments	100.0	%	99.9	%	108.8	%	109.0	%

The accompanying notes are an integral part of these financial statements.

50

The Lazard Funds, Inc.
Notes to Portfolios of Investments (concluded)
December 31, 2003

Portfolio holdings by asset type, previously presented by country, for Lazard Global High Yield Portfolio:

ASSET TYPE
Corporate Bonds	80.4	%
Foreign Government Obligations	3.8
Preferred Stock	0.9
Structured Notes	0.4
U.S. Government Securities	12.4
Subtotal	97.9
Repurchase Agreement	1.8
Total Investments	99.7	%

The accompanying notes are an integral part of these financial statements.

51

The Lazard Funds, Inc.
Statements of Assets and Liabilities
December 31, 2003

										Lazard
	Lazard			Lazard			Lazard			International
	Equity			Mid Cap			Small Cap			Equity
	Portfolio			Portfolio			Portfolio			Portfolio
ASSETS
Investments in securities, at value	$	135,310,484		$	55,098,442		$	516,366,481		$	2,208,925,738
Cash		748			456			288			171
Foreign currency		—			—			—			—
Receivables for:
Investments sold		—			—			124,188			6,148,576
Dividends and interest		123,016			36,604			510,932			4,103,714
Capital stock sold		781,695			455,998			737,320			1,030,864
Gross appreciation on foreign currency contracts		—			—			—			—
Due from Investment Manager	—			—			—			—
Total assets	136,215,943			55,591,500			517,739,209			2,220,209,063
LIABILITIES
Payables for:
Investments purchased		241,903			592,683			—			330,227
Capital stock repurchased		1,738,557			45,643			1,265,366			9,063,000
Dividends payable		—			—			—			127,315
Gross depreciation on foreign currency contracts		—			—			—			—
Payable upon return of securities on loan		—			304,325			—			—
Management fees payable		84,628			24,245			323,689			1,434,925
Accrued directors’ fees payable		510			191			1,901			8,225
Accrued distribution fees payable		4,857			3,120			10,760			22,149
Other accrued expenses and payables	31,642			18,630			59,597			286,823
Total liabilities	2,102,097			988,837			1,661,313			11,272,664
Net assets	$	134,113,846		$	54,602,663		$	516,077,896		$	2,208,936,399
NET ASSETS
Paid in capital	$	148,373,533		$	47,261,509		$	419,012,429		$	2,594,033,736
Undistributed (distributions in excess of)
investment income—net		75,678			110,897			1,692,587			22,484,947
Unrealized appreciation (depreciation) on:
Investments—net		17,499,212			8,113,868			106,770,858			388,248,614
Foreign currency—net		—			—			—			222,366
Accumulated undistributed realized gain (loss)—net	(31,834,577		)	(883,611		)	(11,397,978		)	(796,053,264		)
Net assets	$	134,113,846		$	54,602,663		$	516,077,896		$	2,208,936,399
Institutional Shares
Net assets	$	112,567,902		$	39,625,119		$	465,875,700		$	2,103,600,211
Shares of capital stock outstanding*		7,816,187			3,448,140			23,900,755			184,959,683
Net asset value, offering and redemption price per share	$	14.40		$	11.49		$	19.49		$	11.37
Open Shares
Net assets	$	21,545,944		$	14,977,544		$	50,202,196		$	105,336,188
Shares of capital stock outstanding*		1,495,813			1,316,266			2,582,160			9,263,983
Net asset value, offering and redemption price per share	$	14.40		$	11.38		$	19.44		$	11.37
Cost of investments in securities	$	117,811,272		$	46,984,574		$	409,595,623		$	1,820,677,124
Cost of foreign currency	$	—		$	—		$	—		$	—

*$0.001 par value, 1,750,000,000 shares authorized for the Portfolios in total.

The accompanying notes are an integral part of these financial statements.

52

	Lazard		Lazard			Lazard									Lazard
	International		International			Emerging			Lazard			Lazard			Global			Lazard
	Equity Select		Small Cap			Markets			Bond			High Yield			High Yield			Mortgage
	Portfolio		Portfolio			Portfolio			Portfolio			Portfolio			Portfolio			Portfolio
$	17,051,773		$	722,908,833		$	664,829,622		$	50,536,578		$	127,793,800		$	36,009,610		$	15,028,653
	359			868			270			872			354			249			408
	—			—			4,487,082			—			—			—			—
	—			231,112			—			—			—			—			—
	31,843			664,601			1,922,694			482,075			2,653,937			679,430			27,990
	80			190,624			1,371,412			2,185,144			413,586			5,882			—
	—			—			—			—			—			180,230			—
	2,078		—			—			—			—			—			7,932
	17,086,133		723,996,038			672,611,080			53,204,669			130,861,677			36,875,401			15,064,983
	—			—			19,979,537			309,899			—			—			5,705,716
	—			29,579			777,091			4,100			—			—			—
	—			—			—			11,131			26,465			258,348			—
	—			—			—			—			—			464,632			—
	—			59,090,297			41,065,473			—			—			—			—
	—			409,403			485,364			18,920			55,162			22,864			—
	56			2,349			2,012			200			517			135			36
	1,498			4,003			3,425			1,708			545			848			—
	17,648		95,860			135,184			20,830			25,372			21,844			10,307
	19,202		59,631,491			62,448,086			366,788			108,061			768,671			5,716,059
$	17,066,931		$	664,364,547		$	610,162,994		$	52,837,881		$	130,753,616		$	36,106,730		$	9,348,924
$	16,020,218		$	525,827,631		$	525,589,819		$	57,340,531		$	174,859,239		$	114,802,257		$	9,255,720
	512			(17,953	)		(165,127	)		(11,130	)		(193,001	)		94,069			—
	2,483,772			174,447,770			171,407,015			202,466			10,318,650			937,397			58,322
	—			41,156			(16,740	)		—			—			(279,749	)		—
	(1,437,571	)	(35,934,057		)	(86,651,973		)	(4,693,986		)	(54,231,272		)	(79,447,244		)	34,882
$	17,066,931		$	664,364,547		$	610,162,994		$	52,837,881		$	130,753,616		$	36,106,730		$	9,348,924
$	9,787,614		$	644,240,199		$	591,513,730		$	44,766,584		$	127,764,982		$	32,071,928		$	9,348,924
	998,366			41,682,946			54,747,562			4,558,550			23,663,851			4,144,661			1,104,712
$	9.80		$	15.46		$	10.80		$	9.82		$	5.40		$	7.74		$	8.46
$	7,279,317		$	20,124,348		$	18,649,264		$	8,071,297		$	2,988,634		$	4,034,802			N/A
	740,986			1,305,808			1,716,612			821,719			551,822			519,704			N/A
$	9.82		$	15.41		$	10.86		$	9.82		$	5.42		$	7.76			N/A
$	14,568,001		$	548,461,063		$	493,422,607		$	50,334,112		$	117,475,150		$	35,072,213		$	14,970,331
$	—		$	—		$	4,487,575		$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these financial statements.

53

The Lazard Funds, Inc.
Statements of Operations
For the Year Ended December 31, 2003

										Lazard
	Lazard			Lazard			Lazard			International
	Equity			Mid Cap			Small Cap			Equity
	Portfolio			Portfolio			Portfolio			Portfolio
INVESTMENT INCOME (LOSS)
Income:
Interest	$	32,508		$	13,808		$	167,064		$	1,548,494
Dividends	2,450,661			598,947			5,645,643			54,056,559
Total investment income*	2,483,169			612,755			5,812,707			55,605,053
Expenses:
Management fees		941,684			311,728			3,396,183			14,884,759
Administration fees		70,270			53,352			136,098			345,751
Distribution fees (Open Shares)		56,794			26,655			109,531			230,134
Custodian fees		73,432			67,318			151,825			2,209,171
Professional services		43,074			39,530			56,378			119,943
Registration fees		25,409			24,959			29,051			35,268
Shareholders' services		60,830			51,026			76,418			101,656
Directors' fees and expenses		8,252			2,681			29,590			129,486
Shareholders' reports		17,277			2,900			33,621			60,960
Other	9,123			3,839			25,897			96,047
Total expenses before fees waived and expenses reimbursed		1,306,145			583,988			4,044,592			18,213,175
Management fees waived and expenses reimbursed		—			(114,824	)		—			—
Expense reductions	(138		)	(742		)	(1		)	(594		)
Expenses—net	1,306,007			468,422			4,044,591			18,212,581
Investment income (loss)—net	1,177,162			144,333			1,768,116			37,392,472
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY—NET
Realized gain (loss) on:
Investments—net **		549,013			1,534,351			21,657,252			8,675,425
Foreign currency—net		—			—			—			(3,715,055	)
Change in net unrealized appreciation (depreciation) on:
Investments—net		26,997,003			9,138,885			128,413,247			494,147,459
Foreign currency—net	—			—			—			(55,786		)
Realized and unrealized gain (loss) on investments
and foreign currency—net	27,546,016			10,673,236			150,070,499			499,052,043
Net increase (decrease) in net assets resulting
from operations	$	28,723,178		$	10,817,569		$	151,838,615		$	536,444,515
*Net of foreign withholding taxes of	$	11,286		$	—		$	6,841		$	6,400,874
**Net of foreign capital gains taxes of	$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these financial statements.

54

	Lazard		Lazard			Lazard									Lazard
	International		International			Emerging			Lazard			Lazard			Global			Lazard
	Equity Select		Small Cap			Markets			Bond			High Yield			High Yield			Mortgage
	Portfolio		Portfolio			Portfolio			Portfolio			Portfolio			Portfolio			Portfolio
$	6,639		$	699,636		$	251,062		$	1,775,594		$	10,159,135		$	3,834,941		$	464,478
	608,274		16,586,567			14,130,605			—			280,904			93,452			—
	614,913		17,286,203			14,381,667			1,775,594			10,440,039			3,928,393			464,478
	162,118			4,184,211			4,288,630			272,122			850,907			438,737			128,206
	48,869			157,100			131,168			55,950			67,794			56,821			43,953
	10,419			23,419			30,281			23,104			3,694			10,025			—
	47,847			753,333			943,654			64,142			89,145			98,720			37,026
	38,686			61,106			55,054			40,226			42,496			40,515			39,635
	23,038			25,596			31,023			26,209			23,749			26,367			14,276
	49,760			55,427			56,798			50,881			47,859			52,235			23,087
	1,243			36,418			27,629			3,611			7,422			3,922			2,225
	2,344			6,527			14,796			3,226			1,564			4,355			129
	2,583		26,603			20,775			4,472			7,947			5,548			2,886
	386,907			5,329,740			5,599,808			543,943			1,142,577			737,245			291,423
	(154,963	)		(3,065	)		(19,230	)		(25,781	)		(286,919	)		—			(83,156	)
	(68	)	(120		)	—			—			(232		)	(874		)	—
	231,876		5,326,555			5,580,578			518,162			855,426			736,371			208,267
	383,037		11,959,648			8,801,089			1,257,432			9,584,613			3,192,022			256,211
	(436,975	)		(11,236,430	)		19,704,231			495,298			(604,131	)		484,717			1,973,540
	—			(563,372	)		(734,083	)		—			—			257,989			—
	4,873,631			202,097,403			174,470,244			(515,029	)		14,854,034			4,456,101			(788,184	)
	—		(14,479		)	(18,706		)	—			—			114,639			—
	4,436,656		190,283,122			193,421,686			(19,731		)	14,249,903			5,313,446			1,185,356
$	4,819,693		$	202,242,770		$	202,222,775		$	1,237,701		$	23,834,516		$	8,505,468		$	1,441,567
$	79,541		$	1,681,957		$	1,329,951		$	—		$	—		$	1,267		$	—
$	—		$	—		$	48,491		$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these financial statements.

55

The Lazard Funds, Inc.
Statements of Changes in Net Assets
	Lazard Equity Portfolio
	Year Ended			Year Ended
	December 31,			December 31,
	2003			2002
Increase (Decrease) in Net Assets:
Operations:
Investment income (loss)—net	$	1,177,162		$	1,200,311
Realized gain (loss) on investments and foreign currency—net		549,013			(22,309,387	)
Change in unrealized appreciation (depreciation)—net	26,997,003			(6,894,718		)
Net increase (decrease) in net assets resulting from operations	28,723,178			(28,003,794		)
Distributions to shareholders:
From investment income—net
Institutional Shares		(989,652	)		(1,131,482	)
Open Shares		(129,438	)		(159,184	)
From realized gains—net
Institutional Shares		—			—
Open Shares	—			—
Net decrease in net assets resulting from distributions	(1,119,090		)	(1,290,666		)
Capital stock transactions:
Net proceeds from sales
Institutional Shares		12,657,235			27,727,036
Open Shares		4,894,166			14,335,772
Net proceeds from reinvestment of distributions
Institutional Shares		948,562			1,091,089
Open Shares		129,036			156,305
Cost of shares redeemed
Institutional Shares		(25,495,891	)		(45,188,754	)
Open Shares	(9,805,859		)	(24,055,833		)
Net increase (decrease) in net assets from capital stock transactions	(16,672,751		)	(25,934,385		)
Total increase (decrease) in net assets		10,931,337			(55,228,845	)
Net assets at beginning of period	123,182,509			178,411,354
Net assets at end of period*	$	134,113,846		$	123,182,509
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of period	8,788,212			10,025,389
Shares sold		1,003,420			2,217,510
Shares issued to shareholders from reinvestment of distributions		68,027			92,212
Shares repurchased	(2,043,472		)	(3,546,899		)
Net increase (decrease)	(972,025		)	(1,237,177		)
Shares outstanding at end of period	7,816,187			8,788,212
Open Shares:
Shares outstanding at beginning of period	1,837,937			2,634,812
Shares sold		397,725			1,090,032
Shares issued to shareholders from reinvestment of distributions		9,236			13,257
Shares repurchased	(749,085		)	(1,900,164		)
Net increase (decrease)	(342,124		)	(796,875		)
Shares outstanding at end of period	1,495,813			1,837,937
* Includes undistributed (distributions in excess of) investment income—net	$	75,678		$	17,606

The accompanying notes are an integral part of these financial statements.

56

Lazard Mid Cap Portfolio						Lazard Small Cap Portfolio
Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,
2003			2002			2003			2002
$	144,333		$	114,982		$	1,768,116		$	605,257
	1,534,351			(2,092,690	)		21,657,252			(30,325,445	)
9,138,885			(3,678,819		)	128,413,247			(82,045,010		)
10,817,569			(5,656,527		)	151,838,615			(111,765,198		)
	(84,537	)		—			—			—
	(376	)		—			—			—
	—			(515,271	)		—			(15,697,836	)
—			(152,893		)	—			(1,888,102		)
(84,913		)	(668,164		)	—			(17,585,938		)
	8,553,024			13,813,143			48,909,080			110,711,759
	6,289,197			6,411,779			23,252,966			92,473,402
	78,432			444,842			—			15,182,529
	322			125,407			—			1,872,236
	(5,663,044	)		(2,504,309	)		(109,375,066	)		(198,184,868	)
(2,269,615		)	(4,397,488		)	(30,453,025		)	(105,405,889		)
6,988,316			13,893,374			(67,666,045		)	(83,350,831		)
	17,720,972			7,568,683			84,172,570			(212,701,967	)
36,881,691			29,313,008			431,905,326			644,607,293
$	54,602,663		$	36,881,691		$	516,077,896		$	431,905,326
3,221,004			2,041,924			27,721,008			32,492,106
	809,533			1,390,165			3,070,928			6,527,987
	7,527			48,352			—			1,034,934
(589,924		)	(259,437		)	(6,891,181		)	(12,334,019		)
227,136			1,179,080			(3,820,253		)	(4,771,098		)
3,448,140			3,221,004			23,900,755			27,721,008
919,414			717,284			3,071,851			3,934,559
	630,672			635,516			1,450,205			5,642,513
	31			13,751			—			127,884
(233,851		)	(447,137		)	(1,939,896		)	(6,633,105		)
396,852			202,130			(489,691		)	(862,708		)
1,316,266			919,414			2,582,160			3,071,851
$	110,897		$	102,856		$	1,692,587		$	404,472

The accompanying notes are an integral part of these financial statements.

57

The Lazard Funds, Inc.
Statements of Changes in Net Assets (continued)

	Lazard International Equity Portfolio
	Year Ended			Year Ended
	December 31,			December 31,
	2003			2002
Increase (Decrease) in Net Assets:
Operations:
Investment income (loss)—net	$	37,392,472		$	30,109,124
Realized gain (loss) on investments and foreign currency—net		4,960,370			(363,790,443	)
Change in unrealized appreciation (depreciation)—net	494,091,673			121,768,750
Net increase (decrease) in net assets resulting from operations	536,444,515			(211,912,569		)
Distributions to shareholders:
From investment income—net
Institutional Shares		(31,748,451	)		(9,464,170	)
Open Shares	(928,648		)	(202,681		)
Net decrease in net assets resulting from distributions	(32,677,099		)	(9,666,851		)
Capital stock transactions:
Net proceeds from sales
Institutional Shares		392,045,174			1,237,961,302
Open Shares		127,564,373			252,570,046
Net proceeds from reinvestment of distributions
Institutional Shares		29,499,102			8,783,214
Open Shares		777,054			169,104
Cost of shares redeemed
Institutional Shares		(574,045,236	)		(1,481,615,842	)
Open Shares	(135,501,016		)	(272,014,495		)
Net increase (decrease) in net assets from capital stock transactions	(159,660,549		)	(254,146,671		)
Total increase (decrease) in net assets		344,106,867			(475,726,091	)
Net assets at beginning of period	1,864,829,532			2,340,555,623
Net assets at end of period*	$	2,208,936,399		$	1,864,829,532
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of period	199,225,457			222,189,526
Shares sold		42,147,358			127,897,561
Shares issued to shareholders from reinvestment of distributions		2,885,977			942,405
Shares repurchased	(59,299,109		)	(151,804,035		)
Net increase (decrease)	(14,265,774		)	(22,964,069		)
Shares outstanding at end of period	184,959,683			199,225,457
Open Shares:
Shares outstanding at beginning of period	9,909,067			11,703,788
Shares sold		13,752,398			26,575,768
Shares issued to shareholders from reinvestment of distributions		77,164			18,222
Shares repurchased	(14,474,646		)	(28,388,711		)
Net increase (decrease)	(645,084		)	(1,794,721		)
Shares outstanding at end of period	9,263,983			9,909,067
* Includes undistributed (distributions in excess of) investment income—net	$	22,484,947		$	21,484,623

The accompanying notes are an integral part of these financial statements.

58

Lazard International Equity Select Portfolio						Lazard International Small Cap Portfolio						Lazard Emerging Markets Portfolio
Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2003			2002			2003			2002			2003			2002
$	383,037		$	347,964		$	11,959,648		$	6,603,972		$	8,801,089		$	4,545,894
	(436,975	)		(989,690	)		(11,799,802	)		(20,007,139	)		18,970,148			(28,276,861	)
4,873,631			(2,530,508		)	202,082,924			(11,267,736		)	174,451,538			21,451,552
4,819,693			(3,172,234		)	202,242,770			(24,670,903		)	202,222,775			(2,279,415		)
	(231,523	)		(318,477	)		(11,140,643	)		(7,171,804	)		(9,224,674	)		(4,037,021	)
(152,039		)	(29,966		)	(246,953		)	(26,978		)	(208,388		)	(82,176		)
(383,562		)	(348,443		)	(11,387,596		)	(7,198,782		)	(9,433,062		)	(4,119,197		)
	987,204			22,819,628			110,856,192			383,788,995			141,395,646			299,712,296
	3,956,422			2,450,660			26,910,078			3,288,469			19,509,655			14,316,793
	226,521			314,616			10,568,551			6,722,476			8,895,258			3,809,865
	147,030			27,512			231,650			22,923			198,013			77,772
	(15,574,869	)		(7,601,487	)		(193,255,884	)		(220,003,473	)		(91,219,399	)		(261,081,227	)
(576,667		)	(39,400		)	(13,883,025		)	(3,587,015		)	(15,722,326		)	(11,439,962		)
(10,834,359		)	17,971,529			(58,572,438		)	170,232,375			63,056,847			45,395,537
	(6,398,228	)		14,450,852			132,282,736			138,362,690			255,846,560			38,996,925
23,465,159			9,014,307			532,081,811			393,719,121			354,316,434			315,319,509
$	17,066,931		$	23,465,159		$	664,364,547		$	532,081,811		$	610,162,994		$	354,316,434
2,707,101			937,949			47,805,592			33,699,290			48,534,314			42,736,911
	112,825			2,570,262			9,579,808			32,269,208			17,358,940			38,889,222
	23,985			40,536			710,730			616,175			861,467			534,343
(1,845,545		)	(841,646		)	(16,413,184		)	(18,779,081		)	(12,007,159		)	(33,626,162		)
(1,708,735		)	1,769,152			(6,122,646		)	14,106,302			6,213,248			5,797,403
998,366			2,707,101			41,682,946			47,805,592			54,747,562			48,534,314
323,608			47,429			274,030			298,378			1,282,739			927,234
	468,666			277,299			2,109,505			274,383			2,311,880			1,802,074
	15,526			3,541			15,620			2,109			19,003			10,877
(66,814		)	(4,661		)	(1,093,347		)	(300,840		)	(1,897,010		)	(1,457,446		)
417,378			276,179			1,031,778			(24,348		)	433,873			355,505
740,986			323,608			1,305,808			274,030			1,716,612			1,282,739
$	512		$	1,523		$	(17,953	)	$	(26,632	)	$	(165,127	)	$	202,532

The accompanying notes are an integral part of these financial statements.

59

The Lazard Funds, Inc.
Statements of Changes in Net Assets (concluded)

	Lazard Bond Portfolio
	Year Ended			Year Ended
	December 31,			December 31,
	2003			2002
Increase (Decrease) in Net Assets:
Operations:
Investment income (loss)—net	$	1,257,432		$	2,140,020
Realized gain (loss) on investments, options, swap agreements and foreign currency—net		495,298			1,431,860
Change in unrealized appreciation (depreciation)—net	(515,029		)	(12,803		)
Net increase (decrease) in net assets resulting from operations	1,237,701			3,559,077
Distributions to shareholders:
From investment income—net
Institutional Shares		(1,074,171	)		(1,779,401	)
Open Shares		(201,584	)		(363,821	)
From realized gains—net
Institutional Shares		—			—
Open Shares		—			—
From capital
Institutional Shares		—			—
Open Shares	—			—
Net decrease in net assets resulting from distributions	(1,275,755		)	(2,143,222		)
Capital stock transactions:
Net proceeds from sales
Institutional Shares		4,331,937			14,804,435
Open Shares		1,512,869			3,252,031
Net proceeds from reinvestment of distributions
Institutional Shares		954,622			1,555,070
Open Shares		185,789			338,336
Cost of shares redeemed
Institutional Shares		(9,223,328	)		(12,782,601	)
Open Shares	(4,479,424		)	(1,809,414		)
Net increase (decrease) in net assets from capital stock transactions	(6,717,535		)	5,357,857
Total increase (decrease) in net assets		(6,755,589	)		6,773,712
Net assets at beginning of period	59,593,470			52,819,758
Net assets at end of period*	$	52,837,881		$	59,593,470
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of period	4,954,685			4,603,503
Shares sold		440,859			1,519,530
Shares issued to shareholders from reinvestment of distributions		96,885			161,903
Shares repurchased	(933,879		)	(1,330,251		)
Net increase (decrease)	(396,135		)	351,182
Shares outstanding at end of period	4,558,550			4,954,685
Open Shares:
Shares outstanding at beginning of period	1,102,999			921,653
Shares sold		152,832			334,149
Shares issued to shareholders from reinvestment of distributions		18,854			35,217
Shares repurchased	(452,966		)	(188,020		)
Net increase (decrease)	(281,280		)	181,346
Shares outstanding at end of period	821,719			1,102,999
* Includes undistributed (distributions in excess of) investment income—net	$	(11,130	)	$	(129,171	)

The accompanying notes are an integral part of these financial statements.

60

Lazard High Yield Portfolio						Lazard Global High Yield Portfolio						Lazard Mortgage Portfolio
Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2003			2002			2003			2002			2003			2002
$	9,584,613		$	7,806,072		$	3,192,022		$	7,886,539		$	256,211		$	1,989,135
	(604,131	)		(11,841,659	)		742,706			(14,358,080	)		1,973,540			3,605,679
14,854,034			(3,502,400		)	4,570,740			2,106,314			(788,184		)	1,252,401
23,834,516			(7,537,987		)	8,505,468			(4,365,227		)	1,441,567			6,847,215
	(9,518,725	)		(7,756,049	)		(3,507,763	)		(5,858,506	)		(399,520	)		(2,242,351	)
	(121,859	)		(187,053	)		(269,154	)		(225,134	)		—			—
	—			—			—			—			(1,918,546	)		(2,856,017	)
	—			—			—			—			—			—
	—			—			—			(1,994,483	)		—			—
—			—			—			(79,873		)	—			—
(9,640,584		)	(7,943,102		)	(3,776,917		)	(8,157,996		)	(2,318,066		)	(5,098,368		)
	57,164,592			33,315,841			11,970,397			111,973,009			381,993			35,602,493
	2,377,899			277,793			460,750			2,524,408			—			—
	9,195,187			7,243,422			2,556,599			7,110,539			2,275,904			4,729,288
	101,571			108,635			230,360			275,541			—			—
	(30,719,046	)		(18,643,150	)		(65,954,999	)	(198,656,188		)		(79,580,545	)		(32,563,109	)
(652,638		)	(11,445,492		)	(1,231,421		)	(4,563,661		)	—			—
37,467,565			10,857,049			(51,968,314		)	(81,336,352		)	(76,922,648		)	7,768,672
	51,661,497			(4,624,040	)		(47,239,763	)		(93,859,575	)		(77,799,147	)		9,517,519
79,092,119			83,716,159			83,346,493			177,206,068			87,148,071			77,630,552
$	130,753,616		$	79,092,119		$	36,106,730		$	83,346,493		$	9,348,924		$	87,148,071
16,552,920			12,013,527			10,882,948			21,852,473			8,296,901			7,547,321
	11,132,257			6,503,819			1,584,719			14,344,532			35,703			3,360,753
	1,786,025			1,396,070			339,697			945,294			257,381			449,901
(5,807,351		)	(3,360,496		)	(8,662,703		)	(26,259,351		)	(7,485,273		)	(3,061,074		)
7,110,931			4,539,393			(6,738,287		)	(10,969,525		)	(7,192,189		)	749,580
23,663,851			16,552,920			4,144,661			10,882,948			1,104,712			8,296,901
204,131			2,057,861			593,297			846,806			—			—
	454,709			58,368			60,404			324,564			—			—
	19,657			20,386			30,177			36,709			—			—
(126,675		)	(1,932,484		)	(164,174		)	(614,782		)	—			—
347,691			(1,853,730		)	(73,593		)	(253,509		)	—			—
551,822			204,131			519,704			593,297			—			—
$	(193,001	)	$	(137,030	)	$	94,069		$	366,652		$	—		$	(15,585	)

The accompanying notes are an integral part of these financial statements.

61

The Lazard Funds, Inc.
Financial Highlights

Selected data for a share of capital stock outstanding throughout each period:

LAZARD EQUITY PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	11.59		$	14.10		$	16.72		$	21.08		$	21.75
Income (loss) from investment operations:
Net investment income (loss) (a)		0.13			0.11			0.13			0.17			0.26
Net realized and unrealized gain (loss)	2.81			(2.48		)	(1.07		)	(0.79		)	0.66
Total from investment operations	2.94			(2.37		)	(0.94		)	(0.62		)	0.92
Less distributions from:
Net investment income		(0.13	)		(0.14	)		(0.13	)		(0.23	)		(0.26	)
Net realized gains	—			—			(1.55		)	(3.51		)	(1.33		)
Total distributions	(0.13		)	(0.14		)	(1.68		)	(3.74		)	(1.59		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	14.40		$	11.59		$	14.10		$	16.72		$	21.08
Total Return (b)		25.37	%	(16.84		)%		(5.90	)%		(2.64	)%		4.23	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	112,568		$	101,891		$	141,329		$	187,517		$	377,660
Ratios to average net assets:
Net expenses		0.98	%		0.97	%		0.90	%		0.86	%		0.84	%
Gross expenses		0.98	%		0.97	%		0.90	%		0.86	%		0.84	%
Net investment income		1.00	%		0.87	%		0.82	%		0.85	%		1.14	%
Portfolio turnover rate		46	%		74	%		89	%		36	%		62	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	11.58		$	14.07		$	16.70		$	21.05		$	21.76
Income (loss) from investment operations:
Net investment income (loss) (a)		0.08			0.07			0.09			0.12			0.20
Net realized and unrealized gain (loss)	2.82			(2.47		)	(1.08		)	(0.79		)	0.65
Total from investment operations	2.90			(2.40		)	(0.99		)	(0.67		)	0.85
Less distributions from:
Net investment income		(0.08	)		(0.09	)		(0.09	)		(0.17	)		(0.23	)
Net realized gains	—			—			(1.55		)	(3.51		)	(1.33		)
Total distributions	(0.08		)	(0.09		)	(1.64		)	(3.68		)	(1.56		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	14.40		$	11.58		$	14.07		$	16.70		$	21.05
Total Return (b)		25.06	%	(17.08		)%		(6.23	)%		(2.91	)%		3.92	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	21,546		$	21,292		$	37,082		$	62,167		$	121,994
Ratios to average net assets:
Net expenses		1.31	%		1.28	%		1.18	%		1.13	%		1.10	%
Gross expenses		1.31	%		1.28	%		1.18	%		1.13	%		1.10	%
Net investment income		0.67	%		0.55	%		0.54	%		0.57	%		0.89	%
Portfolio turnover rate		46	%		74	%		89	%		36	%		62	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

62

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD MID CAP PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	8.93		$	10.64		$	11.36		$	10.78		$	10.46
Income (loss) from investment operations:
Net investment income (loss) (a)		0.04			0.04			0.07			0.02			0.02
Net realized and unrealized gain (loss)	2.55			(1.57		)	1.31			2.20			0.43
Total from investment operations	2.59			(1.53		)	1.38			2.22			0.45
Less distributions from:
Net investment income		(0.03	)		—			(0.07	)		(0.03	)		(0.03	)
Net realized gains	—			(0.18		)	(2.03		)	(1.61		)	(0.10		)
Total distributions	(0.03		)	(0.18		)	(2.10		)	(1.64		)	(0.13		)
Redemption fees	—			—		(c)	—			—			—
Net asset value, end of period	$	11.49		$	8.93		$	10.64		$	11.36		$	10.78
Total Return (b)	29.03		%	(14.47		)%	12.85		%	22.44		%		4.38	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	39,625		$	28,754		$	21,729		$	15,344		$	27,521
Ratios to average net assets:
Net expenses		1.05	%		1.05	%		1.05	%		1.05	%		1.05	%
Gross expenses		1.31	%		1.40	%		1.71	%		1.50	%		1.17	%
Net investment income		0.42	%		0.40	%		0.65	%		0.20	%		0.23	%
Portfolio turnover rate		96	%		104	%		160	%		152	%		113	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	8.84		$	10.57		$	11.30		$	10.74		$	10.45
Income (loss) from investment operations:
Net investment income (loss) (a)		0.01			0.01			0.04			(0.01	)		(0.01	)
Net realized and unrealized gain (loss)	2.53			(1.56		)	1.30			2.18			0.42
Total from investment operations	2.54			(1.55		)	1.34			2.17			0.41
Less distributions from:
Net investment income		—	(c)		—			(0.04	)		—			(0.02	)
Net realized gains	—			(0.18		)	(2.03		)	(1.61		)	(0.10		)
Total distributions	—			(0.18		)	(2.07		)	(1.61		)	(0.12		)
Redemption fees	—		(c)	—			—			—			—
Net asset value, end of period	$	11.38		$	8.84		$	10.57		$	11.30		$	10.74
Total Return (b)	28.74		%	(14.75		)%	12.50		%	22.00		%		3.96	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	14,978		$	8,128		$	7,584		$	6,342		$	14,024
Ratios to average net assets:
Net expenses		1.35	%		1.35	%		1.35	%		1.35	%		1.35	%
Gross expenses		1.69	%		1.83	%		2.13	%		1.91	%		1.55	%
Net investment income (loss)		0.12	%		0.09	%		0.35	%	(0.09		)%	(0.08		)%
Portfolio turnover rate		96	%		104	%		160	%		152	%		113	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

63

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD SMALL CAP PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	14.03		$	17.70		$	18.07		$	16.57		$	17.39
Income (loss) from investment operations:
Net investment income (loss) (a)		0.07			0.02			0.08			0.09			0.10
Net realized and unrealized gain (loss)	5.39			(3.18		)	3.06			2.45			0.17
Total from investment operations	5.46			(3.16		)	3.14			2.54			0.27
Less distributions from:
Net investment income		—			—			(0.09	)		(0.23	)		(0.11	)
Net realized gains	—			(0.51		)	(3.42		)	(0.81		)	(0.98		)
Total distributions	—			(0.51		)	(3.51		)	(1.04		)	(1.09		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	19.49		$	14.03		$	17.70		$	18.07		$	16.57
Total Return (b)		38.92	%	(17.97		)%		18.06	%		15.89	%		1.77	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	465,876		$	388,795		$	575,077		$	730,179		$	906,945
Ratios to average net assets:
Net expenses		0.86	%		0.85	%		0.83	%		0.83	%		0.81	%
Gross expenses		0.86	%		0.85	%		0.83	%		0.83	%		0.81	%
Net investment income		0.42	%		0.14	%		0.41	%		0.52	%		0.60	%
Portfolio turnover rate		77	%		93	%		80	%		67	%		50	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	14.03		$	17.67		$	18.04		$	16.51		$	17.35
Income (loss) from investment operations:
Net investment income (loss) (a)		0.02			(0.03	)		0.02			0.04			0.06
Net realized and unrealized gain (loss)	5.39			(3.17		)	3.05			2.45			0.16
Total from investment operations	5.41			(3.20		)	3.07			2.49			0.22
Less distributions from:
Net investment income		—			—			(0.02	)		(0.15	)		(0.08	)
Net realized gains	—			(0.51		)	(3.42		)	(0.81		)	(0.98		)
Total distributions	—			(0.51		)	(3.44		)	(0.96		)	(1.06		)
Redemption fees	—		(c)	0.07			—			—			—
Net asset value, end of period	$	19.44		$	14.03		$	17.67		$	18.04		$	16.51
Total Return (b)		38.56	%	(17.82		)%		17.69	%		15.60	%		1.47	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	50,202		$	43,110		$	69,531		$	67,717		$	86,413
Ratios to average net assets:
Net expenses		1.19	%		1.15	%		1.13	%		1.12	%		1.09	%
Gross expenses		1.19	%		1.15	%		1.13	%		1.12	%		1.09	%
Net investment income (loss)		0.11	%		(0.17	)%		0.12	%		0.24	%		0.33	%
Portfolio turnover rate		77	%		93	%		80	%		67	%		50	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

64

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD INTERNATIONAL EQUITY PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	8.92		$	10.01		$	13.46		$	17.29		$	15.23
Income (loss) from investment operations:
Net investment income (loss) (a)		0.18			0.14			0.11			0.15			0.34
Net realized and unrealized gain (loss)	2.43			(1.18		)	(3.45		)	(2.01		)	3.25
Total from investment operations	2.61			(1.04		)	(3.34		)	(1.86		)	3.59
Less distributions from:
Net investment income		(0.16	)		(0.05	)		—	(c)		(0.17	)		(0.54	)
Net realized gains	—			—			(0.11		)	(1.80		)	(0.99		)
Total distributions	(0.16		)	(0.05		)	(0.11		)	(1.97		)	(1.53		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	11.37		$	8.92		$	10.01		$	13.46		$	17.29
Total Return (b)		29.51	%		(10.44	)%		(24.85	)%		(10.55	)%		24.07	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	2,103,600		$	1,776,799		$	2,224,089		$	3,001,933		$	3,584,093
Ratios to average net assets:
Net expenses		0.90	%		0.90	%		0.90	%		0.88	%		0.88	%
Gross expenses		0.90	%		0.90	%		0.90	%		0.88	%		0.88	%
Net investment income		1.90	%		1.45	%		0.95	%		0.97	%		2.09	%
Portfolio turnover rate		44	%		58	%		69	%		51	%		35	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	8.88		$	9.95		$	13.41		$	17.28		$	15.23
Income (loss) from investment operations:
Net investment income (loss) (a)		0.15			0.11			0.08			0.10			0.31
Net realized and unrealized gain (loss)	2.44			(1.18		)	(3.43		)	(2.02		)	3.22
Total from investment operations	2.59			(1.07		)	(3.35		)	(1.92		)	3.53
Less distributions from:
Net investment income		(0.10	)		(0.02	)		—			(0.15	)		(0.49	)
Net realized gains	—			—			(0.11		)	(1.80		)	(0.99		)
Total distributions	(0.10		)	(0.02		)	(0.11		)	(1.95		)	(1.48		)
Redemption fees	—		(c)	0.02			—			—			—
Net asset value, end of period	$	11.37		$	8.88		$	9.95		$	13.41		$	17.28
Total Return (b)		29.29	%		(10.57	)%		(25.02	)%		(10.95	)%		23.67	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	105,336		$	88,031		$	116,466		$	147,226		$	138,131
Ratios to average net assets:
Net expenses		1.21	%		1.21	%		1.19	%		1.15	%		1.16	%
Gross expenses		1.21	%		1.21	%		1.19	%		1.15	%		1.16	%
Net investment income		1.61	%		1.14	%		0.70	%		0.66	%		1.87	%
Portfolio turnover rate		44	%		58	%		69	%		51	%		35	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

65

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO

							For the
	Year Ended						Period
							5/31/01* to
Institutional Shares	12/31/03			12/31/02			12/31/01
Net asset value, beginning of period	$	7.74		$	9.15		$	10.00
Income (loss) from investment operations:
Net investment income (loss) (a)		0.18			0.12			0.01
Net realized and unrealized gain (loss)	2.12			(1.41		)	(0.85		)
Total from investment operations	2.30			(1.29		)	(0.84		)
Less distributions from:
Net investment income		(0.24	)		(0.12	)		(0.01	)
Net realized gains	—			—			—
Total distributions	(0.24		)	(0.12		)	(0.01		)
Redemption fees	—			—		(c)	—
Net asset value, end of period	$	9.80		$	7.74		$	9.15
Total Return (b)	29.80		%	(14.12		)%	(8.43		)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	9,788		$	20,957		$	8,580
Ratios to average net assets:
Net expenses (d)	1.15		%		1.15	%	1.15		%
Gross expenses (d)	1.85		%		1.63	%	13.75		%
Net investment income (d)	2.26		%		1.41	%	0.15		%
Portfolio turnover rate		29	%		32	%		1	%
							For the
	Year Ended						Period
							5/31/01* to
Open Shares	12/31/03			12/31/02			12/31/01
Net asset value, beginning of period	$	7.75		$	9.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss) (a)		0.09			0.08			(0.02	)
Net realized and unrealized gain (loss)	2.19			(1.40		)	(0.82		)
Total from investment operations	2.28			(1.32		)	(0.84		)
Less distributions from:
Net investment income		(0.21	)		(0.09	)		—
Net realized gains	—			—			—
Total distributions	(0.21		)	(0.09		)	—
Redemption fees	—			—			—
Net asset value, end of period	$	9.82		$	7.75		$	9.16
Total Return (b)	29.49		%	(14.37		)%	(8.40		)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	7,279		$	2,508		$	434
Ratios to average net assets:
Net expenses (d)	1.45		%		1.45	%	1.45		%
Gross expenses (d)	2.68		%		2.79	%	47.06		%
Net investment income (loss) (d)	1.09		%		0.93	%	(0.31		)%
Portfolio turnover rate		29	%		32	%		1	%

*	Commencement of operations.
(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions. Periods of less than one year are not annualized.
(c)	Amount is less than $0.01 per share.
(d)	Annualized for periods of less than one year.

The accompanying notes are an integral part of these financial statements.

66

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD INTERNATIONAL SMALL CAP PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	11.07		$	11.58		$	12.57		$	14.12		$	11.40
Income (loss) from investment operations:
Net investment income (loss) (a)		0.27			0.17			0.18			0.16			0.14
Net realized and unrealized gain (loss)	4.39			(0.53		)	(1.03		)	(0.81		)	2.81
Total from investment operations	4.66			(0.36		)	(0.85		)	(0.65		)	2.95
Less distributions from:
Net investment income		(0.27	)		(0.15	)		(0.14	)		(0.11	)		(0.12	)
Net realized gains	—			—			—			(0.79		)	(0.11		)
Total distributions	(0.27		)	(0.15		)	(0.14		)	(0.90		)	(0.23		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	15.46		$	11.07		$	11.58		$	12.57		$	14.12
Total Return (b)		42.21	%		(3.08	)%		(6.77	)%		(4.44	)%		26.07	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	644,240		$	529,062		$	390,278		$	341,808		$	217,684
Ratios to average net assets:
Net expenses		0.95	%		0.96	%		0.95	%		0.98	%		1.01	%
Gross expenses		0.95	%		0.96	%		0.95	%		0.98	%		1.01	%
Net investment income		2.15	%		1.45	%		1.48	%		1.13	%		1.17	%
Portfolio turnover rate		18	%		25	%		17	%		43	%		50	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	11.02		$	11.53		$	12.53		$	14.06		$	11.38
Income (loss) from investment operations:
Net investment income (loss) (a)		0.21			0.13			0.11			0.10			0.09
Net realized and unrealized gain (loss)	4.36			(0.54		)	(1.03		)	(0.80		)	2.80
Total from investment operations	4.57			(0.41		)	(0.92		)	(0.70		)	2.89
Less distributions from:
Net investment income		(0.20	)		(0.10	)		(0.08	)		(0.04	)		(0.10	)
Net realized gains	—			—			—			(0.79		)	(0.11		)
Total distributions	(0.20		)	(0.10		)	(0.08		)	(0.83		)	(0.21		)
Redemption fees	0.02			—		(c)	—			—			—
Net asset value, end of period	$	15.41		$	11.02		$	11.53		$	12.53		$	14.06
Total Return (b)		41.71	%		(3.55	)%		(7.33	)%		(4.85	)%		25.55	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	20,124		$	3,019		$	3,441		$	1,649		$	2,441
Ratios to average net assets:
Net expenses		1.43	%		1.43	%		1.43	%		1.43	%		1.43	%
Gross expenses		1.46	%		1.86	%		2.03	%		2.27	%		2.12	%
Net investment income		1.59	%		1.15	%		0.91	%		0.68	%		0.77	%
Portfolio turnover rate		18	%		25	%		17	%		43	%		50	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

67

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD EMERGING MARKETS PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	7.11		$	7.22		$	7.52		$	10.70		$	6.94
Income (loss) from investment operations:
Net investment income (loss) (a)		0.17			0.10			0.07			0.06			0.09
Net realized and unrealized gain (loss)	3.69			(0.13		)	(0.31		)	(3.22		)	3.77
Total from investment operations	3.86			(0.03		)	(0.24		)	(3.16		)	3.86
Less distributions from:
Net investment income		(0.17	)		(0.08	)		(0.06	)		(0.02	)		(0.10	)
Net realized gains	—			—			—			—			—
Total distributions	(0.17		)	(0.08		)	(0.06		)	(0.02		)	(0.10		)
Redemption fees	—		(c)	—		(c)	—			—			—
Net asset value, end of period	$	10.80		$	7.11		$	7.22		$	7.52		$	10.70
Total Return (b)		54.45	%		(0.37	)%		(3.16	)%	(29.53		)%		55.81	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	591,514		$	345,176		$	308,608		$	317,691		$	465,278
Ratios to average net assets:
Net expenses		1.29	%		1.31	%		1.29	%		1.26	%		1.24	%
Gross expenses		1.29	%		1.31	%		1.29	%		1.27	%		1.25	%
Net investment income		2.06	%		1.30	%		0.91	%		0.62	%		1.05	%
Portfolio turnover rate		29	%		31	%		43	%		72	%		46	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	7.13		$	7.24		$	7.54		$	10.74		$	6.97
Income (loss) from investment operations:
Net investment income (loss) (a)		0.15			0.08			0.05			0.03			0.06
Net realized and unrealized gain (loss)	3.70			(0.13		)	(0.32		)	(3.23		)	3.79
Total from investment operations	3.85			(0.05		)	(0.27		)	(3.20		)	3.85
Less distributions from:
Net investment income		(0.14	)		(0.06	)		(0.03	)		—			(0.08	)
Net realized gains	—			—			—			—			—
Total distributions	(0.14		)	(0.06		)	(0.03		)	—			(0.08		)
Redemption fees	0.02			—		(c)	—			—			—
Net asset value, end of period	$	10.86		$	7.13		$	7.24		$	7.54		$	10.74
Total Return (b)		54.29	%		(0.65	)%		(3.54	)%	(29.80		)%		55.26	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	18,649		$	9,140		$	6,712		$	5,459		$	10,491
Ratios to average net assets:
Net expenses		1.60	%		1.60	%		1.60	%		1.60	%		1.60	%
Gross expenses		1.76	%		1.84	%		2.00	%		1.80	%		1.75	%
Net investment income		1.82	%		1.09	%		0.63	%		0.30	%		0.73	%
Portfolio turnover rate		29	%		31	%		43	%		72	%		46	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

68

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD BOND PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	9.84		$	9.56		$	9.37		$	9.29		$	9.89
Income (loss) from investment operations:
Net investment income (loss) (a)		0.23			0.41			0.52			0.59			0.55
Net realized and unrealized gain (loss)	(0.01		)	0.28			0.19			0.08			(0.60		)
Total from investment operations	0.22			0.69			0.71			0.67			(0.05		)
Less distributions from:
Net investment income		(0.24	)		(0.41	)		(0.52	)		(0.59	)		(0.55	)
Net realized gains	—			—			—			—			—
Total distributions	(0.24		)	(0.41		)	(0.52		)	(0.59		)	(0.55		)
Redemption fees	—			—		(c)	—			—			—
Net asset value, end of period	$	9.82		$	9.84		$	9.56		$	9.37		$	9.29
Total Return (b)		2.21	%		7.44	%		7.68	%		7.53	%	(0.46		)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	44,767		$	48,745		$	44,013		$	54,847		$	91,557
Ratios to average net assets:
Net expenses		0.92	%		0.98	%		0.91	%		0.82	%		0.76	%
Gross expenses		0.92	%		0.98	%		0.91	%		0.82	%		0.76	%
Net investment income		2.34	%		4.30	%		5.44	%		6.38	%		5.74	%
Portfolio turnover rate		583	%		391	%		238	%		355	%		549	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	9.83		$	9.56		$	9.37		$	9.29		$	9.88
Income (loss) from investment operations:
Net investment income (loss) (a)		0.21			0.40			0.50			0.57			0.51
Net realized and unrealized gain (loss)	(0.01		)	0.27			0.19			0.08			(0.58		)
Total from investment operations	0.20			0.67			0.69			0.65			(0.07		)
Less distributions from:
Net investment income		(0.22	)		(0.40	)		(0.50	)		(0.57	)		(0.52	)
Net realized gains	—			—			—			—			—
Total distributions	(0.22		)	(0.40		)	(0.50		)	(0.57		)	(0.52		)
Redemption fees	0.01			—		(c)	—			—			—
Net asset value, end of period	$	9.82		$	9.83		$	9.56		$	9.37		$	9.29
Total Return (b)		2.13	%		7.15	%		7.49	%		7.25	%	(0.76		)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	8,071		$	10,848		$	8,807		$	11,457		$	11,605
Ratios to average net assets:
Net expenses		1.10	%		1.10	%		1.10	%		1.10	%		1.10	%
Gross expenses		1.38	%		1.44	%		1.35	%		1.27	%		1.15	%
Net investment income		2.15	%		4.15	%		5.24	%		6.13	%		5.37	%
Portfolio turnover rate		583	%		391	%		238	%		355	%		549	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

69

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD HIGH YIELD PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	4.72		$	5.95		$	6.57		$	8.77		$	9.42
Income (loss) from investment operations:
Net investment income (loss) (a)		0.43			0.58			0.76			0.96			0.92
Net realized and unrealized gain (loss)	0.69			(1.22		)	(0.62		)	(2.20		)	(0.65		)
Total from investment operations	1.12			(0.64		)	0.14			(1.24		)	0.27
Less distributions from:
Net investment income		(0.44	)		(0.59	)		(0.76	)		(0.96	)		(0.92	)
Net realized gains	—			—			—			—			—
Total distributions	(0.44		)	(0.59		)	(0.76		)	(0.96		)	(0.92		)
Redemption fees	—		(c)	—			—			—			—
Net asset value, end of period	$	5.40		$	4.72		$	5.95		$	6.57		$	8.77
Total Return (b)		24.58	%	(11.14		)%		2.03	%	(15.19		)%		2.94	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	127,765		$	78,128		$	71,467		$	65,752		$	83,664
Ratios to average net assets:
Net expenses		0.75	%		0.75	%		0.75	%		0.75	%		0.94	%
Gross expenses		0.98	%		1.08	%		1.07	%		1.00	%		1.06	%
Net investment income		8.45	%	11.09		%	11.85		%	12.24		%	10.08		%
Portfolio turnover rate		68	%		229	%		234	%		148	%		190	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	4.73		$	5.95		$	6.57		$	8.78		$	9.42
Income (loss) from investment operations:
Net investment income (loss) (a)		0.42			0.55			0.74			0.94			0.90
Net realized and unrealized gain (loss)	0.68			(1.19		)	(0.62		)	(2.21		)	(0.65		)
Total from investment operations	1.10			(0.64		)	0.12			(1.27		)	0.25
Less distributions from:
Net investment income		(0.42	)		(0.58	)		(0.74	)		(0.94	)		(0.89	)
Net realized gains	—			—			—			—			—
Total distributions	(0.42		)	(0.58		)	(0.74		)	(0.94		)	(0.89		)
Redemption fees	0.01			—		(c)	—			—			—
Net asset value, end of period	$	5.42		$	4.73		$	5.95		$	6.57		$	8.78
Total Return (b)		24.41	%	(11.27		)%		1.72	%	(15.54		)%		2.68	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	2,989		$	965		$	12,249		$	13,552		$	1,305
Ratios to average net assets:
Net expenses		1.05	%		1.05	%		1.05	%		1.05	%		1.22	%
Gross expenses		2.79	%		2.48	%		1.46	%		1.38	%		2.92	%
Net investment income		8.16	%		9.84	%	11.57		%	12.10		%		9.89	%
Portfolio turnover rate		68	%		229	%		234	%		148	%		190	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

70

The Lazard Funds, Inc.
Financial Highlights (continued)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD GLOBAL HIGH YIELD PORTFOLIO

	Year Ended
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	7.26		$	7.81		$	7.96		$	8.83		$	9.01
Income (loss) from investment operations:
Net investment income (loss) (a)		0.41			0.39			0.48			0.59			0.61
Net realized and unrealized gain (loss)	0.64			(0.54		)	(0.15		)	(0.49		)	(0.18		)
Total from investment operations	1.05			(0.15		)	0.33			0.10			0.43
Less distributions from:
Net investment income		(0.57	)		(0.30	)		(0.48	)		(0.97	)		(0.61	)
Net realized gains		—			—			—			—			—
Capital	—			(0.10		)	—			—			—
Total distributions	(0.57		)	(0.40		)	(0.48		)	(0.97		)	(0.61		)
Redemption fees	—			—		(c)	—			—			—
Net asset value, end of period	$	7.74		$	7.26		$	7.81		$	7.96		$	8.83
Total Return (b)	14.88		%	(2.00		)%		4.09	%		1.12	%		4.91	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	32,072		$	79,025		$	170,590		$	240,162		$	306,116
Ratios to average net assets:
Net expenses		1.20	%		0.98	%		0.93	%		0.93	%		0.91	%
Gross expenses		1.20	%		0.98	%		0.93	%		0.93	%		0.91	%
Net investment income		5.48	%		5.14	%		5.99	%		6.82	%		6.82	%
Portfolio turnover rate		187	%		363	%		292	%		207	%		257	%
	Year Ended
Open Shares	12/31/03			12/31/02			12/31/01			12/31/00			12/31/99
Net asset value, beginning of period	$	7.28		$	7.81		$	7.96		$	8.83		$	9.02
Income (loss) from investment operations:
Net investment income (loss) (a)		0.38			0.35			0.43			0.55			0.58
Net realized and unrealized gain (loss)	0.61			(0.55		)	(0.15		)	(0.49		)	(0.19		)
Total from investment operations	0.99			(0.20		)	0.28			0.06			0.39
Less distributions from:
Net investment income		(0.51	)		(0.25	)		(0.43	)		(0.93	)		(0.58	)
Net realized gains		—			—			—			—			—
Capital	—			(0.09		)	—			—			—
Total distributions	(0.51		)	(0.34		)	(0.43		)	(0.93		)	(0.58		)
Redemption fees	—			0.01			—			—			—
Net asset value, end of period	$	7.76		$	7.28		$	7.81		$	7.96		$	8.83
Total Return (b)	13.97		%	(2.48		)%		3.53	%		0.71	%		4.40	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	4,035		$	4,322		$	6,616		$	9,633		$	16,035
Ratios to average net assets:
Net expenses		2.04	%		1.58	%		1.46	%		1.34	%		1.27	%
Gross expenses		2.04	%		1.58	%		1.46	%		1.34	%		1.27	%
Net investment income		5.08	%		4.58	%		5.38	%		6.40	%		6.49	%
Portfolio turnover rate		187	%		363	%		292	%		207	%		257	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions.
(c)	Amount is less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

71

The Lazard Funds, Inc.
Financial Highlights (concluded)

Selected data for a share of capital stock outstanding throughout each period:

LAZARD MORTGAGE PORTFOLIO

										For the
	Year Ended									Period
										12/29/00* to
Institutional Shares	12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of period	$	10.50		$	10.29		$	10.00		$	10.00
Income (loss) from investment operations:
Net investment income (loss) (a)		0.08			0.25			0.40			—	(d)
Net realized and unrealized gain (loss)	0.17			0.60			0.33			—
Total from investment operations	0.25			0.85			0.73			—
Less distributions from:
Net investment income		(0.15	)		(0.28	)		(0.40	)		—	(d)
Net realized gains	(2.14		)	(0.36		)	(0.04		)	—
Total distributions	(2.29		)	(0.64		)	(0.44		)	—
Redemption fees	—			—			—			—
Net asset value, end of period	$	8.46		$	10.50		$	10.29		$	10.00
Total Return (b)	2.47		%		8.38	%		7.44	%	0.04		%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	9,349		$	87,148		$	77,631		$	100
Ratios to average net assets:
Net expenses (c)	0.65		%		0.64	%		0.65	%	0.65		%
Gross expenses (c)	0.91		%		0.64	%		1.37	%	570.50		%(e)
Net investment income (c)	0.80		%		2.37	%		3.04	%	4.38		%
Portfolio turnover rate		485	%		497	%		249	%		0	%

*	Commencement of operations.
(a)	For the periods ended 12/31/03, 12/31/02 and 12/31/00, net investment income (loss) was computed using the average shares method.
(b)	Total returns reflect changes in share price and reinvestment of all dividends and distributions. Periods of less than one year are not annualized.
(c)	Annualized for periods of less than one year.
(d)	Amount is less than $0.01 per share.
(e)	Gross expense ratio was the result of the Portfolio being in existence for three days during the period ended 12/31/00.

The accompanying notes are an integral part of these financial statements.

72

The Lazard Funds, Inc.
Notes to Financial Statements
December 31, 2003

1. Organization

The Lazard Funds, Inc. (the “Fund”) was incorporated in Maryland on May 17, 1991 and is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Fund is comprised of eleven no-load portfolios (each referred to as a “Portfolio”), as follows: Lazard Equity Portfolio, Lazard Mid Cap Portfolio, Lazard Small Cap Portfolio, Lazard International Equity Portfolio, Lazard International Equity Select Portfolio, Lazard International Small Cap Portfolio, Lazard Emerging Markets Portfolio, Lazard Bond Portfolio, Lazard High Yield Portfolio, Lazard Global High Yield Portfolio (formerly Lazard Strategic Yield Portfolio) and Lazard Mortgage Portfolio. The Fund offers two different classes of shares of the Portfolios—Institutional Shares and Open Shares (except for Mortgage Portfolio, which currently offers only Institutional Shares). Institutional Shares and Open Shares are identical, except as to minimum investment requirements and the services offered to and expenses borne by each class of shares. All Portfolios are operated as “diversified” funds, as defined in the Act.

2. Significant Accounting Policies

The following is a summary of significant accounting policies:

(a) Valuation of Investments—Market values for securities listed on the New York Stock Exchange (“NYSE”), NASDAQ national market or other U.S. exchanges or markets are based on the closing market price on the principal exchange or market on which the security is 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 closing bid price. Any securities not listed, for which current over-the-counter market quotations or bids are readily available, are valued at the last quoted bid price or, if available, the mean of two such prices. Securities listed on foreign exchanges are valued at the last reported sales price; securities not traded on the valuation date are valued at the last quoted bid price.

Bonds and other fixed-income securities that are not exchange-traded are valued on the basis of prices provided by pricing services which are based primarily on institutional trading in similar groups of securities, or by using brokers’ quotations. Mortgage-backed securities issued by certain government-related organizations are valued using pricing services or brokers’ quotations based on a matrix system which considers such factors as other security prices, yields and maturities. Debt securities maturing in sixty 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 under the supervision of the Board of Directors.

Securities and other assets for which current market quotations are not readily available are valued at fair value as determined in good faith in accordance with procedures approved by the Board of Directors.

(b) Portfolio Securities Transactions and Investment Income—Portfolio securities transactions are accounted for on trade date. Realized gain (loss) on sales of investments are recorded on a specific identification basis. Dividend income is recorded on the ex-dividend date and interest income is accrued daily. The Portfolios amortize premiums and accrete discounts on fixed-income securities using the effective yield method.

(c) Repurchase Agreements—In connection with transactions in repurchase agreements, the Fund’s custodian takes possession of the underlying collateral securities, the fair value of which at all times is required to be at least equal to the principal amount, plus accrued interest, of the repurchase transaction. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by a Portfolio may be delayed or limited.

(d) Securities Lending—The Portfolios may lend portfolio securities to qualified borrowers in order to earn additional income. The terms of the lending agreements require that loans are secured at all times by cash, U.S. Government securities or irrevocable letters of credit in an amount at least equal to 102% of the market value of domestic securities loaned (105% in the case of foreign securities), plus accrued interest and dividends, determined on a daily basis. Cash collateral received is invested in State Street Navigator Securities Lending Prime Portfolio, a regulated investment company offered by State Street Bank and Trust Company (“State Street”). If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Portfolios could experience delays and costs in recovering the securities loaned or in gaining access to the collateral.

At December 31, 2003, the value of the securities on loan and corresponding collateral received were as follows:

	Securities
Portfolio	Loaned		Collateral
Mid Cap(1)	$	295,771	$	304,325
Small Cap(2)		4,073,424		4,612,290
International Equity(2)		30,695,970		32,114,571
International Small Cap(1)		56,343,433		59,090,297
Emerging Markets(1)		39,834,029		41,065,473

(1)	Collateral is cash.
(2)	Collateral is U.S. Treasury obligations.

In accordance with generally accepted accounting principles, any cash received as collateral for securities lending transactions is shown on the respective Portfolio of Investments. The related amount payable on the return of the securities on loan, where cash is received as collateral, is shown on the respective Statement of Assets and Liabilities.

73

The Lazard Funds, Inc.
Notes to Financial Statements (continued)
December 31, 2003

During the year ended December 31, 2003, the income earned from securities lending, which is included in interest income on the Statement of Operations of the respective Portfolios, was as follows:

	Securities
Portfolio	Lending Income
Mid Cap	$	1,764
Small Cap		34,973
International Equity	1,091,201
International Small Cap		558,846
Emerging Markets		118,143

(e) Foreign Currency Translation and Forward Foreign Currency Contracts—The accounting records of the Portfolios are maintained in U.S. dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rates on the respective transaction dates.

The Portfolios do not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions represents net foreign currency gain (loss) from forward foreign currency contracts, disposition of foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of dividends, interest and foreign withholding taxes recorded on a Portfolio’s accounting records and the U.S. dollar equivalent amounts actually received or paid. Net unrealized foreign currency gain (loss) arises from changes in the value of assets and liabilities, other than investments in securities, as a result of changes in exchange rates.

A forward foreign currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. Certain Portfolios may enter into forward foreign currency contracts for risk management and other purposes. Risk management includes hedging strategies which serve to reduce a Portfolio’s exposure to foreign currency fluctuations. Such exposure may exist during the period that a foreign denominated investment is held, or during the period between the trade date and settlement date of an investment which has been purchased or sold. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

The U.S. dollar value of forward foreign currency contracts is determined using forward exchange rates provided by quotation services. Daily fluctuations in the value of such contracts are recorded as unrealized gain (loss). When the contract is closed, the Portfolio records a realized gain (loss) equal to the difference between the value at the time it was opened and the value at the time it was closed. Such gain (loss) is disclosed in the realized or unrealized gain (loss) on foreign currency in the accompanying Statement of Operations of the respective Portfolios.

(f) Structured Investments—Global High Yield Portfolio may invest in structured investments, whose values are linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices, or other underlying instruments. The Portfolio may use these investments to increase or decrease its exposure to different underlying instruments, to gain exposure to markets that might be difficult to invest in through conventional securities or for other purposes. Structured investments may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment.

(g) Forward Commitments—Each Portfolio may purchase or sell securities on a forward commitment, when-issued or delayed delivery basis. Payment and delivery may take place a month or more after the date of the transaction. The price and yield of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Collateral consisting of cash or liquid securities is segregated in an amount at least equal to these commitments.

(h) Forward Roll Transactions—Mortgage Portfolio may engage in forward roll transactions with respect to mortgage-related securities. In a forward roll transaction, the Portfolio sells a mortgage-related security to a financial institution and, simultaneously, agrees to purchase a similar security from that institution at a later date and agreed upon price. At all times during the transaction the Portfolio will segregate cash or liquid securities at least equal to the amount of the repurchase price (including accrued interest).

(i) Interest Rate Swap Agreements—Certain Portfolios may enter into interest rate swap agreements for investment, hedging or risk management purposes. An interest rate swap agreement involves the exchange of commitments to pay or receive interest, such as an exchange of floating rate payments for fixed rate payments. If forecasts of interest rates and other market factors are incorrect, investment performance will be lower than it would have been if these investment techniques were not used. Even if the forecasts are correct, there are risks that: a liquid market may not always exist; the positions may correlate imperfectly with the asset and liability being hedged; or a counterparty to a transaction may not perform. Interest rate swap agreements are marked-to-market daily using market quotations. The change in market value is recorded by a Portfolio as unrealized gain (loss). The difference between the rates received and paid by a Portfolio constitutes investment income (loss).

74

The Lazard Funds, Inc.
Notes to Financial Statements (continued)
December 31, 2003

(j) Options Transactions—For hedging and investment purposes, certain Portfolios may purchase and write (sell) put and call options that are traded on U.S. and foreign securities exchanges and over-the-counter markets.

The Portfolio pays a premium whether or not the option is exercised. The Portfolio bears the risk of loss of any change in market value should the counterparty not perform under the contract. The risk involved in writing an option is that if the option is exercised the underlying security or other assets could be purchased or sold by the Portfolio at a disadvantageous price. Put and call options purchased are accounted for in the same manner as portfolio securities and other assets. When the Portfolio writes an option, the premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written.

There were no options transactions for the year ended December 31, 2003.

(k) Federal Income Taxes—The Fund’s policy is to continue to have each Portfolio qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and to distribute all its taxable income, including any realized net capital gains, to shareholders. Therefore, no federal income tax provision is required.

At December 31, 2003, the following Portfolios had available for federal income tax purposes unused realized capital losses which can be used to offset future realized capital gains as follows:

Portfolio	Expiring 2006		Expiring 2007
Emerging Markets	$	8,018,049	$	3,337,906
Bond		—		2,033,868
High Yield		1,150,441		6,288,085
Global High Yield		14,900,897		22,094,886
Portfolio	Expiring 2008		Expiring 2009
International Equity	$	—	$	306,476,891
International Equity Select		—		10,906
International Small Cap		—		3,580,062
Emerging Markets		—		28,250,429
Bond		2,509,149		—
High Yield		9,656,683		20,597,061
Global High Yield		9,399,400		16,205,277

Portfolio	Expiring 2010		Expiring 2011
Equity	$	29,023,001	$	1,556,848
Mid Cap		835,023		—
Small Cap		8,388,607		—
International Equity		401,228,521		73,199,015
International Equity Select		849,474		522,838
International Small Cap		12,123,813		19,998,604
Emerging Markets		39,743,070		—
High Yield		13,902,783		2,546,543
Global High Yield		17,080,505		112,189

Under current tax law, certain capital and net foreign currency losses realized after October 31 within the taxable year may be deferred and treated as occurring on the first day of the following tax year. For the tax year ended December 31, 2003, the following Portfolios elected to defer net capital and currency losses arising between November 1, 2003 and December 31, 2003, as follows:

Portfolio	Amount
Equity	$	2,759
International Small Cap		20,556
Emerging Markets		182,882
Bond		114,522

(l) Dividends and Distributions—The Fund intends to declare dividends from net investment income daily on shares of Bond Portfolio, High Yield Portfolio, Global High Yield Portfolio and Mortgage Portfolio and to pay such dividends monthly. Dividends from net investment income, if any, on shares of Equity Portfolio, Mid Cap Portfolio, Small Cap Portfolio, International Equity Portfolio, International Equity Select Portfolio, International Small Cap Portfolio and Emerging Markets Portfolio will be declared and paid annually. During any particular year, net realized gains from investment transactions in excess of available capital loss carryforwards would be taxable to the Portfolio if not distributed. The Portfolios intend to declare and distribute these amounts, at least annually, to shareholders; however, to avoid taxation, a second distribution may be required.

Income dividends and capital gains distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These book/tax differences, which may result in distribution reclassifications, are primarily due to differing treatments of foreign currency transactions. Book/tax differences relating to shareholder distributions may result in reclassifications among certain capital accounts. In 2003, International Equity Portfolio processed an in-kind redemption to a shareholder. The transaction resulted in a $14,597,230 net capital gain, which is attributable to the redeeming shareholder for tax purposes, and is included in realized gain (loss) on investments on the Statement of Operations.

The tax character of dividends and distributions paid during the years ended December 31, other than returns of capital, was as follows:

	Ordinary Income			Long-Term Capital Gain
Portfolio	2003	2002		2003		2002
Equity:
Institutional	$     989,652	$	1,131,482	$	—	$	—
Open	129,438		159,184		—		—
Mid Cap:
Institutional	84,537		470,368		—		44,903
Open	376		139,569		—		13,324
Small Cap:
Institutional	—		5,757,212		—	9,940,624
Open	—		692,463		—	1,195,639

75

The Lazard Funds, Inc.
Notes to Financial Statements (continued)
December 31, 2003

	Ordinary Income				Long-Term Capital Gain
Portfolio	2003		2002		2003		2002
International
Equity:
Institutional	$	31,748,451	$	9,464,170	$	—	$	—
Open		928,648		202,681		—		—
International
Equity Select:
Institutional		231,523		318,477		—		—
Open		152,039		29,966		—		—
International
Small Cap:
Institutional		11,140,643		7,171,804		—		—
Open		246,953		26,978		—		—
Emerging
Markets:
Institutional		9,224,674		4,037,021		—		—
Open		208,388		82,176		—		—
Bond:
Institutional		1,074,171		1,779,401		—		—
Open		201,584		363,821		—		—
High Yield:
Institutional		9,518,725		7,756,049		—		—
Open		121,859		187,053		—		—
Global High
Yield:
Institutional		3,507,763		5,858,506		—		—
Open		269,154		225,134		—		—
Mortgage:
Institutional		2,318,066		5,067,450		—		30,918

As of December 31, 2003, the components of distributable earnings (excluding unrealized appreciation (depreciation)) on a tax basis were as follows:

			Undistributed
	Undistributed		Long-Term
Portfolio	Ordinary Income		Capital Gain
Equity	$	75,679	$ —
Mid Cap		82,606	—
Small Cap		1,223,925	—
International Equity		26,304,650	—
International Equity Select		512	—
International Small Cap		—	—
Emerging Markets		—	—
Bond		—	—
High Yield		—	—
Global High Yield		151,553	—
Mortgage		34,882	—

(m) Allocation of Expenses—Expenses not directly chargeable to a specific Portfolio are allocated among the Portfolios primarily on the basis of relative net assets. A Portfolio accrues distribution and service (12b-1) fees to its Open Shares. Each Portfolio’s income, expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.

(n) Expense Reductions—Portfolios leaving excess cash in demand deposit accounts may receive credits which are available to offset custody expenses. The Statements of Operations report gross custody expenses, and report the amount of such credits separately as an expense reduction.

(o) Redemption Fee—Each Portfolio may impose a 1.00% redemption fee (short-term trading fee) on Portfolio shares redeemed less than 30 days after such shares were acquired. The fees are retained by each Portfolio and are included as paid in capital on its Statement of Assets and Liabilities. During the year ended December 31, 2003, redemption fees were received as follows:

Portfolio	Redemption Fees
Equity	$	826
Mid Cap		32
Small Cap		5,647
International Equity		106,106
International Small Cap		35,324
Emerging Markets		38,771
Bond		5,314
High Yield		5,060

(p) Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires the Fund to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

3. Investment Management, Administrative and Distribution Agreements

The Fund has entered into investment management agreements (the “Management Agreements”) with Lazard Asset Management LLC (the “Investment Manager”), a subsidiary of Lazard Frères & Co. LLC (“Lazard”). Pursuant to the Management Agreements, the Investment Manager regularly provides each Portfolio with investment research, advice and supervision and furnishes continuously an investment program for each Portfolio consistent with its investment objective and policies, including the purchase, retention and disposition of securities. Each Portfolio pays the Investment Manager a management fee, accrued daily and payable monthly, at the annual rate set forth below as a percentage of its average daily net assets:

76

The Lazard Funds, Inc.
Notes to Financial Statements (continued)
December 31, 2003

Portfolio	Annual Rate
Equity	0.75	%
Mid Cap	0.75
Small Cap	0.75
International Equity	0.75
International Equity Select	0.85
International Small Cap	0.75
Emerging Markets	1.00
Bond	0.50
High Yield	0.75
Gloabal High Yield	0.75
Mortgage	0.40

The Investment Manager has voluntarily agreed to reduce its fees and, if necessary, reimburse the following Portfolios if annualized operating expenses exceed the following percentages of average daily net assets for the respective Shares:

	Institutional Shares		Open Shares
	Annual		Annual
Portfolio	Operating Expenses		Operating Expenses
Mid Cap	1.05	%	1.35	%
International Equity Select	1.15		1.45
International Small Cap	N/A		1.43
Emerging Markets	N/A		1.60
Bond	N/A		1.10
High Yield	0.75		1.05
Mortgage	0.65		N/A

During the year ended December 31, 2003, the Investment Manager waived its management fee/reimbursed the Portfolios for other expenses as follows:

	Institutional Shares		Open Shares
	Amount Waived/		Amount Waived/
Portfolio	Reimbursed		Reimbursed
Mid Cap	$	78,296	$	36,528
International Equity Select		103,824		51,139
International Small Cap		—		3,065
Emerging Markets		—		19,230
Bond		—		25,781
High Yield		261,207		25,712
Mortgage		83,156		N/A

The Fund has entered into an administrative agreement with State Street to provide certain administrative services. Each Portfolio bears the cost of such services at a fixed annual rate of $37,500, plus $7,500 per additional class, and 0.02% of average daily net assets up to $1 billion and 0.01% of average daily net assets over $1 billion.

The Fund has a distribution agreement with Lazard pursuant to which Lazard acts as distributor for shares of each Portfolio and bears the cost of printing and mailing prospectuses to potential investors and of any advertising expenses incurred in connection with the distribution of Portfolio shares.

Lazard provides Open Shares with distribution services pursuant to a Distribution and Servicing Plan (the “Plan”) in accordance with Rule 12b-1 under the Act. Under the Plan, each Portfolio pays a monthly fee to Lazard, at an annual rate of 0.25% of the average daily net assets of its Open Shares, for distribution and servicing of accounts. Lazard may make payments to certain financial institutions, securities dealers and other industry professionals, for providing these services.

Certain Directors of the Fund are Managing Directors of the Investment Manager. The Fund pays each Director who is not an employee or an affiliated person of the Investment Manager its allocated portion of a fixed fee of $30,000 per year, plus $2,500 per meeting attended for the Fund and Lazard Retirement Series, Inc., another multi-series fund advised by the Investment Manager, and reimburses such Directors for travel and other out of pocket expenses. In addition, the Chairman of the Audit Committee for the Fund and Lazard Retirement Series, Inc. also receives an annual fee of $5,000.

4. Securities Transactions and Transactions with Affiliates

Purchases and sales of portfolio securities (excluding short-term securities) for the year ended December 31, 2003 were as follows:

Portfolio	Purchases		Sales
Equity	$	56,061,341	$	67,881,058
Mid Cap		46,572,996		38,895,006
Small Cap		339,478,018		402,771,930
International Equity		852,992,003		1,018,823,722
International Equity Select		5,114,562		15,880,252
International Small Cap		95,050,711		161,705,036
Emerging Markets		174,709,932		119,974,470
Bond(1)		42,594,112		24,120,253
High Yield		117,267,967		72,437,475
Global High Yield(2)		70,793,388		94,824,276
Mortgage(3)		—		—

(1)	Excludes purchases and sales of U.S. Government securities of $268,382,719 and $292,157,698, respectively.
(2)	Excludes purchases and sales of U.S. Government securities of $19,824,000 and $32,713,135, respectively.
(3)	Excludes purchases and sales of U.S. Government securities of $28,002,899 and $67,601,763, respectively.

For the year ended December 31, 2003, brokerage commissions of $3,515 were paid to Lazard for portfolio transactions executed on behalf of the Emerging Markets Portfolio.

77

The Lazard Funds, Inc.
Notes to Financial Statements (concluded)
December 31, 2003

5. Line of Credit

The Fund has a $50 million Line of Credit Agreement (the “Agreement”) with State Street, primarily for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest on borrowings is payable at State Street’s cost of funds plus 0.50%, on an annualized basis. Under the Agreement, the Fund has agreed to pay a 0.09% per annum fee on the unused portion of the commitment payable quarterly in arrears. During the year ended December 31, 2003, the Fund had no borrowings under this Agreement.

78

The Lazard Funds, Inc.
Report of Independent Auditors

The Board of Directors and Shareholders The Lazard Funds, Inc.

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of The Lazard Funds, Inc. (comprised of Lazard Equity Portfolio, Lazard Mid Cap Portfolio, Lazard Small Cap Portfolio, Lazard International Equity Portfolio, Lazard International Equity Select Portfolio, Lazard International Small Cap Portfolio, Lazard Emerging Markets Portfolio, Lazard Bond Portfolio, Lazard High Yield Portfolio, Lazard Global High Yield Portfolio and Lazard Mortgage Portfolio) as of December 31, 2003 and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years then ended and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights as stated above, present fairly, in all material respects, the financial position of each of the respective portfolios constituting The Lazard Funds, Inc. as of December 31, 2003, the results of their operations for the year then ended, changes in their net assets for each of the two years then ended and the financial highlights for each of the periods presented in conformity with accounting principles generally accepted in the United States of America.

ANCHIN, BLOCK & ANCHIN LLP

New York, New York
February 5, 2004

79

The Lazard Funds, Inc.
Board of Directors and Officers Information
(unaudited)

Name (Age)	Position(s) with	Principal Occupation(s) During Past 5 Years
Address	the Fund*	and Other Directorships Held
Non-Interested Directors:
John J. Burke (75)	Director	Lawyer and Private Investor; Director, Lazard Alternative Strategies Fund,
50 Burning Tree Lane	since May 1991	LLC; Director, Pacific Steel & Recycling; Director, Sletten Construction
Butte, MT 59701		Company; Trustee Emeritus, The University of Montana Foundation.
Kenneth S. Davidson (58)	Director	President, Davidson Capital Management Corporation; Trustee, The Juilliard
Davidson Capital	since August 1995	School; Chairman of the Board, Bridgehampton Chamber Music Festival;
Management Corporation		Trustee, American Friends of the National Gallery/London.
500 Park Avenue
Suite 510
New York, NY 10022
William Katz (49)	Director	Retired President and Chief Executive Officer, BBDO New York, an
114 Oldchester Road	since April 1997	advertising agency; Retired Director, BBDO Worldwide.
Essex Fells, NJ 07021
Lester Z. Lieberman (73)	Director	Private Investor; Director, Dowel Associates, a real estate developer;
25 Lindsley Drive	since October 1991	Chairman, Healthcare Foundation of NJ; Director, Cives Steel Co.; Director,
Morristown, NJ 07960		Northside Power Transmission Co.; Advisory Trustee, New Jersey Medical
		School; Trustee, Public Health Research Institute; Trustee, Clarkson University.
Richard Reiss, Jr. (59)	Director	Chairman, Georgica Advisors LLC, an investment manager; Director,
Georgica Advisors LLC	since May 1991	Lazard Alternative Strategies Fund, LLC; Director, O’Charley’s, Inc.,
Carnegie Hall Tower		a restaurant chain.
152 West 57th Street
46th Floor
New York, NY 10019
Interested Directors**:
Norman Eig (62)	Chairman of the	Managing Director and Chief Executive Officer of the Investment Manager;
Lazard Asset Management LLC	Board	Member of the Management Committee of Lazard.
30 Rockefeller Plaza	since May 1991
New York, NY 10112-6300
Herbert W. Gullquist (66)	President and Director	Senior Advisor of the Investment Manager; Retired Managing Director and
Lazard Asset Management LLC	since May 1991	Co-Chief Executive Officer of the Investment Manager.
30 Rockefeller Plaza
New York, NY 10112-6300
John Rutledge (55)	Director	President, Rutledge Capital, LLC, an economics and investment advisory
Rutledge Capital, LLC	since May 1991	firm; Director, Crom Corporation, a water storage system manufacturer;
29 Horseshoe Road		Director, Earle M. Jorgensen Co., a steel service company; Director,
Cos Cob, CT 06807		Amerindo Funds, Inc., a family of three investment portfolios; Chairman
		of Advisory Board, Saugatuck Capital.

*	Each Director serves an indefinite term, until his successor is elected, and serves in such capacity for 15 Lazard portfolios.
**	Mr. Eig and Mr. Gullquist are “interested persons” (as defined in the Act) of the Fund (“Interested Directors”) because of their positions with the Investment Manager; Mr. Rutledge is an Interested Director because of a family member’s position with the Investment Manager.

The Fund’s Statement of Additional Information contains further information about the Directors and is available without charge by calling 800-823-6300.

80

The Lazard Funds, Inc.
Board of Directors and Officers Information (concluded)
(unaudited)

Name (Age)	Position(s) with
Address	the Fund*	Principal Occupation(s) During Past 5 Years
Officers:
Nathan A. Paul (30)	Vice President	Managing Director and General Counsel of the Investment Manager; from
Lazard Asset Management LLC	and Secretary	September 1997 to October 2000, an Associate at Schulte Roth & Zabel
30 Rockefeller Plaza	since April 2002	LLP, a law firm.
New York, NY 10112-6300
Stephen St. Clair (45)	Treasurer	Vice President of the Investment Manager.
Lazard Asset Management LLC	since April 2003
30 Rockefeller Plaza
New York, NY 10112-6300
Brian D. Simon (41)	Assistant Secretary	Senior Vice President of the Investment Manager; from July 1999 to
Lazard Asset Management LLC	since November 2002	October 2002, Vice President, Law & Regulation at J. & W. Seligman & Co.;
30 Rockefeller Plaza		from July 1997 to July 1999, an Associate at Schulte Roth & Zabel LLP,
New York, NY 10112-6300		a law firm.

* Each Officer serves an indefinite term, until his successor is elected, and serves in such capacity for 15 Lazard portfolios.

81

Tax Information (Unaudited)
The Lazard Funds, Inc.
Year Ended December 31, 2003

The following tax information represents year end disclosures of tax benefits passed through to shareholders for 2003:

Of the dividends paid by the Portfolios, the corresponding percentage represents the amount of each dividend which will be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The same information will be reported in conjunction with your 2003 1099-DIV.

Portfolio	Percentage
Equity	100.00	%
Mid Cap	—
Small Cap	—
International Equity	100.00
International Equity Select	100.00
International Small Cap	100.00
Emerging Markets	100.00
Bond	—
High Yield	2.91
Global High Yield	2.51
Mortgage	—

Of the dividends paid by the Portfolios, the corresponding percentage represents the amount of each dividend which will qualify for the dividends received deduction available to corporate shareholders.

Portfolio	Percentage
Equity	99.95	%
Mid Cap	14.42
Small Cap	—
International Equity	—
International Equity Select	—
International Small Cap	—
Emerging Markets	—
Bond	—
High Yield	2.91
Global High Yield	2.39
Mortgage	—

82

The Lazard Funds, Inc.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300
http://www.LazardNet.com

Investment Manager
Lazard Asset Management LLC
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-823-6300

Distributor
Lazard Frères & Co. LLC
30 Rockefeller Plaza
New York, New York 10112-6300

Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

Transfer Agent and Dividend Disbursing Agent
Boston Financial Data Services, Inc.
P.O. Box 8514
Boston, Massachusetts 02266-8514
Telephone: 800-986-3455

Independent Auditors
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
http://www.anchin.com

Legal Counsel
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
http://www.stroock.com

This report is for the information of the shareholders of The Lazard Funds, Inc. Its use in connection with any offering of the Fund’s shares is authorized only in the case of a concurrent or prior delivery of the Fund’s current Prospectus.

	The Lazard Funds, Inc.	30 Rockefeller Plaza	Tel 800-823-6300
		New York, NY 10112- 6300	www.LazardNet.com

M F 0 3 1 0 1

ITEM 2.  CODE OF ETHICS.

         The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions.

ITEM 3.  AUDIT COMMITTEE FINANCIAL EXPERT.

         The Registrant's Board of Directors has determined that Lester Z.
Lieberman and John J. Burke, members of the Audit Committee of the Board, are
audit committee financial experts as defined by the Securities and Exchange
Commission (the "SEC"). Mr. Lieberman and Mr. Burke are "independent" as defined
by the SEC for purposes of audit committee financial expert determinations.

ITEM 4.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a) AUDIT FEES. The aggregate fees billed for each of the last two fiscal years
(the "Reporting Periods") for professional services rendered by the Registrant's
principal accountant (the "Auditor") for the audit of the Registrant's annual
financial statements, or services that are normally provided by the Auditor in
connection with the statutory and regulatory filings or engagements for the
Reporting Periods, were $322,000 in 2002 and $368,700 in 2003.

(b) AUDIT-RELATED FEES. There were no fees billed in the Reporting Periods by
the Auditor to the Registrant for assurance and related services that are
reasonably related to the performance of the audit of the Registrant's financial
statements and are not reported under paragraph (a) of this Item 4.

There were no fees billed in the Reporting Periods for assurance and related
services by the Auditor to the Registrant's investment adviser or any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the Registrant ("Service Affiliates").

Note: FOR THE SECOND PARAGRAPH IN EACH OF (B) THROUGH (D) OF THIS ITEM 4,
CERTAIN OF SUCH SERVICES WERE NOT PRE-APPROVED PRIOR TO MAY 6, 2003, WHEN SUCH
SERVICES WERE REQUIRED TO BE PRE-APPROVED. FOR COMPARATIVE PURPOSES, THE FEES
SHOWN ASSUME THAT ALL SUCH SERVICES WERE PRE-APPROVED, INCLUDING SERVICES THAT
WERE NOT PRE-APPROVED PRIOR TO THE COMPLIANCE DATE OF THE PRE-APPROVAL
REQUIREMENT. ON AND AFTER MAY 6, 2003, 100% OF ALL SERVICES PROVIDED BY THE
AUDITOR WERE PRE-APPROVED AS REQUIRED. THERE WERE NO SERVICES PROVIDED BY THE
AUDITOR THAT WERE APPROVED PURSUANT TO (C)(7)(i)(C) OF RULE 2-01 OF REGULATION
S-X.

(c) TAX FEES. The aggregate fees billed in the Reporting Periods by the Auditor
to the Registrant for professional services rendered by the Auditor for tax
compliance, tax advice and tax planning ("Tax Services") were $62,000 in 2002
and $57,200 in 2003. These services consisted of (i) review or preparation of
U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and
local tax planning, advice and assistance regarding statutory, regulatory or
administrative developments, and (iii) tax advice regarding tax qualification
matters and/or treatment of various financial instruments held or proposed to be
acquired or held.

There were no fees billed in the Reporting Periods for Tax Services by the
Auditor to Service Affiliates.

(d) ALL OTHER FEES. There were no fees billed in the Reporting Periods by the
Auditor to the Registrant for products and services other than the services
reported in paragraphs (a) through (c) of this Item.

There were no fees billed in the Reporting Periods by the Auditor to Service
Affiliates.

(e) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. The Registrant's Audit
Committee pre-approves the Auditor's engagements for audit and non-audit
services to the Registrant and, as required, non-audit services to Service
Affiliates on a case-by-case basis. Pre-approval considerations include whether
the proposed services are compatible with maintaining the Auditor's
independence.

(f) None.

(g) NON-AUDIT FEES. The aggregate non-audit fees billed by the Auditor for
services rendered to the Registrant for the Reporting Periods were $62,000 in
2002 and $57,200 in 2003. There were no fees billed in the Reporting Periods by
the Auditor to Service Affiliates.

(h) AUDITOR INDEPENDENCE. There were no services rendered by the Auditor to
Service Affiliates during the Reporting Periods.

ITEM 5.  AUDIT COMMITTEE OF LISTED REGISTRANTS.

         Not applicable.

ITEM 6.  [RESERVED]

ITEM 7.  DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
         MANAGEMENT INVESTMENT COMPANIES.

         Not applicable.

ITEM 8.  PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
         COMPANIES AND AFFILIATED PURCHASERS.

         Not applicable.

ITEM 9.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.

ITEM 10. CONTROLS AND PROCEDURES.

(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.

(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's most recently ended fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the Registrant's internal control over financial reporting.

ITEM 11. EXHIBITS.

(a)(1) Code of Ethics referred to in Item 2.

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

(a)(3) Not applicable.

(b)  Certification of principal  executive and principal  financial  officers as
required by Rule 30a-2(b) under the Investment Company Act of 1940.


                                       -2-


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

THE LAZARD FUNDS, INC.

By:      /s/ Norman Eig
         --------------------------------
         Norman Eig
         Chief Executive Officer

Date:    February 25, 2004

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/ Norman Eig
         --------------------------------
         Norman Eig
         Chief Executive Officer

Date:    February 25, 2004

By:      /s/ Stephen St. Clair
         --------------------------------
         Stephen St. Clair
         Chief Financial Officer

Date:    February 25, 2004


                                      -3-


                                  EXHIBIT INDEX

         (a)(1) Code of Ethics referred to in Item 2.

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

         (b) Certification of principal executive and principal financial
         officers as required by Rule 30a-2(b) under the Investment Company Act
         of 1940. (EX-99.906CERT)