Annualized Returns
Name 3-Month YTD 1-Year 3-Year 5-Year 10-Year Since Inception (%; Gross of fees) (01/01/1996) Lazard U.S. Mid Cap Equity - SMA -0.5 -8.4 -20.3 3.8 11.2 9.0 11.9 (%; Net of fees) Lazard U.S. Mid Cap Equity - SMA -1.2 -9.8 -22.7 0.7 7.9 5.8 8.6 Russell Midcap Index 2.7 -7.6 -11.2 6.8 13.1 8.1 10.9
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			Russell Midcap Index
Number of Securities		72			810
Current Dividend Yield (%)		2.0			1.7
Average Weighted Market Cap ($ billions)		6.1			7.9
Turnover – Trailing 12 Months (%)		75.9			N/A

Characteristics

Equity	95.2
Cash and Equivalents	4.8
Financials	16.3
Ameriprise Financial
CBL & Associates Properties
City National
Federated Investors Cl B
Hudson City Bancorp
Lincoln National
Marsh & Mclennan Companies
Marshall & Ilsley
OneBeacon Insurance Group
PartnerRe
Public Storage
RenaissanceRe Holdings
The St. Joe Company
Willis Group Holdings
Information Technology	13.0
Agilent Technologies
Analog Devices
Arrow Electronics
Brocade Communications Systems
Flextronics International
Ingram Micro Cl A
Lexmark International Cl A
NeuStar
Sybase
Energy	12.9
BJ Services
Exterran Holdings
Foundation Coal Holdings
Holly
Massey Energy
Patterson UTI Energy
Pride International
Sunoco
Williams Companies
Industrials	12.3
Cintas
Covanta Holding
Dover
Masco
Pitney Bowes
Spirit AeroSystems Holdings Cl A

Industrials (cont.)
Textron
USG
WESCO International
Consumer Discretionary	10.7
Brinker International
Darden Restaurants
Foot Locker
Goodyear Tire & Rubber
Hanesbrands
J.C. Penney
Leggett & Platt
Liz Claiborne
Pacific Sunwear of California
Consumer Staples	9.4
Campbell Soup
Coca-Cola Enterprises
Hershey
McCormick & Company
Molson Coors Brewing
Smithfield Foods
Health Care	9.0
Applera-Applied Biosys
Barr Pharmaceuticals
Forest Laboratories
Hospira
Omnicare
Warner Chilcott Cl A
Materials	6.2
Ball
Bemis
Intl Flavors & Fragrances
Louisiana Pacific
Packaging of America
RPM International
Utilities	4.0
American Electric Power
PPL
Wisconsin Energy
Telecommunication Services	1.3
Citizens Communications

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, eliminating 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 stock selection in the energy sector, as holdings in coal producers Massey Energy and Foundation Coal rose sharply during the period. These stocks have performed well, as prices for coal used in power plants and steelmaking climb to new highs amid surging demand. Conversely, stock selection in the industrials sector detracted from performance. Some of our holdings with exposure to the aerospace industry, such as Spirit AeroSystems and Textron, lagged due to concerns over the impact that high fuel prices will have on the demand for new aircraft. However, we are confident that these companies will benefit from multi-year contracts and diverse backlog of aircraft demand, particularly since new planes are far more fuel efficient. Stock selection in the consumer staples sector also detracted from performance. Smithfield Foods, the world’s largest hog producer and pork processor, declined after reporting disappointing earnings as a result of surging feed costs. However, we believe that the company will benefit as hog prices improve, offsetting higher the feed costs. Coca-Cola Enterprises, a company that bottles and distributes the Coca-Cola Company’s beverages, declined after reporting disappointing earnings for the most recent quarter. Sales in North America were hurt by slowing demand for immediate-consumptions products due to slower traffic at gas stations and convenience stores.

We believe our focus on companies that generate strong free cash flow with valuations below historical norms should add value in this uncertain economic environment. While we have avoided many of the companies directly affected by the credit crisis, we have been negatively impacted by a lower exposure to selected industries within the energy and materials sectors, which have dramatically outperformed. We continue to avoid areas such as these, where companies are operating beyond peak margins and trading at historically high valuations. However, recent volatility has created opportunities among high-quality, consistently profitable franchises trading at attractive valuations.

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.