Key questions from the fourth quarter earnings call conducted by Legg Mason, Inc. on May 6, 2008.

William Katz (Buckingham Research): You let off the conversation by saying that the business has turned better in through since March 31st. if that is occurring, why the capital raise at all?

Mark R. Fetting: The capital raise is targeted to a series of issues that to me are separate. First and foremost is the reduced exposure that we have but still there and in this kind of an environment it is because we have done so many, we believe, successful approaches to supporting the money funds on an efficient basis, it is clear to us that as things improve, fundamentally there year wise they have capital to work through it for the remaining piece over a reasonable period of time. As to exactly when and if we have to do it remains to be seen. For those who would say why raise this capital, it is because we do have that remaining exposure and ample capital from an extra margin of safety should facilitate our further reduction of it. If we do not use it, which is a possibility, we have other means, other opportunities in terms of our core building wise strategy to deploy it in both acquisitions and also supporting the growth of our existing managers. We think our businesses are all performing well and like our business model.

William Katz (Buckingham Research): The equity attrition just continues to accelerate, not withstanding a bad backdrop and you have some high profile managers that just continue to under-perform not withstanding a recovery. What steps can you take to help learn some of the attrition and then within the attrition, are there any lumpy account losses or is it just across the border?

Mark R. Fetting: On the equity front, there is the kind of principal managers underlying that would be capital management, PCM and ClearBridge, and if I tried to convey having met with all of the teams there I think they are doing all that should and needs to be done and in some cases you have seen improvement. ClearBridge being an excellent example in terms of the improved performances, depreciation, et cetera, and you do see some impact, still outflows for sure but some impact. Capital management is interesting because it has extended the team and expanded the product offering. They are while still focused on improving the situation, both in performance and flows in their core products; they are pursuing some other opportunities as an example. Bill just got awarded a Financial Services mandate from a sovereign wealth government and fund. That is an indication of some opportunity that they would want to pursue. No one is at all doing anything other than just focused on turning where it needs to be turned and continuing to grow the business.

Prashant Bhatia (Citigroup): Is it fair to think about the amount the Western owes the Legg Mason shareholder to be in the $200 million range And if that is accurate over what time period do you think that will be recovered?

F. Barry Bilson: The agreement is in facts and circumstances market environment, the retention, et cetera, will come to play. But you will recall back last quarter indicated there was an agreement of recovery over the next fiscal year, the more recent 8-K indicated years because candidly it would be inappropriate to cut their nose off and display their face, i.e., squeeze everything out immediately. There is certainly every expectation at this point that there would be recovery and from a standpoint of your modeling, I believe, we indicated in the last quarter's call that you could be looking at something in order of magnitude of about $20 million a quarter. But again that is subject to some variability.

Prashant Bhatia (Citigroup): Is there any update on the leadership back at ClearBridge and what are you looking for in terms of replacing someone in the timeframe there?

Mark R. Fetting: We have an active search underway, it has made good progress meeting with both internal and external candidates and we are on track. In the meantime I am appreciative of the progress the teams have made and confident that we will have that result in a reasonable timeframe.

Robert Lee (Keefe, Bruyette & Woods): Could you give some color on institutional flows and how much of that was coming from Legg Mason capital management?

Mark R. Fetting: The more one becomes more vulnerable for some short-time pressure, it could impact flows. So the short answer is yes, if there has probably been some pickup as you would expect with Western in that number, but other equity managers are part of it. It has been our experience that retaining out that with institutional clients across our managers has been better because of the relationships we have, the understanding they have around the philosophy process that we have and generally being alpha managers. As the underperformance extends, it does become more problematic, and that is a general overview. We do not break that out individually. Relative to pipeline, our leading institutional managers such as Western, you would expect that with the performance issues, there would be some impact, and that has been the case. Having said that they continue to be active in the markets, winning mandates and it is too soon to predict how quickly that can turn back up to their normal level that they have been making good progress when you consider both the market challenges, and some of their individual issues.

Michael Hecht (Banc of America Securities): Could you break out the equity outflows of $17 billion?

Mark R. Fetting: We do not give that specific detail on the manager assets but relative to the out-flows, I was trying to be helpful in terms of acknowledging that the three principal contributors would be who you would expect, which would be Capital Management, ClearBridge and PCM. In Capital Management, you can get more visibility through your own sources on the fund side and then on the institutional side but those have been contributing. On Clear Bride, you have visibility on the fund side and then the retailer’s side less so both is in outflows but there has been some improvement in the rate of outflow relative to the fund side at ClearBridge in light of some of those performance improvements.

Michael Hecht (Banc of America Securities): You are seeing softer trends in Royce and Batterymarch and Brandywine. Where the assets for some of the managers particularly like ClearBridge and Private Capital entered the quarter?

Mark R. Fetting: If you look at Brandywine, you look at Batterymarch, you look at Royce, solid situation, a good performance and decent growth.

Michael Hecht (Banc of America Securities): Could you give any color on outlook for acquisition whether you continue to look for international equity manager, what the pricing environment looks like and whether this capital raise suggests you are closer to something?

Mark R. Fetting: We do not have anything imminent and no immediate use. We do remain active in looking in a targeted and kind of wanting to as we spoke in more publicly in kind of our general goal here than we have on any other situation, it would be helpful to get further resolution on the SIV stuff and this raise helps us have that optionality because there is a combination of events that could allow us to move much more quickly, and we would be poised to do so.

Marc Irizarry (Goldman Sachs): What your balance sheet SIV exposure is?

F. Barry Bilson: We have about 150 million of securities and then we have exposure through a total return swap of about 890 million.

Marc Irizarry (Goldman Sachs): There is a $525 million in other loss, and did you say that the SIV portion of that, the support, was $517 million?