ABOUT COMPANY

2007

Based on its performance in 2007, Finam has moved up to be among Russia’s largest brokers. The company posted a total turnover on 2007 operations with securities of more than RUB 7 trillion. As RBC Rating estimates show, Finam currently has the largest turnover in the stock market for all Russian investment companies.

Finam has the largest regional network. The company’s products and services are now available in more than 89 Russian cities.

Finam is a steadily growing global broker. Finam has gained membership to the Frankfurt stock exchange. The company has started to perform operations with Russian securities on behalf of Japanese investors.

Finam ranks among dominant players for asset management of securities. In 2007, the mutual funds controlled by Finam Management Company increased their net assets by 224.13%, with the total number of individual asset management accounts rising by 38%.

Finam is a leading investment bank for IT projects. Finam Information Technologies Fund holds shares in a number of leading Russian and international IT companies.

Finam is a large-scale investor in real estate. Finam Capital Investments Fund is scaling up its investments in land assets, primarily farmable land. The fund also invests in commercial real estate and other projects.

Finam is an actively developing bank. Finam Bank is now rated among the top 500 participants in the Russian market and 250 largest banks on the retail loan market.

Finam is the leading Russian stock market educator. In 2007, more than 10,000 investors completed training courses at the Finam training center.

In 2007, Finam won the following awards:

• Financial Olympus - the nomination ‘Premier Investment Company in M&A in the Potential and Perspective category’
• Financial Elite of Russia- Finam Investment Bank received the Financial Elite of Russia prize in the category ‘Bank – Discovery of the Year’
• HR-brand of year - the company received the award as one of the most appealing Russian employers,
• Best Financial Services for Population/Best Financial Retail - the Finam.ru site was named the winner in the nomination ‘Best Site – the Most Convenient Site for Clients

In 2006 Finam continued to expand as a full-service investment holding, conducting activities in most segments of the financial services market. By and large, the company made great achievements in all areas of its business ranging from brokerage activities to banking services.

For example, in 2006 Finam nearly quintupled its trading volumes, which topped USD 70 bn. The company has steadily been ranked among the Top 3 professional participants on the Russian stock market. Finam has taken concerted efforts to optimize its brokerage tariffs, making them absolutely transparent and investor-friendly, taking deeper roots in the regions, phasing in new services and options. All of these attainments yielded handsome returns in 2007 when Finam took the lead on the Russian equity market in terms of trading volumes.

Independent experts attest to the company's successful development. In 2006 Finam won the Elite of the Stock Market contest in the category "Best Online Broker", took a prize in the category "Best Analyst" and was given the Financial Elite of Russia award as the most client-oriented company in the financial sector. In addition, last year Andrey Kovinenok, Finam's client, won the RTS-sponsored contest as the best private investor in Russia. Another award was presented to Alexander Filippovich, a client of Finam's Voronezh branch. MICEX also honored him as the 200,000th private investor in Russia.

One of the top priority areas of development for the investment holding is the collective investment sector. In 2006, management company Finam Management extended the range of its mutual funds by forming two close-ended mutual funds (Finam – Information Technologies and Finam – Land), as well as a mutual fund for the money market (Finam Deposit).

Apart from the activities provided to individuals, in 2006 the company intensively rolled out a range of services targeting major accounts. At issue, above all, are asset management services. The high returns steadily generated by Finam's asset managers, the broad mix of investment strategies, the high quality research support on blue chips and second-tiers, additional options (finance planning) and services (an indexable account), and an individual approach to each client have enabled us to boost the number of asset management and advisory management accounts, and also increase their average amount. As a matter of fact asset management and advisory management accounts surged 33% in 2006, while financial resources under management rocketed a record 104%, reaching USD 162.09 mn, while the average amount of accounts soared 53%.

In 2006, Finam set up a full-fledged investment bank within its corporate structure. Finam Investment Bank is the new corporate name of Megawatt Bank that was folded into the holding in 2004. The company has formed on its basis an attractive range of deposit and credit products, investment deposits that offer additional capital growth opportunities to the clients serviced by management company Finam Management. In 2007, the bank continued to expand, primarily by pursuing a strategic development policy. As a result, its services will become available to Finam's clients in various constituent entities of Russia.

Unlike traditional retail banks, Finam is to a large extent geared towards offering its clients new investment products, many of which are unique options. Like any investment bank, we deal closely with legal entities, for example, clients of our corporate finance division. In the near future we'll be offering our corporate clients an array of extra opportunities enabling them to expand their business and attract investments.

Finam's efforts on this front in 2006 have already been recognized, as MICEX Stock Exchange recognized the company as the best underwriter for having arranged Pava's IPO. Furthermore, last year the company substantially broadened the group of its partners, executed several M&A deals, gained the status of a listing agent in the Innovation & Growth Companies section of MICEX. This opens up new opportunities for operations with small and mid-cap companies, which include assisting these businesses in launching private and initial public offerings.

The year 2005 was a time of sustained growth, development and solidification of Finam's leadership positions on the Russian stock market. The year was also marked by new developments, acquisitions, a broader range of services provided, corporate rating upgrades and awards.

Last year the head of the back office at Finam Investment Company was assigned a seat on the trading committee of noncommercial partnership RTS Stock Exchange by decision of the Board of Directors of noncommercial partnership RTS Stock Exchange.

During the year, Finam Investment Holding obtained a number of licenses for new activities which allow the holding to broaden the scope of services provided and take another step towards building an integrated investment holding. Among such services we would like to note the following:

1. The Federal Securities Service adopted a decision to issue Finam Investment Company an unlimited license for asset management services. In line with this decision, Finam Management LLC received a similar 3-year license.

2. The Federal Securities Service decided to issue a 5-year license to provide special custodial services to investment funds, mutual funds and private pension funds to Finam Investment Company.

3. The Central Bank of Russia approved the admission of Megawatt Bank into the deposit insurance system. Thanks to this, the lending institution will be able to commence the implementation of a number of promising projects in the near future.

The expertise of the company's employees was recognized in a number of ratings, among which we would like to mention the following:

1. Sekret Firmy (Business Secret) magazine published its professional reputation rating of functional directors at leading Russian companies. The rating included the company's commercial and IT directors.

2. "Top 1,000 of the most professional managers of Russia" is a joint project of the Russian Managers Association and Kommersant business daily. The rating represents the most professional managers who are considered to be leaders in their industries and the general director of Finam Management was ranked among Russia's leading professional managers.

   The investment company's significance and popularity is confirmed by market surveys conducted by rating agency NAUFOR and Kommersant Dengi business magazine. In this survey the company ranked among the Top 10 in the following categories (FY2004 data):

   • Largest futures market operators;
   • Largest stock market operators;
   • Largest stock operators;
   • Largest intermediaries on the equity market.

   Furthermore, Finam was ranked among the Top 3 investment companies based on the number of customers serviced.

   Summing up, we would like to note that Finam Investment Company launched a new English Internet portal devoted to the Russian equity market. Information in this web-based resource is set out in the most popular Internet format: an online blogger's diary.

   
   

This year Finam strengthened its positions as one of the leading participants on the stock market and a leader in operations with private investors. Throughout the year the company has shown stable performance and ramped up its assets. The investment holding's key performance indicators were substantially higher than those in 2003. The holding's trading turnover rocketed 92% on the year, assets under trust management more than doubled and its customer base rose dramatically. The network of regional representative offices expanded and on the basis of already existing regional branches new training facilities were launched for people anxious to learn the basics of stock market operations.

In 2004 Finam took aggressive actions to break onto international markets, as a result of which the holding added another service to its package of investment opportunities - direct stock trading on the US stock market.

Finam is actively committed to converting state-run entities into joint stock companies both in Russia and the CIS, and also provides advisory services to state-owned and major commercial concerns. In 2004 the company's strategy and business development department arranged and held tenders to sell and have a number of big Uzbek enterprises privatized.

Finam Management remains committed to enlarging the scope of its financial services and improving their quality. Thanks to an agreement signed between Finam Management and non-state pension fund Interros-Dostoinstvo, Finam can offer its clients pension coverage on favorable terms from one of the leading players in the sector of pension management services. In 2004 NAUFOR upgraded Finam Management's reliability rating to A, the highest grade.

In 2004 news group Finam.ru joined the Association of Financial and Economic News Agencies (AFENA). At present, Finam.ru is a large news agency which provides a full range of information about the Russian equity market. Last year Finam.ru ranked first in the category "Best Sector Website" in a contest held by Rotor.

Work done by a professional team of Finam Investment Holding was highly evaluated not only by our clients, but also the investment community. In 2004 Victor Remsha, CEO of Finam, was named among the most professional managers in Russia in a rating by the Association of Managers.

Thus, last year our company took a major step in its development, rolling out of new services and mastering new investment solutions. At present, Finam Investment Holding operates in most sectors of the financial market, ranging from standard brokerage services to large-scale investment banking projects.

A number of interesting projects and services have been devised and implemented. All issues cited above were formed on the basis of our company's core principle - to be a customer-friendly company, i.e. which is able to offer the broadest possible range of investment services.

Meanwhile, the investment holding primarily offers brokerage, asset management and advisory services.

In 2004 Finam defined two areas for its development as an investment bank which are related to the selection of promising investment targets and provision of funds for these projects:

1. A fund which specializes in hi-tech investments. Last year Finam made a number of acquisitions in this sector: Runner, a contextual advertising agency, Search Technologies, an innovative firm and E-generator portal. The company used both its in-house funds and financial resources of its corporate and private investors to make these hi-tech investments.
2. Investments in real estate and agricultural lands. In 2004 Finam purchased land plots in the Rostov, Kursk, Voronezh and Krasnodar regions.

In 2005 the holding has make it a priority to broaden the range of its services and raise their quality. The company strives to offer a wide package of its investment instruments to enable its customers to achieve their targets efficiently and promptly. For this purpose, in 2004 Finam bought Megawatt Bank, which will allow it to enlarge the scope of its services. In addition, the company plans to be active in promoting mutual funds launched by Finam Management.

Currently, Finam is a leader in rendering new, advanced, hi-tech services and can offer challenging investment opportunities to its customers.

FINAM Investment Company is continuing to offer its private and corporate investors a full spectrum of modern brokerage and financial services on the Russian and foreign stock markets:

• Brokerage services on all main exchanges of (RTS, Micex, MSE, exchange of "Saint-Petersburg", RTS-SGTK)
• Customized tariff plans
• Full- service, personal manager-consultant
• Discount - service
• Purchase and sale of equities
• Loan against equities' guarantee
• Insurance of price risks and arbitrary operations on the futures markets
• Analytical support
• Operations with promissory notes, OGSZ, ÎVVZ, etc.,
• Operations with equities, options and futures on the world exchanges;
• Especially for client's convenience was formed the Center of Exchange Operations allowing investors to carry operations in all sectors of financial market. Integration of full spectrum of services on all exchanges of Russia and many foreign markets into united clients' service is adding an innovative character to the company's operations.

"FINAM" is constantly expanding its list of services. Along with traditional brokerage, we are actively developing other services based on the principle of independently operating business.

• Corporate finance services
• Merger & Acquisition
• Finam-Cross - system of over the counter equities trading

Annual report

This year a "Finacial-Analyst" group of companies was reformed into FINAM Investment Holding, consisting of: FINAM Investment Company, Finam.ru News Group, and Trade Communications company.

The year was successful for the holding. "Financial-Analyst" was included in the top five list of the leading operators on the Micex stock exchange, and had taken the 15th place on RTS. This year IH "FINANCIAL-ANALYST" considerably expanded the range of services for its clients and became a real universal company, ready to offer along with internet-trading, the development of investment banking solutions.

The growing number of investors entrusted the company with their capital. In many ways it became possible due to increased quality and expanded list of services. Here we can especially mention such new services as "VIP-broker", which allows to decrease "omitting" and to optimize orders’ execution and "Trade signals", the transmission of trade signals in the regime of real time that allows to determine the moment of the market entrance/exit. Other important services should be mentioned as well: world financial markets in the system of Quick, service for sub-brokers – risk management for marginal trading (Colibri product), service to work on the market through the system of electronic crossing, new tools in the system of alerts. New clients’ products are especially suitable for professional market players: transactions without coverage, "Appointed station" project, etc.

Finam also launched the new innovative system of electronic crossing for out of stock exchange trading of Russian stocks - "Finam-Cross", which became the first system in Russia allowing investors and professional members of stock exchanges to execute counter orders effectively, confidentially and with minimum expenses.

In 2002 as a result of the front-office structure change, every client was assigned personal manger or associate manager, who follows all of the client’s activities. This allowed us to improve the quality of services: now front office employees are paying more attention to the clients’ problems and requests. =========

The main result of 2002 was an assured position of the company in the sector of investment-banking services and financial consulting. We also developed appraisal business, and strengthened the client base by attracting capital, and using wide spectrum of financial instruments.

One of successfully realized projects in 2002 was providing a range of financial consulting services to "SiPro" corporation (the producer of instant products under the trade mark "Bistrov"). Also, "Financial-Analyst" represented the ART TV company as its financial advisor and had signed the services’ agreement with VAO "Nizhegorodskaya yarmarka" to help it raise funds in the framework of The International Exhibition Complex project.

The company’s success didn’t go unnoticed, and IC "Financial-Analyst" had won The Department of State and Municipal Property of Moscow contest of selecting brokers for selling stock of joint companies’ owned by The City of Moscow (through Micex and RTS). In August 2002 "Financial-Analyst" was appointed an official consultant for enterprises’ owned by Pridnestrovskoy Republic of Moldova privatization, and an exclusive advisor in assessment of privatization results in PMR.

The holding secured its positions in many regions of Russia. In 2002 the activities of the regional clients doubled compared to the previous year. The client base increased dramatically, along with expansion of market activities on behalf of private and institutional investors and traders. In addition to the existing ones, the new representative offices were open in Ivanovo, Pskov, Vologda, Kazan, Stari Oskol, Smolensk, Taganrog, Astrahan, Izevsk, Kursk, Ufa, Rostov na Donu.

The company’s training center had been operating successfully, with more than three hundred people managed to learn more about the details of working on the stock market. In order to attract public attention to stock market operations, the company had developed a unique FINAM Class program.

In the beginning of 2002 the work of the Research Department was restructured, and the main focus became preparations of reviews, and daily & weekly reports. All the materials of the analytical department are available under Finam.research.

2002 was a year of intensive growth for Finam.ru News Group. The old, already known sections were expanded and new ideas were realized. The informational richness of the web site increased significantly.

The company offers both private investors and legal entities a complete range of modern brokerage and financial services on the Russian stock market as well as on international markets. Our brokerage services cover all of the Russia's major exchanges (the Russian Trading System (RTS), the Moscow Interbank Currency Exchange (MICEX) the Saint Petersburg Exchange and the RTS Guaranteed Quotes System). We offer several different rate plans, designed to meet the needs of our different clients, including Full Service accounts, personal managers, Discount Services, equities sales and purchases, loans with equities deposits, risk management and arbitrage operations on futures markets. Financial Analyst also offers analytical support (daily analytical reviews of financial markets), transactions with promissory notes, OGSZs (municipal bonds), OVVZs (currency bonds -both domestic and foreign) and more. In addition, our clients got access to trading the Russian stocks, options and futures on international exchanges. Our newly opened Stock Operations Center gave the clients full access to all sectors of the financial market. Our innovative packages incorporate a wide range of services on all of Russia's exchanges and several international markets.

We offer our clients the latest stock, index and currency statistics throughout the day as well as support and an information resource for real-time day trading.

The year 2000 was the first year when the Russian Stock Market began to function normally again after the economic crisis in 1998. Naturally, we experienced many wild fluctuations that year, but in the end, the market developed and grew, and Financial Analyst grew alongside with it. We actively adopted new technology and constantly expanded our range of services. As a result, the company managed to considerably increase its trading volume on the RTS, the MICEX and the Saint Petersburg exchanges. In addition to that, our client base nearly doubled. We were especially proud to present our clients with Internet trading services. Our clients now have access to trading on the MICEX using QUIK Broker software. We also launched the unique Stock Alerts program, which allowed the clients to automatically receive news about the latest changes on the market. Our list of services got longer and longer - we were the first on the Russian market to offer Personal Manager services, which is now especially popular among the investors.

In 2000, we also carried out our Brokerage House project, which is a service system dedicated to providing Brokerage House clients with opportunities to work on a financial market as an independent broker. In September, we began working on an information support system for equity-issuing companies. Along with this project, we conduct online conferences with management representatives from major Russian companies, a market analysis forum, company news briefs and we also created a corporate finance department.

Financial Analyst also opened two new branches in Tyumen and Vladivostock, thus expanding its network of representative offices. We also took the lead on the Russia's information highway, which is still relatively new. We introduced our website, FINAM.RU, which became the most popular Russian online information resource in only a year.

Overall, Financial Analyst's performance results in 2000 can be summed up as follows:

• We were ranked among the top ten on the NAUFOR Top 50;
• We were ranked among the top five companies working on the MICEX;
• Our operational results on The Moscow Stock Exchange (MSE) show strong growth;

Tremendous progress was made in 1999. Brokerage services were introduced on major exchanges and we began offering analytical services to our clients. The Center for Securities Trading was launched on the premises of the former Russian Exchange, providing all clients with the opportunity to trade in all sectors of the Russian market. Our experts began organizing training seminars on a weekly basis to help those new to the market in investing successfully. 1999 was also the year when margin trading was introduced and included the option to use Russian assets as collateral for trading on international markets. Special attention was paid to "remote" customers, who now have the opportunity to watch real-time quotes on the Internet as well as to use the technical analysis software. Clients around the world can also send their orders to brokers via the Internet.

A difficult year: the economic crisis, the political crisis, and the 'trust' crisis among the RTS brokers all occurred in 1998. During those hard times, Financial Analyst was able to retain its customers and update its equity operation accounts in accordance with NAUFOR requirements (by refining our accounting program.) The company became a member of the Futures Section of the Moscow Interbank Currency Exchange (MICEX) and the Saint Petersburg Exchange (SPSE). MSE and SPSE trading systems were also introduced.

In 1997, the Russian stock market experienced both a boom and a collapse. During this dramatic year, Financial Analyst began to expand and set up branches in Tyumen, Ufa, Saratov, Orenburg and Makhachkala. Licenses for The Commodities and Exchange Commission and the Federal Commission for the Securities Market were obtained, and company obtained the NAUFOR, MSE, MICEX and RTS memberships. Financial Analyst also began to expand its analytical work. In the fall of 1997, our experts predicted the start of the financial crisis, and thus the drop in stock prices did not catch the company by surprise. We were able to make the appropriate investment decisions and close that year without losses.

The second Russian Presidential Election Campaign was held that year. The bond market experienced considerable growth. Financial Analyst began to focus on Russian Treasury Bills and the Savings and Loan bond market. We became a leading firm on the Russian Exchange where Treasury Bills, futures and contracts were traded. Transactions on the equity market were introduced and our first regional branch was opened in Noyabrsk (Tyumen region).

The Russian market experienced a period of stagnation, during which many market operators became aware of importance of market analysis and equity research. In our "Investor's Portfolio," we tried to determine and show major market indicators based upon liquidity, spread, price fluctuations, etc. To facilitate analysis for both brokers and investors, we provided an extensive electronic database. The demand for an organized security market led to the establishment of the Russian Trading System (RTS) and the electronic OTC-market for Russian stocks. The "Investor's Portfolio" was a success; its publication was terminated in January 1996, as it had served its purpose. The current "Investor's Portfolio," in circulation since 1999, differs from its predecessor and provides financial, analytical and research information.

Financial Analyst was founded in 1994, as a secondary equity market in Russia began taking shape. We were granted a license by the Russian Ministry of Finance. It was a difficult start for our first market operators, as they had to work with virtually no information about the issuers and stock quotes. They received incomplete information only twice a week from the AK&M Agency - and they were the lucky ones, as many investors didn't even have that opportunity. Our first goal was to provide market players with the most up-to-date and precise information on Russian stocks, and towards that goal we began to publish the daily "Investor's Portfolio," a bulletin containing stock quotes and issuers information as well as economic and financial data. A considerable amount of trades were made thanks to "Investor's Portfolio." In 1994, Financial Analyst had only seven employees; the company began to grow as the Russian stock market became more civilized.