Changes in the Fund Portfolio

In July, portfolio duration was decreased slightly (from 3.48 to 3.40 yrs)and shorter versus benchmark (3.62 yrs on 31 July 2008). Given the goodcondition of the Czech economy (GDP for the 2nd quarter of 2008 at 4.5% y/y),healthy financials of the vast majority of Czech blue chips as well asattractive valuations (measured by P/E ratio), equities remained overweighed(4.9% of the total fund net assets against 4.0% in the benchmark on31 July 2008.

Fund Performance

Last month, NAV per share of the WIOF Conservative CZK Fund increased by1.24% (to CZK 101.0824), less than the benchmark (2.84% m/m). Local medium-termbonds (measured by EFFAS CZK Liquid 3–5 Yrs total return index) increased by2.97% m/m, Czech equities (measured by PX index) decreased 0,3% in the sameperiod.

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 6.9 % y/y in June and 6.7% y/y in June. Our basicscenario calculates with no change in key CNB’s interest rate in the comingmonths. We expect at least a long-term segment of the Czech yield curve toperform well. To sum up, we stick close to neutral duration for the time being.Regarding the Czech equities, our generally bullish outlook still remains intact(reasons mentioned in section „Changes in the Fund Portfolio“).