PROSPECTUS OF RAIFFEISEN VOLUNTARY PENSION FUND

Transcription

1 In accordance with the Mandatory Pension Funds Act (Official gazette no. 19/2014, hereinafter: Act), the Management of Raiffeisen društvo za upravljanje obveznim i dobrovoljnim mirovinskim fondovima d.d., Zagreb, Heinzelova 44, on this day 26 January 2015 (hereinafter: Company) adopted the Prospectus of Raiffeisen Voluntary Pension Fund (hereinafter: Fund), as follows: PROSPECTUS OF RAIFFEISEN VOLUNTARY PENSION FUND CONTENT: Contents A) INFORMATION ON THE FUND Basic Fund data Place of availability of copies of the Fund's Articles of Incorporation, key data for Fund members or other proscribed announcements and semi annual and audited annual reports The manner of publication of the Fund's Prospectus, Articles of Incorporation, key data for Fund members, semi annual and audited annual reports and other proscribed announcements Data on tax regulations applicable to the Fund and of relevance for Fund members Data on the Fund's service providers Manner of recalculation of payments into the personal accounts of Fund members and transferred accounts into shares, manner and conditions for the transfer of financial assets from the personal accounts of Fund members to a pension insurance company, options for pension disbursement and transfer of account into another voluntary pension fund and circumstances under which such activities may be suspended Fund member rights Procedures and conditions for the issuance of shares, manner of entry into the register of Fund members, i.e. issuance of shares, procedures and conditions of the pension scheme offer Type of property into which the Fund is allowed to invest Limitations on investment of Fund s property Investment principles, strategy and goals of the Fund Target structure of the Fund's portfolio and allowed deviations from the target structure Risks and risk management Manner and time of calculation of Fund s property net value Time, method and frequency of calculation of share price and manner of publication thereof Management fees and costs allowed to encumber the Fund and Fund memebrs Instances in which Company may refuse the conclusion of Fund Membership Contract Manner of calculation of Fund's business results Fund's yield Average yield of the Fund from its establishment and historical yield of the Fund over the last five years... 23

2 20. Business year duration B) INFORMATION ON THE COMPANY Basic Company data Other voluntary pension funds under Company management Business goal and strategy of the Company Organizational structure of the Company Description of risks associated with Company operation, with table illustration of such risks and the level of their influence on the Fund and the Company, risk management and risk profile, proneness to risk and risk bearing capacity The principles and strategy of investment of Company property Description of responsibilities and manner of adoption of investment decisions Description of corporate management in the preceding period Description of the reward policy Information on Company auditor Names and positions of Management and Supervisory Board members of the Company, their summary CVs, including details of their main activities outside the Company, if relevant for the Company and the Fund The amount of the share capital of the Company, personal identification numbers and names of Company members, legal form and statement of share of members in the share capital Significant provisions of the contract with the Depositary of relevance for Fund members, except those relating to fee payment List of delegated tasks and persons they are delegated to C) INFORMATION ON THE DEPOSITARY D) INFORMATION ON THE AGENCY

3 A) DATA ON THE FUND 1. Basic Fund data Fund name: Raiffeisen dobrovoljni mirovinski fond. In foreign transactions, the Fund shall operate under the name: Raiffeisen Voluntary Pension Fund. Fund type: open ended voluntary pension fund. Date of Fund establishment: 28 June Place of availability of copies of the Fund's Articles of Incorporation, key data for Fund members or other proscribed announcements and semi annual and audited annual reports Copies of the Fund's Articles of Incorporation, this Prospectus, key data for Fund members and other proscribed announcements and semi annual and audited annual reports are available to Fund members at the Company's website: At the request of a Fund member, the member may be delivered the latest semi annual and audited annual reports of the Fund free of charge, once a year. Key data for Fund members, the Articles of Incorporation and this Prospectus shall be available to potential Fund members at all venues offering the pension schemes of the Fund. 3. The manner of publication of the Fund's Prospectus, Articles of Incorporation, key data for Fund members, semi annual and audited annual reports and other proscribed announcements The Company shall publish this Prospectus and the Fund's Articles of Incorporation at its website. The Company shall also publish key data for Fund members and semi annual and audited annual reports of the Fund at its website. 4. Data on tax regulations applicable to the Fund and of relevance for Fund members The property of the Fund is not subject to taxes. The tax status of the Fund is established pursuant to special regulations and international agreements in application in the Republic of Croatia. 5. Data on the Fund's service providers Auditor Auditor of the Company is Deloitte d.o.o., Zagreb, Radnička cesta 80/VI. Fund's depositary The Fund's depositary is Hypo Alpe Adria Bank d.d., Zagreb, Slavonska avenija 6 (hereinafter: Depositary) with data on the Depositary being available in Title C of the Prospectus "Data on the Depositary". 3

4 6. Manner of recalculation of deposits on the personal accounts of Fund members and transferred accounts into shares, manner and conditions for the transfer of financial assets from the personal accounts of Fund members to a pension insurance company, options for pension disbursement and transfer of account into another voluntary pension fund and circumstances under which such activities may be suspended Manner of recalculation of deposits on the personal accounts of Fund members and transferred accounts into shares Deposits on the personal accounts of Fund members, as well as accounts transferred to the Fund, shall be recalculated into shares. Each share shall represent a proportionate share in the net property of the Fund. The total value of all shares in the Fund shall at all times be equal to the net value of the Fund's property, calculated in accordance with the provisions of the Act and regulations adopted on the basis thereof. Manner and conditions for the transfer of financial assets from the personal accounts of Fund members to a pension insurance company Fund members may not realize their voluntary pension insurance rights (realization of right to old age pension) prior to their 50th birthday. In case that after the realization of the right to old age pension a Fund member decides to have his/her pension paid by a pension insurance company, the amount on the personal account of that Fund member shall be transferred to the pension insurance company of his/her choice within five workdays, to be paid out as pension for the duration of the Fund member's life or temporarily. Pension disbursement options Age Fund members may not realize their voluntary pension insurance rights (realization of right to old age pension) prior to their 50th birthday. Exceptionally, the right to old age pension may be realized earlier in case of death, under the conditions from the Fund Membership Contract. The Croatian Financial Services Supervisory Agency (hereinafter: Agency) shall stipulate detailed conditions for the realization of right to old age pension and conditions and options for the payment thereof by an ordinance. Disbursement of pension by a pension insurance company In case a Fund member, upon realizing his/her right to pension, decides to have his/her pension disbursed by a pension insurance company, the amount on that member's account shall be transferred to the pension insurance company of his/her choice, to be paid out as pension for the duration of the Fund member's life or temporarily. The payment of pension by a pension insurance company shall be executed in keeping with the act regulating the establishment and operation of pension insurance companies. Disbursement of pension by the Fund If following the realization of the right to old age pension the value of the property on the personal account of a Fund member is between HRK , ,00, the Fund member may opt for the payment of the pension by the Fund, providing that only temporary pension payments may be made from the Fund s property, under the following conditions: 1. minimum contracted payment period is five years, 2. payments are periodical and Fund member may choose between one annual, two semi annual, four quarterly and twelve monthly payments in a year and 4

5 3. funds are paid out as a counter value of a certain pre agreed number of shares at share price on payment day. Following the conclusion of contract on the conditions for the disbursement of pension by the Fund, a Fund member shall lose the capacity to make deposits into his/her personal account in the Fund from which his/her pension is being disbursed. A Fund member may open a new personal account in the Fund for purposes of payment of contributions into the Fund. Pensions disbursed by the Fund shall be paid out on a monthly basis, on the 15 th day of the month. The conditions of payment of the pension by the Fund shall be regulated by a separate contract between a Fund member and the Company. Temporary payment of the pension by the Fund shall not be subject to the payment of the exit fee. One off disbursements When a Fund member turns 50, the Company may disburse a part of the pension as a one off payment only if the pension is disbursed by the Fund and then in the amount not exceeding 30% of the amount on the personal account of the Fund member or in a greater amount, but not exceeding HRK ,00. This one off disbursement to a Fund member shall be made together with the first instalment of the pension. The Company shall disburse all realized financial assets to a Fund member who turned 50 and whose value of property on his/her personal account, after the expiry of the contracted period from the Fund Membership Contract, does not exceed HRK ,00. The Company shall make this payment on the basis of the written request of a Fund member, one off, in full amount. In that case, the Company shall not have the right to charge the exit fee. The Company shall disburse the financial assets to the account of the Fund member within 5 workdays from the date of receipt of the member's request. Options for the transfer of account to another voluntary pension fund A Fund member may change membership in the Fund by submitting a request for the transfer of financial assets to another voluntary pension fund. If the conditions for the realization of right to pension are not met, termination of membership shall be possible only in the event of simultaneous entry into membership of another voluntary pension fund. The value of financial assets of the former Fund member shall be calculated in accordance with the provisions of the Act and Agency regulations. Within 5 workdays from the date of termination of membership in the Fund, the financial assets of the Fund member shall be transferred from the Fund to his/her new personal account in another voluntary pension fund. Exit fee for termination of membership in the Fund, i.e. upon the transfer of financial assets to a personal account in another voluntary pension fund not under Company management, shall be calculated and settled from the total amount available on the personal account of the Fund member. Suspension of disbursements from and payments into the Fund The closing of personal accounts of Fund members, payments into personal accounts and transfers of member accounts into other voluntary pension funds may be suspended by a decision of the Company: a) if the Company and the Depositary believe there exist good and sufficient reasons for suspension, b) if suspension is in public interest or c) in the interest of Fund members or potential Fund members. If the Depositary disagrees with the decision of the Company to suspend the closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds, the Depositary shall inform the 5

6 Company and the Agency thereof without delay, and the execution of suspension shall not be allowed. In that case, the Agency shall decide on further action within a reasonable period. The Company shall notify the Agency and competent bodies of its home EU member state or country signatory of the Agreement on the European Economic Area (hereinafter: member state) and the competent bodies of all countries in which pension schemes are available, of any suspension of closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds. The Company shall inform the Agency to which competent bodies it submitted its notification of suspension of closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds. The Company shall have any suspension of closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds published on its website for the entire duration of suspension and inform Fund members thereof. The Agency may order the Company and the Depositary to temporarily suspend the closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds: a) if suspension is in public interest or b) in the interest of Fund members or potential Fund members. The suspension of closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds shall cease as soon as possible, i.e. as soon as the reasons for the suspension are eliminated, but within 28 days from the beginning of suspension at the latest, except if the Agency approves the extension of that period at the well grounded request of the Company. The resumption of Fund s operation shall be immediately reported to the Agency and published on the Company's website and notified to Fund members. The Agency shall proscribe the conditions and manner of receipt of the request for closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts during suspension, conditions for the establishment of share price, payment deadlines and conditions for the resumption of operation after the cessation of suspension of closing of personal accounts, payments into personal accounts of Fund members and transfers of member accounts into other voluntary pension funds, by an ordinance. 7. Fund member rights Right to select the amount of payment into the Fund and payment dynamics Fund members shall have the right to choose the amount and dynamics of payment into their personal accounts in the Fund, with the change of the amount and dynamics of payment having no effect on the rights stemming from membership in the Fund. Right to change the voluntary pension fund The right of Fund members to change the voluntary pension fund is regulated under Title A, Chapter 6, part "Option of transfer of account to another voluntary pension fund" herein. Right to dispose with assets on the personal account 6

7 The withdrawal of amount of capitalized assets from the personal account of Fund member, their transfer to a pension insurance company and the disbursement of pension by the Fund shall be allowed when Fund member turns 50 at the earliest. Exceptionally, pension disbursements may be realized earlier in case of death, under the conditions established by the provisions of the Act and the Fund Membership Contract. Right to pension disbursement The right of Fund members to pension disbursement is regulated under Title A, Chapter 6, part "Payment disbursement options" herein. Right to untaxable payments by the employer, i.e. taxpayer who is an independent entrepreneur Income tax shall not be payable on voluntary pension insurance premiums paid by the employer for his employees, with their consent, to a domestic voluntary pension fund, up to the maximum amount of HRK 500,00 for each month of the tax period, i.e. the total annual amount of HRK 6.000,00. Ownership A Fund member, on the basis of his/her payments into the Fund, becomes the owner of a part of the Fund, proportionate to the amount of financial assets on the member's personal account. The Fund is fully owned by its members. The amount of financial assets on the personal account is the personal property of each Fund member. Fund s property does not belong to the Company, nor does any part of its assets, liquidation or bankruptcy estate, nor can it be subject to enforcement against the Company. Fund s property is held and managed separately from Company s property. Right to a share of the profit Fund member shall have the right to a share of the profit of the Fund, proportionate to the part of each member's ownership share in the total net property of the Fund. Right to information Fund members shall have the right to be informed about quarterly, semi annual and audited annual financial reports of the Fund, as well as to semi annual and audited annual financial reports of the Company, through Company website, regularly updated and maintained by the Company. The Company shall hand over a copy of the Fund s Prospectus to each potential Fund member prior to the obtainment of membership in the Fund. Fund members shall have the right to an insight into their personal accounts and the right to be informed about share value, operation of the Fund and all other relevant indicators of the results of operation thereof. Once a year, the Company shall make available to Fund members a regular certificate containing the following information: number of shares on the personal account of the Fund member, price of one share of the Fund on the date of issuance of the certificate value of assets on the personal account of the Fund member on the date of issuance of the certificate, dates, payment, i.e. disbursement amounts, amounts of charged entry and exit fees, number of shares allocated to the personal account of the Fund member recorded in the corresponding period, short information on the standing of the Company and the Fund. 7

8 Key data for Fund members, the Articles of Incorporation and this Prospectus shall be available to potential Fund members at all venues offering the pension schemes of the Fund. Rights in case of cessation of payments In case of temporary or permanent cessation of payments, the Fund member shall remain a full Fund member and have the same rights as other Fund members. Right to protection of personal account Financial assets on the personal accounts of Fund members may not be subject to enforcement, nor insurance against a Fund member, the Depositary, the Company or any sponsors. Such financial assets can likewise not be a part of the bankruptcy and/or liquidation estate of a Fund member, the Depositary, the Company and/or any sponsors. Assets on the personal accounts of Fund members may not be encumbered, i.e. pledged, nor transferred to the benefit of any other party. Assets on the personal accounts of Fund members may be inherited in accordance with the act regulating inheritance rights. In case a Fund member contracts the temporary disbursement of pension from Fund s property, that member's heirs shall still have the right to one off disbursement, in keeping with the conditions stipulated in the contract between the Fund member and the Company. The provisions of the act regulating pension insurance companies shall apply to the disposal with the testator's assets transferred to a pension insurance company. Right to state incentives The state stimulates voluntary pension savings by granting state incentives equal to 15% of the amount deposited by a Fund member on the annual basis, but maximum for the deposit of HRK 5.000,00 per calendar year and Fund member, i.e. the incentive shall not exceed HRK 750,00 per annum. State incentives are paid into the personal accounts of Fund members and represent their personal property. All Fund members who either reside in the Republic of Croatia or another member state, but have obligatory pension insurance in the Republic of Croatia shall have the right to state incentives based on individual capitalized savings, for the entire insured period. State incentives shall be granted for membership in only one voluntary pension fund. At the conclusion of Fund Membership Contract, Fund members state whether they wish to realize the right to state incentives on the basis of their membership in the Fund or some other voluntary pension fund. In the case of simultaneous membership and realization of the right to state incentives in more than one voluntary pension fund managed by one or more pension fund management companies, Fund members shall, no later than by 1 February of every year, inform the pension fund management company which personal account they want credited with state incentives. If a Fund member fails to select a voluntary pension fund within the designated period, state incentives shall be granted to the voluntary pension fund into which the greatest annual pension contribution for which state incentives are requested was paid in. If the same amount was paid in several voluntary pension funds, state incentive shall be disbursed to the personal account in the voluntary pension fund in which that voluntary pension fund member has the highest amount of assets on his/her personal account, depending on the status on 31 December of the previous year. 8

9 On the behalf and for the benefit of voluntary pension fund members, the pension fund management company shall submit the request for the disbursement of state incentives for the previous year to all voluntary pension fund members who are holders of such right, to the Ministry of Finance, by 1 March of the current year. After mutual harmonization of submitted requests, the Ministry of Finance shall disburse the incentives to the pension fund management company within 60 days from the day of submission of the corrected request. The pension fund management company shall enter such disbursed amount of state incentives into its business ledgers and personal accounts of voluntary pension fund members within eight workdays from the day of receipt of such amount. 8. Procedures and conditions for the issuance of shares, manner of entry into the register of Fund members, i.e. issuance of shares, procedures and conditions of the pension scheme offer Procedures and conditions for the issuance of shares, manner of entry into the register of Fund members, i.e. issuance of shares Payments into the personal accounts of Fund members, as well as accounts transferred into the Fund, shall be recalculated into shares. For valuation needs, each share shall represent a proportionate share in the net property of the Fund. The condition for the issuance of shares is the execution of payment into the account of the Fund, with the correct credit reference number. Shares are kept in the Company's register of Fund members in electronic form. Shares and rights stemming from shares in the Fund shall be acquired upon entry into the register of Fund members. Entry into the register of Fund members shall be made immediately upon the conclusion of the Fund Membership Contract. Procedures and conditions of pension scheme offer Apart from the Company, other persons in the Republic of Croatia may also offer pension schemes on the basis of business cooperation agreements, when allowed by the provisions of the Act or some other act. Said other persons shall offer pension schemes in the capacity of Company's sales representatives, on the basis of a written contract with the Company, of which the Company shall notify the Agency in the manner and within the deadline proscribed by an ordinance to be adopted by the Agency. Company representatives may not offer pension schemes during the period revocation or cancellation of their approval for operation by the Agency, the Croatian National Bank, i.e. another competent body in accordance with special regulations. The Company shall be notified of any revocation or cancellation of approval for operation without delay. The Agency shall proscribe the conditions to be met by Company representatives, the conditions relating to the manner of their operation and the conditions relating to reporting on the pension scheme offer by an ordinance. Persons authorized to offer pension schemes of the Company shall: ensure the availability of all the relevant documents and data to potential Fund members, forward concluded contracts of fund membership to the Company in a timely manner, in Fund advertising, use exclusively the Prospectus, the Articles of Incorporation, monthly reports and promotional materials approved by the Company, 9

10 abstain from giving false information or information capable of misleading Fund members as to the standing of the Fund, state relevant facts and abstain from making false statements about the Fund, its investment goals, related risks, share price, yield or any other issue or content relating to the Fund or the Company and abstain from making any other statements deviating from the content of the Prospectus or monthly report of the Fund, be liable to the Company for the mistakes or oversights of their employees and any non observance of the Act or other regulations, inform potential Fund members which Company it represents and whether it offers only the schemes of the Company or the products of several companies, and at all times act in accordance with the Act and applicable regulations. Persons authorized to offer pension schemes of the Company shall receive compensation for work exclusively from the Company, namely from the entry fee, administration fee or exit fee charged to Fund members, i.e. the Fund by the Company. 9. Type of property into which the Fund is allowed to invest Fund s property may consist exclusively of the following: 1. transferable securities or instruments of the money market: a) listed or traded on an regulated market within the meaning of the act governing the capital market in the Republic of Croatia, another member state or member state of the Organization for Economic Cooperation and Development (hereinafter: OECD) and b) traded on another regularly operating, recognized regulated market open for the public in the Republic of Croatia, another member state or OECD member state 2. recently issued transferable securities into which the Company retained the right to invest on behalf and for the account of the Fund, under the following conditions: a) the prospect of issuance of the said securities includes the obligation of the issuer to file a request for listing into the official stock exchange quotation or another regulated market regularly operating, recognized and open for the public, and b) the listing shall be effected within one year from issuance, otherwise, the transferable securities shall be considered unlisted 3. shares of UCITS funds which obtained the approval for work in the Republic of Croatia, another member state or shares of UCITS, i.e. open ended investment funds with public offering in an OECD member state, under the following conditions: a) the investment funds obtained the approval for work from the Agency, i.e. competent body of a member state or competent body of an OECD member state cooperating with the Agency, provided that the execution of supervision of such funds and the level of protection of investors are equivalent to those proscribed by the act governing the establishment and operation of open ended investment funds with public offering b) the level of protection of shareholders of such investment funds is equivalent to that proscribed the shareholders of UCITS funds and especially the regulations pertaining to the separation of property, incurring debt, granting loans and sale of 10

11 transferable securities and instruments of the money market without coverage are equivalent to the requirements proscribed by the act governing the establishment and management of open ended investment funds with public offering c) reports on the operation of such investment funds are semi annual and audited annual reports, allowing the assessment of their assets and obligations, profit and operation in the reported period and d) the prospectus of the investment fund the shares or stocks of which are intended to be acquired stipulates that a maximum of 10% of investment fund assets may be invested into shares or stocks of other investment funds e) the maximum management fee chargeable from the assets of such investment funds is 2%, and the Company shall, in the case of such investments, clearly state the maximum percentage of the management fee charged from Fund s property and the assets of the investment fund the Fund invested in, in its audited annual reports 4. shares of stocks in alternative investment funds, i.e. stocks or business shares in closed ended alternative investment funds 5. deposits in credit institutions withdrawable at request, becoming due and payable in a maximum of 12 months, provided that the credit institution has registered seat in the Republic of Croatia or another member state or an OECD member state, provided that the supervision of such credit institution and the level of protection of depositors are equivalent to those proscribed by the act governing the operation of credit institutions 6. derivative financial instruments traded on regulated markets from item 1 of this Chapter or derivative financial instruments traded outside regulated markets from item 1 of this Chapter (unlisted OTC derivatives), into which the Company retains the right to invest on behalf and for the account of the Fund, under the following conditions: a) tier one assets of the derivative consist of financial instruments from items 1 and 2 of this Chapter, financial indices, interest rates, exchange rates or currencies, into which the Fund may invest in accordance with its investment goals stated in the prospectus, provisions of the Act and regulations adopted on the basis thereof b) other contracting parties in transactions involving unlisted OTC derivatives are institutions subject to the supervision of financial solvency and belong to categories additionally proscribed by an Agency ordinance stipulating in detail the allowed investments of the Fund, markets considered organized and institutions considered other contracting parties and instruments of the money market which may be invested in c) unlisted (OTC) derivatives are subject to everyday reliable and verifiable valuation and can be sold, liquidated or closed by offsetting at their fair value at the request of the Fund, at any time 7. instruments of the money market not traded on the regulated markets from item 1 of this Chapter, if issued under the following circumstances: a) they were issued or are guaranteed for by the Republic of Croatia, local or regional self governing units or the central bank of the Republic of Croatia, local or regional self governing units or the central bank of another member state or an OECD member state, the European Central Bank, European Union or European Investment Bank, or a public international body to which one or more member states or one or more OECD member states belong b) they were issued by a company the securities of which are traded on regulated markets from item 1 of this Chapter c) they were issued or are guaranteed for by an economic agent subject to the supervision of financial solvency of the competent body of a member state in accordance with the acts governing the capital market and the operation of 11

12 credit institutions or an economic agent subject to or compatible with the supervision rules of the supervisory body of an OECD member state equivalent to those proscribed by the acts governing the capital market and the operation of credit institutions or d) they were issued by another person with the approval of the Agency, provided that investments into such instruments are subject to investor protection equivalent to those the instruments from sub items b) or c) of this item are subject to and provided that the issuer is a company the capital and reserves of which total to a minimum of HRK 80 million, compiling and publishing its annual financial reports in accordance with the regulations governing entrepreneur accounting and the applying financial reporting standards, that the issuer is a company which, in a group of companies consisting of one or more companies with stocks listed on a regulated market, acts as the funder of the group or that the issuer is a company in the line of business of funding special subjects for securitization using bank credit lines 8. money on the business account of the Fund opened with the Depositary and on other accounts when necessary for investment realization 9. other types of assets derived from the assets from items 1 8 of this Chapter. The Agency shall define in detail the allowed investments of voluntary pension funds, the markets it considers organized and institutions considered another contracting party and the instruments of the money market into which investment is allowed, by an ordinance. 10. Limitations on investment of Fund s property The investment of Fund s property shall be subject to the following limitations: 1. a maximum of 10% of the Fund s property net value can be invested into transferable securities or instruments of the money market of a single issuer, providing that if the value of transferable securities or instruments of the money market of a single issuer into which the Fund invested exceeds 5% of Fund s property net value, the sum of such investments for all issuers of this type must not exceed 40% of the Fund s property net value, with the exception that: a) unlimited investment is allowed into transferable securities or instruments of the money market issued or guaranteed for by the Republic of Croatia, a local or regional self governing unit of the Republic of Croatia or another member state or a local or regional self governing unit of another member state, an OECD member state or a public international body to which one or more member states or one or more OECD member states belong, providing that: Fund s property must consist of a minimum of six different securities or instruments of the money market and the value of none of the securities or instruments of the money market from item 1, sub item a) of the first subparagraph of this Chapter does not exceed 30% of the Fund s property net value the Company reserves the right to invest more than 35% of the Fund s property net value into securities and instruments of the money market issued or guaranteed for by the Republic of Croatia, a local or regional self governing unit of the Republic of Croatia or another member state or a local or regional self governing unit of another member state, an OECD member state or a public international body to which one or more member states or one or more OECD member states belong, on behalf and for the account of the Fund 12

13 b) a maximum of 25% of the Fund s property net value may be invested into bonds approved by the Agency, issued by credit institutions with registered seat in the Republic of Croatia or another member state, which are subject to special public supervision intended to protect the persons investing into such bonds, based on a special act. Financial assets from the issuance of such bonds shall be invested in accordance with the special act into property which shall, until the bonds become due any payable, enable the fulfilment of bond related obligations, which shall, in the case of non fulfilment of the obligations of the issuer, primarily be used for the disbursement of the principal and accrued interest from such bonds. If more than 5% of the Fund s property net value is invested into such bonds of a single issuer, the total value of such investments exceeding the 5% of the Fund s property net value shall not exceed 80% of the Fund s property net value. c) A maximum of 10% of Fund s property net value may be invested in securities or instruments of the money market issued by persons who are affiliated companies pursuant to the provisions of the act governing the establishment and operation of companies and the Act. Persons who are affiliated companies pursuant to the provisions of the act governing the establishment and operation of companies and the Act shall be considered a single person for the purposes of calculation of limitations from item 5 of this Chapter. 2. transferable securities and instruments of the money market from item 1, sub items a) and b) of this Chapter shall not be counted towards the calculation of the 40% limitation from item 1 of this Chapter 3. a maximum of 5% of Fund s property net value may be invested into deposits of a single credit institution from Title A, Chapter 9, paragraph 1, item 5 of this Prospectus 4. the exposure of the Fund to the risk of another contracting party in transactions involving unlisted (OTC) derivatives shall not exceed 5% of Fund s property net value 5. the total value of investment in transferable securities or instruments of the money market issued by a single person and the value of deposit with such person and the exposure stemming from transactions with unlisted (OTC) derivatives involving such person shall not exceed 15% of Fund s property net value 6. a maximum of 10% of Fund s property net value may be invested into shares or stocks of investment funds from Title A, Chapter 9, paragraph 1, item 3 of this Prospectus, and a maximum of 5% of Fund s property net value may be invested in alternative investment funds from Title A, Chapter 9, paragraph 1, item 4 of this Prospectus 7. investment in the shares of UCITS funds and shares or stocks of alternative investment funds shall not count towards the calculation of limitations from paragraph 1, items 1 5 of this Chapter 8. if Fund s property is invested in the shares of UCITS funds and shares or stocks of investment funds managed by a management company or another company which such management company is associated with by joint management or control, or significant direct or indirect mutual ownership share, the management company or another company shall not charge entry or exit fee for investments of the Fund in the shares or stocks of such investment funds. 9. The Fund may acquire a maximum of: a) 10% of voting shares of a single issuer b) 10% of non voting shares of a single issuer c) 10% of debt securities of a single issuer 13

14 d) 25% of shares or stocks of any given investment fund e) 10% of instruments of the money market of a single issuer f) limitations from this item shall not apply to transferable securities and instruments of the money market issued or guaranteed for by the Republic of Croatia, another member state, an OECD member state or public international bodies to which one or more member states belong g) limitations from sub items c), d) and e) of this item may be ignored at the moment of acquisition if the total number or value of securities in circulation can not be immediately calculated 10. total exposure of the Fund to financial derivatives shall in no event exceed Fund s property net value. The exposure shall be calculated taking into account the current value of tier one assets, risk of another contracting party, future market fluctuations and available time for liquidation of positions. The Fund may invest in derivative financial instruments, in keeping with its investment policy and limitations from paragraph 1, item 1 of this Chapter, providing that the total exposure towards tier one assets does not exceed limitations from paragraph 1 of this Chapter. If a transferable security or instrument of the money market contains a built in financial derivative, such financial derivative shall be taken into consideration during the calculation of limitations of investment from paragraph 1 of this Chapter. 11. The Fund shall not invest in precious metals nor certificates representing precious metals, nor create exposure towards precious metals and other commodity markets. The Company reserves the right to use the techniques and instruments relating to transferable securities and instruments of the money market for purposes of efficient management of the Fund's portfolio on behalf and for the account of the Fund. The Fund, together with other voluntary pension funds managed by the Company, shall not be the holder of a total of: a) over 25% of voting shares of a single issuer b) over 10% of non voting shares of a single issuer c) over 10% of debt securities of a single issuer d) over 25% of shares of any given investment fund e) over 10% of instruments of the money market of a single issuer. These limitations shall not apply to debt securities and instruments of the money market issued by the Republic of Croatia, another member state, an OECD member state or public international organizations to which one or more member states or OECD member states belong. The Company may use financial derivatives on behalf and for the account of the Fund exclusively to: 1. protect Fund s property, 2. efficiently manage Fund s property and obligations. The following limitations shall be observed when contracting financial derivatives: 1. total exposure to financial derivatives shall not exceed Fund s property net value 2. tier one assets of a financial derivative must be assets the Fund is allowed to invest in 3. exposure towards a single person based on derivative financial instruments contracted with such person shall not exceed 1'% of Fund s property net value 14

15 4. the investment into derivatives or other instruments from Title A, Chapter 9, paragraph 1 hereof, with built in derivative, shall not create exposure exceeding the investment limitations proscribed by the investment strategy, this Prospectus, the Act or ordinance adopted by the Agency pursuant to the Act and shall not create exposure towards property from paragraph 7 of this Chapter. Fund s property shall be invested so as to be in the same currency as the Fund's obligations. The Agency shall proscribe additional investment limitations for pension funds, disposal with the property of voluntary pension funds and calculation of exposure from the Act by an ordinance. By way of exception from the provisions of the Act, in case of significant disturbance on the financial market jeopardizing the value of Fund s property, the Agency may prohibit or additionally limit investments in certain types of assets. Fund s property may not be invested in: assets inalienable by law or encumbered, i.e. pledged or fiduciary transferred to secure a receivable and securities issued by the Depositary, any Company stockholder or any person associated with such persons. The above limitation shall not be applied to securities issued by the Republic of Croatia, another member state or an OECD member state. Investment limitations proscribed by the Act, sub legal regulations and this Prospectus may be exceeded when the Fund is exercising its preferential registration rights or registration rights stemming from transferable securities or instruments of the money market which are a part of its property. If the limitations proscribed by the Act, sub legal regulations and this Prospectus are caused by: 1. circumstances beyond Company's control, 2. the realization of registration rights from paragraph 8 of this Chapter or 3. acquisition of property from Title A, Chapter 9, paragraph 1, item 9 hereof, the Company shall, except in the case of initiation of bankruptcy or liquidation proceedings against a credit institution or issuer of financial instruments, harmonize the Fund s investments within a reasonable period not exceeding three months and effect transactions primarily to harmonize the investment of the Fund s property, bearing in mind the interests of Fund members and endeavouring to reduce possible loss to the minimum. By way of exception, the Agency may extend the period from paragraph 10 of this Chapter by additional three months at the request of the Company, if such extension is in the interest of Fund members and if the overinvestment pertains to an issuer against whom pre bankruptcy settlement procedure was initiated, by more than three months. If limitations proscribed by the Act, sub legal regulations and this Prospectus are exceeded due to a transaction concluded by the Company, which at the moment of conclusion exceeded the limitations in question or additionally increased overinvestment, which are not covered by paragraph 10 of this Chapter, the Company shall harmonize Fund investments immediately upon becoming aware that limitations were exceeded. The Company shall compensate the Fund for any resulting damage. Investment limitations proscribed by the Act, sub legal regulations and this Prospectus may be exceeded in the first six months after the Fund's establishment, with due observance of the principle of the division of risk and protection of interests of Fund members. The Company is prohibited from granting loans or warranties from Fund s property to any legal or physical person. 15

16 11. Investment principles, strategy and goals of the Fund The Company shall invest Fund s property with the care of a good expert, independently from the Depositary, in accordance with the provisions of the Act, sub legal regulations and this Prospectus, in a manner guaranteeing safety, quality, liquidity and profitability of the entire portfolio of the Fund, bearing in mind the principle of the reduction of risk by diversification of investments. Fund s property shall be invested in the best interest of Fund members. In case of potential conflict of interest, the Company shall ensure the investment of Fund s property exclusively in the interest of Fund members. The Company shall endeavour to realize its main goal the realization of an appropriate yield of the Fund in the long term relative to the assumed risk through the strategy of active management of Fund s property, ensuring the optimum increase in pension savings. In case of modification of legal regulations, the Company shall modify its investment strategy to the new conditions and modify the provisions hereof accordingly. The Company shall reinvest revenue from interests and dividends into the Fund on behalf and for the account of the Fund. 12. Target structure of the Fund's portfolio and allowed deviations from the target structure The Fund shall have a moderately conservative risk profile defining target investment structure so that: 1. the target share of Fund s property consisting of transferable debt securities, investment funds mostly investing in fixedyield financial instruments, instruments of the money market, deposits and financial assets on the account of the Fund, receivables and obligations of the Fund account for 75% of Fund net property, 2. the target share of Fund s property consisting of equity securities, investment funds primarily investing in equity securities account for 25% of Fund net property. The share of property from paragraph 1, item 2 of this Chapter may vary depending on market conditions, from 0 55% of Fund net property. By using financial derivatives to efficiently manage property, the allocation of Fund s property shall remain in the framework of allowed deviations from the target structure defined in paragraph 2 of this Chapter. Overview of all techniques, instruments or authority to take out or grant loans or effect other legal transactions with economic effects equal to loan, which may be used to mange the Fund and the conditions for incurring debt The Company may borrow money from third parties on behalf and for the account of the Fund, in the total amount of up to 5% of Fund s property net value, but exclusively through repurchase transactions and sale and repurchase transactions, and then for a period not exceeding three months. Techniques and instruments from Article 157 of the Act, used to efficiently manage the Fund's portfolio, shall be limited to reverse repurchase transactions and purchase and resale transactions. Reverse repurchase transactions and purchase and resale transactions may be concluded exclusively on the basis of a written contract containing a provision allowing the recall or termination of contract on demand within 15 workdays, not exceeding 10% of Fund s property net value. The due date of said contracts shall not exceed 3 months. 16

17 A maximum of 5% of Fund s property net value, and a maximum of 50% of a single investment may be lent to third persons. Fund s property may be lent exclusively based on a written contract or in the framework of organized security lending systems functioning in the framework of the settlement and quittance system. Lending is allowed only for the exclusive benefit of the Fund, to increase the Fund's yield, without undue increase of the risk. In that sense, lent securities must be adequately secured by collateral. Loan contracts shall contain a provision allowing for the withdrawal of lent securities on demand, within 15 workdays. 13. Risks and risk management Investment into the Fund implies the assumption of certain risks by Fund members. The basic sources of earning from Fund s property investment stem from exposure to certain risk types, like market, credit, exchange rate and other types of risk. The primary source of risk of investment in the Fund is the fluctuation of prices of financial instruments in the Fund's portfolio which may go up or drop in the future in comparison with the prices thereof at the time of payment of contributions into the Fund, i.e. the purchase of a certain number of shares in the Fund. Accordingly, in case of decrease in prices, the value of share in the Fund after the payment of contributions into the Fund may for a time be lower than the value of share on the date of payment of such contributions. Generally, the risk of investment in the Fund is the possibility of unsatisfactory or negative yield from investment. Since Fund s property is mostly invested in fixed yield financial instruments, like bonds and instruments of the money market, interest risk and credit rating of the issuer of the said types of financial instruments have an especially great influence on the value of Fund's shares. Since Fund s property is invested in stocks and equity funds, the value of the Fund's portfolio shall be influenced by the risk of stock price changes. Fund s property denominated in a foreign currency is also under the influence of exchange risk, i.e. of exchange rate fluctuations. Fund s property is also under the influence of other forms of risk, the most significant of which are credit risks, liquidity risks and the risk of the other contracting party. Market risk Market risk is the possibility that future changes of market conditions will result in the reduction of yield of a financial instrument which Fund s property is invested in, i.e. result in the reduction of its value. Market conditions are largely a reflection of economic and political conditions in countries which property is invested in, as well as of the condition of the global economy. Market risk includes price risk, interest rate risk and exchange risk. Price risk is the risk of loss or reduction of value of a financial instrument due to the decrease in the price thereof. Interest rate risk is the risk of reduction of investment value due to interest rate changes. If interest rates on the market increase, the prices of debt securities decrease and vice versa, while their yields approximately mirror interest rate fluctuations. The fluctuations of prices of said types of investments are also influenced by time to maturity, with short term debt securities being less susceptible to interest rate fluctuation risk. Exchange risk is the risk of change of foreign currency exchange rates relative to the Croatian currency or another reference currency in which yield on investment is measured. Credit risk Credit risk is the likelihood that the issuer of a financial instrument which is part of Fund s property or a person with whom a transaction was concluded on the financial market will not meet its obligations in full, which would reflect negatively on the liquidity 17

18 and value of Fund s property. Credit risk is a risk stemming from the change, i.e. drop of the credit worthiness of an issuer of securities and other debtors against whom the Fund has receivables. Credit risk types are: non fulfilment of obligations, risk of the other contracting party, risk of concentration and risk of settlement. The risk of non fulfilment of obligations is the risk that the other contracting party will not fulfil its contractual financial obligations. Non fulfilment of obligations implies the non payment, i.e. forced restructuring of contractual obligations. The risk of the other contracting party primarily occurs with derivatives traded outside regulated markets (OTC), repurchase transactions, deposit transactions, transactions involving the lending of securities and transactions with long settlement periods. The risk of concentration is each individual, direct or indirect exposure towards a single person, i.e. group of associated persons or a group of exposures connected with joint risk factors like the economic sector, i.e. geographical area, which may result in a loss bringing into question continued business operation. The risk of settlement is the likelihood that realization or settlement of concluded transactions will not be realized in accordance with the agreed terms, will be aggravated or impossible. Risk of liquidity The risk of liquidity is the risk of inability to transform individual forms of property into financial assets or the risk of inability to balance short term payment abilities on the one hand and short term obligations on the other. The risk of liquidity is the inability to sell financial assets at the price approximately equal to the fair value of such assets. This can occur due to a change in the range between selling and purchase price, due to over exposure to an individual item in the portfolio, insufficient market depth, i.e. other unfavourable business circumstances on the market. The risk of liquidity is also the likelihood that the Fund will be unable to fulfil its obligations in a timely manner. Other risks Risk of inflation occurs when revenue from an investment finds itself under the detrimental influence of inflation. The value of the Fund's investments may decrease, in the sense of reduced purchase power, due to the reduction of the value of money or inflation may have a direct negative effect on the profit realized by an investment. The risk of evaluation of individual financial instruments on illiquid markets occurs due to the deviation of their selling prices from their evaluated prices. In the times of reduced liquidity on the market due to financial crisis or general loss of trust in the investor, the establishment of prices of certain financial instruments on capital markets may be limited, possibly causing the reduction in Fund s property value. If during such times, there arises the need to sell Fund s property to maintain the appropriate liquidity of the Fund, Fund s property may be sold at prices lower than the prices used for evaluation. The risk of change of legal regulations arises when Fund s property value finds itself negatively influenced by the uncertainty in countries into which investments were made, e.g. due to a change in international relations, government policies, tax regulations, limitations on foreign investments and other legal and regulatory changes. Political risk is the uncertainty of investment in countries into which Fund s property is invested due to the instability of the economic, political and social system, changes in international relations, government policies, economic sanctions, limitation of foreign investments and other extraordinary events. 18

19 Ways to reduce the influence of individual investment risks The basic way to reduce the influence of individual types of market and credit risks on Fund s property investment is diversification, i.e. the scattering of investments to several mutually loosely connected individual investments. The diversification of instruments of investment is conducted in more than one way, i.e. by scattering investments across: financial instruments issued in different geographical areas, financial instruments denominated in loosely associated currencies, issuers from loosely associated lines of business, issuers of different credit ratings, financial instruments from different market segments. The goal of diversification is to achieve, with a certain degree of tolerance towards risk, the same level of anticipated yield of the Fund with the simultaneous reduction of anticipated total risk of the Fund or maintenance of a certain anticipated total risk of the Fund at the same level, while realizing maximum possible yield. Since the ratio of anticipated yield and anticipated risk of the Fund is an indicator of successfulness of Fund management, the basic task of the Company is to increase its value. The Company may on behalf and for the account of the Fund use financial derivatives allowed by law, to reduce or largely eliminate the influence of certain risk types (market risk, interest rate risk, currency risk, credit risk) on Fund s property. The Company periodically analyses the risks of individual items in the Fund and their contribution to the total riskiness of the Fund. The Company analyses the credit worthiness of issuers of financial instruments when making an investment decision on their purchase and keeps monitoring its fluctuations. In case of trading on the OTC market, the Company assesses the risk of the other contracting party and limits exposure towards individual contracting parties depending on their individual risk assessments. To reduce the risk of settlement, the Company shall enter into financial transactions, on behalf and for the account of the Fund, with other contracting parties regulated by legal regulations in the Republic of Croatia, member state or an OECD member state, which passed the verification of conformity by the Company. To reduce the risk of liquidity relating to Fund investments, the Company shall, on behalf and for the account of the Fund, primarily invest Fund s property in financial instruments listed on an official market or other segments of regulated markets in the Republic of Croatia, member state or an OECD member state, having a satisfactory level of liquidity. To manage the risk of liquidity relating to the risk of payment of a larger number of shares from the Fund or to the settlement of transactions for the Fund, the Company periodically assesses the Fund's liquidity and endeavours to harmonize investments with potential payment obligations of the Fund. The Company may influence the reduction of the risk of evaluation only from the aspect of reduction of exposure to market risks at illiquid markets, but not in the event of sudden exit of a large number of members from the Fund, i.e. their redemption of a large number of Fund shares due to retirement or transfer into another voluntary pension fund. The Company uses appropriate legal and internal procedures for accurate and independent evaluation of the value of unlisted OTC derivatives. The Company has no influence on the reduction of the risk of change of legal regulations, but continuously monitors all regulatory changes. 19

20 Level of influence of risk on the Fund Market risk Price risk Interest rate risk Currency risk Credit risk (long term) Credit risk (short term) Risk of settlement Risk of liquidity Risk of concentration Risk type Influence of the risk on the Fund Moderate Moderate Moderate Low High Moderate Low Low High In accordance with the legal regulations, the Company shall provide a Fund member, exclusively at request, additional information on limitations applied to the area of Fund risk management, procedures used for that purpose, as well as on any changes in the riskiness and yields of basic types of financial instruments which Fund s property is invested in. Influence of investment in financial derivatives on the Fund's risk profile The use of financial derivatives as protection against market risk reduces the possible negative effect of market price changes on the total yield of the Fund. However, the use of derivatives as protection of property also reduces the riskiness of the Fund and consequently, its anticipated yield. The use of derivatives as protection of Fund s property does not increase exposure to risks and investment strategy remains compatible with the exposure to risks as defined by the Act, sub legal regulations and this Prospectus. 14. Manner and time of calculation of Fund s property net value The evaluation of Fund s property and obligations is performed by the Company on the daily basis, and verified by the Depositary in accordance with legal regulations and regulations of the Agency. Fund s property net value on evaluation day is equal to the total value of Fund s property on that day reduced by the amount of the obligations of the Fund on that same day. 15. Time, method and frequency of calculation of share price and manner of publication thereof The value of a Fund's share is calculated on the daily basis and established by dividing the Fund s property net value on evaluation day with the total number of shares of the Fund on that same day. The initial value of a Fund's share on 6 August 2002 was HRK 100,00. The price of a Fund's share is calculated on the daily basis and rounded off to four decimal places. The Company publishes the price of a Fund's share on its website, on the daily basis. 20

21 16. Management fees and costs allowed to encumber the Fund and Fund memebrs Exclusively the following may be paid from Fund s property: 1. entry fee, 2. management fee, 3. exit fee, 4. Fund audit cost fee, 5. Depositary's fee, and 6. costs, fees or charges relating to the acquisition or sale of the property of the Fund, including the necessary costs of safeguarding, i.e. preservation of Fund s property. Entry fee When joining the Fund, a Fund member chooses the manner of payment of the entry fee, which may be one off or multiple, in the request for membership in the Fund. One off fee may not exceed HRK 1.250,00 and shall be deducted from the paid in amounts in full or once the first or further deposits are made until the collection of the full amount. Multiple fee shall amount to 8% of the deposited amounts in the first four years of membership in the Fund, but shall not exceed HRK 400,00 annually, and after that, 0,25% of the deposited amounts, but no more than HRK 20,00 annually. If a Fund member is transferring financial assets from another voluntary pension fund managed by the Company into the Fund, no entry fee shall be charged for the transfer. The Company may decide to change the entry fee in accordance with the Act. Management fee Fund management fee shall be 1,8% per annum from the basis for calculation proscribed by the Agency. The Company may decide to change the management fee in accordance with the Act. Exit fee Exit fee for termination of membership in the Fund, if financial assets from the personal account are transferred to another voluntary pension fund not managed by the Company, shall be calculated and collected from the total amount available on the personal account of the Fund member. The amount of the exit fee shall depend on the duration of membership in the Fund and shall be charged from the Fund member as follows: - 10% of the amount on the personal account of the Fund member for termination of membership in the Fund within first 10 years of membership, - 5% of the amount on the personal account of the Fund member for termination of membership in the Fund after 10 years of membership. Exit fee shall not be charged to a Fund member who: 21

22 - is transferring amounts from the personal account in the Fund to a pension insurance company for the purpose of beginning of disbursement of old age pension, - is transferring amounts to the personal account in another voluntary pension fund managed by the Company, - in case of disbursement of old age pension by the Fund, - in case of one off disbursement of old age pension, and - in case of death of Fund member. Fee for Fund audit costs Fund s property may be encumbered with the costs of annual audit of the Fund. Depositary's fee The Depositary shall have the right to compensation for acting as the Fund's depositary, calculated in accordance with the Agency regulations. The fee payable to the Depositary by the Fund shall be stipulated in the contract on the performance of function of a depositary between the Company and the Depositary, and shall amount to 0,03% annually of the basis for calculation proscribed by the Agency. The Company, in agreement with the Depositary, may decide to change the Depositary's fee in accordance with the Act. Costs, fees or charges relating to the acquisition or sale of the property of the Fund, including the necessary costs of safeguarding, i.e. preservation of Fund s property Fund s property shall be encumbered with costs, fees or charges relating to the acquisition or sale of the property of the Fund, including the necessary costs of safeguarding, i.e. preservation of Fund s property. 17. Instances in which Company may refuse the conclusion of Fund Membership Contract The Company may refuse conclusion of the Fund Membership Contract if: 1. the relations between the Company and a potential Fund member are gravely disrupted (e.g. pending court or other proceedings), 2. there is reasonable doubt in actual, attempted or possible future money laundering or financing of terrorism, in keeping with applicable regulations. The Company may refuse payments by Fund members if there is reasonable doubt that: 1. by so doing, the Fund member would violate legal provisions, e.g. from the field of prevention of money laundering and financing of terrorism, provisions of the Articles of Incorporation of the Fund and this Prospectus, 2. such payment would violate the obligations the Company assumed pursuant to the Agreement on Improvement of Fulfilment of Tax Obligations at International Level and implementation of the FATCA (Foreign Account Tax Compliance Act) Manner of calculation of Fund's business results Fund's business results and yield

23 The Fund's business results shall be calculated in accordancewith the provisions of the Act and Agency regulations and stated in financial reports. Fund's yield The Fund's yield in period R t shall be calculated as a ratio of the difference between the value of a Fund's share in the beginning, U t 1, and at the end of the observed period, U t, and share value at the beginning of the period: In case the observed period for the calculation of the Fund's yield is longer than one year, the yield shall be stated annually. 19. Average yield of the Fund from its establishment and historical yield of the Fund over the last five years As of the establishment of the Fund on 31 December 2014, its annual yield amounted to 5,72%. Over the last 5 years, the Fund's yield was as stated in the following table: Annual yields % 3.21% 11.72% 4.85% 13.19% 20. Business year duration The Company defines the duration of the business year as being the same as the calendar year, i.e. 1 January 31 December of the current year. B) INFORMATION ON THE COMPANY 1. Basic Company data Company and registered seat of the pension company: Raiffeisen društvo za upravljanje obveznim i dobrovoljnim mirovinskim fondovima d.d., Zagreb, Heinzelova 44. Number of approval for work issued by the Agency: The establishment and operation of the Fund have been approved by the Decision of the former Agency for the Supervision of Pension Funds and Insurance, CLASS: UP/I /01 01/72, Reg.No.: , dated 28 June 2002, in accordance with the provisions of Articles 27 and 105 of the Mandatory and Voluntary Pension Funds Act (Official gazette, no. 49/99, 63/2000, 103/2003, 177/2004, 71/2007, 124/2010, 114/2011 and 51A/2013). Date of establishment: 12 September 2001 Date of entry into the register of companies: 27 September 2001 The Company was not established in a member state which is not the home EU member state of the Fund. 23

24 2. Other voluntary pension funds under Company management Apart from the Fund, the Company also manages the following voluntary pension funds: 1. Closed ended voluntary pension fund Ericsson Nikola Tesla, 2. Closed ended voluntary pension fund Novinar, 3. Closed ended voluntary pension fund of the Croatian Doctors' Union, 4. Closed ended voluntary pension fund T HT, and 5. Closed ended voluntary pension fund of the Croatian Railway Trade Union Raiffeisen. The Company also manages the following mandatory pension funds: 1. Raiffeisen mandatory pension fund of A category, 2. Raiffeisen mandatory pension fund of B category, and 3. Raiffeisen mandatory pension fund of C category. 3. Business goal and strategy of the Company The Company's business goals are: increased number of members of mandatory and voluntary pension funds managed by the Company; successful operation of the Company and adequate yield comparative to the risk undertaken by pension funds under Company management. The Company's strategies for the realization of its business goals are: work on the education of potential members of voluntary pension funds under Company management and making them pension fund members through the Company's sales network; investment policies are intended to give the members of pension funds under Company management adequate yield and protection against currency depreciation, ensuring the optimum increase of pension savings relative to the risk assumed; ensure the stable and successful operation through responsible Company management, primarily bearing in mind safety, prudence, caution, legality, prohibition of conflict of interest and profitability of investment. 24

25 4. Organizational structure of the Company 5. Description of risks associated with Company operation, with table illustration of such risks and the level of their influence on the Fund and the Company, risk management and risk profile, proneness to risk and risk bearing capacity The Company may invest exclusively in: 1. transferable securities and instruments of the money market issued or guaranteed for by the Republic of Croatia, another member state, an OECD member state, the Croatian National Bank or the central bank of another member state or an OECD member state, 2. deposits with credit institutions from Title A, Chapter 9, paragraph 1, item 5 hereof, 3. shares in UCITS cash funds from Title A, Chapter 9, paragraph 1, item 3 hereof, and 4. forward contracts meeting the conditions from Title A, Chapter 9, paragraph 1, item 6 hereof, concluded exclusively to protect Company property invested in a foreign currency towards Croatian kuna. 25

26 The Company is very conservative from the standpoint of risk exposure. Since all investments of Company property are subject to the same risks as the Fund, and bearing in mind the allowed investments of the Company, Company property may be exposed to market (interest rate, currency and exchange rate) and credit risks. The description of the said risks was provided in Title A, Chapter 13. Likewise, the Company is also subject to operative risk largely relating to pension fund management and legal obligations stemming from the basic business activity of the Company. Operative risk is the risk of financial loss due to inadequate internal business processes and information systems used by the Company, the human factor or external events resulting in the reduction of Fund s property value. Some of the operative risks the Company is exposed to, directly related to the process of Fund s property management are: active violation of investment limitations, mistakes in transaction contracting, mistakes during transaction settlement, mistakes in property evaluation, and mistakes in the compilation of financial reports. Other potential operative risks relating to Company operation are: internal fraud, external fraud, malfunctioning of the information system and connections system illness of an employee or termination of work contract by an employee, natural disasters. Other risks The risk of continuous adequacy and suitableness may occur if the Company is financially unstable or if persons responsible for the management of Company and pension Fund s property, risk management and other auxiliary work tasks in the Company possess an insufficient degree of expertise, reliability and reputation. The risk of conformity occurs if relevant persons in the Company are not unbiased and objective in relation to pension Fund s property management, i.e. when in the performance of their work tasks and occupying the specific position of managing Fund s property they have professional or personal interests aggravating the efficient execution of work tasks and bringing into question their objectivity, which are contrary to the interests of pension funds and members thereof, and may consequently inflict damage on pension funds and their members. The risk of activation of a guarantee deposit of the Company occurs if a mandatory pension fund of a certain category, under Company management, realizes lower yield than its guaranteed yield, if the Company undertook to compensate the yield for such mandatory pension fund from the guarantee deposit of the Company. Strategic risk or risk of business surroundings is a risk stemming from strategic business decisions. The strategic risk also includes the risk resulting from the unsuitability of business decisions to changes in the business surroundings. As a rule, strategic risk occurs in 26

27 association with other risks, but may also occur independently, and includes the risks of competition, the risk of changes in the industry and the risk of change in demand. The risk of successfulness and business risk may also be considered strategic risks. The risk of successfulness is the risk of loss due to the yield being lower than expected or revenue lower than planned. Business risks include risks relating to Company operation. The risk of earnings is the risk of loss of planned profit due to the inability of the Company to harmonize its fixed expenses with revenue. It is caused by unexpected changes in operation and/or business surroundings (changes in competitiveness, behaviour of pension fund members, etc.) and the inability of the Company to adapt to the new situation. The risk of good reputation is a risk arising from possible negative influence on Company reputation due to its negative public perception (e.g. by pension fund members, business partners, stockholders or supervisory bodies). Just like strategic risk, the risk of good reputation, as a rule, occurs in association with other risks, but can also occur independently. Ways to reduce the influence of individual risks on the Company In case of loss due to operative risks, the Company shall compensate the damage caused to Fund s property. In its Articles of Association, in case of incorrect calculation of share price and violation of investment limitations in the sense of Article 164, paragraph 4 of the Act, the Company proscribed appropriate procedures and the model of compensation for damage to Fund members, in accordance with the Act the Agency regulations. The monitoring of operative risks is organized and conducted in accordance with internal operative risk management procedures, by proscribing and implementing internal procedures into the operation of individual organizational units of the Company, by continuous supervision of business processes by the Risk Management Directorate and Company Management, and supervision by Company owner and auditor. System based on legal regulations and operative risk management standards in the financial industry was established and additionally proscribed by Raiffeisen Group for purposes of efficient operative risk management. The system uses techniques including risk identification and assessment, collecting data on operative risk events, monitoring of key indicators of operative risk and execution of scenario analyses. The Company established efficient and appropriate rules for the identification, management, monitoring and prevention of conflict of interest, and established an independent function of a legal support and conformity advisor, responsible for the application and monitoring of such rules. To reduce its operative risks, the Company effected a strict division of business processes and responsibilities in accordance with legal regulations, rules of Raiffeisen Group and internal procedures and by applying best practice in the industry in case of specific business processes. The Company is trying to reduce the operative risk by the maximum automation of processes undertaken during regular business activities, by protecting premises and IT systems, having a backup IT system in case of need and by the execution of regular operations control by the Management, the Risk Management Directorate and other organizational units of the Company participating in the control of operations and supervision by Company owner and auditor. Aiming to monitor the risk of activation of guarantee deposits, the Company continuously monitors current deviations from guaranteed yields for each mandatory pension fun under its management and the risk of activation of the Company's guarantee deposit. 27

28 Attempting to reduce the business risk, the Company compiles the budget 3 years in advance if required for the needs of budget revision and continuously monitors current developments on the capital market, operation and successfulness of its competitors. The Company reduces the risk of good reputation by transparent operation, high standard of service, high level of information safety and the efficient management of all previously described risks. Risk types and the level of their influence on the Company Risk type Influence of the risk on the Company Interest rate risk Moderate Currency risk Low Credit risk (long term) High Credit risk (short term) Low Risk of concentration High Risk of liquidity Low Risk of settlement Low Operative risks Low Risk of continuous adequacy and suitableness Low Risk of conformity Low Risk of activation of guarantee deposit Low Strategic risk Low Risk of successfulness Low Risk of good reputation Low 6. The principles and strategy of investment of Company property Company property is invested with the due care of a good expert, in accordance with the provisions of the Act, sub legal regulations and this Prospectus, in the manner guaranteeing the safety, quality, liquidity and profitability of the entire property of the Company, bearing in mind the principle of reduction of risk by diversification of investments. The Company shall endeavour to realize its main goal the realization of an appropriate yield of the Company relative to the assumed risk. 7. Description of responsibilities and manner of adoption of investment decisions Investment Committee is a body making decisions on the allocation of Fund s property, consisting of Company Management and employees of the Directorate for Investment and Analyses. The implementation of decisions of the Investment Committee is within the area of competence of the Directorate for Investment and Analyses. 28

29 8. Description of corporate management in the preceding period The Company may participate in the work of the general assemblies of joint stock companies or other assemblies of issuers of securities forming a part of Fund s property, on behalf and for the account of the Fund. In these cases, the Company shall act exclusively in the interest of Fund members. 9. Description of the reward policy To prevent the taking of inappropriate risks in its operation, the Company proscribed and implemented clear reward policies and procedures for its employees, members of Management and the Supervisory Board of the Company, whose work can have material effect on the risk profile of the Company or the Fund. In its reward policies and procedures the Company consistently promotes efficient risk management and discourages the assumption of risks deviating from the Fund's risk profile or Articles of Incorporation. The Company's reward policy is compatible with the business strategy, goals and size of the Company and the Fund, as well as with the interests of the Company, the Fund and the members thereof, and includes measures for the avoidance of the conflict of interest. Company Management shall adopt and re examine the general principles of the reward policy at least once a year and shall be responsible for their application. The implementation of reward policies and procedures must at least once a year, in the function of supervision of Company operation, be internally reviewed in the sense of conformity with reward policies and procedures adopted by Company Management. The Company may pay rewards to employees, procurators, Management and Supervisory Board members only if they are sustainable considering the financial condition of the Company as a whole and if justified considering the successfulness of the Fund and the Company, i.e. of the employees thereof. Total receipts from rewards shall not limit the capacity of the Company to strengthen its capital base. In case of poorer or negative business results of the Company and/or the Fund, the Company shall take such results into consideration when considering the disbursement of rewards to Management and Supervisory Board members, procurators and employees of the Company. Annual financial reports of the Company shall contain information on: 1. the total amount of bonuses and rewards, divided into fixed and variable amounts, disbursed by the Company to its employees, as well as on the number of beneficiaries of such bonuses and rewards and 2. the total amount of bonuses and rewards, divided into amounts disbursed to Management and Supervisory Board members, procurators and even employees of the Company whose work can have material effect on the risk profile of the Company or the Fund. 10. Information on Company auditor Auditor of the Company is Deloitte d.o.o., Zagreb, Radnička cesta 80/VI. 11. Names and positions of Management and Supervisory Board members of the Company, their summary CVs, including details of their main activities outside the Company, if relevant for the Company and the Fund Company Management 29

30 Company Management members are: 1. Damir Grbavac, Samobor, Andrije Bijankinija 27, PIN: , CEO, 2. Manda Zulić, Zagreb, Kvaternikova ulica br. 1, PIN: , member of Management, 3. PhD Srećko Žganec, Zagreb, Dobri dol 46, PIN: , member of Management. Mr. Grbavac graduated from the Zagreb Faculty of Economics and Business in 1978, and earned his masters degree at the same faculty in His career began in the Đuro Đaković Group in 1978, where he remained until 1997, at positions ranging from the Credit Administrator to Deputy CEO of the entire Holding. He got a job in Raiffeisenbank Austria d.d. Zagreb in 1997, as Investment Banking Division Director, crossed over to Raiffeisen Investment in as member of Management, Raiffeisen Vrijednosnice d.o.o. in 1999 as CEO, Raiffeisenbank Austria d.d., Zagreb in 2003 as Advisor to the Management and Investment Banking Coordinator, and has been the CEO of the Company since He is a licensed manager of pension funds and pension insurance companies. Mrs. Zulić graduated from the Zagreb Faculty of Foreign Trade in Her career began in Zagrebačka banka, where she continuously improved her skills, advancing to the position of the Sales and Marketing Director and Executive Director of the Business Network Management Division. She managed the project of establishment of Prva stambena štedionica, Zagreb in 1998, in which she became member of Management and crossed over to Raiffeisen stambena štedionica, Zagreb, Ulica Savezne Republike Njemačke 8, as CEO. Upon crossing over into the fund industry in 2004, Mrs. Zulić became member of Company Management, which function she held until 2006, when she became Director Advisor in Raiffeisen mirovinsko društvo za upravljanje obveznim mirovinskim fondom, Zagreb, Heinzelova 44. In July 2007 she returned to the Company as Company Director. In 2004, she became a licensed manager of pension funds and pension insurance companies. Mr. Žganec graduated Theoretical Physics at the Zagreb Faculty of Science in 1989, earned his masters degree at the same faculty in 1992, at which he also got his doctoral degree in His career began at the Zagreb Faculty of Science, Theoretical Physics Department, followed by employment in FIMA d.o.o. in 1998 as Head of Research, Analysis and Information. In 1999 he worked in FCT d.o.o. as member of Management, in 2000 in Dalbank Consulting d.o.o. as Advisor and Assistant to CEO, in 2001 in the Company as Director of the Investment and Analysis Directorate and as of 2002, he has been working in the Company as member of Management. Mr. Žganec authored a number of scientific papers from physics, on elementary particles, and published an array of expert articles on the subject of stock valuation and application of riskiness of investment. He is a licensed manager of pension funds and pension insurance companies. Supervisory Board of the Company Members of the Supervisory Board of the Company are: 1. Mr. Branko Dević, Zagreb, Medvedgradska 49, PIN: , Chairman of the Supervisory Board, 2. Mr. Anton Starčević, Zagreb, Horvatovac 76/B, PIN: , Supervisory Board member, 3. Mrs. Anita Cvanciger, Zagreb, Livanjska 9, PIN: , Supervisory Board member, 4. Mrs. Christa Geyer, Austria, VIenna, Frimmelgasse 26, PIN: , Supervisory Board member and 5. Mrs.Barbora Valkova, Austria, Vienna, Halbgasse 21/7, PIN: , Supervisory Board member. 30

31 Mr. Dević graduated from the Zagreb Faculty of Law in His career began in 1987, in Udružena banka Hrvatske, which he remained in until 1990, in the Legal Affairs Division. He crossed over to Privredna banka Zagreb d.d. in , as Advisor in the Legal Affairs Division and than in , in company Elan d.d., Begunje, Slovenia, as Assistant to the Director of the Legal Affairs Department, and simultaneously (without employment) as Advisor in Privredna banka Zagreb d.d. (Foreign Exchange Transactions Division, Investment Banking Division). In , Mr. Dević was the Executive Director of the Legal Affairs Division in Raiffeisenbank Austria d.d., Zagreb, and has been working as a Legal Advisor to the Management of Raiffeisenbank Austria d.d., Zagreb since Mr. Starčević graduated from the Zagreb Faculty of Economics and Business in His career began in 1986, in Željezara Sisak, which he remained in until 1989, as Corporate Analyst. In 1990 he was employed at Željezara Sisak as a Macro economic Strategy Specialist and in as the Finance Manager. In , Mr. Starčević worked in Privredna banka Zagreb d.d. as Executive Director of the Accounting, Planning and Analysis Division and in as President of the Council of Creditors of Željezara Sisak in the governmental restructuring process. Mr. Starčević became an employee of Raiffeisenbank Austria d.d. Zagreb in May 1998 as Executive Director of the Controlling and Risk Management Division. From August 2004 October 2007 he held the function of Executive Director of the Credit Risk Management Division and has been an Advisor to the Management of Raiffeisenbank Austria d.d. Zagreb since November Mrs. Cvanciger graduated from the Zagreb Faculty of Economics and Business in 1991, and began her career in Zagrebačka banka d.d. in 1992, where she held various positions (April 1992 April 1993 in the Training Centre, May 1993 April 1994 as Associate in the Retail Banking Division, May 1994 January 1995 as Associate in the Retail Banking Division, Directorate for Business Network Development, Organization and Technology, February 1995 December 1995 as an organization and technology Specialist in the Retail Banking Division, Directorate for Business Network Development, Organization and Technology, January 1996 April 1996 as an organization and technology Specialist in the Business Network Management Division, Directorate for Organization, Technology, Human Resources and Legal Affairs, May 1996 December 1998 as Executive Director of the Directorate for Organization, Technology, Human Resources and Legal Affairs in the Business Network Management Division and January 1999 January 2000 as Executive Director of the Directorate for Network Support in the Retail Strategy and Development Division). Mrs. Cvanciger became an employee of Raiffeisenbank Austria d.d., Zagreb in February 2002 as Assistant to Executive Director of the Retail Banking Division. Between October 2004 September 2005 she was the Director of Branch Office Zagreb and has been Assistant to the Executive Director of the Retail Banking Division as of October Mrs. Geyer graduated in 1988 in Vienna, Austria from the Vienna University of Economics and Business Administration and got her masters degree from the same institution in Her career began in 1991 in company Peter Hoffmann GesmbH & Co KG Corporate Development, Vienna in Vienna, Austria, where she held the position of Assistant to Director, and where she remained until December January 1994 December 1995 she worked for Österreichische Volksbanken AG, Vienna in Vienna, Austria, as Assistant to the Director of the Retail Banking Division. January 1996 August 1997, she worked for Hong Kong Shanghai Banking Corporation (HSBC) in London, United Kingdom, as Manager. September 1997 August 2000, she worked for RBB Bank of GRAWE GROUP in Vienna, Austria, as Head of Private Banking. January 2001 July 2007, she worked for Pioneer Investments Austria, in Vienna, Austria, as Head of CEE Institutional Business, Deputy Head of International Sales & Network Management, Senior Vice 31

32 President. In September 2007 she became Managing Director at Raiffeisen International Fund Advisory GmbH in Vienna, Austria, responsible for 17 Central and Eastern European countries, and a member of supervisory boards of companies in Croatia, Serbia, Slovakia, Romania, Hungary, Ukraine and Albania, and in May 2010 a member of the advisory council of Anlegerentschädigung von Wertpapierfirmen GmbH. She has been Head of Central and Eastern Europe at Raiffeisen Kapitalanlage GmbH from February 2011, responsible for 17 CEE countries. Mrs. Valkova graduated from Vysoka škola Banska in Ostrava, the Czech Republic in July 2000 and in September 2000 from the Technical University of Ostrava, Faculty of Economics in Ostrava, the Czech Republic. May 2010 May 2012 she studied at the Furman University of Greenville in the United States of America. January 2001 May 2002 she was employed at Investični společnost česke sporitelny, in Prague, the Czech Republic, as Executive Assistant to Board of Directors and Supervisory Board, June 2002 April 2004 at Investični společnost česke sporitelny, in Prague, the Czech Republic, as Group Head of Sales Support Team, and May 2004 January 2005 at ERSTE BANK GROUP, in Vienna, Austria, as Group Head Asset Management CEE. February 2005 November 2007 at ERSTE SPARINVEST in Vienna, Austria as Deputy Head Asset Management CEE, and as of December 2012, she has been employed at Raiffeisen Bank International in Vienna, Austria as Head of Asset Management. 12. The amount of the share capital of the Company, personal identification numbers and names of Company members, legal form and statement of share of members in the share capital The share capital of the Company is HRK ,00. PIN: The founder and only owner of the Company is Raiffeisenbank Austria d.d., Zagreb, Petrinjska 59, PIN: Significant provisions of the contract with the Depositary of relevance for Fund members, except those relating to fee payment In the contract on the performance of jobs of a depositary, the Company entrusted the Depositary with the performance of work tasks of a depositary in accordance with that contract, this Prospectus, Articles of Incorporation of the Fund, the Ordinance on the performance of work tasks, conditions and manner of selection and withdrawal of the issued approval for the performance of work tasks of a depositary of a voluntary pension fund (Official gazette, no. 63/2014) and the Act. The depositary shall perform the following activities for the Fund: a) hold and/or keep record of the Fund's property, b) continuously monitor the Fund's money flows, c) keep accounts for the Fund's property and keep the property of each pension fund separate from the property of other pension funds, the Depositary's property and the property of other clients of the Depositary and the Company, d) control whether the Fund's property is invested in accordance with the stated goals, provisions of the Act, other applicable regulations and the Articles of Incorporation of the Fund, e) report to the Agency and the Company on the conducted procedure of the establishment of the value of the Fund's property and price of shares, verify and ensure that the calculation of the Fund's net property and the value of the 32

33 share in the Fund is published in keeping with the adopted accounting policies, i.e. assessment methodologies, the Act, applicable regulations, the Articles of Association of the Fund and f) other jobs stated in Article 5 of the contract on the performance of jobs of a depositary. The Depositary shall keep the financial instruments of the Fund on the custody account on name with Središnje klirinško depozitarno društvo d.d. or a third person whom safe keeping was delegated to, except if the Company requests otherwise in writing or if proscribed otherwise by coercive regulations or prevalent in the market practice. Fund s property shall be entrusted to the Depositary for safe keeping as follows: 1. financial instruments under custody: a) the Depositary shall take into custody all financial instruments capable of being registered on the account of dematerialised securities, b) financial instruments incapable of being registered on the account of dematerialised securities and materialised financial instruments entrusted to the Depositary shall be registered on other appropriate accounts, 2. unplaced financial assets shall be held on transaction accounts for business use, which can not be subject to enforcement against the Depositary or the Company, 3. other assets: a) the Depositary shall inspect other assets of the Fund and verify that they actually belong to the fund and keep records of such assets, b) the inspection and verification of the fact that the assets are indeed Fund s property shall be based on relevant information or documents delivered to the Depositary by the Company or if applicable, on data from publicly available registers and records. The Depositary shall keep a comprehensive and up to date records of all Fund s property, regardless of whether held in custody. Fund s property held at a separate account with the Depositary may be used exclusively for the execution of Company's instructions. The Depositary shall keep its records up to date. The Depositary shall hold all Fund s property in its custody, in internal records, so as to be able to distinguish the property of each fund from the property of all other funds and other clients of the Depositary and the property of the Depositary at any moment. The property on the Fund's account may not be subject to enforcement against the Depositary, nor a part of the bankruptcy estate of the Depositary. The Fund s property entrusted to the Depositary shall not be part of property, liquidation or bankruptcy estate of the Depositary or any third person, nor shall it be subject to enforcement against the Depositary or any third person. The Company shall submit to the Depositary all documentation on the disposal with Fund s property, as well as all other documentation relevant for the performance of work tasks of the depositary proscribed by the Act and this contract, immediately following their compilation or receipt. The Depositary shall, for purposes of evaluation of efficiency of the Depositary, deliver to the Company annual auditor report on the fulfilment of obligations of the Depositary and other data requested by the Company for that purpose. 33

34 The delegation of the work tasks of the Depositary to sub depositaries shall be executed in the manner proscribed by the Act, within the framework of rights and responsibilities of the Depositary proscribed by the Act. The Depositary shall immediately inform the Company about the conclusion of any contract delegating the performance of the work tasks of the depositary to third persons. The Depositary shall treat any data provided or made available to the Depositary by the Company in the course of its performance of work tasks of the depositary pursuant to this contract, as a business secret in accordance with applicable regulations, including regulations governing the protection of personal information. The Depositary shall, in accordance with the provisions of the Act, allow the performance of audit of the execution of the Depositary's obligations arising from and relating to this contract by an authorized auditor. The Depositary shall be liable to the Company and Fund members for any damage suffered, if the Depositary does not fulfil, perform or incorrectly performs the work tasks of the depositary without reason, including if such tasks were delegated to third persons. The Depositary shall be liable to the Company and Fund members for any loss of Fund s property resulting from an oversight of the Depositary in the performance and execution of its duties. The Depositary shall not be liable for any damage caused by force majeure. The Depositary shall not be liable to the Fund and Fund members for any loss or damage resulting from: a) general risk of investment or investment in and keeping assets in a certain country, including, without limitation, losses due to political risks or other governmental actions; banking regulations and securities system regulations (e.g. unreliable registers, unreliable information obtained from the settlement system, etc.), including devaluation and instability; market conditions having an influence on the timely execution of securities transactions or the value of assets; stock exchange control limitations, confiscation, expropriation, nationalization, uprising, civil and armed conflict, or b) actions undertaken on the basis of data from registers or information, i.e. announcements of the settlement system subsequently established to be unreliable or subsequently modified by the registers, if at the moment of acting upon such data, the data were unverifiable and there was no doubt as to their correctness, or c) negligence, intentional poor management, oversight, inability to pay or bankruptcy of a central institution or calculation agency managing the securities trade systems outside the control of the Depositary, or d) other situations stated in Article 22 of the contract on the performance of jobs of a depositary. 14. List of delegated tasks and persons they are delegated to The Company did not delegate any administrative tasks to third persons. C) INFORMATION ON THE DEPOSITARY Company and registered seat of the Depositary The Fund's depositary is Hypo Alpe Adria Bank d.d., Zagreb, Slavonska avenija 6. Information on and number of approval of the competent institution for the performance of jobs of a depositary The Depositary is authorized and registered for the provision of all investment services, the performance of investment activities and provision of auxiliary services, including the performance of jobs of a depositary, pursuant to the decision of the Croatian 34

35 National Bank, no. Z 1671/2003, dated 16 December 2009, based on prior approval of the Agency, CLASS: UP/I /09 03/3, Reg.No.: /09 7, dated 9 July Moreover, the Depositary was approved by the decision of the Agency CLASS: UP/I /08 33/6, Reg.No.: , dated 11 September 2008, whereby the Agency approved the selection of Hypo Alpe Adria Bank d.d. for the depositary of pension funds under Company management. Delegation of tasks of safe keeping of Fund s property to third persons The Depositary concluded contracts with all third persons to regulate issues relating to transferred tasks and adequate protection of property, as well as the scope of liability in case of insolvency of the third person. The local legislation of third persons was contracted as applicable law in all contracts. The most prominent, although not the only risks of delegation for Fund s property are: - Legal risk and risk of conformity: Foreign financial instruments and/or financial assets are subject to the legal regulations of the country of issuance and/or listing of a financial instrument, which may have an effect on the rights of the Fund stemming from certain financial instruments and be especially pronounced in countries not subject to EU regulations. - Risk of change of terms of business: Transactions with financial instruments and related services involve several service providers: depositaries, sub depositaries, depositories, each of which has the right to change its terms of business. The change of terms of business of just one in the line of service providers may cause changes in the provision of service (including the price of the service). - Offset and settlement risk: Risk is associated with certain markets, relationship between the broker and the depositary, chain of service providers (depositaries, sub depositaries and depositories) and their mutual relations, trading currency and similar. - Risks associated with corporate actions: The issuer of a financial instrument does not directly inform the Depositary of corporate actions. In case of foreign financial instruments, the Depositary is notified about announcements and confirmations of corporate actions by global or local depositaries. Since more than one service provider is involved in notification of corporate actions (from the issuer, through several depositaries), there is risk of mistake in the announcement or confirmation of corporate action, as well as the risk of the very short term in which the Fund can/must state its opinion on certain rights or obligations relating to a corporate action, as well as the risk of translation. - Risks associated with income payments: In case of revenue from dividends, vouchers and similar ("income payments"), several service providers are involved (primarily in case of foreign financial instruments), including the issuer, its payment agent and depositaries. The Depositary shall make payments on the basis of confirmation of payment and receipt of money from its depositary. Consequently, there is the risk that the Fund will not receive money on the issuer's payment date. - Tax risk: May occur due to several reasons, including, without limitation, different tax treatment in different countries, incorrect interpretation of tax regulations (including international agreements on the avoidance of double taxation) and aggravated obtainment of documentation required by a certain country for purposes of calculation of a privileged tax rate. 35

36 - Operative risk: May occur due to difficulties in the functioning of the communication channels of the Depositary, local/global depositaries, depositories and other service providers and has an effect on the execution of the Fund's instructions. - Risk relating to collective holding of assets: In case of a collective custody account, when the assets of several clients are held on the same custody account, some markets allow for the issuer to prohibit voting at general assemblies with only a part of the ownership share, but exclusively with the total ownership share on the account. In this case, there is the possibility that clients will not have identical interests and will therefore be unable to vote. Likewise, on some markets, property held on a collective custody account of a credit institution is not considered property under the protection of the local fund for protection of investors. Since property is held on the collective custody account of the Depositary (administrated in accordance with local legislation), the issuer investor/client communication is aggravated. Further risks possibly associated with investment in foreign financial instruments are especially: currency risk, political risk of the country of order execution, the influence of inflation, inability to give or execute orders due to state holidays and other. The offsetting and settlement procedures and settlement deadlines in foreign trading are subject to the law, rules of the stock exchange, regulated market and local clearing company, i.e. depository of transaction execution. Share capital of the Depositary The share capital of the Depositary is HRK ,00. D) INFORMATION ON THE AGENCY The registered seat of the Agency is in Zagreb, Miramarska 24b. The Agency opened for business on 1 January 2006, taking over the tasks relating to the supervision of pension funds and pension companies from the Agency for the Supervision of Pension Funds and Insurance (HAGENA), and was established to promote and preserve the stability of the financial system and supervise the legality of operation of the subjects of supervision. In its business operation, the Agency acts as an independent legal person with public authority, responsible for its operation to the Croatian Parliament. In the exercise of its public authority, the Agency has the authority to: adopt implementing regulations on the basis of the Croatian Financial Services Supervisory Agency Act (Official gazette no. 140/2005 and 12/2012), acts regulating the capital market, investment and other funds, takeover of joint stock companies, pension insurance companies, insurance, re insurance and financial services, as well as other acts authorizing the Agency to do so, perform supervision of operation of the subjects of supervision as stipulated in the first sub paragraph of this Chapter and legal persons in the factoring business, except if the banks perform supervision within the framework of their registered business activity and proscribe measures for the elimination of established unlawfulness and irregularities, issue and withdraw permits, approvals, licences and consents from its scope of authority in accordance with special regulations from the first sub paragraph of this Chapter, encourage, organize and supervise the measures for efficient operation of financial markets, 36

37 keep books, records and registers in accordance with the provisions of the Croatian Financial Services Supervisory Agency Act and special regulations from the first sub paragraph of this Chapter, propose initiatives for the adoption of acts and other regulations and inform the public on the principles of operation of financial markets, adopt sub legal acts to stipulate the conditions, manner and procedures for the unique performance of supervision from its domain and scope of authority, take other measures and perform other tasks in accordance with its legal authority, report to other supervisory, administrative and judicial bodies on all issues directly or indirectly pertaining to their area of competence and field of operation, in connection with proceedings held before such bodies, relating to the actions from the area of competence and field of operation of the Agency and give opinion on the implementation of the Croatian Financial Services Supervisory Agency Act and special regulations from the first sub paragraph of this Chapter at the request of parties in proceedings or persons who prove their legal interest. Company Management: Damir Grbavac, CEO Manda Zulić, member of Management PhD, Srećko Žganec, member of Management 37