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 7.7 7.7 64.4 -3.9 3.6 8.6 10.6 (%; Net of fees) Lazard U.S. Mid Cap Equity - SMA 6.9 6.9 59.5 -6.8 0.5 5.4 7.3 Russell Midcap Index 8.7 8.7 67.7 -3.3 4.2 4.8 9.3
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		69			766
Current Dividend Yield (%)		1.5			1.5
Average Weighted Market Cap ($ billions)		7.3			6.8
Turnover – Trailing 12 Months (%)		74.4			N/A

Characteristics

Equity	97.5
Cash and Equivalents	2.5
Consumer Discretionary	19.8
American Eagle Outfitters
Apollo Group Cl A
Autozone
Burger King Holdings
Cablevision Systems Cl A
Family Dollar Stores
Genuine Parts
J.C. Penney
Mattel
Newell Rubbermaid
Stanley Works
Viacom Cl B
Financials	16.8
Ameriprise Financial
City National
Fifth Third Bancorp
Keycorp New
Northern Trust
NYSE Euronext
PartnerRe
Public Storage
RenaissanceRe Holdings
St. Joe
Tanger Factory Outlet Centers
TD Ameritrade
UDR
Information Technology	14.0
Analog Devices
BMC Software
Fidelity National Information
Ingram Micro Cl A
Intuit
Lexmark International Cl A
NetApp
NeuStar
Symantec
VeriSign
Health Care	10.5
CareFusion
Hospira

Health Care (cont.)
Life Technologies
Omnicare
Talecris Biotherapeutics Holdings
Teleflex
Warner Chilcott Cl A
Zimmer Holdings
Industrials	9.0
Corrections Corporation of America
Dover
Foster Wheeler
Parker Hannifin
Republic Services Cl A
Rockwell Collins
Materials	8.7
Air Products & Chemicals
Ball
Cliffs Natural Resources
Compass Minerals International
Nucor
Packaging of America
Energy	7.2
Arch Coal
Holly
Massey Energy
Tidewater
Valero Energy
Williams Companies
Consumer Staples	7.0
Avon Products
Campbell Soup
McCormick
Molson Coors Brewing
Ralcorp Holdings
Utilities	4.5
Allegheny Energy
American Electric Power
Energen
Telecommunication Services	0.0

1. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. Source: Lazard, Russell Investments.
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.

Stocks finished the first quarter of 2010 with solid gains, extending the year-long rally that began in early March of 2009. After a sharp sell-off in January, equity markets rebounded strongly in February and maintained the momentum through March amid an improving economic outlook. During the period, many developments impacted the markets, including intensifying sovereign default risk in Europe, tightening credit conditions in China, and, in the United States, proposals to overhaul the financials sector and the passage of landmark health care legislation.

Despite the volatility during the quarter, equities performed well due to improving economic data, including better industrial production and durable goods numbers. Recent manufacturing data showed a modest decline, but remained above the breakeven level, while retail sales and personal spending rose in February. The most recent S&P/Case-Shiller Home Price Index data for January 2010 showed only a slight decline in house prices from the peak of the recent rebound in September 2009, indicating that we may be closer to reaching a bottom in housing prices. However, the continued high unemployment rate remains a major obstacle to a sustained economic recovery.

Consumer discretionary was one of the best-performing sectors during the quarter, followed by financials and industrials, which benefited from the continued economic recovery. The traditionally defensive utilities and telecom services sectors, however, both declined for the quarter despite the solid positive returns for the market overall, as investors favored more cyclical sectors.

During the quarter, the strategy benefited from an overweight position and stock selection in the consumer discretionary sector. Family Dollar Stores reported better-than-expected earnings and an improved outlook as a result of better margins and sales growth in its consumable category. We continue to favor Family Dollar due to its attractive valuation (relative to its history and peers), as well as its increasing free-cash-flow generation. Stock selection in the energy sector also benefited performance. Shares of Smith International, an oil services company, rose sharply as a result of a takeover offer from Schlumberger. A position in refiner Valero Energy rebounded from earlier weakness, as investors generally sought companies with exposure to the economic recovery and shares of refiners had not yet fully participated in the 2009 recovery. However, refining margins remained at the low end of the industry’s historical range amid weak refined-product demand and excess industry production capacity. The strategy also benefited from an underweight position in the utilities sector, which lagged during the quarter.

Conversely, an overweight position and stock selection in the health care sector hurt the strategy’s performance during the quarter, as shares of Talecris Biotherapeutics declined after it reported fourth quarter earnings that disappointed investors. However, we continue to view Talecris favorably due to our outlook for strong revenues and longer-term margin expansion. Stock selection in the industrials sector also detracted from returns. A position in Corrections Corp of America, the largest correctional facilities provider to government agencies in the United States, declined during the quarter on concerns associated with state budgetary constraints.

Over the quarters and years ahead, we continue to believe we will see increasing differentiation between the winners, survivors, and losers. We expect the winners to be the companies with strong balance sheets, robust organic cash flow, and the resulting operational flexibility. We believe that our forward-looking, fundamental research, deployed through a robust scenario analysis framework and disciplined portfolio construction process, is particularly well designed for the kind of uncertainty that we are likely to see on the road ahead.

Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Mid-cap securities carry additional risks, their earnings may be less predictable, their share prices more volatile, and their securities less liquid than large-cap securities.