In 2006 OYAK once again continued to pay its members a real return…

Having successfully passed every endurance test of every business environment that it has been through since it was founded in 1961, OYAK once again continued to create value in 2006.

OYAK adhered to the corporate strategies that it has developed with its superior foresight and vast knowledge and experience without interruption or exception in order to deliver the best possible service to its members and also to manage its resources in the most effective and productive way.

During 2006, a year in which volatilities were experienced in the Turkish economy, OYAK continued to grow its members' savings and secure a real return on them. The actuarial profit (return) added to members' savings in 2006 totaled TRY 965.2 million. This corresponds to a 25.1% rate of return, the fundamental indicator of our success in the eyes of our members. As a result of this, OYAK members' reserves reached TRY 5,089.8 million in value last year.

The financial results briefly summarized above are important in two respects. First of all they demonstrate once again OYAK's strength in securing a sustained real return for its members. Our rate of return, which was achieved in an economic environment characterized as much by single-digit inflation as by intense competition, was 2.6 times the 9.7% posted rate of consumer price inflation. The second important point is that our results reveal OYAK's ability to generate yields at a steadily increasing rate. The high rates of return that we are able to achieve year after year despite the continued growth in our members' reserves is conclusive proof of our ability to generate increasingly more economic value.

For OYAK, the most important event that took place in 2006 was the addition of the ERDEMİR Group to our family.

OYAK acquired a majority stake in ERDEMİR, one of the most important industrial concerns in Turkey, when the state-owned steelmaker was privatized in 2005. ERDEMİR and its subsidiaries officially joined our family on 27 February 2006.

At ERDEMİR, 2006 was a year both of restructuring and of record-breaking results. Immediately after taking ERDEMİR over, OYAK launched a comprehensive restructuring, strategy alignment and productivity increase project. The initial results of this rapidly implemented project have been reaped. In 2006 ERDEMİR posted the best financial and operational results in its history and it booked a net profit 3.5 times that of 2005 based on IFRS.

The results achieved at ERDEMİR, which represents the biggest single acquisition ever undertaken in OYAK's history, also point to the existence of an added-value creation mechanism that is powerful and very important for OYAK as a whole.

Our ERDEMİR investment, which we undertook in light of our expectations concerning the Turkish and global economies, contains within it important clues about the equity participation portfolio policies that OYAK will be following in the years ahead. In an economic environment in which low inflation prevails, our medium-term goals must be to concentrate on production-related activities and further strengthen our position on the industrials side. We believe that the more we produce, the more value we will create for Turkey and consequently the more value we will add to OYAK's assets.

A second important development for OYAK in 2006 was the point that we have reached on the matter of transparency.

Another development in which we can take pride is the attention that international credit rating organizations have been focusing on OYAK. In late 2005 OYAK was rated by both Moody's Investors Service and Standard & Poor's and it became the first and only non-banking concern in Turkey to be awarded credit ratings that were equal to Turkey's country rating.

Later in July 2006, Moody's confirmed the long-term foreign currency and local currency ratings that it had assigned to OYAK as “Ba2”, which is one grade higher than its “Ba3” country rating. It also announced a “stable” outlook for both ratings.

Subsequent to this, Standard & Poor's announced that it had raised OYAK's long-term rating to “BB”, which was higher than its “BB-” long-term foreign currency country rating, while its outlook remained “stable”. As its justification, S&P cited positive developments in both OYAK's and Group companies' business activities and financial standings. As a result of this action, OYAK's credit rating was a grade higher than Turkey's “BB-”. S&P also announced a “stable” outlook for its BB rating.

In its assessment of OYAK, S&P said that OYAK's debt serviceability was higher than that of the country and confirmed that even if the national economy were to experience problems, OYAK itself was unlikely to have any financial difficulties of its own.

The position that we have reached as a result of the ventures made in 2006 defines the roadmap of the corporate strategy that OYAK will be following in the future.

The same month, OYAK also became the first non-banking institution in Turkey to receive a long-term “trAA” rating, the highest national scale rating assigned by S&P. The Company also announced a short-term rating of “trA-1”.

We regard the credit ratings announced by these organizations as international affirmation of OYAK's performance, institutionalization and transparency. To put it another way, the level of institutionalization that we have achieved at OYAK is international in scale and compares favorably with world-class companies.

OYAK will continue to pursue growth as a strong capital group that is global in scope but firmly committed to its national identity.

We shall continue to construct our success on the bedrock of institutionalization.

OYAK was Turkey's first and still is its biggest privately-owned pension fund. OYAK is a large corporate entity as well. Solid corporate attributes, a commitment to ethical values, a belief in free competition and a high level of transparency all provide the support that OYAK needs to enter into any venture and succeed.

Looking to the future, we are working without letup on projects that will generate even higher returns for our members. Our consistent and invariable objective is to enter new business lines that will make OYAK stronger still and to always manage our portfolio in light of the principles of profitability and productivity.

So long as our ability to respond to changes in the business environment in a timely and correct manner and the unstinting support of OYAK's more than 230 thousand members remain united, we shall continue to advance confidently into the future.

In closing, I extend my sincerest thanks to our members, our customers and all OYAK's friends for their contributions that made our excellent performance in 2006 possible.

Coşkun ULUSOY, Ph.D.

Chief Executive Officer