Changes in the Fund Portfolio

During the 2nd quarter 2008, the WIOF Conservative CZK fund total net assetsgrew from CZK 50.8 million to CZK 52.6 million (i.e. EUR 2.2 million). Forthe whole period, portfolio duration was kept neutral in comparison to benchmarkduration (on 30 June 2008, both portfolio and benchmark duration were 3.5 yrssimilar to the 1st quarter). Given the good condition of the Czech economy (GDPfor the 1st quarter of 2008 at 5.2% y/y), healthy financials of the vastmajority of Czech blue chips as well as attractive valuations (measured by P/Eratio), equities remained overweighed within WIOF Conservative CZK. The share ofequities was 6.2% against 4.1% in the benchmark on 30 June 2008 compared tothe share of equities it was 6.2 % against 4.3% in the benchmark at the end ofMarch).

Fund Performance

In the 2nd quarter 2008, NAV per share of the WIOF Conservative CZK Fund fellby 0.36% (to CZK 99.8441), whereas the benchmark decreased by –0.32% i.e. theperformance of fund was in line with benchmark.

Outlook and Expected Strategy

Czech CPI inflation probably passed its peak (7.5% y/y) in Jan/Feb 2008 andis set to decelerate further during the rest of the year (mainly in the secondhalf). Czech CPI index was 6.8 % y/y in May and 6.7% y/y in June. Our basicscenario calculates with no change in key CNB’s interest rate in the comingperiod). We expect at least the long-term segment of the Czech yield curve toperform well. To sum up, we stick to neutral duration for the time being.Regarding Czech equities, our generally bullish outlook still remains intact(reasons mentioned in section „Changes in the Fund Portfolio“).

Jiri Pospisil, Fund Manager, Raiffeisenbank a.s.