2012

Dear shareholders,

In 2012, the Fund’s NAV grew by 1.3% and assets under management increased to CZK 1.1 billion.

Our largest equity positions in early 2013 were Sanofi, WH Smith, Wal-Mart, Berkshire Hathaway and Teva Pharmaceutical. Our portfolio is concentrated into investments that we consider the best in terms of their combination of yield and risk. Sufficiently attractive investment opportunities are relatively rare, and we therefore endeavour to take utmost advantage of them. Our ten largest positions constitute approximately 73% of our portfolio.

The market currently values our portfolio at approximately 9 times the earnings of the past 12 months. This means that for the last year the net profit of our companies was 11% of their market capitalisation. In our opinion, that is a lot and thus the share values do not correspond to the quality and prospects of these companies. This number especially stands out in comparison with interest rates that are at almost zero. By our estimate, the fundamental value of our shares today is about one-third higher than their current prices indicate. The fundamental value is not static, however, but develops over time. In the case of our portfolio, it has been growing rather solidly. By the end of 2013, we estimate that the fundamental value will be in the region of 50% higher compared to current market prices. This should create sufficient upward pressure on the prices of our assets.

In the following part of the annual report, you will find the quarterly letters to shareholders from the past year. Taken together, they provide an overview of our investments and opinions for the year just ended.

We thank you for your support and patronage through the years, and we look forward to continued co-operation in the years ahead.

Daniel Gladiš, January 2013