The Cyprus Stock Exchange (CSE) has continued its strong performance thisyear returning more than 21% to date.

The main drivers of this performance have been the increasing number ofcorporate deals and the inflow of new money by local and foreign investors. Theperformance of the Athens Stock Exchange (ASE) has also been satisfactoryreturning approximately 10% year to date, despite its weak performance in Junealong with most of rest of the European stock markets.

Barring any major correction in world markets we expect the marketperformance of both exchanges to continue to be positive for the rest of theyear. The performance of the Cyprus Stock Market will continue to be driven bycorporate deals and improved results in the banking sector. We also expect theperformance of the Athens Stock Exchange to be positively affected by improvedresults.

The fund continues to be overweight in the Cyprus market as it considers itundervalued compared to the Greek market. The fund performance has benefited byits overweight positions in the property and construction sector (in bothexchanges) and the performance of some of its key positions outside the bankingsector in the Cyprus market. Some of the new positions started this year includeOptions Cassoulides in the printing sector and Ermes Department stores in theretail sector. We believe that the out performance of the property andconstruction sector will continue for the rest of this year as it will benefitfrom the large amounts of money expected to be invested in the area.