Demystifying the Investment Landscape in Latin AmericapThomas BoyleSenior Vice President, Portfolio Manager/Analyst

This presentation and all research and materials enclosed are property of Lazard Asset Management LLC. © 2012 Lazard Asset Management LLCInformation 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 the date of this presentation 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 Emerging market securities carry special risks such as less developed or less efficient trading markets a lack of

23 May 2012

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changes in government administration, and economic and monetary policy. Emerging market 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 market countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging market countries.The securities and/or information referenced should not be considered a recommendation or solicitation to purchase or sell these securities. 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 or equal to the investment performance of securities referenced herein.

Agenda

• Macroeconomic backdrop

• Market structure and performanceMarket structure and performance

• Country-specific insights

• Opportunities and risks

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The Macroeconomic and Demographic Landscape

Mexico

Haiti

HondurasPopulation2011 GDP per capita GDP Growth (%) Honduras

Colombia

Venezuela

Ecuador

T T

Guyana

Suriname

MSCI EM Latin America Constituents

Median Age

Population as of 2010 (million)

per capita (USD,

thousand)

( )

2012E 2013E 2014E

Brazil 29 193.3 $11.6 2.9 4.5 4.0

Chil 31 1 1 $16 1 0 4 4 2

Peru

Ecuador

Brazil

Bolivia

Chile 31 17.1 $16.1 5.0 4.5 4.2

Colombia 28 45.5 $10.0 5.0 5.0 4.5

Mexico 27 112 3 $15 1 3 8 3 5 3 0

Argentina

Chile

Paraguay

Uruguay

Mexico 27 112.3 $15.1 3.8 3.5 3.0

Peru 26 29.5 $10.0 5.5 7.0 6.0

MSCI Latin America1 28 397.7 $12.6 3.5 4.4 3.9

A f D b 2011

Falkland (UK)

United States 37 309.3 $48.4 2.1 2.3 2.9

European Union 41 501.1 $39.6 .03 1.3 1.9

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As of December 20111 GDP per capita and GDP growth aggregates calculated as a GDP-weighted averageEstimated data are not a promise or guarantee of future results and are subject to change.Source: Haver Analytics, The World Factbook, JP Morgan, International Monetary Fund World Economic Outlook, Eurostat

Demographics Are a Source of Economic Growth

• Working age segment is in a “sweet spot” for potential economic growth

• Opportunity to develop retirement infrastructure in the next decades

(P 100 l f ki )

Working Age Segment Continues to Expand Favorable Demographics Due to a Low Dependency Ratio

500

600

700 Elderly (65+)

Working age

Children (age 0-14)

(Million)

70

80

90

100

(Per 100 people of working age)

Sweet spot (34 yrs)

200

300

400

Sweet spot

2003-2036

20

30

40

50

60

Elderly

0

100

1950 1970 1990 2010 2030 2050 2070 20900

10

20

1950 1970 1990 2010 2030 2050 2070 2090

Children

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As of 4 May 2012Estimated data are not a promise or guarantee of future results and are subject to change.Source: Goldman Sachs Global Economics, Commodities, and Strategy Research, United Nations

Latin America in the MSCI Emerging Markets Index

Peru, 3%

MSCI Emerging Markets Index Region Weights (817 stocks) MSCI EM Latin America Index Country Weights (135 stocks)

Brazil 14%

Latin America, 22%

Mexico, 21%

,China, 18%Brazil, 14%

Asia, 59%EMEA 18% Brazil 62%

Colombia, 5%

EMEA, 18% Brazil, 62%Chile, 8%

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As of April 2012All data reflect roundingSource: MSCI, Factset

Market Structure and Evolution

Average Daily Trading Volume

789(USD billion)

• Over 50% of trading volume

123456 • Over 50% of trading volume

today corresponds to local trade

02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

ADR Local

Average Daily Trading Volume by Sector(USD billion)

23456789

• Today, volume traded in consumer discretionary and consumer staples sectors exceeds the total market volume in 2004

012

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Health Care Information Technology Industrials Utilities Telecom Services

Consumer Discretionary Consumer Staples Financials Energy Materials

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As of 4 May 2012Average daily trading volume includes data from stock exchanges in Brazil, Mexico, Chile, Colombia, and Peru.Source: Morgan Stanley

Looking Beyond the Index

• Brazil: – 200 IPOs anticipated through 2016– Nearly 800 privately held companies with revenues in excess of USD 120 million

• Mexico: – 15 IPOs expected in the next 12 months– 33 companies in consumer sectors vs. 34 in the MSCI EM Latin America Index

• Colombia: – Total population and estimated economic growth suggests underrepresentation in the MSCI EM Latin

America Index

Number of Companies in the MSCI EM Latin America Index

Number of Companies in Latin American Markets with 1-Year Average Daily Trading Volume over USD 500k

135 400+

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As of April 2012Source: Itau BBA, MSCI

Demystifying Performance

• Myth: performance in Latin America does not compensate for high volatility

• Fact: over the last decade Latin America outperformed major indices with better risk-adjusted returns

600

700

800($)

Growth of $100

100

200

300

400

500

0JAN-02 JAN-03 JAN-04 JAN-05 JAN-06 JAN-07 JAN-08 JAN-09 JAN-10 JAN-11 JAN-12

MSCI EM Latin America Index MSCI Emerging Markets IndexMSCI AC World Index S&P 500 Index

Annualized Return (%)

Annualized Standard Deviation (%) Sharpe Ratio

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Return (%) Deviation (%) Sharpe Ratio

MSCI EM Latin America Index 19.38 28.51 0.62

MSCI Emerging Markets Index 15.04 24.08 0.55

MSCI AC World Index 5.65 17.25 0.22

S&P 500 Index 3.95 15.73 0.14

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As of April 2012For illustrative purposes onlyThe performance quoted represents past performance. Past performance is not a reliable indicator of future results. One cannot invest directly in an index.Source: MSCI, Factset, Standard & Poors

S&P 500 Index 3.95 15.73 0.14

Demystifying Performance

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Over the last 12 years Latin America has been a top performer and a driver of global returns

-13.94 6.19 -4.75 73.66 39.62 50.42 43.48 50.67 -41.85 104.19 19.35 -6.86

-16.57 -0.39 -6.00 56.28 25.95 34.54 33.22 41.58 -51.28 79.02 19.20 -17.16

30 61 2 37 18 98 50 97 15 75 27 50 32 59 39 78 52 77 74 21 14 89 18 17-30.61 -2.37 -18.98 50.97 15.75 27.50 32.59 39.78 -52.77 74.21 14.89 -18.17

-41.79 -15.91 -22.45 34.63 15.33 11.37 21.53 12.18 -53.18 35.41 13.21 -19.15

MSCI EM Latin America Index – Gross Return

MSCI Emerging Markets Index – Gross Return

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MSCI EM Asia Index – Gross Return

MSCI AC World Index – Gross Return

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As of April 2012For illustrative purposes onlyThe performance quoted represents past performance. Past performance is not a reliable indicator of future results. One cannot invest directly in an index.Source: MSCI, Factset

Diversification of Economies

• Myth: Latin American exports are commodity driven and rely on a single business partner

• Fact: Brazil is a relatively closed economy, Mexico is dependent on the U.S. but not on commodity exports

Export Destinations (as % of total exports)Total Exports as

% of GDPCommodity Exports as

% of Total ExportsU.S. (%)

Eurozone(%)

China (%)

Brazil 9.7 55.4 9.6 21.4 15.2

Chile 31.9 74.8 3.7 6.8 25.3

Colombia 13.8 56.9 43.1 12.6 4.9

Mexico 32.9 18.3 78.8 5.3 1.2

Peru 23.1 77.7 16.4 17.6 11.8

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As of December 2011Source: JP Morgan

Mexico: Regaining Competitiveness

• Mexican and Chinese unit labor costs are converging

• Positive implications for the overall economy

2 00

2.50USD per hour

3,200

3,400

9,500

10,000 (MXN billion)(MXN billion)

Domestic Demand and Exports1Unit Labor Costs

1.00

1.50

2.00

2,400

2,600

2,800

3,000

8,000

8,500

9,000

0.00

0.50

2003 2004 2005 2006 2007 2008 2009 2010 E 2011 E

1,800

2,000

2,200

7,000

7,500

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

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Mexico

China

Domestic Demand (left scale)

Exports (right scale)

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As of April 20121 Seasonally adjusted, 2003 Mexican pesos, and excluding inventories, data as of December 2011Estimated data are not a promise or guarantee of future results and are subject to change.Source: BofA Merrill Lynch Global Research, Banxico, INEGI, International Labor Organization, China National Bureau of Statistics, Morgan Stanley

Brazil: An Emerging Middle Class and Favorable Job Market

• Growing middle class

• Annual average of new jobs created has doubled

• Infrastructure investments: World Cup Olympics and pre-salt oil investments• Infrastructure investments: World Cup, Olympics, and pre-salt oil investments

New Jobs Creation

2 50

Million

Social Class EvolutionTotal population

(%)

1.50

2.00

2.50

2000-2003 average: 664 th d

2004-2011 average: 1.47 million

37

54

821

60

80

100

0.00

0.50

1.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

664 thousand

55

25

54

0

20

40

New Jobs in the Last 12 Months

Average

2003 2010A/B (upper classes)

C (middle class)

D/E (lower classes)

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As of December 2011Source: Instituto Brasileiro de Geografia e Estadistica and BofA Merrill Lynch Global Research, Haver Analytics

Colombia: An Oil Renaissance

• Economy should continue to benefit from improved security, oil production, and free trade agreements

• Capital market improvements should continue

1,400

1,600

Colombia Oil Production (thousands of barrels per day)1

800

1,000

1,200

200

400

600

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01980 1985 1990 1995 2000 2005 2010 2015E 2020E

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As of April 20121 Data from JPM Report Colombian Oils 101, published on 29 Feb 2012Estimated data are not a promise or guarantee of future results and are subject to change.Source: JP Morgan

Conclusion

Opportunities

• Continued growth of the middle class

Risks

• Inflation

• Increasing maturity of the capital markets and IPO pipeline

• Growing pension fund market

• Hard landing in the Chinese economy – base case for soft landing

• Security and social issues – improving

• Infrastructure investments • Government interference – monitoring

Key Insights

• Breadth and depth of investment universe

• Strong indicators for economic growth and renewed political stability

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Opinions as of May 2012 and are subject to change.

Q&AQ&A

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Disclosures

This presentation and all research and materials enclosed are property of Lazard Asset Management LLC © 2012 Lazard Asset Management LLC.

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. This presentation is for informational purposes only. It is not intended to, and does not constitute, an offer to enter into any contract or investment agreement in respect of any product offered by Lazard Asset Management and shall not be considered as an offer or solicitation with respect to any product, security or service in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or unauthorized or otherwise restricted or prohibited. All opinions expressed herein are as of the date of this presentation 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. Emerging market 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 market countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging market countries.p y p g p g g

Past performance is not a reliable indicator of future results.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

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