Brief interview on WIOF Pakistan Performance Fund provided by Habib Bank AGZurich.

Questions: 1/ So far around 20% of the fund assets are invested. When do youexpect to raise this percentage to the full or at least a major part ofthe fund?

2/ Reviewing the current sector exposure of the fund the main sectors areenergy-petroleum, banks and materials-agriculture. Which other sectors do youplan to invest in? Or do you intend to increase exposure in the above-mentionedsectors?

3/ As we have mentioned before the main factors which have driven the fundwere the petroleum companies in the fund’s portfolio and currencyappreciation. What could possibly be the main sources of growth for the fund inthe near future (1–2 years)?

Answers: 1/ As for the rest of the assets we are waiting for the first roundof earnings to conclude. So far results have been encouraging and dividendyields are on target. The currency has performed remarkably well even whenUSD500mn was removed in one day on the back of bond re-payments. We will decideshortly for the next round of investment. The market is going in one direction,which is also not healthy. We believe a correction will occur. Ripples frompolitical splashes might provide some fuel for this.

2/ The other good sectors apart from these are not as liquid. At the momentwe will stick to these we currently engage in. We may choose some more companiesbut additional sectors are not on the cards. Dividend yield is a major factorwhich will keep this market interesting for locals as currently interest ratesare going south on the money market. Also the government is in need of cash soit is expected that state owned listed companies will distribute healthydividends quarter-on-quarter.

3/ Predicting what will happen in the next 1–2 years is not possible. Wehave been very successful in this market by keeping our strategy for as long as6 months however not more. For Pakistan, in general, it will be very positiveif the interior militancy in the northern areas is contained through variousmeasures e.g. dialogue, engaging locals and separating locals from foreigners.Some success has been achieved in this aspect. Also energy has been a problemfor the last 2 years but the government is tackling the problem. If there areno external distractions, e.g. Mumbai event, in one year things will changesignificantly.