N-CSR

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                                  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:    12/31/04









ITEM 1.  REPORTS TO STOCKHOLDERS.

Lazard Funds

Lazard Funds
Annual Report

D E C E M B E R   3 1,   2 0 0 4

The Lazard Funds.

Table of Contents	Page
Investment Overviews	2
Performance Overviews	10
Information About Your Fund’s Expenses	19
Portfolio Holdings Presented by Sector and Credit Rating	21
Portfolios of Investments
Lazard Equity Portfolio	23
Lazard U.S. Strategic Equity Portfolio	25
Lazard Mid Cap Portfolio	26
Lazard Small Cap Portfolio	28
Lazard International Equity Portfolio	31
Lazard International Equity Select Portfolio	33
Lazard International Small Cap Portfolio	34
Lazard Emerging Markets Portfolio	36
Lazard Bond Portfolio	38
Lazard High Yield Portfolio	40
Notes to Portfolios of Investments	45
Statements of
Assets and Liabilities	48
Operations	50
Changes in Net Assets	52
Financial Highlights	58
Notes to Financial Statements	68
Report of Independent Registered Public Accounting Firm	74
Board of Directors and Officers Information	75
Tax Information	77

The views of the Fund‘s management and the portfolio holdings described in this report are as of December 31, 2004; 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

Looking back over 2004, earnings growth in global stocks was offset by reactions to rising interest rates and oil prices. In the U.S., small and mid cap stocks outperformed large caps, posting six consecutive years of strong performance by year end. After some significant month-to-month volatility, the bond markets ended the year with longer maturity yields, almost where they started the year. By year-end 2004, the S&P 500^® Index climbed 10.9%, the Morgan Stanley Capital International (MSCI^®) Europe, Australasia and Far East (EAFE^®) Index gained 20.2%, the MSCI Emerging Markets (EM^®) Index rose 25.5%, the Russell Midcap^® Index and the Russell 2000^® Index were up 20.2% and 18.3%, respectively, and the Lehman Aggregate Bond Index rose by 4.3% .

As 2004 progressed, the low quality rally of 2003 and, to a lesser extent, of the first quarter of 2004 (during which the least profitable and most leveraged companies outperformed), began to give way to an increased focus on fundamentals. Historical data shows that, at economic turning points, low quality companies attract investors. However, investor focus usually returns to fundamentals—those companies that generate a sustainable return on their capital. Over the course of 2004, the global markets moved towards these fundamentally solid, attractively priced companies as the reality of a tighter monetary policy dampened investors’ tolerances for risk.

Continuing the global rally in stocks that began in the last quarter of 2003, the world equity markets grew in the first quarter, before fading in late March. The global bond market continued to trade in a range and, for the most part, yields moved to lower levels, reversing gains made in the last quarter of 2003. Emerging markets equities continued to rise, as did small cap stocks.

As the U.S. Federal Reserve began raising short-term interest rates, the second quarter saw global stocks fall, rebounding late in the quarter, and ending roughly flat. For the second quarter, emerging markets experienced significant profit taking, while global interest rates were higher, with most yield curves flattening.

In the volatile third quarter, global stocks declined in reaction to sharply rising oil prices. However, by mid-August they began an upward climb, finishing the quarter with modest losses. Large caps outperformed small caps, and emerging markets equities logged in strong returns. Speculation over the pace of the Federal Reserve’s tightening resulted in a marked drop in yields, flatter yield curves, and tighter credit spreads.

Global stocks ended the fourth quarter with their best quarterly performance of the year. Emerging markets equities rallied strongly. As the U.S. economy weathered the Fed’s tightening and rising oil costs, U.S. interest rates rose, most sharply in the shorter maturities. Small caps outperformed large caps in the fourth quarter.

Looking ahead, we are optimistic about the equity markets in 2005, as steady growth in the world’s economies should enable companies to grow revenues and reinvest in their businesses. We think the performance of large cap stocks may improve since the relative valuation of large caps versus small caps is very attractive, based on historical norms. Although constructive over the medium- and long-term, we note that the emerging markets asset class is no longer extraordinarily inexpensive. From a U.S. fixed income perspective, we believe that the fundamentals of the recovery have reasserted themselves to the extent that the outlook for economic growth can no longer be seen as “fragile”.

Regardless of trends affecting the global markets, we believe that building a diverse portfolio of various asset and investment classes and maintaining a long-term focus is the most advantageous approach for investors who are seeking to reach their investment goals. We seek to invest in companies with a proven track record of generating returns in a variety of economic environments. These financially productive businesses are expected to sustain productivity regardless of market cycles or macroeconomic issues within the countries where they are domiciled.

The following Investment Overviews are intended to provide you with annual reviews of the current market environment and insights on the Portfolios and their recent performance.

Equity Markets Overview

Global stocks spent most of 2004 in a trading range, as strong earnings growth was offset by concerns over rising interest rates, rising oil prices, and the sustainability of a global economic rebound. The

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The Lazard Funds, Inc.
Investment Overviews (continued)

sharp rally that began in the fourth quarter of 2003 persisted through the early part of 2004 before stocks lost ground in the first quarter. The slow rate of job creation in the U.S. (and its implications for the sustainability of consumer spending) weighed on stocks, as did heightened terrorism concerns in the wake of the Madrid train bombing. Global stocks fell during the early part of the second quarter of 2004, based on concerns regarding rising inflation and tightening monetary policy in the U.S. Stronger economic data and signs of a resurgence in inflation led investors to expect that the U.S. Federal Reserve would raise interest rates sooner than anticipated, which weighed on stocks. Moreover, Chinese authorities announced measures aimed at curbing excessive investment, which had the effect of increasing investors’ perception of risk. This was felt particularly strongly in the emerging markets.

Global stocks reached their lows for the year in August, based on concerns that sharply rising oil prices would hurt corporate earnings and, potentially, reverse the global economic recovery. Concerns over potential terrorist attacks at the Olympics and the U.S. political conventions also weighed on stocks. Even as oil prices stayed stubbornly high, stocks began to rally in mid-August and, in a November post-election rally, finally broke out of the trading range they had been mired in throughout 2004. The definitive outcome of the U.S. election cheered investors who feared a disputed result, as in 2000, and a decline in oil prices further fueled the rally.

Global stocks ended the year with a return of nearly 15%, although a significant portion of the advance resulted from the dollar’s decline against currencies such as the euro and the Japanese yen. Energy stocks were strong during the year, as oil prices rose sharply. In contrast, technology stocks lagged, as corporate spending on IT products hasn't significantly rebounded. Utilities benefited from investor demand for dividend yield, since most fixed income securities offered yields that were very low relative to historical norms. However, yield support did not help health care stocks, which were hurt due to concerns over drug safety following Merck's high profile recall of Vioxx. In addition, several major pharmaceutical companies face uncertainty in the wake of pending legal suits from increasingly aggressive generic drug manufacturers. These lawsuits threaten to overturn highly profitable patents for some of their most important drugs. On a regional basis, European markets generally outperformed, helped by the rising euro, while the Japanese market lagged on concerns over the sustainability of the economic rebound.

For the year, emerging markets rose by over 25%, and the vast majority of countries recorded an increase. The asset class has now sustained its first two-year period of consecutive positive returns since 1993 and 1994, which is attracting further interest from global investors. Although the discounted valuations and positive outlook encourage us to remain constructive over the medium- and long-term, it is worth noting that the emerging markets asset class is no longer extraordinarily inexpensive. Small caps also continued to outperform large caps in 2004, as they have for nearly five years. As with the emerging markets, valuations are no longer as compelling as they were before the period of outperformance, but calling turning points in the cap cycle is notoriously difficult.

Fixed-Income Markets Overview

After the month-to-month volatility ironed itself out, the year ended with longer maturity yields pretty much where they started. Moving down the maturity scale from 10 years to 3 months, however, the increase in yield grew. This “flattening of the yield curve,” a dominant theme for the second half of 2004 and for the year as a whole, reflects a market confidence that the U.S. Federal Reserve will tighten policy along its well advertised path. This confidence comes from evidence that the expansion has endured the surge in energy prices, reduced fiscal stimulus, a less accommodative monetary policy, and dollar weakness. As for what to expect from the Fed, the central bank has been particularly transparent in signaling to the market its intention for removing accommodation and its pace for doing so. While the yield curve shift followed the traditional business cycle script once the Fed began to raise the Fed funds rate, the level of yields is somewhat perplexing, at first glance.

Given current and expected inflation, and downward pressure on the dollar, yield on the 10-year Treasury should be higher than its current 4.20% level. Market participants seemed to agree to this proposition during the second quarter, when the economic expansion showed traction and the yield on the 10-year was sub-

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The Lazard Funds, Inc.
Investment Overviews (continued)

sequently pushed from 3.68% to 4.85%. By mid-September, the yield was back down below 4%. Since then, rates edged higher but now seem well contained in a 4.15 –4.25% trading range. This range will likely not persist, nor is it likely that future events will keep the Fed on the middling path priced into the market.

An analysis of the sources and uses of investment capital in the U.S. reveals why rates seem to be moving opposite to what the fundamentals suggest—growth has not generated an expansion of credit demands sufficient to cause interest rates to rise. It is useful to remember that interest rates are a price like any other and that its level reflects the supply and demand for the product. In this case, the product is money or, more to the point, credit.

While the demand for credit hasn’t grown enough, the supply of available funds for loans is expanding at least as rapidly as the economy. The surplus funds, be it from Asian central banks needing to recycle U.S. dollars or U.S. commercial banks facing tepid loan demand, continue to flow into the market, holding down yields and compressing spreads between Treasurys and products such as corporate debt and mortgage pass-throughs. As a consequence, renewed acceleration in economic growth, inflation scares, and dollar depreciation have had the expected negative impact on the bond market at first, but the impact reverses as the fund flow is sustained.

The fundamentals of the recovery have asserted themselves to the extent that suggest higher rates, and we tend to side with the longer-term fundamentals. Market interest rates, however, trade in a narrow range that appears low relative to growth and inflation prospects. Until there is at least a hint of a resolution of this tug of war between flows and fundamentals, the only reasonable expectation for the bond market is more of the same.

Lazard Equity Portfolio

For the year ended December 31, 2004, Lazard Equity Portfolio’s Institutional Shares posted a total return of 12.49%, while Open Shares posted a total return of 12.09%, as compared with the 10.88% return of the S&P 500 Index.

U.S. stocks spent most of 2004 in a trading range, as strong earnings growth was offset by concerns over rising interest rates and the sustainability of a global economic rebound. However, a rally following the outcome of the U.S. presidential election drove equities to modest gains for the year. Energy stocks were strong, as oil prices rose sharply, and technology stocks lagged, as corporate spending on IT products has yet to significantly rebound.

During 2004, the Portfolio benefited from stock selection in health care by avoiding some of the many large stocks in the sector that experienced weakness due to drug safety issues and patent expirations. The Portfolio also benefited from stock selection and an overweight position in energy. Conversely, stock selection in materials hurt performance as more economically-sensitive stocks outperformed during the year.

While small and mid cap stocks continued to outperform in 2004, we are confident that the relative performance of large caps will improve.

Lazard Mid Cap Portfolio

For the year ended December 31, 2004, Lazard Mid Cap Portfolio’s Institutional Shares posted a total return of 24.97%, while Open Shares posted a total return of 24.59%, as compared with the 20.22% return of the Russell Midcap Index.

U.S. stocks spent most of 2004 in a trading range, as strong earnings growth was offset by concerns over rising interest rates and the sustainability of a global economic rebound. However, a rally following the U.S. presidential election drove equities to modest gains for the year. Mid cap stocks handily outperformed large caps and slightly outperformed small caps during 2004.

The Portfolio benefited from stock selection in consumer discretionary. Mandalay Resort Group's stock rose considerably after MGM Mirage announced its takeover bid for Mandalay. Stock selection in health care also helped performance, as VISX Inc. rose dramatically after the announcement that Advanced Medical Optics would acquire it at a premium. Conversely, the Portfolio was hurt by an underweight position in utilities, as this defensive sector outperformed during the year.

While the mid cap market has now outperformed the large cap market for the past few years, relative valuations are still only near average historical levels and, thus, we believe that we may continue to see mid caps perform admirably over the course of 2005. Despite the quick market rally of the third and

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The Lazard Funds, Inc.
Investment Overviews (continued)

fourth quarters of 2004, earnings growth expectations for 2005 look reasonable as the domestic economy continues to expand and absolute valuations, while not at the significant discount of the past few years, are well within historical norms. We believe that the pickup in merger and acquisition activity experienced in 2004 should continue to be a positive backdrop for mid cap performance in 2005.

Lazard Small Cap Portfolio

For the year ended December 31, 2004, Lazard Small Cap Portfolio’s Institutional Shares posted a total return of 15.28%, while Open Shares posted a total return of 14.90%, as compared with the 18.33% return of the Russell 2000 Index.

The Portfolio underperformed the Index by more than 300 basis points (“bps”), with sector attribution acting as a small positive. The Portfolio benefited from stock selection in health care and technology. In health care, Neighborcare Inc., a distributor of drugs to alternative care settings and Inveresk Research, a provider of clinical research services to the pharmaceutical industry, both received takeover offers at substantial premiums from industry competitors. In the technology sector, DRS Technologies, a provider of electronics to the defense industry, continued to post strong earnings gains, and received an indication of acquisition interest from industry competitor, L3 Communications.

In financial services, results were negatively impacted by our holdings in eSpeed, Inc. and Knight Trading Group. Both companies offer trade execution services for the fixed income and equity marketplace, and were adversely affected by declining trading volumes following the strong market rally of 2003 and early 2004. Additionally, eSpeed faced increased pricing pressure from one of its competitors.

Materials/processing results were hurt by our focus away from the commodity producers of chemicals, metals, and precious metals. Producers of commodity goods continued to benefit from strong global demand, especially from China, and years of under-investment in production infrastructure. We continue our underweight position in this sector, although we have found select names, such as Chicago Bridge & Iron, which we believe may continue to benefit from infrastructure-related builds.

In consumer discretionary, our holding in Leapfrog Enterprises, a leading supplier of educational toys to the K–6th grade marketplace, declined due to disappointing sales of its products and continued logistical missteps. Additionally, Alliance Gaming, a manufacturer of gaming systems for casinos, also declined as sales of existing products slowed and the company increased investment spending on its next generation products.

While the small cap market has currently outperformed the large cap market for the past six years, relative valuations are still only near average historical levels and, thus, we believe that we may continue to see small caps perform admirably over the course of 2005. Despite the quick market rally of the second half of 2004, earnings growth expectations for 2005 look reasonable as the domestic economy continues to expand and absolute valuations, while not at the significant discount of a few years past, are well within historical norms. We believe that the pickup in merger and acquisitions activity that was seen in 2004 should continue to be a positive backdrop for small cap performance in 2005.

Lazard International Equity Portfolio

For the year ended December 31, 2004, Lazard International Equity Portfolio’s Institutional Shares posted a total return of 16.01%, while Open Shares posted a total return of 15.64%, as compared with the 20.25% return of the MSCI EAFE Index.

International stocks spent most of 2004 in a trading range, as strong earnings growth was offset by concerns over rising interest rates, rising oil prices, and the sustainability of the global economic rebound. However, stocks ended 2004 with their best quarterly performance of the year as oil prices crested, easing concerns that higher energy costs would restrain earnings and economic growth. The rally started right after the U.S. presidential election, as uncertainty over the election’s outcome was lifted. Energy stocks were strong during the year, since oil prices rose sharply and utilities also performed well as investors sought out yield in a low interest rate environment. In contrast, technology stocks lagged as corporate spending on IT products has yet to significantly rebound. Health care stocks were hurt by the concerns over drug safety following Merck’s high profile recall of Vioxx. On a regional basis, European markets generally outperformed, helped by the rising euro, while the Japanese

5

The Lazard Funds, Inc.
Investment Overviews (continued)

market lagged the broad index on concerns over the sustainability of the economic rebound.

During 2004, stock selection in health care helped the Portfolio by avoiding problem stocks like AstraZeneca, as well as from gains in Schering, which rose due to ongoing restructuring and the recent approval of its birth control pill. Also, Aventis gained based on expectations of revenue and cost synergies from the since completed acquisition by Sanofi-Synthelabo. Conversely, stock selection in financials hurt performance when reinsurers Swiss Re and Munich Re were hurt by the rash of hurricanes hitting Florida. However, while the hurricanes cause near-term costs as payments are made to their reinsurance clients, the longer-term outlook for these companies’ earnings is positive, since the upfront costs to the industry remove capacity and improve pricing discipline going forward. Stock selection in consumer discretionary also detracted from returns, as Nissan declined due to concerns regarding the steel shortage caused by the increased demand for the metal in China. However, the company stated that the shortage should have a relatively small impact on sales in the U.S., its biggest market.

For 2004 overall, the Portfolio was hurt by its overweight position in large cap stocks, while small and mid cap stocks continued to outperform. However, we are confident that the performance of large caps will improve, since their relative valuation versus small caps is very attractive, based on historical norms.

Lazard International Equity Select Portfolio

For the year ended December 31, 2004, Lazard International Equity Select Portfolio’s Institutional Shares posted a total return of 16.45%, while Open Shares posted a total return of 16.17%, as compared with the 20.25% return of the MSCI EAFE Index.

During 2004, the Portfolio benefited from stock selection in health care by avoiding the many large cap pharmaceuticals that suffered sharp declines due to concerns regarding drug safety or competitive pressures from generic drugs. Stock selection in consumer discretionary also contributed positively to performance, as Richemont, a Swiss luxury goods holding benefited from restructuring efforts, as well as strong holiday demand for luxury goods. The Portfolio was hurt by a low exposure to the utility sector, which performed well as investors sought out yield. Stock selection in financials hurt the Portfolio due to weakness in Nomura, a Japanese brokerage holding which is facing intensified competition from large banks and on-line brokers. However, we believe that this holding has a dominant competitive position and that its valuation is at the low end of the historical range.

Lazard International Small Cap Portfolio

For the year ended December 31, 2004, Lazard International Small Cap Portfolio’s Institutional Shares posted a total return of 32.28%, while Open Shares posted a total return of 32.04%, as compared with the 30.78% return of the MSCI EAFE Small Cap Index.

After an extremely robust 2003, 2004 proved to be another strong year for international small cap companies. Since the beginning of 2003, the Index has doubled, when measured in U.S. dollars, and has substantially outperformed its large cap peers.

2004 started off extremely strong, as measures that many companies took in previous years started to bear fruit. Companies were also facing easier comparisons with the previous year, when business slowed due to the Iraqi conflict. The second and third quarters of 2004 were choppier as a number of global drivers clashed. On the positive side, growth seemed to be returning in Europe while Japan and the United States were continuing their growth. On the negative side, rising commodity prices (most notably oil), rising interest rates, and a slowdown in Chinese consumption all hampered earnings growth. Stocks picked up again in the fourth quarter after the U.S. Presidential election. This was also accompanied by a decline in the U.S. dollar, as investors feared a rising U.S. deficit. This is one of the major trends we may be following in 2005.

Despite the very strong performance of the Index, the Portfolio outperformed the Index by more than 120 bps in 2004. Stock selection was the driving factor of performance and was not limited to a specific geography. Australasia was the one region where the Portfolio had negative stock selection attribution. In terms of sectors, stock selection in energy proved to be a detractor, as our investments were unable to keep up with the best performing sector in the Index. However, our overweight position in energy helped us temper the stock selection impact. Technology, the worst performing sector in the Index, was a major driver of relative outperformance as both our underweight position and stock selection helped the Portfolio.

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The Lazard Funds, Inc.
Investment Overviews (continued)

We believe that the high financial returns and inexpensive valuations of companies within the Portfolio may enable us to benefit in 2005, regardless of market direction.

Lazard Emerging Markets Portfolio

For the year ended December 31, 2004, Lazard Emerging Markets Portfolio’s Institutional Shares posted a total return of 30.79%, while Open Shares posted a total return of 30.43%, as compared with the 25.55% return of the MSCI EM Index.

Over the past twelve months, the emerging markets asset class has witnessed a wide swing in investor sentiment and returns. The asset class rose despite government elections in Taiwan (which included an assassination attempt), India, Indonesia and the Philip-pines, a new Prime Minister and cabinet in Russia, election protests in the Ukraine, a new government in Egypt, and impeachment proceedings in South Korea. In addition, the market had to overcome fears of a Chinese hard landing, the death of Yasser Arafat, and the devastating Tsunami in Southeast Asia. Yet with all of these events, the Index finished the year up by more than 25%.

The Portfolio benefited from good stock selection in energy, consumer discretionary, industrials, materials, and Brazil. Our underweight position in information technology and overweight positions in Hungary, Indonesia, Egypt, Brazil, and telecommunications also added value. Strong share performance was exhibited in Caemi and CVRD (both Brazilian) based on increased iron demand as well as future price hikes; ABSA Group (South Africa), after Barclay's Bank made an offer for the company; and Steinhoff International and Edgars (both South African) as domestic demand for retail products has increased as interest rates decline.

Conversely, poor stock selection in health care and consumer staples, and in Hungary, subtracted value. Additional detractors included: share price declines in Delta Electronics (Thailand), as a previous acquisition has continued to have problems integrating; Harmony Gold (South Africa), which declined after making a hostile bid for Gold Fields; and Pliva (Croatia), which has witnessed increased competition and eroding profits in its core pharmaceutical generics business.

In the first quarter of 2004, the Index rose by more than 9.5% . By region, Eastern European stocks generated a particularly robust return, with especially impressive performance from Russian, Hungarian, and Czech stocks. In both Asia and Latin America, the results were decent, although less dramatic. Positive individual country performances were generated in South Korea, as well as in Malaysia, Colombia, Venezuela, and Mexico. In Taiwan, the market rose despite the bizarre assassination attempt. Only a few countries, including Brazil, India, Thailand, and China, exhibited profit taking.

In response to warnings by U.S. Federal Reserve Chairman, Alan Greenspan, over the likelihood of a new, somewhat inflationary environment, and the probability of interest rates rises, emerging markets equities experienced significant profit taking in the second quarter. Moreover, Chinese authorities announced measures aimed at curbing excessive investment, which had the effect of increasing investors’ perception of risk. After having risen almost 10% in the first quarter, the Index fell by over 10% in the second quarter. All regional markets experienced sizeable corrections, the largest ones occurring in Eastern Europe and Asia. Economically sensitive sectors, such as energy, materials, consumer discretionary, and information technology, fared poorly. Defensive sectors, such as health care and consumer staples, performed relatively well. The U.S. dollar also rallied strongly after a sustained period of weakness.

Emerging markets experienced a strong third quarter after a turbulent second quarter. Eastern European and, especially, Latin American equities led the way with significantly better performance than Asian shares. The quarter began with weak share price performance and investor caution based on several issues, including higher crude oil prices, threats of terrorism, uncertainty over the outcome of the U.S. election, and the risk of a prolonged slowdown in China. However, emerging markets equities continued to generate gains as investors re-entered commodity stocks, as concern over slowing Chinese growth moderated. The most notable feature of the quarter was record high crude oil prices.

Emerging markets equities rallied strongly during the fourth quarter of 2004, especially in the aftermath of the U.S. presidential election and lower crude oil prices. The Index rose by almost 17%, with especially good performance in Latin America. Asian markets recovered, aided by generally strong currencies and good performance in India and Indonesia. Markets in

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The Lazard Funds, Inc.
Investment Overviews (continued)

Eastern Europe lagged, although several countries finished with strong gains. South African equities moved sharply higher, aided by the strong rand. All sectors rose, with the most pronounced increases in financial services and telecommunications services. For the year, the vast majority of emerging market countries recorded an increase. The emerging markets asset class has currently sustained its first two-year period of consecutive positive returns since 1993 and 1994, which may be attracting further interest from global investors.

By sector, energy, consumer discretionary, industrials, materials, telecommunications, information technology, and financials outperformed. Conversely, health care and consumer staples underperformed.

Lazard Bond Portfolio

For the year ended December 31, 2004, Lazard Bond Portfolio posted a total return of 1.87%, as compared with the 3.04% return of the Lehman Intermediate Government/Credit Bond^® Index.

The management of the Portfolio follows the conservative tenor of its intermediate benchmark. As such, the strategy in the past year was to protect assets from the impact of higher interest rates. This strategy caused the Portfolio to lag in the third quarter, when the fixed income markets rallied, unexpectedly, and reversed the second quarter’s rise in yields, which were more in keeping with the fundamentals of an expanding economy. Adjustments were made so that the Portfolio essentially matched Index performance in the fourth quarter.

The Portfolio’s overall strategy is to provide yield and protect assets against adverse market conditions. As such, we are overweight corporate credit, relative to the benchmark, but have a mix of securities that are more focused on A credits than on BBBs. In the past year, BBBs again outperformed A credits, on an excess-return basis, but to a far lesser degree than in 2003. The impact on Portfolio performance is that the overweight in A credits mitigated this difference in excess returns. Looking forward, we remain with the view that credit is priced to such a narrow spread to Treasurys, that the impact on a negative-market surprise will be much greater than if the markets experience a surprise that is favorable to corporate credit.

In order to maintain yield in the Portfolio, we continue to hold mortgages. The excess returns are comparable to corporates but carry a different risk/reward profile. In sum, mortgages carry only the generic risk of the volatility premium implied in the prepayment option. Corporates carry generic credit risk as well as the specific risk of individual companies. In the year ahead, if the tepid economic environment continues, we would expect to see a number of firms lower their recently improved credit positions to finance mergers and acquisitions. This is yet another prospect that has us more focused on earning excess yield in mortgages rather than corporate debt.

For the broader market strategy, the Portfolio has also been positioned to earn excess returns from a flattening yield curve (longer maturity yields rise less than shorter maturity yields in a rising interest-rate market and fall more than shorter maturities in a falling interest-rate market). The flattening of the curve is typical for this stage of the business cycle, when the Fed has begun to remove monetary accommodation. In the year ahead, we expect the Fed to continue with this policy as the economy continues to expand and, in turn, is in less need of monetary stimulus.

Lazard High Yield Portfolio

For the year ended December 31, 2004, Lazard High Yield Portfolio’s Institutional Shares posted a total return of 9.88%, while Open Shares posted a total return of 9.33%, as compared with the 10.87% return of the Merrill Lynch High Yield Master II^® Index.

High Yield outperformed other U.S. fixed income alternatives for all of 2004. In support of the high yield sector, credit fundamentals were positive, technical factors balanced, and credit spreads narrowed throughout the year. For the year, the Portfolio lagged the Index primarily due to its strategic focus on higher credit quality (less CCCs) and modestly shorter duration. Portfolio performance was aided by overweight positions in chemicals and steel, sectors that performed well. Conversely, portfolio performance was hurt by underweight positions in energy and utilities, sectors that materially outperformed.

Again, as has been the case over the past two years, the lowest tier CCC sector outperformed better quality high yield. The CCCs returned 9.5% in the fourth quarter and about 15.6% in 2004, adding approxi-

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The Lazard Funds, Inc.
Investment Overviews (concluded)

mately 90 bps to the Index return. The lowest tier also had a strong showing in new issues, accounting for 22% of total new issue volume. Such statistics reflect the market’s thirst for yield with little apparent regard for the commensurate risk.

High yield market spreads tightened by over 100 bps for the year. BB spreads tightened 50 bps, compared to CCC tightening about 200 bps. Interestingly, the lower tiers of high yield moved the most and contributed an outsized percentage of Index spread tightening. With the spread between BB and B now below 100 bps, a better quality portfolio is likely to outperform.

We have modestly reduced portfolio duration in order to minimize the Portfolio’s exposure to possible future shocks of stronger economic growth, rising inflation, or a dollar plunge. Given the tighter high yield risk premiums and current low interest rates, a more defensive investment strategy appears sound as we enter 2005. Going forward, upper-tier high yield should continue to provide competitive risk-adjusted returns.

Notes to Investment Overviews:

All returns are for the year ended December 31, 2004 and reflect 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.

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*

*	All returns reflect reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principle 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*

*	All returns reflect 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 principle 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.

11

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*

*	All returns reflect reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principle 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.

12

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*

*	All returns reflect reinvestment of all dividends and distributions, if any.
	Past performance is not indicative, nor a guarantee, of future results; the investment return and principle 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.

13

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*

*	All returns reflect 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 principle 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.

14

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*

*	All returns reflect 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 principle 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 exchange 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.

15

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 (EM^®) Index*

*	All returns reflect 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 principle 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 EM 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 Open Shares was January 8, 1997.

16

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*

*	All returns reflect 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 principle 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.

17

The Lazard Funds, Inc.
Performance Overviews (concluded)

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*

*	All returns reflect 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 principle 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.

18

The Lazard Funds, Inc.
Information About Your Fund’s Expenses

Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs including management fees; distribution and service (12b-1) fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2004 through December 31, 2004.

Actual Expenses

For each Share class of the Portfolios, the first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

For each Share class of the Portfolios, the second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

				Annualized
	Beginning	Ending	Expenses Paid	Expense Ratio
	Account Value	Account Value	During Period*	During Period
	7/1/04	12/31/04	7/1/04-12/31/04	7/1/04-12/31/04
Equity Portfolio
Institutional Shares
Actual	$1,000.00	$1,077.00	$5.06	0.97%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.26	$4.93	0.97%
Open Shares
Actual	$1,000.00	$1,074.60	$6.83	1.31%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.55	$6.65	1.31%
Mid Cap Portfolio
Institutional Shares
Actual	$1,000.00	$1,124.40	$5.61	1.05%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.86	$5.33	1.05%
Open Shares
Actual	$1,000.00	$1,122.60	$7.20	1.35%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.35	$6.85	1.35%
Small Cap Portfolio
Institutional Shares
Actual	$1,000.00	$1,084.90	$4.56	0.87%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.76	$4.42	0.87%

19

The Lazard Funds, Inc.
Information About Your Fund’s Expenses (concluded)

Hypothetical Example for Comparison Purposes (concluded)
				Annualized
	Beginning	Ending	Expenses Paid	Expense Ratio
	Account Value	Account Value	During Period*	During Period
	7/1/04	12/31/04	7/1/04-12/31/04	7/1/04-12/31/04
Small Cap Portfolio (continued)
Open Shares
Actual	$1,000.00	$1,083.20	$6.23	1.19%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.15	$6.04	1.19%
International Equity Portfolio
Institutional Shares
Actual	$1,000.00	$1,147.00	$4.86	0.90%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.61	$4.57	0.90%
Open Shares
Actual	$1,000.00	$1,145.30	$6.36	1.18%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.20	$5.99	1.18%
International Equity Select Portfolio
Institutional Shares
Actual	$1,000.00	$1,142.40	$6.19	1.15%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,019.36	$5.84	1.15%
Open Shares
Actual	$1,000.00	$1,141.90	$7.81	1.45%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,017.85	$7.35	1.45%
International Small Cap Portfolio
Institutional Shares
Actual	$1,000.00	$1,162.60	$5.11	0.94%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.41	$4.77	0.94%
Open Shares
Actual	$1,000.00	$1,160.70	$7.33	1.35%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.35	$6.85	1.35%
Emerging Markets Portfolio
Institutional Shares
Actual	$1,000.00	$1,322.60	$7.88	1.35%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,018.35	$6.85	1.35%
Open Shares
Actual	$1,000.00	$1,321.40	$9.34	1.60%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,017.09	$8.11	1.60%
Bond Portfolio
Institutional Shares
Actual	$1,000.00	$1,024.70	$4.89	0.96%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.31	$4.88	0.96%
High Yield Portfolio
Institutional Shares
Actual	$1,000.00	$1,084.10	$2.88	0.55%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,022.37	$2.80	0.55%
Open Shares
Actual	$1,000.00	$1,080.30	$4.44	0.85%
Hypothetical (5% Return Before Expenses)	$1,000.00	$1,020.86	$4.32	0.85%

*Expenses are equal to the Portfolio’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184/366 (to reflect one-half year period).

20

The Lazard Funds, Inc.
Portfolio Holdings Presented by Sector and Credit Rating
December 31, 2004

Portfolio Holdings Presented by Sector
			Lazard
	Lazard		U.S. Strategic		Lazard		Lazard
	Equity		Equity		Mid Cap		Small Cap
Sector*	Portfolio		Portfolio		Portfolio		Portfolio
Commercial Services	2.9	%	—	%	8.9	%	9.3	%
Consumer Discretionary	9.6		—		17.5		9.9
Consumer Durables	—		—		1.9		—
Consumer Staples	7.0		—		4.3		0.5
Energy	8.5		—		5.4		6.3
Financials	23.2		—		16.7		14.9
Health Care	4.7		—		8.7		8.0
Process Industry	4.2		—		6.0		5.4
Producer Manufacturing	6.3		—		4.2		4.1
Technology	6.1		—		9.7		10.5
Telecommunications	3.5		—		1.5		2.3
Transportation	0.9		—		3.7		3.4
Utilities	3.1		—		1.0		1.6
Short-Term Investments	20.0		100.0		10.5		23.8
Total Investments	100.0	%	100.0	%	100.0	%	100.0	%
	Lazard		Lazard		Lazard		Lazard
	International		International		International		Emerging
	Equity		Equity Select		Small Cap		Markets
Sector*	Portfolio		Portfolio		Portfolio		Portfolio
Commercial Services	0.8	%	—	%	8.8	%	2.2	%
Consumer Discretionary	5.9		4.4		28.9		7.0
Consumer Durables	4.5		—		3.4		2.7
Consumer Staples	7.4		18.8		3.1		10.0
Energy	9.0		11.8		2.5		5.5
Financials	21.0		33.8		21.1		16.0
Health Care	7.0		13.5		2.5		1.7
Process Industry	3.1		—		3.6		15.2
Producer Manufacturing	4.5		2.1		6.1		0.9
Technology	3.0		2.8		4.2		12.0
Telecommunications	8.1		8.4		2.2		15.0
Transportation	0.8		—		—		1.6
Utilities	4.4		2.0		—		1.1
Short-Term Investments	20.5		2.4		13.6		9.1
Total Investments	100.0	%	100.0	%	100.0	%	100.0	%
*Represents percentage of total investments.

21

The Lazard Funds, Inc.
Portfolio Holdings Presented by Sector and Credit Rating (concluded)
December 31, 2004

Portfolio Holdings Presented by Credit Rating
	Lazard		Lazard
	Bond		High Yield
S&P Credit Rating*	Portfolio		Portfolio
AAA	23.8	%	—	%
AA	0.6		—
AA-	2.2		—
A+	6.8		—
A	10.4		—
A-	7.1		—
BBB+	2.1		—
BBB	2.7		1.2
BBB-	3.6		1.9
BB+	—		5.4
BB	—		10.3
BB-	—		14.7
B+	—		13.3
B	—		13.1
B-	—		9.1
CCC+	—		4.3
CCC	—		0.8
CCC-	—		1.2
Not Rated	—		1.0
U.S. Treasury	24.4		—
Short-Term Investments	16.3		23.7
Total Investments	100.0	%	100.0	%
*Represents percentage of total investments.

22

The Lazard Funds, Inc.
Portfolios of Investments
December 31, 2004

Description	Shares	Value
Lazard Equity Portfolio
Common Stocks—96.8%
Aerospace & Defense—2.2%
Goodrich Corp. (c)	21,500	$	701,760
Lockheed Martin Corp. (c)	16,100	894,355
United Technologies Corp. (c)	13,400	1,384,890
		2,981,005
Airlines—0.5%
Southwest Airlines Co. (c)	40,600	660,968
Apparel & Textiles—0.5%
Reebok International, Ltd. (c)	14,300	629,200
Banking—10.0%
Bank of America Corp.	66,300	3,115,437
Golden West Financial Corp. (c)	26,800	1,646,056
M&T Bank Corp. (c)	6,200	668,608
North Fork Bancorporation, Inc.	60,000	1,731,000
Northern Trust Corp. (c)	41,700	2,025,786
SunTrust Banks, Inc.	24,600	1,817,448
U.S. Bancorp (c)	24,800	776,736
Wells Fargo & Co.	31,300	1,945,295
		13,726,366
Business Services & Supplies—4.4%
ARAMARK Corp., Class B (c)	57,600	1,526,976
Automatic Data Processing, Inc. (c)	31,400	1,392,590
First Data Corp. (c)	24,100	1,025,214
IAC/InterActiveCorp. (a), (c)	29,900	825,838
Iron Mountain, Inc. (a), (c)	18,200	554,918
Pitney Bowes, Inc.	14,700	680,316
		6,005,852
Cable & Broadcasting—1.1%
Comcast Corp., Class A (a), (c)	44,400	1,458,096
Chemicals—1.6%
Du Pont (E.I.) de Nemours & Co.	26,700	1,309,635
Praxair, Inc.	20,800	918,320
		2,227,955
Computer Software—2.3%
Microsoft Corp.	86,300	2,305,073
Oracle Corp. (a)	58,600	803,992
		3,109,065
Computers & Business
Equipment—3.1%
Cisco Systems, Inc. (a)	50,600	976,580
Hewlett-Packard Co. (c)	53,800	1,128,186
International Business
Machines Corp. (c)	22,100	2,178,618
		4,283,384
Consumer Products—0.9%
Altria Group, Inc. (c)	21,200	1,295,320
Containers—1.3%
Pactiv Corp. (a)	27,100	685,359
Sealed Air Corp. (a), (c)	20,600	1,097,362
		1,782,721
Cosmetics & Toiletries—1.5%
Avon Products, Inc.	39,300	1,520,910
Colgate-Palmolive Co.	11,800	603,688
		2,124,598
Diversified—4.5%
Emerson Electric Co.	14,000	981,400
General Electric Co	80,900	2,952,850
Honeywell International, Inc.	17,600	623,216
Tyco International, Ltd. (c)	46,600	1,665,484
		6,222,950
Drugs & Health Care—3.3%
GlaxoSmithKline PLC ADR (c)	19,100	905,149
Medco Health Solutions, Inc. (a), (c)	34,000	1,414,400
Novartis AG ADR (c)	17,600	889,504
Pfizer, Inc.	48,700	1,309,543
		4,518,596
Environmental—1.3%
Republic Services, Inc. (c)	52,600	1,764,204
Financial Services—12.1%
American Express Co.	44,400	2,502,828
Citigroup, Inc.	75,597	3,642,263
Fifth Third Bancorp (c)	56,800	2,685,504
JPMorgan Chase & Co.	79,072	3,084,599
MBNA Corp.	46,500	1,310,835
Merrill Lynch & Co., Inc.	22,700	1,356,779
Morgan Stanley	36,900	2,048,688
		16,631,496
Food & Beverages—4.9%
General Mills, Inc. (c)	36,800	1,829,328
H.J. Heinz Co.	24,400	951,356
PepsiCo, Inc.	14,640	764,208
Sara Lee Corp.	27,900	673,506
Sysco Corp. (c)	16,500	629,805
The Coca-Cola Co.	37,600	1,565,288
The Pepsi Bottling Group, Inc. (c)	13,000	351,520
		6,765,011
Forest & Paper Products—1.1%
International Paper Co. (c)	36,000	1,512,000

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

23

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares			Value
Lazard Equity Portfolio (concluded)
Insurance—5.9%
American International Group, Inc.	29,569			$	1,941,796
Berkshire Hathaway, Inc., Class A (a)	22			1,933,800
Jefferson-Pilot Corp. (c)	18,800			976,848
RenaissanceRe Holdings, Ltd.	27,000			1,406,160
The St. Paul Travelers Cos., Inc. (c)	19,300			715,451
WellPoint, Inc. (a)	10,000			1,150,000
				8,124,055
Leisure & Entertainment—0.5%
Mattel, Inc. (c)	35,200			686,048
Machinery—0.5%
Deere & Co. (c)	8,500			632,400
Medical Products & Services—2.3%
Baxter International, Inc. (c)	26,300			908,402
Johnson & Johnson	26,700			1,693,314
MedImmune, Inc. (a)	22,500			609,975
				3,211,691
Metals & Mining—1.1%
Alcoa, Inc. (c)	48,500			1,523,870
Multimedia—6.0%
Clear Channel Communications, Inc. (c)	17,900			599,471
News Corp., Class A (c)	208,400			3,888,744
Time Warner, Inc. (a)	73,200			1,423,008
Tribune Co. (c)	26,100			1,099,854
Viacom, Inc., Class B	32,200			1,171,758
				8,182,835
Oil & Gas—10.3%
Burlington Resources, Inc. (c)	34,700			1,509,450
ChevronTexaco Corp. (c)	36,158			1,898,657
ConocoPhillips (c)	20,380			1,769,596
Exxon Mobil Corp.	84,028			4,307,275
GlobalSantaFe Corp. (c)	52,300			1,731,653
Marathon Oil Corp.	10,000			376,100
Occidental Petroleum Corp.	9,000			525,240
Schlumberger, Ltd.	11,500			769,925
Unocal Corp.	27,600			1,193,424
				14,081,320
Restaurants—1.1%
Brinker International, Inc. (a), (c)	19,200			673,344
Darden Restaurants, Inc. (c)	29,600			821,104
				1,494,448
Retail—3.0%
Sears, Roebuck & Co. (c)	13,600			694,008
Target Corp.	13,100			680,283
The Home Depot, Inc.	34,800			1,487,352
Wal-Mart Stores, Inc.	23,500			1,241,270
				4,102,913
Semiconductors &
Components—2.0%
Intel Corp.	41,800			977,702
Novellus Systems, Inc. (a), (c)	39,200			1,093,288
Texas Instruments, Inc.	27,400			674,588
				2,745,578
Telecommunications—3.1%
BellSouth Corp. (c)	33,600			933,744
Nextel Communications, Inc., Class A (a)	13,600			408,000
Sprint Corp.	33,800			839,930
Verizon Communications, Inc.	52,400			2,122,724
				4,304,398
Transportation—0.6%
Union Pacific Corp. (c)	11,300			759,925
Utilities—3.8%
Ameren Corp. (c)	13,700			686,918
Duke Energy Corp. (c)	17,400			440,742
Entergy Corp.	14,300			966,537
KeySpan Corp. (c)	38,100			1,503,045
The Southern Co. (c)	46,800			1,568,736
				5,165,978
Total Common Stocks
(Identified cost $112,075,340)				132,714,246
	Principal
	Amount
	(000
Short-Term Investments—24.1%
Repurchase Agreement—3.0%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$4,255,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $4,243,988)
Proceeds of $4,160,485	$	4,160		4,160,000
Collateral for Securities
on Loan—21.1%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	28,959			28,958,667
Total Short-Term Investments
(Identified cost $33,118,667)				33,118,667
Total Investments
(Identified cost $145,194,007) (b)	120.9		%	$165,832,913
Liabilities in Excess of Cash and
Other Assets	(20.9		)	(28,719,343		)
Net Assets	100.0		%	$137,113,570

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

24

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)	Value
Lazard U.S. Strategic Equity Portfolio
Repurchase Agreement—99.0%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$425,000 United States Treasury
Bond, 6.25%, 08/15/23, with a
value of $505,816)
Proceeds of $495,058
(Identified cost $495,000)	$495	495,000

Description			Value
Total Investments
(Identified cost $495,000) (b)	99.0	%	$495,000
Cash and Other Assets in Excess
of Liabilities	1.0		5,025
Net Assets	100.0	%	$500,025

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

25

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares	Value
Lazard Mid Cap Portfolio
Common Stocks—96.7%
Aerospace & Defense—1.5%
Alliant Techsystems, Inc. (a)	19,900	$	1,301,062
Airlines—1.3%
Southwest Airlines Co.	71,900	1,170,532
Apparel & Textiles—3.6%
AnnTaylor Stores Corp. (a)	8,400	180,852
Polo Ralph Lauren Corp.	20,400	869,040
Reebok International, Ltd.	46,700	2,054,800
		3,104,692
Automotive—2.0%
Lear Corp.	29,200	1,781,492
Banking—5.6%
City National Corp.	11,600	819,540
M&T Bank Corp.	8,500	916,640
Mercantile Bankshares Corp.	15,500	809,100
North Fork Bancorporation, Inc.	49,100	1,416,535
Northern Trust Corp.	18,600	903,588
		4,865,403
Business Services & Supplies—7.4%
ARAMARK Corp., Class B	72,800	1,929,928
Arbitron, Inc. (a), (c)	38,700	1,516,266
Avery Dennison Corp.	16,600	995,502
CDW Corp.	20,000	1,327,000
Pitney Bowes, Inc.	13,900	643,292
		6,411,988
Chemicals—2.5%
Ashland, Inc.	12,600	735,588
Rohm & Haas Co.	33,300	1,472,859
		2,208,447
Computer Software—6.2%
BEA Systems, Inc. (a)	108,700	963,082
DST Systems, Inc. (a)	35,500	1,850,260
Ingram Micro, Inc., Class A (a)	25,400	528,320
Siebel Systems, Inc. (a)	67,300	706,650
Storage Technology Corp. (a)	42,100	1,330,781
		5,379,093
Containers—3.5%
Ball Corp.	32,500	1,429,350
Pactiv Corp. (a)	64,300	1,626,147
		3,055,497
Diversified—1.2%
ITT Industries, Inc.	11,900	1,004,955
Drugs & Health Care—3.5%
Health Net, Inc. (a)	39,100	1,128,817
Medco Health Solutions, Inc. (a)	46,900	1,951,040
		3,079,857
Education—0.7%
Leapfrog Enterprises, Inc. (a), (c)	43,500	591,600
Engineering—1.0%
Jacobs Engineering Group, Inc. (a), (c)	17,300	826,767
Environmental—1.8%
Republic Services, Inc.	46,200	1,549,548
Financial Services—4.7%
Federated Investors, Inc., Class B	36,400	1,106,560
Legg Mason, Inc.	24,800	1,816,848
The Student Loan Corp.	6,200	1,140,800
		4,064,208
Food & Beverages—2.5%
Dean Foods Co. (a)	28,400	935,780
The Pepsi Bottling Group, Inc.	44,200	1,195,168
		2,130,948
Forest & Paper Products—0.4%
Temple-Inland, Inc.	5,300	362,520
Household Products &
Home Furnishings—1.3%
Newell Rubbermaid, Inc.	48,000	1,161,120
Insurance—4.1%
Protective Life Corp.	41,700	1,780,173
RenaissanceRe Holdings, Ltd.	34,100	1,775,928
		3,556,101
Leisure & Entertainment—1.2%
Mattel, Inc.	51,800	1,009,582
Medical Products & Services—5.8%
DaVita, Inc. (a)	42,400	1,676,072
Edwards Lifesciences Corp. (a), (c)	31,800	1,312,068
Laboratory Corp. of
America Holdings (a)	41,000	2,042,620
		5,030,760
Multimedia—5.8%
Belo Corp., Class A	72,200	1,894,528
Westwood One, Inc. (a)	116,300	3,131,959
		5,026,487

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

26

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares	Value
Lazard Mid Cap Portfolio (concluded)
Oil & Gas—5.8%
Baker Hughes, Inc.	21,800	$	930,206
GlobalSantaFe Corp.	45,100	1,493,261
Premcor, Inc.	13,600	573,512
Unocal Corp.	32,000	1,383,680
Valero Energy Corp.	14,400	653,760
		5,034,419
Printing & Publishing—3.0%
Dex Media, Inc.	105,800	2,640,768
Real Estate—3.7%
AMB Property Corp.	22,300	900,697
Health Care Property Investors, Inc. (c)	43,800	1,212,822
Trizec Properties, Inc.	57,800	1,093,576
		3,207,095
Restaurants—2.2%
Brinker International, Inc. (a)	30,600	1,073,142
Darden Restaurants, Inc.	29,800	826,652
		1,899,794
Retail—4.2%
Dollar Tree Stores, Inc. (a)	77,900	2,234,172
OfficeMax, Inc. (c)	15,400	483,252
Sears, Roebuck & Co.	17,500	893,025
		3,610,449
Semiconductors &
Components—4.9%
AMIS Holdings, Inc. (a), (c)	48,500	801,220
Intersil Corp., Class A	46,200	773,388
Novellus Systems, Inc. (a)	49,800	1,388,922
QLogic Corp. (a)	11,500	422,395
Vishay Intertechnology, Inc. (a)	57,200	859,144
		4,245,069
Telecommunications—1.6%
MCI, Inc. (c)	39,600	798,336
Western Wireless Corp., Class A (a), (c)	20,300	594,790
		1,393,126
Transportation—2.6%
CNF, Inc.	25,400	1,272,540
Norfolk Southern Corp.	27,700	1,002,463
		2,275,003
Utilities—1.1%
KeySpan Corp.	24,700	974,415
Total Common Stocks
(Identified cost $69,594,453)		83,952,797

	Principal
	Amount
Description	(000)		Value
Short-Term Investments—11.3%
Repurchase Agreement—3.0%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$2,645,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $2,638,155)
Proceeds of $2,585,302	$ 2,585		$ 2,585,000
Collateral for Securities
on Loan—8.3%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	7,210		7,209,879
Total Short-Term Investments
(Identified cost $9,794,879)			9,794,879
Total Investments
(Identified cost $79,389,332) (b)	108.0	%	$93,747,676
Liabilities in Excess of Cash and
Other Assets	(8.0	)	$(6,904,662	)
Net Assets	100.0	%	$86,843,014

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

27

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares		Value
Lazard Small Cap Portfolio
Common Stocks—94.5%
Aerospace & Defense—2.4%
DRS Technologies, Inc. (a), (c)	111,700	$	4,770,707
Esterline Technologies Corp. (a), (c)	59,200		1,932,880
The Titan Corp. (a), (c)	224,500		3,636,900
			10,340,487
Agriculture—0.9%
Delta & Pine Land Co. (c)	144,500		3,941,960
Apparel & Textiles—4.5%
AnnTaylor Stores Corp. (a)	136,400		2,936,692
Hot Topic, Inc. (a), (c)	146,800		2,523,492
K-Swiss, Inc., Class A (c)	77,700		2,262,624
The Gymboree Corp. (a), (c)	181,000		2,320,420
The Sports Authority, Inc. (a), (c)	123,600		3,182,700
The Timberland Co., Class A (a)	51,400		3,221,238
The Warnaco Group, Inc. (a)	165,900		3,583,440
			20,030,606
Automotive—2.1%
CSK Auto Corp. (a)	136,200		2,279,988
Rush Enterprises, Inc., Class A (a)	119,900		1,945,977
TBC Corp. (a), (c)	111,700		3,105,260
Winnebago Industries, Inc. (c)	54,100		2,113,146
			9,444,371
Banking—7.3%
Bank of the Ozarks, Inc. (c)	8,500		289,255
First Community Bancorp	64,600		2,758,420
First Midwest Bancorp, Inc. (c)	82,600		2,997,554
First Republic Bank (c)	50,300		2,665,900
Hudson United Bancorp (c)	32,600		1,283,788
MB Financial, Inc.	27,400		1,154,910
Provident Bankshares Corp.	66,400		2,414,968
Sterling Bancshares, Inc. (c)	279,000		3,981,330
Texas Regional Bancshares, Inc.,
Class A (c)	62,000		2,026,160
Umpqua Holdings Corp. (c)	86,200		2,173,102
United Bankshares, Inc. (c)	104,600		3,990,490
W Holding Co., Inc.	105,774		2,426,456
Westamerica Bancorporation (c)	72,300		4,215,813
			32,378,146
Building & Construction—1.5%
Chicago Bridge & Iron Co. NV,
NY Shares (c)	84,000		3,360,000
The Shaw Group, Inc. (a), (c)	192,200		3,430,770
			6,790,770
Business Services & Supplies—8.3%
ADVO, Inc. (c)	162,000		5,775,300
Arbitron, Inc. (a)	131,900		5,167,842
BearingPoint, Inc. (a), (c)	227,900		1,830,037
Herman Miller, Inc. (c)	128,000		3,536,640
MPS Group, Inc. (a), (c)	302,100		3,703,746
ProQuest Co. (a), (c)	89,800		2,667,060
Tetra Tech, Inc. (a), (c)	271,600		4,546,584
The BISYS Group, Inc. (a), (c)	152,100		2,502,045
Veritas DGC, Inc. (a)	130,100		2,915,541
Watson Wyatt & Co. Holdings (c)	138,300		3,727,185
			36,371,980
Chemicals—2.6%
Ferro Corp. (c)	81,500		1,889,985
Olin Corp. (c)	170,300		3,750,006
PolyOne Corp. (a)	291,900		2,644,614
Spartech Corp. (c)	123,700		3,351,033
			11,635,638
Coal—0.7%
Foundation Coal Holdings, Inc.	125,500		2,894,030
Computer Software—2.7%
Avocent Corp. (a), (c)	54,800		2,220,496
Catapult Communications Corp. (a), (c)	24,191		584,455
JDA Software Group, Inc. (a), (c)	128,000		1,743,360
SERENA Software, Inc. (a), (c)	199,300		4,312,852
Verity, Inc. (a)	217,200		2,849,664
			11,710,827
Computers & Business
Equipment—3.0%
Advanced Digital
Information Corp. (a), (c)	261,000		2,615,220
Black Box Corp.	6,100		292,922
Foundry Networks, Inc. (a)	207,800		2,734,648
Komag, Inc. (a)	223,100		4,189,818
Photon Dynamics, Inc. (a), (c)	136,600		3,316,648
			13,149,256
Consumer Products—1.2%
Jarden Corp. (a), (c)	38,100		1,655,064
The Scotts Co., Class A (a), (c)	49,300		3,624,536
			5,279,600
Diversified—0.9%
The Liberty Corp. (c)	93,100		4,092,676
Drugs & Health Care—6.6%
Able Laboratories, Inc. (a), (c)	119,700		2,723,175
Andrx Corp. (a), (c)	149,700		3,267,951
Beverly Enterprises, Inc. (a), (c)	467,000		4,273,050
Kindred Healthcare, Inc. (a), (c)	155,200		4,648,240

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

28

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares		Value
Lazard Small Cap Portfolio (continued)
LifePoint Hospitals, Inc. (a), (c)	123,500	$	4,300,270
MIM Corp. (a), (c)	439,400		2,790,190
Select Medical Corp.	252,600		4,445,760
Taro Pharmaceutical
Industries, Ltd. (a), (c)	81,000		2,756,430
			29,205,066
Education—1.9%
Corinthian Colleges, Inc. (a), (c)	162,000		3,052,890
DeVry, Inc. (a), (c)	124,800		2,166,528
Leapfrog Enterprises, Inc. (a), (c)	7,900		107,440
Learning Tree International, Inc. (a), (c)	235,900		3,161,060
			8,487,918
Electrical Equipment—2.8%
Coherent, Inc. (a), (c)	113,600		3,457,984
General Cable Corp. (a), (c)	47,900		663,415
GrafTech International, Ltd. (a), (c)	231,100		2,186,206
Plexus Corp. (a), (c)	180,800		2,352,208
Rogers Corp. (a)	81,400		3,508,340
			12,168,153
Electronics—1.6%
Metrologic Instruments, Inc. (a), (c)	135,300		2,875,125
TTM Technologies, Inc. (a), (c)	364,000		4,295,200
			7,170,325
Environmental—0.5%
Waste Connections, Inc. (a), (c)	65,000		2,226,250
Equipment Rental—0.4%
United Rentals, Inc. (a), (c)	100,100		1,891,890
Financial Services—5.0%
Calamos Asset Management, Inc.,
Class A	90,100		2,432,700
eSpeed, Inc., Class A (a), (c)	325,500		4,026,435
Financial Federal Corp. (a), (c)	62,300		2,442,160
IndyMac Bancorp, Inc. (c)	55,200		1,901,640
Knight Trading Group, Inc.,
Class A (a), (c)	380,500		4,166,475
MAF Bancorp, Inc. (c)	81,600		3,657,312
The South Financial Group, Inc. (c)	111,200		3,617,336
			22,244,058
Food & Beverages—0.6%
Performance Food Group Co. (a), (c)	97,500		2,623,725
Forest & Paper Products—0.5%
Packaging Corp. of America	90,800		2,138,340
Household Products &
Home Furnishings—0.4%
Cost Plus, Inc. (a), (c)	53,400		1,715,742
Industrial & Machinery—1.9%
Roper Industries, Inc. (c)	67,200		4,083,744
Tecumseh Products Co., Class A (c)	87,700		4,192,060
			8,275,804
Insurance—3.0%
Arch Capital Group, Ltd. (a)	107,000		4,140,900
Assured Guaranty, Ltd. (c)	220,400		4,335,268
Bristol West Holdings, Inc. (c)	30,700		614,000
Max Re Capital, Ltd.	130,300		2,779,299
Reinsurance Group of America, Inc. (c)	27,900		1,351,755
			13,221,222
Leisure & Entertainment—1.1%
Alliance Gaming Corp. (a), (c)	210,300		2,904,243
WMS Industries, Inc. (a), (c)	53,000		1,777,620
			4,681,863
Medical Products & Services—3.3%
Bio-Rad Laboratories, Inc., Class A (a) .	3,100		177,847
Charles River Laboratories
International, Inc. (a), (c)	25,800		1,187,058
Cutera, Inc. (c)	36,500		455,520
DJ Orthopedics, Inc. (a), (c)	166,700		3,570,714
Hanger Orthopedic Group, Inc. (a), (c)	49,100		397,710
INAMED Corp. (a), (c)	52,800		3,339,600
Martek Biosciences Corp. (a), (c)	34,100		1,745,920
PSS World Medical, Inc. (a), (c)	260,800		3,263,912
Respironics, Inc. (a)	3,600		195,696
Viasys Healthcare, Inc. (a), (c)	16,800		319,200
			14,653,177
Oil & Gas—7.2%
Bill Barrett Corp.	29,600		946,904
Denbury Resources, Inc. (a)	81,900		2,248,155
Energy Partners, Ltd. (a), (c)	100,500		2,037,135
Forest Oil Corp. (a), (c)	68,800		2,182,336
Grey Wolf, Inc. (a), (c)	417,700		2,201,279
Hanover Compressor Co. (a), (c)	207,300		2,929,149
Key Energy Services, Inc. (a), (c)	519,900		6,134,820
Kinder Morgan Management, LLC (a) .	88,090		3,585,263
Maverick Tube Corp. (a), (c)	56,600		1,714,980
Range Resources Corp. (c)	136,000		2,782,560
The Houston Exploration Co. (a)	49,400		2,781,714
Whiting Petroleum Corp. (a)	73,300		2,217,325
			31,761,620

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

29

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares			Value
Lazard Small Cap Portfolio (concluded)
Printing & Publishing—1.9%
Journal Register Co. (a)	210,800		$	4,074,764
R. H. Donnelley Corp. (a), (c)	69,200			4,086,260
				8,161,024
Real Estate—3.1%
Alexandria Real Estate Equities, Inc.	28,800			2,143,296
Capital Automotive REIT	40,900			1,452,972
CarrAmerica Realty Corp.	67,200			2,217,600
Inland Real Estate Corp. (c)	59,000			941,050
Lexington Corporate Properties Trust	86,300			1,948,654
Prentiss Properties Trust (c)	33,100			1,264,420
The Mills Corp. (c)	57,800			3,685,328
				13,653,320
Restaurants—0.6%
CBRL Group, Inc. (c)	64,000			2,678,400
Retail—1.2%
99 Cents Only Stores (a), (c)	127,400			2,058,784
Tractor Supply Co. (a), (c)	89,000			3,311,690
				5,370,474
Semiconductors &
Components—3.2%
AMIS Holdings, Inc. (a), (c)	191,600			3,165,232
Benchmark Electronics, Inc. (a), (c)	82,200			2,803,020
Brooks Automation, Inc. (a), (c)	133,500			2,298,870
Exar Corp. (a), (c)	303,800			4,310,922
Ultratech, Inc. (a), (c)	89,300			1,683,305
				14,261,349
Steel—0.6%
Schnitzer Steel Industries, Inc.,
Class A (c)	37,900			1,285,947
Steel Dynamics, Inc. (c)	33,700			1,276,556
				2,562,503
Telecommunications—2.8%
C-COR, Inc. (a), (c)	469,500			4,366,350
CommScope, Inc. (a), (c)	191,300			3,615,570
Ditech Communications Corp. (a)	98,100			1,466,595
Oplink Communications, Inc. (a), (c)	417,200			821,884
Wireless Facilities, Inc. (a), (c)	229,200			2,163,648
				12,434,047
Transportation—4.2%
AirTran Holdings, Inc. (a), (c)	274,500			2,937,150
Forward Air Corp. (a), (c)	68,600			3,066,420
OMI Corp. (c)	163,500			2,754,975
Overnite Corp.	73,300			2,729,692
Pacer International, Inc. (a), (c)	222,300			4,726,098
Swift Transportation Co., Inc. (a), (c)	105,000			2,255,400
				18,469,735
Utilities—2.0%
AGL Resources, Inc. (c)	88,700			2,948,388
Cleco Corp.	175,500			3,555,630
New Jersey Resources Corp. (c)	51,800			2,245,012
				8,749,030
Total Common Stocks
(Identified cost $341,742,208)				416,865,382
	Principal
	Amount
	(000)
Convertible Bond—0.0%
Manufacturing—0.0%
TIMCO Aviation Services, Inc.,
8.00%, 01/02/07
(Identified cost $337)	$                  1			0
Short-Term Investments—29.4%
Repurchase Agreement—5.0%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$21,050,000 United States Treasury
Note, 6.875%, 05/15/06, with a
value of $22,339,313)
Proceeds of $21,901,555	21,899			21,899,000
Collateral for Securities
on Loan—24.4%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	107,841			107,840,956
Total Short-Term Investments
(Identified cost $129,739,956)				129,739,956
Total Investments
(Identified cost $471,482,501) (b)	123.9	%		$546,605,338
Liabilities in Excess of Cash and
Other Assets	(23.9	)		(105,403,627	)
Net Assets	100.0	%		$441,201,711

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

30

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares		Value
Lazard International Equity Portfolio
Common Stocks—97.9%
Finland—4.5%
Nokia Oyj (c)	3,246,500	$	51,276,784
Stora Enso Oyj, R Shares (c)	1,340,100		20,528,649
Total Finland			71,805,433
France—11.8%
Carrefour SA (c)	539,000		25,671,551
Credit Agricole SA (c)	981,514		29,617,522
Lagardere SCA (c)	230,430		16,631,552
Sanofi-Aventis (c)	470,377		37,594,356
Schneider Electric SA	115,600		8,045,018
Total SA (c)	206,225		45,046,021
Vivendi Universal SA (a), (c)	818,500		26,133,703
Total France			188,739,723
Germany—11.0%
Deutsche Telekom AG (a), (c)	2,015,800		45,620,593
E.ON AG (c)	395,900		36,086,793
Schering AG (c)	475,800		35,576,673
Siemens AG (c)	332,500		28,192,674
Volkswagen AG (c)	688,100		31,192,245
Total Germany			176,668,978
Ireland—3.0%
Bank of Ireland	1,819,650		30,298,644
CRH PLC	672,876		18,017,748
Total Ireland			48,316,392
Italy—4.2%
Enel SpA (c)	1,848,100		18,161,972
Eni SpA (c)	1,570,700		39,326,212
Terna SpA (c)	3,206,900		9,197,443
Total Italy			66,685,627
Japan—18.9%
ACOM Co., Ltd.	196,490		14,707,508
Aiful Corp.	75,000		8,248,756
East Japan Railway Co.	2,726		15,163,658
Fanuc, Ltd.	389,900		25,493,608
Fujitsu, Ltd.	3,217,000		20,940,168
Mitsubishi Estate Co., Ltd.	1,943,000		22,753,977
Murata Manufacturing Co., Ltd.	478,100		26,734,781
NEC Electronics Corp.	224,400		10,949,546
Nissan Motor Co., Ltd.	2,767,600		30,087,893
Nomura Holdings, Inc.	2,240,000		32,658,924
NTT DoCoMo, Inc.	7,568		13,958,739
Shin-Etsu Chemical Co., Ltd.	614,400		25,182,785
Takeda Pharmaceutical Co., Ltd.	307,100		15,464,390
The Sumitomo Trust and
Banking Co., Ltd.	2,264,000		16,371,855
Tokyo Gas Co., Ltd.	5,980,000		24,510,588
Total Japan			303,227,176
Netherlands—6.5%
Heineken NV (c)	444,393		14,817,127
Koninklijke (Royal) Philips
Electronics NV	1,069,125		28,352,085
Royal Dutch Petroleum Co. (c)	1,045,866		60,204,465
Total Netherlands			103,373,677
Norway—1.9%
DnB NOR ASA (c)	1,095,200		10,804,356
Statoil ASA (c)	1,221,400		19,157,950
Total Norway			29,962,306
Singapore—1.2%
Oversea-Chinese Banking
Corp., Ltd.	2,371,850		19,615,275
Switzerland—7.0%
Compagnie Financiere
Richemont AG, A Shares	509,000		16,942,793
Credit Suisse Group (a), (c)	980,220		41,205,273
Nestle SA	91,100		23,834,535
Swiss Re	416,300		29,691,259
Total Switzerland			111,673,860
United Kingdom—27.9%
Barclays PLC	3,393,300		38,176,742
BP PLC	1,505,000		14,678,416
Cadbury Schweppes PLC	1,834,426		17,081,300
Diageo PLC	2,406,742		34,331,861
EMAP PLC	615,472		9,636,321
GlaxoSmithKline PLC	2,120,301		49,744,803
HSBC Holdings PLC	2,859,669		48,259,591
Imperial Tobacco Group PLC	803,840		22,022,802
Kesa Electricals PLC	1,396,619		7,574,874
Marks & Spencer Group PLC	2,232,051		14,698,643
Prudential PLC	3,101,650		26,975,530
Rentokil Initial PLC	5,600,495		15,886,671
Rio Tinto PLC	517,300		15,225,222
Royal Bank of Scotland
Group PLC	1,402,300		47,168,713
Unilever PLC	3,525,500		34,621,458
Vodafone Group PLC	18,389,400		49,869,499
Total United Kingdom			445,952,446
Total Common Stocks
(Identified cost $1,289,616,570)			1,566,020,893
Preferred Stock—0.6%
Germany—0.6%
Porsche AG
(Identified cost $6,579,222)	13,900		8,870,531

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

31

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)			Value
Lazard International Equity Portfolio (concluded)
Short-Term Investments—25.4%
Repurchase Agreement—1.5%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$23,650,000 United States Treasury
Note, 5.875%, 11/15/05, with a
value of $24,448,188)
Proceeds of $23,969,796	$ 23,967		$	23,967,000
Collateral for Securities
on Loan—23.9%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	$382,086		$	382,086,253
Total Short-Term Investments
(Identified cost $406,053,253)				406,053,253
Total Investments
(Identified cost $1,702,249,045) (b)	123.9	%	$	1,980,944,677
Liabilities in Excess of Cash and
Other Assets	(23.9	)		(381,741,253	)
Net Assets	100.0	%	$	1,599,203,424

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

32

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares			Value
Lazard International Equity Select Portfolio
Common Stocks—97.5%
Denmark—2.2%
Danske Bank A/S ADR	12,300		$	375,519
Finland—4.1%
Nokia Oyj Sponsored ADR	45,200			708,284
France—10.3%
Axa Sponsored ADR	14,450			357,638
Sanofi-Aventis ADR	9,280			371,664
Societe Generale Sponsored ADR	26,500			534,240
Total SA Sponsored ADR	4,600			505,264
Total France				1,768,806
Germany—4.4%
Schering AG ADR	5,400			400,950
Siemens AG Sponsored ADR	4,300			364,081
Total Germany				765,031
Ireland—3.5%
Allied Irish Banks PLC Sponsored ADR	14,500			598,560
Italy—7.3%
Enel SpA Sponsored ADR	6,900			341,136
Eni SpA Sponsored ADR	4,400			553,696
SanPaolo IMI SpA Sponsored ADR	12,600			361,242
Total Italy				1,256,074
Japan—8.3%
Canon, Inc. Sponsored ADR	8,900			482,914
Kao Corp. Sponsored ADR	1,900			484,652
Nomura Holdings, Inc. ADR	31,500			458,640
Total Japan				1,426,206
Netherlands—5.7%
Heineken NV ADR	14,700			488,040
Royal Dutch Petroleum Co., NY Shares	8,600			493,468
Total Netherlands				981,508
Switzerland—19.5%
Compagnie Financiere Richemont AG
Sponsored ADR	11,500			384,560
Credit Suisse Group Sponsored ADR (a)	13,700			578,003
Nestle SA Sponsored ADR	6,800			446,760
Novartis AG ADR	10,200			515,508
Roche Holding AG Sponsored ADR	3,000			346,920
Swiss Re Sponsored ADR	4,900			351,036
UBS AG	8,700			729,408
Total Switzerland				3,352,195
United Kingdom—32.2%
Barclays PLC Sponsored ADR	17,200			785,696
BP PLC Sponsored ADR	8,200			478,880
Cadbury Schweppes PLC
Sponsored ADR	17,700			667,290
Diageo PLC Sponsored ADR	8,700			503,556
GlaxoSmithKline PLC ADR	14,400			682,416
HSBC Holdings PLC Sponsored ADR .	8,000			681,120
Tesco PLC Sponsored ADR	20,200			374,344
Unilever PLC Sponsored ADR	16,000			632,320
Vodafone Group PLC Sponsored ADR	26,600			728,308
Total United Kingdom				5,533,930
Total Common Stocks
(Identified cost $12,858,858)				16,766,113
	Principal
	Amount
	(000)
Repurchase Agreement—2.4%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$420,000 United States Treasury
Note, 2.75%, 06/30/06, with a
value of $418,688)
Proceeds of $409,048
(Identified cost $409,000)	$                 409			409,000
Total Investments
(Identified cost $13,267,858) (b)	99.9	%	$	17,175,113
Cash and Other Assets in Excess
of Liabilities	0.1			24,273
Net Assets	100.0	%	$	17,199,386

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

33

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares		Value
Lazard International Small Cap Portfolio
Common Stocks—96.7%
Australia—3.5%
ABC Learning Centres, Ltd. (c)	842,410	$	3,638,612
John Fairfax Holdings, Ltd.	3,019,194		10,768,694
Macquarie Infrastructure Group (c)	4,056,932		10,812,778
Total Australia			25,220,084
Austria—1.6%
Erste Bank der Oesterreichischen
Sparkassen AG	218,800		11,687,971
Finland—4.0%
Amer Group, Ltd.	616,500		10,768,010
Sampo Oyj, A Shares (c)	815,400		11,260,655
TietoEnator Oyj (c)	216,200		6,876,553
Total Finland			28,905,218
France—4.5%
Carbone Lorraine SA (a), (c)	196,526		10,417,988
Neopost SA (c)	282,800		21,987,441
Total France			32,405,429
Germany—4.6%
Fielmann AG	152,600		10,785,918
Puma AG	48,900		13,446,337
Techem AG (a)	257,846		9,375,262
Total Germany			33,607,517
Greece—1.8%
OPAP SA	473,150		13,081,244
Hong Kong—3.3%
Esprit Holdings, Ltd.	2,441,965		14,766,086
Texwinca Holdings, Ltd. (c)	9,746,000		9,215,986
Total Hong Kong			23,982,072
Ireland—5.3%
Anglo Irish Bank Corp. PLC	649,506		15,802,851
DCC PLC	577,100		12,942,980
Grafton Group PLC Units (a)	865,800		9,355,865
Total Ireland			38,101,696
Italy—2.6%
Davide Campari-Milano SpA (c)	179,400		11,570,654
Lottomatica SpA (c)	192,300		7,052,132
Total Italy			18,622,786
Japan—18.4%
Credit Saison Co., Ltd.	306,000		11,138,675
Daito Trust Construction Co., Ltd. (c)	305,000		14,495,462
Don Quijote Co., Ltd. (c)	114,400		5,838,899
eAccess, Ltd. (a), (c)	7,810		6,897,677
Hisamitsu Pharmaceutical Co., Inc.	502,000		9,739,202
JSR Corp.	444,500		9,738,485
Leopalace21 Corp.	644,700		11,350,042
OSG Corp. (c)	650,200		7,868,137
Rinnai Corp.	280,700		7,533,181
Sanyo Shokai, Ltd. (c)	1,190,000		6,480,141
Secom Techno Service Co., Ltd.	138,500		5,406,460
Suruga Bank, Ltd.	1,255,000		10,018,444
Uniden Corp. (c)	517,000		10,191,666
USS Co., Ltd. (c)	132,800		11,145,506
Yoshinoya D&C Co., Ltd. (c)	3,317		5,211,642
Total Japan			133,053,619
Netherlands—10.0%
Euronext NV	247,600		7,562,284
Fugro NV	160,727		13,413,943
Holdingmaatschappij De
Telegraaf NV (c)	299,200		7,422,047
Hunter Douglas NV	335,932		17,922,157
IHC Caland NV (c)	113,602		7,217,286
James Hardie Industries NV	1,673,700		8,790,489
Koninklijke Boskalis Westminster NV	295,936		10,016,048
Total Netherlands			72,344,254
Norway—1.2%
DnB NOR ASA (c)	917,800		9,054,271
Spain—7.0%
Abengoa SA	638,000		6,304,553
Aldeasa SA (c)	279,200		11,802,528
Corporacion Mapfre SA (c)	741,026		10,918,475
Indra Sistemas SA (a)	731,700		12,501,657
Prosegur Compania de Seguridad SA	477,800		9,404,029
Total Spain			50,931,242
Sweden—4.3%
Alfa Laval AB (c)	459,300		7,429,914
Getinge AB, B Shares	841,700		10,481,036
Swedish Match AB (c)	1,153,100		13,360,926
Total Sweden			31,271,876
Switzerland—2.6%
Edipresse SA	17,213		8,931,202
Geberit AG	13,300		9,731,422
Total Switzerland			18,662,624
United Kingdom—22.0%
Brit Insurance Holdings PLC	4,955,400		7,492,181
Bunzl PLC	1,148,119		9,577,578
Carpetright PLC	565,000		12,366,087
Cattles PLC	1,202,632		8,473,792
Cookson Group PLC (a)	11,983,800		8,167,740

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

34

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description		Shares			Value
Lazard International Small Cap Portfolio (concluded)
Enterprise Inns PLC		832,200		$	12,702,050
George Wimpey PLC		1,224,800			9,511,800
Halfords Group PLC		1,398,920			8,325,946
Intertek Group PLC		828,100			11,208,588
Kesa Electricals PLC		1,419,300			7,697,889
Man Group PLC		418,134			11,816,865
Northgate PLC		719,900			11,803,452
Regus Group PLC (a)		6,077,583			8,926,297
Signet Group PLC Sponsored ADR (c)		580,236			12,573,714
Trinity Mirror PLC		759,500			9,273,932
William Hill PLC		831,900			9,008,017
Total United Kingdom					158,925,928
Total Common Stocks
(Identified cost $457,117,177)					699,857,831
Preferred Stock—1.0%
Germany—1.0%
ProSiebenSat.1 Media AG
(Identified cost $6,964,586)		409,800			7,519,777
Warrant—0.0%
Japan—0.0%
Belluna Co., Ltd. Right,
09/29/06
(Identified cost $20,894) (a), (g)		21,850			0
	Principal
	Amount
	(000)
Short-Term Investments—15.4%
Repurchase Agreement—1.9%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$13,950,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $13,913,897)
Proceeds of $13,639,591	$	13,638			13,638,000
Collateral for Securities
on Loan—13.5%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)		97,694			97,693,958
Total Short-Term Investments
(Identified cost $111,331,958)					111,331,958
Total Investments
(Identified cost $575,434,615) (b)		113.1	%	$	818,709,566
Liabilities in Excess of Cash and
Other Assets		(13.1	)		(95,058,636	)
Net Assets		100.0	%	$	723,650,930

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

35

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares		Value
Lazard Emerging Markets Portfolio
Common Stocks—87.5%
Brazil—8.3%
Brasil Telecom
Participacoes SA ADR	137,700	$	5,253,255
Companhia de Concessoes
Rodoviarias	300,300		6,569,062
Companhia Vale do Rio Doce ADR	773,000		22,424,730
Empresa Brasileira de
Aeronautica SA ADR	217,000		7,256,480
Grendene SA (a)	420,900		4,991,849
Petroleo Brasileiro SA ADR	261,100		10,386,558
Souza Cruz SA	722,600		9,690,893
Total Brazil			66,572,827
Chile—1.3%
Administradora de Fondos de
Pensiones Provida SA
Sponsored ADR (c)	360,400		10,271,400
China—0.9%
People’s Food Holdings, Ltd.	7,540,000		6,928,449
Croatia—0.7%
Pliva d.d. GDR (d)	419,750		5,424,429
Czech Republic—0.8%
Cesky Telecom AS	370,100		6,148,914
Egypt—4.1%
Commercial International Bank	2,285,300		14,626,673
Orascom Construction Industries	802,362		9,580,757
Orascom Telecom Holding SAE (a)	205,100		8,614,538
Total Egypt			32,821,968
Hong Kong—4.5%
China Mobile (Hong Kong), Ltd.
Sponsored ADR (c)	573,700		9,844,692
China Netcom Group Corp.
(Hong Kong), Ltd.	1,108,500		1,504,583
CNOOC, Ltd. ADR (c)	123,200		6,676,208
Hutchison Telecommunications
International, Ltd. (a), (c)	5,957,000		5,403,123
Pacific Basin Shipping, Ltd.	15,372,000		6,625,265
Texwinca Holdings, Ltd.	6,396,000		6,048,169
Total Hong Kong			36,102,040
Hungary—1.7%
Gedeon Richter Rt.	68,990		8,665,520
MOL Magyar Olaj-es Gazipari Rt. .	75,100		5,281,631
Total Hungary			13,947,151
India—8.3%
Hero Honda Motors, Ltd.	561,600		7,378,186
Hindalco Industries, Ltd.	323,447		10,616,383
Hindustan Lever, Ltd.	2,078,600		6,861,723
Reliance Industries, Ltd.	982,200		12,061,154
Satyam Computer Services, Ltd.	1,273,600		12,009,401
State Bank of India	1,180,800		17,722,866
Total India			66,649,713
Indonesia—3.7%
PT Hanjaya Mandala
Sampoerna Tbk	23,635,800		16,932,730
PT Telekomunikasi Indonesia Tbk
Sponsored ADR (c)	624,800		13,133,296
Total Indonesia			30,066,026
Israel—0.9%
Bank Hapoalim, Ltd.	2,075,500		7,000,008
Mexico—6.5%
America Telecom SA de CV, Series
A1 Shares (a)	2,027,900		5,823,367
Fomento Economico Mexicano
SA de CV Sponsored ADR (c)	124,100		6,528,901
Grupo Televisa SA Sponsored ADR .	145,200		8,784,600
Kimberly-Clark de Mexico SA de CV,
Series A Shares	1,616,800		5,584,175
Telefonos de Mexico SA de CV,
Series L Shares Sponsored ADR	469,900		18,006,568
Urbi, Desarrollos Urbanos, SA de CV	1,695,300		7,406,577
Total Mexico			52,134,188
Morocco—0.1%
Maroc Telecom	64,200		675,544
Netherlands—0.2%
Efes Breweries International
Sponsored GDR (a), (d)	61,700		1,851,000
Peru—0.8%
Credicorp, Ltd. (c)	418,400		6,614,904
Philippines—0.7%
Philippine Long Distance Telephone
Co. Sponsored ADR (a), (c)	223,000		5,559,390
Russia—2.2%
LUKOIL Sponsored ADR (c)	97,300		11,919,250
Mobile TeleSystems Sponsored ADR (c) 8,000			1,108,080
Wimm-Bill-Dann Foods OJSC
ADR (a), (c)	315,800		4,519,098
Total Russia			17,546,428

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

36

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

Description	Shares			Value
Lazard Emerging Markets Portfolio (concluded)
South Africa—12.2%
ABSA Group, Ltd.	1		$	14
Edgars Consolidated Stores, Ltd.	238,550			12,798,178
Harmony Gold Mining Co., Ltd.
Sponsored ADR (c)	224,400			2,080,188
Impala Platinum Holdings, Ltd.	162,600			13,824,788
Kumba Resources, Ltd.	1,323,100			10,333,508
Old Mutual PLC	5,558,300			14,139,591
Sanlam, Ltd.	2,789,900			6,437,755
Sappi, Ltd.	772,600			11,382,436
Sasol, Ltd.	548,700			11,784,815
Steinhoff International
Holdings, Ltd.	6,606,156			14,774,806
Total South Africa				97,556,079
South Korea—18.9%
Daewoo Shipbuilding & Marine
Engineering Co., Ltd. GDR (d)	332,600			8,730,750
Hite Brewery Co., Ltd.	75,300			6,219,233
Hyundai Motor Co.	159,100			8,529,801
Kookmin Bank (a)	536,983			21,008,319
KT Corp. Sponsored ADR (c)	384,236			8,380,187
LG Chem, Ltd.	174,800			6,965,321
LG Electronics, Inc.	100,700			6,235,384
LG Household & Health Care, Ltd.	231,500			6,138,596
LG Philips LCD Co., Ltd. ADR (c)	318,700			5,733,413
POSCO	41,900			7,568,876
POSCO ADR (c)	42,000			1,870,260
Samsung Electronics Co., Ltd.	75,181			32,717,388
Samsung Fire & Marine
Insurance Co., Ltd.	121,838			9,592,153
Samsung SDI Co., Ltd.	62,700			6,844,185
SK Telecom Co., Ltd.	80,930			15,401,092
Total South Korea				151,934,958
Taiwan—7.4%
Advantech Co., Ltd.	3,569,327			8,672,710
Chinatrust Financial
Holding Co., Ltd.	5,307,513			6,347,578
Compal Electronics, Inc.	2,787,145			2,788,025
Compal Electronics, Inc. GDR (c)	506,590			2,517,752
Fubon Financial Holding Co., Ltd.	8,322,000			8,534,711
Hon Hai Precision
Industry Co., Ltd.	2,934,269			13,611,156
Taiwan Semiconductor
Manufacturing Co., Ltd.	10,482,000			16,703,724
Total Taiwan				59,175,656
Thailand—0.5%
Thai Union Frozen Products PCL	6,841,600			4,367,353
Turkey—1.6%
Akbank TAS	2,044,824,550			12,661,687
Venezuela—1.2%
Compania Anonima Nacional
Telefonos de Venezuela ADR	422,673			9,463,649
Total Common Stocks
(Identified cost $471,626,673)				701,473,761
Preferred Stocks—8.1%
Brazil—8.1%
Caemi Mineracao e
Metalurgia SA (a)	25,670,900			22,036,767
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar Sponsored ADR (c)	214,600			5,493,760
Companhia de Bebidas das
Americas ADR (c)	301,791			8,549,739
Companhia Paranaense de
Energia-Copel Sponsored ADR (c)	2,070,199			9,253,789
Telemar Norte Leste SA	471,017			11,979,367
Usinas Siderurgicas de
Minas Gerais SA	382,700			7,773,594
Total Brazil				65,087,016
Total Preferred Stocks
(Identified cost $38,443,945)				65,087,016
	Principal
	Amount
	(000)
Short-Term Investments—9.6%
Repurchase Agreement—2.2%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$18,220,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $18,172,847)
Proceeds of $17,817,078	$                17,815			17,815,000
Collateral for Securities
on Loan—7.4%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	59,243			59,243,223
Total Short-Term Investments
(Identified cost $77,058,223)				77,058,223
Total Investments
(Identified cost $587,128,841) (b) .	105.2	%	$	843,619,000
Liabilities in Excess of Cash and
Other Assets	(5.2	)		(41,484,709	)
Net Assets	100.0	%	$	802,134,291

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

37

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)		Value
Lazard Bond Portfolio
Collateralized Mortgage
Obligation—2.3%
Federal National Mortgage Association,
Series 2003-8, Class BN,
4.50%, 03/25/16
(Identified cost $907,115)(j)	$	892	$	901,275
Corporate Bonds—43.1%
Aerospace & Defense—0.9%
Boeing Capital Corp.,
5.75%, 02/15/07 (c)		320		334,302
Automotive—3.6%
Ford Motor Credit Co.:
7.00%, 10/01/13 (c)		245		258,928
7.25%, 10/25/11 (c)		190		203,234
General Motors Acceptance Corp.,
6.875%, 09/15/11 (c)		470		480,207
Lear Corp.,
5.75%, 08/01/14 (c), (d)		450		456,655
Venture Holdings Co. LLC,
12.00%, 06/01/09 (a), (h)		50		5
				1,399,029
Banking—4.5%
Bank One Corp.,
6.00%, 08/01/08		350		374,620
U.S. Bancorp,
3.125%, 03/15/08		425		417,570
Wachovia Corp.,
4.95%, 11/01/06 (c)		450		462,117
Wells Fargo & Co.,
5.90%, 05/21/06 (c)		485		502,702
				1,757,009
Brewery—0.8%
Anheuser-Busch Cos., Inc.,
7.50%, 03/15/12		250		297,328
Computers & Business
Equipment—1.3%
Hewlett-Packard Co.,
5.50%, 07/01/07 (c)		475		496,359
Consumer Products—0.9%
Fortune Brands, Inc.,
2.875%, 12/01/06		375		370,688
Energy—4.2%
Baker Hughes, Inc.,
6.00%, 02/15/09		495		532,853
Conoco Funding Co.,
6.35%, 10/15/11 (c)		430		479,029
Duke Capital LLC,
7.50%, 10/01/09 (c)		230		261,159
USX Corp.,
6.65%, 02/01/06		370		382,912
				1,655,953
Financial Services—10.6%
American General Finance Corp.,
5.375%, 10/01/12		345		356,823
Bear Stearns Cos., Inc.,
4.00%, 01/31/08		555		558,618
Citigroup, Inc.,
5.00%, 03/06/07		500		515,876
General Electric Capital Corp.,
5.35%, 03/30/06 (c)		365		374,774
Goldman Sachs Group, L.P.,
5.00%, 10/01/14		350		349,506
Household Finance Corp.,
6.375%, 08/01/10		430		471,010
MBNA America Bank NA,
7.125%, 11/15/12		225		256,282
MBNA Corp.,
5.625%, 11/30/07		265		277,295
Morgan Stanley,
4.75%, 04/01/14 (c)		485		472,630
SLM Corp.,
4.00%, 01/15/09		530		530,046
				4,162,860
Food & Beverages—1.3%
Sara Lee Corp.,
6.25%, 09/15/11		475		526,435
Forest & Paper Products—0.6%
Weyerhaeuser Co.,
6.75%, 03/15/12		215		242,522
Insurance—2.0%
Allstate Corp.,
7.50%, 06/15/13		255		302,027
MetLife, Inc.,
5.00%, 11/24/13 (c)		490		491,783
				793,810
Medical Products & Services—0.8%
Amgen, Inc.,
4.85%, 11/18/14 (d)		300		300,025
Multimedia—0.7%
Viacom, Inc.,
7.75%, 06/01/05		285		290,072

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

38

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)			Value
Lazard Bond Portfolio (concluded)
Retail—0.7%
Wal-Mart Stores, Inc.,
6.875%, 08/10/09	$	240		$	269,437
Telecommunications—2.8%
AT&T Wireless Services, Inc.,
8.125%, 05/01/12 (c)		350			422,918
SBC Communications, Inc.,
5.10%, 09/15/14 (c)		400			403,710
Verizon Global Funding Corp.,
6.125%, 06/15/07 (c)		250			264,444
					1,091,072
Transportation—1.2%
Norfolk Southern Corp.,
6.75%, 02/15/11 (c)		410			460,975
Utilities—6.2%
Alabama Power Co.,
2.65%, 02/15/06		345			343,106
MidAmerican Energy Co.,
6.375%, 06/15/06		454			472,583
Public Service Electric & Gas Co.,
6.375%, 05/01/08		500			536,452
Virginia Electric & Power Co.,
5.375%, 02/01/07		575			595,489
Wisconsin Electric Power Co.,
4.50%, 05/15/13		500			494,201
					2,441,831
Total Corporate Bonds
(Identified cost $16,869,171)					16,889,707
Mortgage Pass-Through
Securities—10.7%
Federal National Mortgage Association:
Pool #255317
5.50%, 07/01/19		1,805			1,867,359
4.00%, TBA		1,230			1,200,404
4.50%, TBA		1,150			1,111,187
Total Mortgage Pass-Through
Securities
(Identified cost $4,186,721)					4,178,950
U.S. Government Securities—14.5%
Federal Home Loan Mortgage Corp.,
1.875%, 02/15/06		2,660			2,626,049
Federal National Mortgage Association:
2.323%, 01/19/05		1,200			1,198,650
4.625%, 10/15/13 (j)		1,440			1,452,776
4.625%, 10/15/14		400			400,264
Total U.S. Government Securities
(Identified cost $5,674,979)					5,677,739
U.S. Treasury Securities—29.1%
United States Treasury Notes:
2.50%, 10/31/06		10,645			10,546,001
5.375%, 02/15/31		800			864,872
Total U.S. Treasury Securities
(Identified cost $11,421,168)					11,410,873
Short-Term Investments—19.4%
Repurchase Agreement—3.2%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$1,300,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $1,296,636)
Proceeds of $1,267,148		1,267			1,267,000
Collateral for Securities
on Loan—16.2%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)		6,355			6,355,338
Total Short-Term Investments
(Identified cost $7,622,338)					7,622,338
Total Investments
(Identified cost $46,681,492) (b)		119.1	%	$	46,680,882
Liabilities in Excess of Cash and
Other Assets		(19.1	)		(7,469,945	)
Net Assets		100.0	%		$39,210,937

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

39

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio
Corporate Bonds—91.6%
Aerospace & Defense—1.4%
Sequa Corp.,
8.875%, 04/01/08 (c)	$	1,300	$	1,423,500
Agriculture—1.7%
Case New Holland, Inc.,
6.00%, 06/01/09 (c), (d)		725		706,875
Southern States Cooperative, Inc.,
10.50%, 11/01/10 (d)		1,000		1,025,000
				1,731,875
Apparel & Textiles—0.4%
Foamex L.P.,
9.875%, 06/15/07		470		385,400
Automotive—3.7%
Affinia Group, Inc.,
9.00%, 11/30/14 (d)		250		260,625
Dana Corp.,
9.00%, 08/15/11		1,100		1,353,407
HLI Operating Co., Inc.,
10.50%, 06/15/10 (c)		520		557,700
TRW Automotive, Inc.:
9.375%, 02/15/13 (c)		870		1,009,200
11.00%, 02/15/13 (c)		227		273,535
Venture Holdings Co. LLC,
12.00%, 06/01/09 (a), (h)		2,840		284
Visteon Corp.,
7.00%, 03/10/14 (c)		400		382,000
				3,836,751
Building & Construction—1.1%
KB Home,
7.75%, 02/01/10 (c)		1,060		1,147,450
Building Materials—1.6%
Legrand SA,
8.50%, 02/15/25		925		1,091,500
Texas Industries, Inc.,
10.25%, 06/15/11		525		614,250
				1,705,750
Cable Television—4.9%
Charter Communications Holdings LLC,
10.75%, 10/01/09		650		591,500
CSC Holdings, Inc.,
7.625%, 04/01/11 (c)		1,002		1,079,655
EchoStar DBS Corp.:
5.75%, 10/01/08 (c)		250		253,125
6.625%, 10/01/14 (d)		310		313,875
9.125%, 01/15/09 (c)		195		214,500
Mediacom Broadband LLC,
11.00%, 07/15/13 (c)		825		886,875
Pegasus Communications Corp.,
12.50%, 08/01/07 (h)		275		176,688
Rogers Cable, Inc.,
6.25%, 06/15/13 (c)		605		606,512
Shaw Communications, Inc.,
7.25%, 04/06/11 (c)		900		992,250
				5,114,980
Chemicals—5.0%
Acetex Corp.,
10.875%, 08/01/09		1,000		1,087,500
ARCO Chemical Co.,
9.80%, 02/01/20 (c)		535		609,900
Ethyl Corp.,
8.875%, 05/01/10		300		331,500
Huntsman ICI Chemicals,
10.125%, 07/01/09 (c)		825		868,312
Huntsman International LLC,
9.875%, 03/01/09		325		356,688
ISP Holdings, Inc.,
10.625%, 12/15/09		524		580,330
Lyondell Chemical Co.,
9.625%, 05/01/07 (c)		500		550,000
Rockwood Specialties Group, Inc.,
7.50%, 11/15/14 (d)		250		259,375
Westlake Chemical Corp.,
8.75%, 07/15/11		471		532,230
				5,175,835
Consumer Products—1.9%
Icon Health & Fitness, Inc.,
11.25%, 04/01/12		405		340,200
Riddell Bell Holdings, Inc.,
8.375%, 10/01/12 (d)		250		258,750
Sola International, Inc.,
6.875%, 03/15/08		1,360		1,375,218
				1,974,168
Containers—2.0%
Crown Euro Holdings SA:
9.50%, 03/01/11 (c)		875		997,500
10.875%, 03/01/13 (c)		500		591,250
Graham Packaging Co., Inc.:
8.50%, 10/15/12 (d)		250		262,500
9.875%, 10/15/14 (d)		250		266,875
				2,118,125
Diversified—1.5%
AMSTED Industries, Inc.,
10.25%, 10/15/11 (d)		1,345		1,519,850

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

40

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)			Value
Lazard High Yield Portfolio (continued)
Electronics—2.5%
Freescale Semiconductor, Inc.,
7.125%, 07/15/14 (c)	$	750	$	813,750
PerkinElmer, Inc.,
8.875%, 01/15/13		650		741,000
Thomas & Betts Corp.,
7.25%, 06/01/13		1,000		1,096,918
				2,651,668
Energy—3.4%
ANR Pipeline, Inc.,
8.875%, 03/15/10 (c)		500		560,000
Chesapeake Energy Corp.,
9.00%, 08/15/12 (c)		535		611,237
CITGO Petroleum Corp.,
6.00%, 10/15/11 (d)		275		273,625
Compton Petroleum Corp.,
9.90%, 05/15/09		245		270,725
Harvest Operations Corp.,
7.875%, 10/15/11 (d)		325		327,438
Northwest Pipeline Corp.,
8.125%, 03/01/10		850		940,312
Southern Natural Gas Co.,
8.875%, 03/15/10		500		560,000
				3,543,337
Environmental—0.9%
Allied Waste North America, Inc.,
8.875%, 04/01/08 (c)		230		246,100
Browning-Ferris Industries, Inc.,
7.40%, 09/15/35		775		678,125
				924,225
Equipment Rental—2.0%
H&E Equipment Services LLC,
11.125%, 06/15/12		780		858,000
United Rentals North America, Inc.,
6.50%, 02/15/12		500		487,500
Williams Scotsman, Inc.,
9.875%, 06/01/07 (c)		700		700,000
				2,045,500
Financial Services—0.4%
Finance One PLC:
0.00%, 01/03/05 (a), (h), (k), (m)		20,000		0
Morgan Guarantee Trust,
0.00%, 07/31/06 (a), (h), (k), (m)		10,569		0
Refco Finance Holdings LLC,
9.00%, 08/01/12 (d)		375		410,625
				410,625
Food & Beverages—1.5%
Burns Philp Capital Property, Ltd.,
9.75%, 07/15/12		635		698,500
Chiquita Brands International, Inc.,
7.50%, 11/01/14 (d)		560		567,000
Dole Foods Co., Inc.,
8.875%, 03/15/11		275		299,062
				1,564,562
Forest & Paper Products—5.0%
Bowater Canada Finance,
7.95%, 11/15/11		1,050		1,131,452
Caraustar Industries, Inc.,
9.875%, 04/01/11 (c)		100		108,500
Georgia-Pacific Corp.:
8.875%, 02/01/10		275		320,031
9.50%, 12/01/11 (c)		500		616,250
Kappa Beheer BV,
10.625%, 07/15/09		1,235		1,309,100
Smurfit Capital Funding PLC,
7.50%, 11/20/25		1,760		1,751,200
				5,236,533
Gaming—5.7%
Majestic Star Casino LLC,
9.50%, 10/15/10 (c)		500		530,000
Mandalay Resort Group:
9.375%, 02/15/10 (c)		1,035		1,205,775
10.25%, 08/01/07 (c)		655		740,150
Sun International Hotels, Ltd.,
8.875%, 08/15/11		990		1,081,575
Venetian Casino Resort LLC,
11.00%, 06/15/10		1,275		1,455,094
Wheeling Island Gaming, Inc.,
10.125%, 12/15/09		405		431,325
Wynn Las Vegas LLC,
6.625%, 12/01/14 (d)		500		495,000
				5,938,919
Health Services—2.8%
Fresenius Medical Capital Trust,
7.875%, 02/01/08 (c)		1,120		1,209,600
Service Corp. International,
6.875%, 10/01/07		1,635		1,702,444
				2,912,044
Hotels—4.2%
Host Marriott L.P.,
9.25%, 10/01/07 (c)		1,285		1,432,775
ITT Corp.,
7.375%, 11/15/15 (c)		750		834,375

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

41

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)			Value
Lazard High Yield Portfolio (continued)
John Q. Hammons Hotels,
8.875%, 05/15/12 (c)	$	585	$	661,050
La Quinta Properties, Inc.,
8.875%, 03/15/11		775		864,125
MeriStar Hospitality Corp.:
9.00%, 01/15/08		295		310,856
9.125%, 01/15/11 (c)		270		291,600
				4,394,781
Insurance—2.9%
Crum & Forster Holdings Corp.,
10.375%, 06/15/13		1,100		1,226,500
Leucadia National Corp.,
7.00%, 08/15/13		950		978,500
Presidential Life Corp.,
7.875%, 02/15/09		865		865,000
				3,070,000
Leisure & Entertainment—0.7%
Intrawest Corp.,
7.50%, 10/15/13 (d)		300		319,125
Royal Caribbean Cruises, Ltd.,
8.00%, 05/15/10 (c)		400		452,000
				771,125
Manufacturing—0.7%
Goodman Global Holdings, Inc.,
7.875%, 12/15/12 (d)		775		767,250
Media-Diversified—2.0%
CanWest Media, Inc.,
8.00%, 09/15/12 (d)		1,910		2,049,196
Medical Products & Services—2.1%
Elan Finance PLC,
7.75%, 11/15/11 (d)		175		186,375
Medquest, Inc.,
11.875%, 08/15/12 (c)		635		746,125
NDCHealth Corp.,
10.50%, 12/01/12		760		817,000
Tenet Healthcare Corp.,
7.375%, 02/01/13 (c)		500		485,000
				2,234,500
Metals & Mining—2.6%
Arch Western Resources LLC:
6.75%, 07/01/13 (c), (l)		675		696,937
6.75%, 07/01/13 (d)		325		335,563
Century Aluminum Co.,
7.50%, 08/15/14 (d)		225		239,625
Peabody Energy Corp.,
6.875%, 03/15/13 (c)		500		541,250
Wolverine Tube, Inc.,
7.375%, 08/01/08 (d)		890		881,100
				2,694,475
Printing & Publishing—2.3%
Dex Media East LLC,
12.125%, 11/15/12 (j)		195		237,656
Phoenix Color Corp.,
10.375%, 02/01/09		515		448,694
RH Donnelley Finance Corp.,
10.875%, 12/15/12		440		522,500
The Sheridan Group, Inc.,
10.25%, 08/15/11		300		328,125
Vertis, Inc.,
10.875%, 06/15/09 (c)		765		830,025
				2,367,000
Real Estate—3.3%
AMR Real Estate Partners,
8.125%, 06/01/12		350		373,187
CB Richard Ellis Services, Inc.,
9.75%, 05/15/10		227		258,780
Forest City Enterprises, Inc.,
7.625%, 06/01/15		475		503,500
LNR Property Corp.,
7.25%, 10/15/13		1,350		1,520,437
Senior Housing Properties Trust,
7.875%, 04/15/15		275		303,188
Tanger Properties L.P.,
9.125%, 02/15/08		400		440,000
				3,399,092
Restaurants—0.3%
Landry’s Restaurants, Inc.,
7.50%, 12/15/14 (d)		275		272,938
Retail—4.0%
Rite Aid Corp.,
11.25%, 07/01/08		1,010		1,095,850
Saks, Inc.,
9.875%, 10/01/11		1,250		1,481,250
ShopKo Stores, Inc.,
9.25%, 03/15/22		910		942,987
The Jean Coutu Group (PJC), Inc.,
8.50%, 08/01/14 (c), (d)		625		640,625
				4,160,712
Shipping—1.1%
CP Ships, Ltd.,
10.375%, 07/15/12		990		1,142,213

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

42

The Lazard Funds, Inc.
Portfolios of Investments (continued)
December 31, 2004

	Principal
	Amount
Description	(000)		Value
Lazard High Yield Portfolio (continued)
Steel—1.5%
International Steel Group, Inc.,
6.50%, 04/15/14	$	725	$	777,563
United States Steel Corp.,
9.75%, 05/15/10		294		335,160
United States Steel LLC,
10.75%, 08/01/08		364		428,610
				1,541,333
Support Services—0.5%
Coinmach Corp.,
9.00%, 02/01/10		461		481,745
Telecommunications—5.8%
Alamosa Delaware, Inc.,
0.00%, 07/31/09 (i)		380		412,300
American Cellular Corp.,
10.00%, 08/01/11		625		535,938
FairPoint Communications, Inc.,
11.875%, 03/01/10		975		1,140,750
MCI, Inc.,
7.688%, 05/01/09 (l)		500		517,500
Nextel Communications, Inc.,
6.875%, 10/31/13		560		607,600
PanAmSat Corp.,
9.00%, 08/15/14 (d)		725		809,281
Qwest Services Corp.,
14.00%, 12/15/10 (d), (l)		710		853,775
Rogers Wireless, Inc.,
9.625%, 05/01/11 (c)		1,000		1,172,500
				6,049,644
Tobacco—0.8%
DIMON, Inc.,
7.75%, 06/01/13		810		850,500
Transportation—2.8%
Kansas City Southern Railway Co.,
7.50%, 06/15/09		610		640,500
Laidlaw International, Inc.,
10.75%, 06/15/11		1,075		1,255,062
Stena AB,
7.50%, 11/01/13		925		968,938
				2,864,500
Utilities—4.6%
AES Corp.,
9.375%, 09/15/10		125		145,313
Alliant Energy Resources, Inc.,
9.75%, 01/15/13		500		649,125
Calpine Corp.,
7.875%, 04/01/08 (c)		770		627,550
Mission Energy Holding Co.,
13.50%, 07/15/08 (c)		500		623,750
MSW Energy Holdings LLC:
7.375%, 09/01/10		425		446,250
8.50%, 09/01/10		695		761,025
Reliant Energy, Inc.,
6.75%, 12/15/14 (c)		525		521,719
Reliant Energy Resources Corp.,
8.125%, 07/15/05		750		769,754
Texas Genco LLC,
6.875%, 12/15/14 (d)		250		258,437
				4,802,923
Total Corporate Bonds
(Identified cost $90,273,122)				95,275,024
Structured Note—0.1%
Mauritius—0.1%
Standard Bank Johannesburg
Credit Link Deposit,
7.50%, 01/07/05
(Identified cost $96,472) (m)		2,500		88,627
		Shares
Preferred Stocks—1.9%
Broadcasting—0.9%
Paxson Communications Corp.
14.25%, 11/15/06 (c)		125		918,750
Telecommunications—1.0%
Alamosa Holdings, Inc.
7.20%, 07/31/13 (c)		1,172		1,084,100
Total Preferred Stocks
(Identified cost $1,195,666)				2,002,850
Warrants—0.0%
Cable Television—0.0%
Ono Finance PLC:
05/31/09 (a), (d), (g)		500		5
03/16/11 (a), (d), (g)		470		4
				9
Retail—0.0%
Travelcenters of America, Inc.:
05/01/09 (a), (d), (g)		810		8
05/01/09 (a), (g)		965		10
				18
Total Warrants
(Identified cost $74,226)				27

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

43

The Lazard Funds, Inc.
Portfolios of Investments (concluded)
December 31, 2004

	Principal
	Amount
Description	(000)				Value
Lazard High Yield Portfolio (concluded)
Short-Term Investments—29.2%
Repurchase Agreement—4.4%
State Street Bank and Trust Co.,
1.40%, 01/03/05
(Dated 12/31/04, collateralized by
$4,615,000 United States Treasury
Note, 2.50%, 09/30/06, with a
value of $4,603,056)
Proceeds of $4,509,526	$	4,509		$	4,509,000
Collateral for Securities
on Loan—24.8%
State Street Navigator Securities
Lending Prime Portfolio,
2.19% (e), (f)	$	25,813		$	25,813,165
Total Short-Term Investments
(Identified cost $30,322,165)					30,322,165
Total Investments
(Identified cost $121,961,651) (b)		122.8	%	$	127,688,693
Liabilities in Excess of Cash and
Other Assets		(22.8	)		(23,707,150	)
Net Assets		100.0	%	$	103,981,543

Forward Currency Contracts open at December 31, 2004:
			U.S. $ Cost		U.S. $
Foreign Currency	Expiration	Foreign	on Origination		Current		Unrealized
Purchase Contracts	Date	Currency	Date		Value		Appreciation
Russian Ruble	01/20/05	2,724,900	$	93,000	$	98,324	$	5,324
Russian Ruble	01/20/05	3,824,640		128,000		138,006		10,006
Total Forward Currency Contracts open at December 31, 2004			$	221,000	$	236,330	$	15,330

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

44

The Lazard Funds, Inc.
Notes to Portfolios of Investments
December 31, 2004

(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 (depreciation) is as follows:

			Aggregate		Aggregate		Net
			Gross		Gross		Unrealized
	Aggregate		Unrealized		Unrealized		Appreciation
Portfolio	Cost		Appreciation		Depreciation		(Depreciation)
Equity	$	146,349,695	$	20,669,676	$	1,186,458	$	19,483,218
U.S. Strategic Equity		495,000		—		—		—
Mid Cap		79,719,564		14,642,001		613,889		14,028,112
Small Cap		472,787,691		80,651,110		6,833,463		73,817,647
International Equity		1,714,794,451		279,085,889		12,935,663		266,150,226
International Equity Select		13,322,738		3,938,173		85,798		3,852,375
International Small Cap		575,667,315		246,488,456		3,446,205		243,042,251
Emerging Markets		592,152,480		260,522,594		9,056,074		251,466,520
Bond		46,682,392		164,012		165,522		(1,510	)
High Yield		122,277,172		8,806,040		3,394,519		5,411,521

(c)	Security or portion thereof is out on loan.
(d)	Pursuant to Rule 144A under the Securities Act of 1933, these securities may only be traded among “qualified institutional buyers.”
(e)	Rate shown reflects 7 day yield as of December 31, 2004.
(f)	Represents security purchased with cash collateral received for securities on loan.
(g)	Date shown is the expiration date.
(h)	Issue in default.
(i)	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, 2004, which may step up at a future date.
(j)	Segregated security for when-issued purchases and/or forward currency contracts.
(k)	Bankrupt issuer; security valued at zero.
(l)	Variable rate security. Interest rate shown is the rate in effect at December 31, 2004.
(m)	Principal amount denominated in respective country’s currency.

Security Abbreviations:
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
REIT — Real Estate Investment Trust
TBA — To Be Announced

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

45

The Lazard Funds, Inc.
Notes to Portfolios of Investments (concluded)
December 31, 2004
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	—	%	—	%	—	%	0.9	%
Apparel & Textiles	—		—		6.1		3.0
Automotive	4.4		—		4.5		2.0
Banking	16.4		21.7		6.4		9.9
Brewery	0.9		2.9		—		2.9
Broadcasting	—		—		—		1.1
Building & Construction	1.1		—		7.4		2.1
Business Services & Supplies	—		—		5.9		—
Chemicals	1.6		—		—		2.4
Computer Services	—		—		3.6		—
Computers & Business Equipment	1.3		—		—		4.9
Cosmetics & Toiletries	—		2.8		—		—
Diversified	6.0		5.8		4.4		—
Drugs & Health Care	8.6		13.5		1.4		1.8
Education	—		—		0.5		—
Electrical Equipment	0.5		—		—		—
Electronics	3.4		2.8		2.7		6.4
Financial Services	4.7		8.0		8.4		3.2
Food & Beverages	4.7		9.4		1.6		2.0
Forest & Paper Products	1.3		—		—		2.1
Household Products & Home Furnishings	—		—		3.5		3.5
Industrial & Machinery	—		—		1.1		—
Insurance	3.5		4.1		2.6		3.8
Leisure & Entertainment	—		—		4.0		—
Manufacturing	—		—		1.0		—
Medical Products & Services	—		—		1.5		—
Metals & Mining	1.0		—		—		10.1
Multimedia	1.6		—		—		—
Oil & Gas	11.2		11.8		2.8		5.7
Printing & Publishing	0.6		—		5.0		—
Real Estate	1.4		—		4.8		—
Restaurants	—		—		0.7		—
Retail	4.1		4.4		11.3		0.7
Security Services	—		—		2.1		—
Semiconductors & Components	2.4		—		—		2.1
Shipbuilding	—		—		—		1.1
Steel	—		—		—		2.2
Telecommunications	10.0		4.2		2.5		15.7
Telecommunications Equipment	—		4.1		—		—
Tobacco	1.4		—		1.9		3.3
Transportation	0.9		—		—		1.6
Utilities	5.5		2.0		—		1.1
Subtotal	98.5		97.5		97.7		95.6
Repurchase Agreements	1.5		2.4		1.9		2.2
Collateral for Securities on Loan	23.9		—		13.5		7.4
Total Investments	123.9	%	99.9	%	113.1	%	105.2	%
The accompanying notes are an integral part of these financial statements.

46

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47

The Lazard Funds, Inc.
Statements of Assets and Liabilities
December 31, 2004

				Lazard
	Lazard			U.S. Strategic		Lazard
	Equity			Equity		Mid Cap
	Portfolio			Portfolio		Portfolio
ASSETS
Investments in securities, at value	$	161,672,913		$	—	$	91,162,676
Repurchase Agreements, at value		4,160,000			495,000		2,585,000
Cash		5,022			24		4,852
Foreign currency		—			—		—
Receivables for:
Investments sold		—			—		266,965
Dividends and interest		162,364			19		56,985
Capital stock sold		1,446,796			—		739,857
Amount due from Investment Manager		—			8,810		—
Gross appreciation on forward currency contracts		—			—		—
Deferred offering expenses		—			29,226		—
Total assets		167,447,095			533,079		94,816,335
LIABILITIES
Payables for:
Amount due to Custodian		—			—		—
Management fees		86,239			—		49,306
Accrued distribution fees		4,417			1		6,214
Accrued directors' fees		561			—		339
Amounts due upon return of securities on loan		28,958,667			—		7,209,879
Investments purchased		130,700			—		683,707
Capital stock repurchased		1,123,275			—		520
Dividends		—			—		—
Other accrued expenses and payables		29,666			33,053		23,356
Total liabilities		30,333,525			33,054		7,973,321
Net assets	$	137,113,570		$	500,025	$	86,843,014
NET ASSETS
Paid in capital	$	137,278,832			500,000	$	70,748,580
Undistributed (distributions in excess of)
net investment income		85,376			25		59,895
Accumulated undistributed net realized gain (loss)		(20,889,544	)		—		1,676,195
Net unrealized appreciation (depreciation) on:
Investments		20,638,906			—		14,358,344
Foreign currency		—			—		—
Net assets	$	137,113,570		$	500,025	$	86,843,014
Institutional Shares
Net assets	$	116,020,851		$	400,021	$	56,430,759
Shares of capital stock outstanding*		7,233,860			40,000		4,275,005
Net asset value, offering and redemption price per share	$	16.04		$	10.00	$	13.20
Open Shares
Net assets	$	21,092,719		$	100,004	$	30,412,255
Shares of capital stock outstanding*		1,314,098			10,000		2,328,775
Net asset value, offering and redemption price per share	$	16.05		$	10.00	$	13.06
Cost of investments in securities and repurchase agreements	$	145,194,007		$	495,000	$	79,389,332
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.

48

		Lazard			Lazard			Lazard		Lazard
Lazard		International			International			International		Emerging		Lazard			Lazard
Small Cap		Equity			Equity Select			Small Cap		Markets		Bond			High Yield
Portfolio		Portfolio			Portfolio			Portfolio		Portfolio		Portfolio			Portfolio
$	524,706,338	$	1,956,977,677		$	16,766,113		$	805,071,566	$	825,804,000	$	45,413,882		$	123,179,693
	21,899,000		23,967,000			409,000			13,638,000		17,815,000		1,267,000			4,509,000
	1,207		—			5,395			—		—		5,655			—
	—		—			—			—		254,857		—			—
	2,998,054		—			—			236,844		6,485,317		—			—
	233,596		2,510,832			24,902			2,896,721		1,426,091		352,005			2,003,271
	147,899		836,736			11,409			903,472		11,790,650		895,830			227,452
	—		—			1,135			—		—		—			—
	—		—			—			—		—		—			15,330
	—		—			—			—		—		—			—
	549,986,094		1,984,292,245			17,217,954			822,746,603		863,575,915		47,934,372			129,934,746
	—		11,367			—			763		818		—			50
	276,730		1,013,053			—			444,044		633,222		16,354			23,903
	10,499		18,600			1,416			9,597		6,097		—			1,620
	2,111		6,656			70			2,934		3,150		162			403
	107,840,956		382,086,253			—			97,693,958		59,243,223		6,355,338			25,813,165
	512,267		—			—			819,244		41,323		2,320,473			—
	75,003		1,721,667			—			1,872		1,269,216		10,000			11,195
	—		—			—			—		—		3,211			85,573
	66,817		231,225			17,082			123,261		244,575		17,897			17,294
	108,784,383		385,088,821			18,568			99,095,673		61,441,624		8,723,435			25,953,203
$	441,201,711	$	1,599,203,424		$	17,199,386		$	723,650,930	$	802,134,291	$	39,210,937		$	103,981,543
$	346,724,324	$	1,829,282,383		$	13,958,155		$	431,372,967	$	537,769,245	$	44,017,055		$	156,545,629
	198,431		23,302,461			1,252			1,686,085		23,548		(3,211	)		(233,179	)
	19,156,119		(532,139,860	)		(667,276	)		47,234,055		7,798,508		(4,802,297	)		(58,073,279	)
	75,122,837		278,695,632			3,907,255			243,274,951		256,490,159		(610	)		5,727,042
	—		62,808			—			82,872		52,831		—			15,330
$	441,201,711	$	1,599,203,424		$	17,199,386		$	723,650,930	$	802,134,291	$	39,210,937		$	103,981,543
$	390,906,358	$	1,509,461,885		$	10,454,976		$	674,065,728	$	771,597,995	$	39,210,937		$	96,758,899
	20,752,662		116,921,520			929,081			35,037,543		55,176,272		4,024,310			17,697,485
$	18.84	$	12.91		$	11.25		$	19.24	$	13.98	$	9.74		$	5.47
$	50,295,353	$	89,741,539		$	6,744,410		$	49,585,202	$	30,536,296		N/A		$	7,222,644
	2,678,808		6,934,136			598,095			2,580,283		2,171,237		N/A			1,317,990
$	18.78	$	12.94		$	11.28		$	19.22	$	14.06		N/A		$	5.48
$	471,482,501	$	1,702,249,045		$	13,267,858		$	575,434,615	$	587,128,841	$	46,681,492		$	121,961,651
$	—	$	—		$	—		$	—	$	248,183	$	—		$	—
The accompanying notes are an integral part of these financial statements.

49

The Lazard Funds, Inc.
Statements of Operations
For the period ended December 31, 2004 

				Lazard
	Lazard			U.S. Strategic			Lazard
	Equity			Equity			Mid Cap
	Portfolio			Portfolio***			Portfolio
INVESTMENT INCOME
Income:
Dividends		$	2,534,084	$	—		$	803,563
Interest			54,005		43			32,294
Income from securities loaned			3,086		—			13,745
Total investment income*			2,591,175		43			849,602
Expenses:
Management fees			976,108		11			508,038
Administration fees			71,233		61			58,714
Distribution fees (Open Shares)			49,281		1			54,192
Custodian fees			80,968		—			77,829
Shareholders’ services			61,543		3,667			55,387
Professional services			46,682		5,000			43,595
Directors’ fees and expenses			9,819		—			5,152
Registration fees			24,555		—			24,996
Shareholders’ reports			10,561		50			4,183
Merger			—		—			—
Other			7,388		50			4,308
Total gross expenses			1,338,138		8,840			836,394
Management fees waived and expenses reimbursed			—		(8,822	)		(59,910	)
Expense reductions			—		—			(1,202	)
Total net expenses			1,338,138		18			775,282
Net Investment Income			1,253,037		25			74,320
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments**			10,945,033		—			9,121,513
Foreign currency			—		—			—
Net change in unrealized appreciation (depreciation) on:
Investments			3,139,694		—			6,244,476
Foreign currency			—		—			—
Net realized and unrealized gain (loss) on investments
and foreign currency			14,084,727		—			15,365,989
Net increase in net assets resulting from operations		$	15,337,764	$	25		$	15,440,309
*Net of foreign withholding taxes of		$	5,979	$	—		$	—
**Net of foreign capital gains taxes of		$	—	$	—		$	—
***Portfolio commenced operations on December 30, 2004.

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

50

			Lazard			Lazard			Lazard			Lazard
Lazard			International			International			International			Emerging			Lazard			Lazard
Small Cap			Equity			Equity Select			Small Cap			Markets			Bond			High Yield
Portfolio			Portfolio			Portfolio			Portfolio			Portfolio			Portfolio			Portfolio
$	4,338,815		$	43,026,575		$	423,869		$	17,762,512		$	17,860,906		$	—		$	190,274
	141,125			384,196			7,022			165,050			245,085			1,609,945			8,461,207
	167,540			884,265			—			758,410			118,312			1,548			7,678
	4,647,480			44,295,036			430,891			18,685,972			18,224,303			1,611,493			8,659,159
	3,748,542			13,758,692			138,775			5,276,124			6,701,038			220,551			550,455
	145,392			329,635			48,399			186,258			179,535			53,977			65,193
	124,902			231,951			16,639			56,540			55,787			8,851			10,192
	172,696			2,024,434			45,804			945,674			1,637,814			47,739			85,266
	80,000			90,096			50,078			68,778			76,823			40,213			51,257
	65,395			129,746			40,948			75,662			74,090			46,985			45,284
	38,026			137,448			1,230			53,261			50,893			4,102			9,264
	28,536			30,888			23,520			29,744			30,591			17,628			27,145
	22,334			34,461			2,422			11,987			124,429			2,304			2,405
	—			—			—			—			—			—			67,202
	31,129			93,797			1,950			33,576			31,276			3,417			7,664
	4,456,952			16,861,148			369,765			6,737,604			8,962,276			445,767			921,327
	—			—			(162,004	)		—			(23,400	)		(13,219	)		(357,923	)
	—			—			—			—			—			—			—
	4,456,952			16,861,148			207,761			6,737,604			8,938,876			432,548			563,404
	190,528			27,433,888			223,130			11,948,368			9,285,427			1,178,945			8,095,755
	99,688,308			320,612,764			770,295			115,415,506			93,770,742			(108,311	)		5,592,742
	—			(3,239,048	)		—			(1,174,091	)		(776,769	)		—			(34,713	)
	(31,648,021	)		(109,552,982	)		1,423,483			68,827,181			85,083,144			(203,076	)		(4,274,866	)
	—			(159,558	)		—			41,716			69,571			—			15,330
	68,040,287			207,661,176			2,193,778			183,110,312			178,146,688			(311,387	)		1,298,493
$	68,230,815		$	235,095,064		$	2,416,908		$	195,058,680		$	187,432,115		$	867,558		$	9,394,248
$	7,557		$	5,482,657		$	55,640		$	1,821,666		$	1,997,178		$	—		$	—
$	—		$	—		$	—		$	—		$	1,623,470		$	—		$	—

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

51

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

		Lazard Equity Portfolio
	Year Ended			Year Ended
	December 31,			December 31,
	2004			2003
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income	$	1,253,037		$	1,177,162
Net realized gain on investments and foreign currency		10,945,033			549,013
Net change in unrealized appreciation (depreciation) on investments and foreign currency		3,139,694			26,997,003
Net increase in net assets resulting from operations		15,337,764			28,723,178
Distributions to shareholders:
From net investment income
Institutional Shares		(1,125,752	)		(989,652	)
Open Shares		(117,587	)		(129,438	)
From net realized gains
Institutional Shares		—			—
Open Shares		—			—
Net decrease in net assets resulting from distributions		(1,243,339	)		(1,119,090	)
Capital stock transactions:
Net proceeds from sales
Institutional Shares		15,718,219			12,657,235
Open Shares		3,819,237			4,894,166
Net proceeds from reinvestment of distributions
Institutional Shares		1,083,342			948,562
Open Shares		112,604			129,036
Cost of shares redeemed
Institutional Shares		(25,269,034	)		(25,496,713	)
Open Shares		(6,560,161	)		(9,805,863	)
Net increase (decrease) in net assets from capital stock transactions		(11,095,793	)		(16,673,577	)
Redemption fees:
Institutional Shares		1,092			822
Open Shares		—			4
Net increase in net assets from redemption fees		1,092			826
Total increase (decrease) in net assets		2,999,724			10,931,337
Net assets at beginning of period		134,113,846			123,182,509
Net assets at end of period*	$	137,113,570		$	134,113,846
*Includes undistributed net investment income	$	85,376		$	75,678
**Portfolio commenced operations on December 30, 2004.
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of period		7,816,187			8,788,212
Shares sold		1,040,408			1,003,420
Shares issued to shareholders from reinvestment of distributions		68,554			68,027
Shares repurchased		(1,691,289	)		(2,043,472	)
Net increase (decrease)		(582,327	)		(972,025	)
Shares outstanding at end of period		7,233,860			7,816,187
Open Shares:
Shares outstanding at beginning of period		1,495,813			1,837,937
Shares sold		257,757			397,725
Shares issued to shareholders from reinvestment of distributions		7,069			9,236
Shares repurchased		(446,541	)		(749,085	)
Net increase (decrease)		(181,715	)		(342,124	)
Shares outstanding at end of period		1,314,098			1,495,813
The accompanying notes are an integral part of these financial statements.

52

	Lazard U.S. Strategic Equity Portfolio**		Lazard Mid Cap Portfolio						Lazard Small Cap Portfolio
Period Ended		Year Ended			Year Ended			Year Ended			Year Ended
December 31,		December 31,			December 31,			December 31,			December 31,
2004		2004			2003			2004			2003
$	25	$	74,320		$	144,333		$	190,528		$	1,768,116
	—		9,121,513			1,534,351			99,688,308			21,657,252
	—		6,244,476			9,138,885			(31,648,021	)		128,413,247
	25		15,440,309			10,817,569			68,230,815			151,838,615
	—		(131,171	)		(84,537	)		(1,416,443	)		—
	—		—			(376	)		(11,546	)		—
	—		(4,208,667	)		—			(61,419,693	)		—
	—		(2,347,191	)		—			(7,971,213	)		—
	—		(6,687,029	)		(84,913	)		(70,818,895	)		—
	400,000		11,043,008			8,553,024			29,762,748			48,909,080
	100,000		18,922,327			6,289,197			15,360,928			23,252,966
	—		4,172,147			78,432			61,347,985			—
	—		2,091,099			322			7,684,046			—
	—		(4,824,546	)		(5,663,044	)		(164,807,014	)		(109,380,323	)
	—		(7,919,427	)		(2,269,647	)		(21,713,204	)		(30,453,415	)
	500,000		23,484,608			6,988,284			(72,364,511	)		(67,671,692	)
	—		31			—			76,341			5,257
	—		2,432			32			65			390
	—		2,463			32			76,406			5,647
	500,025		32,240,351			17,720,972			(74,876,185	)		84,172,570
	—		54,602,663			36,881,691			516,077,896			431,905,326
$	500,025	$	86,843,014		$	54,602,663		$	441,201,711		$	516,077,896
$	25	$	59,895		$	110,897		$	198,431		$	1,692,587
	—		3,448,140			3,221,004			23,900,755			27,721,008
	40,000		880,758			809,533			1,486,487			3,070,928
	—		320,551			7,527			3,287,204			—
	—		(374,444	)		(589,924	)		(7,921,784	)		(6,891,181	)
	40,000		826,865			227,136			(3,148,093	)		(3,820,253	)
	40,000		4,275,005			3,448,140			20,752,662			23,900,755
	—		1,316,266			919,414			2,582,160			3,071,851
	10,000		1,518,052			630,672			768,189			1,450,205
	—		161,975			31			413,116			—
	—		(667,518	)		(233,851	)		(1,084,657	)		(1,939,896	)
	10,000		1,012,509			396,852			96,648			(489,691	)
	10,000		2,328,775			1,316,266			2,678,808			2,582,160
The accompanying notes are an integral part of these financial statements.

53

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

		Lazard International Equity Portfolio
		Year Ended			Year Ended
		December 31,			December 31,
		2004			2003
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income	$	27,433,888		$	37,392,472
Net realized gain (loss) on investments and foreign currency		317,373,716			4,960,370
Net change in unrealized appreciation (depreciation) on investments and foreign currency .		(109,712,540	)		494,091,673
Net increase in net assets resulting from operations		235,095,064			536,444,515
Distributions to shareholders:
From net investment income
Institutional Shares		(30,925,843	)		(31,748,451	)
Open Shares		(1,250,602	)		(928,648	)
From net realized gains
Institutional Shares		—			—
Open Shares		—			—
Net decrease in net assets resulting from distributions		(32,176,445	)		(32,677,099	)
Capital stock transactions:
Net proceeds from sales
Institutional Shares		163,097,180			392,045,174
Open Shares		47,862,849			127,564,373
Net proceeds from reinvestment of distributions
Institutional Shares		29,288,344			29,499,102
Open Shares		942,475			777,054
Cost of shares redeemed
Institutional Shares		(978,488,975	)		(574,120,616	)
Open Shares		(75,387,025	)		(135,531,742	)
Net increase (decrease) in net assets from capital stock transactions		(812,685,152	)		(159,766,655	)
Redemption fees:
Institutional Shares		22,032			75,380
Open Shares		11,526			30,726
Net increase in net assets from redemption fees		33,558			106,106
Total increase (decrease) in net assets		(609,732,975	)		344,106,867
Net assets at beginning of year		2,208,936,399			1,864,829,532
Net assets at end of year*	$	1,599,203,424		$	2,208,936,399
* Includes undistributed (distributions in excess of) net investment income	$	23,302,461		$	22,484,947
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of year		184,959,683			199,225,457
Shares sold		13,895,939			42,147,358
Shares issued to shareholders from reinvestment of distributions		2,636,545			2,885,977
Shares repurchased		(84,570,647	)		(59,299,109	)
Net increase (decrease)		(68,038,163	)		(14,265,774	)
Shares outstanding at end of year		116,921,520			184,959,683
Open Shares:
Shares outstanding at beginning of year		9,263,983			9,909,067
Shares sold		4,092,404			13,752,398
Shares issued to shareholders from reinvestment of distributions		86,183			77,164
Shares repurchased		(6,508,434	)		(14,474,646	)
Net increase (decrease)		(2,329,847	)		(645,084	)
Shares outstanding at end of year		6,934,136			9,263,983
The accompanying notes are an integral part of these financial statements.

54

		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,
		2004		2003					2004			2003			2004			2003
	$	223,130			$	383,037		$	11,948,368		$	11,959,648		$	9,285,427		$	8,801,089
		770,295				(436,975	)		114,241,415			(11,799,802	)		92,993,973			18,970,148
		1,423,483				4,873,631			68,868,897			202,082,924			85,152,715			174,451,538
		2,416,908				4,819,693			195,058,680			202,242,770			187,432,115			202,222,775
		(146,675	)			(231,523	)		(8,644,321	)		(11,140,643	)		(7,426,243	)		(9,224,674	)
		(75,440	)			(152,039	)		(425,918	)		(246,953	)		(214,001	)		(208,388	)
		—				—			(30,108,832	)		—			—			—
		—				—			(2,138,562	)		—			—			—
		(222,115	)			(383,562	)		(41,317,633	)		(11,387,596	)		(7,640,244	)		(9,433,062	)
		1,013,621				987,204			154,015,280			110,856,192			245,879,251			141,395,646
		2,340,035				3,956,422			49,794,998			26,910,078			18,383,355			19,509,655
		143,335				226,521			37,482,611			10,568,551			6,440,090			8,895,258
		72,092				147,030			2,306,143			231,650			198,438			198,013
		(1,827,124	)			(15,574,869	)		(310,866,566	)		(193,276,830	)		(246,232,941	)		(91,229,060	)
		(3,804,607	)			(576,667	)		(27,245,940	)		(13,897,403	)		(12,628,238	)		(15,751,436	)
		(2,062,648	)			(10,834,359	)		(94,513,474	)		(58,607,762	)		12,039,955			63,018,076
		—				—			15,415			20,946			133,408			9,661
		310				—			43,395			14,378			6,063			29,110
		310				—			58,810			35,324			139,471			38,771
		132,455				(6,398,228	)		59,286,383			132,282,736			191,971,297			255,846,560
		17,066,931				23,465,159			664,364,547			532,081,811			610,162,994			354,316,434
	$	17,199,386			$	17,066,931		$	723,650,930		$	664,364,547		$	802,134,291		$	610,162,994
	$	1,252			$	512		$	1,686,085		$	(17,953	)	$	23,548		$	(165,127	)
		998,366				2,707,101			41,682,946			47,805,592			54,747,562			48,534,314
		100,256				112,825			8,940,178			9,579,808			21,061,554			17,358,940
		12,991				23,985			2,010,868			710,730			483,490			861,467
		(182,532	)			(1,845,545	)		(17,596,449	)		(16,413,184	)		(21,116,334	)		(12,007,159	)
		(69,285	)			(1,708,735	)		(6,645,403	)		(6,122,646	)		428,710			6,213,248
		929,081				998,366			35,037,543			41,682,946			55,176,272			54,747,562
		740,986				323,608			1,305,808			274,030			1,716,612			1,282,739
		231,464				468,666			2,797,292			2,109,505			1,559,953			2,311,880
		6,518				15,526			123,786			15,620			14,820			19,003
		(380,873	)			(66,814	)		(1,646,603	)		(1,093,347	)		(1,120,148	)		(1,897,010	)
		(142,891	)			417,378			1,274,475			1,031,778			454,625			433,873
		598,095				740,986			2,580,283			1,305,808			2,171,237			1,716,612
The accompanying notes are an integral part of these financial statements.

55

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

		Lazard Bond Portfolio
	Year Ended				Year Ended
	December 31,				December 31,
	2004			2003
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income	$	1,178,945			$	1,257,432
Net realized gain (loss) on investments and foreign currency		(108,311	)			495,298
Net change in unrealized appreciation (depreciation) on investments and foreign currency .		(203,076	)			(515,029	)
Net increase in net assets resulting from operations		867,558				1,237,701
Distributions to shareholders:
From net investment income
Institutional Shares		(1,084,733	)			(1,074,171	)
Open Shares		(92,674	)			(201,584	)
Net decrease in net assets resulting from distributions		(1,177,407	)			(1,275,755	)
Capital stock transactions:
Net proceeds from sales
Institutional Shares**		10,460,403				4,331,937
Open Shares		188,488				1,512,869
Net proceeds in connection with acquisition of Lazard Global High Yield Portfolio
Institutional Shares		—				—
Open Shares		—				—
Net proceeds from reinvestment of distributions
Institutional Shares		981,734				954,622
Open Shares		81,978				185,789
Cost of shares redeemed
Institutional Shares		(16,871,406	)			(9,223,328	)
Open Shares**		(8,158,292	)			(4,484,738	)
Net increase (decrease) in net assets from capital stock transactions		(13,317,095	)			(6,722,849	)
Redemption fees:
Institutional Shares		—				—
Open Shares		—				5,314
Net increase in net assets from redemption fees		—				5,314
Total increase (decrease) in net assets		(13,626,944	)			(6,755,589	)
Net assets at beginning of year		52,837,881				59,593,470
Net assets at end of year*	$	39,210,937			$	52,837,881
* Includes distributions in excess of net investment income	$	(3,211	)		$	(11,130	)
Shares issued and repurchased:
Institutional Shares:
Shares outstanding at beginning of year		4,558,550				4,954,685
Shares sold**		1,084,711				440,859
Shares issued in connection with acquisition of Lazard Global High Yield Portfolio		—				—
Shares issued to shareholders from reinvestment of distributions		100,483				96,885
Shares repurchased		(1,719,434	)			(933,879	)
Net increase (decrease)		(534,240	)			(396,135	)
Shares outstanding at end of year		4,024,310				4,558,550
Open Shares:
Shares outstanding at beginning of year		821,719				1,102,999
Shares sold		19,064				152,832
Shares issued in connection with acquisition of Lazard Global High Yield Portfolio		—				—
Shares issued to shareholders from reinvestment of distributions		8,347				18,854
Shares repurchased**		(849,130	)			(452,966	)
Net increase (decrease)		(821,719	)			(281,280	)
Shares outstanding at end of year		—				821,719

**Includes 761,996 shares and $7,314,403 from exchange of Open Shares to Institutional Shares on June 8, 2004 for Lazard Bond Portfolio.

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

56

Lazard High Yield Portfolio

Year Ended			Year Ended
December 31,			December 31,
2004			2003
$	8,095,755		$	9,584,613
	5,558,029		$	(604,131	)
	(4,259,536	)		14,854,034
	9,394,248			23,834,516
	(7,784,628	)		(9,518,725	)
	(311,395	)		(121,859	)
	(8,096,023	)		(9,640,584	)
	8,258,061			57,164,592
	4,887,892			2,377,899
	27,992,967			—
	2,762,845			—
	7,096,736			9,195,187
	290,478			101,571
	(75,518,300	)		(30,720,728	)
	(3,841,075	)		(656,016	)
	(28,070,396	)		37,462,505
	98			1,682
	—			3,378
	98			5,060
	(26,772,073	)		51,661,497
	130,753,616			79,092,119
$	103,981,543		$	130,753,616
$	(233,179	)	$	(193,001	)
	23,663,851			16,552,920
	1,558,608			11,132,257
	5,291,673			—
	1,321,591			1,786,025
	(14,138,238	)		(5,807,351	)
	(5,966,366	)		7,110,931
	17,697,485			23,663,851
	551,822			204,131
	899,933			454,709
	521,291			—
	53,730			19,657
	(708,786	)		(126,675	)
	766,168			347,691
	1,317,990			551,822

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

57

The Lazard Funds, Inc.
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
LAZARD EQUITY PORTFOLIO
	Year Ended
Institutional Shares	12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	14.40		$	11.59		$	14.10		$	16.72		$	21.08
Income (loss) from investment operations:
Net investment income (a)		0.15			0.13			0.11			0.13			0.17
Net realized and unrealized gain (loss)		1.65			2.81			(2.48	)		(1.07	)		(0.79	)
Total from investment operations		1.80			2.94			(2.37	)		(0.94	)		(0.62	)
Less distributions from:
Net investment income		(0.16	)		(0.13	)		(0.14	)		(0.13	)		(0.23	)
Net realized gains		—			—			—			(1.55	)		(3.51	)
Total distributions		(0.16	)		(0.13	)		(0.14	)		(1.68	)		(3.74	)
Redemption fees		—	(c)		—	(c)		—	(c)		—			—
Net asset value, end of year	$	16.04		$	14.40		$	11.59		$	14.10		$	16.72
Total Return (b)		12.49	%		25.37	%		(16.84	)%		(5.90	)%		(2.64	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	116,021		$	112,568		$	101,891		$	141,329		$	187,517
Ratios to average net assets:
Net expenses		0.98	%		0.98	%		0.97	%		0.90	%		0.86	%
Gross expenses		0.98	%		0.98	%		0.97	%		0.90	%		0.86	%
Net investment income		1.02	%		1.00	%		0.87	%		0.82	%		0.85	%
Portfolio turnover rate		57	%		46	%		74	%		89	%		36	%
	Year Ended
Open Shares	12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	14.40		$	11.58		$	14.07		$	16.70		$	21.05
Income (loss) from investment operations:
Net investment income (a)		0.10			0.08			0.07			0.09			0.12
Net realized and unrealized gain (loss)		1.64			2.82			(2.47	)		(1.08	)		(0.79	)
Total from investment operations		1.74			2.90			(2.40	)		(0.99	)		(0.67	)
Less distributions from:
Net investment income		(0.09	)		(0.08	)		(0.09	)		(0.09	)		(0.17	)
Net realized gains		—			—			—			(1.55	)		(3.51	)
Total distributions		(0.09	)		(0.08	)		(0.09	)		(1.64	)		(3.68	)
Redemption fees		—			—	(c)		—	(c)		—			—
Net asset value, end of year	$	16.05		$	14.40		$	11.58		$	14.07		$	16.70
Total Return (b)		12.09	%		25.06	%		(17.08	)%		(6.23	)%		(2.91	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	21,093		$	21,546		$	21,292		$	37,082		$	62,167
Ratios to average net assets:
Net expenses		1.32	%		1.31	%		1.28	%		1.18	%		1.13	%
Gross expenses		1.32	%		1.31	%		1.28	%		1.18	%		1.13	%
Net investment income		0.67	%		0.67	%		0.55	%		0.54	%		0.57	%
Portfolio turnover rate		57	%		46	%		74	%		89	%		36	%

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

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

58

The Lazard Funds, Inc.

Financial Highlights (continued)

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

LAZARD U.S. STRATEGIC EQUITY PORTFOLIO

	For the
	Period
	12/30/04* to
Institutional Shares	12/31/04
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income (a)		—	(b)
Net realized and unrealized gain		—
Total from investment operations		—
Net asset value, end of period	$	10.00
Total Return		0.00	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	400
Ratios to average net assets:
Net expenses (c)		1.25	%
Gross expenses (c)		546.34	%(d)
Net investment income (c)		1.92	%
Portfolio turnover rate		0	%
	For the
	Period
	12/30/04* to
Open Shares	12/31/04
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income (a)		—	(b)
Net realized and unrealized gain		—
Total from investment operations		—
Net asset value, end of period	$	10.00
Total Return		0.00	%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	100
Ratios to average net assets:
Net expenses (c)		1.55
Gross expenses (c)		1,049.82	%(d)
Net investment income (c)		1.62	%
Portfolio turnover rate		0	%

*	Commencement of operations.
(a)	Net investment income has been computed using the average shares method.
(b)	Amount is less than $0.01 per share.
(c)	Period of less than one year is not annualized.
(d)	Gross expenses ratio was the result of the Portfolio being in existence for two days during the period ended 12/31/04.

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

59

The Lazard Funds, Inc. 

Financial Highlights (continued) 

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

LAZARD MID CAP PORTFOLIO

	Year Ended
Institutional Shares	12/31/04			12/31/03				12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	11.49		$	8.93		$	10.64		$	11.36		$	10.78
Income (loss) from investment operations:
Net investment income (a)		0.03			0.04			0.04			0.07			0.02
Net realized and unrealized gain (loss)		2.83			2.55			(1.57	)		1.31			2.20
Total from investment operations		2.86			2.59			(1.53	)		1.38			2.22
Less distributions from:
Net investment income		(0.04	)		(0.03	)		—			(0.07	)		(0.03	)
Net realized gains		(1.11	)		—			(0.18	)		(2.03	)		(1.61	)
Total distributions		(1.15	)		(0.03	)		(0.18	)		(2.10	)		(1.64	)
Redemption fees		—	(c)		—			—	(c)		—			—
Net asset value, end of year	$	13.20		$	11.49		$	8.93		$	10.64		$	11.36
Total Return (b)		24.97	%		29.03	%		(14.47	)%		12.85	%		22.44	%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	56,431		$	39,625		$	28,754		$	21,729		$	15,344
Ratios to average net assets:
Net expenses		1.05	%		1.05	%		1.05	%		1.05	%		1.05	%
Gross expenses		1.13	%		1.31	%		1.40	%		1.71	%		1.50	%
Net investment income		0.21	%		0.42	%		0.40	%		0.65	%		0.20	%
Portfolio turnover rate		92	%		96	%		104	%		160	%		152	%
	Year Ended
Open Shares	12/31/04			12/31/03				12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	11.38		$	8.84		$	10.57		$	11.30		$	10.74
Income (loss) from investment operations:
Net investment income (loss) (a)		(0.01	)		0.01			0.01			0.04			(0.01	)
Net realized and unrealized gain (loss)		2.80			2.53			(1.56	)		1.30			2.18
Total from investment operations		2.79			2.54			(1.55	)		1.34			2.17
Less distributions from:
Net investment income		—			—	(c)		—			(0.04	)		—
Net realized gains		(1.11	)		—			(0.18	)		(2.03	)		(1.61	)
Total distributions		(1.11	)		—			(0.18	)		(2.07	)		(1.61	)
Redemption fees		—	(c)		—	(c)		—			—			—
Net asset value, end of year	$	13.06		$	11.38		$	8.84		$	10.57		$	11.30
Total Return (b)		24.59	%		28.74	%		(14.75	)%		12.50	%		22.00	%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	30,412		$	14,978		$	8,128		$	7,584		$	6,342
Ratios to average net assets:
Net expenses		1.35	%		1.35	%		1.35	%		1.35	%		1.35	%
Gross expenses		1.45	%		1.69	%		1.83	%		2.13	%		1.91	%
Net investment income (loss)		(0.09	)%		0.12	%		0.09	%		0.35	%		(0.09	)%
Portfolio turnover rate		92	%		96	%		104	%		160	%		152	%

(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reim- bursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
(c)	Amount is less than $0.01 per share.

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

60

The Lazard Funds, Inc. 

Financial Highlights (continued) 

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

LAZARD SMALL CAP PORTFOLIO

	Year Ended
Institutional Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	19.49		$	14.03		$	17.70		$	18.07		$	16.57
Income (loss) from investment operations:
Net investment income (a)		0.01			0.07			0.02			0.08			0.09
Net realized and unrealized gain (loss)		2.93			5.39			(3.18	)		3.06			2.45
Total from investment operations		2.94			5.46			(3.16	)		3.14			2.54
Less distributions from:
Net investment income		(0.07	)		—			—			(0.09	)		(0.23	)
Net realized gains		(3.52	)		—			(0.51	)		(3.42	)		(0.81	)
Total distributions		(3.59	)		—			(0.51	)		(3.51	)		(1.04	)
Redemption fees		—	(c)		—	(c)		—	(c)		—			—
Net asset value, end of year	$	18.84		$	19.49		$	14.03		$	17.70		$	18.07
Total Return (b)		15.28	%		38.92	%		(17.97	)%		18.06	%		15.89	%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	390,906		$	465,876		$	388,795		$	575,077		$	730,179
Ratios to average net assets:
Net expenses		0.86	%		0.86	%		0.85	%		0.83	%		0.83	%
Gross expenses		0.86	%		0.86	%		0.85	%		0.83	%		0.83	%
Net investment income		0.07	%		0.42	%		0.14	%		0.41	%		0.52	%
Portfolio turnover rate		100	%		77	%		93	%		80	%		67	%
	Year Ended
Open Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	19.44		$	14.03		$	17.67		$	18.04		$	16.51
Income (loss) from investment operations:
Net investment income (loss) (a)		(0.05	)		0.02			(0.03	)		0.02			0.04
Net realized and unrealized gain (loss)		2.91			5.39			(3.17	)		3.05			2.45
Total from investment operations		2.86			5.41			(3.20	)		3.07			2.49
Less distributions from:
Net investment income		—(c)			—			—			(0.02	)		(0.15	)
Net realized gains		(3.52	)		—			(0.51	)		(3.42	)		(0.81	)
Total distributions		(3.52	)		—			(0.51	)		(3.44	)		(0.96	)
Redemption fees		—	(c)		—	(c)		0.07			—			—
Net asset value, end of year	$	18.78		$	19.44		$	14.03		$	17.67		$	18.04
Total Return (b)		14.90	%		38.56	%		(17.82	)%		17.69	%		15.60	%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	50,295		$	50,202		$	43,110		$	69,531		$	67,717
Ratios to average net assets:
Net expenses		1.18	%		1.19	%		1.15	%		1.13	%		1.12	%
Gross expenses		1.18	%		1.19	%		1.15	%		1.13	%		1.12	%
Net investment income (loss)		(0.25	)%		0.11	%		(0.17	)%		0.12	%		0.24	%
Portfolio turnover rate		100	%		77	%		93	%		80	%		67	%

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

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

61

The Lazard Funds, Inc. 

Financial Highlights (continued) 

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

LAZARD INTERNATIONAL EQUITY PORTFOLIO

	Year Ended
Institutional Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	11.37		$	8.92		$	10.01		$	13.46		$	17.29
Income (loss) from investment operations:
Net investment income (a)		0.18			0.18			0.14			0.11			0.15
Net realized and unrealized gain (loss)		1.60			2.43			(1.18	)		(3.45	)		(2.01	)
Total from investment operations		1.78			2.61			(1.04	)		(3.34	)		(1.86	)
Less distributions from:
Net investment income		(0.24	)		(0.16	)		(0.05	)		—	(c)		(0.17	)
Net realized gains		—			—			—			(0.11	)		(1.80	)
Total distributions		(0.24	)		(0.16	)		(0.05	)		(0.11	)		(1.97	)
Redemption fees		—	(c)		—	(c)		—	(c)		—			—
Net asset value, end of year	$	12.91		$	11.37		$	8.92		$	10.01		$	13.46
Total Return (b)		16.01	%		29.51	%		(10.44	)%		(24.85	)%		(10.55	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	1,509,462		$	2,103,600		$	1,776,799		$	2,224,089		$	3,001,933
Ratios to average net assets:
Net expenses		0.90	%		0.90	%		0.90	%		0.90	%		0.88	%
Gross expenses		0.90	%		0.90	%		0.90	%		0.90	%		0.88	%
Net investment income		1.51	%		1.90	%		1.45	%		0.95	%		0.97	%
Portfolio turnover rate		58	%		44	%		58	%		69	%		51	%
	Year Ended
Open Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	11.37		$	8.88		$	9.95		$	13.41		$	17.28
Income (loss) from investment operations:
Net investment income (a)		0.14			0.15			0.11			0.08			0.10
Net realized and unrealized gain (loss)		1.61			2.44			(1.18	)		(3.43	)		(2.02	)
Total from investment operations		1.75			2.59			(1.07	)		(3.35	)		(1.92	)
Less distributions from:
Net investment income		(0.18	)		(0.10	)		(0.02	)		—			(0.15	)
Net realized gains		—			—			—			(0.11	)		(1.80	)
Total distributions		(0.18	)		(0.10	)		(0.02	)		(0.11	)		(1.95	)
Redemption fees		—	(c)		—	(c)		0.02			—			—
Net asset value, end of year	$	12.94		$	11.37		$	8.88		$	9.95		$	13.41
Total Return (b)		15.64	%		29.29	%		(10.57	)%		(25.02	)%		(10.95	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	89,742		$	105,336		$	88,031		$	116,466		$	147,226
Ratios to average net assets:
Net expenses		1.20	%		1.21	%		1.21	%		1.19	%		1.15	%
Gross expenses		1.20	%		1.21	%		1.21	%		1.19	%		1.15	%
Net investment income		1.18	%		1.61	%		1.14	%		0.70	%		0.66	%
Portfolio turnover rate		58	%		44	%		58	%		69	%		51	%

(a)	Net investment income has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any.
(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 year:

LAZARD INTERNATIONAL EQUITY SELECT PORTFOLIO

										For the
	Year Ended									Period
										5/31/01* to
Institutional Shares	12/31/04			12/31/03				12/31/02		12/31/01
Net asset value, beginning of period	$	9.80		$	7.74		$	9.15		$	10.00
Income (loss) from investment operations:
Net investment income (a)		0.14			0.18			0.12			0.01
Net realized and unrealized gain (loss)		1.47			2.12			(1.41	)		(0.85	)
Total from investment operations		1.61			2.30			(1.29	)		(0.84	)
Less distributions from:
Net investment income		(0.16	)		(0.24	)		(0.12	)		(0.01	)
Total distributions		(0.16	)		(0.24	)		(0.12	)		(0.01	)
Redemption fees		—			—			—(c)			—
Net asset value, end of period	$	11.25		$	9.80		$	7.74		$	9.15
Total Return (b)		16.45	%		29.80	%		(14.12	)%		(8.43	)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	10,455		$	9,788		$	20,957		$	8,580
Ratios to average net assets:
Net expenses (d)		1.15	%		1.15	%		1.15	%		1.15	%
Gross expenses (d)		2.13	%		1.85	%		1.63	%		13.75	%
Net investment income (d)		1.43	%		2.26	%		1.41	%		0.15	%
Portfolio turnover rate		16	%		29	%		32	%		1	%
										For the
	Year Ended									Period
										5/31/01* to
Institutional Shares	12/31/04			12/31/03			12/31/02			12/31/01
Net asset value, beginning of period	$	9.82		$	7.75		$	9.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss) (a)		0.13			0.09			0.08			(0.02	)
Net realized and unrealized gain (loss)		1.46			2.19			(1.40	)		(0.82	)
Total from investment operations		1.59			2.28			(1.32	)		(0.84	)
Less distributions from:
Net investment income		(0.13	)		(0.21	)		(0.09	)		—
Total distributions		(0.13	)		(0.21	)		(0.09	)		—
Redemption fees		—	(c)		—			—			—
Net asset value, end of period	$	11.28		$	9.82		$	7.75		$	9.16
Total Return (b)		16.17	%		29.49	%		(14.37	)%		(8.40	)%
Ratios and Supplemental Data:
Net assets, end of period (in thousands)	$	6,744		$	7,279		$	2,508		$	434
Ratios to average net assets:
Net expenses (d)		1.45	%		1.45	%		1.45	%		1.45	%
Gross expenses (d)		2.47	%		2.68	%		2.79	%		47.06	%
Net investment income (loss) (d)		1.28	%		1.09	%		0.93	%		(0.31	)%
Portfolio turnover rate		16	%		29	%		32	%		1	%

*	Commencement of operations.
(a)	Net investment income (loss) has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reim- bursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower. Period of less than one year is not annualized.
(c)	Amount is less than $0.01 per share.
(d)	Period of less than one year is not annualized.

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 year:

LAZARD INTERNATIONAL SMALL CAP PORTFOLIO 

	Year Ended
Institutional Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	15.46		$	11.07		$	11.58		$	12.57		$	14.12
Income (loss) from investment operations:
Net investment income (a)		0.29			0.27			0.17			0.18			0.16
Net realized and unrealized gain (loss)		4.66			4.39			(0.53	)		(1.03	)		(0.81	)
Total from investment operations		4.95			4.66			(0.36	)		(0.85	)		(0.65	)
Less distributions from:
Net investment income		(0.26	)		(0.27	)		(0.15	)		(0.14	)		(0.11	)
Net realized gains		(0.91	)		—			—			—			(0.79	)
Total distributions		(1.17	)		(0.27	)		(0.15	)		(0.14	)		(0.90	)
Redemption fees		—	(c)		—	(c)		—	(c)		—			—
Net asset value, end of year	$	19.24		$	15.46		$	11.07		$	11.58		$	12.57
Total Return (b)		32.28	%		42.21	%		(3.08	)%		(6.77	)%		(4.44	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	674,066		$	644,240		$	529,062		$	390,278		$	341,808
Ratios to average net assets:
Net expenses		0.94	%		0.95	%		0.96	%		0.95	%		0.98	%
Gross expenses		0.94	%		0.95	%		0.96	%		0.95	%		0.98	%
Net investment income		1.71	%		2.15	%		1.45	%		1.48	%		1.13	%
Portfolio turnover rate		39	%		18	%		25	%		17	%		43	%
	Year Ended
Open Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	15.41		$	11.02		$	11.53		$	12.53		$	14.06
Income (loss) from investment operations:
Net investment income (a)		0.23			0.21			0.13			0.11			0.10
Net realized and unrealized gain (loss)		4.64			4.36			(0.54	)		(1.03	)		(0.80	)
Total from investment operations		4.87			4.57			(0.41	)		(0.92	)		(0.70	)
Less distributions from:
Net investment income		(0.18	)		(0.20	)		(0.10	)		(0.08	)		(0.04	)
Net realized gains		(0.91	)		—			—			—			(0.79	)
Total distributions		(1.09	)		(0.20	)		(0.10	)		(0.08	)		(0.83	)
Redemption fees		0.03			0.02			—	(c)		—			—
Net asset value, end of year	$	19.22		$	15.41		$	11.02		$	11.53		$	12.53
Total Return (b)		32.04	%		41.71	%		(3.55	)%		(7.33	)%		(4.85	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	49,585		$	20,124		$	3,019		$	3,441		$	1,649
Ratios to average net assets:
Net expenses		1.36	%		1.43	%		1.43	%		1.43	%		1.43	%
Gross expenses		1.36	%		1.46	%		1.86	%		2.03	%		2.27	%
Net investment income		1.30	%		1.59	%		1.15	%		0.91	%		0.68	%
Portfolio turnover rate		39	%		18	%		25	%		17	%		43	%

(a)	Net investment income has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reim- bursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
(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 year:

LAZARD EMERGING MARKETS PORTFOLIO

	Year Ended
Institutional Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	10.80		$	7.11		$	7.22		$	7.52		$	10.70
Income (loss) from investment operations:
Net investment income (a)		0.16			0.17			0.10			0.07			0.06
Net realized and unrealized gain (loss)		3.16			3.69			(0.13	)		(0.31	)		(3.22	)
Total from investment operations		3.32			3.86			(0.03	)		(0.24	)		(3.16	)
Less distributions from:
Net investment income		(0.14	)		(0.17	)		(0.08	)		(0.06	)		(0.02	)
Total distributions		(0.14	)		(0.17	)		(0.08	)		(0.06	)		(0.02	)
Redemption fees		—	(c)		—	(c)		—	(c)		—			—
Net asset value, end of year	$	13.98		$	10.80		$	7.11		$	7.22		$	7.52
Total Return (b)		30.79	%		54.45	%		(0.37	)%		(3.16	)%		(29.53	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	771,598		$	591,514		$	345,176		$	308,608		$	317,691
Ratios to average net assets:
Net expenses		1.32	%		1.29	%		1.31	%		1.29	%		1.26	%
Gross expenses		1.32	%		1.29	%		1.31	%		1.29	%		1.27	%
Net investment income		1.40	%		2.06	%		1.30	%		0.91	%		0.62	%
Portfolio turnover rate		43	%		29	%		31	%		43	%		72	%
	Year Ended
Open Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	10.86		$	7.13		$	7.24		$	7.54		$	10.74
Income (loss) from investment operations:
Net investment income (a)		0.13			0.15			0.08			0.05			0.03
Net realized and unrealized gain (loss)		3.17			3.70			(0.13	)		(0.32	)		(3.23	)
Total from investment operations		3.30			3.85			(0.05	)		(0.27	)		(3.20	)
Less distributions from:
Net investment income		(0.10	)		(0.14	)		(0.06	)		(0.03	)		—
Total distributions		(0.10	)		(0.14	)		(0.06	)		(0.03	)		—
Redemption fees		—	(c)		0.02			—	(c)		—			—
Net asset value, end of year	$	14.06		$	10.86		$	7.13		$	7.24		$	7.54
Total Return (b)		30.43	%		54.29	%		(0.65	)%		(3.54	)%		(29.80	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	30,536		$	18,649		$	9,140		$	6,712		$	5,459
Ratios to average net assets:
Net expenses		1.60	%		1.60	%		1.60	%		1.60	%		1.60	%
Gross expenses		1.71	%		1.76	%		1.84	%		2.00	%		1.80	%
Net investment income		1.11	%		1.82	%		1.09	%		0.63	%		0.30	%
Portfolio turnover rate		43	%		29	%		31	%		43	%		72	%

(a)	Net investment income has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reim- bursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
(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 year:

LAZARD BOND PORTFOLIO

	Year Ended
Institutional Shares	12/31/04			12/31/03				12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	9.82		$	9.84		$	9.56		$	9.37		$	9.29
Income (loss) from investment operations:
Net investment income (a)		0.26			0.23			0.41			0.52			0.59
Net realized and unrealized gain (loss)		(0.08	)		(0.01	)		0.28			0.19			0.08
Total from investment operations		0.18			0.22			0.69			0.71			0.67
Less distributions from:
Net investment income		(0.26	)		(0.24	)		(0.41	)		(0.52	)		(0.59	)
Total distributions		(0.26	)		(0.24	)		(0.41	)		(0.52	)		(0.59	)
Redemption fees		—			—			—	(c)		—			—
Net asset value, end of year	$	9.74		$	9.82		$	9.84		$	9.56		$	9.37
Total Return (b)		1.87	%		2.21	%		7.44	%		7.68	%		7.53	%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	39,211		$	44,767		$	48,745		$	44,013		$	54,847
Ratios to average net assets:
Net expenses		0.97	%		0.92	%		0.98	%		0.91	%		0.82	%
Gross expenses		0.97	%		0.92	%		0.98	%		0.91	%		0.82	%
Net investment income		2.68	%		2.34	%		4.30	%		5.44	%		6.38	%
Portfolio turnover rate		218	%		583	%		391	%		238	%		355	%

(a)	For years ended 12/31/00 through 12/31/03, when the Portfolio held two classes of shares, net investment income had been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any.
(c)	Amount is less than $0.01 per share.

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

66

The Lazard Funds, Inc. 

Financial Highlights (concluded) 

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

LAZARD HIGH YIELD PORTFOLIO

	Year Ended
Institutional Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	5.40		$	4.72		$	5.95		$	6.57		$	8.77
Income (loss) from investment operations:
Net investment income (a)		0.44			0.43			0.58			0.76			0.96
Net realized and unrealized gain (loss)		0.07			0.69			(1.22	)		(0.62	)		(2.20	)
Total from investment operations		0.51			1.12			(0.64	)		0.14			(1.24	)
Less distributions from:
Net investment income		(0.44	)		(0.44	)		(0.59	)		(0.76	)		(0.96	)
Total distributions		(0.44	)		(0.44	)		(0.59	)		(0.76	)		(0.96	)
Redemption fees		—	(c)		—	(c)		—			—			—
Net asset value, end of year	$	5.47		$	5.40		$	4.72		$	5.95		$	6.57
Total Return (b)		9.88	%		24.58	%		(11.14	)%		2.03	%		(15.19	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	96,759		$	127,765		$	78,128		$	71,467		$	65,752
Ratios to average net assets:
Net expenses		0.55	%		0.75	%		0.75	%		0.75	%		0.75	%
Gross expenses		0.89	%		0.98	%		1.08	%		1.07	%		1.00	%
Net investment income		8.11	%		8.45	%		11.09	%		11.85	%		12.24	%
Portfolio turnover rate		49	%		68	%		229	%		234	%		148	%
	Year Ended
Open Shares		12/31/04			12/31/03			12/31/02			12/31/01			12/31/00
Net asset value, beginning of year	$	5.42		$	4.73		$	5.95		$	6.57		$	8.78
Income (loss) from investment operations:
Net investment income (a)		0.42			0.42			0.55			0.74			0.94
Net realized and unrealized gain (loss)		0.06			0.68			(1.19	)		(0.62	)		(2.21	)
Total from investment operations		0.48			1.10			(0.64	)		0.12			(1.27	)
Less distributions from:
Net investment income		(0.42	)		(0.42	)		(0.58	)		(0.74	)		(0.94	)
Total distributions		(0.42	)		(0.42	)		(0.58	)		(0.74	)		(0.94	)
Redemption fees		—			0.01			—	(c)		—			—
Net asset value, end of year	$	5.48		$	5.42		$	4.73		$	5.95		$	6.57
Total Return (b)		9.33	%		24.41	%		(11.27	)%		1.72	%		(15.54	)%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)	$	7,223		$	2,989		$	965		$	12,249		$	13,552
Ratios to average net assets:
Net expenses		0.85	%		1.05	%		1.05	%		1.05	%		1.05	%
Gross expenses		1.67	%		2.79	%		2.48	%		1.46	%		1.38	%
Net investment income		7.64	%		8.16	%		9.84	%		11.57	%		12.10	%
Portfolio turnover rate		49	%		68	%		229	%		234	%		148	%

(a)	Net investment income has been computed using the average shares method.
(b)	Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reim- bursed by the Portfolio’s Investment Manager or Administrator; without such waiver/reimbursement of expenses, the Portfolio’s returns would have been lower.
(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. 

Notes to Financial Statements

December 31, 2004

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 ten no-load portfolios (each referred to as a “Portfolio”), as follows: Lazard Equity Portfolio, Lazard U.S. Strategic Equity Portfolio (commenced operations on December 30, 2004), 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 and Lazard High Yield Portfolio. The Fund offers two different classes of shares of the Portfolios — Institutional Shares and Open Shares (except for Bond Portfolio, which currently offers only Institutional Shares). Bond Portfolio terminated the class of Open Shares on June 8, 2004 by issuing and exchanging Institutional Shares for its outstanding Open 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 equity 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, except as described below.

If events materially affecting the value of securities occur between the close of the exchange or market on which the security is principally traded and the time when a Portfolio’s net asset value is calculated, such securities will be valued at their fair values as determined by, or in accordance with procedures approved by, the Board of Directors. The fair value of foreign securities may be determined with the assistance of a pricing service, using correlations between the movement of prices of such securities and indices of domestic securities and other appropriate indicators, such as closing market prices of relevant ADRs or futures contracts. The effect of using fair value pricing is that the net asset value of a Portfolio will reflect the affected securities’ values as determined in the judgment of the Board of Directors or its designee instead of being determined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios’ net asset values.

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.

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.

Under these procedures, in the event that Lazard Asset Management LLC, the Fund’s investment manager (the “Investment Manager”) and a majority-owned subsidiary of Lazard Frères & Co. LLC (“Lazard”), determines that a significant event has occurred after the close of a market on which a foreign security is traded but before the close of regular trading on the NYSE, such that current market quotations for a security or securities are not readily available, a Valuation Committee of the Investment Manager will evaluate a variety of factors to determine the fair value of the affected securities. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager’s analysts will also be considered.

(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.

68

The Lazard Funds, Inc. 

Notes to Financial Statements (continued)

December 31, 2004

(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, 2004, the value of the securities on loan and corresponding collateral received were as follows:

	Securities
Portfolio	Loaned		Collateral
Equity(1)	$	28,281,163	$	28,958,667
Mid Cap(2)		7,047,517		7,216,711
Small Cap(3)		105,308,363		108,035,920
International Equity(4)		397,504,804		417,283,063
International Small Cap(1)		93,011,060		97,693,958
Emerging Markets(1)		57,788,139		59,243,223
Bond(1)		6,139,078		6,355,338
High Yield(1)		25,181,549		25,813,165

(1)	Collateral is cash.
(2)	Collateral is cash, except for $6,832 in U.S. Treasury obligations.
(3)	Collateral is cash, except for $194,964 in U.S. Treasury obligations.
(4)	Collateral is cash, except for $35,196,810 in U.S. Treasury obligations.

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

(e) Foreign Currency Translation and Forward 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 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 currency contract is an agreement between two parties to buy or sell currency at a set price on a future date. High Yield Portfolio may enter into forward 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 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) 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.

69

The Lazard Funds, Inc. 

Notes to Financial Statements (continued)

December 31, 2004

(g) Structured Investments—Structured investments’ values are linked either directly or inversely to changes in foreign currencies, interest rates, commodities, indices or other underlying instruments. These investments may be used to increase or decrease 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.

(h) 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 of its taxable income, including any realized net capital gains, to shareholders. Therefore, no federal income tax provision is required.

At December 31, 2004, 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 2007		Expiring 2008
Bond	$	2,033,868	$	2,509,149
High Yield		2,516,454		9,656,683
Portfolio		Expiring 2009		Expiring 2010
Equity	$	—	$	18,177,005
International Equity		52,002,971		401,228,521
International Equity Select		—		89,557
High Yield		20,597,061		22,612,829
Portfolio		Expiring 2011		Expiring 2012
Equity	$	1,556,848	$	—
International Equity		73,199,015		—
International Equity Select		522,838		—
Bond		—		219,556
High Yield		2,658,732		—

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, 2004, Bond Portfolio elected to defer net capital and currency losses of $38,825 arising between November 1, 2004 and December 31, 2004.

(i) Dividends and Distributions—The Fund intends to declare dividends from net investment income daily on shares of Bond Portfolio and High Yield Portfolio and to pay such dividends monthly. Dividends from net investment income, if any, on shares of Equity Portfolio, U.S. Strategic 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 U.S. 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. During the year ended December 31, 2004, International Equity Portfolio processed in-kind redemptions to shareholders which resulted in $47,900,242 of net capital gain, which is attributable to the redeeming shareholders, and not to the Portfolio, 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	2004		2003		2004		2003
Equity:
Institutional	$	1,125,752	$	989,652	$	—	$	—
Open	117,587			129,438		—		—
Mid Cap:
Institutional	1,465,138			84,537		2,874,700		—
Open	743,959			376		1,603,232		—
Small Cap:
Institutional	14,915,561			—		47,920,575		—
Open	1,763,498			—		6,219,261		—
International
Equity:
Institutional	30,925,843			31,748,451		—		—
Open	1,250,602			928,648		—		—
International
Equity Select:
Institutional	146,675			231,523		—		—
Open	75,440			152,039		—		—
International
Small Cap:
Institutional	8,644,321			11,140,643		30,108,832		—
Open	425,918			246,953		2,138,562		—
Emerging
Markets:
Institutional	6,508,946			9,224,674		917,297		—
Open	187,567			208,388		26,434		—
Bond:
Institutional	1,084,733			1,074,171		—		—
Open	92,674			201,584		—		—
High Yield:
Institutional	7,784,628			9,518,725		—		—
Open	311,395			121,859		—		—

70

The Lazard Funds, Inc. 

Notes to Financial Statements (continued)

December 31, 2004

At December 31, 2004, 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	$	85,377	$	—
U.S. Strategic Equity		—		—
Mid Cap		1,401,232		665,096
Small Cap		6,533,490		14,126,250
International Equity		30,138,516		—
International Equity Select		1,252		—
International Small Cap		1,689,870		47,466,755
Emerging Markets		—		12,822,145
Bond		—		—
High Yield		66,152		—

(j) 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.

(k) 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.

(l) 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. The fees are also shown on its Statement of Changes in Net Assets.

(m) Estimates—The preparation of financial statements in conformity with U.S. 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 the Investment Manager. 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:

Portfolio	Annual Rate
Equity	0.75	%
U.S. Strategic Equity	0.85
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	0.55

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
U.S. Strategic Equity	1.25	%	1.55	%
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	0.55		0.85

During the period ended December 31, 2004, 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
U.S. Strategic Equity	$	5,958	$	2,864
Mid Cap		38,301		21,609
International Equity Select		94,427		67,577
Emerging Markets		—		23,400
Bond		—		13,219
High Yield		324,564		33,359

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.

71

The Lazard Funds, Inc. 

Notes to Financial Statements (continued)

December 31, 2004

The Fund has a distribution agreement with Lazard Asset Management Securities LLC (the “Distributor”), a wholly-owned subsidiary of the Investment Manager, to serve as distributor for shares of each Portfolio and bears the cost of printing and mailing prospectuses to potential investors and of certain expenses in connection with the offering of Portfolio shares.

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

4. Directors’ Compensation

Certain Directors of the Fund are Managing Directors or other employees 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 $50,000 per year, plus $2,500 per meeting attended ($1,000 per meeting attended by telephone) for the Fund, Lazard Retirement Series, Inc. and Lazard Global Total Return & Income Fund, Inc. (“LGI”) (collectively, the “Lazard Funds”), each a registered management investment company advised by the Investment Manager, and reimburses such Directors for travel and other out of pocket expenses. In addition, the Chairman of the Audit Committees for the Lazard Funds also receives an annual fee of $5,000.

5. Securities Transactions and Transactions with Affiliates

Purchases and sales of portfolio securities (excluding short-term securities) for the year ended December 31, 2004 were as follows:

Portfolio	Purchases		Sales
Equity	$	72,624,295	$	88,553,777
Mid Cap	76,503,840		60,788,222
Small Cap	486,691,699		644,040,893
International Equity	1,039,746,093		1,857,518,429
International Equity Select	2,538,695		4,516,311
International Small Cap	270,040,144		394,585,883
Emerging Markets	280,446,916		281,907,338
Bond(1)	5,588,204		21,607,761
High Yield	46,813,580		100,543,281

⁽¹⁾    Excludes purchases and sales of U.S. Government securities of $87,374,930 and $80,618,698, respectively.

For the year ended December 31, 2004, brokerage commissions were paid to Lazard for portfolio transactions executed on behalf of the Portfolios were as follows:

	Brokerage
Portfolio	Commissions
Small Cap	$	850
International Small Cap		386
Emerging Markets		650

6. 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, 2004, Small Cap Portfolio and International Equity Portfolio had borrowings under the Agreement as follows:

			Maximum		Weighted
	Average Daily		Daily Loan		Average
Portfolio	Loan Balance		Outstanding		Interest Rate
Small Cap	$	43,084,739	$	46,249,178	2.563	%
International
Equity		22,337,448		37,039,302	1.523

At December 31, 2004, there were no borrowings outstanding. 

7. Foreign Securities Investment Risks

Certain Portfolios invest in securities of foreign entities and securities denominated in foreign currencies which involve risks not typically involved in domestic investments. Foreign securities carry special risks, such as expo sure to currency fluctuations, less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards and, potentially, less liquidity. To the extent a Portfolio invests in companies in emerging market countries, it is exposed to additional volatility. A Portfolio’s per formance will be influenced by political, social and economic factors affecting companies in emerging market countries. Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries.

8. Reorganization

On July 30, 2004, High Yield Portfolio acquired the net assets of Global High Yield Portfolio pursuant to a plan of reorganization approved by Global High Yield shareholders on July 30, 2004. The acquisition was accomplished by a tax-free exchange of 5,291,673 Institutional Shares (valued at $27,992,967) and 521,291 Open Shares (val-

72

The Lazard Funds, Inc. 

Notes to Financial Statements (concluded)

December 31, 2004

ued at $2,762,845) of High Yield Portfolio for the 3,707,813 Institutional Shares and 363,901 Open Shares of Global High Yield Portfolio outstanding on July 30, 2004. Global High Yield Portfolio’s net assets at that date, including $316,742 of unrealized depreciation and $78,991,740 of accumulated realized net loss, were combined with those of High Yield Portfolio. The aggregate net assets of High Yield Portfolio and Global High Yield Portfolio immediately before the reorganization were $71,269,194 and $30,755,812, respectively. The aggregate net assets of High Yield Portfolio immediately after the reorganization were $102,025,006.

9. Proxy Voting (unaudited)

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the Securities and Exchange Commission (“SEC”) website at www.sec.gov.

The Fund’s proxy voting record for the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 823-6300 or (2) on the SEC’s website at www.sec.gov. Information as of June 30 each year will generally be available by the following August 31.

10. Form N-Q (unaudited)

The Fund files a complete schedule of each Portfolio’s holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.

73

The Lazard Funds, Inc. 

Report of Independent Registered Public Accounting Firm

To 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 U.S. Strategic Equity Portfolio (commenced operations December 30, 2004), 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 and Lazard High Yield Portfolio) as of December 31, 2004 and the related statements of operations for the year or period then ended, the statements of changes in net assets for each of the two years in the period then ended, or the period from commencement of operations to December 31, 2004, 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 standards of the Public Company Accounting Oversight Board (United States). 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, 2004, 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, 2004, the results of their operations for the year or period then ended and changes in their net assets for each of the two years in the period then ended, or the period from commencement of operations to December 31, 2004 and the financial highlights for the periods presented in conformity with U.S. generally accepted accounting principles.

ANCHIN, BLOCK & ANCHIN LLP

New York, New York
January 28, 2005

74

The Lazard Funds, Inc. 

Board of Directors and Officers Information

(unaudited)

Name (Age)	Position(s) and Term	Principal Occupation(s) During Past 5 Years
Address(1)	with the Fund(2)	and Other Directorships Held
Non-Interested Directors:
John J. Burke (76)	Director	Lawyer and Private Investor; Director, Lazard Alternative Strategies Fund,
	since May 1991	LLC; Director, Pacific Steel & Recycling; Director, Sletten Construction
		Company; Trustee Emeritus, The University of Montana Foundation.
Kenneth S. Davidson (59)	Director	President, Davidson Capital Management Corporation; Trustee, The Juilliard
	since August 1995	School; Chairman of the Board, Bridgehampton Chamber Music Festival;
		Trustee, American Friends of the National Gallery/London.
William Katz (50)	Director	Retired President and Chief Executive Officer, BBDO New York, an
	since April 1997	advertising agency; Retired Director, BBDO Worldwide.
Lester Z. Lieberman (74)	Director	Private Investor; Chairman, Healthcare Foundation of NJ; Director, Cives
	since October 1991	Steel Co.; Director, Northside Power Transmission Co.; Advisory Trustee,
		New Jersey Medical School; Director, Public Health Research Institute;
		Trustee Emeritus, Clarkson University; Council of Trustees, New Jersey
		Performing Arts Center.
Richard Reiss, Jr. (60)	Director	Chairman, Georgica Advisors LLC, an investment manager; Director, Lazard
	since May 1991	Alternative Strategies Fund, LLC; Director, O’Charley’s, Inc., a restaurant
		chain.
Robert M. Solmson (57)	Director	Director, Colonial Williamsburg Co.; Former Chief Executive Officer and
	since September 2004	Chairman, RFS Hotel Investors, Inc.; Former Director, Morgan Keegan, Inc.;
		Former Director, Independent Bank, Memphis.
Interested Directors(3):
Charles Carroll (44)	President and Director	Managing Director and Deputy Chairman, Head of Global Marketing of the
	since June 2004	Investment Manager.
Norman Eig (63)	Chairman of the Board	Senior Adviser of the Investment Manager; Previously Chairman and
	since May 1991	Co-Chief Executive Officer of the Investment Manager and Member of the
		Management Committee of Lazard.

(1)	The address of each Director is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300.
(2)	Each Director serves as a Director for each of the Lazard Funds (total comprised of 18 investment portfolios). Each Director serves an indefinite term, until his successor is elected, and serves in the same capacity for the other Lazard Funds.
(3)	Mr. Carroll and Mr. Eig are “interested persons” (as defined in the Act) of the Fund because of their positions 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.

75

The Lazard Funds, Inc. 

Board of Directors and Officers Information (concluded)

(unaudited)

Name (Age)	Position(s) and Term	Principal Occupation(s) During Past 5 Years
Address(1)	with the Fund(2)
Officers:
Nathan A. Paul (31)	Vice President	Managing Director and General Counsel of the Investment Manager; from
	and Secretary	September 1997 to October 2000, an Associate at Schulte Roth & Zabel
	since April 2002	LLP, a law firm.
Stephen St. Clair (46)	Treasurer	Vice President of the Investment Manager.
	since April 2003
Brian D. Simon (42)	Assistant Secretary	Senior Vice President of the Investment Manager; from July 1999 to October
	since November 2002	2002, Vice President, Law & Regulation at J. & W. Seligman & Co.
Cesar A. Trelles (30)	Assistant Treasurer	Fund Administration Manager of the Investment Manager since September
	since December 2004	2004; from August 1998 to August 2004, a manager for Mutual Fund
		Finance Group at UBS Global Asset Management.
John Blevins (39)	Chief Compliance Officer	Senior Vice President and Chief Compliance Officer of the Investment
	since September 2004	Manager since 2000; Director of Compliance for North America, Citi Asset
		Management Group from November 1999 to July 2000.

(1)	The address of each officer is Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, New York 10112-6300.
(2)	Each officer serves for an indefinite term, until his successor is elected and qualified, and serves in the same capacity for the other Lazard Funds, except that Mr. Paul is not Vice President of LGI.

76

Tax Information (unaudited)
The Lazard Funds, Inc.
Year Ended December 31, 2004

The following tax information represents year end disclosures of the tax benefits passed through to shareholders for 2004:

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 2004 1099-DIV.

Portfolio	Percentage
Equity	100.00	%
U.S. Strategic Equity	—
Mid Cap	23.52
Small Cap	22.65
International Equity	100.00
International Equity Select	100.00
International Small Cap	89.30
Emerging Markets	100.00
Bond	—
High Yield	2.35
Global High Yield	1.71

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	100.00	%
U.S. Strategic Equity	—
Mid Cap	20.28
Small Cap	13.54
International Equity	—
International Equity Select	—
International Small Cap	—
Emerging Markets	—
Bond	—
High Yield	2.33
Global High Yield	—

77

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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 Asset Management Securities 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 Registered Public Accounting Firm
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

Performance information as of the most recent month end is available online at www.LazardNet.com.

			M F 0 3 1 0 1
	The Lazard Funds, Inc.	30 Rockefeller Plaza	Tel 800-823-6300
		New York, NY 10112- 6300	www.LazardNet.com

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 (the "Board") has determined that
Lester Z. Lieberman, John J. Burke and Robert M. Solmson, 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, Mr. Burke and Mr.
Solmson 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 $368,700 in 2003 and $332,500 in 2004.

(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").

(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 $57,200 in 2003
and $61,200 in 2004. 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.

Certain of such services may not have been 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.

(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 $57,200 in
2003 and $61,200 in 2004. There were no fees billed in the Reporting Periods by
the Auditor to Service Affiliates. 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.

(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.  SCHEDULE OF INVESTMENTS

         Not applicable.

ITEM 7.  DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END
MANAGEMENT INVESTMENTCOMPANIES.

         Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

         Not applicable.

ITEM 9.  PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

             Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         The Registrant has a Nominating Committee (the "Committee") of the
Board, which is currently comprised of all of the Directors who are not
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of the Registrant. The Committee's function is to select and nominate
candidates for election to the Board. The Committee will consider
recommendations for nominees from stockholders sent to the Secretary of the
Registrant, 30 Rockefeller Plaza, New York, New York 10112. Nominations may be
submitted only by a stockholder or group of stockholders that, individually or
as a group, has beneficially owned the lesser of (a) 1% of the Registrant's
outstanding shares or (b) $500,000 of the Registrant's shares for at least one
year prior to the date such stockholder or group submits a candidate for
nomination. Not more than one nominee for Director may be submitted by such a
stockholder or group each calendar year.

In evaluating potential nominees, including any nominees recommended by
stockholders, the Committee takes into consideration the factors listed in the
Nominating Committee Charter, including character and integrity, business and
professional experience, and whether the Committee believes that the person has
the ability to apply sound and independent business judgment and would act in
the interest of the Registrant and its stockholders. A nomination submission
must include all information relating to the recommended nominee that is
required to be disclosed in solicitations or proxy statements for the election
of Directors, as well as information sufficient to evaluate the factors listed
above. Nomination submissions must be accompanied by a written consent of the
individual to stand for election if nominated by the Board and to serve if
elected by the stockholders, and such additional information must be provided
regarding the recommended nominee as reasonably requested by the Committee.

ITEM 11. 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 second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably likely to
materially affect, the Registrant's internal control over financial reporting.

ITEM 12. 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) Certifications of principal executive and principal financial officers as
required by Rule 30a-2(b) under the Investment Company Act of 1940.





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/ Charles Carroll
         ---------------------
         Charles Carroll
         Chief Executive Officer

Date    March 8, 2005


Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By       /s/ Charles Carroll
         ---------------------
         Charles Carroll
         Chief Executive Officer

Date    March 8, 2005

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

Date    March 8, 2005

EX-99.CODE ETH

                                                                  Exhibit (a)(1)

                                THE LAZARD FUNDS


                     CODE OF ETHICS FOR PRINCIPAL EXECUTIVE
                          AND SENIOR FINANCIAL OFFICERS



I.    COVERED OFFICERS/PURPOSE OF THE CODE

      This code of ethics (this "Code") for the Fund applies to the Fund's
Principal Executive Officer and Principal Financial Officer (the "Covered
Officers") for the purpose of promoting:

      o     honest and ethical conduct, including the ethical handling of actual
            or apparent conflicts of interest between personal and professional
            relationships;

      o     full, fair, accurate, timely and understandable disclosure in
            reports and documents that the Fund files with, or submits to, the
            Securities and Exchange Commission (the "SEC") and in other public
            communications made by the Fund;

      o     compliance with applicable laws and governmental rules and
            regulations;

      o     the prompt internal reporting of violations of the Code to an
            appropriate person or persons identified in the Code; and

      o     accountability for adherence to the Code.

      Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.

II.   COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF
      INTEREST

      OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private
interest interferes with the interests of, or his service to, the Fund. For
example, a conflict of interest would arise if a Covered Officer, or a member of
his family, receives improper personal benefits as a result of his position with
the Fund.

      Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"). For example, Covered Officers may not individually
engage in certain transactions (such as the purchase or sale of securities or
other property) with the Fund because of their status as "affiliated persons" of
the Fund. The compliance programs and procedures of the



Fund and the Fund's investment adviser (the "Adviser") are designed to prevent,
or identify and correct, violations of these provisions. The Code does not, and
is not intended to, repeat or replace these programs and procedures, and the
circumstances they cover fall outside of the parameters of this Code.

      Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Fund and the Adviser of which the Covered Officers are also officers
or employees. As a result, this Code recognizes that the Covered Officers, in
the ordinary course of their duties (whether formally for the Fund or for the
Adviser, or for both), will be involved in establishing policies and
implementing decisions that will have different effects on the Adviser and the
Fund. The participation of the Covered Officers in such activities is inherent
in the contractual relationship between the Fund and the Adviser and is
consistent with the performance by the Covered Officers of their duties as
officers of the Fund and, if addressed in conformity with the provisions of the
Investment Company Act and the Investment Advisers Act, will be deemed to have
been handled ethically. In addition, it is recognized by the Fund's Board of
Directors (the "Board") that the Covered Officers may also be officers or
employees of one or more other investment companies covered by this or other
codes of ethics.

      Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. The following list provides examples of
conflicts of interest under the Code, but Covered Officers should keep in mind
that these examples are not exhaustive. The overarching principle of the Code is
that the personal interest of a Covered Officer should not be placed improperly
before the interest of the Fund.

      Each Covered Officer must:

      o     not use his personal influence or personal relationships improperly
            to influence investment decisions or financial reporting by the Fund
            whereby the Covered Officer would benefit personally to the
            detriment of the Fund;

      o     not cause the Fund to take action, or fail to take action, for the
            individual personal benefit of the Covered Officer rather than the
            benefit of the Fund;

      o     report at least annually any affiliations or other relationships
            related to conflicts of interest indicated in the Fund's Directors
            and Officers Questionnaire; and

      o     disclose any material ownership interest in, or any consulting or
            employment relationship with, any of the Fund's service providers,
            other than the Adviser or any affiliated person thereof.

III.  DISCLOSURE AND COMPLIANCE

      o     Each Covered Officer should familiarize himself with the disclosure
            requirements generally applicable to the Fund;

      o     each Covered Officer should not knowingly misrepresent, or cause
            others to misrepresent, facts about the Fund to others, whether
            within or outside the Fund, including to the Fund's Board members
            and auditors, and to governmental regulators and self-regulatory
            organizations;



      o     each Covered Officer should, to the extent appropriate within his
            area of responsibility, consult with other officers and employees of
            the Fund and the Adviser and take other appropriate steps with the
            goal of promoting full, fair, accurate, timely and understandable
            disclosure in the reports and documents the Fund files with, or
            submits to, the SEC and in other public communications made by the
            Fund; and

      o     it is the responsibility of each Covered Officer to promote
            compliance with the standards and restrictions imposed by laws,
            rules and regulations applicable to the Fund.

IV.   REPORTING AND ACCOUNTABILITY

      Each Covered Officer must:

      o     upon adoption of the Code (or thereafter, as applicable, upon
            becoming a Covered Officer), affirm in writing to the Board that he
            has received, read, and understands the Code;

      o     annually thereafter affirm to the Board that he has complied with
            the requirements of the Code;

      o     not retaliate against any other Covered Officer or any employee of
            the Fund or their affiliated persons for reports of potential
            violations that are made in good faith; and

      o     notify the Fund's Chief Legal Officer (the "CLO") promptly if he
            knows of any violation of this Code. Failure to do so is itself a
            violation of this Code.

      The Fund will follow these procedures in investigating and enforcing this
Code:

      o     the CLO will take all appropriate action to investigate any
            potential violations reported to it;

      o     if, after such investigation, the CLO believes that no violation has
            occurred, the CLO is not required to take any further action;

      o     any matter that the CLO believes is a violation will be reported to
            the Board;

      o     if the Board concurs that a violation has occurred, it will consider
            appropriate action, which may include: review of, and appropriate
            modifications to, applicable policies and procedures; notification
            to appropriate personnel of the Adviser or its board; or a
            recommendation to dismiss the Covered Officer;

      o     the CLO will be responsible for granting waivers, as appropriate;
            and

      o     any changes to or waivers of this Code will, to the extent required,
            be disclosed as provided by SEC rules.

V.    OTHER POLICIES AND PROCEDURES

      This Code shall be the sole code of ethics adopted by the Fund for
purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and
forms applicable to registered investment companies thereunder. Insofar as other
policies and procedures of



the Fund, the Adviser, the principal underwriter or other service providers
govern or purport to govern the behavior or activities of the Covered Officers
who are subject to this Code, they are superseded by this Code to the extent
that they overlap or conflict with the provisions of this Code. The Fund's and
the Adviser's codes of ethics under Rule 17j-1 under the Investment Company Act
and the Adviser's additional policies and procedures are separate requirements
applying to the Covered Officers and others, and are not part of this Code.

VI.   AMENDMENTS

      Any amendments to this Code must be approved or ratified by a majority
vote of the Fund's Board, including a majority of independent Board members.

VII.  CONFIDENTIALITY

      All reports and records prepared or maintained pursuant to this Code will
be considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than the Fund and its Board and the Adviser and each
of their respective counsel.

VIII. INTERNAL USE

The Code is intended solely for the internal use by the Fund and does not
constitute an admission, by or on behalf of any Fund, as to any fact,
circumstance, or legal conclusion.



Adopted: February 24, 2004

EX-99.CERT

                                                                    [EX-99.CERT]

Exhibit (a)(2)


                          Rule 30a-2(a) CERTIFICATIONS

I, Charles Carroll, certify that:

1. I have reviewed this report on Form N-CSR of The Lazard Funds, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have:

      (a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

      (b) Designed such internal control over financial reporting, or caused
      such internal control over financial reporting to be designed under our
      supervision, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for
      external purposes in accordance with generally accepted accounting
      principles;

      (c) Evaluated the effectiveness of the registrant's disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures, as of a date
      within 90 days prior to the filing date of this report based on such
      evaluation; and

      (d) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the second fiscal
      quarter of the period covered by this report that has materially affected,
      or is reasonably likely to materially affect, the registrant's internal
      control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

      (a) All significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize, and report financial information; and

      (b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.

Date: March 8, 2005

                                    /s/ Charles Carroll
                                    --------------------
                                    Charles Carroll
                                    Chief Executive Officer









                                                                    [EX-99.CERT]
                                                                  Exhibit (a)(2)


                          Rule 30a-2(a) CERTIFICATIONS

I, Stephen St. Clair, certify that:

1. I have reviewed this report on Form N-CSR of The Lazard Funds, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have:

      (a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

      (b) Designed such internal control over financial reporting, or caused
      such internal control over financial reporting to be designed under our
      supervision, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for
      external purposes in accordance with generally accepted accounting
      principles;

      (c) Evaluated the effectiveness of the registrant's disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures, as of a date
      within 90 days prior to the filing date of this report based on such
      evaluation; and

      (d) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the second fiscal
      quarter of the period covered by this report that has materially affected,
      or is reasonably likely to materially affect, the registrant's internal
      control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

      (a) All significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize, and report financial information; and

      (b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.

Date: March 8, 2005


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

EX-99.906CERT

                                                                 [EX-99.906CERT]
                                                                     Exhibit (b)

                           SECTION 906 CERTIFICATIONS


         In connection with this report on Form N-CSR for the Registrant as
furnished to the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned hereby certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1) the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as applicable; and

         (2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.

                                              By:      /s/ Charles Carroll
                                                       -------------------
                                                       Charles Carroll
                                                       Chief Executive Officer

                                              Date:    March 8, 2005


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

                                              Date:    March 8, 2005



THIS CERTIFICATE IS FURNISHED PURSUANT TO THE REQUIREMENTS OF FORM N-CSR AND
SHALL NOT BE DEEMED "FILED" FOR PURPOSES OF SECTION 18 OF THE SECURITIES
EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF THAT SECTION, AND
SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934.