Global Listed Infrastructure: In a Class of Its Own Edward P. Keating Senior Vice President

This presentation and all research and materials enclosed are property of 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. All opinions expressed herein are as of the date of this presentation and are subject to change. Key Takeaways Global Listed Infrastructure: In a Class of its Own

. Inflation protection: stronger than commodities, REITS, timber, etc.

. Stability: Robust, highly forecastable earnings; defensive companies

. Yield : Stable earnings allow for sustainably high dividend yields

. Attractive: Significantly undervalued today

1 Lazard Asset Management Large, Diverse, Liquid Universe 400+ Listed Infrastructure Companies, $3 Trillion+ in Market Capitalization

Transport Energy Water Communication Social . Toll roads . Gas & electricity . Pipelines & . Broadcast . Hospitals transmission, treatment plants . Airports . Satellite . Schools distribution & . Seaports generation . Cable . Prisons . Rail

In recent years, there has been an international trend to increased private sector ownership and management of these assets.

Infrastructure comprises the physical assets that a society requires to facilitate its orderly operation. They include: 2 Lazard Asset Management Privately Owned, Listed Airports (stocks!)

. Mexico (30+): Monterrey, Los Cabos, Cancun, Guadalajara . Europe (20+): Charles de Gaulle, Zurich, Vienna, Heathrow, Milan, Rome . Asia/Australia (25+): Sydney, Melbourne, Auckland, Beijing, Guangzhou, Bangkok . USA (0) Copenhagen, Denmark

Heathrow, Frankfurt UK , Zurich, Germany Switzerland Vienna, Austria Tokyo, Japan

Monterrey, Mexico

Sydney, Australia

Publicly listed infrastructure companies form the largest opportunity set for global infrastructure investors with a total market cap more than US$3.0 Trillion.

As of 31 December 2010 The information identified above should not be considered a recommendation or solicitation to purchase or sell any security. It should not be assumed that any investment was, or will be profitable. Source: Lazard Asset Management. 3 Lazard Asset Management Why Invest in Infrastructure? Attractive Investment Characteristics

Attractive characteristics that can be found in infrastructure: . Long-life

. Low risk of capital loss

. Inflation linked revenues

. Low correlations with major asset classes Key risks associated with investing in Infrastructure: . Regulatory and political

. Leverage

. Real interest rates

4 Lazard Asset Management Expected Risk and Return

Expected Return

Alternatives Listed Equities

Preferred Infrastructure

Real Assets Fixed Income

Cash

Expected Volatility

For illustrative purposes only. Expected returns do not represent a promise or guarantee of future results and are subject to change. 5 Lazard Asset Management Allocating to Global Listed Infrastructure Attractive Characteristics Offer Flexibility

Asset Class Rationale for Listed Infrastructure Alongside… Infrastructure Largest infrastructure investment universe, Private Equity diversification, liquidity, transparency infrastructure

Real Assets Contractual or regulated inflation protection REITS, Timber, Commodities

Equities Lower risk, sustainable yield premium, Global Equities diversifying

6 Lazard Asset Management Not All Infrastructure Is Created Equal…

Preferred Non-Preferred Regulated Utility Merchant Electricity Generator (e.g., Southern Company) (e.g., E.On; Exelon)

. . Monopoly like assets Competitive markets . Regulated return . Commodity price volatility . Explicit/implicit inflation pass through . High fixed cost structure

= Stable, consistent pattern of return = Volatile, uncertain pattern of return

Other Preferred examples… Other Non-Preferred examples… . Toll roads . Construction companies, road services . Airports . Airlines, baggage handling . Broadcast towers . Telecommunication service companies . OECD nations . Most emerging market nations

Strict adherence a Preferred Infrastructure investment philosophy is critical to delivering on the attractive characteristics of infrastructure

The securities identified are not necessarily held by Lazard Asset Management and should not be considered a recommendation or solicitation to purchase or sell these securities. 7 Lazard Asset Management Not All Infrastructure is Created Equal…

Regulated Utility: Southern Company Merchant Electricity Generator : Exelon 5 Year Results 5 Year Results EPS Growth: +20% EPS Growth: -44% Stock Performance: +15% Stock Performance: -63%

50 2.8 95 4.4

85 2.7 45 75 3.9 2.6 40 65 2.5 3.4 55 35 2.4 45 2.9 30 2.3 35

25 2.2 25 2.4 Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan 08 08 08 09 09 10 10 10 11 11 12 12 13 08 08 08 09 09 10 10 10 11 11 12 12 13 Southern Company Share Price Exelon Share Price Southern Company EPS Exelon EPS

8 Lazard Asset Management Compelling Real Asset Characteristics of Preferred Infrastructure

“An Inflation Linked Bond with Rising Coupons”

- Warren Buffett

9 Lazard Asset Management A Framework for Evaluating Real Assets

Three key criteria investors need to consider when considering Real Assets:

. Strength of Inflation Pass Through

• What is the inflation pass-through mechanism? Contractual or market reliant?

. Risk Profile

• What are the underlying risks of the asset type & cash flow stream?

. Valuation

• What are the key risks to valuation?

• Are current asset prices materially above or below intrinsic value?

10 Lazard Asset Management Real Assets Framework: Strength of Inflation Protection Contractual or Market Forces?

Stronger Inflation Protection Contractual Asset Type TIPS Preferred Infrastructure Contractual or Regulated Pricing Mechanism Contractual (CPI) (Tariffs/Rates) Market Structure NA Monopoly Demand Volatility NA Low Risk of Capital Loss Low Low

Weaker Inflation Protection Market Forces Asset Type Real Estate Timber Commodities Supply & Demand Supply & Demand Supply & Demand Pricing Mechanism (Rents) (Marginal Cost) (Marginal Cost) Market Structure Competitive Competitive Competitive Demand Volatility Moderate Moderate High

Risk of Capital Loss Moderate Moderate Moderate/High11 Lazard Asset Management

Source: Lazard Commodities: Inflation protection? Negative real returns since 1845

The Economist Industrial Commodity-price Index Real1 Terms, 1845-2010

Equally-weighted Base Metals Real Price Index (Log)

120

100

80

60 1850 1870 1890 1910 1930 1950 1970 1990 2010

Over the long-run, as technology and efficiencies have improved, commodity prices have declined in real terms—that is, they have produced a negative real return

Adjusted by US GDP deflator Source: The Economist 12 Lazard Asset Management Real Assets Framework: Risk Profile Stability of Earnings Earnings $ 120

100

80

60

40

20 2002 EPS: Lazard PIU -6.0% 2009 EPS: Lazard PIU -3.0% MSCI World -23.0% MSCI World -27.0% 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 MSCI World Lazard PIU

Not all infrastructure companies will exhibit stable earnings – selectivity is critical

As of 30 September 2013 Estimates based on historical financial accounts of companies held in the Lazard Global Listed Infrastructure strategy. Statistics are calculated using an index style construction methodology. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. All estimates are based on current information and are subject to change. Past performance is not a reliable indicator of future results. Source: Lazard, UBS 13 Lazard Asset Management Real Assets Framework: Risk Profile Stability of Dividends

8.0

7.0

6.0

5.0

4.0 3.6% Lazard GLI

3.3% UBS 50/50 Index 3.0

2.0 2.3% MSCI World Index Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec

As of 31 December 2013 Estimates based on historical financial accounts of companies held in the Lazard Global Listed Infrastructure strategy. Statistics are calculated using an index style construction methodology. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. All estimates are based on current information and are subject to change. Past performance is not a reliable indicator of future results. Source: Lazard, UBS*, MSCI 14 Lazard Asset Management Real Assets Framework: Risk Profile Infrastructure Helps Increase Returns, Decrease Risk

Annualized Returns and Volatility over 5, 10 & 15 years (31 December 2013) 5 Years 10 Years 15 Years Description1 Return Volatility Return Volatility Return Volatility U.S Inflation (CPI) 1.7 0.2 1.9 0.3 2.0 0.3 Bonds US Bonds 4.4 2.9 4.5 3.4 5.2 3.5 Global Bonds 3.9 5.7 4.5 5.8 4.8 5.9 Real Assets US TIPS 5.4 6.0 4.9 6.5 Infrastructure 9.9 14.6 9.5 14.9 6.5 14.6 Commodities 3.9 19.5 0.7 23.9 6.2 23.4 USA REITS 16.9 25.6 8.6 25.8 10.5 22.2 Equities S&P 500 17.9 15.7 7.4 14.6 4.7 15.5 MSCI World 15.7 17.1 7.6 15.9 4.8 16.0 MSCI EM 15.1 22.4 11.5 23.8 11.2 23.5

As of 31 December 2013 1 Index data represented by monthly returns derived from the following indexes: CPI-U All Items Less Food And Energy US City Average SA, Barclays Capital US Aggregate, Barclays 15 Lazard Asset Management Capital Global Aggregate Bond, Barclays Capital US Govt Inflation-Linked, UBS Global Infrastructure & Utilities 50-50 Index, S&P GSCII, FTSE NAREIT All Equity REITs, FTSE EPRA/NAREIT Developed Net Return , S&P 500, MSCI The World Index, MSCI EMF Source: Factset Real Assets Framework: Valuation Forecastability of Future Earnings

Preferred Infrastructure assets have relatively low valuation risk . As regulated monopolies, assessing supply & demand and long run market pricing is largely irrelevant when valuing Preferred Infrastructure assets . Preferred Infrastructure valuations should therefore be relatively stable over time

Preferred Asset Type Infrastructure Real Estate Timber Commodities Allowed Timber Growth Returns/Tolls Rental Yields Short, Medium & Long Rates Run Supply & Demand Key Valuation Capital Local Supply & Harvest Rates Drivers Expenditures Demand Marginal Cost Global Supply & Long Run Capitalization Rate Resource Lives Demand Traffic/PAX/Volume

Forecasting Risk Low Moderate Moderate High

Valuation Risk Low Moderate Moderate High

We believe valuation is the most important criteria: 16 Lazard Asset Management overpayment = underperformance Real Assets Framework: Valuation Comparing Value & Price

Transurban Intrinsic Value to Share Price % Share price above/below Intrinsic value 60%

40%

20%

Intrinsic Value 0%

-20%

-40%

-60% Jan-00 Oct-00 Jul-01 Apr-02 Jan-03 Oct-03 Jul-04 Apr-05 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13

As of 12 July 2013 Past performance is not a reliable indicator of future results. The security identified above is not necessarily held by Lazard for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell this security. It should not be assumed that any investment in this security was, or will be profitable. Source: Factset, Lazard 17 Lazard Asset Management Diversifying Real Asset Allocations Investing in Global Listed Infrastructure

Summary: Investors seeking increased inflation protection, lower risk and attractive returns are increasingly allocating to Infrastructure

Existing Rationale for Preferred Infrastructure Allocation TIPS Increased return Tips offer very little real yield and debt market return expectations are muted Commodities Increased inflation protection Commodities have provided negative real returns over the long run and recently have been very volatile REITS Lower risk profile REITS have been one of the more volatile global asset classes

18 Lazard Asset Management Lazard Asset Management Contact Information

Scott Toohig Capital Advisory Group Office: 212.632.6077 [email protected]

Edward Keating Global Listed Infrastructure Office: 212.632.6953 [email protected]

19 Lazard Asset Management Disclosures

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. Securities and instruments of infrastructure companies may be more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including additional costs, competition, regulatory implications and certain other factors. Certain information included herein is derived by Lazard in part from an MSCI index or indices (the “Index Data”). However, MSCI has not reviewed this product or report, and does not endorse or express any opinion regarding this product or report or any analysis or other information contained herein or the author or source of any such information or analysis. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any Index Data or data derived there from.

20 Lazard Asset Management