Annualized Returns
Name 3-Month YTD 1-Year 3-Year 5-Year 10-Year Since Inception (%; Gross of fees) (10/01/1993) Lazard U.S. Equity Select - SMA -1.7 -9.7 -10.2 6.6 8.4 4.6 10.2 (%; Net of fees) Lazard U.S. Equity Select - SMA -2.4 -11.0 -12.8 3.4 5.2 1.5 7.0 S&P 500 Index -2.7 -11.9 -13.1 4.4 7.6 2.9 9.2
Performance is presented gross and net of all fees. Net of fees performance has been calculated using a 3.0% fee assumption. Gross of fee performance is presented as supplementary information, as performance excludes transaction costs. Please refer to the disclosures for important additional details of this composite. The performance quoted represents past performance. Past performance does not guarantee future results.

		Lazard			S&P 500 Index
Number of Securities		43			501
Current Dividend Yield (%)		2.3			2.3
Average Weighted Market Cap ($ billions)		127.4			89.0
Turnover – Trailing 12 Months (%)		64.5			N/A

Characteristics

Equity	91.3
Cash and Equivalents	8.7
Information Technology	24.2
Cisco Systems
Corning
EMC
Hewlett-Packard
Intel
International Business Machines
Microsoft
Oracle
Visa Cl A
Energy	13.7
Arch Coal
Baker Hughes
Chevron
ConocoPhillips
Exxon Mobil
Halliburton
Health Care	13.2
Johnson & Johnson
Medtronic
Merck
Pfizer
Wyeth
Industrials	12.4
Boeing
General Electric
Honeywell International

Industrials (cont.)
Masco
Textron
United Technologies
Consumer Staples	8.8
Anheuser Busch Companies
Coca-Cola Enterprises
PepsiCo
Procter & Gamble
Wal-Mart Stores
Consumer Discretionary	8.2
Comcast Special Cl A
Home Depot
J.C. Penney
Liz Claiborne
Time Warner
Financials	6.5
Bank of New York
Citigroup
JPMorgan Chase
Lincoln National
PartnerRe
Materials	4.3
Dow Chemical
E.I. du Pont de Nemours
Telecommunication Services	0.0
Utilities	0.0

1. Portfolio characteristics are based upon a representative portfolio which represents the proposed investment for a fully discretionary account. Source: Lazard, FactSet.
2. The allocations mentioned are based upon a representative portfolio which represents the proposed investment for a fully discretionary account. Allocations are subject to change.
3. The allocations and specific securities mentioned are based upon a representative portfolio which represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change. It should not be assumed that any of the referenced securities were or will be profitable, or that the investment decisions we make in the future will be profitable. All information provided in this list should not be considered a recommendation or solicitation to purchase or sell any particular security. Please note that cash is not viewed as a strategic asset class.

The rally that began in mid-March in the aftermath of the near collapse of investment bank Bear Stearns continued until mid-May. Stocks generated sizeable gains and almost eliminated their losses for the year, powered in particular by the surging energy and materials sectors. However, investor optimism proved misplaced, as equities fell heavily from mid-May to the end of the quarter as concerns weighed on investor sentiment. Among these worries was the price of oil, which climbed unchecked to breach $140 per barrel towards the end of June, contributing to concerns that the economy may be entering a stagflationary period of lower growth and higher inflation. In addition, home prices continued to record significant decreases, and a key consumer confidence measure touched a 16-year low. Comments from U.S. Federal Reserve officials implied a greater focus on inflationary pressures, shifting investor expectations from further rate cuts to potential rate increases.

From a sector perspective, there were renewed concerns about the health of financials. Many financial stocks fell due to fears that the credit crisis is not over and investor expectations of further losses from additional write-offs. Moreover, the downward housing spiral and rising energy costs continued to weigh on consumer discretionary stocks. The consumer staples sector failed to play its usual safe-haven role during market turbulence due to a confluence of rising input costs and fears of a significant consumer slowdown. Conversely, the energy and materials sectors continued to lead the markets, further widening the return gap with other sectors on a year-to-date basis.

The strategy benefited from an underweight position in the financials sector, which continued to underperform the broader market. In addition to further write-offs, continued home price declines and uncertainties surrounding the length and severity of economic contraction and consumer credit woes have added to negative sentiment in the group. Stock selection in the consumer staples sector also helped performance, as one of our holdings in a large U.S. brewer received a takeover offer from a larger international competitor. The strategy also benefited from a large position in the world’s biggest retailer. The stock performed well during the month, extending its gains from the previous quarter after reporting better-than-expected earnings results. Sales in the company have benefited because of its appeal to cost-conscious consumers amid an uncertain economic environment. Conversely, stock selection in the industrials sector detracted from performance. Some of our holdings that have exposure to the aerospace industry lagged due to concerns over the impact that high fuel prices may have on the demand for new aircraft. However, we are confident that these companies will benefit from the multi-year, diverse backlog of aircraft demand, particularly since the new planes are far more fuel-efficient.

We believe our focus on larger, consistently profitable companies should continue to add value in this uncertain economic environment. While we have avoided many of the companies most impacted by the credit crisis, we believe that the recent volatility has created opportunities among high-quality franchises.

4. The allocations and specific securities mentioned are derived from a representative portfolio which represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change. The information provided should not be considered a recommendation or solicitation to purchase or sell any particular security. There is no assurance that any securities referenced herein will remain in the account’s portfolio or that securities sold have not been repurchased. The securities discussed may not represent the account’s entire portfolio. It should not be assumed that any of the referenced securities were, or will prove to be profitable, or that the investment decisions we make in the future will be profitable.