To the Board of Directors Fomento Económico Mexicano, S.A.B. de C.V. (the "Company"):

Pursuant to Articles 42 and 43 of the Mexican Securities Law (Ley del Mercado de Valores) and the Charter of the Audit Committee, we submit to the Board of Directors our report on the activities performed during, 2012. We considered the recommendations established in the Code of Corporate Best Practices and, since the Company is a publicly-listed company in the New York Stock Exchange (¨NYSE¨), we also complied with the applicable provisions set forth in Sarbanes-Oxley Act. We met at least on a quarterly basis and, based on a work program, we carried out the activities described below

Internal Control

We verified the compliance by management of its responsibilities regarding internal control, and the establishment of general guidelines and the procedures necessary for their application and compliance. Additionally, we followed the comments and remarks made in this regard by External Auditors as a result of their findings.

We verified the actions taken by the Company in order to comply with section 404 of Sarbanes-Oxley Act regarding the self-assessment of internal controls performed by the Company. Throughout this process, we verified the preventive and corrective measures implemented.

Risk Assessment

We periodically evaluated the effectiveness of the Risk Management System, which is established to identify, measure, record, assess, and control the Company´s risks, as well as for the implementation of follow-up measures to ensure its effective operation

We reviewed with Management and both External and Internal Auditors of the Company, the key risk factors that could adversely affect the Company´s operations and assets, and we determined that they have been appropriately identified managed, and considered in both audit programs.

External Audit

We recommended to the Board of Directors to approve the external auditors for the Company and its subsidiaries. For this purpose, we verified their independence and their compliance with the requirements established by applicable laws and regulations. We analyzed their approach, work program as well as their coordination with Internal Audit.

We were in permanent and direct communication with them to be timely informed of their progress and their observations, and also to consider any comments that resulted from their review of the quarterly financial statements. We were timely informed of their conclusions and reports, regarding annual financial statements and followed up on the actions implemented resulting from the findings and recommendations provided during the year

We authorized the fees of the external auditors for their audit and other permitted services, and made sure that such services would not compromise their Independence.

With the appropriate input from Managements, we carried out an evaluation of their services for the previous year and initiated the evaluation process for the fiscal year 2012.

Internal Auditing

In order to maintain its independence and objectivity, the Internal Audit area reports functionally to the Audit Committee. Therefore:

We reviewed and approved the annual work program and budget, in order to comply with the requirements of SAROX. For its preparation, the Internal Audit area participated in the process of identifying risks, reviewing controls and testing them.

We received periodic reports regarding the progress of the approved work program, any deviations and the causes thereof.

We followed up the implementation of the observations developed by Internal Audit.

We confirmed the existence of an Annual Training program.

We reviewed the evaluations of the Internal Audit service performed by the responsible of each business unit and the Audit Committee, as well as the results of the Quality Assurance Review performed by a qualified, independent reviewer.

Financial Information, Accounting Policies and Reports to the Third Parties

We reviewed the quarterly and annual financial statements of the Company with the individual responsible for their preparation and recommended the Board of Directors its approval and authorized their publication. As part of this process, we took into account the opinions and remarks of the external auditors and made sure that the criteria, accounting policies and information used by Management to prepare financial information were adequate, sufficient, and except for the adoption of the International Reporting Standards were consistently applied with the prior year. As a consequence, the information submitted by Management reasonably reflects the Company´s financial situation, its operating results and cash flows for the fiscal year ending on December 31, 2012.

We also reviewed the quarterly reports prepared by Management and submitted to shareholders and the financial community, verifying that such information was prepared under International Financial Reporting Standards (IFRS) and the same accounting criteria for preparing annual information. We also reviewed the existence of an integral process that provides a reasonable assurance of fairness in the information content. To conclude, we recommended to the Board to authorize the release of such information.

Our reviews also included reports and any other financial information required by Mexican and United States regulatory authorities.

We reviewed and approved the adoption of the accounting standards for the Company that became effective in 2012, as a result of the implementation of International Financial Reporting Standards (IFRS), recommending their approval to the Board of Directors.

Compliance With Applicable Laws and Regulations, Legal Issues and Contingencies

We verified the existence and reliability of the Company-established controls to ensure compliance with the various legal provisions applicable to the Company. When required, we verified the appropriate disclosure in the financial reports.

We made periodic reviews of the various tax, legal and labor contingencies of the Company. We supervised the efficiency of the procedures established for their identification and follow-up, as well as their adequate disclosure and recording.

Code of Conduct

We reviewed the new version of the Business Code of Ethics which includes the anti-bribery provisions established by the Foreign Corrupt Practices Act (FCPA), recommending their approval to the board of Directors.

With the support from Internal Audit, we verified the compliance of the Business Code of Ethics, the existence of adequate processes to update it and its communication to employees, as well as the application of sanctions in those cases where violations were detected.

We reviewed the complaints received in the Company´s Whistle-Blowing System and followed up on their correct and timely handling.

Administrative Activities

We held regular meetings with Management to be informed of any relevant or unusual activities and events. We also met individually with external and internal auditors to review their work, and observations.

In those cases where we deemed advisable, we requested the support and opinion from independent experts. We are not aware of any significant non-compliance with the operating policies, the internal control system or the accounting records of the Company.

We held executive meetings. In the course of such meetings, agreements and recommendations for Management were made.

We submitted quarterly reports to the Board of Directors, on the activities performed by the Committee.

We reviewed the Audit Committee Charter and made the amendments that we deemed appropriate, submitting such changes for its approval of Board of Directors.

We verified that the financial expert of the committee meets the technical background and experience requirements to be considered as such, and that each Committee Member meets the independence requirements set forth in by the applicable laws and regulations.

Our activities were duly documented in the minutes prepared for each meeting. Such minutes were properly reviewed and approved by Committee members.

As required by our Charter, we organized a training session to improve our effectiveness as an Audit Committee and become more familiar with current trends and practices in the United States of America.

We made our annual performance self-assessment, and submitted the results to the Chairman of the Board of Directors.


February 27, 2013
José Manuel Canal Hernando
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