The fund management company Kmecka druzba za upravljanje investicijskih skladov d.d., Ljubljana was incorporated on March 2, 1994 and was legally registered at the District Court in Ljubljana under reg. no I/25274/00.

The company’s basic and only activity is management of close-end privatisation funds and mutual funds. It pursues an active management investment policy shares and holdings in enterprises within the portfolio of close-end privatization fund, together with its specialists and representatives on supervisory boards of such enterprises.

The company manages shares and bonds in the portfolio of close-end privatization funds and mutual funds in a passive manner, i.e. by investing in transferable securities quoted on the Ljubljana Stock Exchange according to the criterion of the actual rate of return.

The basic and only activity of Kmecka druzba d.d. is management of investment funds. The legal basis of its activity is the Law on Investment Funds and Management Companies (LIFC) and appropriate licence issued by the Securities and Exchange Commission (SEC). Close-end privatisation funds (CPF) managed by Kmecka druzba are legal entities organized in accordance with LIFC which offer their shares to the public in accordance with the licence granted to it by SEC. Shares may be subscribed in cash and/or privatization vouchers. Funds pooled in this way are then invested by CPF in shares of companies subject to privatization under the Law on Ownership transformation, in accordance with their prospectus approved by SEC.

An CPF is managed by a director and a three-member supervisory board.

All matters relating to the management of CPF are the responsibility of Kmecka druzba, on behalf and for the account of CPF, in accordance with the Management Agreement made between individual CPF and Kmecka druzba.

All operating costs of CPE, except interest on loans, for which CPF needs to obtain an approval by SEC, and taxes are covered by Kmecka druzba.

Kmecka druzba charges CPF for its services a management fee in the amount of 2% p.a. of the net assets value in cash and 1% in CPF shares, which is established according to the methodology laid down by SEC.

The fees are calculated daily and are paid monthly.

Mutual funds managed by Kmecka druzba are not legal entities, but represent investor’s assets invested in a particular mutual fund.

Kmecka druzba d.d. invests in more than 140 selected Slovenian companies. Most of them are internationally oriented and stand out in terms of quality, future potential and market strength regarding future Slovenian and global trends.

The information about performance of mutual funds, managed by Kmecka druzba d.d., are presented in charts below:

Funds are open-end ones, which means that investors may invest and withdraw their assets from it at any time. According to last year results (1997), the average annual return for mutual funds was 25%.

Mutual funds are organized in accordance with LIFC by SEC approval.

According to its prospectus and principles of the management Kmecka druzba charges investment funds an intial and management fee.

Activities carried out by mutual investment funds include receiving payments, requests for disbursements, keeping of investor records, calculation of the fund’s assets (NAV) and daily notification of the media, daily monitoring of mutual fund portfolio (buying and selling) and notification of the stockbroking house of portfolio balances, provision of funds for eventual payments to investors, changes in funds, payment of commissions.

in DEM

as % of net assets

10,361,311

6.74 %

8,108,081

5.27 %

7,831,270

5.09 %

5,372,947

3.50 %

3,920,143

2.55 %

3,780,321

2.46 %

114,339,330

74.39 %

153,713,403

100 %

295,286,597