quỹ Đầu tư chứng khoán việt nam – vf1

THE INVESTMENT FUND DESCRIBED IN THIS PROSPECTUS IS ESTABLISHED UNDER DECREE NO. 144/2003/ND-CP ON 28 NOVEMBER 2003 AND IMPLEMENTING DOCUMENTS. THIS PROSPECTUS WAS REGISTERED WITH THE STATE SECURITIES COMMISSION ON …… MARCH, 2007.

THE STATE SECURITIES COMMISSION IS NOT RESPONSIBLE FOR THE CONTENT OF THIS PROSPECTUS, NOR THE INVESTMENT OBJECTIVE AND STRATEGY OF THE FUND

VIETNAM SECURITIES INVESTMENT FUND (VF1) (License of establishment and issuance of Vietnam Securities Investment Fund

dated on March 24, 2004 by the State Securities Commission) Registered on: ___ ___ 2007.

PPRROOSSPPEECCTTUUSS

INCREASING CHARTER CAPITAL OF VIETNAM SECURITIES INVESTMENT FUND

(VF1)

This prospectus can be obtained at:

Hochiminh City Ha Noi:

VietFund Management

8th Floor - Bitexco Tower

19 - 25 Nguyen Hue Blvd - Ben Nghe Ward - District 1

Ho Chi Minh City - Vietnam

Tel: (84-8) 914 3393 – Fax: (84-8) 914 3392

Email: [email protected]

Website: www.vinafund.com

VietFund Management

7th floor, Sacombank Tower

88 Ly Thuong Kiet St., Hoan Kiem District

Ha Noi, Vietnam

Tel: (84-4) 942 8168 – Fax: (84-4) 942 8169

Email: [email protected]

Website: www.vinafund.com

Spokeman: TRAN THANNH TAN (Mr.)

General Director - Vietfund Management Address : VietFund Management Company,

8th Floor, Bitexco Tower, 19-25 Nguyen Hue, Dist. 1, HCM City, Vietnam.

mailto:[email protected]

http://www.vinafund.com/


http://www.vinafund.com/

Prospectus on raising charter capital of Vietnam Securities Investment Fund – VF1

PROSPECTUS ON RAISING CHARTER CAPITAL OF VF1 2 2007

INDEX I. RESPONSIBLE FOR THE CONTENTS OF THE PROSPECTUS..................................... 4 II. DEFINITIONS....................................................................................................................... 5 III. SITUATION AND FEATURES OF VIETNAM SECURITIES INVESTMENT FUND.... 7

1. Overview of Vietnam Securities Investment Fund:......................................................... 7 1.1 Establishment and development process: ................................................................... 7 1.2 Key information on the Fund:..................................................................................... 7 1.3 Board of Fund Representative, Vietfund Management, custodian bank and relevant authorities................................................................................................................................ 8

2. Performance of VF1 from 20/05/2004 to 31/12/2006 ................................................... 11 2.1 Capital disbursement situation:................................................................................. 11 2.2 Investment Liquidation: ............................................................................................ 12 2.3 Performance results................................................................................................... 13

IV. PROJECT FOR CAPITAL INCREASE OF VF1 ............................................................... 14 1. Legal base for capital increase of VF1........................................................................... 14 2. Market opportunities ...................................................................................................... 14

2.1 Prospect of Vietnam Economy ................................................................................. 14 2.2 The growth of Vietnam stock market ....................................................................... 16 3 Investment opportunities........................................................................................... 16 3.1 Opportunities to invest in listed companies .............................................................. 16 3.2 Opportunities to invest in equitized companies: ....................................................... 17

3. Capital demand .............................................................................................................. 18 4. Projects for using capital................................................................................................ 18

Asset allocation..................................................................................................................... 18 Sectors to be invested............................................................................................................ 19

5. Capital raise method....................................................................................................... 21 V. OTHER RELEVANT ISSUES............................................................................................ 24

1. Fees, expenses and incentive fees .................................................................................. 24 1.1 Placing fee................................................................................................................. 24 1.2 Annual fee ................................................................................................................. 24 1.3 Incentive fee.............................................................................................................. 25

2. Determination of Net Asset of VF1 ............................................................................... 26 2.1 Time of determination............................................................................................... 26 2.2 Determination of NAV calculation ........................................................................... 26 Net Asset Value equals the total value of all assets and investments owned by VF1 less the relevant liabilities (e.g. brokerage fee, custodian fee, administrative fee, valuation fee, bank interest (if any) … ) on the Valuation Day. NAV is calculated as follows: ......................... 26 N: total current fund certificates ........................................................................................... 26

3. Income calculation and plan for dividend distribution .................................................. 26 3.1 Principles of Income calculation............................................................................... 26 3.2 Plan for profit distribution......................................................................................... 27

4. Fund certificates transaction .......................................................................................... 27 5. Suspend fund certificates transaction............................................................................. 27 6. Conflicts of interest between different funds and other financial products ................... 28 7. Financial reporting standards ......................................................................................... 28 8. Risk on system ............................................................................................................... 29 9. Risk on market interest .................................................................................................. 29 10. Risk on failure to settle payment.................................................................................... 29



11. Risk on liquidity............................................................................................................. 29 12. Risk on centralized investment ...................................................................................... 29 13. Competition.................................................................................................................... 29 14. Legal System.................................................................................................................. 30 15. Management risks .......................................................................................................... 30 16. Risk on declining net asset value of the Fund................................................................ 30 17. Risk on fluctuation of NAV and transaction price of fund certificate after capital increase 30



I. RESPONSIBLE FOR THE CONTENTS OF THE PROSPECTUS

Issuer

Phan Dao Vu (Mr.) Chairman of The Board of Representative – Vietnam Securities Investment

Tran Thanh Tan (Mr.) General Director of Vietfund Management

Nguyen Minh Dang Khanh (Mr.) Financial Director of Vietfund Management

We assure that all the information and figures provided in this Prospectus are in conformity with facts that have been investigated appropriately.

Underwriter

BaoViet Securities Company Headquarters: 94 Ba Trieu St., Hoan Kiem District, Ha Noi. Tel: (04) 943 3016 Fax: (04) 9433012 Email: [email protected] Website: www.bvsc.com.vn Hochiminh City Securities Corporation Headquarters: 2nd Floor, Capital Place Building, 06 Thai Van Lung St, District 1, HCMC. Tel: (08) 823 3299 Fax: (08) 823 3301 Website: www.hsc.com.vn


http://www.bvsc.com.vn/

http://www.hsc.com.vn/



II. DEFINITIONS

The following definitions shall be applied throughout this Prospectus:

Board of Fund Representative The people who represent the investors to vote at the General Meeting of Investors and act on their behalf to conduct the regular supervision the operation of the Investment Fund VF1, the fund management company VFM and the Custodian.

Underwriter of fund certificate issuance

Underwriters commit to implement procedures prior to the offer of fund certificate, the purchase a part or the whole of remaining VF1 fund certificates that have not been distributed

VF1 fund certificate A certificate or booking record issued by VFM, that confirms the legal rights and benefits of the Investors towards assets or capital of the VF1 in proportion to units of the holders in the capital of the VF1.

Auditor - Ernst & Young Ernst & Young Vietnam

Vietfund Management (VFM) Vietfund Management

Fund dividend The remittance of the Fund profits out of the valid expenses by VFM and distributed between investors that is according to the proportion of owned shares by investors meeting.

Dragon Capital Dragon Capital Management Limited

General Meeting of Investors A meeting of the Investors who have the voting rights, to be organized regularly or extraordinarily in order to pass important issues relating to the Investment Fund VF1. The Investors Meeting is the important organization of investors inVF1.

Unit The unit with par value of VND 10,000 each in the fund’s charter capital.

Underwriter The securities company approved by the State Securities Committee to underwrite securities issuance.

Net Asset Value The net asset value of VF1, calculated by a total of assets and investments owned by VF1 after deducting its liabilities at Valuation Day.

Closing day The day, as approved by the SSC on which the mobilization for the Investment Fund VF1 will be terminated.

Current investors Individual or institutional investors domestically and abroad who own VF1 Fund certificates till the closing day have the right to buy more fund units in the capital raise issuance as implemented in this Prospectus.

VF1 Investment Fund Vietnam Securities Investment Fund

Close-ended Fund A securities investment fund, in which the investors to be limited the right to sell back the investment fund’s certificates to the fund before the term of termination or disbandment.

Sacombank SaiGon Thuong Tin Bank

Valuation day The last business day in each month or such other days as the



VF1’s Board of Fund Representative may determine, each being a day on which the Net Asset Value is calculated.

Performance fee The premium out of management fee being paid to VFM by VF1 Investment Fund.

Compensation VFM sells the fund’s investment items for interest or capital collection aiming at other investment schemes

Deposited members Securities companies, state commercial banks, joint-stock commercial banks, joint-venture banks, foreign bank subsidiaries which are granted as deposited members at securities trading centers to provide services of deposit, compensate and liquidate securities by the SSC.

HoSTC Hochiminh City Securities Trading Center

SSC State Securities Committee

Fund’s charter capital Total amount of money contributed by Investors and mentioned in this Prospectus.

Vietcombank Bank for Foreign Trade of Vietnam

Other definitions (if any) will be comprehensible as defined at the Law of Securities dated 29/6/2006 by the National Assembly of the Socialist Republic of Vietnam on securities and securities market and other relevant legal documents.



III. SITUATION AND FEATURES OF VIETNAM SECURITIES INVESTMENT FUND

1. Overview of Vietnam Securities Investment Fund:

1.1 Establishment and development process:

Vietfund Management is a close-ended fund, established on March 24th, 2004 following License no. 01/GP-QĐT on establishing the fund and issuing fund certificates to the public signed by Head of the State Securities Committee. Accordingly, the fund’s charter capital to be mobilized is VND300 billion, equaling to 30 million units, each of which worth VND10,000 par value.

From 24/03/2004 to 10/04/2004, VF1 started mobilizing capital from investors domestically and abroad. At the time of closing fund on April 10th, 2004, total mobilized charter capital was VND300 billion with the participation of 1,064 investors including 1,064 individuals and 18 organizers, accounting for 53% and 47% of the capital, respectively.

Vietnam Securities Investment Fund officially operated on May 20th, 2004 following License no. 01/UBCK-ĐKQĐT issued by Head of the State Securities Committee (SSC).

On September 22nd, 2004, the SSC granted License no. 01/UBCK – NYQĐT to the Fund and VF1 fund certificates were transacted on Hochiminh City Securities Trading Center (HoSTC) on November 08th, 2004.

Grasping investment opportunities from equitization of State enterprises and securities market development, VF1 has raised its charter capital to VND500 billion following License no. 468/QĐ-UBCKNN issued by the SSC dated July 05th, 2006.

On November 14th, 2006, Head of the SSC granted license no. 694/QĐ-UBCK on listing supplementary fund certificates on HoSTC. Total of 20 million fund units had been transaction officially on October 16th and November 20th, 2006.

Over 2 years and a half of operation, VF1 has approved to have stable growth through its net asset value (NAV), to grasp investment opportunities to equitized enterprises and listed stocks on HoSTC and HaSTC. At the end of December, 2006, its NAV reached VND31,281/unit and transaction price of VF1 reached VND35,800/unit.

1.2 Key information on the Fund:

� Fund’s name: Vietnam Securities Investment Fund

� Abbreviation name: VF1 Investment Fund

� Trading code: VFMVF1

� Fund type: Close-ended securities fund

� Charter capital: VND500,000,000,000 (Five hundred billion dong)

� Par value: VND10,000 per unit

� Volume of units: 50,000,000 (Fifty million)

� Operation period: 10 years

� Investment goals: Investing in listed and to-be listed shares, debt securities and other assets to balance and minimize risks.

� Target investors: Domestic and foreign institutions and individuals investors.

� License of issuing fund units: License no. 01/GP-QDT dated March 24, 2004 by State Securities Commission.



� License of fund operation: License no. 01/UBCK-DKQDT dated May 20, 2004 by State Securities Commission.

� License of listing fund units: License no. 01/UBCK-NYQDT dated September 22, 2004 by State Securities Commission.

� License of increasing fund’s charter capital:

License no. 468/QĐ-UBCK dated July 05, 2006 by State Securities Commission.

� License on listing supplementary fund certificates:

License no. 694/QĐ-UBCK dated November 14, 2006 by State Securities Commission.

� Fund management: VietFund Management.

� Custodian: Vietnam Commercial Bank (Vietcombank)

� Auditor: Ernst&Young.

� Dividend: By annual, based on returns from investments.

� NAV: By week, posted on Stock market news and on website.

� Fees: − Management fee: 2%/ NAV/ year

− Custodian and deposit fee: 0.12%/ NAV/year.

− Incentive fee and others.

1.3 Board of Fund Representative, Vietfund Management, custodian bank and relevant authorities

a. Board of VF1 Fund Representative

Board of VF1 Fund Representative of 2006 consists of 07 (seven) members as follows:

(1) Phan Dao Vu (Mr.) - Chairman

(2) Huynh Que Ha (Ms.) - Vice Chairman

(3) Nguyen Thanh Hung (Mr.) - Vice Chairman

(4) Hoang Kien (Mr.) - Member

(5) Ngo Thi Thu Trang (Ms.) - Member

(6) Phan Minh Tuan (Mr.) - Member

(7) Giao Thi Yen (Ms.) - Member

Detail information on the Board of Representatives (BOD):

(1) Phan Dao Vu (Mr.) - Chairman

Mr. Phan Dao Vu is representative of Indovina Bank’s capital contribution in VF1 Investment Fund. At present, he is a member of Board of Directors cum the First Vice General Director of Indovina Bank in Vietnam. He has worked for State Bank for many years and held key positions at Vietnam Income Bank.

Mr. Phan has a BA in economics and has been professionally trained in management domestically and abroad. He also rewarded the Master of Business Administration at Hawaii University of America.



(2) Huynh Que Ha (Ms.) – Standing Vice Chairman

Ms. Huynh Que Ha is the representative of Sacombank’s investment in VF1. At present, she’s the Standing Vice Chairman of Sacombank and also the Vice Chairman of the First Securities Company. Prior to joining Sacombank Ms. Ha was Import – Export Manager at Donabochang company; Assistant & Chief Accountant at ProSun company; and Business Manager at Sunsco company.

(3) Nguyen Thanh Hung (Mr.) – Vice Chairman

Mr. Nguyen Thanh Hung represents Sovico Group’s investment in VF1. Mr. Hung received his Ph.D degree in Russia and is in charge of Chairman of Sovico Group at the moment.

(4) Hoang Kien (Mr.) – Member of BOD

Mr. Hoang Kien is a representative of Dragon Capital’s investment in VF1. He has worked at Petro Vietnam as an International Trading Executive. At present, Mr. Kien is Associate Director of Dragon Capital managing Veil’s portfolio.

(5) Ngo Thi Thu Trang – Member of BOD

Ms. Ngo Thi Thu Trang represents Vinamilk’s investment in VF1. Graduating from University of Finance and Accounting with major in industrial accounting in 1984 and Master of Business Administration in 2001, she has been in charge of Chief Accounting at Vinamilk since 1998. At present, she is Vice General Director of Vinamilk.

(6) Phan Minh Tuan (Mr.) – Member of BOD

Mr. Phan Minh Tuan represents VEIL investment in VF1. Mr. Tuấn graduated from Kharkov Civil Engineering University, in the former Soviet Union, in 1976 with an honors degree in Civil Engineering. He received a U.K. M.Sc. in 1982 from Delft Institute. From 1976 to 1989, he worked as a technical project consultant and manager in a number of projects in Vietnam. In 1989 he joined the Vietnam Chamber of Commerce and Industry (VCCI) as project manager. He was seconded by VCCI as Chief Representative to BHP from 1991 to 1994. In 1994, he joined Peregrine Capital Vietnam as Director of the Hanoi branch. At present, he is a director of Dragon Capital managing the largest funds in Vietnam.

(7) Giao Thi Yen (Ms.) – Member of BOD

Ms. Giao Thi Yen is represents HCMC Securities Company’s investment in VF1. At present, Ms. Yen is General Director of HCMC Urban Development Investment Fund – a stated financial organization of HCMC and also is Chairman of HCMC Securities Company.

Ms. Yen was Deputy General Director, in charge of finance & investment at Savico; Vice Chairman of Orient Commercial Bank; and Deputy Manager of City Committee Finance Management Department.



b. Vietfund Management (VFM)

Vietfund Management, the joint-venture between Dragon Capital Management and Saigon Thuong Tin Bank, was established in accordance with License No. 01/GPĐT-UBCKNN dated July 15, 2003 by the State Securities Committee. Vietfund Management is the official fund management company of Vietnam Securities Investment Fund. The company operates under the adjustment of Foreign Investment Law and Law on securities and securities market.

Vietfund Management is the premier joint-venture company in Vietnam specialize on securities fund management and advisory consultancy.

Vietfund Management’s Board of Managers:

(1) Tran Thanh Tan (Mr.) - General Director

(2) Do Song Hong (Ms.) - Vice General Director and Chief Investment Officer

(3) Pham Khanh Lynh (Mr.) - Director of Business Development (in charge of capital mobilization)

(4) Nguyen Minh Dang Khanh (Mr.) - Chief Accountant (in charge of financial, accounting and payment)

Detail information on members of Board of Vietfund’s Managers

(1) Tran Thanh Tan (Mr.) - General Director

Mr. Tran Thanh Tan received the MBA from Brussels Freedom University in Belgium. He has over 15 year experiences in investment, securities, privatization and the capital market in Vietnam. He joined Dragon Capital at the time of its establishment in 1994 as a founder. He has been responsible for many successful capital markets, equitization and corporate restructuring activities such as issuing 5 millions convertible bonds for REE, consulting on equitization for 20 Vietnam enterprises like: Hiep An, Vifoco, Halong Canfoco, Lafooco, PV Trans, Seaprodex no. 4 and other private and state enterprises. Besides, Mr. Tan also held senior management positions in some of these joint-stock companies.

(2) Do Song Hong (Ms.) - Vice General Director and Chief Investment Officer

Ms. Hong received a Master of Finance from Golden Gate University in San Francisco, California, USA in 2000. In September of 2000 she joined Sacombank and since then has held many senior positions in different departments of Sacombank. Ms. Hong has extensive experience in finance, investment, privatization and the capital market of Vietnam. She was officially appointed to be Vice General Director and Chief Investment Officer of VietFund Management.

(3) Pham Khanh Lynh (Mr.) - Business Development Director

Mr. Pham Khanh Lynh received a Master of Finance and Accounting from Swinburne University, Australia. Mr. Lynh was the Ex-Director of Business Transactions and Development at the Asia Commercial Bank Securities Company (ACBS). Mr. Lynh has extensive experiences in securities trading and investment.

Mr. Lynh joined VietFund Management as Business Development Director and was fully in charge of mobilizing capital for the VF1 Investment Fund. At present, he is conducting the building and development of new financial products and taking charge of many investment commercial affairs of Vietfund Management.

(4) Nguyen Minh Dang Khanh (Mr.)– Financial Director

Mr. Nguyen Minh Dang Khanh graduated from HCM Accounting – Finance University and Law University. He awarded CPA in 1999 and ACCA. Over 12 year experiences in financing, accounting,



auditing, he was at the superior positions as Financial Controller, Auditor in foreign-invested enterprises in Vietnam.

Being the Financial Controller in VietFund Management, he is in charge of structuring the disciplined financial policy for VFM and ensuring the legality of the financial reports and statements.

c. Custodian

Vietcombank - the Custodian for VF1 - carries out the task of depositing securities, storing contracts and other documents relating to VF1 assets; valuing net assets of the Fund; supervising VF1’s activities and Vietfund Management company in accordance with License No. 14/GPHĐLK by State Securities Commission dated May 02, 2005.

d. The Auditor

Ernst & Young is the auditor of Vietnam Securities Investment Fund. Every year, Ernst & Young will audit the accounts and the operations of VFM to guarantee the accuracy of the reports and control VFM’s performance.

e. Legal Advisor

VFM will seek legal advice from and employ the service of Vilaf – Hong Duc Law Firm in order to keep all transactions in accordance with the rules and to minimize risks and to protect investors’ interest. Vilaf – Hong Duc is one of the first commercial law firms in Vietnam, highly respected in banking and has advised upon big financial transactions. Most lawyers of Vilaf – Hong Duc have had experience working at well known international law firms in Vietnam.

2. Performance of VF1 from 20/05/2004 to 31/12/2006

2.1 Capital disbursement situation:

a. Disbursement size:

Over 3 years of operation, from 20/05/2004 to 31/12/2006, VF1 disbursed a source of capital totaling VND1,335.6 billion, 2.4 times total capital source including initial mobilized capital and increasing capital of October 2006.

387.2

240.1

708.3

300.0 263.4

2004 2005 2006

Giải ngân(tỷ đồng)Nguồn vốn(tỷ đồng) 42.2%

57.8%

Cơ cấu vốn giải ngân

Thu từ thanh hoán

Vốn mới

b. Disbursement structure:

Disbursement structure of Vietnam Securities Investment fund in the recent time represented the Fund’s guidelines and strategy: prioritize equitization projects and unlisted companies of good operations, strong growth potential and especially those that will be listed in the future



65%

19% 18%

16%

65%50%

19% 16%32%

2004 2005 2006

Cổ phiếu niêm yết

Cổ phiếu chưa niêm yết

Trái phiếu

100.0%84.0% 82.0%

16.0% 18.0%

2004 2005 2006

Đầu tư thêm

Đầu tư mới

c. Disbursement progress:

Tiến độ giải ngân theo Quý (tỷ đồng)

286

673434 10 17

180

87 104141

378

Q1 Q2 Q3 Q4

2004

2005

2006

2.2 Investment Liquidation:

a. Liquidation scale:

2006 2005 2004

227

353

238

252

37

156

4676

4060

Cổ phiếu niêmyết

Cổ phiếu chưaniêm yết

Trái phiếu

75 61

161



Trái phiếu

128 12187



Trái phiếuGiải ngân (tỷ đồng) Thanh hoán (tỷ đồng)

b. Real profits from disbursement:

26.0

204.0

5.084.0

2004 2005 2006

961.0

Lợi nhuận từ thanhhoán (tỷ đồng)

Tổng lợi nhuận ròng(tỷ đồng)



2.3 Performance results

a. Profit:

Unit: VND billion 2006 2005 7 months of 2004 Realized net operating results 86,078 30,616 8,133 Unrealized net operating results 875,466 53,701 (3,397) PROFITS IN THE TERM 961,544 84,317 4,736

b. Net asset value (NAV):

31/12/2006 31/12/2005 31/12/2004 Fund size (VND billion) 1,564.1 381.6 304.7 NAV/unit (VND) 31,281 12,718 10,158 Growth over beginning of year (%) 146.0 25.20 1.58 Cumulative growth (%) 212.8 27.18 1.58

c. Asset allocation:

Accumulated from 20/07/2004 to 31/12/2006

Income structure by investment activities Income structure by investment sectors

1.1%

19.1%

76.7%

2.1%

1.0%

Cổ tức

Lãi trái phiếu

Lãi tiền gửi ngân hàng

Chênh lệch giá cổ phiếu thực hiện

57.5%

40.5%

1.0%1.0%

Cổ phiếu niêm yết

Cổ phiếu chưa niêm yết

Trái phiếu

Chênh lệch giá cổ phiếu chưa thực hiện Tiền gửi ngân hàng



IV. PROJECT FOR CAPITAL INCREASE OF VF1

1. Legal base for capital increase of VF1 Capital increase of the Fund and other relevant matters will be under the adjustment of:

1. The law of Securities dated 29/06/2006 and was valid on 01/01/2007 stipulating on raising capital of close-ended fund stated at Article 94, Chapter 7.

2. Article 43 in the Regulations on organization and operation of the Fund prescribes “VF1 Investment Fund may increase its charter capital through issuing new fund certificates to the securities market. However, the capital increase must comply with relevant statues from the Securities State Committee”.

3. The minute of voting on increasing charter capital of Vietnam Securites Investment Fund by collecting suggestions in text from 14/12/2006 to 25/12/2006 in which ayes accounting for 67.85% of charter capital.

4. Other relevant legal documents.

2. Market opportunities

2.1 Prospect of Vietnam Economy

The Vietnam economy grew favorably in 2006 with GDP growth rate of 8.2%, GDP per capita of USD720 and total social investment capital accounting for 41% of GDP. Vietnam has still been one of the countries with the highest economic growth rates in the Asian region, behind China.

Besides high economic growth rate, inflation rate in 2006 was restrained at the rate of 6.6%, lower than 2004-2005.

30.4 32.1 34.838.7

10

20

30

4041.3

60.6

68.4

77.8

88.8

52.7

50

60

70

80

90

%

5

6

7

8

9

10

$ USD tỷ

1

2

3

4

GDP giá trị thực tế

% tăng trưởng

Source: General Statistic Office (GSO)

Export in 2006 had continued high growth momentum. Total export turnover reached US$ 39.605 billion, an increase of 22.1% over 2005. Of that, foreign investment continued to lead both in percentage contributed and growth, with US$ 22.865 billion and 23.2% correlatively. Amongst export markets, the U.S. continues to lead with US$ 7.9 billions, the E.U. accounts for US$ 7.1 billions and US$ Japan 5.1 billions... these key markets still have growth rates from 20-35%. Exports contribute more than 50% of the country’s GDP; showing that the growth of exports has a very important meaning for the growth of the overall economy.

Trade gap in year 2006 was 12.1%

0

10

20

30

40

50

2000 2001 2002 2003 2004 2005 2006 2007F

US$tỷ

-6

-5

-4

-3

-2

-1

0

US$ tỷ Nhập khẩu Xuất khẩu

Cán cân



PROSPECTUS ON RAISING CHARTER CAPITAL OF VF1 2007

15

compared to 14.5% last year. Decline in trade gap ratio showed the competitive capacity of the economy and was considered to be a preparation for Vietnam’s coming intergration into WTO.

2007 is the 1st year of Vietnam’s integration into WTO which requires Vietnam to strictly comply with WTO’s conventions. In addition, Vietnam’s goods face with trading barrier – that is indispensable in the world economy. Export turnover is forcasted to be roughly 46.5 billion, 17.4% higher than that of year 2006.

Thâm hụt thương mại/Xuất khẩu

14.70% 14.50%

21.20%

12.10%

2000-3 2004 2005 2006


Industrial yield in 2006 reach VND491 trillion, increased by 17.74% as compared to 2005; in which state sectors, private sectors, and foreigned-owned sectors increased by 12.2%, 23.0% and 19.0% respectively.

Industrial value growth in the period of 2006 – 2010 is forecasted to be about 15.5% and reach its highest point in 2007 – 2008.

000000

2002 2003 2004 2005 200615.0%15.5%16.0%16.5%17.0%17.5%

1020304050600 18.0%

Giá trị sản xuất công nghiệp Tăng trưởng

Source: General Statistic Office (GSO), MOI

Foreign direct investment (FDI) in Vietnam in 2006 reached record US$10.2 billion. This is the highest level of attracting FDI capital since the passage of the Law on Foreign Investment in Vietnam in 1997. These impressive results continue to affirm the important role of foreign direct investment in the Vietnam economy and contribute toward creating high growth momentum for foreign investments in 2007

The attracting FDI for 2007 is forecasted to reach US$11 billions, 75% of which comes from new projects and 25% from on-going projects. The FDI source for disbursement during 2007 is forecasted to increase from US$ 4.1 to US$ 4.5 billions.

Increasing total investment proves the improvement of Vietnam’s business environment. The ratio of investment capital over GDP in Vietnam is higher than that of other countries: it reaches 40%GDP in 2006 compared to 29% in 1998.

0

2

4

6

8

10

2000 2001 2002 2003 2004 2005 2006

12

2007

US$ tỷ

Vốn thực hiện

Vốn đăng kýSố dự án

Đầu tư/GDP

31%

35%

40%

45%

37.60%

48%

0% 10% 20% 30% 40% 50% 60%

2003

2004

2005

2006

2007E

2008F

Source: Ministry of Planning and Investment

Business environment in coming years has many favourable changes through agreements to open the market within WTO members and bilateral and multilateral trade agreements. The government has committed to improve the business environment through improving administration, clarifying business procedures, reducing trivial licenses requirement, renewing real estate managing mechanism, improving operation effects of legal system, etc. Therefore, we could forecast Vietnam




economy to continue to grow in 2007 – 2008 at 8.2 – 8.5%, equals to US$ 70 billions, GDP per capita equals US$ 820. Although facing the threats of credit increase, inflation, energy shortage…, reducing quota barriers for Vietnam exporting companies when joining WTO is an advantage for export activities. However, Vietnamese enterprises need a certain time to penetrate other markets. In the mean time, Vietnam can attract foreign capital from multinational companies to create high growth.

2.2 The growth of Vietnam stock market

TTGDCK Tp. HCM

1.50.1

0.9

15.0

9.2

0.5

166

108

3226

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007F

$ USD tỷ

10

30

50

70

90

110

130

150

170CK niêm yết

Giá trị niêm yết

Giá trị thị trường

Chứng khoán niêm yết

Nguồn: TTGDCK Tp. HCM & dự báo của VFM

TTGDCK Hà Nội

0.10.7 1.1

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Nguồn: TTGDCK Hà Nội & dự báo của VFM

Like many new markets in Asia, the Vietnamese securities market in 2006 witnessed pleasant advances. In particular, the indices of the two trading exchanges in Ho Chi Minh City and Hanoi saw great changes and continued to set new records. VN-Index of HoSTC used to fell to its lowest points of 304.23 and reached the highest point of 809.86 (on 20 December). HaSTC-Index also showed sharp fluctuation from its lowest of 89.93 to the highest points of 258.78. Market capitalization rocketed from 1%GDP up to 22.6%GDP equivalent to USD$14bil in late 2006. There are about 400 kinds of listed bonds totally worth of USD$4bil, roughly 7.7%GDP. Number of securities transaction accounts increase from 30,000 (late 2005) to more than 100,000 in 2006, among which foreign investors account for 2% and hold 25-30% listed stocks. Increased transaction turnover leads to services improvement. Only in 2006, the State Securities Committee granted operational

licenses for 41 new securities companies, 76 companies being listed in HoSTC (among which is one listing certificate fund) and 88 companies being listed in HaSTC, 18 fund management companies, 6 banks of depositing operations.

This growth momentum promises securities market size to continue to grow in the next 5 years with market capital of listed stocks equalling to 30 – 40 % GDP by 2010, particularly that of 2007 to reach about 30% GDP. Number of investors will increase by 3 – 4 times, reaching 250,000 – 300,000 trading accounts.

3 Investment opportunities

3.1 Opportunities to invest in listed companies

With the possibility to be upgraded to Stock Exchange in 2007, HoSTC together with HaSTC will attract a great amount of investment capital source. According to VAFI statistics, the number of listed companies and register for trading is predicted to be 100 in 2007, lifting total stock market capital to 30% GDP.



3.2 Opportunities to invest in equitized companies:

The development of Vietnam economy in 2007 is predicted to be potential due to the affect of Vietnam joining WTO. Enterprises consider this as a good opportunity to restructure and mobilize capital, promoting business activities. The number of state-owned enterprises, private enterprises, and foreign-invested enterprises to be equitized is forecasted to increase considerably during 2007.

State-owned enterprises:

The process of equitizing state-owned enterprises has been going on since the beginning of the 1990s. However, this process has only been sped up in recent years due to pressures of the demands of economic renovation. Up until 2006, 3,600 state-owned enterprises have been equitized.

In the period of 2006 - 2010, the government will proceed to equitize approximately 1,500 state-owned enterprises with a total capital of 260,000 focusing primarily on the two years of 2007 and 2008. Especially, the Government is speeding up equitization of enterprises in the fields of banking, insurance, telecommunications, consumer goods, etc.

Companies to be equitized in 2007 – 2008

Company name Year Capital (billion VND)

1 Mobifone 2007 26,672 2 Viettel 2007 16,000 3 Vietcombank 2007 12,8004 Mekong Housing Bank 2007 700 5 BIDV 2007 8,528 6 Incombank 2007 5,328 7 Habeco 2007 2,128 8 Sabeco 2007 5,500 9 Bao Viet 2007 3,728

10 Phu My Fertilizer Plant 2007 2,079 11 Vinaphone 2008 23,360 12 Agribank 2008 19,200 13 Vinatex 2008 1,000

Total 1228.316 Source: VFM’s forecast

Big cooperations to be equitized in 2007 and 2008 are Vietcombank, MHB, Incombank, BIDV, Agribank, Vietnam Insurance Cooperation, Mobifone, Vinaphone, Viettel, Habeco, Sabeco, Vinatex …whose charter capital are about VND130,000billion and total market value in the period of 2007 – 2008 is above VND200,000billion.

Private enterprises

As of June 2006, the entire country had 165,000 private enterprises with initial mobilized capital sources of VND320 trillion and supplemental mobilization of VND105 trillion.

Private enterprises are growing larger every day, improving business management, and popularized through the mobilization of capital from outside. In recent years, the market has witnessed the success of large Vietnamese private enterprises like Kinh Do, Hoang Anh Gia Lai, Mai Linh, Thien Long, Vilube, Lotus Steel (Ton Hoa Sen), etc. and this has displayed the strength of private enterprises in Vietnam.

The trend of equitization and raising capital of private enterprises is creating many very large investment opportunities for the market. It is predicted that in the coming years, the market



capital of the 5% of the largest enterprises among the total of private enterprises will be about VND60 trillion.

Foreign-invested enterprises

Decree 38/2003/ND-CP of the Government promulgated in April 2003 created a legal passage for the transformation of foreign-invested enterprises into joint-stock companies. The years 2004 and 2005 witnessed a trend in equitization of a number of large foreign-invested enterprises like Taya, Taicera, Chang Yih, Tung Kuang, etc. along with the listing on the securities exchange of these enterprises. The equitization and stock listing of foreign-invested enterprises increased the diversity of and created additional vitality for the securities market.

With more than 7,300 foreign-invested enterprises making up realized capital of more than US$ 37 billion up until now, the equitization capital source from these enterprises will create large investment opportunities in the forth coming years.

3. Capital demand

VF1’s remaining capital is limited and its investment items are not at due date of disbursement meanwhile there are many investment opportunities. Therefore, raising charter capital of VF1 Investment Fund in earlier 2007 is necessary for grasping investment opportunities in the market.

Charter capital to be mobilized for VF1 Investment Fund is planned to be VND500bil.

4. Projects for using capital

a. Investment targets

Increasing capital is aiming at building a balanced and diversified investment portfolio in order to maximize profits, minimize risks for the Fund’s investment capital. Increased capital from this mobilization will be used for enhancing investments into good projects that have high potential growth in the future, especially big enterprises to be equitized in 2007-2008

b. Investment policy

Asset allocation

VF1 investment fund is a type of securities investment, thus most of business affairs will be concentrated on listed and to be listed in Vietnam stock market. In order to make the most of investment opportunities and create growth for the portfolio, 95% of the fund’s total assets will be invested in listed and to be listed stocks while the rest will be invested in other assets like monetary and reserved cash. As per current regulations, VF1 investment fund will not invest more than 10% of its total asset to real estate.

VF1 investment fund plan to use the raising capital to invest in stocks and bonds in order to optimize balance investment portfolio. Detail investment structure for mobilizing capital of VF1 is expected to be allocated as follow:

Asset allocation as at 12/31/2006

Expected asset allocation

Ratio (%) Investment scale

(billion VND)

Ratio (%) Investment scale

(billion VND)

Số vốn giải ngân thêm (tỷ

đồng)

Stocks 96.2 1,505 85 2,434 929

Bonds and other assets 3.8 59 15 430 371

Sum total 100.0 1,564 100 2,864 1,300



Asset allocation of VF1 at present (31/12/06) Expected asset allocation

Cổ phiếu, 96.2%

Trái phiếu &

TS khác, 3.8%

Tài sản khác, 5%

Cổ phiếu, 85% Trái

phiếu, 10%

Bond: Government bonds, local bonds and company bonds of high interests and low risk. Bond portfolio is not only used for balancing investment portfolio but also for securing flexibility and grasping investment opportunities

Stock: listed and to be listed stocks on Vietnam’s bourse, focusing on unlisted stocks. VF1 investment fund concentrates on investing into equitized company of big capital, good coperation and transparent listing guidelines through equitization opportunities from 1,500 among 2,176 state-owned enterprises with total capital of VND260,000bil in 2007-2008. Big cooperations to be equitized in 2007 and 2008 are Vietcombank, MHB, Incombank, BIDV, Agribank, Vietnam Insurance Cooperation, Mobifone, Vinaphone, Viettel, Habeco, Sabeco, Vinatex …whose charter capital are about VND130,000billion and estimated total market value in the period of 2007 – 2008 is VND200,000billion.

Other assets: cash, short-term monetary tools to create flexibility and grasp market opportunities.

Sectors to be invested

VF1 Investment Fund will concentrate on investing in fields and sectors of high growth potential, especially big enterprises and cooperattions to be equitized in the future such as:

Banking - Finance;

Oil & Gas;

Telecommunications – Telecommunication materials;

Pharmaceutical – Medical – Education;

Consumer goods;

Food & Beverages;

Agriculture – Forestry – Aquatic products;



Planning Investment Portfolio by sector of VF1

TP-NGK, 8%

CB NLTHS, 8%

CSHT, 8%HTD, 12%

TC-NH, 25%

Dầu khí, 12%

TICC, 3%

TM -DV, 3%Vận tải HH,

5%

Dược phẩm -Y tế,

8%Viễn thông - Vật liệu VT,

8%

However, depending on investment strategy in each period, we may change structure or kind of sectors in order to reach high growth rate for investment portfolio.

Stock portfolio structure at 12/31/2006 Planning Stock portfolio structure

Investment sectors Investment value

(billion VND)

Ratio (%) Ratio (%)

Investment scale (billion

VND)

Added investment

value (billion VND)

Banking – Finance 392 26.1 25,0 609 217

Oil & gas 178 11.9 12,0 292 114

Consumer goods 177 11.8 12,0 292 115

Infrastructure 167 11.1 8,0 195 28

Food – Beverages 150 9.9 8,0 195 45 Agriculture – Forestry – Aquatic products 128 8.5 8,0 195 67

Telecommunication material 97 6.4 8,0 195 98

Pharmaceutical - Medical 95 6.3 8,0 195 100

Transportation 84 5.5 5,0 122 38

Commerce – Services 21 1.4 3,0 72 51

Utilities 16 1.0 3,0 72 56

Sum total 1.505 100 100 2,434 929

Besides increasing the fund size to secure investment ratio into main sectors as utilities, food & beverages, banking – finance, VF1 investment fund will limit investment in sectors of low growth rate and invest in those of high growth rate such as telecommunication, oil & gas, education – pharmacetical – medical, tourism & hospitality, commerce & services… VF1 Investment Fund will focus on equitized enterprises of big capital, good performance and transparent listing guidelines.

Along with investment process, VF1 investment fund assist other units in financial restructure, management and competetive capacity improvement… so as to increase financial asset of these companies and increase the fund’s investment asset accordingly



5. Capital raise method

Raising capital is performed by issuing VF1 fund certificates.

Type of securities: Investment fund certificates

Par value: VND10,000

Total number of fund certificates: 50,000,000 units

Where:

Issue the whole fund certificates to existing investors at the time of final list as per the announcement from HoSTC.

Placing price:

Placing price will be based on NAV of VF1 Investment Fund being published at the week of final preferential list and be discounted maximum 30% as compared to NAV

Placing price of the capital raise issuance will be calculated as below:

tt NAVXNAV *%G −=

Where:

- G is the placing fee in the capital raise issuance;

- NAVt is the weekly NAV announced at the week of final preferential list.

- X% is the discount rate as compared to NAV of the fund announced at the week of final preferential list.

Placement fee is 2%/ par value/ fund certificate will be applied to all investors in the issuance of the capital raise.

Placing price will be applied to underwriter in case there are redundant fund certificates after terminating the preferential rights of investors.

Distribution mode:

In principles, VF1 fund certificates will be distributed to existing investors at the time of making the final list of investors having the preferential rights to buy as per HoSTC’s announcement.

VF1 fund certificates will be distributed by performing buying rights. An investors who owns 01 (one) fund certificate at the time of making the final list of investors having the preferential rights to buy will be able to buy 01 (one) supplementary fund certificate.

Distribution Method: Distribute 500,000,000 fund certificates to current investors.

Investor will have the right to buy fund certificate, in particular, each investor who owns 01 (one) unit at the time of recording the list of those executing his buying rights will be entitled to buy 01 (one) extra unit issued. The rights to buy fund certificate will be allocated according to the list VF1 owner at the time of recording those who use their buying rights announced by HOSTC. The distribution of extra fund certificate to investors who join in the period of raising capital will be executed as per the process defined by HOSTC.

The record date, suggested by Board of Representative of the Fund and by VFM, must be approved by HOSTC and will be announced to investors and publicized via mass media.

Investors who participate in the capital raise will be informed of their buying rights volume and be able to transfer the buying rights within 07 (seven) working days as per HOSTC’s announcement.



Investors who participate in the period of raising capital will proceed to buy and pay for the fund certificates being allowed to buy within 15 (fifteen) working days basing on the HOSTC’s announcement on raising the Fund’s capital. The process of registration and payment will occur in deposited members of HOSTC.

Surplus fund certificates

Surplus fund certificates are the redundant which have not been sold out to investors as per their preferential rights in the capital raise. The number of redundant fund certificates can only be defined after terminating payment term. These also includes retail fund certificates that have not been distributed in order to secure the regulations on the minimum transaction rate of 1 plot equaling to 10 units.

In order to guarantee the success in this capital raise, surplus fund certificates will be distributed to underwriters chosen by the Board of Representatives who appointed fund management company to sign guaranteeing contracts for the issuance. Underwriters can sell the surplus fund certificates to their investors to buy for their own organization.

Distribution planning process:

Distributing time is planned to take place within 30-40 working days starting from the day receiving issuing license from the State Securities Committee.

Vietfund Management will proceed and accomplish all the listing procedures for the total number of fund certificates in the capital raise at HoSTC as regulated.

The procedures of tasks from the day receiving Issuing license are described as below:

Week No. Tasks

1 2 3 4 5 6 7 8

1 Information publication

2 Annoucement on closing list of investors holding fund certificates that have the rights to buy fund certificates in the capital raise.

3 Receiving final list of investors holding fund certificates that have the rights to buy fund certificates in the capital raise from HoSTC.

4 Distribution and announcement on rights of buying fund certificates.

5 Existing investors participating in the capital raise transfer, register and pay money to buy supplementary fund certificates.

7 Deposited members report and transfer money to blockade account of VF1.

8 The board of management deal with redundant fund certificates or distribute to underwriter.

9 Report on issuing results.

10 Completing supplementary listing process.

11 Deposit and trading supplementary fund certificates.

Documents on raising fund’s charter capital can be obtained at:



- Vietfund Management – Head Office

8th floor, Bitexco Tower, 19-25 Nguyen Hue, District 1, HCMC

- Vietfund Management – Branch Office

7th floor, Sacombank Tower, 88 Ly Thuong Kiet, Hoan Kiem District, Hanoi.

Some notes in term of capital raise:

- Limited power of foreigners: Maximum ownership ratio for foreigners is 49% of fund certificates in circulation regulated by Decision no. 238/2005 QĐ-TTg dated 09/29/2005 signed by Prime Minister or by latest decision from the government on maximum ownership ratio of foreign investors.

- Deal with retail fund certificates: Đối với số chứng chỉ quỹ lẻ (nếu có) phát sinh khi thực hiện quyền sẽ được xử lý để đảm bảo tuân thủ quy định về mức giao dịch tối thiểu là 1 lô bằng 10 chứng chỉ, số lượng chứng chỉ quỹ phát hành thêm mà nhà đầu tư sở hữu quyền được mua sẽ được làm tròn đến hàng chục và không vuợt quá số lượng phát hành, toàn bộ số chứng chỉ lẻ sẽ được làm tròn xuống đến hàng chục.



V. OTHER RELEVANT ISSUES

1. Fees, expenses and incentive fees

1.1 Placing fee

Existing investors must pay placing fee in the charter capital raise of VF1 Investment fund as stated in this Prospectus.

Buying fee is 2%/par value/ unit.

1.2 Annual fee

a. Management fee

VF1 pays to the VFM a monthly management fee equal to 2% (two percent) of the Net Asset Value of VF1 for VFM investment services.

The Administration fee is determined by the following formula:

2% of admin fee (per annual)/12 (months) * NAV (of the last day of the month).

Trong trường hợp ngày giải ngân của số vốn mới huy động không tròn tháng thì phí quản lý sẽ được tính vào tháng kế tiếp, nghĩa là sẽ không tính phí quản lý trên số vốn điều lệ mới tăng thêm không tròn tháng.

b. Custodian and deposit fees:

These fees are determined pursuant to Custodian Contract of VF1’s asset signed by Vietcombank and Vietfund Managemtn on April 24th, 2004.

Custodian fee

In the first 3 years, VF1 pays to the Custodian a monthly management fee equal to 0.12% (zero point twelve percent) of the Net Asset Value of VF1 for the custodian services.

Since the fourth year, both parties will agree on the Custodian fee applicable before the date of 31 of December every year.

The custodian fee is paid monthly. This fee is paid directly to custodian bank for its services.

The custodian fee is determined by the following formula:

Proportion of custodian fee (per annual)/12 (months)* NAV (of the last day of the month).

Deposit fee

Deposit fee of shares, bonds is free in the first year.

Deposit fee correspond with the fee being regulated by the State Securities Committee or the Securities Trading Center.

Fee for other assets will be paid based on real expenses on VF1’s assets of the Custodian for the third party (if any).

Other fees:

Other fees include:

i. Brokerage fee, ii. Tax, fee and expenses payable to state, iii. Interest expense which is allowed by Fund Charter and regulation, iv. Auditing expense, v. Legal advisory fee, vi. Expenses for valuing securities and other investments by the Fund, vii. Article revision fee,



viii. Cost of organizing the annual Investors’ meeting not requested or for benefits of VFM and Custodian bank,

ix. Publication fee, issuance of Prospectus, x. Salaries of the Board of Representatives, xi. Other suitable and legal expense which are approved by Board of Representatives.

Tổng The total of fees mentioned at Sections 2.2 and 2.3 above shall not exceed 1% of the Net Asset Value of VF1.

1.3 Incentive fee

The fund management, apart from fees mentioned in Section 2.1. above, will be entitled to an incentive fee. The incentive fee is extracted from the Fund’s profit, and should be less than the Fund’s profit in that year.

The incentive fee is only payable if the increase of the Net Asset Value of VF1 is higher than a basic threshold (detailed below). The incentive fee that VFM receives in a financial year equals to 20% of Li (detailed below), calculated as follows:

Increase of NAV = Vi /Vi - 1

Basic threshold = I + 2%

Li = Vi – {Vi-1 x [100% + (I + 2%)] + N x [100% + (I + 2%) x d/365]}

Where:

Li: the relevant amount against which the Incentive Fee will be calculated. Vi: is the Net Asset Value of all investments on December 31 (or the nearest working

day) of year i plus fund’s dividend in that year Vi-1: is the Net Asset Value of all investments on December 31 (or the nearest working

day) of year i – 1. N: total amount collected in the capital raise in year i d number of days counting from the liquidation of newly mobilized capital till December

31 of year i.

I is the interest of 10 year government bond being issued at the nearest time to valuation day or the interest of longest correspondable government bond.

Government Bond: Bond issued and guaranteed by the Government of Vietnam

Interest: is the interest of 10 year government bond or the interest that government bonds of equivalent maturity trades on the stock exchange in sufficient volume that is nearest in time to the Valuation Day. If the difference between the two rates above is greater than 1%, I would be the simple average of them.

Example:

The day that newly mobilized capital to be disbursed is 04/15/200i => d = 261 days

Vi – 1 = 1.500 bn

Vi = 3.150 bn

Ii = 9%

N = 1.300 bn

In this case,

Li = 3.150 - {1.500 x [100% + (9% + 2%)] + 1.300 x [100% + (9% + 2%) x 261/365]}

Prospectus on raising charter capital of Vietnam Securities Investment Fund – VF1 = 82,75 bn

Incentive fee in year i = 20% x 82,75 bn = 16,55 bn.

2. Determination of Net Asset of VF1

2.1 Time of determination

The determination of NAV is carried out by VFM with the approval of the Custodian for conformation to SSC regulation and VF1’s Charter.

2.2 Determination of NAV calculation

Net Asset Value equals the total value of all assets and investments owned by VF1 less the relevant liabilities (e.g. brokerage fee, custodian fee, administrative fee, valuation fee, bank interest (if any) … ) on the Valuation Day. NAV is calculated as follows:

Unit value

NNAVV =

Where:

- V: unit value

N: total current fund certificates

3. Income calculation and plan for dividend distribution

3.1 Principles of Income calculation

Profit/ (Loss) from VF1’s activities in a year is defined from 2 main sources:

Net realised profit/ (loss): The net income collected from investment activities perfomed in the coming years less expenses as regulated.

Net income from investment activities includes:

- Dividend from shares,

- Interest from bonds,

- Bank interest,

- Other profits from investment disbursement.

Expenses to be deducted includes:

- Management and incentive fee

- Custodian fee

- Administration fee (for activities, meetings...)

- Auditing fee

- Other fees

Unrealised profit/ (Loss): The differential result from reassessment of fund’s investment at the time of the report and unrealized dividend.

REPORT ON VF1’S PERFORMANCE

A. REALIZED RESULTS

I. Income from realized investments 1+2+3+4




1. Receivable stocks

2. Receivable interests from bonds

3. Interest

4. Income from selling securities

II. Expenses 1+2+3+4+5

1. Management and incentive fees

2. Custodian and asset management fees

3. Meeting fees

4. Auditing fee

5. Fees for other activities

III. Net outcome from realized activities in the I-II

B. UNREALIZED RESULTS

I. Income 1+2

1. Income from reassessment of securities investments

2. Unrealized dividend

II. Expenses 1

1. Differential loss from reassessment of investments

III. Net income from unrealized activities in the year I-II

PROFIT/ (LOSS) IN THE YEAR A+B

3.2 Plan for profit distribution

Based on the results of yearly business operations of VF1 Investment fund, profit distribution will be proposed by the Board of Fund’s Management and passed by the Annual General Meeting of Investors.

4. Fund certificates transaction

Supplementary VF1 fund certificates will be listed after being approved by the State Securities Committee. Therefore, disposal of VF1 will be perfomed under the current legal regulations on securities and securities market

VF1 is a close-ended fund, thus, VF1 Investment Fund and VFM are not responsible for purchasing fund certificates from investors.

5. Suspend fund certificates transaction

Fund certificates will be suspended when terminating the fund’s operations as stated in the Regulations on organization and operation of VF1 without the decision on extension from the Annual General Meeting of Investors or when terminating the fund’s operation before due date decided by the Annual General Meeting of Investors.



Transaction price and volume of fund certificates extraordinarily fluctuate.

Severe violation on information disclosure according to law.

Business operation of VF1 causes loss in 02 consecutive years.

When the State Securities Committee or Securities Trading Center find it necessary to protect investors’ interests or to secure stable market’s operation.

6. Conflicts of interest between different funds and other financial products The services of VFM to the Fund are not exclusive. While VFM itself does not render services to other companies at the current time, it may do so in the future. However, the control of these conflicts of interest is possible based on the following policies:

1) Funds and other financial products offered by VFM have to be separated in:

a. Operating personnel and structure;

b. Investment targets and strategy;

c. Management of assets.

2) When there is a conflict of interest between the Funds and other financial products offered by the Fund, the investment will be made based on:

a. Investment target for each fund;

b. Restrictions for each sector (no more than 30% of the total assets can be invested in 1 sector);

c. Percentage of free capital of each fund or each financial product.

7. Financial reporting standards Vietfund Management is responsible for making periodical financial reports on business operational results and financial situation of the fund as well as other necessary reports on investment situation.

1) Financial Report

Financial reports will be independently audited by selected auditors every year. Copies of auditing and performance reports of the Fund must be sent to each of the Board of Fund’s Representatives and to each investors of the Fund.

Fund Management Company must comply with regulations of the State Securities Committee on auditing reports.

2) Other reports

Fund Management Company must comply with regulations of the State Securities Committee on information disclosure and on VF1’s business operations report.



RISK FACTORS Neither banks nor organizations commit guarantee investment into a fund, nor firm commitment from the fund on reaching their targets.

Investing into a securities fund means targeting long-term income. Investors should not expect short-term income from this kind of investment.

Prospective investors should be aware of some, not all risk factors relating to VF1 investment fund. These include:

8. Risk on system

When there is economic crisis, financial market in general and securities market in particular will be directly affected. This will also influence the effect of VF1’s investment items. Thanks to appropriate macroscopic operational policy, the Vietnam economy has been fairly stable in the recent years compared to other the economy of other countries in the region and all over the world

9. Risk on market interest

The risk appears when there is an increase on market interest, resulting in devaluing of stable income from such investment items as company bonds, government bonds, dividend preferential stocks, especially those investment of long-term fall due.

Market interest of Vietnam has been floating for many years, however thanks to appropriate policy on running the monetary market, the interest just slighty fluctuated and did not create disorders to VF1’s investment in the recent time.

10. Risk on failure to settle payment

This risk arises when issuer or underwriter in the capital raise of credit stocks fails to settle payment at due date and interest as well as original debts. Vietnam lacks of intermediate financial organizations which are responsible for evaluating trusting limit of enterprises and economical organizations. In order to minimize the risk, VF1 Investment fund will focus on investing in government bonds, local bonds and company bonds of high liquidity along with applying a diversified portfolio.

11. Risk on liquidity

A considerable percentrage of the Fund’s total asset are invested in privatized and joint-stock enterprises while there is not yet an official transaction bourse for unlisted stocks. Therefore, stocks of low liquidity will be a difficulty for disbursement and influence the Fund’s performance. To increase liquidity, VF1 investment fund will prefer stocks of good enterprises with famous trade name, big capital scale, good performance and high potential of listing.

As for VF1’s investors, limited liquidity will affect transaction price of fund certificates. However, the risk may be limited as VF1 fund certificates are listed stocks and augmented charter capital will be listed in HoSTC.

12. Risk on centralized investment

VF1 Investment Fund may invest more than 5% of its asset into a portfolio in order to catch investment opportunities; therefore, there are potential risks on this centralized investment. However, in order to minimize risk to the fund’s total net asset, we invest in various kinds of asset from different sectors, apply balanced portfolio and limited investment propotion regulated by legal documents on public investment fund and by charter on the fund’s operations.

13. Competition A large number of equity companies, institutions and other investors are active in seeking private equity investments in Vietnam. Competition for a limited number of attractive investment opportunities may lead to a delay in investment and may increase the price at which investments may be made and reduce the potential profits. However, thanks to support from the two joint-venture partners, Dragon Capital Management and Sacombank, both of which have more than 10 years of experience in the capital market of Vietnam, VFM has a competitive edge over other investors in this area.



14. Legal System

VF1’s area of operations are rather delicate and have strong effects on securities market as well as social economy. For this reason, VF1’s actions are not only regulated by nominative acts but also by system of under-law acts from the State Securities Committee. Thus, any change or supplement from underlaw acts will directly influence all VF1’s activities. However, with the transparent financial situation, experience in management – operation – control through a long time of operating and listing in HoSTC, VF1 Investment Fund will swiftly adopt to these changes and supplements.

15. Management risks

These risks originate from company management. This leads to the consequence that VF1 investment has not reached its proposed goal. In order to minimize management risk, VFM will apply modern business management process, employ staff with professional ability and decentralize investment with the foundation of Investment Board including senior leaders of VFM. Besides, there is compliment supervision from Custodian as well.

16. Risk on declining net asset value of the Fund

The risk generates from price reduction of stocks on OTC market and on official bourse invested by VF1. In this case, NAV of the fund will be reduced and directly influence VF1’s market price. However, the risk may be limited thanks to VF1’s balance portfolio of and its investment on stocks of high potential growth and good operational results.

17. Risk on fluctuation of NAV and transaction price of fund certificate after capital increase

Owing to the issue of fund certificates with par value price in the capital raise, net asset value of the fund will be declined at the end of the issue. The decrease of NAV will affect transaction price of VF1 fund certificates in the market. The risk will influence on individual investors when the market price of VF1 fund certificates strongly fluctuates and on those who buy VF1 with high price to get the rights to buy fund certificates in this issuance. For this reason, in order to protect individual investors from the fluctuation of the market price of fund certificate after the issuance, together with the price variation in the securities market, Vietfund Management recommend that individual investors consider carefully before deciding to invest in VF1 Investment Fund.



CONTACT INFO

VF1 Investment fund certificates will be issued at:

Vietfund Management (VFM)

Head Office: 8th Floor, Bitexco Tower, 19 – 25 Nguyen Hue, Distric 1, HCMC Tel: 08-914 3393 Fax: 08-914 3392 Branch Office: 7th Floor, Sacombank Tower, 88 Ly Thuong Kiet, Hoan Kiem District, Ha Noi Tel: 04-942 8168 Fax: 04-942 8169