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 12.6 3.2 3.2 14.8 1.8 4.4 8.9 (%; Net of fees) Lazard U.S. Equity Select - SMA 11.8 0.2 0.2 11.4 -1.2 1.3 5.7 S&P 500 Index 11.8 2.1 2.1 14.1 -0.3 2.9 7.7
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		51			500
Current Dividend Yield (%)		1.8			1.9
Average Weighted Market Cap ($ billions)		107.3			93.1
Turnover – Trailing 12 Months (%)		64.8			N/A

Characteristics

Equity	98.7
Cash and Equivalents	1.3
Information Technology	22.4
AOL
Apple
Cisco Systems
EMC
Google Cl A
Intel
International Business Machines
MasterCard
Microsoft
Oracle
Qualcomm
Industrials	15.4
Dover
Emerson Electric
Honeywell International
Illinois Tool Works
Parker Hannifin
Raytheon
United Parcel Service Cl B
United Technologies
Energy	14.7
Chevron
ConocoPhillips
Consol Energy
Devon Energy
Schlumberger
Financials	13.8
American Express
Bank of America
BB&T

Financials (cont.)
JPMorgan Chase
Morgan Stanley
Prudential Financial
Wells Fargo
Consumer Staples	10.2
Coca Cola
Energizer Holdings
General Mills
Wal-Mart Stores
Walgreen
Health Care	9.7
Amgen
Gilead Sciences
Merck
Pfizer
Consumer Discretionary	7.9
Comcast Special Cl A
Darden Restaurants
Gap
International Game Technology
Lowes
Newell Rubbermaid
TJX Companies
Materials	3.0
Ball
Monsanto
Newmont Mining
Telecommunication Services	1.4
AT&T
Utilities	0.0

1. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. Source: Lazard, Standard & Poor’s.
2. The allocations mentioned are based upon a portfolio that 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 portfolio that represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change. The securities mentioned are not necessarily held by Lazard for all client portfolios, and their mention should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable, or that the investment decisions we make in the future will be profitable or equal to the investment performance of securities referenced herein. There is no assurance that any securities referenced herein are currently held in the portfolio or that securities sold have not been repurchased. Please note that cash is not viewed as a strategic asset class.

The U.S. stock market increased during the first quarter of 2011, as the S&P 500 Index rose 5.9%, despite global shocks. During the quarter, the market was confronted with escalating political turmoil in the Middle East and North Africa, as well as the devastating earthquake and nuclear crisis in Japan. The CBOE Market Volatility Index, the “fear gauge” known as the VIX, increased by 70% at one point during the quarter, reaching levels last seen in the summer of 2010. However, by the end of March, the VIX was essentially flat for the quarter. Although headlines were largely dominated by international events, the U.S. market did enjoy a strong earnings season, as well as increased share repurchase and merger activity. Investors were further heartened by improving economic indicators, such as manufacturing and jobs data, as well as housing starts. However, concerns about the economy remain, as the unemployment rate continues to stagnate, home prices remain weak, and the price of crude oil has been high. Additionally, many investors are weighing the importance of the upcoming withdrawal of the Federal Reserve’s quantitative easing program.

The strongest performing sectors in the S&P 500 Index were driven by the turmoil in the Mideast. The energy sector had the largest gain, as crude oil prices climbed 17% during the quarter. The industrials sector was the second best performer, as booming prices in commodities helped drive returns. The consumer staples and utilities sectors, which are generally considered defensive sectors, posted the lowest returns in the Index.

Stock selection and an underweight position in the consumer discretionary sector contributed to performance. Shares of Comcast rose as the company, one of the nation’s largest cable and media providers, increased on strong results across its businesses and the continuation of returning capital to shareholders. We believe that Comcast will execute well this year, providing better customer service and better churn, as well as finding the optimal revenue per user, relative to subscriber volume. The strategy’s lack of exposure to utilities also aided performance, as the sector had one of the lowest returns in the Index.

In contrast, stock selection in the consumer staples sector detracted from performance. Shares of Wal-Mart Stores, the world’s largest retailer, declined after the company reported quarterly earnings. Although the retailer posted an overall 2.5% increase in sales and a 27% increase in profits for its fiscal fourth quarter, investors were disappointed by weaker-than-expected U.S. year-over-year comparisons. We believe Wal-Mart is an attractive investment as the company is expected to continue to grow over the next five years, has traditionally benefited from food inflation, and has been experiencing sales momentum and outperformance in most markets. Stock selection in the financials sector also hurt returns. Shares of City National, a bank whose footprint is primarily in California, declined after the firm reported results. Although the bank reported earnings ahead of expectations and doubled its dividend, investors were concerned about revenue growth and net interest margins going forward.

U.S. equities have outperformed global markets for two consecutive quarters. Part of this outperformance has been driven by the budding economic momentum in the United States. Adding to the upside has been a sharp rebound in corporate profits that has only begun to be recognized in share prices in recent quarters. We could argue that profitability justified higher equity prices early in 2010, but the markets faced a wall of uncertainty. As the rally continued through the first quarter of 2011, we saw some of the undervaluation resolved in U.S. equities.

In spite of the recent rally, we continue to see reason for optimism for U.S. equities. If we consider equities, versus fixed income instruments, the risk/reward remains asymmetric for much of the fixed income universe, especially considering the degree to which the Federal Reserve and other central banks arguably are distorting yields downward. If quantitative easing is effective, the legitimate expectation should be for economic growth to put downward pressure on bond prices and upward pressure on yields. If quantitative easing fails, one could argue that credit quality concerns will resurface in a significant way as investors question what will lead to economic growth.

Regarding the equity universe, we believe the U.S. is in a positive position as it is already enjoying meaningful real economic growth and seeing the early signs of job growth. To the extent this economic growth gains traction, there would likely be further legs to the upside story as demand recovers from newly re-employed workers. To the extent the bet on growth in gross domestic product (GDP) works, deleveraging can proceed, as the debt outstanding is divided by a bigger and bigger denominator of economic output.

Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss.