Emerging Fixed Income Local Debt December 2007

Introduction Evolution of the asset class Investment case Investment process FLF Bond World Emerging Local Appendix

Introduction

Evolution of the asset class

Investment case

Investment process

FLF Bond World Emerging Local

Appendix

Why invest in local debt Strong fundamental and technical business case Local debt is moving to the centre of the asset class Return potential better than for external debt Strong macro picture likely to drive local yields downwards Currency risks skewed to the upside Diversification Against both developed and emerging external debt

Strong fundamental and technical business case

Local debt is moving to the centre of the asset class

Return potential better than for external debt

Strong macro picture likely to drive local yields downwards

Currency risks skewed to the upside

Diversification

Against both developed and emerging external debt

Fortis Investments’ strengths Expertise to exploit this growing opportunity Proven process and team continuity since 1998 Track record of success in tackling traditional and new drivers of returns Local debt is already at the heart of our investment process One of the first dedicated funds 50% of our AUM Clear investment philosophy and appropriate resources Global practice support by growing presence in key local markets

Expertise to exploit this growing opportunity

Proven process and team continuity since 1998

Track record of success in tackling traditional and new drivers of returns

Local debt is already at the heart of our investment process

One of the first dedicated funds

50% of our AUM

Clear investment philosophy and appropriate resources

Global practice support by growing presence in key local markets

Investment Philosophy There are two distinct sources of risk & return in local debt: bond and currency Top-down factors drive the market and form the starting point for all our decisions Detailed fundamental and technical scoring reveals expected returns We focus on curve, carry and currency in deep markets The opportunity set is diverse and evolving We can take small, opportunistic positions in exploratory markets Tight risk control can help to limit the impact of negative events in individual positions We are not “slave to the index” and seek broadly diversified position

There are two distinct sources of risk & return in local debt: bond and currency

Top-down factors drive the market and form the starting point for all our decisions

Detailed fundamental and technical scoring reveals expected returns

We focus on curve, carry and currency in deep markets

The opportunity set is diverse and evolving

We can take small, opportunistic positions in exploratory markets

Tight risk control can help to limit the impact of negative events in individual positions

We are not “slave to the index” and seek broadly diversified position

Introduction Evolution of the asset class Investment case Investment process FLF Bond World Emerging Local Appendix

Introduction

Evolution of the asset class

Investment case

Investment process

FLF Bond World Emerging Local

Appendix

Local debt The asset class Local debt is sovereign or corporate bonds issued in local currency The risk profile is different from external debt External debt: solvency risk Local debt: currency risk Local debt has grown in importance as the Emerging World has stabilised Wealthier countries – less need to issue debt, retire outstanding external debt Stable currency markets – investors are more willing to buy local debt More diversified investor base – local investors want local debt

Local debt is sovereign or corporate bonds issued in local currency

The risk profile is different from external debt

External debt: solvency risk

Local debt: currency risk

Local debt has grown in importance as the Emerging World has stabilised

Wealthier countries – less need to issue debt, retire outstanding external debt

Stable currency markets – investors are more willing to buy local debt

More diversified investor base – local investors want local debt

Powerful structural changes in the asset class Reduced currency risk Fiscal Balance (% GDP) Current Account Balance (% GDP) FX reserves by region (USD mn) Source: JPMorgan

Market evolution favours local debt Benefits for issuers Advantages for issuers Avoid mismatch between local currency revenues and foreign currency debt service Reduce dependence on international capital Limit vulnerability to external shocks Domestic Debt Securities stock (USDbn)

Advantages for issuers

Avoid mismatch between local currency revenues and foreign currency debt service

Reduce dependence on international capital

Limit vulnerability to external shocks

Market evolution favours local debt Benefits for investors Ave. daily trading in quarter, cash (USD bn) Trading activity in EM by instrument (%) Local markets are set to continue to overtake external debt as both cash and derivative markets deepen A credible local curve and wide choice of instruments now exists Instruments include Sovereign T-bills and T-bonds Corporate bonds Inflation linked bonds Local currency bonds issued in international markets (eg Columbian europeso bonds)

Local markets are set to continue to overtake external debt as both cash and derivative markets deepen

A credible local curve and wide choice of instruments now exists

Instruments include

Sovereign T-bills and T-bonds

Corporate bonds

Inflation linked bonds

Local currency bonds issued in international markets (eg Columbian europeso bonds)

Continuing trend New issuers, new investors Domestic Debt Securities stock USDbn as of June 2006 Investor profile of local currency government debt ownership becoming more diversified

Introduction Evolution of the asset class Investment case Investment process FLF Bond World Emerging Local Appendix

Introduction

Evolution of the asset class

Investment case

Investment process

FLF Bond World Emerging Local

Appendix

Attractive yields – high potential returns Structural undervaluation of many emerging currencies Normalisation of curves in less developed countries Higher yield, shorter duration, improving credit quality Source: JP Morgan Indices, Bloomberg, S&P +233 BB- 1.8 16.2 BB Turkey +159 BBB+ 5.0 8.5 A+ South Africa +158 BBB+ 2.0 6.1 A- Russia +166 BBB 5.1 8.1 BBB+ Mexico +269 BB- 6.0 10.1 BB+ Indonesia n/a n/a 6.3 7.9 BBB- India +93 BBB+ 3.8 7.2 BBB+ Hungary +216 BB+ 6.5 10.7 BBB Brazil Spread (bp) S&P Rating Duration Yield S&P Rating External Debt Markets Local Debt Markets As at 18-12-2007

Structural undervaluation of many emerging currencies

Normalisation of curves in less developed countries

Higher yield, shorter duration, improving credit quality

Diversification benefits Correlations have risen (search for yield) But diversification benefits remain Source:, Bloomberg / Fortis Investments Monthly rolling correlations: benchmark and major asset classes Jan 2003-Nov 2007

Correlations have risen (search for yield)

But diversification benefits remain

Introduction Evolution of the asset class Investment case Investment process FLF Bond World Emerging Local Appendix

Introduction

Evolution of the asset class

Investment case

Investment process

FLF Bond World Emerging Local

Appendix

Investment process Implementation Macro-economic assessment expanded to include local debt drivers Fundamentals Bonds: domestic curve and carry analysis; implied move versus market Currency: REER, carry against volatility Value Catalysts EM Debt and currency universe Portfolio Expected return Country indicators Investment decision Drivers and risks to expected return – technical and policy driven Risk monitoring and control Coherence of views, positions and portfolios

Score cards based investment decisions

Fundamentals Macro-economic assessment Key variables affecting local debt Growth, debt ratio, inflation, balance of payments Fiscal and monetary policy relative to those factors Example: underweight South Africa as Reserve Bank expected to hike rates to fight inflation Source: Bloomberg

Key variables affecting local debt

Growth, debt ratio, inflation, balance of payments

Fiscal and monetary policy relative to those factors

Example: underweight South Africa as Reserve Bank expected to hike rates to fight inflation

Value Bonds – primary source of returns and risk Key assessment based on our macro view: Do we override the curve? Curve change versus consensus Source: Fortis Investments (%) (%)

Key assessment based on our macro view:

Do we override the curve?

Curve change versus consensus

Value example Thai bonds Difference between 10 year and 2 year sovereign THB bonds (Sell 10 yr / Buy 2yr) Source: Bloomberg

Value Currency – real effective exchange rate Key assessment: will the market rate converge to real rate Mean reversion or fundamental adjustment in REER Remuneration versus volatility Source: Bloomberg Egypt Positive pressure on Balance of Payments means currency appreciation Plus 8% yield Risk well rewarded

Key assessment: will the market rate converge to real rate

Mean reversion or fundamental adjustment in REER

Remuneration versus volatility

Egypt

Positive pressure on Balance of Payments means currency appreciation

Plus 8% yield

Risk well rewarded

Catalysts Risks to expected returns - policy Driven by top-down factors Internal: fiscal policy, monetary policy, politics External: hot money Example: India is much better positioned to finance a current account deficit than Hungary Source: Bloomberg & Fortis Investments

Driven by top-down factors

Internal: fiscal policy, monetary policy, politics

External: hot money

Example: India is much better positioned to finance a current account deficit than Hungary

Catalysts Risks vs expected returns - technicals Israeli bonds stretched technically despite strong fundamental support Source: Bloomberg

Israeli bonds stretched technically despite strong fundamental support

Catalysts Risks to expected returns – external Huge support for Philippines peso Growth in remittances from overseas as global economy grows Laws to encourage overseas investors Philippines peso Source: Bloomberg

Huge support for Philippines peso

Growth in remittances from overseas as global economy grows

Laws to encourage overseas investors

All decisions within risk-return framework Data based on score cards

Opportunistic positions Outside the process, max 1% each Tanzania 50% of central budget comes from international donors Fiscal position highly uncertain Seasonal remittances Source: Bloomberg Tanzanian shilling June 2002-June 2007

Tanzania

50% of central budget comes from international donors

Fiscal position highly uncertain

Seasonal remittances

Introduction Evolution of the asset class Investment case Investment process FLF Bond World Emerging Local Appendix

Introduction

Evolution of the asset class

Investment case

Investment process

FLF Bond World Emerging Local

Appendix

FLF Bond World Emerging Local Overview JP Morgan GBI EM Global Diversified, unhedged in USD as of Jan 1, 2007. This benchmark is indicative; the “best selection” approach will result in a large tracking error versus its benchmark. Tracking error up to 10% Indicative maximum 20% in corporate bonds Indicative maximum 20% in EM bonds denominated in hard currencies (e.g. USD, EUR) High returns and declining volatility De-correlation from global markets Low correlation of returns within the emerging country universe Strategic role in asset allocation: enhanced returns with lower volatility

JP Morgan GBI EM Global Diversified, unhedged in USD as of Jan 1, 2007.

This benchmark is indicative; the “best selection” approach will result in a large tracking error versus its benchmark.

Tracking error up to 10%

Indicative maximum 20% in corporate bonds

Indicative maximum 20% in EM bonds denominated in hard currencies (e.g. USD, EUR)

High returns and declining volatility

De-correlation from global markets

Low correlation of returns within the emerging country universe

Strategic role in asset allocation: enhanced returns with lower volatility

FLF Bond World Emerging Local Performance Global emerging debt fund (US$ or Euro based) invested primarily in local debt instruments of both sovereign and corporate issuers and in currency markets Wider universe than the benchmark to allow further diversification Past performance or achievements are not indicative of current or future performance.

Global emerging debt fund (US$ or Euro based) invested primarily in local debt instruments of both sovereign and corporate issuers and in currency markets

Wider universe than the benchmark to allow further diversification

Conclusion Value exists in local bonds and currencies Top-down drivers determine both the risk and the return Our process reviews all aspects of expected return and risks to that return

Value exists in local bonds and currencies

Top-down drivers determine both the risk and the return

Our process reviews all aspects of expected return and risks to that return

Introduction Evolution of the asset class Investment case FLF Bond World Emerging Local Investment process Performance Appendix

Introduction

Evolution of the asset class

Investment case

FLF Bond World Emerging Local

Investment process

Performance

Appendix

Biographies Pierre-Yves Bareau, CIO Product CIO (since ‘98) Responsible for Emerging Fixed Income funds management 16 years’ investment experience Graduate in Finance Raphaël Mar é chal Fund manager (since Jun ’01) Regional focus: Emerging Europe Responsible for Emerging Europe FI funds and Emerging CDOs 10 years’ investment experience Graduate in Engineering and Post-graduate in Finance Sergio Trigo Paz Fund manager (since Oct ‘04) Regional focus: Latin America Responsible for Absolute Return funds 13 years’ investment experience Graduate in Economics and Finance; Post-graduate in Management Didier Lambert, CFA Fund manager (since ‘00) Regional focus: Asia, MiddleEast, Africa Responsible for Global EM funds 7 years’ investment experience Graduate in Banking & Finance; Post-graduate in Economic and Financial Modelling

Pierre-Yves Bareau, CIO

Product CIO (since ‘98)

Responsible for Emerging Fixed Income funds management

16 years’ investment experience

Graduate in Finance

Raphaël Mar é chal

Fund manager (since Jun ’01)

Regional focus: Emerging Europe

Responsible for Emerging Europe FI funds and Emerging CDOs

10 years’ investment experience

Graduate in Engineering and Post-graduate in Finance

Sergio Trigo Paz

Fund manager (since Oct ‘04)

Regional focus: Latin America

Responsible for Absolute Return funds

13 years’ investment experience

Graduate in Economics and Finance; Post-graduate in Management

Didier Lambert, CFA

Fund manager (since ‘00)

Regional focus: Asia, MiddleEast, Africa

Responsible for Global EM funds

7 years’ investment experience

Graduate in Banking & Finance; Post-graduate in Economic and Financial Modelling

Biographies Yves Oloui Senior Quant Analyst since Aug ‘06 6 years’ business experience Graduate in Applied Mathematics Filip Ruszkowski Junior Portfolio Manager since October ’06 (FI Jul ‘05) 3 years’ investment experience Master’s in Management, ESCP-EAP European School of Management, Paris, Oxford, Berlin Alain Defise Credit Analyst since Oct ’06 (FI Aug ‘00) 10 years’ business experience Graduate in Finance Vladimir Gersamia Economist since Mar ’07 3 years’ investment experience BSc in Economics and History

Yves Oloui

Senior Quant Analyst

since Aug ‘06

6 years’ business experience

Graduate in Applied Mathematics

Filip Ruszkowski

Junior Portfolio Manager

since October ’06 (FI Jul ‘05)

3 years’ investment experience

Master’s in Management, ESCP-EAP European School of Management, Paris, Oxford, Berlin

Alain Defise

Credit Analyst

since Oct ’06 (FI Aug ‘00)

10 years’ business experience

Graduate in Finance

Vladimir Gersamia

Economist

since Mar ’07

3 years’ investment experience

BSc in Economics and History

Biographies Michal Wozniak, CFA* Eastern Europe Fund Manager since Sept. 07 5 years’ business experience Graduate in Economics *Partnership with the Euro Fixed Income Investment Center

Michal Wozniak, CFA*

Eastern Europe Fund Manager since Sept. 07

5 years’ business experience

Graduate in Economics

Team structure Stable, successful team PORTFOLIO MANAGERS Key supporting teams within Fortis Investments * Partnership with the Euro Fixed Income Investment Centre Global Fixed Income - London Global Credit Research Team with 21 analysts London, Boston, Paris (A. Serpico, Y. de Bray, M. Baud) EM Equities teams – London, Boston, Hong Kong Local Offices Research Support – Turkey, Russia, Indonesia (C. Arras, V. Tsuprov, W. Kastami) Michel Gonnard G. Tossou (London) A. Jakubowicz L. Develay A. Macleod C. Carney (Boston) Product Specialist Dealers Pierre-Yves Bareau – CIO Yves Oloui Filip Ruszkowski Didier Lambert Raphael Marechal Michal Wozniak* Sergio Trigo Paz Vladimir Gersamia Alain Defise Quant Analyst Junior Portfolio Manager Global & Local funds Asia, ME, Africa CDO, Corporates Emerging Europe Absolute return Latin America Strategist Credit Analyst Emerging Market Fixed Income

AUM evolution

Local debt example Clear view of risk and return opportunities (As of December 21 st 2006)

Risk management and control FLF Bond World Emerging Local

This document has been prepared solely for informational purposes and does not constitute 1) an offer to buy or sell or a solicitation of an offer to buy or sell any security or financial instrument mentioned in this document or 2) any investment advice. Any decision to invest in the securities described herein should be made after reviewing the most recent version of the prospectus, which can be obtained free of charge from Fortis Investments*. Moreover, prospective investors should conduct such investigations as the investor deems necessary and should seek their own legal, accounting and tax advice in order to make an independent determination of the suitability and consequences of an investment in the securities. The opinions contained herein are subject to change without notice. Investors should ensure themselves that they read the last available version of this document. Past performance or achievements are not indicative of current or future performance. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units. For more information, please contact [email_address] Fortis Investments is the trade name for all entities within the group of Fortis Investment Management. This document has been issued by Fortis Investment Management Belgium N.V./S.A. (address : Avenue de l’Astronomie 14, 1210 Brussels, Belgium, RPM/RPR 0882 221 433).

This document has been prepared solely for informational purposes and does not constitute 1) an offer to buy or sell or a solicitation of an offer to buy or sell any security or financial instrument mentioned in this document or 2) any investment advice. Any decision to invest in the securities described herein should be made after reviewing the most recent version of the prospectus, which can be obtained free of charge from Fortis Investments*. Moreover, prospective investors should conduct such investigations as the investor deems necessary and should seek their own legal, accounting and tax advice in order to make an independent determination of the suitability and consequences of an investment in the securities. The opinions contained herein are subject to change without notice.

Investors should ensure themselves that they read the last available version of this document.

Past performance or achievements are not indicative of current or future performance. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units.

For more information, please contact [email_address]

Fortis Investments is the trade name for all entities within the group of Fortis Investment Management. This document has been issued by Fortis Investment Management Belgium N.V./S.A. (address : Avenue de l’Astronomie 14, 1210 Brussels, Belgium, RPM/RPR 0882 221 433).

Fund Legal Factsheet Fund Manager: Didier Lambert Management fees: 1.50% for C-shares 0.60% for I-shares ISIN Code: Capital: LU0251280011 Distribution: LU0251280102 Institutional: LU0251280367 Registration: Belgium, Luxembourg and The Netherlands Legal Form: Compartment of the Fortis L Fund UCITS III Sicav Nationality: Luxembourg fund NAV Agent: Fastnet Lux SA Risk indicators: Risk class: 3 on a 0 to 6 scale Advised Horizon: 8 years Investor Profile: Dynamic The investments in Fortis L Fund Bond World Emerging Local are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay.

Fund Manager:

Didier Lambert

Management fees:

1.50% for C-shares

0.60% for I-shares

ISIN Code:

Capital: LU0251280011

Distribution: LU0251280102

Institutional: LU0251280367

Registration: Belgium, Luxembourg and The Netherlands

Legal Form: Compartment of the Fortis L Fund UCITS III Sicav

Nationality: Luxembourg fund

NAV Agent: Fastnet Lux SA

Risk indicators:

Risk class: 3 on a 0 to 6 scale

Advised Horizon: 8 years

Investor Profile: Dynamic

The investments in Fortis L Fund Bond World Emerging Local are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay.