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The Currency Exchange Fund N.V. Year ended 31 December 2008 ANNUAL REPORT Contents General information ................................................................................................................................. 1 Profile ....................................................................................................................................................... 2 Report of the Board of Directors .............................................................................................................. 3 Report of the Supervisory Board ............................................................................................................. 5 Report of the Investment Manager .......................................................................................................... 7 TCX Shareholders and Subordinated Convertible Lender ...................................................................... 9 Financial statements .............................................................................................................................. 13 Balance sheet .................................................................................................................................... 13 Income statement .............................................................................................................................. 14 Statement of cash flows .................................................................................................................... 15 Statement of changes in net assets attributable to holders of redeemable shares Class A............. 16 Notes to the financial statements .......................................................................................................... 17 Other Information ................................................................................................................................... 41 Proposal for profit appropriation ........................................................................................................ 41 Auditor‟s report .................................................................................................................................. 42 General information Supervisory Board Registered Office Mr. P.C. Baloyi Locatellikade 1 Mr. F.R.V. Czichowski 1076 AZ Amsterdam Mr. T.F. Johansen The Netherlands Mr. C. Maas (chairman) Mr. A. van Nederveen Board of Directors Administrator TMF Management B.V. TMF Nederland B.V. Locatellikade 1 Locatellikade 1 1076 AZ Amsterdam 1076 AZ Amsterdam The Netherlands The Netherlands Investment Management Company Back Office Service Provider TCX Investment Management Company B.V. Zanders & Partners B.V. Sarphatikade 13 Brinklaan 134 1017 WV Amsterdam 1404 GV Bussum The Netherlands The Netherlands Risk Manager Compliance Officer Cardano Risk Management B.V. Compliance Advies Beursplein 37 Mr. A. van der Heiden RA 3011 AA Rotterdam Rotondeweg 22 The Netherlands 1261 BG Blaricum The Netherlands Accounts Bank Legal and Netherlands Tax Advisor Citigroup Clifford Chance LLP Schiphol Boulevard 257 Droogbak 1a WTC Building, Tower D, Floor 8 1013 GZ Amsterdam 1118 BH Airport Schiphol The Netherlands The Netherlands International Tax Advisor PriceWaterhouseCoopers Fascinatio Boulevard 350 Rotterdam The Netherlands Independent Auditor Ernst & Young Accountants LLP Wassenaarseweg 80 2596 CZ Den Haag The Netherlands - 1 - Profile The Currency Exchange Fund N.V. (“TCX” or “the Fund”) was launched on 5 September 2007 with the objective to invest, along commercially sound principles, in long-term emerging-market currency and interest rate derivatives, with the purpose to complement existing available product offerings in the market. Long-term investors and borrowers in these markets utilize TCX as a facilitator in the mitigation of the currency and interest rate mismatches. TCX exclusively invests in markets related to countries mentioned in the OECD Development Assistance Committee list of Official Development Assistance recipients, effective from 2006. It concentrates on currencies and maturities not provided for by the international financial markets. TCX is a USD-based fund. TCX‟s natural position is long emerging-market currencies and short USD. TCX‟s long-term financial investments as described above (the Primary Investments) currently consist of currency swaps in certain target currencies. TCX complements the diversification of its Primary Investment portfolio with shorter-term swaps entered into with certain globally operating banks (the Trading Investments). Finally, TCX manages the proceeds of its share capital issuance and loans drawn down in its Liquidity Portfolio by way of liquid USD money market instruments. TCX is rated AA- by Standard and Poor‟s. TCX was created by a group of like-minded investors to address the problems associated with the common practice of providing long-term (debt) financing denominated in hard currencies to emerging- market clients with local currency earnings. In many cases, such financing leads to a currency mismatch with these clients, who thereby become exposed to potentially high and adverse currency fluctuations. Exposure to unwarranted currency risks has a negative impact on the stability and sustainability of companies and economies, and it reduces the effectiveness of their capital in the generation of growth. TCX is the result of the collective will of its founding shareholders to address this market imperfection. Special attention is placed on Sub-Sahara African currencies, with the objective to maximize TCX‟s contribution to the development of the markets in the region. Efforts are also undertaken to serve the microfinance sector specifically, given the high development impact and additionality of local currency (debt) products in this sector, especially in the current phase of the sector‟s development. TCX was created with the dual intention to create a commercially sound solution to their own currency hedging needs and to contribute to the general development of local currency capital markets. Up to September 2010, TCX will transact almost exclusively with its investors and counterparties designated by its investors. TCX offers its investors the benefits of scale and scope in managing local currency exposures. Its most important risk mitigation tool is the establishment and maintenance of a broadly diversified emerging-market portfolio. A broadly diversified emerging-market portfolio is established quickly and evenly by pooling the origination efforts of a large number of institutions, many of which have a regional focus. TCX is a Dutch, tax-exempt corporation. It has partnered with the Netherlands-based investment manager TCX Investment Management Company B.V. and the risk manager Cardano Risk Management B.V. for the management of its main activities. TCX has no employees. - 2 - Report of the Board of Directors We are pleased to submit the annual report for the year ended 31 December, 2008 and the Independent Auditor‟s report for The Currency Exchange Fund N.V. Results The net asset value per share Class A decreased by USD 76,949 (2007: a decrease of USD 3,684) equals to a decrease of 15.5% during the year (2007: a decrease of 0.7%). The net asset value per share Class A for all series at the end of the reporting period is as follows: 31 December, 2008 31 December, 2007 Intrinsic value1 per share Class A (in USD) 448,909 496,316 Net asset value per share Class A (in USD) 419,367 496,316 Developments during the year The report of the Investment Manager has been included in this annual report and elaborates on the operational and investment activities during the year. Internal control over financial reporting The Board of Directors of The Currency Exchange Fund N.V. (TCX) confirms that it is responsible for the risk management, internal control, integrity and compliance systems of TCX and its activities. It has outsourced a substantial part of the management- and operational activities to third parties through various agreements entered into at TCX‟s establishment on 5 September, 2007. The third parties providing such services (each, a Service Provider) are: TCX Investment Management Company BV, TCX‟s Investment Manager (which in turn has outsourced administrative and back office services to TMF Nederland BV and Zanders and Partners, respectively) Cardano Risk Management BV, TCX‟s Risk Manager Compliance Advies Financiele Ondernemingen, TCX‟s Compliance Officer The Board of Directors confirms that TCX and its Service Providers operate in accordance with the Operational Guidelines (as adopted on 5 September, 2007 and amended on 1 July, 2008). The scope of involvement of the Board of Directors in the operational management of TCX as described in the Operational Guidelines is limited. The Board of Directors confirms for its own account, and has received from each Service Provider a confirmation for their account, that: it is not aware of any material breach in the risk management and internal control systems as they relate to the activities that it performs under the relevant TCX services agreement and the relevant procedures as described in the Operational Guidelines of TCX (as adopted on 5 September, 2007 and amended on 1 July, 2008); it is not aware of any indications that the risk management and internal control systems as they relate to the activities that it performs under the relevant TCX services agreement have not worked effectively over the financial year ending 31 December 2008, and that

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