Investing in Eastern Europe April 2008 Elizabeth Eaton, Senior Portfolio Manager

1. Investing in Eastern Europe April 2008Elizabeth Eaton, Senior Portfolio Manager

2. Emerging Markets in a Global Context Despite dominating global growth and population, Emerging Markets continue to have disproportionately low levels of GDP and market capitalization From a “big picture” view, there remains massive opportunity for investors in emerging markets Eastern Europe provides unique opportunities within a GEM context • Anchor of European Union Membership – lowers long term economic risk and provides funding for development • Commodity exposure – growth area for both oil & gas and metal & mining • Advanced labor force and competitive tax rates • Close proximity to major export markets of the European Union Source: National Statistical Services, ING Estimates Asset Management

3. Eastern Europe – the Big Picture Source: IMF, ING Estimates • The bulk of regional population is in Russia and other CIS countries, including Ukraine and Kazakhstan. • The overall economy of the region remains only one-fifth of that in Western Europe (EU 15). • Despite rapid convergence, GDP per capita still averages only 17% of the EU 15. Even the 2004 enlargement countries still have only one third the GDP of the EU 15. • There remains a great deal of “catch up” potential across the region. Asset Management

4. Economic Snapshot • Economic outlook across the broad region remains strong. • Growth is in excess of 4% across markets, with the exception of Hungary where fiscal cutbacks continue to cause pain. On average, the region is expected to grow at 5.1% in 2008 versus 6.3% in 2007. • While a global slowdown could result in reduced exports, countries across the region are experiencing buoyant dometic demand which should leave them relatively insulated from any pullback. • Inflation pressure is likely to intensify in the region, with exposure to energy and tightening labor markets. • Interest rates are likely to rise in most markets, except Hungary where progress will be slow. Source: Goldman Sachs estimates, Credit Suisse Asset Management

5. Then Improving macroeconomics Convergence process Russia’s recovery from 1998 crisis Rising Commodity Prices Very low valuation Growing investor interest in the region Eastern Europe had historically been ignored as a distinct asset class Now Financials -- credit expansion across the region Infrastructure -- public and private sector investment Consumer – domestic demand is growing Natural Resouces – remain a global force Remaining undervalued assets Bottom up delivery on investment performance supports valuation But supported by Range bound commodity prices Stable macroeconomics & politics Domestic Drivers Increasingly Important and Stock Selection is Key Asset Management

6. Financials: Loan Penetration Remains Low Households were unable to be indebted prior to the 1990s Low level of product sophistication in retail – compared to both developed and emerging markets Basic financial products, like credit cards and mortgage loans, are still being introduced Deepening financial intermediation will provide strength not only to the banking sector itself, but through to domestic economies through consumption and investment as well Source: Credit Suisse, UBS Estimates Asset Management

7. Financials: Eastern Europe in the current context Many Eastern European banks continue to be funded through deposits and do not need to tap into the credit market to continue high levels of loan growth Kazakh banks, in general, are an exception Maintaining high levels of deposit growth will be key Loan growth remains high, although we expect lower levels in 2008 Focus continues to be on retail and consumer loans Source: Credit Suissee Estimates Asset Management

8. Financials: Sector View and Focus • Sector Drivers • Credit penetration remains low across the region • Earnings growth remains relatively high, albeit lower than in 2007 • Retail products offer highest margins • Banks focused on SMEs, mortgage loans, small consumer loans, and credit cards • Watch the macro – how will rising inflation and interest rates effect the sector? • No direct sub prime exposure in Eastern European banks • Default risks remain low, despite some rise in unsecured lending • Access to capital is not yet problematic for most banks (Kazakhstan is the exception) • Foreign banks • Could strategic holdings be reduced in Central Europe? • M&A in Russia likely to support valuation • Stock Selection • Focus on growth in under saturated markets across the region • Poland – large cap banks with cross-selling opportunities; smaller, innovative banks looking at niche markets • Russia – highly favorable macro outlook combined with bottom-up structural growth in several products • Value plays • Hungarian banks look inexpensive, despite being very well managed • Kazakhstan will likely be ignored by risk-averse investors, despite rock bottom valuation • Avoid Romania Asset Management

9. Infrastructure: A Growing Sector *Source: GE & Merrill Lynch Asset Management

10. Infrastructure: Expected Spending China ($400bn): Energy, transport, environment, Olympics, real estate Russia ($250bn): Export facilities, pipeline and ports, housing Gulf Region ($150bn): Real estate, water India ($110bn): Roads, ports, oil and gas Brazil ($100bn): Power generation and transmission, telecoms and transport South Africa ($60bn): Electricity generation, rail freight, road works related to 2010 World Cup, housing Indonesia ($45bn): Roads, power generation, water treatment, oil and gas Mexico ($60bn): Natural gas, toll roads, highways and airports, homebuilding Central and Trans-European transport network Eastern Europe ($45bn): USD1.2 trillion to be spent in emerging markets Source: Merrill Lynch, CAIB, World Bank, IIF Asset Management

11. Infrastructure: Central and Eastern Europe • Infrastructure spending in Central and Eastern Europe is likely to be dominated by the Trans-European Network for Transport, which aims to connect the CEE with Western Europe’s motorways, rail lines and waterways. The bulk of expenditure is expected to take place in Poland. • Transport financing is mostly funded by EU member states and transfers from the EU Cohesion Fund. Total fund transfers are expected to be around 3% of GDP each year through 2010. Source: CAIB Source: UN Economic Commission for Europe Asset Management

12. Infrastructure: Russia • Russia has seen a steady decline in the quality of its infrastructure after years of underinvestment across most sectors. • The bulk of spending will be undertaken by state-controlled monopolies to upgrade oil pipeline and energy capacity. The Investment Fund (Rb140bn) is financing Public-Private Partnerships in road and railway infrastructure and utilities. • Housing is also getting particular attention: President Putin called for increasing new housing space to 100-130m sq m per year and setting up Rb$250bn fund to reform housing market (around 1% of GDP for next 4-5years) Source: Deutsche Bank, Bloomberg Asset Management

13. Infrastructure: Real Estate Still Compelling • Despite global concerns, the real estate sector in Eastern Europe remains in fundamentally good condition • The main driver continues to be structural shortage of quality real estate, where demand continues to outstrip supply and vacancy rates remain at extremely low levels in most major cities • There are not yet signs overheating in the mortgage sector, where penetration levels remain at a very low levels • Commercial property yields have fallen from peak levels, but early indications show rents are once again on the rise in capital cities Source: Credit Suisse, UBS Estimates Asset Management

14. Infrastructure: Sector View and Focus • Sector Drivers • Infrastructure spending is growing rapidly across Eastern Europe in order to upgrade aging capital stock • Government spending • In accession countries, transfers from the EU budget are tagged for specific infrastructure related projects • In Russia, the • Private spending • Oil & gas companies are now starting major greenfield expansion plans • Utility sector is undergoing restructuring and requires massive amounts of capex to expand generation • Real estate sector is in fundamentally good condition despite global concerns • Lack of supply in high-end commercial real estate keeps rents high • Availability of mortgages and higher disposable incomes will drive residential sector • Stock Selection • Real estate remains compelling • Residential continues to benefit from mortgage growth and roll out • Preference for construction oriented companies rather than real estate investment funds • Polish construction companies will benefit from EU structural funds • Investment is not only focused on end owners of infrastructure assets, but on companies contributing to sector growth • Companies that make products for the end owners (steel companies) • Intermediaries that make investment possible (developers, banks, oil service companies) Asset Management

15. Consumer: Domestic Demand Remains High and Growing • Overall, the Emerging European retail market is expected to grow close to 20% per annum until 2008 • Russia represents the strongest area of growth, with a 50% expansion in turnover between 2004 and 2006 • Increased wealth of the population means higher spending in retail • Market share opportunities exist for large players as local markets remain highly fragmented • Russia is set to be largest retail market in Europe Source: Rosstat, Renaissance Capital Estimates Asset Management

16. Consumer: Sector View and Focus • Sector Drivers • GDP per capita across the region averages only 17% of Western European levels • Disposable income continues to rise at a steady pace • Lower levels of unemployment • Higher and wages (and growing) • Regulated prices have kept some costs low, such as electricity and gas • A broad range of consumers now have access to credit through the banking system • Mortgage loans • Credit cards • Small consumer/home improvement loans • Retail trade is becoming formalized – turnover is rising in modern format stores at the expense of open markets • An element of “trapped demand” remains in some areas where imported products were once scarce • Stock Selection • Despite several recent listings, consumer stocks remain under-represented in regional indices • There are virtually no pure consumer oriented stocks in either Hungary or Czech Republic • Poland • Most consumer stocks are both illiquid and expensive • Prefer industry leaders and established local brands with strong management teams • Use sell-offs as an opportunity • Russia • Food retailers remain the most liquid and accessible part of the market – focus on companies with successful region roll-out strategies • Watch for impact of raw material costs Asset Management

17. Natural Resources: Key Beliefs The world is resource short • Not finding enough additional resources • Demand continues to grow in emerging markets, secular and cyclical growth • Not enough development and service capacity – people and machines • Oil: non-Opec decline rates are accelerating Slow supply side reaction • More difficult to produce and mainly non-conventional • Deeper and more complex horizons • Oil sands: expensive, new technology, environment • High technology intensity in enhanced oil recovery and heavy oil High oil prices are a reality • Marginal cost of production at above $55-60/bl • Low spare capacity – unlikely to go – geopolitical threats likely to remain • Resources controlled by unstable regimes Asset Management

18. Natural Resources: A Global Force • Russia and Central Asia represent a significant portion of global production and reserves in several major commodity items • World’s largest producer of hydrocarbons • Large and growing base metals resource • Portion of global reserves in many commodity items is much, much higher • China and Greater Asia are growing consumers of CIS commodities – “Russian bear feeds Chinese dragon” Source: GFMS Metals Consulting, IISI, Johnson Matthey, ABARE, BHP Billiton, Rio Tinto, Commodities Research Unit, USGS, World Nuclear Assoc. Asset Management

19. Russian Oil & Gas: What can the Prime Minister Do? • Gazprom has always been the most leveraged Russian company, due to high taxation in the oil sector • Russian integrated oil companies have been burdened by two main taxes • Crude export tax • Mineral Extraction Tax (MET) • Government is slowly making changes in taxation to support future investment growth in the industry • No tax for development in Eastern Siberian basin (since 2007) • On the table: tax exempt development in Timan-Pechora (Lukoil), reduction in MET, sliding scale for domestic oil products • Putin has generated full support from the president and relevant ministries, and claims the bill is ready for the Duma Asset Management

20. Natural Resources: Sector View and Focus • Sector Drivers • Oil price continues to surprise on the upside • Sell-side analysts are slow to upgrade estimates and many remain “behind the curve” in 2007 – expect further revisions in 2008 • Pricing in base metals will likely be volatile, but medium-term demand continues to outstrip supply • Project delays and problems damage supply side picture • Demand from BRICs continue to grow • Cost of greenfield projects remains high and high quality equipment is in shortage • M&A activity could be a catalyst in Russia and other CIS countries where companies remain relatively inexpensive and development potential remains high • Changes in taxation in the Russian oil & gas sector could be a catalyst, but is unlikely in the near term • Stock Selection • Russian oil & gas • Integrated oil companies have been ignored despite high crude prices –changes in taxes are imminent • Prefer companies associated with local governments as they are likely to benefit from new licensing opportunities • Metals & Mining • Russian metals companies remain some of the cheapest in the world despite world-class resource bases • Expect political clarity to result in multiple expansion Asset Management

21. Other Industries • Telecoms • Fixed line telecoms are now x-growth in most areas – optimization of balance sheets and high dividends will be drivers as businesses have reached maturity • Mobile companies still riding the wave of upgrades in ARPU over 2007 • Broadband is growing rapidly across the region – Russian companies remain compelling • Media • Advertising penetration remains low across the Eastern European region and is a growth area • Listed companies have disappointed as competition has increased over time • Downstream oil • While refining margins are expected to be lower in 2008 than in 2007, we still find stock specific ideas in the industry • Refinery upgrades in Poland and Lithuania should provide a catalyst • Utilities • Electricity prices and acquisitions should fuel earnings growth in Central Europe • In Russia, sector restructuring has been a major driver • Government has now approved all major sector reforms • Demand for electricity is increasing and generation capacity must be built to fulfill future needs Asset Management

22. Where are the risks? • Risks remain largely externally driven • Global growth and commodity prices • Risk aversion and change in global sentiment • Inflation • High inflation in Russia appears to be one of the few economic vulnerabilities • Current accounts stretched in some convergence countries • Can this be covered with FDI? • Hungary also suffers from large fiscal deficit Asset Management

23. Eastern European Investment Team Asset Management

24. On the ground, Bottom-Up Security Selection adds Value Asset Management

25. CS Equity Fund (Lux) Eastern Europe Gross Returns as of 30 April 2008 • Account: Credit Suisse Equity Fund (Lux) Eastern Europe • Benchmark: MSCI EM Eastern Europe 10-40 Index in Euros/Prior to 1/1/07 MSCI EM Eastern Europe Index Source: Credit Suisse, data as at 30 April 2008. Inception date September 1997 Gross of fees, Base Currency EUR, LO-CEQEEF5BOPP. Please note that past performance is not necessarily a guide to the future. The value of investments can go down as well as up. Asset Management

26. CS EF (Lux) Eastern Europe Country Allocation As at 30 April 2008 Sector Allocation As at 30 April 2008 Source: Credit Suisse *Regional includes Romania, Georgia and Croatia Asset Management

27. CS Equity Fund (Lux) Russia Explorer Gross Returns as of 30 April 2008 No comparative benchmark exists. Russian Indices shown only for reference purposes. • Account: Credit Suisse Equity Fund (Lux) Russia Explorer • Benchmark 1: MSCI Russia • Benchmark 2: RTS Index in Euros Source: Credit Suisse, data as at 30 April 2008. Inception date May 2006 Gross of fees, Base Currency EUR, LO-RUSEXP5BOPP. Please note that past performance is not necessarily a guide to the future. The value of investments can go down as well as up. Asset Management

28. CS Equity Fund (Lux) Russia Explorer Country Allocation As at 30 April 2008 Sector Allocation As at 30 April 2008 Source: Credit Suisse Asset Management

29. Important Information • This communication is directed at institutional clients only. It should not be distributed to or relied upon by private customers. • This document has been prepared and issued by CREDIT SUISSE ASSET MANAGEMENT LIMITED, One Cabot Square, London E14 4QJ, www.credit-suisse.com/uk, Tel: 020 7888 1000, on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the information is accurate and any assumptions made or simulations used are fair and reasonable, neither CREDIT SUISSE ASSET MANAGEMENT LIMITED, nor any director, officer nor employee, shall in any way be responsible for the contents. This document does not constitute investment advice and no reliance should be placed on its contents. It has been prepared for illustrative purposes only to demonstrate CREDIT SUISSE ASSET MANAGEMENT LIMITED's investment process and strategy. • The price of shares and income from them may fall as well as rise and is not guaranteed, You may not get back the amount of your original investment. Please note that past performance is not a guide to future performance. The value of investments can go down as well as up. Where investments are made internationally their values may fluctuate due to currency exchange rate movement. The yield quoted is appropriate at the time of going to print, but may fluctuate subject to market conditions. • Any research included in this document is for illustrative purposes only. It was procured for CREDIT SUISSE ASSET MANAGEMENT LIMITED for its own purposes and is no longer current. It should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. • All forecasts are based on reasonable belief. The yields quoted in this document are appropriate at the time of going to print, but may fluctuate subject to market conditions. • CREDIT SUISSE ASSET MANAGEMENT LIMITED is authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. Asset Management