2. CONTENTS
Chairperson’s Statement ....................................................... 3
Macro review ................................................................................... 4
Healthcare sector review ...................................................... 6
Fund Director’s Message ....................................................... 7
Historical Performance ........................................................... 8
Portfolio Summary ..................................................................... 10
Financial Statements ................................................................ 14
Report of the independent auditors .......................... 15
Statement of fund management ................................. 16
Approval of the financial statements . ....................... 17
Balance sheet ................................................................................. 18
Statement of assets .................................................................. 18
Statement of income for the period ........................... 19
Statement of changes in net assets ........................... 19
Statement of investment portfolio .............................. 20
Notes to the financial statements ................................. 21
Important Note:
This Annual Report is published to the Investors of Viet Capital Healthcare Fund (Fund). This Report carries a variety of
information which is all for informational purposes only and not based on the particular circumstances of any addressee.
The information herein is not construed an offer or solicitation to buy or sell the Fund Certificate or other securities in
the Fund’s portfolio nor is it construed an advice or an expression of VCAM view as to whether a particular security or
financial instrument is suitable or appropriate for the addressee and meets his/her financial or any other objectives. As
a result, VCAM shall not be liable for any loss and/or damages regarding results from its usage. The Investors should
therefore not rely solely on this Report and should obtain separate legal or financial advice in evaluating whether or
not to buy or sell any securities or other financial instruments, including the Fund Certificate and other securities of the
Fund’s portfolio. All the figures are quoted in Vietnam Dong unless stated otherwise. Some figures may not total due to
rounding effect.
3. Chairperson’s Statement
Dear Valued Investor,
The year 2008 has seen a dramatic and painful decline in
both international and domestic stock markets, and our
funds have not been spared from the turmoil. Being an
investor in these difficult times can be unsettling because As painful as this downturn is, it has created attractive
there seem to be few safe havens from the uncertainty opportunities for investors who can see beyond the
created by the dramatic global downturn. Prudent risk- fear. We continue to believe in the prospect of the
management strategies such as diversification and high- domestic Vietnam economy, and we are using our rigorous
quality stock screening may have helped reduce losses, understanding of the market to position ourselves for
but they certainly could not fully avoid them as the capitalizing on the opportunities in it. Our business is
breadth and depth of the decline was broad-based and managing our investors’ assets, and our long-term success
systematic. is tied to our maximizing the value of our investors’
portfolio.
In times like these, taking a step back to gain perspective
and to absorb the lessons learned is important. Experience Please take a moment to read our annual report. Your
has shown us that the importance of top down economic fund’s director provides a candid assessment of recent
analysis cannot be underestimated, especially for a frontier performance which will help you understand how the fund
market like Vietnam – where the contagion effect can be is managed, and our perspectives for the upcoming year.
dramatically stronger, and market confidence is more fragile We know it has been a very difficult year for equity investors,
and vulnerable to shocks. We have learned that during and we thank you for your support and confidence in Viet
such financial downturns, emotional responses do not Capital. We look forward to your feedback, and we will
produce good results and succumbing to the prevailing fear is continue to work hard to outperform the market and your
not prudent. Rather, maintaining a long-term perspective, expectations.
staying focused on fundamentals, and having discipline
are the keys to overcome such a systemic crisis.
This is what we are currently doing at Viet Capital. Our
research team rigorously analyzes global markets to indentify
trends and important factors that will have an effect on the
domestic economy. Meanwhile, our experienced team of Phuong Nguyen
analysts and portfolio managers continually examines our Chairperson
portfolio holdings to make sure each of our funds’ holdings April 20th, 2009
still adhere to our core investment strategy and fit into our
value model in this market environment. Before we revise
our outlook or make a decision to buy or sell any position,
we rely on our own proprietary research and internal
investment process. This disciplined approach is a core
part of our values and what we expect to differentiate our
performance over the long-term.
Annual R epor t 2008 3
4. Macro Review
A year ago, it would have been hard to imagine that a “Black
Swan” was lurking global financial markets – one of the steepest
and most unpredictable declines in a generation. While year 2007
ended with healthy worldwide economic expansions, year 2008
ended with a global confession that the world economy has
entered the worst recession since the Great Depression.
The most significant contributor to the global recession is a fragile economy that had been suffering since December
the liquidity crisis that grew out of the US subprime mortgage 2007 – the official start month of the US recession as
meltdown in mid-2007 and intensified markedly during defined by the National Bureau of Economics Research.
2008. The bursting of the US housing market triggered a European and Asian economies deteriorated as well.
sharp increase in mortgage delinquencies and foreclosures The UK faced bank failures, weak housing market and
which in turn led to hundreds of billions of dollars in financial growing unemployment rate. Germany’s exports slumped in
losses and write-downs on mortgage-related securities. response to weakening status of emerging markets. In
The scale and magnitude of the losses magnified in the meantime, Japan was still in face with deflationary
September of 2008 when Lehman Brothers filed for pressures while consumption slowed down visibly in China.
bankruptcy and several other major-league institutions -
including Merrill Lynch, Goldman Sachs, Fortis and AIG – Condition of the Vietnamese economy in 2008 was
avoided bankruptcy by either seeking federal assistance similarly challenging. During the first half of the year, prices
or accepting takeover offers from competitors. of commodities, food and energy surged, with many
Governments around the world responded with aggressive commodities reaching all-time highs; trade deficit stemmed
and unprecedented level of intervention – all with the from dependence on external supplies of input material
goal of restoring global confidence against the backdrop for the economy escalating to USD 14.2 billion in first six
of systemic weaknesses and unbalances stemming from months. These factors had led to the risk of skyrocketing
dependency on US trade and budget deficits, lax control inflation. Overheated credit growth, excessive capital
over banking system and derivatives market, overleveraged inflows together with growing real estate market bubble
corporate and private sectors. further facilitated the rise in consumer price index. In
response, the State Bank of Vietnam implemented
Collapsing financial markets had a cascading effect aggressive tightening monetary policies by forcing banks
and took their toll on real economies worldwide. buying treasury bonds and raising interest rates and
Unemployment rose dramatically in the US, weighting on required reserves. The measures took effect but have
4 Vi e t Ca p it a l H ea l thc a re Fun d
5. also put the banking system in a liquidity crisis which the economy’s structural issues, aggressive monetary
immediately spread to consumers and enterprises, policy have driven down the market during the first
in turn led to meltdown of the stock market, falling half of the 2008, ashes of US subprime mortgage crisis
property market prices and rising bad debt in the pushed the Vietnam stock market over the cliff during
banking system. Despite the difficulties, the banking the last months of 2008. High cost of borrowing, frozen
system was still able to successfully override the property market and low aggregate demand deteriorated
economic storm thanks to Government’s guarantee that corporate earnings growth. Worse, the meltdown of the
no bank in the system will collapse. stock market further weighted on earnings of companies
involved with financial investments. Around 30% of
During the second half of the year and especially after listed companies on HOSE and HASTC bourses posted
September 2008, the domestic economy took a drastic negative year-on-year earnings growth in 2008. By the
turn along with the rest of the world. Commodity prices end of year 2008, many companies traded at 4 to 5 times
plummeted back to earth, consumption decreased lower than their 52 week high.
dramatically and exports started declining as global
demand waned. As consequences, inflation eased; trade Although the fundamentals of Vietnam economy are still
deficit gap narrowed with USD 17.5 billion at year end; solid: high social stability, inflation under control and
FDI – which reached a record high of USD 64 billion stable banking system supported by pretty flexible and
registered and USD 11.5 billion disbursed – showed appropriate economic policies by the Government, the
signs of contraction as global risk aversion skyrocketed. 2009 year ahead will be a challenging year for Vietnam
Government policies were quickly switched from tightening economy and stock market. Weaker international and
to loosening monetary and fiscal policies to deal with domestic demands, higher unemployment, exhaustion
the risk of slower growth. As a result, banking system of private investments and rising protectionism will
was provided with adequate liquidity, interest declined finally have impacts on economic growth and corporate
and many companies especially real estate ones avoided profitability.
a collapse.
Vietnam economy ended year 2008 with real GDP growth
for the year was 6.2% instead of the previously planned
8.0%; CPI ended at 20.0% from the peak of 28.3%; the
USD/VND exchange rate stabilized at 17,200-17,500 due
to stable FX policy, relatively solid foreign reserve and
the country’s low short-term external debt.
Given difficulties in the domestic and global macro
economy, domestic equities spent most of the year on
a downward trajectory that grew steeper as the year
progressed. For the year-end, domestic equity indices
were down approximately 66%. While anxiousness for
Annual R epor t 2008 5
6. Healthcare sector Review
The spread of global economy recession in 2008 posed adversely
impacts upon the Vietnam economy. Healthcare sector, however,
proved to be a defensive sector as its organic growth remained
strong and stable at double digit number.
In 2008, local demand for healthcare was still on the Hospital and medical treatment activities on the other
rise and consumption per capita reached USD14.2, an hand remarked many changes in the year. Robust growth,
increased by 18% yoy. Sector output accelerated by supported by exemptions of investment, taxation policies
15.5%, in which leading companies such as Hau Giang attracted experienced corporation to invest in hospital,
Pharmaceutical JSC, Imexpharm, and Domesco achieved clinic, and healthcare equipment in Viet Nam.
the rate of 16% on average. From 2009 onwards,
Healthcare sector is expected to keep its growth at the The year 2008 continued to witness the problem of
pace of 15%-18%, according to the Ministry of Health. overcrowded hospitals, raising a significant challenge
for the healthcare sector in recent years, particularly at
Nevertheless, volatility of foreign exchange and material central state-owned hospitals and in big cities many
price caused difficulties for firms, especially in managing of which have obsolete medical equipments. The
and controlling materials, inventories. Besides, tightening overload reduces service quality, and raises the needs for
monetary policy also furthered the borrowing cost, and replacement of machines and equipments. Moreover,
thus restrained many firms from expanding. along with the fact that GDP per capita has increased
significantly to nearly USD1,000, consumer spending for
In term of WTO compliance, Vietnam has opened one healthcare also rose by 18% yoy. These conditions add in
step further of the pharmaceutical market by allowing more demands for quality and premium health services.
foreigners to engage in import and export pharmaceutical
products directly, which resulted in lower price of imported Moving on to 2009, there are still challenges facing the
drugs. This may accelerate market competition, but the healthcare sector. However, fundamentals such as lower
competition in turn also helped firms to realize their core materials price and stable interest rate show significant
competencies, stay focused on competitive products and improvement and serve as supporting forces. Besides, with
strengthen distribution channels, a crucial factor as at the help from the Government stimulus package that have
the time. come in handy, firms are able to continuing their expansion
plans and improve operation. In mid and long-term, GDP
growth and public spending on healthcare will be key drivers
to help sustaining growth of the sector in Viet Nam.
6 Vi e t Ca p it a l H ea l thc a re Fun d
7. Fund Director’s Message
As at 2008 financial year ended,
VCHF was in an excellent position
to continue its strong perfor-
mance, with a solid portfolio and
the availability of cash.
We are pleased to present the annual financial statements The strategy for the year 2009 will be to invest in selected
of Viet Capital Healthcare Fund (VCHF) for the year ended projects in the Vietnam’s top portfolio of operating/ growth
31 December 2008. assets in pharmaceutical and hospital sector.
The closing of the FY 2008 also marked the first year of While recognizing the challenges posed by the current
operation of the VCHF. The first birthday of the VCHF global and domestic environment, the fund manager
celebrated with a remarkable increase of net asset value believes the strong prospect of VCHF in the future, taking
(NAV) at 31 December 2008 to 511 billion VND, a 2% into account the persistent growth of the healthcare
increase when it started (500 billion) or even better a 4% industry. With the strong team on the ground and the
increase comparing to cash available for investment (492 strong pipelines lining up in 2009, VCHF will continue its
billion VND after netting off placement fee). This is quite an investment strategies and its path of growth.
achievable given the stock market affected by the economy
through a period of sharp adjustments to combat high Thank you for your support.
inflation and a rising trade deficit.
During 2008, VCHF has not only placed a strong foothold
in a number of top tier pharmaceutical companies but also
secured investment opportunities in top operating hospital/
clinic projects. The disbursements as at 31 December
2008 accounted for more than 30% of the fund asset. The
disbursement of the fund asset in 2008 reflects the prudent Tuan Pham
approach of the fund manager in considering the severe Viet Capial Healthcare Fund Director
impact of the global financial crisis to the Vietnam economy April 20th, 2009
in general and to the healthcare sector particularly. The
aim goal of which is to protect shareholders’ value.
Annual R epor t 2008 7
8. Historical Performance
- 63% 4% 511Bil
Index loss 2008 NAV gain 2008 NAV 2008
VCHF’s Monthly Performance in 2008
Pharma Index NAV VN-Index
150
100 100 103 104
100
73 67
57
61 48
50
47 54
37
Jun Mar Jun Sep Dec
The year 2008 was extremely difficult for Vietnam equity market with severe effect from global economy crisis,
reversed commodity price, volatility in interest rate and exchange rate. While both VN-Index and Pharma Index have
lost more than 50% since January, VCHF has delivered a positive return of 4%.
(The Pharma-index has been calculated by VCAM based on the market capitalization weighted prices of listed pharmaceutical stocks)
Net Asset Value (NAV) of VCHF in 2008
520
511
510
505 506
501
500 499
498
497
493 494 494 492 493
490
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Thanks to reasonable strategy, the Fund’s asset has been well protected against the market downturn. The Fund has
successfully disbursed 30% of total asset into strong fundamental stocks and government bond at good prices.
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD VNIndex
2008 0.2% 0.1% 0.6% -0.9% 0.2% 1.1% 1.3% 0.2% -1% -0.6% 2.6% 4% -63%
The return is calculated on month by month basis. The YTD figures represent the annual return.
8 Vi e t Ca p it a l H ea l thc a re Fun d
9.
10. Portfolio Summary
Summary of Asset Allocation in 2008
2% 10%
4% 4% 5%
Cash
Bond 14%
Listed
OTC
96% 94% 71%
1000 844
VN-Index
HASTC 500 399
294 316
113 106
Jan/08 Jun/08 Dec/08
Allocation by Sector
Cash 70.6%
Government 9.8%
Bond
Functional 0.5%
food
Pharmaceuticals 19.1%
0% 20% 40% 60% 80%
10 Vi e t Ca p it a l H ea l thc a re Fun d
11. Major Movement in 2008 Action Effect Top Holding Investment Type %
DHG Buy + DHG Listed 6.5
IMP Buy - IMP Listed 3.9
DMC Buy - DMC Listed 3.4
Mekophar Buy - Mekophar OTC 2.5
Bidiphar Buy - Bidiphar OTC 2.0
Vinh Hao Buy - Vinh Hao OTC 0.5
Bond Buy + Bond Government Bond 9.8
(*) The effect on NAV is calculated by comparing the
buying/selling price and the market price on 31/12/2008
Top Gain/Loss % NAV
Bond 1.5
DHG 0.26
Mekophar - 2.95
OPC - 1.4
IMP - 1.33
DMC - 1.03
Bidiphar - 0.5
Including realized and unrealized gain/loss at 31/12/2008 base
on the NAV at 492.5
Annual R epor t 2008 11
12. Portfolio Summary (cont.)
Equity
DHG Company IMP Company
Year 2008 Year 2008
Charter 200 bil Charter 116,6 bil
Revenue 1,513 bil Revenue 561 bil
Earnings 137 bil Earnings 59 bil
ROE 18% ROE 12%
Debt ratio 1% Debt ratio 1.1%
Next year Earnings 150 bil Next year Earnings 65 bil
Hau Giang is a leading enterprise in the pharmaceutical Imexpharm is the runner up market player who has seen
sector with annual sale accounting for more than 10% stable sale growth hovering around 20% over the last three
domestic production volume of the market. The key years. Imexpharm positions itself in this highly fragmented
competitive advantage of the company lies beneath its market by serious investment in production quality.
nationwide distribution system which has been firmly
established, effective controlled and developed. The company undertakes license production and joint
venture with prestigious multinational manufacturers
In 2008, despite unfavorable market conditions, the to strengthen its product quality competitiveness.
company managed to sustain sale growth at 19%, highest In late 2009, Imexpharm will inaugurate a high-tech
among the industry players, and slightly improved profit Cephalosporin in VSIP II. Products from the factory are
margin from 9.0% to 9.1%. The company has invested in expected to contribute as much as 30% to current sales
a 200 Billion factory with more advanced technology to volume.
expand capacity and meet increasing market demand.
Mekophar Company Bidiphar 1
Year 2008 Year 2008
Charter 92.1 bil Charter 70 bil
Revenue 598 bil Revenue 150 bil
Earnings 61 bil Earnings 15 bil
ROE 16.4% ROE 18 %
Debt ratio 8% Debt ratio 0%
Next year Earnings 64 bil Next year Earnings 22 bil
Mekophar is a prestigious manufacturer in the industry Bidiphar 1, previously a manufacturing base of Bidiphar
and a business leader in Ho Chi Minh city. Mekophar has (the parent company), was just privatized in April 2008 but
a strong competitive advantage in the anti-biotic material the company has started making good profit. Bidiphar is
production which so far no other local peers have been the biggest company in the central region of Vietnam with
able to undertake. advanced production technology and a strong distribution
network.
In recent years, Mekophar has made some strategic
horizontal expansion into related sector as hospital and The company also produces medical products such as
laboratory service. The company has ownership in An Sinh syringes and infusion sets that are widely used in the public
Hospital and Mekostem cell bank. hospital system. The investment of VCHF into Bidiphar 1
as a strategic investor also promises attractive investment
opportunity into Bidiphar, the parent company in the near
future.
12 Vi e t Ca p it a l H ea l thc a re Fun d
13. Fixed income
DMC Company Government Bond
Year 2008 Year 2008
Charter 137.7 bil Date of purchase 17/07/08
Revenue 938 bil Maturity day 19/12/09
Earnings 63 bil Coupon rate 7.9%
ROE 14% YTM at purchase price 20%
Debt ratio 7% Market equiv. yield 8%
Next year Earnings 65 bil
DMC is among top players in the pharmaceutical The 50 billion face value of Government bond was bought
industry with a diversified product portfolio, including in the period when interest rate was escalating and we
self-manufactured products (200) and trading ones (126). intend to hold it until maturity.
The company’s key products are: antibiotics, analgetics,
antiseptics and cardiovascular drugs. DMC has a good brand
name with 3 factories already certified GMP-WHO. Thanks
to possessing a large distribution network, the company
takes advantage of introducing new products in the market
and developing its strategy toward high margin products.
In 2008, despite difficulties of the economy, DMC achieved
its target of profit and revenue. In 2009, the company’s
profit is expected to fluctuate at around VND 65 bil due to
the tax effect.
Annual R epor t 2008 13
14. Financial Statements
for the period from 15 January 2008 (date of establishment) to 31 December 2008
Viet Capital Healthcare Fund
General Information
Registration Establishment Certificate: 08/TB-UBCK 15 January 2008
The Registration Establishment Certificate was issued by the State
Securities Commission and is valid for 6 years..
Fund Representative Committee: Phan Thanh Hai Chairman
Truong Hoang Luong Member
Nguyen Thuy Trang Member
Fund Management Company: Viet Capital Asset Management Joint Stock Company (formerly known as
Viet Capital Fund Management Joint Stock Company)
Supervising Bank: HSBC Bank (Vietnam) Ltd., (formerly known as “The Hongkong and Shanghai
Banking Corporation Limited - Ho Chi Minh City Branch”)
Đơn vị kiểm toán: KPMG Limited
Vietnam
14 Vi e t Ca p it a l H ea l thc a re Fun d
15. Report of the Independent Auditors
To the Unitholders
Viet Capital Healthcare Fund
Scope
We have audited the accompanying balance sheet, the statement of assets and the statement of investment portfolio of
Viet Capital Healthcare Fund (“the Fund”) as at 31 December 2008 and related statements of income and changes in net
assets and notes to the financial statements for the period from 15 January 2008 (date of establishment) to 31 December
2008. These financial statements are the responsibility of the management of Viet Capital Asset Management Joint Stock
Company as the Fund Management Company and have been certified by HSBC Bank (Vietnam) Ltd. as the Supervising
Bank of the Fund. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we plan and
perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management of the
Fund Management Company, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Viet Capital Healthcare
Fund as at 31 December 2008 and the results of its operations for the period from 15 January 2008 (date of establishment)
to 31 December 2008 in accordance with Decision No. 63/2005/QD-BTC issued by the Ministry of Finance on 14 September
2005 on the promulgation of accounting systems for securities investment funds and Decision No. 45/2007/QD-BTC issued
by the Ministry of Finance on 5 June 2007 on the promulgation of regulations on establishment and management of securities
investment funds, Vietnamese Accounting Standards, the Vietnamese Accounting System and accounting principles
generally accepted in Vietnam.
KPMG Limited
Vietnam
Investment Certificate No: 01143000345
Audit Report No: 08-01-201
John T. Ditty Tran Dinh Vinh
CPA No. N0555/KTV CPA No. 0339/KTV
General Director
Annual R epor t 2008 15
16. Statement of fund management company’s responsibility in
respect of the financial statements
Viet Capital Asset Management Joint Stock Company’s management is responsible for the financial statements, prepared
in accordance with Decision 63/2005/QD-BTC issued by the Ministry of Finance on the promulgation of accounting
systems for securities investment funds, Decision 45/2007/QD-BTC issued by the Ministry of Finance on the promulgation
of regulations on establishment and management of securities investment funds, Vietnamese Accounting Standards, the
Vietnamese Accounting System and accounting principles generally accepted in Vietnam, which give a true and fair view
of the state of affairs of the Fund as at 31 December 2008 and of its results for the period from 15 January 2008 (date of
establishment) to 31 December 2008. In preparing those financial statements, the Fund Management Company is required to:
ƒƒ select suitable accounting policies and then apply them consistently;
ƒƒ make judgments and estimates that are reasonable and prudent;
ƒƒ state whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
ƒƒ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Fund will
continue in business.
The management of the Fund Management Company is also responsible for ensuring that proper accounting records
are kept which disclose, with reasonable accuracy at any time, the financial position of the Fund and to ensure that the
accounting records comply with the requirements of Decision 63/2005/QD-BTC issued by the Ministry of Finance on the
promulgation of accounting systems for securities investment funds, Decision 45/2007/QD-BTC issued by the Ministry of
Finance on the promulgation of regulations on establishment and management of securities investment funds, Vietnamese
Accounting Standards, the Vietnamese Accounting System and accounting principles generally accepted in Vietnam. It
is also responsible for safeguarding the assets of the Fund and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Viet Capital Asset Management Joint Stock Company’s management confirms that they have complied with the above
requirements in preparing the financial statements of the Fund for the period ended 31 December 2008.
On behalf of the Fund Management Company.
Nguyen Khanh Linh
Managing Partner
March 31st, 2009
16 Vi e t Ca p it a l H ea l thc a re Fun d
17. Approval of the financial statements
I, Phan Thanh Hai, being the Chairman of the Fund Representative Committee and on behalf of the Unitholders of Viet Capital
Healthcare Fund (“the Fund”), do hereby approve the accompanying financial statements of the Fund which present fairly, in
all material respects, the financial position of the Fund as at 31 December 2008 and the results of its operations for the period
from 15 January 2008 (date of establishment) to 31December 2008 in accordance with Decision No. 63/2005/QD-BTC
issued by the Ministry of Finance on 14 September 2005 on the promulgation of accounting systems for securities investment
funds and Decision No. 45/2007/QD-BTC issued by the Ministry of Finance on 5 June 2007 on the promulgation of regulations
on establishment and management of securities investment funds, Vietnamese Accounting Standards, the Vietnamese
Accounting System and accounting principles generally accepted in Vietnam.
On behalf of the Fund Representative Committee
Phan Thanh Hai
Chairman
March 31st, 2009
Annual R epor t 2008 17
18. Balance sheet
B01-QDT
2008
Code Note
VND’000
A. ASSETS
1. Cash in banks 110 3 357,952,018
2. Investments in securities 120 4 150,535,642
3. Receivables from investing activities 130 5 8,762,268
Total Assets 270 517,249,928
B. Resources
I. Liabilities 300 6,121,950
1. Payable for investing activities 311 6 4,502,463
2. Payables to Fund Representative Committee 314 161,618
3. Payables to Fund Management Company and Supervising
315 7 1,323,834
Bank
4. Other payables 318 134,035
II. Equity 400 511,127,978
1. Share capital 410 492,500,000
1.1 Share capital 411 8 500,000,000
1.2 Share surplus 412 (7,500,000)
2. Retained profits 420 18,627,978
Total Resources 430 517,249,928
Off balance sheet items
2008
Items
VND’000
Securities at par value 67,021,680
Statement of assets B05-QDT
2008
VND’000
1. Cash in banks 357,952,018
2. Investments in securities 150,535,642
2.1 Listed shares 72,634,112
2.2 Unlisted shares 27,600,030
2.2 Bonds 50,301,500
3. Other receivables 8,762,268
Total assets 517,249,928
4. Payables for investing activities (4,502,463)
5. Payables to Fund Representative Committee (161,618)
6. Payables to Fund management Company and Supervising Bank (1,323,834)
7. Other payables (134,035)
Total liabilities (6,121,950)
Net assets of the Fund 511,127,978
Number of fund units (in units) 5,000
Net asset value per fund unit 102,226
18 Vi e t Ca p it a l H ea l thc a re Fun d
19. Statement of income for the period
B02-QDT
From 15/1//2008
to 31/12/ /2008
Code Note VND’000
A. Realised operating result
I. Realised income from investment activities 10 53,076,277
1. Dividend income 11 2,515,457
2. Interest income from bond 12 1,802,707
3. Interest income from bank deposits 13 54,844,126
4. Loss from securities trading 14 (6,086,013)
II. Expenses 30 (15,765,383)
1. Fund management and performance fees 31 9 (14,445,813)
2. Custody and supervision fees 32 (481,527)
3. Fund meetings and conferences expenses 33 (31,183)
4. Audit fees 34 (200,975)
5. Consultant fees 35 (123,031)
6. Other operating expenses 38 (482,854)
III. Net realised operating gain for the period 50 37,310,894
B. Unrealised operating result
I. Unrealised gain 60 7,774,035
1. Gain on securities investments revaluation 61 7,774,035
II. Unrealised loss 70 (26,456,951)
1. Loss on securities investments revaluation 71 (26,456,951)
III. Net unrealised loss for the period 80 (18,682,916)
Net profit for the period 18,627,978
Profit per fund unit 10 3,726
Statement of changes in net assets for the period B06-QDT
From 15/1//2008
to 31/12//2008
VND’000
I. Net assets at the beginning of the period -
II. Changes in net assets during the period 511,127,978
in which:
1. Capital contributed by Unitholders 500,000,000
2. Placing fee (7,500,000)
3. Changes in net assets due to investing activities during the period 18,627,978
III. Net assets at the end of the period 511,127,978
Annual R epor t 2008 19
20. Statement of investment portfolio
B07-QDT
No. of Market price Market
Effective % of total
shares per share as at value as at
Items holding assets of
held by 31/12/2008 31/12/2008
% the Fund
the Fund VND’000 VND’000
I. Listed shares
1. Hau Giang Pharmaceutical Joint Stock
277,840 1.39% 119.00 33,062,960 6.39%
Company (DHG)
2. Imexpharm Pharmaceutical Joint Stock
268,770 2.31% 75.00 20,157,750 3.90%
Company (IMP)
3. OPC Pharmaceutical Joint-Stock
81,251 0.99% 27.30 2,218,152 0.43%
Company (OPC)
4. Domesco Medical Import Export Joint
340,500 2.47% 50.50 17,195,250 3.32%
Stock Corporation (DMC)
Total 968,361 72,634,112 14.04%
II. Unlisted shares
1. Vinh Hao Mineral Water Joint Stock
16,762 2.07% 148.33 2,486,358 0.48%
Company
2. Pymepharco Joint Stock Company 39,666 0.47% 45.00 1,784,970 0.35%
3. Mekophar Chemical Pharmaceutical
191,086 2.27% 67.67 12,930,217 2.50%
Joint Stock Company
4. Bidiphar 1 Joint Stock Pharmaceutical
335,435 4.79% 31.00 10,398,485 2.01%
Company
582,949 27,600,030 5.34%
III. Bonds
1. Government bond (CPB070945) 500,000 100.60 50,301,500 9.72%
500,000 100.60 50,301,500 9.72%
Total investments 2,051,310 150,535,642 29.10%
IV. Receivables from investing activities 8,762,268 1.69%
V. Cash in banks 357,952,018 69.20%
Grand total 517,249,928 100.00%
20 Vi e t Ca p it a l H ea l thc a re Fun d
21. Notes to the financial statements for the period
B04-QDT
These notes form an integral part of and should be read in conjunction with
the accompanying financial statements.
1. Principal activities
Viet Capital Healthcare Fund (“the Fund”) is established as a closed-end member fund in Vietnam
under Registration Establishment Certificate No 08/TB-UBCK issued by the State Securities Commission of
Vietnam on 15 January 2008. The Registration Establishment Certificate is valid for 6 years from the
Registration Establishment Certificate date. The principal activities of the Fund are long-term and short-term
investment in a portfolio of securities of Vietnamese companies operating in pharmaceuticals, hospitals,
medical equipment and machinery industrial and projects in Vietnam.
The maximum total capital of the Fund as stipulated in the Registration Establishment Certificate is
VND5,000 billion. The amount of each fund unit, an equal division of the total capital of the Fund, is
VND100 million. Total maximum number of fund units is 50,000.
The Fund is managed by Viet Capital Asset Management Joint Stock Company (formerly known
as “Viet Capital Fund Management Joint Stock Company”), an investment management company
incorporated in Vietnam, and supervised by HSBC Bank (Vietnam) Ltd. (formerly known as “the Hongkong
and Shanghai Banking Corporation Limited – Ho Chi Minh City Branch”), the Supervising Bank.
2. Summary of significant accounting policies
The following significant accounting policies have been adopted by the Fund in the preparation of these
financial statements.
a. Basis of financial statement preparation
The financial statements, expressed in Vietnam Dong (“VND”), have been prepared in accordance with
Decision No. 63/2005/QD-BTC issued by the Ministry of Finance on 14 September 2005 on the promulgation
of accounting systems for securities investment funds and Decision No. 45/2007/QD-BTC issued by the
Ministry of Finance on 5 June 2007 on the promulgation of regulations on establishment and management
of securities investment funds, Vietnamese Accounting Standards, the Vietnamese Accounting System
and accounting principles generally accepted in Vietnam.
According to Decision No. 63/2005/QD-BTC, the Fund’s financial statements include the following
reports:
ƒƒ Balance sheet;
ƒƒ Statement of income;
ƒƒ Statement of assets;
ƒƒ Statement of changes in net assets;
ƒƒ Statement of investment portfolio; and
ƒƒ Notes to the financial statements.
The financial statements of the Fund are prepared on the accrual basis using the historical cost concept,
except as discussed in Note 2(e). The accounting policies set out below have been consistently applied by
the Fund during the year.
Annual R epor t 2008 21
22. b. Fiscal year
The first fiscal year of the Fund is from 15 January 2008 (date of establishment) to 31 December 2008.
Succeeding fiscal years will be from 1 January to 31 December.
c. Foreign currency transactions
Monetary assets and liabilities denominated in currencies other than VND are translated into VND at rates
of exchange ruling at the balance sheet date. Transactions in currencies other than VND during the year
have been translated into VND at rates approximating those ruling at the transaction dates.
All realised and unrealised foreign exchange differences are recorded in the statement of income.
d. Cash
Cash comprises cash in banks under call deposits and term deposits.
e. Investments
Investments are initially stated at cost and revalued at the balance sheet date in accordance with Decision
63/2005/QD-BTC issued by the Ministry of Finance on the promulgation of accounting systems for securities
investment funds and Decision 45/2007/QD-BTC issued by the Ministry of Finance on the promulgation of
regulations on establishment and management of securities investment funds.
(i) Classification
The Fund classifies its listed securities and unlisted securities which are purchased for trading purposes
as trading securities.
(ii) Recognition
The Fund recognises trading securities and other investments on the date it becomes a party to the
contractual provisions of the investments.
(iii) Measurement
Listed securities are revalued at the balance sheet date by reference to market prices of securities from
the Ho Chi Minh City Stock Exchange and Hanoi Securities Trading Centre.
Unlisted securities are stated at cost and revalued at the balance sheet date by reference to price quotes
from three securities companies.
(iv) Derecognition
Investments in securities are derecognised when the rights to receive cash flows from the investments
have expired or the Fund has transferred substantially all risks and rewards of ownership.
Cost of trading securities is determined on a weighted average basis.
f. Accounts receivable
Receivables representing amounts due from customers for securities trading, investee companies for
dividends declared, bond issuers for bond interest, banks for bank interest and other receivables are stated
at cost less allowance for doubtful debts.
22 Vi e t Ca p it a l H ea l thc a re Fun d
23. g. Trade and other payables
Payables for investing activities and other payables are stated at cost.
h. Provisions
A provision is recognised if, as a result of a past event, the Fund has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
i. Taxation
Under current regulations on Vietnam, the Fund is not subject to corporate income tax. When the Fund
distributes its profit to the investor it will withhold and declare a withholding tax at 20% on the distributed
amounts.
j. Capital and capital surplus
The Fund’s units are classified as equity. Capital surplus representing the difference between the actual
cash received and the par value of the fund units issued is recognised as a separate component in equity.
k. Earnings per fund unit and net asset value per fund unit
The Fund presents basic earnings per unit (“EPU”) for its fund units. Basic EPU is calculated by dividing the
profit or loss of the Fund by the weighted average number of fund units outstanding during the period.
Net assets value (NAV) per unit is calculated by dividing the net asset value of the Fund by the number of
outstanding fund units as at the balance sheet date. The Fund’s net assets is determined as total assets less
total liabilities.
l. Segment reporting
The Fund operates as one segment.
m. Revenue
(i) Interest income and dividend income
Interest income is recognised in the statement of income as the interest accrues unless collectibility is
in doubt. Dividend income is recognised when the right to receive payment is established.
(ii) Income from securities trading
Income from securities trading activities is recognised in the statement of income upon receipt of the
Notice for settlements of securities trading transactions from the Ho Chi Minh Stock Exchange or Hanoi
Securities Trading Centre (for listed securities) and completion of the agreement on transfer of assets
(for unlisted securities).
n. Expenses
Expenses are recognised in the statement of income on an accrual basis except for expenses incurred on
the acquisition of an investment which are included in the cost of that investment. Expenses arising from
sales of investments are deducted from the sales proceeds.
Annual R epor t 2008 23
24. o. Related companies
Parties are considered to be related if one party has the ability, directly or indirectly, to control other party
or exercise significant influence over the other party in making financial and operating decisions. Parties
are also considered to be related if they are subject to common control or common significant influence.
Other investment funds under the management of the Fund Manager are considered related parties to
the Fund.
p. Off balance sheet items
Amounts which are defined as off balance sheet items under the Decision 63/2005/QD-BTC dated 14 September
2005 issued by the Ministry of Finance on promulgation of accounting system of securities investment funds
and Vietnam Accounting System are disclosed in the relevant notes to these financial statements.
q. Nil balances
Items or balances required by the Decision 63/2005/QD-BTC dated 14 September 2005 issued by the
Ministry of Finance on promulgation of accounting system of securities investment funds and Vietnam
Accounting System that are not shown in these financial statements indicate nil balances.
3. Cash in banks
2008
VND’000
Cash in bank 12,952,018
Term deposits 345,000,000
357,952,018
Cash in banks at 31 December 2008 were denominated in VND.
4. Investments in securities
All the investee companies (both listed and unlisted) as in the statements of investment portfolio are
incorporated in Vietnam.
The Fund does not seek to participate in day-to-day financial and operating policy decisions of the investee
companies. Accordingly, the Fund does not intend to exert a controlling or significant influence over the
investee companies and therefore, the Fund’s investments are recorded on the basis set out in Note 2(d),
rather than being consolidated or equity accounted.
5. Receivables from investing activities
2008
VND’000
Bond interest receivable 140,685
Interest receivable from bank deposits 8,621,583
8,762,268
6. Payables for investing activities
2008
VND’000
Purchase awaiting settlement 4,502,463
24 Vi e t Ca p it a l H ea l thc a re Fun d
25. In accordance with the Fund’s policy of trade date accounting for regular way purchases transactions, purchases
awaiting settlement represent amounts payable for securities purchased, but not yet settled.
7. Payables to Fund Management Company and Supervising Bank
2008
VND’000
Fund management fee payable to Fund Management Company 1,281,130
Custodian and supervision fees payable to Supervising Bank 42,704
1,323,834
8. Share capital
The Fund’s maximum authorised share capital is VND5,000 billion, equivalent to 50,000 fund units of
VND100 million each. Up to 31 December 2008, total capital subscribed by existing Unitholders was
VND500 billion, equivalent to 5,000 fund units.
Movements in share capital (before deducting of placing fee) during the year were as follows:
2008
VND’000
Balance at beginning of the period -
Capital issued during the period 500,000,000
Balance at end of the period 500,000,000
The share capital was presented excluding the placing fee of VND7.5 billion payable to the Fund
Management Company, in relation to the issuance of the capital, which was recorded as a deduction in
share surplus account in equity.
9. Fund management and performance fees
In accordance with the Fund’s Charter, the Fund has to pay the Fund Management Company a monthly
management fee in arrears equal to one-twelfth of three per cent of the Net Assets Value of the Fund on
the last working day of such month.
The Fund also has to pay the Fund Management Company a performance fee in relation to any financial year
if the Fund’s growth of the net assets at the end of such year exceeds 12%. The fee equals the higher of nil
and 20% of the net amount between [1] Net Assets Value at the end of such year, and [2] 112% of net assets
value at the end of prior year, plus capital issued during the year, compounded at interest rate of 12% per
annum, for the period from the date capital was issued to the end of such year. There was no performance
fee recorded for the period from 15 January 2008 (date of establishment) to 31 December 2008.
Also in accordance with the Fund’s Charter, Net Assets Value is determined as total assets less total liabilities
which include performance fee.
For the purpose of calculating the performance fee which has been accrued in the financial statements,
Net Assets Value was calculated as total assets less liabilities which excluded the performance fee itself. The
Fund’s Directors and the Fund Management Company believe that the method of determination of the Net
Assets Value as a basis for the calculation of the performance fee, as accrued in the financial statements,
represent the appropriate interpretation of the Net Assets Value as defined in the Fund’s Charter.
Annual R epor t 2008 25
26. 10. Earnings per fund unit
The calculation of basic earnings per fund unit at 31 December 2008 was based on the profit for the period
from 15 January 2008 (date of establishment) to 31 December 2008 of VND18,628 million and a weighted
average number of fund units outstanding of 5,000.
11. Significant transactions with related parties
As at period end and during the period there were the following significant balances and transactions
with related parties:
Balance as from 15/1/2008
Nature of
Related party Relationship 31/12/2008 to 31/12 /2008
transactions
VND’000 VND’000
Viet Capital Asset Management Joint
Fund Fund
Stock Company (formerly known as
Management management 1,281,130 14,445,813
“Viet Capital Fund Management Joint
Company fee
Stock Company”)
HSBC Bank (Vietnam) Ltd., (formerly
known as “The Hongkong and Supervising Custody and
42,704 481,527
Shanghai Banking Corporation Bank supervision fees
Limited - Ho Chi Minh City Branch”)
12. Indices
2008
I. Investment ratios
Securities investments/Total assets 29.10%
Shares investments/Total assets 19.38%
Listed shares/Total assets 14.04%
Unlisted shares/Total assets 5.34%
Bonds/Total assets 9.72%
Cash in banks/Total assets 69.20%
Average income/Total assets 10.26%
Average expenses/Total assets 6.66%
II. Market ratios
Number of fund units 5,000
Number of fund units held by 10 largest Unitholders/Total fund units 70.80%
Number of fund units held by foreign Unitholders/Total fund units -
Value per fund unit (VND’000) 102,226
13. Subsequent event
As of the date of issuance of these financial statements, the aggregate fair value of the Fund’s investments
has fallen by VND22,278 million to VND128,258 million from the carrying amount of the investment as of
31 December 2008 due to the general decline in securities market in Vietnam.
Fair value
31/12/ 2008 31/03/2009 Movement
VND’000 VND’000 VND’000
26 Vi e t Ca p it a l H ea l thc a re Fun d
27. Investments in securities
Listed securities 72,634,112 58,129,890 14,504,222
Unlisted securities 27,600,030 23,663,749 3,936,281
Bonds 50,301,500 46,464,000 3,837,500
150,535,642 128,257,639 22,278,003
Annual R epor t 2008 27
28. Your ca pital Ca pitalize d
www.vietcapital.com.vn
Head office Hanoi office
Unit 2, 19/F, Centec Tower 16 Ham Long St.,
72-74 Nguyen Thi Minh Khai St., Dist. 3, Hoan Kiem Dist.,
Ho Chi Minh City, Vietnam Hanoi, Vietnam
T +84 8 3823 9909 F +84 8 3824 6329 T +84 4 3944 7990 F +84 4 3944 7991
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