Annual Report 2018

INVESTOR COMPENSATION FUND – BUCHAREST, ROMANIA

Contents

1. About the Fund ...... 3 1.1 Scope of the Fund ...... 3 1.2 Legal framework ...... 3 1.3 Compensation limit ...... 4 2. Fund’s activity in 2018 ...... 4 I. Maintaining the compensation capacity ...... 4 2.1 Fund’s Management ...... 6 2.2 Share Capital and Shareholders ...... 6 2.3 Members of the Fund ...... 7 2.4 Investors ...... 8 2.5 Investment eligible for compensation ...... 9 2.6 Average portfolio of an investor ...... 10 2.7 Financial resources at December 31, 2018 ...... 12 2.7.1 Initial Contributions ...... 12 2.7.2 Annual Contributions ...... 13 2.7.3 The evolution of initial and annual contributions ...... 13 2.7.4 Investment of the financial resources ...... 13 3. Financial Statements ...... 15 3.1 Balance sheet as at 31.12.2018 ...... 15 3.2 Profit and loss account for 2018 ...... 15 Annex 1 - Shareholders at 31.12.2018 ...... 16 Annex 2 - Members at 31.12.2018 ...... 17 Annex 3 – Calculation of the annual contribution ...... 19 Annex 4 – Organizational Chart ...... 20 Annex 5 – Balance sheet as at 31.12.2018 ...... 21 Annex 6 – Profit and loss account at 31.12.2018 ...... 22 Contact information ...... 23

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Abbreviations

• A.S.F. –The Romanian Financial Supervisory Authority

• BET –Bucharest Exchange Trading Index

• BET-FI –Bucharest Exchange Trading Investment Funds Index

• C.N.V.M. – The Romanian National Securities Commission

• IC – Investment eligible to compensation

• IMC – Average Investment eligible to compensation

• SAI – Asset Management Company

• SSIF – Financial Investment Services Company

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1. About the Fund

The Investors Compensation Fund is a legal person established as a joint- stock company according to its articles of incorporation, preliminary approved by the Romanian National Securities Commission (Comisia Nationala a Valorilor Mobiliare - C.N.V.M.). Since April 2013, C.N.V.M’s attributions were transferred to the Romanian Financial Supervisory Authority (A.S.F.). Mission The Investors Compensation Fund mission is to manage a solid compensation scheme aimed at contributing to the increase of investors’ trust and participation to the Romanian capital market. Values • Responsibility towards the investors and protection of their interests • Strong cooperation with the members of the Fund, the regulatory authority and the financial institutions • Confidentiality of information received from the members of the Fund

1.1 Scope of the Fund

The Fund was set up in June 2005, with the purpose of paying compensation to investors in case a member of the Fund fails to return the money and/or the financial instruments owed by or belonging to investors, which have been held on their behalf for providing investment services or managing individual investment portfolios.

1.2 Legal framework

The Fund carries out its activity according to: • The provisions of its articles of incorporation authorized by C.N.V.M/ A.S.F; • Law no.31/1990 on trade companies, republished, with further modifications and completions; • The Capital Market Law no. 297/2004, with further modifications and completions; • The Regulation no. 3/2006 regarding the authorization, organization and functioning of the Investors Compensation Fund, issued by C.N.V.M., with further modifications and completions; • The Procedures of the Fund; • The accounting law no. 82/1991; • Directive 97/9/EC on investor compensation schemes; • Directive 2004/39/EC on markets in financial instruments (MiFID).

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1.3 Compensation limit

The compensation limit is currently established at 20,000 euro. 2. Fund’s activity in 2018

In 2018, the Fund collected annual contribution amounting 1,438,813 lei, which represent approximately 6.53% of the total annual contributions collected during 2005-2018. Compared to 2017, the total value of annual contributions collected in 2018 increased by approximately 10.47%.

The Fund’s activity in 2018 has been directed according to the objectives approved in the Board of Governors Report from the previous year:

1) Maintaining the compensation capacity; 2) Maintain cooperation at international level; 3) Keeping the Fund’s resources safe; 4) Active participation in the development of the capital market legal framework.

I. Maintaining the compensation capacity

One of the Fund’s objectives is to increase its compensation capacity in order to accomplish its mission of managing a solid compensation scheme aimed at increasing the investors’ trust and participation to the Romanian capital market. In this respect, the Fund observes the evolution of the following indicators: • Coverage index of the Fund’s exposure • Coverage level of the investment eligible to compensation • Coverage level of the cash funds

Table no. 1 – EVOLUTION OF THE INDICATORS MEASURING THE COMPENSATION CAPACITY Dec. 2016 Dec. 2017 Dec. 2018

Fund’s resources (thousands lei) 15,515 16,817 18,256 Investment eligible to compensation-IC 1,580,638 1,795,163 1,663,212 (thousands lei) No. members 41 37 31 Coverage index of the Fund’s exposure 0.98% 0.94% 1.10% Coverage level of investment eligible to 53.85% 52.94% 57.14% compensation Coverage level of cash funds 84.62% 85.29% 78.57%

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The coverage index of the Fund’s exposure (CI) Represents the ratio between the Fund’s resources for compensation and the total amount of the investments eligible for compensation:

Fund′s resources CI = ∗ 100 Total amount of investments to compensate

• The compensation capacity of the Fund increased to a level of 1.10% at the end of 2018. The increase in the compensation capacity was due to the increase of the resurces for compensation and to the reduction of the compensable investment.

Covered level of the investment eligible for compensation (C-Inv) Determines the number of members that the Fund could compensate individually. The number of members for which the investment eligible to compensation is smaller or equal to the available resources C − Inv = ∗ 100 Total number of members

• Comparing the Fund’s resources of 18.25 million lei with the individual amount of the investment eligible for compensation of each member (ICi) (monies and financial instruments), it results a number of 16 members which can be fully covered. The rest of 12 members, with ICi from 18.25 million lei to 391.06 million lei cannot be covered entirely. Thus, the Fund has a covered level of the investment of 57.14%, on the increase than the value from the previous year, of 52.94%.

* At the end of 2018, three members were in the process of withdrawing

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Coverage level of the cash funds (C-CF) Is calculated in order to analyze the situation of the investments to compensate reported by the members, highlighting cash funds capacity to compensate.

The number of members for which cash funds are smaller or equal to the Fund′s resources C − CF = ∗ 100 Total number of members

The coverage level of the investment to compensate and the coverage level of the cash funds are calculated assuming the existence of a single case of compensation in a year. • Taking into consideration strictly the cash funds of investors, the Fund can compensate individually a number of 22 members with reported values lower than the Fund’s resources. The cash reported by 6 members cannot be entirely covered by the Fund, with values between 18.6 million lei and 98.2 million lei. Thus, the coverage level of the cash funds is 78.57%, on the decrease than the value from the previous year, or 85.29%.

2.1 Fund’s Management

The Fund administration is entrusted to a Board of Directors, elected by the General Meeting of Shareholders for a term of four years During 2018, The Fund had the following Board of Directors:

Table no. 2 - Board of Directors during 01.01.2018-12.31.2018:

No. Company Manager’s representative Quality crt. 1 S.C. SWISS CAPITAL S.A. Ioana Valeria Avram Chairman of the Board 2 S.C. ESTINVEST S.A. Petrica Tudoran Member of the Board 3 S.C. BT SECURITIES S.A. Nicolae Moroianu Member of the Board

The Executive Director of the Fund is Mr. Fanel Chirtu, elected by the General Meeting of Shareholders.

2.2 Share Capital and Shareholders

The Investors Compensation Fund had, in the set-up year, 72 founding shareholders: 60 financial investment services companies, 10 asset management companies, a credit institution, as well as the Bucharest Stock Exchange. The initial Share capital of the company was 109.500 lei. At the end of 2018, The Fund had 44 registered shareholders. (Annex 1) In 2018 there were no changes in the Share capital of the Investors Compensation Fund, having the same value as in the previous year, of 344,350 lei, corresponding to a total of 34,435 shares with a nominal value of 10 lei.

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2.3 Members of the Fund

All intermediaries authorized to provide financial investment services (investment services companies and credit institutions) and asset management companies that manage individual investment portfolios must be members of the Fund.

The number of members continued to decrease in 2018 as well as in the previous years, to a value of 31 members at the end of 2018 compared to 37 members in 2017. Among the members of the Fund at the end of 2018 there were 21 financial investment services companies, 7 credit institutions and 3 asset management companies.

In 2018 no new member was registered and 6 members withdrew from the Fund, namely S.S.I.F. Confident Invest S.A., S.S.I.F. Romintrade S.A.; S.S.I.F. Romcapital S.A., S.A.I. OTP Asset Management S.A., S.A.I. Atlas Asset Management S.A. and Libra Bank S.A.

The complete list of members at the end of 2018 is presented in the Annex 2.

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2.4 Investors

The total number of investors at the end of 2018, according to the statements of the Fund’s members, was 53,981, without considering if an investor is a client of one or more members. Compared to the end of 2017, the number of investors decreased by approx. 9.23%, from 59,467 investors reported. The following tables present the evolution of the number of investors, according to the category they are part of (with eligible monies and financial instruments below the limit, above the limit or excluded from compensation):

Table no. 3 – EVOLUTION OF THE NUMBER OF INVESTORS 2014-2018 % Change Categories Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 2017/2018 Investors eligible for full 64,706 60,992 55,115 46,884 42,309 -9.76% compensation Investors eligible for compensation within the 8,297 8,772 10,007 11,333 10,516 -7.21% compensation limit Investors excluded from 1,568 1,344 1,371 1,250 1,156 -7.52% compensation Total no. of investor 74,571 71,108 66,493 59,467 53,981 -9.23%

2018 ended with a decrease in the number of investors with portfolios lower than the compensation limit, with a 9.76% negative change than the value registered at the end of 2017. The number of investors in the other two categories dropped by more than 7% each.

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Table no. 4 – QUARTERLY EVOLUTION OF THE TOTAL NUMBER OF INVESTORS 2018 Categories March June Sept. Dec. Investors eligible for full 47,443 46,077 42,944 42,309 compensation Investors eligible for compensation 11,801 10,969 11,114 10,516 within the compensation limit Investors excluded from 1,212 1,244 1,200 1,156 compensation Total no. of investor 60,456 58,290 55,258 53,981

The table below presents the number of investors classified by categories of members and types of investors. We can observe that the highest weight of investors eligible for full compensation, of 86%, was represented by investors using brokerage firms and, at the opposite side, with a weight of less 0.1%, investor using the services of asset management companies.

Table no. 5 – INVESTORS CLASSIFICATION BY CATEGORIES OF MEMBERS AT THE END OF 2018 Investors eligible for Investors eligible Investors compensation within Categories for full excluded from Total the compensation compensation compensation limit Financial investment 36,371 6,140 548 43,059 services companies Credit institutions 5,924 4,160 604 10,688 Asset Management 14 216 4 234 Companies Total 42,309 10,516 1,156 53,981

2.5 Investment eligible for compensation

The investment eligible for compensation (IC) consists of cash funds and financial instruments owned by eligible investors at each member of the Fund. At the end of 2018, the IC amounted 1.66 billion lei.

Table no. 6 shows the quarterly values of the total investment eligible for compensation, as well as of its components, cash and financial instruments. There was a decrease at the end of 2018 by 7.35% from end of 2017.

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Table no. 6 – INVESTMENT ELIGIBLE FOR COMPENSATION (IC) 2017

Investment eligible for IC – financial Change IC (current IC – cash funds compensation (IC) instruments /previous quarter) 31,12,2017 1,795,162,555 457,228,701 1,337,933,855 #

31,03,2018 1,788,922,679 417,497,152 1,371,425,527 -0.35%

30,06,2018 1,710,992,933 427,601,214 1,283,391,719 -4.36%

30,09,2018 1,719,226,042 424,695,589 1,294,530,453 0.48% 31,12,2018 1,663,211,615 377,500,370 1,285,711,245 -3.26%

1.6 Average portfolio of an investor

The value of the average portfolio reported to the category of investors is presented in Table no. 7, The limit for compensation is 20,000 EUR: • The portfolio of an investor eligible for full compensation (with investments under 20,000 EUR) is the ratio between the sum of the investments eligible for compensation under the compensation limit and the total number of investors eligible to compensation within this compensation limit,

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• The average portfolio of an investor eligible for compensation within the compensation limit (with investments over the compensation limit) is the ratio between the sum of investments eligible for compensation over the compensation limit and the total number of investors eligible to compensation within the compensation limit, • The average portfolio of an investor excluded from compensation is the ratio between the sum of investments excluded from compensation and the total number of investors excluded.

Table no, 7 – THE AVERAGE PORTFOLIO OF AN INVESTOR (EURO)

Average Change DEC 2014 DEC 2015 DEC 2016 DEC 2017 DEC 2018 portfolio/investor 2018/2017 Investors eligible to full 2,246 2,389 2,679 3,383 3,458 2.22% compensation Investors eligible to comp, within the comp, 192,816 188,653 178,883 177,642 208,121 17.16% limit Investors excluded from 4,795,040 6,323,630 6,086,753 7,709,144 8,547,907 10.88% compensation

The average portfolio increased in 2018 by 2.22% for the investors eligible for full compensation. The investors excluded from compensation increased by 10.88%, The investors eligible for compensation within limit registered a increase of the average portfolio of 17.16%, reaching a value of 208,121 euro, out of which only 20,000 euro per investor is compensable.

Table no, 8 – THE AVERAGE PORTFOLIO OF AN INVESTOR ELIGIBLE FOR FULL COMPENSATION (EURO)

Portofoliul Change mediu/investitor DEC 2014 DEC 2015 DEC 2016 DEC 2017 DEC 2018 2018/2017 (EUR) Financial investment services 1,841 1,920 2,224 2,989 3,068 2.63% companies

Credit institutions 5,323 5,465 5,624 5,509 5,825 5.75%

Asset Management 13,757 14,759 15,164 14,972 14,046 -6.18% Companies

Average portfolio of an eligible for full 2,246 2,389 2,679 3,383 3,458 2.22% compensation investor

The average portfolio of an investor eligible for full compensation increased steadily during the quarters of 2018, reaching 3,458 euro at the end of the year. Among this category, the investors with the highest average portfolio are clients of asset management companies, with a value of 14,046 euro.

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2,7 Financial resources at December 31, 2018

Under the National Securities Commission’s Regulation, no,3/2006 regarding the authorization, organization and functioning of the Investor Compensation Fund, as amended and supplemented, the Fund's financial resources may be composed of: • Initial contributions, annual contributions and/or special contributions; • Income from investing the Fund’s resources • Short term loans, donations, sponsorships, financial assistance; • Other revenues, including penalties from delays,

2.7.1 Initial Contributions

During 2018, the Fund did not receive any initial contributions.

The total amount of initial contributions collected by the Fund during 2005- 2018 reached 649,839 lei, representing approximately 2.86% of the total collected contributions (initial and annual) in the same period (Table no, 9)

Table no, 9 – EVOLUTION OF INITIAL CONTRIBUTION PAID BY MEMBERS (LEI)

Category of 2005- Total initial 2014 2015 2016 2017 2018 members 2013 contributions

Fin, Inv, Services 318,680 - 32,956 - - - 351,636 Companies Credit institutions 183,269 - - - - - 183,269 Asset Manag, 109,299 5,635 - - - - 114,934 Companies Total initial 611,248 5,635 32,956 - - - 649,839 contributions

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2.7.2 Annual Contributions

In 2018 the Fund collected annual contributions of 1,438,813 lei, representing approximately 6,53% of the total annual contributions collected during 2005- 2018, The total value of contributions collected in 2018 increased by 10.47% compared to 2016, Depending on the category of members paying the contribution, in 2018, the financial investment services companies paid together the largest amount of contributions (836,669 lei), followed by credit institutions (536,997 lei) and asset management companies (65,147 lei).

Table no, 10 – EVOLUTION OF ANNUAL CONTRIBUTION PAID BY MEMBERS (LEI)

Category of Total annual 2005-2014 2015 2016 2017 2018 members contributions

Fin, Inv, Services 13,849,905 679,308 726,089 751,007 836,669 16,842,978 Companies Credit institutions 2,442,030 390,824 390,892 482,278 536,997 4,243,022 Asset Manag, 674,170 76,697 73,034 69,132 65,147 958,181 Companies Total annual 16,966,105 1,146,829 1,190,015 1,302,418 1,438,813 22,044,181 contributions

2.7.3 The evolution of initial and annual contributions

At the end of 2018, the total amount of contributions collected by the Fund since 2005 was of 22,044,181 lei (approximately 4.87 million euro, considering 1eur/1leu=4.6639 at 31.12.2018).

2.7.4 Investment of the financial resources

According to the National Securities Commission’s Regulation no. 3/2006 regarding the authorization, organization and functioning of the Investor Compensation Fund, as amended and supplemented, the Fund may invest its financial resources in: • bonds or other fixed income instruments fully guaranteed by the State; • treasury bonds and other low risk assets issued by Member States and securities issued by their central banks; • securities issued by the U.S. Treasury; • bonds of local and central public administration with the principle of risk spreading; • deposits at credit institutions up to 35% of the available resources in, provided that the Fund’s exposure for each credit institution must not exceed 20% of their volume, The Investment policy adopted by the Board of Directors provides that Fund’s resources are invested according to the following principles:

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• safety, aiming to reduce counterparty risk and systemic risk; • liquidity, aiming to ensure liquidity for both the administration and operation, and to make payments in case of a compensation case; • yield, aiming to obtain high interest rates in terms of market data, In 2018, the Fund invested its resources mainly in treasury bills, benchmark bonds, negotiated deposits and other types of deposits, The average yield in 2018 for the investments was 2.55%,

Table no,11 – INVESTMENT OF RESOURCES IN 2018

Average resources invested Type of investment Average YIELD (%) (lei) Treasury bills 2,082,885 1.43% Benchmark bonds 13,880,552 2.86% Deposits 2,774,676 1.84% Total investments 18,738,113 2.55%

In 2018, 74.1% of the Fund’s resources were invested in benchmark bonds, 11.1% in discounted treasury bills and 14.8% in negotiated deposits,

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3. Financial Statements

The Fund’s financial activity was analyzed by the Board of Directors based on the statements presented by the executive management regarding the collection of contributions, the fund’s resources investment and the details of current expenses of the Fund,

3.1 Balance sheet as at 31.12.2017

At the end of 2018, the total assets of the Fund minus the current liabilities accounted 19,158,479 lei and were comprised mainly from long-term bonds issued by the Ministry of Finance, other short-term financial investments such as deposits at commercial banks, state bonds, commercial bonds and current accounts.

The sum of equity ownership was 827,314 lei and consisted in share capital, legal reserves and other reserves,

The balance sheet as at December 31, 2018 is presented in Annex no. 5.

3.2 Profit and loss account for 2018

The profit and loss account was realized based on the accounting records of income and expenses.

The revenues in 2018 (548,087 lei) consist of operational income, which represent interest income from investments, and other operating revenue which consist of late payments for the annual contributions, exchange-rate profit.

Expenses (909,754 lei) represent mostly expenses with salaries, rent and maintenance, services executed by third parties and other commercial obligations.

The profit and loss account is presented in Annex no. 6.

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Annex no. 1 - Shareholders at 31.12.2018

No. of No. Shareholder % ownership shares

1 S.S.I.F. ALPHA FINANCE ROMANIA S.A. 150 0.4356 2 BRD - GROUPE SOCIETE GENERALE 150 0.4356 3 S.S.I.F. BT CAPITAL PARTNERS S.A. 300 0.8712 4 BURSA DE VALORI BUCURESTI S.A. 21,504 62.4481 5 S.S.I.F. CARPATICA INVEST S.A. 150 0.4356 6 S.S.I.F. CONFIDENT INVEST S.A. 150 0.4356 7 S.S.I.F. EASTERN SECURITIES S.A. 396 1.1500 8 S.C. ELDAINVEST S.R.L. 150 0.4356 9 S.C. EQUITY INVEST S.R.L. 150 0.4356 10 S.S.I.F. ESTINVEST S.A. 1,765 5.1256 11 S.S.I.F. FINACO SECURITIES S.A. 150 0.4356 12 S.S.I.F. GOLDRING S.A. 179 0.5198 13 S.S.I.F. IEBA TRUST S.A. 150 0.4356 14 S.S.I.F. IFB FINWEST S.A. 179 0.5198 15 S.S.I.F. INTERCAPITAL INVEST S.A. 235 0.6824 16 S.S.I.F. INTERDEALER CAPITAL INVEST S.A. 150 0.4356 17 S.S.I.F. INTERFINBROK CORPORATION S.A. 150 0.4356 18 S.S.I.F. INTERVAM S.A. 396 1.1500 19 S.S.I.F. MOBINVEST ORADEA SA 150 0.4356 20 S.S.I.F. MUNTENIA GLOBAL INVEST S.A. 179 0.5198 21 S.S.I.F. SHARE INVEST S.A. 150 0.4356 22 FIRST BANK S.A. 179 0.5198 23 S.S.I.F. PRIME TRANSACTION S.A. 150 0.4356 24 S.S.I.F. ROMBELL SECURITIES S.A. 179 0.5198 25 S.S.I.F. ROMCAPITAL SA 150 0.4356 26 S.S.I.F. ROMINTRADE S.A. 472 1.3707 27 S.A.I CERTINVEST S.A. 198 0.5750 28 S.A.I. BT ASSET MANAGEMENT S.A. 150 0.4356 29 S.A.I. ERSTE ASSET MANAGEMENT S.A. 231 0.6708 30 S.A.I. GLOBINVEST S.A. 179 0.5198 31 S.A.I. PIONEER ASSET MANAGEMENT S.A. 150 0.4356 32 S.A.I. STK FINANCIAL SA 150 0.4356 33 S.A.I. SWISS CAPITAL ASSET MANAGEMENT S.A. 334 0.9699 34 S.A.I. VANGUARD ASSET MANAGEMENT S.A. 150 0.4356 35 S.S.I.F. BRK FINANCIAL GROUP S.A. 922 2.6775 36 S.S.I.F. SUPER GOLD INVEST S.A. 150 0.4356 37 S.S.I.F. SWISS CAPITAL S.A. 2,679 7.7799 38 S.S.I.F. TRADEVILLE S.A. 150 0.4356 39 S.S.I.F. BLUE ROCK FINANCIAL SERVICES S.A. 179 0.5198 40 S.S.I.F. VIENNA INVESTMENT TRUST S.A. 150 0.4356 41 S.S.I.F. VOLTINVEST S.A. 150 0.4356 42 RAIFFEISEN BANK S.A. 150 0.4356 43 S.C. CITIUS CAPITAL S.R.L. 150 0.4356 44 S.C. ALVIS CAPITAL S.R.L. 150 0.4356 TOTAL 34,435 100.0000

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Annex 2 - Members at 31,12,2017

I Financial investment services companies 1 S.S.I.F. ALPHA FINANCE ROMANIA S.A. 2 S.S.I.F. BLUE ROCK FINANCIAL SERVICES S.A. 3 S.S.I.F. BT CAPITAL PARTNERS S.A. 4 S.S.I.F. BURSA ROMANA DE MARFURI S.A. 5 S.S.I.F. CONFIDENT INVEST S.A. 6 S.S.I.F. EASTERN SECURITIES S.A. 7 S.S.I.F. ESTINVEST S.A. 8 S.S.I.F. FINACO SECURITIES S.A. 9 S.S.I.F. GOLDRING S.A. 10 S.S.I.F. IEBA TRUST S.A. 11 S.S.I.F. IFB FINWEST S.A. 12 S.S.I.F. INTERDEALER CAPITAL INVEST S.A. 13 S.S.I.F. INTERFINBROK CORPORATION S.A. 14 S.S.I.F. INTERVAM S.A. 15 S.S.I.F. MUNTENIA GLOBAL INVEST S.A. 16 S.S.I.F. SHARE INVEST S.A. (OLTENIA GRUP INVEST S.A.) 17 S.S.I.F. PRIME TRANSACTION S.A. 18 S.S.I.F. ROMCAPITAL S.A. 19 S.S.I.F. ROMINTRADE S.A. 20 S.S.I.F. BRK FINANCIAL GROUP S.A. (BROKER S.A.) 21 S.S.I.F. SWISS CAPITAL S.A. 22 S.S.I.F. TRADEVILLE S.A. 23 S.S.I.F. VIENNA INVESTMENT TRUST S.A. 24 S.S.I.F. VOLTINVEST S.A.

II Credit Institutions 1 ROMANIA S.A. 2 3 BCR 4 BRD - GROUPE SOCIETE GENERALE 5 LIBRA BANK S.A. 6 FIRST BANK S.A. ( ROMANIA S.A.) 7 RAIFFEISEN BANK S.A. 8 UNICREDIT TIRIAC BANK S.A.

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III Asset Management Companies 1 S.A.I. CERTINVEST S.A. 2 S.A.I. ERSTE ASSET MANAGEMENT 3 S.A.I. OTP ASSET MANAGEMENT S.A. 4 S.A.I. ATLASS ASSET MANAGEMENT SA fost SAI PISCATOR CAPITAL S.A. 5 S.A.I. RAIFFEISEN ASSET MANAGEMENT S.A.

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Annex 3 – Calculation of the annual contribution

Starting with 2013. the members calculate their contribution using three components of equal values: one fixed component (equal for each member). one variable component (calculated using a percentage of incomes) and another variable component (calculated as a percentage of the investment amount eligible for compensation). The calculation starts from the total amount that the Fund decides to collect for the respective year. which is divided in the three parts described above.

The parts (or components) of the annual contribution are computed as follows: a) the fixed part is equally spread among members

b) the income component is calculated by applying a percentage rate indicator (cp1) to the income base of each members. as follows:

1. for members - intermediaries is the income from fees / charges of securities transactions and operations in the custody and administration of financial instruments;

2. for members - investment management companies. the income from managing individual investment portfolios. excluding income from pension fund management;

3. branch members intermediaries and investment management companies and members of non-member EU states - intermediate and investment management companies in the Member States or their branches is the income earned in Romania in the activities defined in subparagraph a) or b).

c) the investment component is calculated by applying a percentage rate indicator (cp2) to the investment eligible for compensation base for each member. The investment eligible for compensation is the amount of money and financial instruments that the Fund will pay to an investor (investors that are not explicitly excluded by the legal framework) up to the effective compensation limit. in the eventuality of a compensation case.

The components of the annual contribution are decided by the Board of Directors annually. until March 15. The annual contribution is paid until June 1st each year. based on the statements of the members for the previous year and the Annex no. 3 reported at the end of the previous year by each member.

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Annex 4 – Organizational Chart

General Meeting of Shareholders

Financial Audit Board of Governors

Internal Audit

Executive Director

Network Members, International Legal Economic Administration compensation Relations and Department Department Department and Strategies Department Shareholders Department

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Annex 5 – Balance sheet as at 31.12.2018 (lei)

Name of indicator 2018, Dec.31 2017, Dec.31

Assets Cash and cash equivalents 141,585 148,487 Financial assets held to maturity 629,533 902,629 Financial assets held to maturity - 14,524,408 restricted 15,643,986 Deposits - restricted 2,714,314 2,460,453 Deposits - 203,046 Receivables and other assets 14,794 11,262 Tangible and intangible assets 14,267 13,089 Total assets 19,158,479 18,263,374

Liability Other financial liabilities 74,892 191,145 Liabilities for compensation 18,256,273 16,817,460 Total liabilities 18,331,165 17,008,605

Capial Share capital 344,350 344,350 Share premium 5,877 5,877 Reserves 949,959 1,298,276 Result of the financial year (381,857) (348,317) Retain earnings undistributed (159,885) (114,287) Legal reserves 68,870 68,870 Total equity capital 827,314 1,254,769

Total liabilitys and equity capital 19,158,479 18,263,374

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Annex 6 – Profit and loss account at 31.12.2018

Name of indicator 2018, Dec.31 2017, Dec.31

Operating revenues 526,122 428,706 Other revenues 487 3,200 Total 526,609 431,906

Net gain / net loss from exchange rate 1,288 23,741 differences Administrative expenses and other operating (694,953) (527,646) expenses Expenses for services provided by third parties (140,261) (132,383) Other operating expenses (74,540) (143,935)

Loss before tax (381,857) (348,317)

Loss for the year (381,857) (348,317)

Result of the financial year (381,857) (348,317)

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Contact information

VALERIA AVRAM S.C SWISS CAPITAL S.A President

Tel: +40.21.408.42.00 Email: [email protected]

PETRICA TUDORAN S.C. ESTINVEST S.A Board Member

Tel +40.237.221.804 Email: [email protected]

NICOLAE MOROIANU BT SECURITIES Board Member

Tel +40.0264.430564 Email: [email protected]

FANEL CHIRTU Executive Director

Tel: +40.21.315.73.48 Email: [email protected]

Investors Compensation Fund

Carol I. no. 34-36. 3rd floor. district 2. Bucharest Tel: +40.21.315.73.48 Fax: +40.21.315.73.40

[email protected] www.fond-fci.ro

23 Annual Report 2018 – Investors Compensation Fund