The new MEAG equity fund "MEAG Osteuropa"

MEAG is starting the sales phase of its MEAG Osteuropa (MEAG Eastern Europe) equity fund issued on 1 October 2007, which gives investors the opportunity to participate in a highly promising market segment.

The MEAG Osteuropa fund enables investors to benefit from the growth in Central and Eastern European countries. MEAG sees GDPs in these areas growing much more rapidly than in Euroland in the coming years. Dieter Wolf, Managing Director at MEAG, says: "The MEAG Osteuropa will probably perform better than a European equity fund in the longer term, but it also entails higher risks. The MEAG Osteuropa is ideal as a higher risk, higher opportunity addition to a long-term investment portfolio."

The MEAG Osteuropa equity fund focuses on three growth drivers: Russia, with its enormous oil and gas reserves as the motor of this country's dynamic economic development; the economic convergence of EU member states in the eastward enlargement, especially Poland, Hungary and the Czech Republic, and the EU candidates such as Croatia and in particular Turkey. Fund manager Martin Sirch says: "With this approach we diversify the risks while remaining in a position to benefit from opportunities for the investor." Holger Kerzel, head of Portfolio Management Equities, goes on to say: "In this fund, the investor also profits from our extensive expertise in all countries and industries, which we also exploit in our asset management work for the Munich Re Group."

Russia is by far the largest and most liquid capital market in Eastern Europe. However, it is not just its size that makes Russia attractive for investors. Fund manager Sirch continues: "Russia's path from being a supplier of energy and primary products to becoming a developed industrial nation offers great opportunities to companies who profit from the structural changes that this transformation brings with it, but the existing oil and gas enterprises are also attractive due to their massive reserves." In MEAG's view, Russia is currently in a phase of quite stable growth. Its economy is slowly distancing itself from the dependence on oil and gas cycles by connecting more closely to international trade. Russia also still has a lot of catching up to do when it comes to attaining the level of prosperity of Western industrial countries." MEAG Fund Management also considers the oil and gas companies such as Gazprom to still be attractive investment propositions, as are telecommunication service providers such as MTS and financial services companies such as Sberbank, in view of the economic transformation taking place.

The second driver is the EU eastward enlargement. Sirch says: "The twelve new EU states that joined in 2004 and 2007 profit from the continuously improving business relations with Western Europe." The interest convergence is sending out positive impulses, as are the considerable transfer payments coming from Brussels. These states are in the process of improving their infrastructure. Among the direct beneficiaries of this progress is, for example, the construction industry. The relatively low penetration of the market with lending products should continue to ensure healthy demand and lend wings to the profits in the financial sector. Of the twelve new EU states, Poland, Hungary and the Czech Republic are the most significant due to their size and the investibility of their equities markets. Interesting names in this growth segment are, for example, the financial services provider PKO Bank in Poland and the utility Cez from the Czech Republic.

Thirdly, the fund management also focuses on EU neighbouring countries such as Turkey. Sirch explains: "The accession negotiations entail major reforms for countries like Turkey. This is a long but worthwhile process for aspiring EU candidates." Unlike Western Europe, Turkey does not have a demographic problem. Its population is younger than that of Germany, for example, and the share of the employable population will continue to grow in the years to come. What is more, Turkey lies at the border between Orient and Occident. It is a bridgehead and hub between Europe and the Middle and Far East. The willingness of the governing AKP party to embrace reforms is benefiting Turkey's economic development. Inflation is still relatively high, but the foundations have been laid. Turkey is in the throes of a political and economic reform and has a lot of ground to cover before being on the same level as Western Europe. Interesting equities here are, for example, the financial services provider Garanti Bank, the retail discounter BIM and IS-Reit from the real estate sector.

Managing Director Dieter Wolf sums up by saying: "The chances of being invested in Eastern Europe outweigh the risks of not being there." This fund is available from all MEAG sales partners, in particular from the ERGO insurance companies Victoria, Hamburg-Mannheimer, DKV, D.A.S., KarstadtQuelle Versicherungen and from MEAG itself (tel. 089/ 2867-2867).

MEAG MUNICH ERGO AssetManagement GmbH in Munich is the asset manager for Munich Re and ERGO Insurance Group. With offices in New York and Hong Kong, MEAG has an international orientation and also manages the assets of clients outside the Munich Re Group. MEAG currently manages assets to the value of around € 182 billion, of which around € 13 billion are held in real estate.

Munich, 19 October 2007

Contact:
Dr. Josef Wild
Telephone: +49 89 | 2489 - 2072
Fax: +49 89 | 2489 - 2075
E-mail: JWild@meag.com