MPC Capital AG enjoyed successful financial year With by renata.vivien



     MPC Capital AG enjoyed a successful 2006 financial year. With
     placed equity of EUR 1.01 billion, the Group achieved the second-
     highest placement volume in the company’s history and again
     positioned itself as market leader for closed-end funds in Germany.
     With the initiation, marketing, administration and management of
     investment products for HNWI customers, MPC Capital generated
     sales of EUR 228 million (previous year: EUR 191 million), earnings
     per share of EUR 5.29 (previous year: EUR 4.10) and a dividend of
     EUR 5.00 (previous year: EUR 4.00). These key ratios underline the
     success of the corporate strategy and the committed team at MPC
     Capital AG. In the ship investments segment, MPC Capital was
     again market leader. Here, with growth of 33% over the previous
     year in a declining market, the company’s result was the best since
     its foundation. With regard to real estate funds, the company
     impressively demonstrated its specialist expertise by success-
     fully processing one of the largest transactions in the history of
     closed-end funds. In the structured products growth segment,
     MPC Capital set the strategic course for extending its product mix
     through implementation of Assentus Bank, thus opening up new
     growth opportunities.
                                                     Group management report   General economic environment   45

Group management report 2006

45 General economic environment                           71 Private equity funds
52 Business development 2006                              74 Other investments
55 Ship investments                                       83 Supplementary report
60 Real estate funds                                      84 New legal requirements
64 Life insurance funds                                   86 Risk report
68 Structured products                                    92 Forecast report

Business of the MPC Capital Group
The Hamburg-based company develops, initiates, sells and manages yield-oriented and
tax-optimised investments. The investment strategy adopted by MPC Capital for all
investments is based on the economic and tax environment of the markets as well as the
needs of the investors and sales partners. The ongoing diversification of the product
portfolio shows a high degree of readiness and ability of MPC Capital to innovate and
leads to the company being less dependent on developments in individual business
divisions. This diversification strategy is accompanied by two fundamental product
concepts. The first is traditional, asset-backed investments such as real estate funds, ship
investments and life insurance funds. Here a vital factor is the ability of MPC Capital to
identify and secure attractive projects. The other is the development of management-based
investments whose availability can be continually developed as a structured product or by
means of fund of funds structures.

     The private equity funds, umbrella funds and real estate opportunity funds as well as
     the asset class of structured products (certificates, notes and insurances) are products of
     this type. The broadly diversified product portfolio offers investors and sales partners
     attractive and innovative products. The MPC Capital Group has developed a strong
     position as an independent, innovative and powerful product partner for the bank and
     savings bank sector.

     Group structure further developed

     Product focus     Thanks to its broad product range, the MPC Capital Group combined the
     development expertise of the various product lines in autonomous companies with experi-
     enced experts at a very early stage. These teams of specialists are constantly developing
     new ideas and ensure that product quality enjoys the highest priority during design and
     initiation. Examples of successes achieved here include the development of the real estate
     system MPC Real Estate Opportunity and the initiation of the MPC Reefer Fleet (refriger-
     ated vessels) in the shipping division.

       Product expertise centre
       (simplified)                                   MPC Capital

       Ship               Real estate funds    Life insurance       Private equity   Structured
       investments        incl. real estate    funds                and investment   products
                          opportunity                               funds

       MPC Steamship      MPC Real Estate      MPC Life Plus        MPC Asset        MPC Financial
                          Consulting           Consulting           Consulting       Services AG
                                                        Group management report            General economic environment   47

Sales focus        In the 2006 financial year, MPC Capital AG also concentrated on combin-
ing different areas of expertise in Sales. MPC Capital has had an autonomous banking
house in the Group since July 1, 2006 in the form of Assentus Bank AG. Assentus Bank
resulted from increasing the interest in Hanseatische i-Bank to 75% followed by the com-
plete realignment of the business model.
     For sales a clear distinction has been made between asset-backed closed-end funds
and management-based and structured products since July 2006. MPC Capital continues
to offer traditional closed-end funds such as ship investments, real estate and life insurance
funds. Assentus Bank has been in charge of selling the management-based investments
and the structured products since the middle of the year.

  Sales focus

           MPC Capital

   Ship investments                             Real estate opportunity funds
   Real estate funds                            Private equity funds
   Life insurance funds                         Investment funds/umbrella funds
                                                Structured products (notes/certificates)

Investor focus The MPC Capital Group considers its responsibility towards its
investors to extend well beyond initiating and selling investments. The customers (who
number more than 141,000) can look forward to active management and a continuous sup-
ply of information about their investments. To this end, TVP Treuhand- und Verwaltungs-
gesellschaft für Publikumsfonds mbH (TVP) acts as an interface between the investors and
the various partners of an investment. In the 2006 financial year, the sales processes in
real estate in particular placed heavy demands on the process of supplying information to
investors. In the one sales package of 99 properties from 27 Dutch real estate funds, around
17,000 investors were involved. Following the coordination procedure for carrying out
the transaction, TVP kept the investors informed about the progress of the sale, the
successful conclusion of the sale, the return flow of funds to be expected and the process-
ing of the funds.

         In addition, MPC Münchmeyer Petersen FundXchange GmbH (www.mpc-fund- offers the investors an Internet-based secondary market platform, and this led
     to a considerable increase in investor activity in the 2006 financial year. In the reporting
     year, units in 33 shipping companies were traded (previous year: 20). As buying interest
     was substantially higher than the selling interest, it was again possible to fulfil all sales
     requests at fair prices. MPC Münchmeyer Petersen FundXchange performed a total of
     107 transactions (previous year: 18).

     General economic development
     The German economy grew substantially in 2006. Price-adjusted gross domestic product
     (GDP) increased by 2.5% in comparison with the previous year. This is the greatest
     economic revival since the boom in 2000. Unlike the previous two years, growth impulses
     came from both Germany and abroad. The quickening of economic expansion is primarily
     due to increased domestic demand. The main driving force behind this was the dramatic
     increase in corporate investment activity. After two almost stagnant years, a 0.6% increase
     in private consumption as well as a 1.7% increase in state consumption contributed to this
     growth. Foreign trade remained dynamic. In comparison with the previous year, growth
     rates in imports and exports nearly doubled. Export levels again outperformed imports
     with an increase of 12.4%, compared with an increase of 12.1% for imports.
         Prices in Germany increased by 1.7% compared with 2005. This is a much lower
     inflation rate than the previous year (+2.0%). The increase in prices was mainly due to
     energy prices, which had an inflationary effect for almost the entire year. Excluding energy
     prices, the annual average inflation rate was only 0.9%.
                                                       Group management report    General economic environment   49

Sustained expansion of the global economy and
further growth of the equity markets
For the fourth year in succession, the global economy expanded rapidly and grew at a
sustained high rate compared to the previous year. Despite the increase in energy costs, the
global economy grew by 5.1% in 2006 according to the estimates of the International
Monetary Fund (IMF). The growth drivers behind the global economy were continued
momentum in China (IMF estimate: +10.0%), robust growth in the USA (IMF estimate:
+3.4%) as well as a positive performance in Europe (IMF estimate: +2.4%).
    The US Federal Reserve Bank continued its policy of small interest rate steps until
the middle of the year. The American Federal Funds rate increased in four steps, each by
0.25%, from 4.25% to 5.25% to June 29, 2006. Since then the US Federal Reserve Bank
has left the Federal Funds rate unchanged. The European Central Bank on the other hand
raised the main refinancing rate for the Eurozone in five 0.25% steps from 2.25% to 3.5%
in the course of the year.
    All in all, the international equity markets can look back on a successful year in 2006.
After a spectacular start, global fears of inflation led to consolidation in May and June. The
equity markets made a display of strength and quickly recovered as fears about interest
abated. Continued good corporate earnings and overall economic growth led to rises in
stock exchange prices for the fourth consecutive year. The German stock market index
DAX finished 2006 with an increase of 21% at 6,597 points (XETRA closing rate). During
the consolidation phase on June 13, 2006, the DAX posted its low at 5,292 points and a
decrease of 3% compared with the start of the year. It reached its year-high just before the
end of the year on December 28, 2006 with 6,612 points.
    The euro appreciated strongly in the first six months of 2006. Following a phase of
relative stability during the summer, it gained in strength against most major world
currencies. Particularly worthy of note is its strength against the dollar. At the end of 2006,
the euro was 6.9% above the average level of 2005.

     Placement in closed-end investment models                                                         Development of the industry
     in EUR billion
                                                                                                       Market for investment models beneath previous
          Equity                                                                                       year’s level     Despite the discontinuation of tax-
          Fund volume
                                                                                                       induced investment models, the German market for

                                                              24.12                                    closed-end funds declined by only 5% in 2006,
              19.59                                                                                    reaching a level of EUR 11.64 billion. The industry
                                                                                                       had expected a much stronger decline. This shows
                                      12.85           12.30
                                                                      11.64           11.68            that initiators and investors completed the switch-
                                                                                                       over to return-oriented investments. In the second
                                                                                                       half of the year, and particularly in the last quarter,
                                                                                                       the market exhibited stronger momentum. The last
          02              03              04                  05          06              07*
                                                                                          * Forecast
                                                                                                       three months of 2006 contributed over 39% to the
Source: Loipfinger, Market Analysis of the Investment Models 2007                                      overall result for the year.

                                                                                                       Global assets of the target group grow            The
     Market for investment models 2006                                                                 continued growth in the global economy and the
                                                                                                       increasing market capitalisation were the main
                                                              Ship investments                         factors causing the global assets of high-net-worth
                                                                                                       individuals (HNWIs) to grow by 8.5% to USD 33.3
                                                                       Private equity funds            trillion in 2006. This is the conclusion of the authors
                                                                                                       of the World Wealth Report 2006, published in
     real estate funds                                                                                 June 2006. This means that growth again exceeded
                   43%                                                 Life insurance funds
                                                                                                       the momentum of the previous period. In the tenth
                                                                                                       year of the report, this therefore resulted in annual
                        (leasing, media)                       Speciality funds                        asset growth for 1996 to 2005 of 8% from USD 16.6
                                     3%                                      6%
                                                                                                       trillion in 1996 to EUR 33.3 trillion in 2005. With
                                                                                                       a growth rate of almost 10%, the number of HNWIs
Source: Loipfinger, Market Analysis of the Investment Models 2007
                                                                                                       increased mainly in North America. The number of
                                                                                                       HNWIs in North America remains unchanged at
                                       2.9 million – this is more dollar millionaires than anywhere else in the world. Second
                                       place goes to Europe which had a total of 2.8 million HNWIs last year. Despite the low
                                       overall level, Africa, the Middle East and Latin America recorded the highest growth
                                       rates (11.7%, 9.8% and 9.7% respectively). For the coming years, the experts expect an
                                       average annual growth rate of global assets of 6%. By 2010, this is expected to reach
                                       USD 44.6 trillion.
                                                      Group management report    General economic environment   51

    Rising equity markets and low interest rates are also reflected in the asset structure of
HNWI customers. After a defensive portfolio alignment in 2002 and 2003, investors have
now structured their investments much more aggressively. This is documented in the
weighting of the asset classes equities and alternative investments. The percentage of alter-
native investments doubled from 10% in 2002 to 20% in 2005. The weighting of the equity
investments rose from 20% (2002) to 30% (2005). In return, the significance of fixed-
interest investments and liquidity declined considerably.
    The number of German investors investing in closed-end funds fell to 355,000 in
2006. Compared to a figure of 409,000 investors in the previous year, this represents a
13% decline in subscribers to closed-end investment products.

Real estate funds and ship investments the most strongly placed product groups
With syndicated equity of EUR 4.96 billion in 2006 (previous year: EUR 4.0 billion),
closed-end real estate funds once again represented the most strongly placed product
group. However, the share of real estate funds in placed equity rose from 33% in 2005 to
43%. This rise is primarily due to the greater popularity of real estate funds in Germany.
Offers with foreign real estate represent 24% of equity volume.
    The market share of ship investments declined slightly from 24% last year to 23% in
2006. A total of EUR 2.6 billion (previous year: EUR 3 billion) was invested in these
investment models.
    The revival of the private equity market was also seen in the placement figures for
2006. At EUR 2.3 billion (previous year: EUR 1.4 billion), the private equity funds
recorded growth of 64% and increased their market share from 11% to 20%.
    By contrast, the market share of life insurance funds declined from 12% in 2005 to
7% in 2006. This is due to a strong decline in products based on US policies. EUR 846
million (previous year: EUR 1.5 billion) of equity were invested in products based on
secondary life insurance policies.
    The sale of closed-end funds via banks and savings banks increased from a 59% share
in placed equity in the previous year to 64%.

     MPC Capital Group overall market leader in 2006 again
     The MPC Capital Group also positioned itself in the past financial year as market leader in
     Germany in the area of closed-end funds. This is documented in the study entitled “Market
     Analysis of the Investment Models 2007” by analyst Stefan Loipfinger. This statistic relates
     only to the German market and does not take specific MPC Capital products such as
     structured products into consideration. The market share of the MPC Capital Group in
     Germany, as measured by placed equity, rose from 6.7% to 7.3%. With placed equity of
     EUR 1,008 million, the MPC Capital Group exceeded the EUR 1 billion mark for the
     second time in its twelve years of existence. Placed equity of the MPC Capital Group rose
     by 4% compared to the figure of EUR 974 million for the previous year and came close to
     the Management Board’s expectation of around EUR 1 billion, an expectation which it
     raised during the financial year.
         MPC Münchmeyer Petersen Capital Austria AG contributed around EUR 112 million
     (previous year: EUR 157 million) or 11% to syndicated Group equity in 2006. The inten-
     sive, service-oriented cooperation with institutional and independent sales partners, as
     well as the wide range of alternative investments explain the leading position of MPC
     Capital on the Austrian market.
         The Dutch company MPC Münchmeyer Petersen Capital N.V. focussed its activities
     on ship investments, real estate funds and private equity funds. Due to differences in oper-
     ating policy objectives between the partners, in the middle of the year MPC Capital AG
     decided to sell all its shares in the Dutch subsidiary to the Dutch partners. The trans-
     action was completed on October 31, 2006. Equity of EUR 57 million was placed
     between January 1 and October 31, 2006.
         Business in Switzerland was unchanged in the past financial year. MPC Capital is
     currently investigating the regulatory and operational requirements for offering products
     and services to the Swiss market. An exhaustive evaluation of the activities is expected in
     the 2007 financial year.
                                                                                     Group management report   Business development 2006     53

                                                      among                                                                       Change
                                                        initi-                                                                      from
Placed equity                                          ators*             2002         2003      2004      2005       2006          2005
in EUR million                                       (previous                                                                        in %

Corporate investments                                                    102.8         196.4    409.8     327.2       420.2          + 28
of which Ship investments                                  1 (2)           96.4        190.6    396.7     310.1       411.2          + 33
Real estate funds                                         8 (1)          215.1        429.7     493.7     409.0       234.4          – 43
of which Real estate opportunity funds                    3 (5)                                            117.5      102.9           – 12
Life insurance funds                                      1 (1)            28.2        107.1    142.0     118.2       141.9          + 20
Structured products                                            –                                           61.9       119.0          + 92
Private equity funds                                    11 (9)             24.5         16.5     19.8      38.0        49.2          + 29
Investment funds                                               –           12.7       –1.75      28.0      19.8        43.7         + 121
                                                          1 (1)          383.3         747.8   1,093.3    974.1     1,008.4           +4

* Source: Loipfinger, Market Analysis of the Investment Models 2007

Total investments*                                                                                                                  from
in EUR million                                                            2002         2003      2004      2005       2006          2005
                                                                                                                                      in %

Ship investments                                                         160.4       1,069.2    838.3     618.0     1,222.0          + 98
Real estate funds                                                        615.5       1,008.4   1,102.5    829.1       332.1          – 60
Life insurance funds                                                       87.0        377.9    439.6     409.7       438.3           +7
Structured products                                                                                        61.9       119.0          + 92
Private equity funds                                                       16.5         16.5     19.8      38.0        49.2          + 29
Investment funds                                                           12.7       – 1.75     28.0      19.8        43.7         +121
                                                                         892.1       2,470.3   2,423.7   1,972.4    2,202.2          +12

* To be noted in the development of the total investment volume is the fact
 that the total investment volume is attributed in full to the year of initiation.

     Over 141,000 customers invested in the products The number of investors rose by
     18% from 119,000 to more than 141,000. This figure includes around 16,000 investors
     from the company in the Netherlands, which was sold on October 31, 2006. The percent-
     age of investors subscribing to more than one product remained unchanged at 23% in the
     reporting period. Since 1994, investors have invested a total of EUR 5.8 billion equity in
     MPC Capital products and thus realised a total investment volume of EUR 14.2 billion.
     The Dutch company which was sold has cumulated placed equity of EUR 472 million as
     well as an investment volume of EUR 1.4 billion.

     Banks and savings banks are the largest sales channel            MPC Capital AG possesses
     a first-class network of independent and institutional sales partners for the purpose of
     marketing its investments. High-quality products are – connected with dependability
     in terms of initiation, training and management – the key to successful partnerships.
     In 2006, customers of banks and savings banks in Germany subscribed to almost 60% of
     the placed equity. Institutional demand for independently developed, alternative invest-
     ments is determined by the customer’s desire for best advice. As a leading, independent
     market supplier with high product quality, MPC Capital is a reliable partner for the banks
     and savings banks.
         During the reporting year, the independent sales partners were again an important and
     extremely loyal distribution pillar and increased their share in placed equity to almost 37%.
         In Austria, 86% of the placed equity is distributed by means of institutions. The reason
     for the repeated increase on the previous year lies in the exclusive cooperation with banks
     for individual fund products. Independent sales partners reached a share of 14% in 2006.
         In the Netherlands, the majority of the placed equity continues to be mediated directly
     to the customers.
                              Group management report Business development in 2006   55

The story of MPC Capital AG started with the investment in the
MS Santa Ana in 1994. Today, the Hamburg-based issuing house
has 173 ships in its fleet. The investors are largely invested in
container ships via 108 closed-end funds. In the course of design-
ing an investment, MPC Capital analyses and evaluates the mari-
time markets and brings together renowned partners such as
reliable shipyards, top-class shipping companies and recognised
charterers. A long-term first employment of the ship secures the
income side of the investment. It is the basis for distributions to
investors and ensures the quickest possible repayment of loans.
A lump-sum tax on earnings based on the system of tonnage tax
means that distributions are virtually tax-free and ensures inves-
tors an attractive long-term return. However, the shipping team at
MPC Capital has its eye on a lot more than container shipping and
allows its customers to make attractive investments in alternative
maritime segments. For example, on the market for refrigerated
vessels a fleet of 14 ships already in operation was placed in 2006.
Additional areas were opened up for investors with a crude oil
tanker and an LPG tanker fleet.

                           Development of the business divisions
                           Ship investments

                           Market leadership and growth against the trend            In the 2006 financial year, placed
                           equity in ship investments made by MPC Capital rose to EUR 411 million. This represents
                           growth of 33% on the previous year’s figure of EUR 310 million. The realised investment
                           volume was more than EUR 1.2 billion. The fact that this growth was achieved in a
                           declining market is a demonstration of the quality of the partners and products as well as
                           the sales strength of MPC Capital. The market volume for ship investments in Germany
                           fell by 14% to EUR 2.6 billion. By contrast, the market share of MPC Capital rose from
                           10.1% to 16.8% and means that the company was the market leader for ship investments
                           in 2006. Since 1994, 108 funds with 173 ships, equity of EUR 2.2 billion and an invest-
                           ment volume of over EUR 6.5 billion have been realised.

     Placement volumes of ship investments
                                                                 Investments in alternative ship segments
     in EUR million                                              Thanks to its heavy involvement in the maritime
⁄                                                                markets, MPC Capital was able to offer its investors
                                             411                 an attractive investment in one niche of the maritime
                                                                 industry in 2006. With the MPC Reefer Fleet, an
                                                                 investment was placed in 14 refrigerated vessels (or
                                                                 reefers) with equity of EUR 144 million. These ships
                                                                 have been specially developed for transporting large
                      96                                         quantities of easily perishable goods and the special
                                                                 transportation requirements they present. Globally,

                      02   03    04    05    06
                                                                 80% of bananas, 71% of citrus fruits and 70% of pip
                                                                 fruits are transported on refrigerated vessels. The
                                                                 growth in demand for these products is offset by a
                           considerable decline in the shipping facilities on offer. The global refrigerated vessel fleet
                           is, on average, 19 years old, which makes it outdated. Unlike the container sector, new
                           orders do not even account for 1.5% of the vessels in operation. With an average age of
                           seven years, the ships in the MPC Reefer Fleet are considerably younger than the average.
                           They also have a guaranteed, five-year pool income from the world’s largest refrigerated
                           vessel pool, Seatrade Reefer Pool.
                                                                                Group management report   Business development 2006     57

  Performance overview                                         Dec. 31, 2003        Dec. 31, 2004   Dec. 31, 2005      Dec. 31, 2006
  of ship investments

  Initiated ships and funds*                                   101 ships in          122 ships in     134 ships in       173 ships in
                                                                  79 funds              89 funds        100 funds          108 funds
  Equity volume** in EUR million                                        1,044               1,441            1,751             2,162
  Investment volume** in EUR million                                    3,802               4,640            5,358             6,580
  * including ships which have been sold / funds which have been liquidated
  ** cumulated

As all further income is shared between the fund company and the Seetrade Reefer Pool in
a profit share, investors can participate in rate increases.
     A tanker project from MPC Capital was placed for the very first time in the reporting
year. Amended liability regulations in the USA ensure minimum risk for investors in this
area and allow an investment in this ship segment. The double-hulled tanker capable of
containing 160,000 tonnes of crude oil is being built in Japan, delivered in 2007 and has
a long-term employment with the Italian energy group Eni S.p.A. The limited partner’s
equity of EUR 24 million was syndicated within a very short time.
     The container maritime industry offered attractive investments for investors in 2006
as well. The Institute of Shipping Economics and Logistics (ISL) forecasts that the global
container transhipment will again double over the next ten years. On the one hand, this has
led to a situation where increasingly large ships which can only call at a small number of
ports worldwide are being designed. On the other hand, smaller shipping units are playing
an equally significant role as they can provide ancillary route and feeder services in
conjunction with the global logistics chain. The MPC Offen Fleet investors invested
EUR 177 million in this segment of the container maritime industry. The fleet comprises
14 container ships with a capacity of TEU 1,800 or TEU 2,800 per ship. The ships are due
for delivery between October 2006 and April 2008. Eight of the 14 ships have been char-
tered to renowned addresses in the maritime industry for five years each. No charter agree-
ments have been concluded for the ships to be delivered at the end of 2007 and in the
course of 2008. This allows investors to exploit potential and market opportunities.
     For MPC Capital, sustained, economic success for the investors is the primary prior-
ity in all ship investments. For this reason, the company remains very selective with regard
to new ship projects.

                                     Correction expected for charter rates            The Howe Robinson Containership Hire Index
                                     declined by 20% throughout 2006. However, a much stronger decline was expected at the
                                     start of the financial year. Following a correction in the first quarter, the rates surprisingly
                                     recovered for many market participants in the second quarter. The charter rates then
                                     declined again in the third and fourth quarter.
                                             The charter level in 2006 was unchanged and offered good opportunities for ships
                                     already in operation. As a result of charter agreements coming to an end, these ships can
                                     now sign new and, generally speaking, longer agreements at an attractive level.

     Howe Robinson Containership Charter Hire Index 1998 to 2006

     2000 2,000

     1500 1,500
     Index points

     1000 1,000

            500         500

                    0    0
                              1/98    1/99        1/00      1/01     1/02      1/03         1/04         1/05      1/06         1/07

                                                                                                                 Source: Howe Robinson Research

                                     Ship investments purely as yield investments                  Ship investments represent an entre-
                                     preneurial investment in a shipping company as well as an investment in one of the most
                                     flexible assets with global deployment possibilities. From a subscription of USD 10,000 or
                                     EUR 10,000, investors can become co-owners of one or more ships.
                                                         Group management report    Business development 2006   59

     In accordance with Article 5a of the German Income Tax Act (EStG), shipping
companies can determine their profits as a lump-sum tax, depending on the size of the ship
(net storage space). This regulation is generally called tonnage tax although this is not an
independent type of tax, rather a standard way to determine the profit. The regulations of
tonnage tax allow the profit of the shipping company to be determined independently from
actual economic developments. This system is recognised in many European countries and
ensures that the annual distributions are taken virtually tax-free throughout the entire
duration. Funds initiated today generally use the system of tonnage tax right from the
beginning. With this type of fund, a profit resulting from subsequent disposal of the ships
is also included in the tonnage tax.
     As a result of other tax conditions, ship investments were often used as tax-saving
models in the past. With carefully selected partners and full knowledge of the risks, they
now offer a high annual net distribution despite the abolition of corresponding tax regu-
lations. This is generally 8% p.a. initially.

Strong partners for success         As an experienced issuing house, MPC Capital develops
the overall concept for each ship fund and performs the calculation on which the investment
offer is based. Conservative assumptions in respect of the development of charter rates,
operating costs, interest rates, exchange rates and disposal proceeds are key factors for a
sound investment. MPC Capital assumes responsibility for selecting and bringing together
important partners with the aim of achieving mutual long-term success. These partners
include shipyards with design and shipbuilding skills, which will be responsible for the
high-quality workmanship and technical reliability of the ships. Additional partners come
in the form of experienced shipping companies which assume responsibility for the com-
mercial, operating and financial management. It is of central importance for the ship’s first
employment to be with a first-class, creditworthy charterer of international standing.
A valuable charter agreement lasting several years guarantees that the fund will consis-
tently and promptly pay back loans and generate attractive annual net distributions. For this
reason, MPC Capital works together in the area of ship investments with the best-known
international shipping companies, the largest shipyards and leading global charterers.

     In 1995, MPC Capital designed and placed the first closed-end fund
     with Dutch office properties. Since then, 95 real estate funds have
     been initiated which are subject to strictly defined quality criteria.
     The 277 financed properties are located in the Netherlands,
     Portugal, Germany, the USA, Canada, Austria and England. Most
     of these are what is known as core investments – office properties
     in good locations with long-term tenancy agreements. In light of
     the situation on the international real estate markets, 2006 saw
     MPC Capital AG focussing on identifying, developing and realising
     opportunities for selling properties in the Netherlands, England
     and Canada from the existing portfolio of closed-end funds in the
     interests of its investors. An outstanding achievement in this
     regard was the sale of 99 properties from 27 Dutch real estate
     funds with over 17,000 investors involved in a single transaction.
     The Real Estate Opportunity America, which is designed as an
     umbrella fund investment, has established itself firmly in the MPC
     Capital product range. It opens up an asset class to private inves-
     tors, which hitherto had been the exclusive preserve of institu-
     tional investors and HNWI customers. The investment co-invests
     with three US real estate opportunity funds specialising in real
     estate opportunity investments.
                                                                          Group management report      Business development 2006        61

  Performance overview real estate funds                 Dec. 31, 2003         Dec. 31, 2004     Dec. 31, 2005          Dec. 31, 2006

  Initiated funds *                                                  68                  79                     90                95
  Issue volume ** in EUR million                               1,173                   1,667                  2,076             2,310
  Investment volume ** in EUR million                          2,945                   4,047                  4,876             5,208
  * incl. funds which have been liquidated
  ** cumulated

Real estate funds

Restraint with initiation                In 2006, the global situ-             Development of the placement volume
ation of real estate markets continued to limit avail-                         of real estate funds in EUR million
ability of attractive real estate. Large demand, high
purchase prices and falling yields made it difficult to                                                  494

initiate a successful long-term investment. The in-                                              430

vestors place their confidence in a professional fund
and real estate management team which takes on the
tasks for investors of selecting, assessing, financing
and ongoing management of the investment. The
investment focus of traditional real estate funds is
generally what is known as core investments – office                                        02    03     04       05    06

properties in first-rate locations with tenants with
excellent financial standing. Long-term tenancy
agreements with weighted time remaining until expiry of between eight and ten years
ensure a high degree of reliability for the development of the distribution of the fund
calculated for between ten and twelve years. In order to do justice to the trust placed in
MPC Capital by investors and in light of their long-term interest, MPC Capital was very
selective with regard to the opportunities which presented themselves in the reporting year.
The MPC Capital Group issued one Dutch real estate fund for Dutch investors and two
other Holland funds for Austrian investors. A fund with a property in Germany was also
designed for the Austrian market and placed there. MPC Capital fully placed a Holland
fund initiated late in 2005 and the second England fund in the German market.

         For the above-mentioned reasons, the syndicated equity in the field of traditional
     closed-end real estate funds fell from EUR 292 million in 2005 to EUR 131 million in
     the reporting period, thus reaching its lowest level since the stock market boom in 2000.
     Since 1995, MPC Capital has been developing, initiating, selling and managing tradi-
     tional closed-end real estate funds. The total investment volume of the real estate funds is
     over EUR 5.2 billion; the syndicated equity more than EUR 2.3 billion. MPC Capital’s
     experience and competence can be found in 95 real estate funds invested in 290 properties
     in attractive locations in the Netherlands, Germany, Portugal, the USA, Austria, England
     and Canada.

     Largest transaction in the history of closed-end funds At present, international
     real estate markets are experiencing high demand, in particular from foreign institutional
     investors and high valuations combined with a moderate interest rate. The market analysis
     performed by the MPC Capital real estate team showed that this situation offers attractive
     sales scenarios. In the reporting year, opportunities to sell real estate from the closed-end
     fund portfolios were therefore systematically identified, developed and implemented for
     the benefit of the investors. These processes were always performed in close cooperation
     with the subscribers. The sale of a real estate package of 99 properties from 27 Holland
     real estate funds with a value of almost EUR 1 billion represented a milestone with regard
     to the size and complexity of the transaction. More than 17,000 investors were involved
     and agreed to the transaction by a majority. Every single fund had to be treated specifi-
     cally and professionally with its individual duration, its volume and its investor structure.
     And success was ours: a package premium of 5.5% for the portfolio was achieved above
     and beyond the total value of individual assets. Thanks to this, over EUR 450 million was
     paid out to the investors following sale of the portfolio. Given an average duration of just
     under seven years, an average dividend of 8% per year was achieved.
         After only two and a half years, the property from the England “88 Wood Street” real
     estate fund was sold achieving an above-average result. The well-known building in the
     heart of London was acquired in 2004 for GBP 160 million and sold in September 2006
     for GBP 232.5 million to an international investor.
                                                          Group management report   Business development 2006   63

All in all, the investors achieve an average total return flow of 169%, in addition to the
dividends which they have already received.
    In addition, the sale of a total of ten properties from three funds in Canada led to
average dividends of around 14% p.a. for the investors.
    By means of these different – and in some cases, extremely complex – sales processes,
MPC Capital has established itself as a professional partner in the preparation, execution
and processing of large-scale real estate transactions. MPC Capital will continue using this
position in the future for the benefit of its investors.

Real Estate Opportunity America firmly established            In 2005, MPC Capital was the
first German supplier to expand the successful traditional real estate funds with investments
in long-term leased properties by introducing a new funds concept. The investment, which
was designed as a fund of funds, invests in three North American real estate opportunity
funds specialising in real estate opportunity investments. Due to the high minimum invest-
ment of around USD 10 million, this asset class has hitherto generally speaking been the
preserve of institutional investors or HMWI customers. MPC Capital has created an
opportunity for German private investors to invest in such funds with investments starting
at USD 10,000. The investment objectives are real estate properties with the potential for
development and an increase in value. These include project developments as well as
standard properties, which are to be newly positioned, renovated, released or allocated to
another use. Well-known real estate experts with impressive track records manage these
target funds in a professional manner.
    The placing of the first public fund in this series was completed and a follow-up fund
initiated in the reporting year. Just like its predecessor, the Real Estate Opportunity
America Fund 2 invests in three target funds from acknowledged experts (Blackstone Real
Estate Advisors, Barrow Street, Brookfield Asset Management) and has an equity volume
of up to USD 215 million.
    As of December 31, 2006, total equity of EUR 103 million had been syndicated in the
product class. This was less than the previous year’s result of EUR 117 million and did not
meet the company’s expectations.

     The success story of the life insurance funds began in 2002. MPC
     Capital initiated a fund in Germany on the basis of existing German
     endowment and annuity insurance policies from renowned Ger-
     man insurance companies. The basic idea is easy: the fund
     acquires the policies from the secondary market for less than their
     actual value. This is possible because the amount which policy-
     holders receive from the insurance company if they cancel the
     endowment insurance agreement prematurely is generally consid-
     erably lower than the actual value of the agreement. The life insur-
     ance fund then pays the premiums until the end of the policy and
     then collects the amount due on the expiration of the policy term.
     Both the secondary market for endowment insurance policies as
     well as the market for investments with this structure have grown
     at breakneck speed. In 2005, MPC Capital expanded its product
     portfolio into the area of British policies. Trading policies has a
     long tradition in Great Britain, thus ensuring an established, effi-
     cient secondary market. Together with its partners, MPC Capital
     AG has secured itself excellent access to this market and hence
     laid the foundation for a successful, long-lasting product line.
                                                            Group management report     Business development 2006       65

  Performance overview                      Dec. 31, 2003        Dec. 31, 2004     Dec. 31, 2005        Dec. 31, 2006
  life insurance funds

  Initiated funds*                                      4                    6                    9               11
  Issue volume * in EUR million                     135                    277                 395               537
  Investment volume * in EUR million                465                    904                1,314             1,752
  * cumulated

Life insurance funds

Share of life insurance funds in total volume is                 Development of placement volume of
growing With EUR 142 million, the area of life                   life insurance funds in EUR million

insurance funds achieved a share of 14% of equity            ⁄
placed by MPC Capital in the last financial year.                                        142            142

The previous year, it had a share of 12% or EUR 118                                              118
million. The reason behind this growth is the fact
that the fund concept was established with insurance
policies from the British market in addition to the
success with products based on German insurance
policies. The speed at which the British funds were
placed fell below expectations in 2006.                                      02    03    04      05    06
     The sixth public fund in the German life insu-
rance fund range was initiated on the basis of German
insurance policies in the reporting year. The equity volume was again EUR 100 million
and was fully syndicated in 2006. Deploying loans, it is planned to acquire around 3,000
policies with a purchase price volume of over EUR 276 million. In Austria, the German
Life Insurance Fund Special 3 was placed in 2006 with an equity of EUR 10 million.

         The first fund on the basis of British traded endowment policies is MPC British Life
     Insurance fund. The fund was initiated at the end of 2005, and the placing of equity
     totalling GBP 20 million was concluded in the first six months of 2006. For the follow-up
     fund MPC British Life Insurance fund II, syndication of equity totalling GBP 35 million
     (EUR 51.5 million) was started in the second half of 2006. As of December 31, 2006,
     EUR 14 million of this figure had been placed. MPC Capital expects full placement of the
     fund in the course of the first six months of 2007.

     Product concept transparent       The objective of the fund design, on the basis of German
     secondary life insurance policies, is to invest in existing endowment and annuity policies
     from well-known German insurance companies with a time to maturity of between two and
     fifteen years. The fund pays the necessary premiums until the end of the policy and then
     collects the amount due on the expiration of the policy. The concept is based on the
     opportunity of buying the policies for less than their actual value. Because even though the
     purchase price is greater than the surrender value of the insurance companies, the policies
     can often be acquired for much less than their actual value. The purchase and the manage-
     ment of the insurance policies are carried out by the Munich-based company AG.
     As one of the leading companies in the secondary market for endowment and annuity
     insurance policies, has contact with a vast number of insurance agents, insurance
     brokers and banks. At the end of 2006, managed a portfolio of around EUR 1,672
     million. At present, only around 14% of the German population knows that it is possible to
     sell a life insurance policy instead of returning it to the insurance company at the low
     surrender value. However, this figure is steadily increasing thanks to the activities of the
     policy purchasers, fund initiators and associations. The animated secondary market for life
     insurance policies will further improve the options for buying in the medium to long-term.
     According to the German Association for Secondary Life Insurance, policy purchasers
     acquired life insurance policies totalling EUR 1.1 billion in 2006 alone. This represents a
     100% increase on the previous year.
                                                        Group management report    Business development 2006   67

    As with the funds based on German policies, the investors investing in the British
secondary market benefit from the fact that the life insurance policies are purchased at a
price which is above the surrender value and below the value of the assets already accumu-
lated. Unlike Germany, trading in endowment insurance policies has a long tradition in
Great Britain. A large part of the trade is handled via market makers, which come under
the scrutiny of the British Financial Services Authority, the FSA. This long tradition and
the established structures have created a very efficient market. According to the German
Association for Secondary Life Insurance, around 85% of the British population has heard
of this market.

Rapid purchase of policies       The purchase of policies organised jointly with partners
ran extremely efficiently and successfully in the reporting year. The purchase of the funds
based on British policies was quicker than expected. The MPC British Life Insurance fund
was fully placed in the reporting year and had almost fully syndicated its purchase volume
by December 31, 2006. The MPC British Life Insurance fund II, which is also in the
process of being placed, has already achieved an investment rate of over 63%. The struc-
ture chosen for the British policy purchase thus paid off. Cooperation with independent
partners opened up the possibility of using a large range of purchasing sources.
    Investments in the German life insurance funds I to IV as well as Spezial I to III were
already completed at the end of the reporting period. The MPC Life Insurance fund V,
syndicated in 2005, had an investment rate of over 85% as of the reporting date. In parallel
to this, purchase of policies for the German life insurance fund VI placed in the reporting
year commenced. This fund already has an investment rate of over 25%.
    As of the reporting date, the number of policies in the eleven funds exceeded 18,000
and was spread over an average of 38 insurance companies.

     Since 2005, MPC Capital has counted structured investments in its
     product portfolio. The first notes involving MPC Capital offered
     investors the chance to participate in further performance of the
     hedge funds asset class without having to forego 100% capital
     guarantee. MPC Capital has now developed a large number of
     structured products with a wide variety of underlyings: commodities,
     share baskets, property indices as well as hedge funds. In addition,
     innovative insurance products are designed which allow investors
     to combine the benefits of a life insurance policy with the income
     possibilities of an attractive investment. Structured products have
     been sold under the name of the Assentus Bank since mid-2006.
     Assentus Bank has established itself as a flexible, impartial
     product supplier with strong development skills for institutional
     partners, and offers independent sales partners access to this
     asset class on the basis of umbrella liability solutions.
                                                          Group management report     Business development 2006   69

Structured products

Equity almost doubled       The structured products business division is one of the growth
areas in the product portfolio of the MPC Capital Group. Syndicated capital was almost
doubled here in comparison with the previous year’s figure of EUR 62 million. Investors
have invested a total of EUR 119 million in the notes, certificates and life insurance
     These are notes and certificates for investors who want to participate in the value
development of different asset classes such as hedge funds or commodities without having
to forego a 100% capital guarantee. Well-known banking partners with excellent credit
standing such as JPMorgan Chase Bank, the Dutch Rabobank or the Lehman Brothers
investment bank provide the capital guarantee.
     The insurance solutions which are developed and sold are, by way of example, unit-
linked life insurance policies with asset management and one-off premium payment. These
combine the benefits of a tax-favoured life insurance policy with the income possibilities
of an attractive investment in an optimal manner. The savings element in the investors’
premiums is initially invested in notes with an interesting performance component and a
capital guarantee component.
     With the implementation of Assentus Bank AG,
                                                               Development of the placement volume
the MPC Capital Group is opening up opportunities
                                                               of structured products in EUR million
for itself in the field of structured products. The bank    ⁄
is creating a clear, autonomous profile for this asset
class by means of the MPC Capital product mix.
Assentus Bank AG operates in a dynamic growth                                               119

market. The market for derivative securities achieved
a record trading volume of EUR 127.6 billion on
German stock exchanges. At the end of 2006, a total
of 137,515 derivative products were listed on all
German stock exchanges. This represents a 96%
increase on the previous year. The relative impor-
tance across the portfolio structure also documents                                    05    06

investor interest. In 1990, certificates were completely

     absent from the financial asset structure of private households. By 1995, they accounted
     for 7.2% of such assets and this figure rose to 12.1% by 2005. In making these invest-
     ments, security is of importance to investors. 42% of the certificates have partial cover or
     have guarantee certificates. The majority of the Assentus Bank AG certificate products also
     take the form of guarantee certificates.
         The strategic advantages of Assentus Bank in this competitive market are its product
     expertise and its independence. On this basis it positions itself as an ideal partner and
     product supplier for smaller commercial banks, savings banks and cooperative banks.
     These banks frequently do not have resources of their own to design such products and
     avoid domestic competitors for product sourcing. In addition, the Assentus Bank sales
     team can address such banks on a broad basis. This represents a decisive competitive edge
     over foreign suppliers with limited sales resources.
         In the future, Assentus Bank AG will analyse market opportunities, develop such
     opportunities in cooperation with experts from MPC Münchmeyer Petersen Financial
     Services AG as well as experienced external specialists, and use these opportunities with
     innovative, suitable investment products.
                             Group management report Business development in 2006   71

Since 1999, the MPC Global Equity funds concept has given private
investors access to the attractive private equity asset class. With
a private equity investment, investors participate in the equity of
high-growth companies so as to participate in their economic
success. MPC Capital works together with partners which have
many years of experience in the private equity market and thus
have achieved excellent success for their investors with previous
investments. Compared with other forms of assets, a private
equity investment offers above-average yield possibilities, opti-
mises the personal asset portfolio and leads to an improvement
in the risk/yield structure. In 2006, the funds from the Global
Equity range focused on investments in European middle-sized
companies. The aim of the fund of funds concept is to spread the
investor’s capital over previously selected partner funds which
invest predominantly in the high-growth European Economic Area.
The investment programs of the experienced partners focus their
investments on the buy-out area. Thanks to the size and individual
investment strategy of the partner funds, broad diversification of
the investor’s capital is ensured.

     Performance overview private equity           Dec. 31, 2003   Dec. 31, 2004     Dec. 31, 2005     Dec. 31, 2006

     Initiated funds * incl. step by step                    7                 9                10               13
     Equity volume * in EUR million                        266               287               324              374
     Investment volume * in EUR million                    266               287               324              374
     * cumulated

                          Private equity funds

                          Syndicated equity increased by almost 30%           With syndicated equity of EUR 49 mil-
                          lion, compared to EUR 38 million the previous year, MPC Capital increased the volume in
                          the field of Private Equity by almost 30%. In 2006, investors had the opportunity to invest
                          in a total of three funds from the Global Equity range. The placement of Global Equity VII
                          was completed early in 2006; the Global Equity 8 fund was completely placed in the
                          reporting period. Placing of the Global Equity 9 fund has begun.
                               As private equity has a low correlation to traditional capital market investments, it is
                          the ideal complement for a portfolio. Investing in private equity allows investors to spread
                          their total assets over a broader range of products and reduces their dependency on the
                          fluctuations of the capital market. Private equity thus ensures greater value stability in an
                          investment portfolio. With a share of between 5% and 15%, an investment in private equity
                          optimises the personal asset portfolio by improving the risk/yield structure. Compared
                          with other forms of assets, investors with a medium to long-term investment horizon
                          benefit from above-average yield possibilities.
                                In Germany, private equity is frequently only equated with financing start-ups.
                          However, the term actually refers to very different phases of company financing. For
                          example, the largest volume of private equity investment is the buy-out phase, during
                          which the management takes over a company with the help of private equity.
                                                        Group management report    Business development 2006   73

Fund concept with a clear focus        When designing the funds placed and initiated in
2006, MPC Capital paid particularly close attention to the investors’ need for transparent
investment goals and a focus within the various private equity phases.
    The concept of the Global Equity range invests in private equity investment
programs which focus on buy-out transactions with medium-sized companies in the
European Economic Area. By focussing on strong investments in European medium-sized
companies, this concept concentrates on a market with high growth potential and invest-
ments in established, successful companies.
    The objective of the investment strategy is to
                                                           Development of placement volume
invest the equity capital in private equity companies      for private equity in EUR million
which are selected in advance. These experienced
investment companies are brought together to form
an optimum portfolio. This allows the investor to get                                     38

a picture of the expertise and experience and the
previous track record of the investment managers.                        25
These also form the decisive criteria for selecting
the partners. The managers of MPC Münchmeyer
Petersen Asset Consulting GmbH are in charge
of the selection process. These people have vast
                                                                         02   03    04    05    06
experience of the capital market and an outstanding
network within the private equity sector.
    The current Global Equity 9 strategy includes four excellent private equity investment
programs, broad, regional diversification, an indirect interest in up to 60 companies and a
clear focus on healthy, European medium-sized companies.

     MPC Europa Methodik _The value-oriented MPC Europa Methodik
     knows only one investment criterion: the methodology of Frank
     Lingohr, who is seen as a pioneer of quantitative share analysis.
     The securities are always selected in accordance with precisely
     defined analysis models with computer assistance. This strictly
     methodical approach gives countries and shares in the fund struc-
     ture a uniform weighting. The success achieved demonstrates that
     this methodology is the correct one.
           MPC Absolute Return Superfunds _The aim of the umbrella
     funds is steady performance and a positive return in absolute
     terms, regardless of orientation to a comparison index. According
     to the market situation, the funds invest in shares, bonds, gold,
     precious metals, commodities and real estate. By adopting differ-
     ent focuses, investor requirements with regard to income, growth
     and opportunities are covered.
           Best Select _The Best Select fund concept gives the investor
     four fundamental investment classes from the field of closed-end
     funds in an investment: real estate funds, ship investments, life
     insurance funds and private equity funds. In this way, the investor
     invests in a portfolio which covers the important goals of yield,
     security and regular dividends, and which helps optimise his
     overall portfolio.
                                                        Group management report     Business development 2006   75

Other investments

MPC Europa Methodik with inflows and very good performance The MPC Europa
Methodik fund is regularly assessed as first class and has for years belonged to the top
group of European funds. The fund follows a strictly methodical concept of investing in
undervalued European shares. With an increase of 28.0%, the fund, which is managed by
Frank Lingohr, achieved an excellent performance and was again able to exceed the MSCI
TR Net Europe benchmark by 8%. As a result, the fund posted significant cash inflows in
the reporting year. At the balance sheet date, MPC Europa Methodik had a fund volume of
EUR 81.4 million compared with EUR 36 million in the previous year.
    Using the absolute return approach, the MPC Absolute Return Superfunds invest
globally in the most promising asset segments. The investment profiles of the three fund of
funds range from security to risk-oriented. The fund volume comes to almost EUR 40 mil-
lion in total. All three funds achieved a positive performance of between 3.6% and
9.6% in the reporting period. The FERI Trust, Europe’s leading independent funds analysis
house and the largest private financial research institute, is responsible for managing
MPC Capital Superfunds.
    Other corporate investments totalling approxi-           Development of cash inflows/outflows
mately EUR 9 million (previous year: EUR 17 mil-             for investment funds in EUR million

lion) are equity of the Best Select umbrella funds       ⁄
which has not yet been invested. The invested
equity is assigned to the respective investments. The
Best Select concept is based on the philosophy of
strategic asset structuring referred to as asset
allocation. The fund offers the four fundamental
asset classes, (real estate funds, ship investments,
life insurance funds and private equity funds) in
one investment. The investor therefore receives                           02   03    04    05    06
a professionally managed portfolio of closed-end
funds for as little as EUR 5,000.

     Earnings position, financial and net worth position
     Earnings position

       Key data overview                             2004              2005              2006

       Sales in TEUR                               240,227           191,316          228,366
       EBIT in TEUR                                 72,008            57,756           74,624
       Net income for the year after
       minorities in TEUR                           52,293            43,477           55,993
       Earnings per share in EUR                      4.93              4.10             5.28
       Return on sales in %                           21.8              22.7             24.5
       EBIT margin in %                               30.0              30.2              32.7

     With the initiation, sale, administration and management of investment products for HNWI
     customers, the MPC Capital Group generated sales of TEUR 228,366. This equates to an
     increase of 19% compared with last year’s figure of TEUR 191,316. A detailed breakdown
     of the sales and profit contribution can be found in the development of gross income. The
     share of sales achieved outside Germany increased from 11.3% to 12.3% and was princi-
     pally generated in Austria and the Netherlands. The increase in the share of sales achieved
     outside Germany was primarily the result of sales in the Netherlands generated by the
     disposal of 99 properties. The subsidiaries sold were consolidated until October 31, 2006.
         Also pleasing is the further increase in the share of recurring revenue (sales from fund
     management), which in the 2006 financial year increased from 8.7% to 9.3%. As a result
     of the sale of properties in the Netherlands, Canada and England and the associated release
     of funds, sales of EUR 29.0 million were generated. This equates to a share of 12.7% in
     consolidated sales.
                                                        Group management report               Business development 2006                    77

The cost of purchased services principally relates to      Development of sales and gross income in TEUR
commission payments for placing equity by institu-
tional and independent sales partners. The increase           Sales
                                                              Gross income
of 8% to TEUR 103,972 resulted almost entirely                                          240,227
from the increased placement volume. Gross income
rose by 31% from TEUR 94,780 to TEUR 124,394,                              159,208
particularly as a result of sales components from the                                                                         124,394
disposal of properties.                                        85,206
    In the reporting period personnel costs rose by                     46,116
26% from TEUR 24,397 to TEUR 30,833. The main
reason for this was the significant rise in the number               02           03            04              05             06
of personnel from an average of 215 to 249. Assentus
Bank with an average of 27 employees also contri-
buted to this. The higher placement volume, the
                                                           Sales components of total sales in %
successful performance of transactions and the
increased overall result led to an increase in the              Sales from placing equity
                                                                           TEUR 165,136
variable remuneration components. The personnel
expenses/sales ratio increased from 13% to 14%.
                                                                                                                          Sales from
    Other operating expenses also take into account                                                                 fund management
the expenditure for the development and marketing                                                                        TEUR 21,179
of new and existing products and product lines.
                                                                                                                        Sales from fund
Moreover, start-up costs were incurred for the estab-
lishment and implementation of Assentus Bank. In                                                                           TEUR 28,958
                                                                Sales from initiating projects                                    12.7 %
2006, expenses increased by 45% from TEUR 22,998                                 TEUR 13,092
                                                                                         5.7 %
to TEUR 33,401.
    At TEUR 74,624, EBIT at the balance sheet
date was 29% higher than the previous year’s figure
of TEUR 57,756. The EBIT margin expressed as a
percentage of consolidated sales was 33% and was
positively impacted by the sales from the disposal of

          The tax rate as at December 31, 2006 was 28% as in the previous year. Assentus Bank
     AG (formerly: Hanseatische i-Bank AG) was fully consolidated for the first time in 2006
     and reported a slightly negative result as a result of the implementation and establishment
     of a new business model during the reporting period.
         At TEUR 55,993, consolidated net income after minorities was 29% higher than last
     year’s figure of TEUR 43,477. The return expressed as a percentage of consolidated sales
     increased from 23% in the previous year to 25%.

     Financial and net worth position
          Principles and goals of financial management
     The goal of financial management is to ensure the financial stability and flexibility of the
     MPC Capital Group by establishing a balanced ratio between equity and debt. Here, the
     MPC Capital Group has to take into account both the shareholders’ yield expectations and
     the liquidity and financing requirements of the MPC Capital Group.
          Within the MPC Capital Group, currency and interest rate risks are controlled primar-
     ily by means of hedges with regard to product development and design.
          Free liquidity is invested as interest-bearing within financial management. Only
     conservative, largely short-term forms of investment are selected such as call money or
     time deposits with banks. Speculative transactions are not concluded.
         As a whole, the earnings, financial and net worth position of the MPC Capital Group
     reflects an excellent financial structure with a good earnings contribution and adequate
                                                         Group management report                   Business development 2006     79

Cash flow statement

In the successful 2006 financial year, MPC Capital once again generated a positive cash
flow from the ongoing operating activities. At the end of the period, this was TEUR 34,402
and thus down by 27% on the TEUR 47,208 of the previous year.
     Owing to the business activity of the companies in the MPC Capital Group, invest-
ments in fixed assets did take place to a limited degree in the financial year. Investments of
this kind are usually restricted to office furniture and equipment. Only small investments
in fixed assets are planned for the future.
     Cash flows from investment activity in the reporting period amounted to TEUR 4,335
(after TEUR 3,210 in the previous year) and were primarily the result of investments in
financial and tangible assets.
    After the dividend for 2005 again amounted to EUR 4.00 per share, the shareholder-
friendly dividend policy led to a cash outflow from financing activities of TEUR 42,400 as
in the previous year.
    As at the balance sheet date, the company posted a decrease in liquid funds of
TEUR 12,333 and had financial resources of TEUR 93,585.

Consolidated balance sheet

At TEUR 213,350, the Group’s balance sheet total as at December 31, 2006 was 14%
higher than in the previous year (TEUR 187,189). This increase on the assets side is pri-
marily due to the increase in trade receivables and financial investments as at the balance
sheet date. These are balanced on the liabilities side by higher equity, lower provisions and
higher current liabilities.
                                                               Development of balance sheet total and equity ratio
    At the end of 2006, the MPC Capital Group had
equity of TEUR 152,499. This represents an increase
                                                                 Balance sheet total in TEUR
of 12% compared to the previous year’s figure of                  Equity ratio in %
TEUR 136,328. This is primarily attributable to the                                                176,779

increase in retained earnings. The equity ratio                                          152,490
declined in the MPC Capital Group from 73% to
72%. The return on equity amounted to 37% due to                          80

the increased net income for the year compared with                       70

32% in the comparative period of 2005.                                    60


                                                                                 02        03        04        05        06

     Development of the dividend in EUR                            Provisions fell from TEUR 22,295 to TEUR
                                                              15,584 and correspond to 7% of total assets. They fall
                                             5.00             due within one year and mainly contain provisions
                                                              for taxes on income and earnings, for personnel as
                               4.00   4.00
                                                              well as for legal and consulting provisions.


                                                              Distribution of EUR 5.00 per share         MPC Capi-
                                                              tal continued its shareholder-friendly dividend poli-
                                                              cy in 2006. With a distribution rate of 95%, MPC
                  02    03     04     05      06              Capital directly involves the shareholders in the
                                                              success of the company. The Supervisory Board and
                                                              Management Board will propose a dividend distri-
                        bution of EUR 5.00 per share at the Annual General Meeting on April 19, 2007. Subject to
                        the approval of the Annual General Meeting, the dividend will be paid on April 20, 2007.

                        On the basis of the year-end price (XETRA) of EUR 66.81, a dividend yield of 7.5% is
                        calculated for the 2006 financial year.

                        First-class employees       The success of MPC Capital AG would not be possible without
                        the passion and skill of its employees. The values and the corporate culture of the evolved
                        Group have proven themselves and are put into daily practice. The company’s philosophy,
                        which is characterised by partnership, a high degree of reliability, entrepreneurial trading,
                        professionalism and enthusiasm, has great expectations in terms of the quality and com-
                        mitment of its employees. The Management Board of MPC Capital AG therefore extends
                        its thanks to all its employees for their loyalty and their exceptional performance in 2006.
                                                         Group management report    Business development 2006    81

    During the reporting year, the development of the MPC Capital Group required the
establishment and expansion of expertise and capacities in all corporate divisions. The
priority for human resources activities is to acquire and further develop first-class indi-
viduals for the company and retain them at MPC Capital in the long term. A particular
challenge in 2006 in terms of personnel recruitment and organisational development was
the establishment of Assentus Bank. With the efforts undertaken, the Group consolidated
its strengths in terms of flexibility, creativity, speed and performance capacity in a process
of growth and entrepreneurial change.
    Human resources capacities were further increased in 2006 in order to improve the
performance capacity and professionalism both in recruitment and in personnel develop-
ment. Regular personnel appraisal meetings took place in which MPC Capital secured the
individual development of every single employee and created the foundation for continu-
ous development.
    As part of its continuous evolution, the MPC Capital Group also increased its manage-
ment in 2006. With the arrival of Boris Boldyreff and Axel Siepmann, the Management
Board of MPC Capital AG now has five members (previously three). Boris Boldyreff took
over responsibility for Sales while Axel Siepmann is responsible for Product Development
and M&A.

  Employees                                    2002          2003           2004          2005           2006

  Number of employees (average)                 137            147           182            215            249
  Personnel expenditure in TEUR              11,882         14,839        25,074         24,397         30,833
  Personnel expenditure ratio in %             13.9            9.3           10.4          12.8           13.5

    The average number of employees in the reporting period was 249. This was an
increase of 16% compared with last year (215 employees). 272 people were employed by
the MPC Capital Group as of December 31, 2006. The share of employees outside Germany
fell to 4% at year-end (previous year: 17%), due to the disinvestment in the Netherlands.
    Members of management boards and other senior employees of MPC Capital AG and
its subsidiaries receive performance-related remuneration in addition to their fixed salary.

     Social commitment       Since being founded in 1994, MPC Capital has supported social
     projects with donations. In accordance with the company’s growth and successful develop-
     ment, MPC Capital saw the founding of the MPC Capital Foundation at the end of 2005 as
     the best opportunity to continue this social commitment in the long-term. The objective of
     the MPC Capital Foundation is to enable people – principally young people – to have
     access to good education and training in order to encourage their potential and to spur
     them on to commitment and performance. Expertise, a good education and commitment
     form a solid basis for the development of every individual. The MPC Capital Foundation
     aims to encourage self-help and to motivate young people to take responsibility for
     themselves and others. With these activities, the MPC Capital Foundation is taking on
     long-term responsibility in Hamburg and is contributing to the progress of society.
         The ELB:STATION is the first MPC Capital Foundation project and was developed in
     conjunction with the Bürger Stiftung Hamburg. The participants in the project receive
                                          specialist instruction while working independently
                                          and purposefully on selected media projects. Work
                                          on media and artistic projects helps the participants
                                          to develop their linguistic and personal skills. The
                                          project also aims to effect a paradigm shift regarding
                                          integration work: migration is not seen as a deficit.
                                          On the contrary, the ability to speak more than one
                                          language as well as intercultural competence are
⁄                                         recognised as individual strengths and are promoted
                                          as such.
                                    Group management report   Business development 2006_Supplementary report   83

Projects were secured or new investments designed in the individual business divisions as
part of normal business activity. In the area of ship investments in particular, additional
projects with an equity volume of around EUR 400 million were contracted in the current
financial year.
    Based on the information available now, MPC Capital expects to be able to place
equity of EUR 1 billion in the 2007 financial year. Consolidated net income of
EUR 40 million is forecast.
    On January 11, 2007, Corsair Capital reduced its share in MPC Capital AG from
20% to 10.6% as part of a placement of 1,000,000 shares. The shares were placed with
institutional investors. As a result, the free float of MPC Capital AG rose from 52.0% to
61.4%. J.P. Morgan Corsair has participated in MPC Capital AG since June 2004. As part
of a management buy-out, the responsibility for the investment in MPC Capital passed to
Corsair Capital in January 2007. Corsair Capital also continues to be connected with
MPC Capital. A twelve-month lock-up was agreed for the remaining 10.6% stake.
    On January 17, 2007, MPC Capital AG signed an agreement for the acquisition of
7,080,000 shares, equating to a share of 29.5%, of HCI Capital AG from HCI SICAR A.G.,
Luxembourg. As part of a reorganisation of the shareholder structure at HCI Capital AG
on February 1, 2007, MPC Capital continues to be HCI Capital AG’s largest shareholder,
with 15.1%. MPC Capital AG disposed of 10% (2,400,000 shares) of Peter Döhle
Schiffahrts-KG. A further 4.4% (1,056,000 shares) were acquired by Corsair Capital. The
investment totalling 15.1% is an attractive financial investment for MPC Capital AG. The
acquisition was mainly financed by loans. The cost of debt is likely to be more than offset
by the expected dividend payment of HCI Capital AG and would therefore have an overall
positive effect on earnings per share at MPC Capital AG.
    When the management report was prepared, there were no other significant events
which concerned, or would have a material influence on, the earnings position, financial
position or net worth position of the MPC Capital Group.

     Management Board Remuneration Disclosure Act (VorstOG)

     The Management Board Disclosure Act provides for individualised disclosure of remu-
     neration paid to members of the Management Board divided into performance-indepen-
     dent and performance-related components as well as components with long-term incen-
     tive. The required data does not have to be disclosed if the Annual General Meeting has
     decided this should be the case with a three quarters majority of the share capital repre-
     sented at resolution. The Annual General Meeting of MPC Münchmeyer Petersen Capital
     AG on May 4, 2006 resolved to suppress this information for the period of five years with
     82.9447% of those present with voting rights. The overall remuneration approved for the
     Management Board is published in the notes to the annual report on page 133.

     Takeover Directive Implementation Act

     With the resolution of the Takeover Directive Implementation Act on July 8, 2006, the fol-
     lowing information is binding in the Group management report of MPC Capital:

     1. The subscribed capital as at balance sheet date December 31, 2006 comprises
        10,600,000 non-par bearer shares.
     2. On June 16, 2000 the shareholders MPC Münchmeyer Petersen & Co. GmbH
         (MPC Holding) and Oldehaver Beteiligungsgesellschaft mbH decided in favour of
         a voting pool for a period of 15 years.
     3. As at balance sheet date December 31, 2006, MPC Capital AG was aware of the
         following participations with a share of more than 10% of voting rights:
           25.5% of the shares are held by MPC Münchmeyer Petersen & Co. GmbH.
           2.5% of the shares are held by Oldehaver Beteiligungsgesellschaft mbH,
           to which the voting rights of MPC Münchmeyer Petersen & Co. GmbH are to be
           assigned on the basis of the agreements contained in 2.
           20% of the voting rights are to be assigned to J.P. Morgan Chase & Co. via various
           subsidiaries and the participations of the private equity fund J.P. Morgan Corsair II
           Capital Partners, L.P. to MPC Capital AG.
                                                           Group management report   New legal requirements   85

4. Shares with special rights which bestow control powers do not exist.
5. It is to be assumed that employees participate in the capital. However, the Management
   Board is not aware of any employee holding significant numbers of MPC Capital AG
6. The legal provisions apply to the appointment and dismissal of members of the
   Management Board of MPC Capital AG. The Annual General Meeting of MPC Capital
   AG on May 4, 2006 resolved various changes to the Articles of Association with a
   large majority:
   a) Agenda item 6: Resolution on the remuneration of the Supervisory Board and
       corresponding changes to the Articles of Association.
   b) Agenda item 9: Resolution on the creation of an authorised capital 2006 as well as
       corresponding changes to the Articles of Association.
   c) Agenda item 13: Resolution on changes to Articles 12, 13 and 14 of the Articles of
      Association with respect to changes in the law resulting from the Company Integrity
       and Modernisation of the Right of Rescission Act.
The wording of the changes can be found in the invitation to the Annual General Meeting
of MPC Capital AG on May 4, 2006, which is permanently available in the internet.
7. With agenda item 9, the Annual General Meeting of MPC Capital AG on May 4, 2006
    authorised the Management Board with the Supervisory Board’s approval to increase
    the company’s share capital by May 3, 2011, once or on several occasions, by a total of
   EUR 5,300,000.00 by issuing up to 5,300,000 new shares for cash or kind (authorised
    capital 2006). Moreover, with agenda item 10, the company was authorised to acquire
    own shares totalling up to 10% of the current share capital by November 3, 2007.
8. No significant agreements exist which come under the condition of a change of
    control due to a takeover bid (change of control clauses).
9. Compensation agreements have not been concluded with the members of the
   Management Board or employees in the event of a takeover bid.

     Anchoring the risk and value culture in the company

     The Management Board of MPC Capital AG is committed to the principles of a manage-
     ment system aligned to value orientation and therefore attaches great importance to
     systematic risk management. In addition to exposing existing risk items, the key issue is
     to recognise available opportunities.
         Within the Group, responsibility for risk management with all investments lies with
     management. The operating units as well as the holding itself identify, assess, control and
     continually monitor the risk situation. As potential risks must be included in entrepre-
     neurial activities, MPC Capital implements comprehensive risk inventory measures in all
     areas and has worked out an efficient reporting system.
         The risk policy in place at MPC Capital AG consists of exhausting available opportu-
     nities as best as possible and only taking risks associated with business activity when there
     is the opportunity to create a corresponding added value. Risk management is therefore
     a vital component of the business processes and of the value-oriented management at
     MPC Capital AG.
         Dealing with risks responsibly is a task for every single employee. It is the respon-
     sibility of the operating management to create risk awareness and to deal with early recog-
     nition, assessment, control and disclosure of risks.

     Risk management system

     Central risk management is under the control of the CFO, and is responsible for the further
     development of the risk management system, in particular for risk aggregation throughout
     the entire MPC Capital Group. On the other hand, the tasks of identifying and controlling
     new risks, as well as the ongoing monitoring of already identified risks, are organised
     decentrally. Regular reporting, which is embedded in the integrated controlling concept,
     communicates the status of, and material changes to, significant risks. The controlling and
     reporting systems are designed in such a way that the Management Board receives all the
     relevant information in order to detect any development which could have a detrimental
     effect on the financial, net worth and earnings position of the Group at an early stage. The
     risk management system in place at MPC Capital AG is always a part of the annual audit
     of the financial statements and fulfils the legal requirements of the Control and Trans-
     parency in Enterprises Act (KonTraG).
                                                                        Group management report   Risk report   87

MPC Capital AG also sees its risk management as a dynamic and constantly evolving
function. The findings of the daily risk management programme serve to protect the
objectives of the company and to increase the value of the company on an ongoing basis.

External Risks

Environment and industry risks         The product portfolio of the MPC Capital Group is
in competition with the broad range of investments. Investment decisions of private
investors are subject to constant change and depend on a variety of external influences. For
example, the general interest rate is a parameter which determines the competitiveness of
closed-end funds compared with directly interest-based products.
     The industry of alternative investments and, in particular, closed-end funds is subject
to the risk of changes to the tax and legal framework. Such changes may have a direct
impact on the design and distribution of the MPC Capital Group’s products. In view of the
MPC Capital Group’s current product mix, the risk can be classified as low.

Availability of assets    MPC Capital AG’s business model is based on the design, initia-
tion and distribution of principally closed-end funds. In order to guarantee a high-quality
range of products for investors and sales partners, this model requires, both now and in the
future, the continuous acquisition of high-quality assets such as ships, real estate and life
insurance policies. Market, price and competition considerations all have an influence on
the availability of attractive investment objects which meet MPC Capital’s stringent quality

         With the expansion of non-asset-orientated investments such as structured products,
     the risk and dependence on the availability of attractive assets have decreased. The struc-
     ture of these products – fund of funds, for example – allows initiation to be continuous.
     As a result of the growing importance attached to structured products and management-
     orientated products like the Real Estate Opportunity fund or the Private Equity fund, the
     relative significance of asset-orientated asset classes such as ships, real estate and life
     insurance funds will decrease in future. As a result, the proportion of recurring shares in
     total sales will further grow, thus improving the stability and long-term planning of income.
     In 2006, the share of recurring revenue was 9.3% (2005: 8.7%), which is expected to grow
     to between 15% and 20% in the next three to five years.

     Competition in the procurement of attractive assets             MPC Capital is in a competi-
     tive situation, both in the acquisition of attractive assets and in the initiation and distribu-
     tion of investments. The strength of the MPC Capital brand, the company’s reliability as a
     business partner, the product quality and the company’s leading market position in all
     relevant product markets and sales areas mean that MPC Capital can react flexibly to
     changes in market conditions and remain on course for success.

     Company-specific risks

     Corporate strategy risks       In 2006, the MPC Capital Group made a number of strategic
     decisions concerning the further development of the Group. These corporate decisions
     involve risks. Particularly gaining control (75%) of Assentus Bank AG (formerly
     Hanseatische i-Bank AG) and the complete realignment of the business model were large
     steps and were the subject of in-depth management discussions before any decision was
     taken. In addition to the organisational integration and the definition of processes,
     the greatest challenges involved the establishment of the product, distribution and the
     announcement of the new brand.
                                                                        Group management report   Risk report   89

    The MPC Capital Group continues to be a fast-developing company. Strong growth
remains a challenge for the company, involving organisational risks which must be recog-
nised at an early stage.

Personnel risks The dynamic development of the MPC Capital Group requires
adequate provision of personnel. By using modern personnel marketing measures,
MPC Capital increased the number of employees in the reporting period from an average
of 215 people to 249 people and thus was successful in attaining the necessary personnel
    MPC Capital counters the risk of dependency on key persons by rigorous personnel
and quality development of the management level below the Management Board. This risk
was dealt with on the Management Board level by increasing the number of Management
Board members from three to five.

Image and reputation risks       In addition to the liability risk for statements made in the
prospectuses, there is also an image and reputation risk with existing or potential custom-
ers and sales partners in the event of negative developments in one or several funds. MPC
Capital counters this risk with active fund management and a consistent quality strategy in
the selection of assets and in fund design.

Risks from placement guarantees As part of the design and initiation process, MPC
Capital generally provides a placement guarantee for the equity portion of the fund to the
fund companies. The Group is thus exposed to a placement risk until all the fund equity is
syndicated. Since the foundation of the company, it has always been possible to place the
entire equity portion of the funds. A corresponding development may be assumed for the
funds currently being placed. A detailed explanation of the placement guarantees and
guarantee conditions of existing contingent liabilities can be found in the notes.
    Once a fund has been placed in its entirety, the existing financial risks relating to the
placement guarantee are eliminated. Further guarantees such as rental guarantees for real
estate funds are not secured by the MPC Capital Group for basic reasons. This means that
a negative financial development of the fund does not directly influence the earnings posi-
tion, financial position or net worth position of the MPC Capital Group. MPC Capital AG
and its subsidiaries generally only participate as limited partners in the individual fund

     Risks in distribution The MPC Capital Group consciously participates to only a very
     limited extent in direct customer distribution. The long-term partnership with institutional
     and independent sales partners provides the basis for the distribution policy. Due to the
     existence of a number of different relationships, individual sales partners do not dominate.
     The implementation of Assentus Bank AG and the resulting delimitation of the product
     ranges for the purpose of distribution strengthen the position with regard to distribution of
     investments and opens up new sales opportunities.

     Financial risks

     Liquidity and financing risks        With an equity ratio of 71.5% and liquid assets of
     TEUR 93,585, MPC Capital’s financing risk remains low and provides the medium to long-
     term stability and flexibility required to develop the company further. In particular, the
     interim financing requirements for the equity of the fund company are safeguarded in this
     way. Such interim financing is then scaled back as quickly as possible in the process of
     placing the equity. As the acquisition of 15.1% of shares in HCI Capital AG which was
     concluded after the end of the reporting period was predominantly financed by debt, it has
     little impact on liquidity. Risks which may arise from acquisition of the shares are price
     risks, on the one hand, which may be reflected in evaluation of the portion in the
     balance sheet of the MPC Capital Group. On the other hand, a significant decline in the
     ability of HCI Capital AG to pay a dividend may lead to a reduction of the financial scope
     of the MPC Capital Group.

     Influence of the interest rate      While a further rise in interest rates in the global finan-
     cial markets can increase the attractiveness of investment products competing with MPC
     Capital products, this also means a change in the financing conditions of the fund. In the
     target group of HNWI customers, alternative investments, in the form of MPC Capital
     products, are now a fixed component of the asset allocation. The refinancing costs of the
     fund company are one of many factors in the overall design. Possible effects of an increase
     in interest rates on profitability have so far been compensated primarily by changes in
     other components.
                                                                        Group management report   Risk report   91

    In view of the fact that the shares in HCI Capital AG were acquired through debt,
there are risks of a possible interest rate increase. The company intends to minimise this
risk by interest hedging.

Currency risks      MPC Capital’s expenditure and income is mainly incurred in the report-
ing currency of the euro. However, the initiation of funds in foreign currencies such as US
dollar, Canadian dollar and British sterling can have exchange rate effects.

IT risks    Information technology is the basis of the business processes in the MPC
Capital Group. These are linked not only within the Group but also with our investors
and sales and business partners. In particular, the highest priority is given to the security
of information concerning the personal data of our more than 141,000 customers.
The MPC Capital Group has outsourced the IT management as well as the ongoing inspec-
tion and monitoring of information technology and IT processes to MPC IT Services
GmbH & Co. KG, a subsidiary of MPC Holding.

Legal risks    Legal proceedings or damages claims are – in so far as they are known – of
subordinate importance and are taken into consideration in the annual financial statements.
Moreover, claims which have a considerable potential influence on the economic situation
are neither pending nor threatened.

Overall risk The evaluation of the risks in the context of the central risk management of
MPC Capital did not indicate any risks in the past financial year which had a material
effect on the earnings, financial and net worth position of the Group. Nor are there any
risks which could jeopardise the existence of the company whether alone or in conjunction
with other risks.

     The following forecast is based on assumptions which may or may not materialise. If one
     or more assumptions do not materialise, the actual results and developments may differ
     considerably from the forecasts made here.

     Further expansion of the global economy

     While the global economy will continue expanding rapidly in the current year, growth will
     be slightly less than in 2006. According to the estimates of the International Monetary
     Fund (IMF), the global economy will once again grow by 4.9% (previous year: +5.1%).
     Researchers again expect double-figure growth for the driving force that is China (IMF
     estimate: +10.0%), but this is counterbalanced by an expected decrease in growth in the
     USA (IMF estimate: +2.9%) and in Europe (IMF estimate: +2.0%).
         With regard to the interest rate policy of the US Federal Reserve Bank, it is expected
     that the “interest break” which has been in force since August 2006 will continue. Recent
     indications that the next step is more likely to be a reduction in interest rates rather than
     another increase were not confirmed by the publication of the Federal Reserve Bank on
     January 31, 2007. For the European Central Bank, market observers see further potential
     for increasing the main refinancing rate after a brief pause. This is a result of the money
     supply growth which vastly exceeded the reference benchmark.

     Robust economic revival in Germany

     The experts at the Hamburgisches WeltWirtschaftsInstitut (HWWI) expect there will be a
     further considerable upturn of the economy in Germany in 2007. Even though the sales tax
     increase will lead to a perceptible deceleration in growth, the Institute forecasts a real
     gross domestic product of 1.7%. The German Institute for Economic Research (DIW)
     shares this estimate. In addition to the strong global economy and the positive trend in
     domestic demand, the Hamburg-based researchers regard international competitiveness of
     the companies as the key driving force behind the economic success.
                                                                    Group management report     Forecast report   93

    For 2008, the experts at the HWWI therefore expect that the economy will gain further
momentum. The HWWI expects GDP to increase by 2.0%. The DIW is even more optimistic
and predicts growth of 2.5%.

The market for closed-end funds

Following the decline in the market volume of closed-end investment models in 2006,
experts predict stable investments of around EUR 11.7 billion in closed-end funds for the
current financial year. In addition to the fact that the industry has completed its switchover
to yield concepts, the continued high demand for high-yield investments from sales and
investors is named as the reason behind this.

Good, realistic prospects for MPC Capital in 2007

Based on the information available now about the contracted placement volume and
distribution plans, MPC Capital expects to be able to place equity of EUR 1 billion in the
2007 financial year. The forecast for consolidated net income is EUR 40 million and
represents earnings per share of EUR 3.77.
    The strategic target for the current financial year is to develop systematically the com-
pany further and to defend its market leadership in the field of closed-end investment
models. The opportunities for further product diversification along with further expansion
of Assentus Bank or opportunities in disposing assets will play a role here. The MPC
Capital Group will continue down the path to become a holistic asset manager.

Expansion of Assentus Bank         With the implementation of the sales focus of a diversi-
fied product portfolio started with Assentus Bank in 2006, the Bank should develop the
required momentum in its first full financial year. The management-based and structured
products are continuously available and thus allow market penetration to be increased and
new sources of sales potential to be tapped. However, regulatory and administrative chal-
lenges which will influence placement performance during the year will have to be mas-
tered. MPC Capital is convinced that it will be able to establish Assentus Bank as a strong
brand with a clear product and distribution focus.

         The potential offered by asset-backed investments such as traditional real estate funds,
     ship investments and life insurance funds will remain dependent on the ability of MPC
     Capital to identify and secure attractive projects. MPC Capital has proven its high level of
     willingness and ability to create innovative products in recent years and works continu-
     ously on developing new investment concepts.
         The development of the MPC Capital Group will be rigorously continued. To this end,
     the company will both tap into sources of organic potential as well as investigate further
     financial investments or opportunities for strategic partnerships.

     Examination of the business divisions

     Ship investments As demand for attractive, high-yield investments remains high in the
     maritime industry, MPC Capital expects an extremely large number of ship investment
     placements to be made in 2007 following the record year that was 2006. MPC Capital is
     currently assuming a placement volume of EUR 400 million for 2007.
         The placing of a further ship portfolio of 14 modern second-hand refrigerated
     vessels will begin in the first quarter. This portfolio has syndicated equity of around
     EUR 116 million. Initial dividends of 8% are planned for the investment. In addition to
     refrigerated vessels, MPC Capital will design ship investments in a wide range of ship
     segments for the investors. These include smaller container ships from class 2,000 TEU as
     well as the “giants of the seas” from class 9,700 TEU. All offers feature long-term charter
     agreements with renowned partners with excellent credit standing, and thus offer the
     investors a high degree of reliability.

     Real estate funds       In light of the continuing high level of international real estate
     markets and strict adherence to high quality criteria, no change in the difficulty of initia-
     ting high-yield investments in the area of traditional foreign real estate funds is predicted
     for the current financial year. MPC Capital will examine and use opportunities in both the
     long-standing real estate markets and other real estate markets. Equity to be placed in
     traditional real estate funds depends largely on the opportunities offered in the course of
     the year. MPC Capital is currently assuming there will be a decrease in this sub-area.
                                                                     Group management report     Forecast report   95

    In contrast, the Real Estate Opportunity Amerika 2 will offer product volumes at the
start of the year. In this product class, development depends on the speed at which invest-
ments are placed and the opportunity for designing follow-up products in the same or a
further developed structure.
    Syndicated equity currently expected in the field of real estate funds is between EUR
150 million and EUR 250 million. The real estate opportunity funds will account for
between EUR 100 million and EUR 150 million of this figure.
    MPC Capital intends to continue using the situation on the real estate markets for the
benefit of the investors in the current financial year. To this end, it is examining the sale of
real estate from the MPC Capital real estate funds and discussing this with the investors.

Life insurance funds       MPC Capital plans to continue the fund concepts based on
German and British life insurance policies in the 2007 financial year. The equity volume
in this product line is forecast at between EUR 150 million and EUR 200 million.
    The growth forecast for the German secondary market will further increase the
availability of suitable insurance policies of good quality. The intensive partnership
with AG offers MPC Capital the best possible access to this market. In the
second quarter, the next fund will be available to investors. It will also have equity of
EUR 100 million and be based on German policies.
    In the developed secondary market of Great Britain, MPC Capital succeeded in
implementing very efficient purchase processes. Therefore, this fund concept is expected
to continue after the MPC British Life Insurance fund II has been placed.

     Structured products      With the creation of Assentus Bank and the support this offers for
     sales and the expansion of the team of experts, MPC Capital expects to increase its
     activities in the field of structured products. The reasons for the positive sales expectation
     lie in the market potential of certificates, notes and insurance products as well as the
     positioning of MPC Capital as an independent product supplier for institutional sales
     partners and a supplier of liability solutions for independent sales partners.
         Assentus Bank will develop new product ideas, use market opportunities and
     quickly transform these into successful, high-quality investment products. In light of
     this, continued expansion of the product range is to be expected.
         In the area of structured products, MPC Capital expects for 2007 a total placement
     volume of between EUR 150 million and EUR 200 million.

     Private equity funds      Revival of the private equity market is perceptible. This means
     that the fund of funds structures face increasing competition for the most attractive
     investment opportunities from leading companies. Long-standing cooperation with
     successful partners guarantees MPC Capital access to top-class investment concepts.
     The global equity fund investors benefit from this. On completion of the current Global
     Equity 9 fund, the aim is to create a follow-up fund in the third quarter. MPC Capital
     expects a placement volume of EUR 50 million in this opportunistic asset class in 2007.

     Other investments       Thanks to the good performance and the increase in fund volumes,
     MPC Capital expects further in-flows for the investment funds. An increase in placement
     volumes in the field of Best Select umbrella funds is also expected.


     MPC Capital continues its dual distribution structure The intensive and service-ori-
     ented cooperation with institutional distribution partners ensures both the high quality of
     products and the placement success of the investments. MPC Capital remains committed
     to a dual distribution structure with institutional and independent distribution partners in
     the future as well. MPC Capital is responsible for distributing asset-backed products, while
     Assentus Bank is in charge of distributing management-based and structured products.
     This makes it possible to work more intensively with partners and find new ones. As a
     product partner independent of the banks and a market-leading initiator, the
     MPC Capital Group is well positioned to fulfil the demand for alternative investments
     from the banks and savings banks as well as from the independent distribution partners.
                                                                   Group management report    Forecast report   97

    Changes to tax legislation are also to be expected in the future. However, the Group
currently cannot identify any potential tax changes that could have material effects on the
development and sale of products. This is because of the focus MPC Capital has placed on
investment yield.
    The Management Board is convinced that its business model will prove to be viable
and sustainable and lead to high earnings in the years to come. The Management Board
does not believe the above developments contain any risks that need to be reported.

Hamburg, February 23, 2007
The Management Board

Dr. Axel Schroeder                  Ulrich Oldehaver                  Ulf Holländer

Boris Boldyreff                     Axel Siepmann

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