FINANCIAL RATINGS AGENCY – Nr. 3 WORLDWIDE

Fitch Ratings is the world's third largest financial ratings agency. It evaluates the creditworthiness of securities and issuers, including sovereigns, corporates, financial institutions, insurance companies and public finance issues. With more than 2,300 employees across its 39 offices and subsidiaries worldwide, Fitch operates in all the traditional market segments, such as structured finance issuance and asset manager ratings, and also provides investor-solicited research.

OPERATING HIGHLIGHTS

(in € Millions)	Fiscal 2006 (pro forma)	Fiscal 2007	Change
Sales	534.3	642.6	+20.3%
Operating Result % Operating Result / Sales	164.2 30.7%	193.0 30.0%	+17.5%
Number of Employees	--	2 361

REVENUE (EXCLUDING KOREA RATINGS)

BY GEOGRAPHIC AREA

BY SEGMENT

SIGNIFICANT EVENTS

To further penetrate the growing Asian market, Fitch increased its equity position in Korea Ratings to 53% from 8% in April 2007. Korea Ratings is South Korea's leading credit rating agency and has had a strategic alliance with Fitch Ratings since 1999. Fitch is also planning to acquire a minority stake in one of China's largest rating agencies and is currently seeking the government's authorization to proceed.

Demand from Eastern Europe, emerging markets and the Middle East created strong growth opportunities, as did merger and acquisition related activity in the more mature investment grade markets. In addition, new models to evaluate the capital of insurance companies (Prism) and financial guarantors (Matrix) were introduced during the year.

The structured finance market in 2007 started with strong fixed income market volumes and relatively benign economic conditions feeding what can be characterized as an overheated market for credit. Spreads were unreasonably tight and newer, more exotic instruments were being manufactured and consumed on the market.

Early in the year, the U.S. subprime real estate mortgage market witnessed a significant increase in the rate of delinquencies and foreclosures due to an unprecedented reversal in home prices and high instances of fraudulent loans. The result, coupled with known risk factors, created a high degree of uncertainty throughout the credit markets and a significant decline in structured finance new issuance activity from the late summer into the fall.

Fitch's reaction has been to review all its current ratings, make changes necessary to reflect current and forecasted events, and to be transparent with the assumptions used to form its judgments. Fitch continues to be proactive with investors and has made several enhancements to the rating criteria in its RMBS model, ResiLogic, and CDO model, VECTOR.

On the regulatory front, the Credit Ratings Agency Reform Act of 2006 became law in September 2006 and the U.S. Securities and Exchange Commission initiated rules enacting the legislation in June 2007. Shortly after, pursuant to the rules, Fitch applied to be recognized as a nationally recognized statistical-rating organization (NRSRO). On September 25, 2007, Fitch, along with six other ratings agencies, was granted NRSRO status by the Securities and Exchange Commission.

NEW PRODUCTS

Market Implied Ratings
Fitch Ratings introduced a new suite of Market Implied Ratings based on credit default swap (CDS) spreads and equity prices. Designed to summarize the market's perspective on an entity's credit risk, Fitch's Market Implied Ratings distill market information into the common language of credit ratings and can be used as a primary input for a multitude of portfolio management and optimization, valuation, and risk management purposes.

ResiLogic
Fitch Ratings brought a crucial tool to the US RMBS industry called ResiLogic. ResiLogic is a quantitative model that provides credit risk analysis at the individual loan or pool level for U.S. RMBS prime, Alt-A, and subprime transactions. The release was particularly timely, allowing for the release of presale reports for all sub-prime RMBS deals which investors find extremely helpful in uncertain market conditions in order to make investment decisions. After releasing ResiLogic, Fitch was responsive to the fast paced changes of the mortgage market by updating criteria for falling home prices, poor performance of loans with certain characteristics, and substantial changes in mortgage originations.

RAP CD v2.0
The new version of Derivative Fitch's CDO pricing and market risk analytics platform meets current market needs for the pricing of credit derivatives in a volatile and illiquid market. The platform also offers full support for hedge trades.

CMBS Model
To bring sharper insight into the credit risk of a US Commercial Mortgage Backed Security (CMBS) portfolio, Fitch introduced the first statistically valid U.S. CMBS multi-borrower rating model. The maturation of the CMBS market allowed for an extensive study of the performance of over 32,000 CMBS fixed-rate conduit loans originated during 1994-2001, totaling $173 billion.

Prism
To be proactive in meeting regulatory demand and the needs of insurers in understanding key risks to determine capital adequacy, Fitch developed Prism, a global model that is used to apply ratings consistency from insurer to insurer in our global industry analysis. Its rollout has expanded this year into new regions of the world.

Matrix
To support its ratings of financial guarantors globally, Fitch Ratings publicly unveiled Matrix, a new, economic, fully stochastic capital model that had been in development for the past two years.

Fitch's Corporate and Banks Peer Analysis Tools
Fitch Ratings launched two new web-based analytical services.
Fitch Corporate Peer Analysis Tool enables investors to perform detailed peer analysis of more than 100 sovereigns and over 800 corporates from a centralized database of financial information. This tool provides investors with greater flexibility to perform tailored analysis of either sovereign or corporate entities, using more than 200 search variables and ratios. Fitch Banks Peer Analysis Tool encompasses comprehensive data on banks from 200 countries, with reporting in Euros, U.S. dollars, Japanese yen, and U.K. sterling. It includes quarterly and annual data for North American banks and provides information on over 90 financial ratios and data items for over 15,000 global banks.

INSTITUTIONAL ACCEPTANCE

An Investor Development Program has been the cornerstone of Fitch Ratings' plan to increase its capital markets visibility through external relationship building efforts. The program is designed to have analysts and relationship managers interact on a regular basis with top institutional bondholders, as well as major 'new' investors (asset managers, hedge funds, etc.), providing opinions and commentary on credit topics. Fitch is focused on cultivating strong relationships with capital market participants, and has also been successful in garnering their support for inclusion in major bond indices and investment guidelines and to request Fitch's ratings on more issuers and securities.

During the year Fitch's ratings were added as a determinate of Bloomberg's Composite Rating. The Composite Rating is available on Bloomberg screens for all issues on which at least two ratings are present, and now reflects an evenly weighted blend of Fitch, S&P, DBRS and Moody's ratings. Fitch Ratings issuer default ratings and recovery ratings were added to Bloomberg's individual issuer pages and exclusively to Bloomberg's Credit Default Swap information pages for credit derivative market participants.

To date, 82 of the top 100 U.S. investors have Fitch or are in the process of adding Fitch Ratings to their guidelines. And, 46 of the top 50 public pension fund investors and 30 of the top 50 corporate pension funds have or are in the process of changing guidelines to include Fitch Ratings.

Major bond index providers that utilize Fitch Ratings:

• Merrill Lynch Global Family of Bond Indices
• Merrill Lynch Commercial Mortgage-Backed Index
• Lehman Brothers Global Family of Bond Indices
• NASD TRACE Data
• NASD-Bloomberg Active US Corporate Bond Indices
• iBoxx
• iTraxx Europe
• Bank of America Index
• Citigroup/SSB & Yield Book
• S&P/TSX Canadian Bond Index
• Credit Suisse's Latin America Corporate Bond Index (LACI)
• CMBX Commercial Mortgage-Backed Credit Derivative Index
• Bloomberg Composite
• Credit Suisse Emerging Market Corporate Bond Index.

FINANCIAL REVIEW

In the following discussion, all comparatives are with pro forma results for the twelve months ended September 30, 2006.

Fitch Ratings, excluding Korea Ratings, generated revenues of $827.4 million during the 2007 fiscal year, a 26.2% increase from $655.6 million for the previous period. After translation into euros, its contribution to consolidated revenue, excluding Korea Ratings, came to €623.4 million versus $534.3 million for the previous period, an increase of 16.7% on a reported basis and 21.4% like-for-like.

Recurring operating profit, excluding Korea Ratings, was $252.8 million, representing a 25.3% increase from the previous period. Translated into euros, recurring operating profit was up 16.0% on a reported basis and 21.2% like-for-like. Recurring operating margin was 30.8% for fiscal 2007 and 30.6% for the previous period. The stable margin - despite the growth in revenue - was mainly attributable to Fitch Ratings' continued investment in new models, data and business opportunities.

REVENUE BY GEOGRAPHIC AREA

North America
Revenue from North America was $429.4 million for fiscal 2007, a 17.6% increase. The U.S. structured finance markets experienced growth across most asset classes except for Residential Mortgage Backed Securities (RMBS), with the strongest growth in Commercial Mortgage Backed Securities (CMBS).
CDO issuance in the first half of the fiscal year was driven by investor demand for both cash flow and synthetic transactions. The impact of a high level of defaults in subprime mortgages, as well as the reversal in real estate prices, created a slowdown in RMBS and CDO issuance during the latter half of the fiscal year.
Corporate and financial services revenue increased due to high levels of corporate bond issuance in the investment grade sector. Despite rising interest rates and credit spreads over much of the period, investor demand for high-grade corporates and financial institutions remained strong.

Europe, the Middle East & Africa (EMEA)
In the Europe, Middle East & Africa (EMEA) region, revenue was $332.5 million for fiscal 2007, a 37.8% increase. EMEA experienced strong growth in both the corporate and structured finance markets throughout fiscal 2007. Growth in structured finance was driven by robust growth in the European CMBS market due to a positive interest rate environment and strong investor demand for the asset type across the whole of Europe. Corporate growth was driven by strong merger and acquisition activity, and the expansion of ratings in emerging markets, particularly for financial institutions.

Asia-Pacific
Revenue generated from the Asia/Pacific region was $30.7 million in fiscal 2007, an increase of 34.1%. Market growth was driven by a strong credit derivatives market, as well as growth in financial institution and corporate issuance. Although revenue from this region is currently a small percentage of the company's total revenue, the burgeoning economies and developing capital markets are likely to drive continued growth.

Latin America
Revenue generated in Latin America was $34.8 million, an increase of 30.8% that reflected higher revenues in both structured finance and corporates, as good economic performance and a relatively benign political environment has improved investor demand for the region's debt in several countries, especially Mexico and Brazil.

SUBSCRIPTION SERVICES

Revenues from subscription services rose 23.6% in fiscal 2007 to $89.5 million, driven by an increased subscriber base to Fitch Research and Fitch Rating Delivery Service. The recent inclusion in major bond indices and investment guidelines has fueled demand for Fitch Research products, significantly increasing the subscriber base.

MARKET SHARE AND COMPETITION

Based on global debt issuance of approximately $6.9 trillion for the twelve months ended September 30, 2007, Fitch Ratings' market share, measured in terms of the dollar issuance volume, stood at an estimated 68%.

Fitch Ratings competes with other credit rating agencies and with investment banks and brokerage firms that offer credit opinions and research worldwide. Its largest competitors in the global credit rating business are Moody's Investor Service (Moody's) and Standard & Poor's Ratings Services (S&P), a division of The McGraw-Hill Companies, Inc.

For each individual market sector, in fiscal 2007, Fitch Ratings estimates that it rated approximately 54% of structured finance issuance, 71% of the global non-financial corporate market, 89% of financial institutions issuance, 60% of U.S. public finance issuance, and 92% of the sovereign market.

Fitch Ratings Market Share (twelve months ended September 30, 2007) (1)

(1) Source: Fitch Ratings

Fitch Ratings' Scope:
• 6,012 financial institutions ratings, including 3,178 banks and 2,435 insurance companies
• 1,661 corporate ratings
• 93,109 municipal issues
• 162 local government ratings
• 7,184 U.S. structured finance issues
• 1,839 European structured finance issues
• 451 structured finance issues in the Asia-Pacific region.

FISCAL 2008 OUTLOOK

The length and extent of the current credit market crisis are hard to estimate, making it difficult to issue guidance for fiscal 2008. If the credit market continues to contract in the coming months, it will be necessary to exercise caution. However, we should subsequently see a return to a more stable environment, leading to the restoration of the usual growth drivers in the rating business.