Contents. Responsibility for the financial statements 1. Independent auditor's report 2. Statement of comprehensive income 3

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1 RAIFFEISEN CASH OPEN-ENDED INVESTMENT INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

2 RAIFFEISEN CASH OPEN-ENDED INVESTMENT INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 Contents Page Responsibility for the financial statements 1 Independent auditor's report 2 Statement of comprehensive income 3 Statement of financial position 4 Cash flow statement 5 Statement of changes in net assets 6 Notes to financial statements Appendix 1 Changes in net value assets Appendix 2 Set of statistical reports as requested by Securities Commission of Federation Bosnia and Herzegovina Appendix 3 Management report upon operating results of Fund, changes in portfolio and planned investment strategy in subsequent period

3 RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Management of Raiffeisen INVEST Fund Management Company Ltd Sarajevo (hereinafter the Company ) is responsible for ensuring that financial statements are prepared for each financial year in accordance with International Financial Reporting Standards (IFRS), as published by the International Accounting Standards Board (IASB), Law upon Investment Funds and other legislation as published by FB&H Securities Commission, which give a true and fair view of the state of affairs of the Raiffeisen CASH open-ended investment fund with a public offering Sarajevo (hereinafter the Fund ) and results of the Fund for the period. After making enquiries, Management has a reasonable expectation that the Fund has adequate resources to continue in operational existence for the foreseeable future. For this reason, Management continues to adopt the going concern basis in preparing the financial statements. In preparing those financial statements, the responsibilities of Management include ensuring that: suitable accounting policies are selected and then applied consistently; judgments and estimates are reasonable and prudent; applicable accounting standards are followed, subject to any material departures disclosed and explained in the financial statements; and the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Fund will continue in business. Management is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Fund. Management must also ensure that the financial statements comply with the Accounting and Auditing Law of Federation of Bosnia and Herzegovina. Management is also responsible for safeguarding the assets of the Fund, and hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. Signed on behalf of Management of Raiffeisen INVEST Fund Management Company Ltd Sarajevo Lejla Baljević Ramović, Director Alma Sarić, Executive director Zmaja od Bosne bb Sarajevo Bosnia and Herzegovina 22 January 2014 Page - 1 -

4 Independent auditor's report To the owners of Raiffeisen CASH Open-ended investment fund with public offering Sarajevo We have audited the financial statements of Raiffeisen CASH Open-ended investment fund with public offering (the Fund ), set out on pages 3 to 25, which comprise of the statement of financial position as at 31 December 2013, statement of comprehensive income, cash flow statement and statement of changes in net assets and for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the unconsolidated financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at 31 December 2013 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. BAKER TILLY RE OPINION d.o.o. Nihad Fejzić, Director and Certified Auditor Lejla Kaknjo, Certified Auditor Sarajevo, 22 January 2014

5 RAIFFEISEN CASH OPEN-ENDED INVESTMENT STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013 Notes 2013 From 11/1/ 2012 Up to 31/12/2012 Operating income Operating expenses 4 (191) (120) Subtotal Realized profit REALIZED INCREASEE IN INVESTMENT VALUE Interest income REALIZED PROFIT BEFORE TAX Income tax - - REALIZED PROFIT AFTER TAX Unrealized increase in investment value Unrealized decrease in investment value (5) - TOTAL INCREASE IN NET ASSETS The accompanying notes set out on pages from 7 to 25 forms an integral part of these financial statements. Page - - 3

6 RAIFFEISEN CASH OPEN-ENDED INVESTMENT STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER /12/ /12/2012 Notes ASSETS Cash and cash equivalents Financial assets at fair value through profit or loss 7 1,805 1,327 Held to maturity investments 8 20,557 9,753 Receivables TOTAL ASSETS 23,407 11,204 LIABILITIES AND NET ASSETS Liabilities Current liabilities Total liabilities Net assets Stakes 22,292 10,998 Accumulated profit Total net assets 10 22,812 11,179 TOTAL LIABILITIES AND NET ASSETS 23,407 11,204 Additional information Number of stakes 218, , Net asset value per stake Average net asset value for the period 15,233, ,867, Average number of stakes for the period 147, , Average net asset value per stake for the period The accompanying notes set out on pages from 7 to 25 forms an integral part of these financial statements. Signed on behalf of Management of Raiffeisen INVEST Management Company Ltd Sarajevo as of 22 January 2014: Lejla Baljević Ramović Alma Sarić Director Executive director Page - - 4

7 RAIFFEISEN CASH OPEN-ENDED INVESTMENT CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER OPERATING ACTIVITIES Cash from interests Other cash from operating activities 12,812 11,860 Total cash from operating activities 12,971 12,014 Cash used in investment in securities (4,554) (1,905) Cash used in other investments (16,869) (19,390) Cash used for management company fee (144) (76) Cash used for depository bank fees (19) (17) Cash used for auditor fee (5) - Cash used for other operating expenses (2,472) (1,588) Total cash used in operating activities (24,063) (22,947) Net cash used in operating activities (11,092) (10,933) FINANCIAL ACTIVITIES Cash from sale of stakes 46,685 16,805 Cash used in withdraw of stakes (34,831) (5,840) Net cash from financial activities 11,854 10,965 NET INCREASE IN CASH Cash in the begining of the year 32 - Cash at the year end The accompanying notes set out on pages from 7 to 25 forms an integral part of these financial statements. Page - 5 -

8 RAIFFEISEN CASH OPEN-ENDED INVESTMENT STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 DECEMBER 2013 Stakes Accumulated profit Total Balance as at 31 December Initial public offering* 4,897-4,897 Increase from sale of stakes 11,902-11,902 Decrease from redemption of stakes (5,801) - (5,801) Profit for the year Balance as at 31 December , ,179 Increase from sale of stakes 46,123-46,123 Decrease from redemption of stakes (34,829) - (34,829) Profit for the year Balance as at 31 December , ,812 The accompanying notes set out on pages from 7 to 25 forms an integral part of these financial statements. * In accordance with decision of Supervisory Board of the Company dated 22 November 2011 and in accordance with Minutes of Securities Commission of FB&H (hereinafter Commission ), initial public offering had been placed with each stake value of KM 100 per unit, and total nominal value in amount of KM 1,000,000. Public offering had been published as of 15 December 2011 and lasted for 7 days, with rate of successfulness of 100%. In accordance with Depository Bank report number / dated 22 December 2011, the Company collected 48, stakes at nominal value of KM per stake, in total nominal value of KM 4,897,075 that was the value of the stakes on 21 December Page - 6 -

9 1. GENERAL RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 Raiffeisen CASH open-ended investment fund with a public offering is a separate pool of assets, without legal entity status, which is established upon the authorization of Commission by the Raiffeisen INVEST Fund Management Company d.o.o. Sarajevo. The Commission approved establishment of the Fund under number 05/ /11 dated 5 December 2011, and approval for managing of Fund under number 05/ /11 as of 11 January Depository Bank of the Fund is Hypo Alpe Adria Bank d.d. Mostar. Fund is registered at the address Zmaja od Bosne bb Sarajevo. These financial statements are presented in the official currency of Bosnia and Herzegovina, the Konvertibilna Marka ( KM ), which is officially tied to Euro (EUR 1 = KM). Principal activity The Fund is registered for the purpose of raising monetary assets through a public offering of stakes in Fund, whose assets are invested in accordance with the provisions of the Investment Funds Law and whose owners shall have the right, in addition to the right to a proportionate participation in the Fund's profit, to request, at any time, redemption of their stakes, and in this manner, to exit the Fund. The Fund had been established in accordance with decision of Supervisory Board of the Company as of 22 November 2011, to indefinite time of duration, and possibility of seizing its operations exclusively in accordance with Law, Statute and Prospectus of Fund. In accordance with decision of Supervisory Board of the Company dated 22 November 2011 and in accordance with Minutes of Securities Commission of FB&H (hereinafter Commission ), initial public offering had been placed with each stake value of KM 100 per unit, and total nominal value in amount of KM 1,000,000. Public offering had been published as of 15 December 2011 and lasted for 7 days, with rate of successfulness of 100%. In accordance with Depository Bank report number / dated 22 December 2011, the Company collected 48, stakes at nominal value of KM per stake, in total nominal value of KM 4,897,075 that was the value of the stakes on 21 December According to Prospectus and Statute of the Fund, investment target of the Fund is generating as much as possible high yield on investments in short-term assets, along with achievement of stable stake price of the Fund. Therefore, the Fund is continuously exposed to money and bond markets, with investments of at least 75% of its net assets into financial instruments with maturity up to one year. In addition the Fund's strategy enables investments into financial instruments on the B&H market, EU Member Countries as well as non-member Countries. The Fund's assets shall be invested in the following financial instruments: Term deposits and cash on accounts with authorised banks in Bosnia and Herzegovina with maximum maturity of 12 months, up to 100% of the Fund's assets; Money market instruments issued or guaranteed by Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, the Republic of Srpska, or units of local and regional self-government of the FB&H and RS, or by the Central Bank of Bosnia and Herzegovina, EU Member States, local government units or central banks of the Member States, the European Central Bank, European Investment Bank, non-member States, federal units in the case of federal countries, or by a public international body of which one or more Member States are members, up to 60% of the Fund's net assets, according to the Law; Investment funds which primarily invest into low risk instruments with fixed yield rate, issued either in B&H, EU Member states or non-member States, up to 10% of the Fund's net assets and maximum tenor of 1 year; Page - 7 -

10 1. GENERAL (CONTINUED) Principal activity (continued) RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 The Fund's assets shall be invested in the following financial instruments (continued): Bonds issued or guaranteed by Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, the Republic of Srpska, or units of local and regional self-government of the FB&H and RS, or by the Central Bank of Bosnia and Herzegovina, EU Member States, local government units or central banks of the Member States, the European Central Bank, European Investment Bank, non-member States, federal units in the case of federal countries, or by a public international body of which one or more Member States are members, and commercial bonds by issuers in B&H, EU Member States and non-member States, up to 25% of the Fund's net assets, whereby the investment into commercial bonds may be at most 5% of the Fund's net assets. The Fund's currency exposure in KM and EUR shall be minimum 70% of the Fund's net value, while the modified duration shall not exceed 1.5. Investment exceeding 35% of the Fund's net assets shall be permissible for financial instruments issued either by the State of B&H, or its entities the FB&H and RS, according to the Law. Investments into forward rate and option agreements, transferable securities and money market instruments with derivate included as well as other financial derivatives may be used for the purpose of Fund's assets protection and achievement of Fund's investment objectives, or increase of yield and reduction of Fund's expenses. The usage of financial derivatives shall not change the investment strategy nor shall it increase the risk exposure above that set forth in the Prospectus, the Fund's Statute and the Law. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with International financial reporting standards, applicable legislation or regulations adopted by the Securities Commission of FB&H. The following is a description of significant accounting policies adopted. 2.1 Basic principles Principle of prudence Principle of prudence recommends that gains should be recognized in financial statement only if probability of collection is anticipated. In accordance with this principle, when estimating value of assets and income lover of possible amounts should be registered, and when estimating liabilities and expenses higher of possible amounts should be recognized in financial statements. Best possible estimate should be made so that assets should not be overstated, and liabilities understated. Principle of individual assessment Principle of individual assessment recommends that each category of asset and liabilities should be estimated separately. Substance over form principle Substance over form principle recommends that recognition and presentation of financial transactions should be recorded in accordance with substance and nature and not in accordance with law form solemnly. Materiality principle Principle of materiality recommends that financial statements should present all significant information needed for proper decision making. Page - 8 -

11 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 Basic principles (continued) Principle of consistency Principle of consistency requires that equal accounting policies should be applied in different accounting periods, and change of accounting policies should be performed only if objective circumstances exist and change of accounting policy will result in objective and fair presentation about assets, liabilities and result of period. When applying above mentioned basic accounting principles, financial statements are presented on historical cost basis or fair value basis. Exception of that is occurrence of increase in production prices of industrial products in B&H by 100% cumulatively during period of 3 years, when nonmonetary categories of financial statements are corrected in accordance with mentioned increase in prices (all in accordance with publication of Institute of Statistics). 2.2 Assets, liabilities and off-balance sheet currency classification Business transactions may occur in Konvertibilna Marka, foreign currencies and under currency clause. Foreign currencies are recorded in original currency. Receivable collection or liabilities settlement under currency clause is tied to average exchange rate of Central Bank of Bosnia and Herzegovina or other exchange rate that had been contracted Foreign currency and foreign currency gain/loss Transactions stated other than in KM are recorded at the exchange rate prevailing on the date of transactions. Assets and liabilities denominated in foreign currencies or under currency clause are translated at the official rate of the Central Bank of Bosnia and Herzegovina prevailing on the balance sheet date. For foreign currencies for which no official exchange rate at Central Bank of Bosnia and Herzegovina is stated, foreign currencies are translated to Euros, in accordance with the exchange rate prevailing on transaction date, and Euros translated to official exchange rates published by national central banks. Profit and losses arising on translation are included in net profit or loss of the period. Foreign exchange calculated on receivables and liabilities is recalculated on daily basis or other if it is defined by date of price of stake calculation. Profit or loss arising from currency exchange rates are registered as income or expense of accounting period, on gross or net basis, depending on categories of income statements. Profit or loss arising on exchange is registered at balance sheet date Post balance sheet date events Post balance sheet date events represent events, both favourable and unfavorable, that occur in period between balance sheet date and date of financial statements. Such events may require adjustments of assets or liabilities, or disclosure. Adjustments of assets and liabilities for post balance sheet date events is required if adjustment is significant. If additional post balance sheet date events exist, but are not important for decision making process of users of financial statements, then such events require only disclosure in notes with financial statements. Page - 9 -

12 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.5. Changes in accounting policies Accounting policies are applied consistently through different accounting periods. An entity may change an accounting policy only if the change: is required by a local legislation, or international accounting standards, results in financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows. If change in accounting policies occurs, mentioned change is disclosed in notes with financial statements in period in which change occurred, and an entity is required to disclose financial impact of change of accounting policy. Change of accounting policy requires retrospective application, where opening balance of each affected component is adjusted to change. Change of accounting policy due to the change of International Accounting Standards does not require retrospective application Interest income and expense Interest income and expenses are calculated upon assets and liabilities of the Fund, regardless of agreed method of collection of interests. Interest income is registered in income statement on effective yield basis, where variable interest rate is applied. Interest income and expense includes amortization of discounts or premium, and other differences between opening and ending carrying amount of financial asset or liability that is bearing interest. When calculating interest income or expense effective interest rate is applied. Effective interest rate is the rate that exactly discounts estimated future cash receipts/outflows to the current net carrying value of financial asset/liability. Net carrying value of financial asset/liability represents expected future receipts/outflows arising from that financial asset/liability. Net carrying value of financial asset/liability should include all contracted fees paid or received (transaction costs). If asset had been partially impaired to net residual value, interest income is registered in accordance with interest rate that discounts future cash flows to net residual value. In accordance with IAS 39, that interest rate is historical effective interest rate that had been used before asset became bad and doubtful Fees expenses Fees expenses mainly refers to managing fee towards the Company, depositary bank fees and transaction costs related to managing of Fund, and other fees prescribed by local legislation. Fees are charged to the income statements in period in which they occur Dividend income Dividend income relates to the right provided from equity securities. Dividend income is recognized when right on payment of dividend is determined. When right on dividend is determined it is registered as Fund's asset in full. Page

13 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.9. Net profit/loss from financial assets held for trading Income and expenses from securities held for trading are recognized in income statement of accounting period in which they occur. Net income from trade includes profit or loss in trade of foreign currencies and changes in fair value of financial assets classified in category of financial assets held for trading. By definition, such income and expenses includes change in fair value of derivative, and futures instruments, and are recognized on net basis Net profit/loss from financial assets available for sale Net profit or loss from financial assets available for sale includes net profit or loss from trade and changes in fair value of financial assets available for sale Impairment expenses and related income Impairment expense and income related to reversal of impairment is recognized in income statement in period end Other income and expenses Other income and expenses relates to all income and expenses not classified in previously mentioned categories. Allowed other expenses of the Fund may be presented as follows: costs of keeping a stake register, including the costs of issuing the transaction certificates or stake balance certificates, if necessary, and costs of distribution of a stake in profit; costs of annual audit; costs of preparing, printing and postal charges related to the semi-annual and annual reports for the stakeholders; all the prescribed fees paid to the Commission; taxes payable by the Fund on its assets or profit; expenses of change of prospectus and other changes as required in local regulations; other costs stipulated by the laws Deferred income and expenses Income and expenses that relates to current accounting period, and where collection, or payment relates to subsequent accounting period, are deferred. Such income and expenses are proportionally allocated through the relevant period Financial assets Financial assets relates to the assets that are: money; contractual right to receive money or other financial asset of other company; contracted right to exchange financial asset with other company in potentially favourable manner; other company's equity instruments; contract that may be settled with equity instruments of the companies. Page

14 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial assets (continued) Classification of financial assets Financial assets are classified in five categories: financial assets held for trading; financial assets at fair value through profit or loss ; loans and receivables created by Funds; financial assets held to maturity; financial assets available for sale. Financial assets held for trading refers to assets acquired or incurred principally for the purpose of acquiring short-term profit, or if they relates to derivatives. Financial assets at fair value through profit or loss relate to assets that the Company designated for the results of measurement and recognition to be recognized through income statement. Loans and receivables created by Funds relate to the non-derivative financial assets that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. For loans and receivables the Company has no attention of sale in short term (financial assets held for trading) and is not classified as financial assets at fair value through profit or loss or financial assets available for sale. Financial assets held to maturity relates to non-derivative financial assets with fixed or determinable payments that is acquired with attention of holding to maturity. Financial assets available for sale represents all other financial assets not mentioned in previous paragraphs. Recognition of financial assets All financial assets including derivatives are recognized when the purchase of an investment is under a contract. Financial assets held for trading, financial assets at fair value through profit or loss, and assets available for sale are initially measured on a trade date, in terms in which sale and purchase had been contracted. After that date, all income or expenses from change in fair value of financial assets held for trading, and financial assets at fair value through profit and loss are registered in income statement. Changes in fair value of financial assets available for sale is registered at accounts of equity, with exception of impairment. Financial assets classified as loans and receivables are initially recognized at cost. Derecognition and subsequent measurement of financial assets Financial assets are initially recognized at cost, including transaction costs that are directly attributable to acquiring of assets. Cost represents amount for which an asset could be exchanged, or a liability settled. Financial assets at fair value through profit and loss, is initially recognized at fair value and no transaction expenses are included in initial recognition. Subsequent to initial recognition of financial assets that are not classified as financial assets held for trading or financial asset available for sale, financial assets should be measured at fair value, with the exceptions of financial assets that are quoted in an active market and for which an estimate of fair value cannot be made. Value of such financial assets is recognized at cost, including transaction costs and decreased for depreciation and impairment expenses. Page

15 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial assets (continued) Loans and receivables and held-to-maturity investments should be measured at amortized cost using the effective interest method, decreased for impairment loss if any. Amortized cost is calculated using the effective interest method. The effective interest rate method discounts estimated premium and discounts, including transaction to the net carrying amount of the financial asset. Short-term receivables that are not bearing interest are subsequently measured at cost. Fair values of derivatives that are not quoted in active market are estimated on basis of proceeds or outflows that may occur in case of termination of contract, at balance sheet date. Such estimate should be corrected for current market conditions and credit risk of counterparty. Profit and loss arising from change of fair value of financial assets that are classified as financial assets held for trading or assets that are not acquired for trade in short-term, are recognized in income statement, and changes in fair value of financial assets available for sale are recognized in equity, with exception of impairment expense. Impairment of financial assets Financial assets are estimated on every balance sheet date to determine on whether there is objective evidence upon impairment of financial asset. If mentioned indication exists, net residual value for financial instruments that are classified as held to maturity or receivables are calculated upon net present value of future cash flows and outflows, discounted in accordance with effective interest rate of that asset. Loss upon impairment for receivables or securities classified as financial assets held to maturity are recognized in favor of income in case that net residual value may be objectively tied to an event that appeared after former recognition of impairment loss. Such income may not exceed previously recognized loss. Derecognition of financial assets The Fund derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Fund derecognizes available for sale financial assets and financial assets held for trading in case of sale of asset, when related trade receivable is registered, all in accordance with decision upon sale of asset. Held to maturity assets and loans and receivables are derecognized upon loss of control of assets. Categories of financial assets Short-term debt securities Short-term debt securities issued by B&H are to be classified as financial assets at fair value, and are subsequently measured on basis of effective interest rate that measures yield to maturity of financial statement, for each transaction, and different yield to maturity series. Long-term debt securities Long-term debt securities are to be classified in any of four categories of financial asset, depending on specificities of debt securities, and in accordance with previously mentioned classification criteria. Page

16 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial assets (continued) Debt securities classified as financial assets held for trading or financial assets available for sale are adjusted to estimated or fair value on a daily basis. In case of debt securities quoted on an active market in B&H fair value is calculated in accordance with weighted average trading price of securities, and reported institutional transactions. Price is rounded to four decimal points. For securities quoted in foreign markets of European Union and liquid markets of OECD member states, fair value is calculated in accordance with last market price of securities as published on a formal price list of stock exchange. In case that such prices are not published or report upon trade had not been issued on a date of estimate, fair value of long-term debt securities are calculated in accordance with previously published formal prices. In case that such report had not been published in period of last 30 days, effective interest method is applied on previously determined fair value of such security. When securities trade are activated once again, long-term debt securities are again registered at trading price quoted at stock exchange/market, as described earlier. Debt securities classified as held to maturity financial assets are stated at amortized cost decreased for loss of impairment. Amortized cost is calculated on effective interest rate method. Discounts and premium, including initial transaction costs, are included in cost of instrument and are amortized in accordance with effective interest rate, and adjustment in such measurement of financial instrument is recognized in favor of income or charged as expense of period. In accounting principal, discount and premium, and interests are divided in separate accounts, for different securities. In case that financial instrument classified as held to md in maturity fall to situation that no financial sources that could finance such financial instrument exist, or there is no intent of keeping financial instruments to maturity, in accordance with IAS 39, all financial assets held to maturity is classified to financial instruments held for trading, or available for sale financial instruments. Difference between carrying amount of instrument that is reclassified and its fair value is registered in income statement. Investment in equity instruments Equity instruments refer to investments in stakes, stakes in funds and other rights. Equity instruments are, in accordance with its purpose, classified as financial assets held for trading or financial assets available for sale. Equity instruments classified as tradable financial assets or financial assets available for sale are adjusted to fair value on daily basis. For equity instruments that are quoted on active financial market of FB&H, fair value is registered in accordance with average trading price, weighted with amount of securities traded at stock exchange and institutional transactions reported. Price is rounded to four decimal points. For equity instruments that are traded on markets of European Union and liquid markets of OECD, fair value is determined in accordance with formally published market price, published on stock exchange price list, on domestic stock exchange, or stock exchange that is determined as primary source of price value. For equity instruments that are traded outside of European Union and OECD markets, fair value is recognized on average price of such instrument published on stock market on date of estimate. Page

17 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial assets (continued) For stakes that had not been traded within period of 90 days, fair value is estimated in accordance with International Accounting Standard 39 and its valuation techniques. Such techniques include sector analysis, reference to the current fair value of another instrument that is substantially the same. Acceptable valuation techniques incorporate all important business factors. Decision upon measurement in accordance with valuation techniques could be applied in case of significant economical or market changes and in case of extraordinary circumstances, related to financial instrument. Subsequent estimate of fair value of stakes is prepared on a monthly basis, up to appearance of conditions from clause 9 of Pravilnik o vrednovanju i obračunu imovine investicijskog ( Rule book of estimating and calculating value of assets of investment fund ), issued by Commission in official gazette of FB&H under number 42/09. Investments in other funds stakes are estimated in accordance with net value of assets per stake, or share of fund, as formally published as of date of estimate. Partial sale of equity portfolio is registered on average carrying amount of the investment. Upon sale of investments, profit or loss is registered on net basis, in category of realized profit/loss in income statement. Forward exchange, spot and repo transactions Forward exchange transactions are registered at fair value on a daily basis, where officially published bid prices quoted on a financially-informational service is applied. Forwards in foreign currency are daily adjusted to fair value in accordance with unique interbanking offering interest rate for each different foreign currency (ZIBOR, EURIBOR, LIBOR and similar). Fair value of spot transaction is recognized as difference between contracted value and monetary exchange rate as published on CBB&H, as of date of estimate. Transactions of sale, and reversal of trade of same assets on future date (passive repo) is measured from settlement date of subject of transaction registered as funds assets and further in accordance with measurement of such assets, while liability for received cash is calculated in accordance with recognition of interest liabilities. Active repos, where purchase of securities and sale of such assets in future date, are measured up to date of settlement as deposits to maturity, with interest calculation on a daily basis Liabilities Liabilities present obligation of Fund arising from past transactions, for which future settlement and outflow of resources is expected (principal and other economic rights of creditor). Liabilities may be classified as follows: Financial liabilities liabilities arising from Fund's investments: Other liabilities liabilities arising from Fund's other expenses. Page

18 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Liabilities (continued) Financial liabilities present every obligation that is provided from agreed transactions with financial instruments, and for which cash outflow or exchange of other financial instrument is expected, under potentially unfavorable conditions. Financial liabilities from derivative financial instruments are registered at fair value. Financial liabilities from partial purchase of financial assets are registered at cost. Financial liabilities that are arising from partial purchase of financial assets are registered at fair value that represents exchanged fees accepted. Transaction costs are included in initial measurement of such financial liability. Subsequent measurement is registered at amortized cost. Measurements of short-term financial liabilities that are not bearing interests are registered at cost that is often fair value of fees accepted. Other liabilities are registered at nominal value that is provided from business transactions, and based upon contract or other business document. In case that for liabilities in local currencies foreign currency clause, increase in price range or similar clause is included, liabilities are registered upon revalue method. Liabilities are settled in manner of contract. Liabilities are derecognized upon settlement; it is cancelled, or obsolete. 3. OPERATING INCOME 2013 Period from 11/1/2012 to 31/12/2012 Interests on placed deposits Interests on debentures 62 6 Realized gains from matured securities Total: OPERATING EXPENSES 2013 Period from 11/1/2012 to 31/12/2012 Managing fee Depositary Bank fee Agency fee 11 6 Auditors fee 5 5 Other expenses 3 4 Total: INTEREST INCOME 2013 Period from 11/1/2012 to 31/12/2012 Interests on cash 5 2 Total: Page

19 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER CASH AND CASH EQUIVALENTS 31/12/ /12/2012 Cash in banks Total: FINANCIAL ASSETS AT FAIR VALUE THROUGH INCOME STATEMENT Maturity 31/12/ /12/2012 Treasury Notes of Ministry of Finances of Srpska Republic 27/03/ Treasury Notes of Ministry of Finances of Srpska Republic 21/01/ Treasury Notes of Ministry of Finances of Srpska Republic 23/05/ Treasury Notes of Ministry of Finances of Republic of Croatia 09/05/ Treasury Notes of Ministry of Finances of Republic of Croatia 02/05/ Treasury Notes of Ministry of Finances of Srpska Republic 18/01/ Total: 1,805 1,327 At the balance sheet date the Company has for the Fund made an estimation of the fair value of financial assets at fair value through profit and loss. To measure the fair value of investments in treasury notes the Company uses the method of calculating the yield to maturity. Accordingly, the Company uses the second level hierarchy inputs to determine fair value, in accordance with IFRS 13 Fair Value Measurement. Page

20 RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER FINANCIAL ASSETS HELD TO MATURITY Interest rate Maturity 31/12/ /12/2012 Deposits in banks Bosna Bank International d.d. Sarajevo 2.50% 7/9/2014 4, Sberbank BH d.d. Sarajevo 2.75%-3.70% 21/11/2014 3, Unicredit Bank d.d. Mostar 2.74% 22/11/2014 3, Nova Banka a.d. Banja Luka 2.54% % 26/11/2014 2, Hypo Alpe Adria Bank d.d. Mostar 3.55% % 10/1/2014 1, Komercijalna Banka a.d. Banja Luka 3.25% 7/3/ Union Banka d.d. Sarajevo 4.10% 18/1/ Sparkasse Bank d.d. Sarajevo 3.00% 12/1/ Moja Banka d.d. Sarajevo 3.05% 27/4/ Subtotal deposits in banks 15,113 8,767 Treasury Bills of Srpska Republic - 15/5/2014 1, Debentures of Republic Serbia 4.18% 24/5/ Debentures of Republic Serbia 4.28% 27/12/ Debentures of Ministry of Finance of FB&H 2.5% 30/9/ Debentures of Ministry of Finance of FB&H 2.5% 31/8/ Debentures of Ministry of Finance of FB&H 2.5% 31/8/ Debentures of Ministry of Finance of FB&H 4.3% 26/9/ Debentures of Ministry of Finance of FB&H 2.5% 31/3/ Debentures of Ministry of Finance of Republic of Srpska 2.5% 30/9/ Debentures of Ministry of Finance of FB&H 2.5% 31/3/ Debentures of Ministry of Finance of FB&H 2.5% 31/3/ Debentures of Ministry of Finance of FB&H 2.5% 30/9/ Subtotal of securities classified as held to maturity 5, Total: 20,557 9,753 In accordance with International Financial Reporting Standards, the Fund subsequently performs measuring of value of deposits and securities classified as financial assets held to maturity on a daily basis. In order to recognize currying net value of Fund's assets, for each separate transaction with assets classified as held to maturity, the Fund prepares separate calculation of value in accordance with effective interest rate method. Results of such measurement are recognized in income statement under category of interest income (amortizing cost). With the purpose of presenting currying value of net assets of the Fund, for each separate transaction of same class of securities, the Fund is preparing separate calculation of effective interest rate, since that cost of transactions may vary, and that this difference in cost of purchase is affecting calculation of effective interest rate, and therefore amortized cost. Page

21 9. OTHER RECEIVABLES RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER /12/ /12/2012 Interest receivables Total: NET ASSET VALUE Net value of Fund's assets as of 31 December 2013 and 31 December 2012 may be presented as follows: (%) stake 31/12/ /12/2012 Investment in assets held to maturity 87.83% 20,557 9,835 Investment in financial assets at fair value through income statement 7.71% 1,805 1,327 Cash 3.39% Other receivables 1.07% Subtotal 100% 23,407 11,204 Other liabilities 100% (595) (25) Subtotal other liabilities 100% (595) (25) Total: % 22,812 11,179 Average Funds net asset value and average net asset value per stake during the 2013 and 2012 may be presented as follows 31/12/2013 KM 31/12/2012 KM Average net value of assets 15,233, ,867, Average number of stakes 147, , Average net value of assets per stake Number of stakes at beginning of the period 109, , Number of stakes at end of the period 218, , Price of stake at beginning of the period Price of stake at end of the period In accordance with Rule book upon calculation and recognition of value of assets of investment fund, net value of assets per stake of investment fund is calculated by dividing net assets value with total number of stakes of Fund. Net asset value of Fund during the year 2013 had been calculated in accordance with Rule book upon calculation and recognition of value of assets of investment fund that had been officially adopted as of 1 July Calculation of net value of assets had been calculated by the Company, and control of calculation had been performed by Depositary Bank Hypo Alpe Adria Bank d.d. Sarajevo. In accordance with our audit procedures upon certain dates, we may confirm that calculation of net value of assets had been performed in accordance with local regulations. Page

22 11. LIABILITIES RAIFFEISEN CASH OPEN-ENDED INVESTMENT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER /12/ /12/2012 Redemption of stakes liabilities Managing fee liabilities Audit fees liabilities 5 5 Depositary Bank liabilities 2 2 Other liabilities 1 1 Total: LAW COMPLIANCE Investment limitations into the Fund and investments by the Fund are prescribed by the Act on Investment Funds (Official Gazette of the Federation of Bosnia and Herzegovina, no 85/08). Pursuant to Article 88 of the Act on Investment Funds (hereinafter: the Act), the value of the assets of investment fund with public offer cannot fall below KM 1,000,000 during the three consecutive calendar months. In case that this happens, the fund must be liquidated. According to the auditing procedures performed and insight into financial reports it is clear that the Fund fulfils the conditions prescribed by the Act regulating the minimum property value of the Fund. Furthermore, pursuant to the Article 90 of the Act, charging of fees and net fees calculation is prescribed. In accordance to auditing procedures performed we may conclude that fees calculation had not departed from request of the Act. Pursuant to Articles 91, 92 and 93 of the Act types of costs which can be charged to the Fund are defined. The Articles also define that the costs must be listed in the fund prospectus and statute. Total cost must not be over 3.5 % of the average net property value of the Fund. We have checked the calculation of the total costs and have concluded that it does not exceed amount prescribed by the Act. Furthermore, pursuant to the Article 97 of the Act, property investment of the open investment fund with public offer is subject to the following limitations: - the maximum 10% value of the fund property can be invested into securities, or money market instruments, issued by same entity, with exception for the securities or MMI issued at the stock-exchange or some other public market, in condition that such investment is regulated by the fund prospectus and the statute, as well as in case of newly-emitted transferable securities; - maximum 10% value of the fund property can be invested into the transferable securities or MMI, issued by same entity, in condition that if the value of transferable securities or MMI, which are the property of the Fund, issued by the same entity, exceeds 5% net value of the Fund property, the sum of the values of those investments cannot exceed 40% of the value of the Fund s property, except in cases when the issuer is or the one guaranteed by the Federation, Republic of Srpska, Member state, non-member state or international public organization, whose members are one or more member states, can invest with no limitations in condition that following restraints are followed: o o o the prospectus, statute and promoting materials of the fund clearly states the states, local governing units, or international organizations into which securities and MMI more that 35% net value of the fund s assets can be invested; Fund s assets consists of, at least, six different securities or MMIs, and the value of securities or MMI from Article b Line 1 of this Article does not exceed 30% of the net fund s assets value; Page