VinaCapital Vietnam Opportunity Fund (VOF)

VOF is a Guernsey-incorporated company with limited liability. VOF is traded on the Main Market of the London Stock Exchange. The company is a closed-end investment company that does not have any staff but does have a board of directors who are all independent of the investment managers.

VOF is managed by VinaCapital Investment Management Limited (“VCIM”), a company incorporated in the Cayman Islands. VCIM has entered into an agreement with VinaCapital Fund Management JSC (“VCFM”), an affiliate of VCIM and a fully licensed fund management company domiciled in Vietnam, to delegate certain investment management and advisory activities.

VCFM is regulated by the State Securities Commission of Vietnam (“SSC”). The SSC belongs to the International Organization of Securities Commissions (“IOSCO”), of which the UK and US security commissions are also participating members.

Andy Ho.

The Board is responsible for managing the Company on behalf of its shareholders. To create and deliver sustainable shareholder value, the Board must establish the objectives and policies of the Company, set the overall strategic direction and ensure it is delivered within an appropriate framework of reward, incentive and control. The Board has at least four scheduled Board meetings each year and uses a structured agenda to ensure all key areas are reviewed over the course of the year.

Certain responsibilities of the Board are delegated to Board Committees to assist the Board in carrying out its functions and to ensure independent oversight of internal control and risk management. Each Board Committee’s terms of reference set out the specific matters for which delegated authority has been given.

The Board has four committees in operation:

• The Audit Committee, which meets at least three times a year, comprises all the Directors and is chaired by Mr Evans. The Audit Committee is responsible for monitoring the process of production and ensuring the integrity of the Company’s accounts and advises the Board that the accounts are fair, balanced and understandable. One of the responsibilities of the Audit Committee is to oversee the relationship with the External Auditor. In discharging its responsibility to oversee the External Auditor’s independence, the Audit Committee considers whether any other engagements provided by the auditor will have an effect on, or perception of, compromising the External Auditor’s independence and objectivity. The performance of services outside of external audit must be specific and approved by the Audit Committee Chairman.
• The Audit Committee is also responsible for recommending to the Board the valuation of investments. In seeking to determine the fair value of the Company’s real estate and private equity investments, the Committee reviews the reports of independent valuation specialists as well as reviewing the Investment Manager’s valuation process. Each individual valuation is reviewed in detail and the recommendations of the independent valuers may be accepted or modified. The Committee approves the fair value of investments used to prepare the Financial Statements.
  The Management Engagement Committee comprises all of the Directors and is chaired by Mr Adams. The Committee’s responsibilities include: reviewing the performance of the Investment Manager under the Investment Management Agreement and to consider any variation to the terms of the agreement. The Management Engagement Committee also reviews the performance of the Company Secretary, Corporate Brokers, Custodian, Administrator and Registrar and any matters concerning their respective agreements with the Company. The IMA between the Company and the Investment Manager sets out the limits of the Investment Manager’s authority, beyond which Board approval is required. The Board has also agreed detailed investment guidelines with the Investment Manager, which are considered at each Board meeting. Representatives of the Investment Manager attend each meeting of the Board to address questions on specific matters and to seek approval for specific transactions which the Investment Manager is required to refer to the Board.
• The Remuneration Committee comprises all of the Directors and is chaired by Ms Dam. The Committee’s responsibilities include: recommending to the Board the policy for the remuneration of the Company’s Chairman, the Audit Committee Chairman and the remaining non-executive Directors, and reviewing the ongoing appropriateness and relevance of the remuneration policy; determining the individual remuneration of each non-executive Director; agreeing the policy for authorising Directors’ expenses claims; and the selection and appointment of any remuneration consultants who advise the Committee.
• The Nomination Committee comprises all of the Directors and is chaired by Mr Bates. The Committee’s responsibilities include: reviewing the structure, size and composition of the Board and making recommendations to the Board in respect of any changes; succession planning for the Chairman and the remaining nonexecutive Directors; making recommendations to the Board concerning the membership and chairmanship of the Board committees; identifying and nominating for the approval of the Board candidates to fill Board vacancies; and, before any new appointment is recommended, evaluating the balance of skills, knowledge, experience and diversity within the Board and preparing an appropriate role description.

VOF has an independent board of directors, who endeavour to ensure that VOF complies with relevant best practice corporate governance frameworks, such as the UK Corporate Governance Code (the Code) and the Association of Investment Companies Code of Corporate Governance (the AIC Code), which adapts the Code specifically for investment companies.

VOF is subject to the rules and regulations for investment companies trading on the Main Market of the London Stock Exchange (LSE). The Listing Rules are set by the UK Listing Authority and are available at: www.handbook.fca.org.uk/handbook/LR/.VOF is also subject to the UK Disclosure and Transparency Rules, which are available at: www.handbook.fca.org.uk/handbook/DTR/. These rules and regulations provide for a high degree of transparency and disclosure, which collectively help to protect investor interests.

NAV is calculated on a daily, weekly and monthly basis, and public announcements are made accordingly.

The estimated daily NAV is prepared by the Investment Manager, and is based on estimated valuations and, accordingly, the Company accepts no responsibility for the accuracy of the estimated daily NAV given, and neither is any responsibility implied. The actual month-end NAV in any month may vary from the estimated daily NAV’s provided in the relevant month. Accordingly, no reliance should be placed on the estimated daily NAV and it has been provided for indicative purposes only. The Company’s unaudited NAV as at the end of each month is published on or around the 10th of each month.

The estimated weekly NAV is prepared by the Company’s Administrator and reviewed by the Investment Manager, and is based on estimated valuations and, accordingly, the Company accepts no responsibility for the accuracy of the estimated weekly NAV given, and neither is any responsibility implied. The actual month end NAV in any month may vary from the estimated weekly NAVs provided in the relevant month. Accordingly, no reliance should be placed on the estimated weekly NAV and it has been provided for indicative purposes only. The Company’s unaudited NAV as at the end of each month is published on or around the 10th of each month.

The monthly reported unaudited, estimated NAV is prepared by the Company’s Administrator and reviewed by the Investment Manager. It may vary from the estimated weekly NAV announcements that are produced by the Administrator and reviewed by the Manager, which are based on estimated valuations.

The estimated daily, weekly and monthly NAV’s are prepared based on the following valuation guidelines:

• Listed equities are marked to market, based on the closing price of the most recent trading day for the day, week or month-end, provided by the Vietnam stock exchanges (the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange).
• Unlisted securities include over-the-counter (OTC) traded securities and unlisted securities publicly traded on the Unlisted Public Companies Market (UPCoM) of the Hanoi Stock Exchange. These holdings are marked-to-market on the same basis as listed equities. Where this valuation approach is not available, unlisted securities valuations are based on the average of up to three independent broker quotes for the last trading day of the prior week or month-end, or where these are unavailable, the last available price.
• Non-publicly traded investments, including private equity and direct real estate investments, and operating assets are valued based on the last available valuation as approved by the Audit Committee, which may be adjusted for any impairment, loss or disposal.
  The valuation of cash positions is based on cash in the Company’s bank accounts at the close of the most recent trading day, week or month-end, and is adjusted for receivables and accruals.
• The Vietnam Dong (VND) foreign exchange rate is the daily reference rate provided by Vietcombank as of the date of the NAV. The British Sterling (GBP) and US Dollar (USD) exchange rates are based on the Bloomberg reference rate of the same day.

The market value of the ordinary shares can fluctuate. Share price, as well as being affected by NAV per share, also takes into account the relevant dividend yield and prevailing interest rates and market sentiment. As such, share price may vary considerably from the underlying NAV, creating a discount or a premium. The greater the difference between share price and NAV, the greater is the discount or premium. VOF has over its history traded at both a premium and a discount.

The Company’s objective is to achieve medium to long-term returns through investment either in Vietnam or in companies with a substantial majority of their assets, operations, revenues or income in, or derived from, Vietnam.

The managers follow a rigorous process in sourcing, analysing and making investments for VOF. The fund managers have extensive networks and knowledge of Vietnam that they leverage to identify investment opportunities. Once such an opportunity has been identified, the fund managers conduct careful analysis of the company (including strategy, operations, financials, management and risks), and the sector in which it operates. The fund manager’s analysis also includes consultation with the Investment Committee and the investment manager’s Risk Management Committee to ensure that all risks are identified and properly considered. The analysis is presented to the VOF Investment Committee for review and approval; only those opportunities approved by the Investment Committee will be executed. After investing into a company, the fund managers continue to monitor the company to keep apprised of its operational and financial performance, and, where appropriate, to offer assistance to enhance its effectiveness. In some cases, the fund managers will serve as Board and Committee members for investee companies. Throughout the investment cycle, the fund managers actively seek exit opportunities that will allow VOF to meet or exceed target returns. VOF exits investments primarily by selling shares on the stock exchange, or by selling to other investors (i.e., trade sale).

More information about our Investment Policy may be found at http://vof.vinacapital.com/investment-approach-and-policies/.

30 June.

The Vietnam Index (VN Index) tracks the performance of the Ho Chi Minh City Stock Exchange and is therefore a comparable index for VOF’s capital markets portfolio. However, such a comparison is imperfect given VOF’s holdings in private equity as well as listed equity investments.

Investors should be cognizant of a range of potential risks associated with investing in the funds, including Vietnamese market risk, foreign exchange, changing investor sentiment, investment performance, and valuation. A detailed discussion about these and other risks, as well as mitigating actions the Company takes, may be found in our annual report.

VOF publishes monthly, interim, and annual reports, as well as public announcements when events warrant. You may sign up for email updates from links on our home page, or by sending an email with your contact information to ir@vinacapital.com.

Yes. On 17 August 2017, the Company announced a change in its dividend policy and declared its first dividend. The Board now intends that the Company will pay a dividend representing approximately 1% of NAV twice each year, normally declared in April and October.

Yes. VOF is actively engaged in share buybacks.

The manager receives a base fee of 1.5% of NAV. Incentive fees are based on two separate pools of investments: direct real estate and all other investments. The incentive fee paid equates to 15% of the increase in the NAV of each pool during the year over a hurdle of 8%. The total amount of incentive fees paid in any one year is capped at 1.5% of the pool’s NAV. More information about fees may be found in our annual report at http://vof.vinacapital.com/wp-content/uploads/sites/2/2017/12/VOF_ANU-2017.pdf.

VOF is a widely held company. A list of top shareholders is published on our website at http://vof.vinacapital.com/shareholder-information/. However, most shares are held via nominees, and the end holders of these shares are often unknown.

As the Company’s shares are traded on the Main Market of the London Stock Exchange, every member shall comply with the notification and disclosure requirements set out in Chapter 5 of the Disclosure and Transparency Rules Sourcebook of the UK Financial Services Authority Handbook as if the Company were classed as an ‘issuer’ whose ‘home state’ is the United Kingdom. If it comes to the attention of the Directors that a member has not within the requisite period disclosed their holding in the Company, the Company may, inter alia, at the discretion of the Directors, notify the member that their shares in relation to the holding shall not be entitled to a vote, either in person or in proxy, at any general meeting of the Company.

The manager therefore asks all shareholders to contact and inform us of their investments in VOF. Furthermore, all shareholders of more than 3% are required to report their shareholdings to the Company for announcement on the Regulatory News Service. These shareholders are also required to notify the Company on any change in shareholding of plus or minus 1% of the total shares of the Company.

Yes, the investment manager, VinaCapital Investment Management Ltd (VCIM), and other related parties, such as board members and executives of VCIM hold shares in VOF. The latest holding information can be found on our website at Shareholder Information.

VOF is domiciled in Guernsey. Under the current laws of Guernsey, there is no income, state, corporation, capital gains or other taxes payable by the Company. The majority of the Company’s subsidiaries are domiciled in the British Virgin Islands (BVI) and so have a tax exempt status. Some of the subsidiaries are established in Singapore and have offshore operations in Vietnam. The income from these offshore operations is also tax exempt in Singapore. A small number of subsidiaries are established in Vietnam and are subject to corporate income tax in Vietnam.

The treatment of VOF for tax purposes depends on each investor’s specific situation. Although VOF operates in many respects as a fund, we understand that investors in some European jurisdictions classify VOF as a company for tax purposes, on the basis that investors have no short-term redemption rights. Please consult your tax advisor for more specific details in respect to this matter.

The company was incorporated on 14 March 2003 with the registration number CR­ 124038 and with the name Vietnam Millennium Fund Limited. On 17 July 2003 the Company changed its name to Vietnam Opportunity Fund Limited. On 30 September 2003 the Company was admitted to trading on the AIM. The Company changed its name to VinaCapital Vietnam Opportunity Fund Ltd on 11 November 2008.

The Company migrated to Guernsey on 22 March 2016 and has Guernsey registration number 61765. The Company’s registered office is at P.O. Box 255 Trafalgar Court Les Banques St Peter Port GUERNSEY GY1 3QL.

On 30 March 2016 the Company cancelled its listing on AIM and was admitted to trading on the Main Market of the London Stock Exchange.

The VOF Memorandum and Articles of Association can be found at on our website at http://vof.vinacapital.com/wp-content/uploads/sites/2/2017/12/INCORPORATION-Certified-Copies-of-the-Articles-of-Incorporation-22-03-2016.pdf.

VOF shares trade on the Main Market of the London Stock Exchange. Your broker should be able to access this market and purchase shares. Investors in some jurisdictions, such as the United States, may need a certified investor status before purchasing shares. Please contact your broker for more details.

More information about how to invest is available at http://vof.vinacapital.com/how-to-invest/.

Information, regulatory news, fund reports and updates are available on the company website at vof.vinacapital.com, via the VOF page on the London Stock Exchange website, as well as a variety of other sources, including Bloomberg (VOF:LN) and Yahoo! Finance (VOF.L).

VOF’s investor relations team can be contacted on +84 28 3821 9930 or via email at ir@vinacapital.com.