Lazard Capital Allocator Series Non-Traditional Investments. 2Q16 Outlook. Thematic. Contrarian. Discounted. Diversifying

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1 Lazard Capital Allocator Series Non-Traditional Investments 2Q16 Outlook The Lazard Capital Allocator Series Investment Team ( Investment Team ) has taken recent market, economic, and global developments into consideration in developing a non-traditional portfolio. The strategy seeks specialized investments within the global capital markets that offer unique investment characteristics with the objective of outsized excess returns and correlation or risk benefits. The investments can be equity, debt, commodity, real estate, currency, or market hedging instruments. Typically, these investments are not clearly defined by asset allocation limitations and are unconstrained by region, size, or style. There are four categories of investments: Thematic Investments that are most consistent with our overall market viewpoint and represent unique or niche opportunities that we believe will provide performance benefits, to the extent our viewpoint materializes. Contrarian Investments that reflect out-of-favor or non-consensus views to potentially capture inflection points of attractively valued areas of the market. Discounted Investments across global markets that are viewed favorably by the Investment Team and that can be purchased at a tangible discount to net asset value. Diversifying Investments in areas that tend to be uncorrelated to the overall equity market, or that we believe possess attractive absolute return-oriented characteristics, including fixed income securities and other market hedging tools. PC12103

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3 Thematic US Large Cap Equities S&P 500 Index The Investment Team believes that the likelihood of an economic recession in the United States in 2016 is low. Given this view, we believe that a diversified US large cap portfolio is very attractive on a risk-adjusted basis. We believe that monetary policy will continue to be supportive of equity prices and that upside surprises are possible via stable but low energy prices and a stable FX value of the US dollar. European Equities: Broad, and Small Cap Exposure The European Central Bank (ECB) has embarked on a massive monetary easing program to stimulate economic growth and reduce deflationary forces in Europe. Similar programs in the United States and Japan have resulted in improved economic conditions and higher equity prices. The euro zone economic recovery gained pace in 2015 led by a bounceback in consumer spending and banking lending that will likely continue into European exporters have benefited from the euro s decline, which restored their profit margins. This could lead to a virtuous cycle of an improvement in capital spending, employment, and consumption. The Investment Team initiated positions in a broad basket of euro zone companies and European small cap companies which should all benefit from improving conditions in Europe. Japanese Equity: Large and Small Cap The Bank of Japan continues its aggressive monetary plan to reflate and reinvigorate Japan by introducing negative rates and expanding the qualitative and quantitative easing (QQE) purchase of bonds and REITs. Japan s increased focus on return on equity (ROE) is clear via evidence of corporate change buybacks are up more than 100% year on year. Notably, 127 Japanese companies have raised their dividend projections, the highest number in nine years. Japan Households assets rose to the highest level on record and mark nine straight years of growth. Retail investors in Japan responded by purchasing equities; this is the first time in more than 25 years that net purchases have been positive. 1 Deflation in the Japanese commercial land market may be over. Land is the most important collateral to the Japanese banking system; rising land prices corresponds to stronger banks that may respond by increasing credit. We believe Japanese equities remain attractively valued. The price-tobook (PB) ratio of the MSCI Japan Index, as of 31 March 2016, is less than half that of the S&P 500 Index: 1.3 times versus 2.8 times. 2 North American Technology The technology sector outperformed in 2015 as heightened macro volatility, divergent central bank policies, Fed lift-off, and a stronger US dollar, drove investors out of more cyclically sensitive sectors such as energy, industrials, and materials into growth-oriented sectors like technology. The sector has high profitability and innovation, is less dependent on cyclical factors, and more insulated in theory from macro unrest. In 2015, growth tech companies outperformed mature tech stocks. Technology demand remains strong globally, revenues are expected to grow 6% in 2016 greater than the overall market. 3 In the United States, improving employment, rising stock markets, and more stable housing is aiding consumer confidence, which in turn is driving demand for internet video, wearables, tablets, and mobile devices. Many of the technology sector s leading companies have recently embraced shareholders requests for higher dividends and share repurchase programs, resulting in a higher return profile for shareholders. Aerospace and Defense Rising consumer wealth in Asia, increased fuel efficiency, and recordlow interest rates have spurred demand for new commercial aircraft. Typically, airline traffic grows globally at approximately three times the rate of GDP. Although emerging markets growth rates have moderated, they are still in the mid-single digits, which translate into very high traffic growth. Aircraft order backlogs are at recordhigh levels. Rising geopolitical risks in Ukraine, Syria, and the South China Sea may lead to an increase in defense spending in these parts of the world. Improving US federal government revenues may also result in higher defense spending in The recent budget accord confirmed this. All of these factors combine to make aerospace and defense fairly unique among industrials, as the industry exhibits rising growth.

4 US Consumer Services Consumption was the key driver of the US and global business cycles until This era of excessive consumption driven by rising debt came to an end because of the housing market bust and the resulting economic/banking crisis culminating in the sharp sell-off in global equities. Following the crisis, US consumers spent several years rebuilding their personal balance sheets through a higher savings rate, which came at the expense of consumption. The crisis is now six years in the past and rising equity and home prices in the United States the two primary sources of wealth for many US consumers have resulted in a decline in the savings rate. The US Conference Board measure of consumer confidence rose in June 2015 to within touching distance of the eight-year high, suggesting that the surge in real consumption in 2015 will be sustained in the remainder of the year. 4 The unemployment rate in the United States is now 5.0% and wages are rising at nearly 2%. More US workers are receiving higher wages the engine of consumption. With low gasoline prices, low mortgage rates, rising household net worth, and improving confidence, we believe US consumer spending is set to continue to grow in Contrarian US Value Momentum Arbitrage The performance differential between US large cap stocks with value characteristics and those that possess high momentum characteristics rose to historically wide levels in the first quarter of The Investment Team structured a pair trade that will benefit from narrowing of this gap which is consistent with prior patterns of equity market performance when the US economy is not in recession. We believe there is a low likelihood of a US economic recession in 2016, a view that was contrarian to market sentiment in early The three fundamental characteristics that define value stocks are low price-to-book value, low price-to-forward earnings, and low enterprise value to cash flow from operations. Momentum stocks are those with high risk-adjusted price momentum, and is calculated for each security over 6- and 12-month time periods. Latin American Equities Over the last five years Latin American equities underperformed the MSCI World Index by more than 80%. The causes were a well-known poisonous mix: depreciating currencies, falling energy and material prices, volatile politics, and stubbornly high inflation all leading to low or negative GDP growth throughout the region. The investment team believes that at the margin all of these problems may have bottomed and might improve in the coming quarters with the possibility for improved earnings outlook and investor sentiment. Discounted Closed-End Credit Funds The Investment Team has invested in two different closed-end funds that employ strategies that invest primarily in short-term corporate debt to provide limited interest rate risk, with an average duration between two and five years. We believe that fixed income credit remains very attractively priced; our view is that the US economy is likely to remain in a low-growth, low-inflation environment which means credit defaults should remain subdued. Credit spreads, however, are at levels more associated with a macro environment, signaling an impending recession and much higher default rates. These two funds were purchased at substantial discounts to net asset value of approximately 12%. We expect these discounts to narrow over time. Diversifying US High Yield Fixed Income ETFs The high yield corporate fixed income sector has very favorable fundamentals. There is large demand fueled by attractive yields and continued adequate supply due to refinancing and mergers and acquisitions. After the large decline in oil prices in 2014 and 2015 market participants acted as if default rates would rise. This has not been the situation and we believe there is a tactical opportunity for BB-rated fixed income spreads to narrow. The Investment Team has two positions in this asset class: an ETF that consists of BB-rated fixed income, just below investment grade

5 and an ETF that is exposed to fallen angels, bonds that were once investment grade but slipped to non-investment grade which have the potential to be re-rated higher resulting in substantial price appreciation. Investment Grade US Corporate Fixed Income The Vanguard Short-Term Corporate Bond ETF tracks a marketweighted index of investment grade fixed-rate corporate bonds with maturities between one to five years. The ETF currently has a weighted average duration of 2.8 years. The Investment Team believes it is prudent that diversification assets have low sensitivity to both interest-rate risk and credit risk in this economic environment.

6 Global Non-Traditional Investments Thematic Contrarian Diversifying Discounted US Large Cap Japanese Small-Cap US Consumer Services Aerospace & Defense Japanese Equity Pair trade: Long Value/ Short Momentum Global Industrials Latin America Equity Energy Cash IG Corporate Bonds High Yield Corporate Bonds Short-Term Credit Fund Short-Term High Yield European Small-Cap European Exporters Basket North American Technology 43% as of 31 March % as of 31 March % as of 31 March % as of 31 March % as of 31 Dec % as of 31 Dec % as of 31 Dec % as of 31 Dec 2015 For illustrative purposes only. Allocations are based upon a portfolio which represents the proposed investment for a fully discretionary account and are subject to change. The data represent that of the LCAS Global Non-Traditional strategy. Historical Active Sector Rotation (%) Thematic Contrarian Discounted Cash Diversifying As of 31 March 2016 Data shown from March 2011 March 2016 Allocations are based upon a portfolio which represents the proposed investment for a fully discretionary account and are subject to change. The data represent that of the LCAS Global Non-Traditional strategy. In December 2011, notional cash value was negative. For visualization purposes, the data point is not shown.

7 This content represents the views of the author(s), and its conclusions may vary from those held elsewhere within Lazard Asset Management. Lazard is committed to giving our investment professionals the autonomy to develop their own investment views, which are informed by a robust exchange of ideas throughout the firm. Notes 1 Source: Bank of Japan, as of 30 June Source: Capital Economics, Japan Chart Book, as of 7 December Source: ISI: Tech Strategy 2016 Outlook, as of 5 January Source: Bloomberg, as of 30 June 2015 Important Information Published on 18 April Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of 31 March 2016 and are subject to change. Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one s home market. The values of these securities may be affected by changes in currency rates, application of a country s specific tax laws, changes in government administration, and economic and monetary policy. Small- and mid-capitalization stocks may be subject to higher degrees of risk, their earnings may be less predictable, their prices more volatile, and their liquidity less than that of large-capitalization or more established companies securities. Emerging markets securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging markets countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging markets countries. An investment in bonds carries risk. If interest rates rise, bond prices usually decline. The longer a bond s maturity, the greater the impact a change in interest rates can have on its price. If you do not hold a bond until maturity, you may experience a gain or loss when you sell. Bonds also carry the risk of default, which is the risk that the issuer is unable to make further income and principal payments. Other risks, including inflation risk, call risk, and pre-payment risk, also apply. High yield securities (also referred to as junk bonds ) inherently have a higher degree of market risk, default risk, and credit risk. Investments in closed-end funds are non-redeemable and are subject to the same risks as other publicly-traded equity securities. Sometimes, however, there may be no public market for units of closed-end funds. The shares of closed-end funds, and exchange-traded funds ( ETFs ) may trade at prices at, below, or above their most recent net asset value. There is no guarantee that a fund s discount will ever be narrowed or eliminated. Additionally, the performance of an ETF pursuing a passive index-based strategy may diverge from the performance of the index. Exchangetraded notes ( ETNs ) may not trade in the secondary market, but typically are redeemable by the issuer. Unlike ETFs and closed-end funds, ETNs are not registered investment companies and thus are not regulated under the 1940 Act. In addition, as debt securities, ETNs are subject to the additional risk of the creditworthiness of the issuer. ETNs typically do not make periodic interest payments. An investment in these types of instruments is indirectly subject to all the risks associated with the investments made by the closed-end fund, ETF, or ETN. 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. The securities mentioned may not represent the entire portfolio. Certain information included herein is derived by Lazard in part from an MSCI index or indices (the Index Data ). However, MSCI has not reviewed this product or report, and does not endorse or express any opinion regarding this product or report or any analysis or other information contained herein or the author or source of any such information or analysis. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any Index Data or data derived therefrom.

8 Lazard Capital Allocator Series Non-Traditional Investments This document reflects the views of Lazard Asset Management LLC or its affiliates ( Lazard ) and sources believed to be reliable as of the publication date. There is no guarantee that any projection, forecast, or opinion in this material will be realized. Past performance does not guarantee future results. This document is for informational purposes only and does not constitute an investment agreement or investment advice. References to specific strategies or securities are provided solely in the context of this document and are not to be considered recommendations by Lazard. Investments in securities and derivatives involve risk, will fluctuate in price, and may result in losses. Certain securities and derivatives in Lazard s investment strategies, and alternative strategies in particular, can include high degrees of risk and volatility, when compared to other securities or strategies. Similarly, certain securities in Lazard s investment portfolios may trade in less liquid or efficient markets, which can affect investment performance. Australia: FOR WHOLESALE INVESTORS ONLY. Issued by Lazard Asset Management Pacific Co., ABN , AFS License , Level 39 Gateway, 1 Macquarie Place, Sydney NSW Dubai: Issued and approved by Lazard Gulf Limited, Gate Village 1, Level 2, Dubai International Financial Centre, PO Box , Dubai, United Arab Emirates. Registered in Dubai International Financial Centre Authorised and regulated by the Dubai Financial Services Authority to deal with Professional Clients only. Germany: Issued by Lazard Asset Management (Deutschland) GmbH, Neue Mainzer Strasse 75, D Frankfurt am Main. Hong Kong: Issued by Lazard Asset Management (Hong Kong) Limited (AQZ743), Unit 29, Level 8, Two Exchange Square, 8 Connaught Place, Central, Hong Kong. Lazard Asset Management (Hong Kong) Limited is a corporation licensed by the Hong Kong Securities and Futures Commission to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities. This document is only for professional investors as defined under the Hong Kong Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and its subsidiary legislation and may not be distributed or otherwise made available to any other person. Japan: Issued by Lazard Japan Asset Management K.K., ATT Annex 7th Floor, Akasaka, Minato-ku, Tokyo People s Republic of China: Issued by Lazard Asset Management. Lazard Asset Management does not carry out business in the P.R.C. and is not a licensed investment adviser with the China Securities Regulatory Commission or the China Banking Regulatory Commission. This document is for reference only and for intended recipients only. The information in this document does not constitute any specific investment advice on China capital markets or an offer of securities or investment, tax, legal, or other advice or recommendation or, an offer to sell or an invitation to apply for any product or service of Lazard Asset Management. Singapore: Issued by Lazard Asset Management (Singapore) Pte. Ltd., 1 Raffles Place, #15-02 One Raffles Place Tower 1, Singapore Company Registration Number W. This document is for institutional investors or accredited investors as defined under the Securities and Futures Act, Chapter 289 of Singapore and may not be distributed to any other person. South Korea: Issued by Lazard Korea Asset Management Co. Ltd., 10F Seoul Finance Center, 136 Sejong-daero, Jung-gu, Seoul, United Kingdom: FOR PROFESSIONAL INVESTORS ONLY. Issued by Lazard Asset Management Ltd., 50 Stratton Street, London W1J 8LL. Registered in England Number Authorised and regulated by the Financial Conduct Authority (FCA). United States: Issued by Lazard Asset Management LLC, 30 Rockefeller Plaza, New York, NY