As at 30/09/08

Quarterly Market Review by Sector

The third quarter of 2008 will be remembered as one of the most eventful periods in the history of financial markets, as the credit crisis intensified. The iBoxx Sterling Corporates index declined by -4.7% over the period, the worst quarterly return since the inception of the index. Just considering the month of September in isolation, the market lost -7.5%.

What Helped the Fund

• Underweight AIG, Bradford & Bingley and Wachovia
• Defensive positions in utilities
• Overweight duration

What Hurt the Fund

• Overweight positioning in subordinated financials
• Corporate hybrids

Outlook

The market is currently in an environment of heightened uncertainty and fear, the like of which few market participants have ever experienced before. Corporate bond spreads continue to offer good long-term value, in our opinion, but buyers are holding off whilst there is the chance that corporate bond spreads could move wider still. In addition, dealers continue to be reluctant to provide liquidity to the market by taking bonds onto their own balance sheets, and whilst this situation persists, it is difficult to see how credit spreads can rally to any meaningful extent.

Past performance should not be taken as guide to future returns.

Source: Lazard Asset Management.

Portfolio information as at 30/09/08.

This is a financial promotion and is not intended to constitute investment advice.

The Lazard Sterling Corporate Bond Fund is a sub-fund of Lazard Investment Funds, a UK-authorised Open Ended Investment Company (“OEIC”) and UCITS.

Investors are reminded that the value of shares and the income from them can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Fluctuations in the rate of exchange between the currency in which shares are denominated and currency of investment may have the effect of causing the value of investment to diminish or increase. Yields from bonds reflect in part the risk rating of the bond issuer. Investment in lower rated bonds increases the risk of default on repayment and the risk to capital of the fund. The information provided should not be considered as a recommendation or solicitation to purchase, sell or hold these securities. It should also not be assumed that any investment in these securities was or will be, profitable.

The Authorised Corporate Director of the fund is Lazard Fund Managers Limited, which is authorised and regulated by the Financial Services Authority (“FSA”) and is a member of IMA.

This financial promotion is issued and approved by Lazard Asset Management Limited, 50 Stratton Street, London W1J 8LL.

Lazard Asset Management Limited is incorporated in England and Wales with registered number 525667. It is authorised and regulated by the Financial Services Authority.