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 11.4 -4.9 -4.9 17.7 0.3 6.3 10.0 (%; Net of fees) Lazard U.S. Mid Cap Equity - SMA 10.6 -7.8 -7.8 14.1 -2.7 3.1 6.7 Russell Midcap Index 12.3 -1.5 -1.5 20.2 1.4 7.0 9.1
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		74			778
Current Dividend Yield (%)		1.2			1.4
Average Weighted Market Cap ($ billions)		8.0			8.5
Turnover – Trailing 12 Months (%)		79.0			N/A

Characteristics

Equity	96.8
Cash and Equivalents	3.2
Consumer Discretionary	16.8
Autozone
Cablevision Systems Cl A
Darden Restaurants
Devry
Dreamworks Animation
Interpublic Group of Companies
Intl Game Technology
Lear Corporation
Mattel
Newell Rubbermaid
Ross Stores
Sirius XM Radio
Stanley Works
TJX Companies
Information Technology	15.0
Amdocs
Analog Devices
AOL
BMC Software
Ingram Micro Cl A
Intuit
Lender Process Services
Motorola Mobility Holdings
Quest Software
Symantec
Teradata
Teradyne
Xilinx
Industrials	14.6
Corrections Corporation of America
Dover
Equifax
Foster Wheeler
Joy Global
Parker Hannifin
Rockwell Collins
Thomas & Betts
Financials	13.4
Ameriprise Financial
City National
Fifth Third Bancorp
Invesco

Financials (cont.)
Keycorp New
Macerich
NYSE Euronext
PartnerRe
The Principal Financial Group
Weingarten Rlty Invs Sh B
Health Care	9.1
CareFusion
Dentsply International New
Healthsouth
Hospira
Laboratory Corporation of America Holdings
Life Technologies
Medicis Pharmaceutical Cl A
Warner Chilcott Cl A
Zimmer Holdings
Energy	8.7
Arch Coal
EQT
Noble Energy
Rowan
Tidewater
Williams Companies
Materials	8.2
Ball
Cliffs Natural Resources
Compass Minerals International
Eastman Chemical
Rock-Tenn Cl A
U.S. Steel
Consumer Staples	6.7
Avon Products
Campbell Soup
Energizer Holdings
Molson Coors Brewing
Ralcorp Holdings
Utilities	4.1
CMS Energy
Energen
Wisconsin Energy
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.

The U.S. stock market increased during the first quarter of 2011, as the Russell Midcap Index rose 7.6%, 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.

The energy sector had the largest gain in the Russell Midcap Index, as crude oil prices climbed 17% during the quarter. The materials and industrials sectors also performed well, as booming prices in commodities helped drive returns. The telecom services sector, which is generally considered defensive, posted the only negative return in the Index.

Stock selection in the industrials sector contributed to performance. Shares of Dover, a diversified manufacturer of industrial products, increased after the company reported strong quarterly earnings ahead of expectations. The company reported stronger sales in each of its business segments, better margin performance, and robust free cash flow generation. Furthermore, the company also provided better-than-expected earnings guidance for 2011. The strategy’s lack of exposure to telecom services also aided performance, as the sector had the lowest returns in the Index.

In contrast, stock selection in the consumer staples sector detracted from performance. Molson Coors Brewing fell as quarterly earnings were lower than expected, mainly driven by an increase in costs by a distributor acquisition. However, the quarter saw market share gains in all of its major regions. We like the brewer as we believe it is a stable cash flow business with concentrated end markets, and that its joint venture with MillerCoors has the potential to unlock significant value in Molson Coors’ U.S. business.

Stock selection in the health care sector also hurt performance. Hospira, a specialty pharmaceutical and medication delivery company that is a leader in specialty injectable pharmaceuticals, decreased after the company reported lower-than-expected earnings, primarily due to operational issues. However, we believe the company’s focus on generic injectables is a solid business with high barriers to entry. Moreover, Hospira’s core generic injectables end market in the United States is in short supply, which will likely benefit the company as it works through its operational issues.

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 U.S. 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 United States 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. 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.