The overview of activities of the Union of Investment Companies of the Czech Republic in the period from July 2004 to April 2005 follows.

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2 REPORT FROM THE BOARD OF TRUSTEES OF UNIS ČR ON ACTIVITIES OF THE UNION FOR THE PERIOD FROM THE LAST GENERAL ASSEMBLY, HELD ON JUNE 29, 2004 AND THE MAIN TASKS FOR THE NEXT PERIOD Firstly, let us summarise the past developments in the collective investment industry. The year 2003 was successful from the perspective of an increase in assets in open-end mutual funds, although the anticipated growth rate was not achieved. The total assets in open-end mutual funds grew from CZK billion to CZK billion in Net sales of shares of funds amounting to CZK 2 billion accounted the most for this increase. The highest increase in financial means was recorded by money market funds equalling CZK 11.1 billion, equity funds with net sales of CZK 1.1 billion and funds of funds with net sales amounting to CZK 72 million. On the other hand, balanced funds and bond funds recorded negative net sales of CZK -7.7 billion, resp. CZK -6.6 billion. With regard to the fact that even foreign funds recorded a significant increase in assets, it seems that the period of distrust from minor investors towards fund investment is over. It can be expected that after learning more about the real functioning of the fund sector and the prospective boom of the capital markets, the investors will also shift their investments to a more risky groups of funds. During 2004, assets in open-end mutual funds of UNIS ČR members rose from CZK billion to CZK billion, i. e. by CZK 4 billion Total sales were CZK 33.3 billion Total redemption volume was CZK 35.2 billion Total net sales were thus negative and equalled CZK - 2 billion. The increase in fund assets has been continuing in In the first term of 2005, net sales were CZK 7.8 billion when total sales equalled CZK 26.2 billion and the total redemption volume amounted to CZK 18.4 billion in this period. Investors continue to pay their attention to money market funds (net sales of CZK 8.1 billion) while bond funds continue in negative net sales. 2 The overview of activities of the Union of Investment Companies of the Czech Republic in the period from July 2004 to April 2005 follows.

3 A. Organisational and Membership Issues A.1. GENERAL ASSEMBLIES The last regular General Assembly of the Union was held on June 29, It approved the change of the concept of UNIS ČR activities concerning the law on collective investment, minor changes of the Union By-Laws and Binding Instructions and by-elected members of the Board of Trustees and the Ethics Committee, and it elected new members of the Account Controllers. In the period from the last regular General Assembly, one extraordinary General Assembly was held on September 21, 2004 with the only item on the agenda admitting the Prosperita, a.s. as a regular member of UNIS ČR. Ten out of eleven regular members of UNIS ČR took part in the extraordinary General Assembly and the proposal submitted by the Board of Trustees did not have the absolute minority of votes. A.2. MEMBERSHIP BASE As of the date of the last regular General Assembly, i. e. June 29, 2004, the Union had 11 regular members, 13 associate members and one partner. As of October 27, 2004, the copany ŽB-Trust, investiční společnost, a.s. terminated its regular membership following the merge with Pioneer česká investiční společnost, a.s. As of December 31, 2004, the Association of Financial Advisors and Agents terminated its associate membership following the merge with the Association of Registered Financial Agents. As of April 30, 2005, the Union had 10 regular members: AKRO investiční společnost, a.s. AIG Funds Central Europe správ.spol., a.s. ČP Invest investiční společnost, a.s. ČSOB Investiční společnost, a.s., člen skupiny ČSOB Investiční kapitálová společnost KB, a s. Investiční společnost České spořitelny, a.s. Investiční společnost České spořitelny, a.s. reprezentant rodiny fondů ESPA (ERSTE Sparinvest) J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s. Pioneer česká investiční společnost, a.s. Pioneer česká finanční společnost, s.r.o. 3 The Union also has twelve associate members and one partner.

4 A.3. BOARD OF TRUSTEES The regular General Assembly held on June 29, 2004 by-elected the following new members of the Board of Trustees: Ing. Josef Beneš, ČSOB investiční společnost, a.s. Pavel Bodlák, AIG Funds Central Europe správ.spol., a.s. Ing. Pavel Veselý, ČP Invest investiční společnost, a.s. The following changes in the constitution of the Board of Trustees have taken place in the next period: As of October 27, 2004, the membership of Ing. Jiří Brabec terminated following the liquidation of ŽB-Trust, investiční společnost, a.s. As of January 11, 2005, Ing. Vít Vařeka resigned following the termination of his employment contract in AKRO investiční společnost, a.s. As of February 15, 2005, Ing. Jiří Trávníček from AKRO investiční společnost, a.s. was co-opted the member of the Board. As of May 24, 2005, Pavel Bodlák resigned following the termination of his employment contract in AIG Funds Central Europe správ.spol., a.s. The Union Board of Trustees steps before the General Assembly in the following constitution: Chairman of the Board RNDr. Petr Zapletal, Investiční společnost České spořitelny, a.s. Vice-chairman of the Board Ing. Pavel Pršala, Investiční kapitálová společnost KB, a.s. 4 Members of the Board Ing. Josef Beneš, ČSOB investiční společnost, a.s., člen skupiny ČSOB Mgr. Roman Pospíšil, Pioneer česká investiční společnost, a.s. Ing. Jiří Trávníček, AKRO investiční společnost, a.s. Ing. Pavel Veselý, ČP Invest investiční společnost, a.s. Mgr. Miloslav Zábojník J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s.

5 A.4. ETHICS COMMITTEE After the regular General Assembly held on June 29, 2004, the Ethics Committee worked in the following constitution: Chairman Ing. Pavel Hoffman, Investiční kapitálová společnost KB, a.s. Vice-chairmen Ing. Jana Doucková, ČP INVEST, investiční společnost, a.s. Ing. Vendulka Klučková, ŽB-Trust, investiční společnost, a. s. In-house members Ing. Martin Burda, Investiční společnost České spořitelny, a.s. Ing. Jana Procházková, J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s. Outside members Ing. Helena Čacká, UNIVYC, a.s. Ing. Martin Gradavský, Asociace finančních zprostředkovatelů a finančních poradců České republiky Ing. Miroslav Singer, Česká národní banka Ing. Petra Wendelová, Ernst & Young, s.r.o. The Ethics Committee appeared before the General Assembly 2004 in the following constitution: Chairman Ing. Pavel Hoffman, Investiční kapitálová společnost KB, a.s. 5 Vice-chairmen Ing. Jana Doucková, ČP INVEST, investiční společnost, a.s. Ing. Vendulka Klučková, ŽB-Trust, investiční společnost, a. s. In-house members Ing. Martin Burda, Investiční společnost České spořitelny, a.s. Ing. Jana Procházková, J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s. Outside members Ing. Helena Čacká, UNIVYC, a.s. Ing. Martin Gradavský, Asociace finančních zprostředkovatelů a finančních poradců České republiky Ing. Miroslav Singer, Česká národní banka Ing. Petra Wendelová, Ernst & Young, s.r.o. The term of office of all members of the Ethics Committee expires this year, except for Ing. Jana Procházková and Ing. Miroslav Singer who were elected by the last regular General Assembly held on June 29, 2004.

6 A.5. ACCOUNT CONTROLLERS The General Assembly held on June 29, 2004 elected Ing. Jarmila Čermáková (ČSOB investiční společnost, a.s., člen skupiny ČSOB) and Ing. Jana Dlouhá (J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s.) to be the controllers of UNIS ČR accounts for a two-year period. A.6. GENERAL MANAGER Ing. Martin Hanzlík took the position of the General Manager on June 15, B. Important Activities of the Union in the Past Period B.1. PREPARATION OF THE STRATEGY, THE BUDGET AND MEMBERSHIP FEES 6 Union's activities continue to be negatively influenced by the current situation in the collective investment industry, i. e. high market concentration and thus a low number of udertakings and a decrease in number of employees in membership companies. The UNIS strategy is to struggle for an extension of invesment opportunities for public and institutional investors in colletive investment undertakings; further, also in compliance with European trends, to encompass the representation of all funds (both domestic a and foreing) and asset management into one association. All activities leading to higher efficiency of asset management, protection of investors, implementation of European regulations on the basis of activities of Ing. Hanzlík in the EFAMA European association (see below) and certainly, all activities leading to investors' eduction remain the priorities. Following the definiction of the concept, the view of the performance of the Ethics Committee has been adjusted and members of the management of the Ministry of Finance of the ČR, the Commission and ČNB are to be involved in the work of the Committee. The Committee should then focus more attention to the definition of rules for the investment sector and to handling disputable points of view on the regulation as an independent self-regulatory body. After budget reductions in past years, it almost remains the same; further decrease in payments of membership companies will have to be handled on the income side rather than from expenditures. It means focussing on acquiring new members and involving them in the Union activities. It is also important for the internal Union situation towards performed activities. After a strong consolidation of the sector and changes in membership companies, it more difficult to assign the work groups of different topics. No changes occurred as far as the calculation of membership fees is concerned. European Association of Funds and Asset Management (EFAMA) was established in March It substituted former FEFSI and encompassed also the European Asset Management. Thus a new association associating both national associations and corporate members from important asset management companies was established.

7 B.2. PREPARATION OF THE LAW ON COLLECTIVE INVESTMENT AND OTHER LEGISLATIVE ISSUES UNIS ČR actively participated in the process of submitting the law on colletive investment into the Partliament. The law came into effect on May 1, After the adoption of the law, UNIS ČR started to cooperate with the Ministry of Finance and the Securities Commission on a law amendment. The law amendment was divided into three parts, the first one was focused on technical amendments, i. e. amendment of articles which have to be specified or modified with relation to the market performance and experience of martket players with provisions of the law. The second part of the amendment concerned specifications and quite an extensive amendment of articles referring to property funds. A German law using the type of an open-end mutual fund was used as a model. The third part of the amendment wanted to eliminate the conflict in the current wording of the law. The law spaeks of investment of the public but introduces types of funds determined for a limited number of persons from institutional investors and wealthy persons. With regard to to the fact that obligations of these funds are the same as of public funds, it is not possible to establish such funds. The law, therefore, defines the only fund "a special fund of qualified investors" and keeps a special equity fund, fund of funds and the aforementioned property fund. UNIS was very active in preparation of this amendment as a member of a work group consisting of representatives of the Ministry of Finance, Securities Commission, UNIS ČR and the Association of Banks. The issue of a levy of property from funds deposited at the depositary to the guarantee fund of securities traders was handled within the framework of debating over the law amendment. A whole range of regulations, in which the Union had participated with its comments, was prepared after the adoption of the law,. B.3. MODIFICATION OF FUND TAXATION The fund taxation was lowered from 15 % to 5 % in In the past period, UNIS was trying to further decrease the fund taxation to the effective zero rate; the reason being continuous discrimination of investors investing in collective investment undertakings compared to direct investments. Unfortunatelly, the Ministry of Finance has not responded to this proposal and thus the taxation of 5 % remains. 7 B.4. OTHER IMPORTANT ACTIVITIES OF UNIS ČR The Union co-operates with other associations in handling issues common to financial market entities other than collective investment undertakings. It concerned, for example, a united procedure in handling the possibility of using birth numbers for registration of investors investing into collective investment products or a joint procedure with the Association of Banks in the matter of "evaluation differences" in the income tax law. A work group consisting of representatives of UNIS ČR, the Association of Banks and the Association of Pension Funds was established in the past period. The result is a signature of a joint memorandum supporting the pension reform in the ČR and addressed to key political representatives and the government of the ČR. Introduction of a new system for gathering data from membership companies and a new web presenting the results and information represents an important activity. It is a complex system enabling membership companies to manange funds' data directly without the need to send the data to Union employees. The system is fully automatic and dynamic i. e. all data are published and updated on-line. The system enables to generate any questions for the needs of membership companies and those interested from the general public. The system has a built-in publishing system enabling the Union employees to publish documents such as laws, press releases or other documents without the need of the software company delivering the system to do it. The system has a built-in intranet web enabling certain groups of users (e. g. the Board of Trustees) to share reports from boards meetings or any other documtns. The system is operated outside the UNIS headquarter and backed up every hour. The stricktest requirements for protection and security of data provided by membership companies are thus met. The system automatically, in prearranged time, generates several formats of documents for media and sends them to beforeanded addresses.

8 B.5. CO-OPERATION WITH THE SECURITIES COMMISSION In the given period, co-operation with the Securities Commission mainly in the sphere of the legislation (preparation of the law on collective investment), education (important co-operation in the field of educational programs focused on investment mediators, schools, state institutions, etc.) and the concept (a memorandum on mutual co-operation was signed), has become significantly more active. The co-operation with the Securities Commission in the sphere of investors' education continued in 2004 and The Czech television put on a seven-episode eductional programm on investment at the beginning of The programm is also produced on DVD for the need of financial institutions, distribution networks and the Commission. The General Manager of UNIS Ing. Hanzlík together with Prof. Tomáš Ježek were professional guarantors of the programm. The General Manager and representatives of member companies regularly participate in educational programmes under the auspices of the Commission as speakers. In order to support investor knowledge, the Union, in co-operation with the department of external relations of the Securities Commission, has prepared a brochure entitled "The Art to Invest". On the basis of the activity of the Commission, the schoolbook "Guide in the capital market", of which the general manager Ing. Martin Hanzlík is a co-author", was incorporated in the plan for secondary economic schools and universities. Ing. Hanzlík is the member of the Committee for broker certificate and the member of the Committee for preparation of the Corporate Governance rules, both established within the Commission. B.6. CO-OPERATION WITH THE ASSOCIATION FOR THE CAPITAL MARKET 8 In 2004, the Union and AKAT agreed on organising a joint press conference which presented results of funds in the ČR for 2004 both of domestic undertakings and foreign funds operating in the ČR. This joint activity can be assumed to continue in the coming period and similar comparisons should always be presented at the half year and at the end of the year. The press conference held in February 2005 presented results for domestic and foreign funds for B.7. INTERNATIONAL ACTIVITIES OF THE UNION UNIS ČR continues to be an active member of the European Federation of Investment Companies and Funds and Asset Management (EFAMA) where Ing. Martin Hanzlík replaced Ing. Jiří Brabec in the EFAMA Board of Directors following the departure of Jiří Brabec from ŽB-Trust. The Union Board of Trustees recommended Ing. Hanzlík as the representative of the Czech Republic in the EFAMA Board of Directors for the next term of office. His candidacy was confirmed at the EFAMA General Assembly held on March 2, 2005 in Brussels. The benefits of this membership are unambiguously positive, not only due to the access to data and information,but also due to the know-how for discussions on development of the domestic regulation and its standardisation with regulations of the European Union. It is an important fact that EFAMA (former FEFSI) now encompasses both the collective investment sector and asset management activities at the European level and it is the bigget and strongest association covering asset management.

9 C. Professional Commissions The activities of professional commissions and work groups play an important role in the whole Union because a large number of experts from our members work there and at the same time, they represent a major benefit to the solution of issues affecting all or some of our members. Work in professional commissions and work groups is very time consuming for members already heavily committed within their mother companies. The Board of Trustees highly appreciates their work and thanks them for it. The Legislative Commission and the Financial and Tax Commission have taken a standing position in the activities of the Union. C.1. LEGISLATIVE COMMISSION Currently, the Legislative Commission works in the following constitution: Chairman JUDr. František Tlustoš, ČP Invest investiční společnost, a.s. Members Mgr. Libor Vacek, Advokátní kancelář Balcar Polanský Bortin Rose, v.o.s. Mgr. Andrea Cejnarová, Advokátní kancelář Pokorný, Wagner & spol. Mgr. Jakub Joska, Advokátní kancelář Vyroubal Krajhanzl Školout a spol. Mgr. Martin Vít, ČSOB investiční společnost, a.s., člen skupiny ČSOB JUDr. Vlasta Belicová, Investiční kapitálová společnost KB, a.s. JUDr. Karel Choc, Investiční společnost České spořitelny, a.s. Mgr. Ivo Enenkl, J&T Asset Management, investiční společnost a.s. Mgr. Nina Tobiášová, Pioneer česká investiční společnost, a.s. Ing. Jan Fořt, RM-SYSTÉM, a.s. JUDr. Daniel Weinhold, Ph.D., Weinhold Legal v.o.s. JUDr. Věra Filkuková, Weinhold Legal v.o.s. Mgr. Radka Kunovská (Šmídová) Pioneer česká investiční společnost, a.s. 9 C.2. FINANCIAL AND TAX COMMISSION Currently, the Financial and Tax Commission works in the following constitution: Chairman Ing. Jan Drápal, Investiční kapitálová společnost KB, a.s. Vice-chairmen Ing. Jana Dlouhá, J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s. Members Ing. Jarmila Čermáková, ČSOB investiční společnost, a.s., člen skupiny ČSOB Zenon Folwarczny, Pricewaterhouse Audit, s.r.o. Ing. Ondřej Janeček, Ernst & Young, k.s. RNDr. Richard Scholle, Investiční společnost České spořitelny, a.s. Ing. Martin Švalbach, Deloitte s.r.o. RNDr. František Vencl, Pioneer česká investiční společnost, a.s.

10 D. Aims of the Union for the Future At its meeting held in November 2002, the Board of Trustees approved a Union long-term mission and subsequent target spheres for a long-term period (three years and more). MISSION: TO SUPPORT THE COLLECTIVE INVESTMENT ENTERPRISE AND TO CONTRIBUTE TO ITS DEVELOPMENT, GROWTH AND PROTECTION OF INVESTORS. OBJECTIVES: 1) To officially represent the industry to civil service entities, regulatory bodies and other undertakings of the financial market. (To encompass the whole collective investment industry, i. e. to organise most market participants who operate on the basis of the law regulating the collective investment) 2) To be active in determining the strategy of a further development of the industry in compliance with European trends. (Active relationships with EFAMA and other European organisations, accession of the ČR to the EU). 3) To unify conditions for domestic and foreign collective investment undertakings and to expand the potential for collective investment instruments in the economy. (Taxes, the degree of regulation, the use of funds in the pension system, etc.) 4) To increase the industry status and the protection of investors by active influencing on its members and the sector as a leading self-regulatory organisation. (Transfer of a part of the performance of the regulatory body to the Union.) 10 It is clear that UNIS ČR continues to be a very successful organisation associating investment companies and other collective investment undertakings. Co-operation with EFAMA (FEFSI) proved to be beneficial. This organisation has been changing its concept in relation to the world development of the industry and its experience may be useful alongside other experience and information which we have already acquired through this co-operation.

11 SHORT-TERM OBJECTIVES: 1) To be active in finalising the amendment of the Law on collective investment with the aim of adopting the amendment as of January 1, Mainly to focus on extension of the market potential by funds of qualified investors, property funds, etc. 2) To improve the general public and professional public awareness of the development in the mutual fund industry. To have a more quality overview of sales and performance developments, and of other information on all funds distributed in the Czech market. To extend the co-operation with membership companies, foreign managers and representatives of foreign funds, managers of asset management and AKAT. UNIS has a modern information system enabling to gather and publish data on domestic and foreign funds. 3) To become involved in the discussion on the tax reform after the election in Despite the ongoing effort to lower the fund tax rate, it becomes a higher priority to take care of an appropriate tax regime for mutual funds in the tax reform. A neutral impact of an individual or a corporation on investing directly or through mutual funds is the objective. 4) To be active in influencing prospective reformatory steps in the market of financial products. The increasing interest of clients in financial products has been leading to the need to adjust motivational conditions for clients choosing the products. It is our objective to take care of an appropriate position of mutual funds among other types of products such as the pension insurance, life insurance or building society. Prague, May 24, 2005 On behalf of the Board of Trustees of UNIS ČR: 11 RNDr. Petr Zapletal Chairman of the Board of Trustees

12 REPORT ON ACTIVITY OF THE ETHICS COMMITTEE OF UNIS ČR FOR THE PERIOD In the period from the last General Assembly, held on June 29, 2004, the Ethics Committee undertook a minimum of submissions and complaints, none of them was found to be a serious breach of the Union Ethical rules. No sanction was applied. It is regarded by the Ethics Committee as a very positive situation and a confirmation that UNIS ČR's attempt to create a transparent and trustworthy collective investment sector in the Czech Republic is being successfully pursued. The Ethics Committee also dealt with a whole range of topics in relation to the activity of Union members. These concerned the fund classification, corporate governance issues, etc. The Ethics Committee also appealed for UNIS ČR to continue in the effort to unify the regulation against other products, such as pension or life insurance. Following the changes in the UNIS ČR strategy, the Ethics Committee started to pay more attention to, and to co-operate with, the whole collective investment sector, i. e. mainly with regard to foreign funds associated in AKAT ČR. With regard to the limited number of complaints from clients and further market stabilisation, future activities and the concept of the Ethics Committee should be re-considered so that the Committee does not become only a formal Union body and contines to fulfill its tasks. Prague May 16, Ing. Pavel Hoffman Chairman of the Ethics Committee

13 Full members Management AIG Funds Central Europe správ.spol., a.s. Hviezdoslavovo nám. 20, Bratislava Management AKRO investiční společnost, a.s. Slunná 25, Praha 6 akro@akro.cz Management Infoline ČP INVEST investiční společnost, a. s. Purkyňova 74/2, Praha 1 info@cp-invest.cz Management Infoline ČSOB investiční společnost, a.s. Perlová 371/5, Praha 1 investice@csob.cz Management Infoline Investiční kapitálová společnost KB, a.s. Dlouhá 34, Praha 1 info@iks-kb.cz

14 Full members Management Infoline Investiční společnost České spořitelny, a.s. Na Perštýně 342/1, Praha 1 iscs@iscs.cz ; Management Infoline J&T ASSET MANAGEMENT, INVESTIČNÍ SPOLEČNOST, a.s. Pobřežní 14, Praha 8 info@jtam.cz Management Infoline Pioneer česká finanční, s.r.o. Karolinská 650/1, Praha 8 info@pioneer.cz Management Infoline Pioneer investiční společnost, a.s. Karolinská 650/1, Praha 8 info@pioneer.cz

15 Associate members Advokátní kancelář Balcar Polanský Norton Rose, v. o. s. Elišky Peškové 735/15, Praha 5 bpnr@bpnr.cz Advokátní kancelář Vyroubal Krajhanzl Školout a spol. Lazarská 5, Praha 1 akvks@comp.cz Asociace finančních zprostředkovatelů a finančních poradců České republiky Vinohradská 938/37, Praha 2 info@afizcr.cz 15 CRA RATING AGENCY, a. s. Washingtonova 17, Praha 1 cra@crarating.com Česká kapitálová informační agentura, a. s. Opletalova 5, Praha 1 marketing@cekia.cz

16 Associate members Deloitte&Touche CR, s.r.o. Týn 641/1, Praha 1 receptioncz@deloittece.com Ernst & Young, s.r.o. Karlovo náměstí 10, Praha 2 ErnstYoung.cz@cz.ey.com 16 Pražská softwarová, s.r.o. Veletržní 24/200, Praha 7 rousek@praguesoft.cz PricewaterhouseCoopers Audit, s.r.o. Kateřinská 40/466, Praha 2 helena.vojackova@cz.pwcglobal.com RM-SYSTÉM, a. s. Podvinný mlýn 6, Praha 9 rmsystem@pha.pvt.cz

17 Associate members Středisko cenných papírů Rybná 14, Praha 1 scp_is@scp UNIVYC, a.s. Rybná 14, Praha 1 info@univyc.cz Weinhold Legal, v. o. s. Karlovo nám. 10, Praha 2 wl@weinholdlegal.com 17 Partner Mgr. Andrea Cejnarová Karolíny Světlé 301/8, Praha 1 pokwag@mbox.vol.cz

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