Prospectus Vietnam Active Fund (Vfmvfa)

Vietnam Active Fund (VFMVFA), as described in this Prospectus is incorporated under the Law on Securities No.70/2006/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on 29th June 2006 and the documents providing guidelines for its implementation. This Prospectus is registered with the SSC on 18th April 2013.

The granting of permission by the SSC for VFMVFA’s issuance of the fund certificates to the public shall strictly mean that its application for incorporating the Fund and issuing the investment fund certificates is undertaken in compliance with the laws, and such grant shall not be construed to hold VFMVFA responsible for the content hereof, nor its investment strategy. The market price of Fund certificates, profit-generating potential and risks as provided for herein is for reference purposes only, and may vary subject to the market situation. Any investment in the Fund shall not be construed as a way to ensure any profitability for investors. Investors are advised to scrutinize any possible risks prior to their making any decision on investments herein.

PROSPECTUS VIETNAM ACTIVE FUND (VFMVFA)

(License of Establishment and Issue No 03/GCN-UBCK granted by the SSC dated 18 April 2013) The Prospectus is updated and effective on May 09, 2014

ISSUER:

VIETFUND MANAGEMENT VFM) - Head office in Ho Chi Minh City VietFund Management (VFM) Unit 1701-04, 17th Floor, Melinh Point Tower, 02 Ngo Duc Ke St., Ben Nghe Ward, District 1 HCMC, Vietnam Tel: (84.8) 3825 1488 Fax: (84.8) 3825 1489 Email: [email protected] Website: www.vinafund.com - Hanoi Branch Office VietFund Management (VFM) Suite 903, 9th Floor, HCO Building, 44B Ly Thuong Kiet St., Hoan Kiem District Hanoi, Vietnam Tel: (84.4) 3942 8168 Fax: (84.4) 3942 8169

- The prospectus is provided at the distribution agents and distribution branch of VFMVFA fund certificates listed in Annex II of this prospectus - The prospectus can be updated once every six months

SPOKESMAN: Name : PHAM KHANH LYNH (Mr.) – Deputy CEO Address : VietFund Management (VFM) : Unit 1701-04, 17th Floor, Melinh Point Tower, 02 Ngo Duc Ke St., Ben Nghe Ward, District 1 HCMC, Vietnam Tel :(84.8) 3825 1488 Fax: (84.8) 3825 1489

IMPORTANT NOTICE

As provided below, before their subscription for Vietnam Active Fund (hereafter referred to as “VFMVFA”), investors are provided with important information which they are obligated to carefully read and review before making any decisions on investing in VFMVFA.

VFMVFA fund certificates are permitted to issue to the public based on the information and commitments disclosed in this Prospectus. Fund Management Company (VFM) and its representatives will not be accounted for pledges or information given by brokers, distribution agents or others, and such information is not included in this Prospectus, and neither. No person shall be entitled to deliver any pledge or information contrary to the contents of this Prospectus and attached documents. VFMVFA fund certificates are issued subject to the information and commitments disclosed in this Prospectus and the attached financial information. The circulation of this Prospectus as well as the distribution or issue of the fund certificates shall, under no circumstances, be construed as having any impact on the Fund’s operational activity from the date of this Prospectus.

This Prospectus shall not constitute an offer for sale to any person in any country where such an offer is not approved or to whom such offer is not permitted under the law of that country. This Prospectus and distribution of its fund certificates may be restricted for circulation in some countries by their laws. Investors who wish to subscribe to buy the Fund certificates are obliged to do research, understand, and comply with any regulatory restrictions, foreign exchange, and duties laws of their respective countries.

Investors, including foreign investors, are obliged to seek professional advice concerning how tax matters, regulatory provisions on foreign exchange transactions and control of the acquisition and sale of fund certificates will be regulated or adjusted in their countries.

Investors should be aware that fund certificates and any potential income arising out of their investments in the Fund may fluctuate in value without notice. Accordingly, at the date of dissolution, the residual value of fund certificates held by the Investors may be lower than the original value paid.

Investors should remember that the fund management company’s past business results shall not be an indicator of future ones.

Prior to making any investments, investors are obliged to carefully scrutinize this Prospectus, the Fund Charter, and other documents related to Vietnam Active Fund (VFMVFA) issued by the fund management company and its designated distribution agents, whose names are included herein. Particularly, the value of the fund certificates, profit-generating potential and potential risks as provided in this document shall serve for reference purposes only, and may vary subject to market circumstances. Any investment in VFMVFA shall not be construed as a way to ensure profitability for investors. Investors are advised to scrutinize any possible risks described in this Prospectus prior to deciding to make any investments.

MỤC LỤC

I. KEY PERSONS RESPONSIBLE FOR THE PROSPECTUS CONTENT ...... 5

1. Issuing Organization ...... 5 2. Custodian Bank ...... 5 II. TERMS/ DEFINITIONS ...... 6 III. INVESTMENT OPPORTUNITIES ...... 10

1. Vietnam Macro Economy ...... 10 2. Investment opportunities from quantitative analysis - Investing through Trend Following ...... 12 IV. INFORMATION ABOUT VFMVFA FUND ...... 13

1. Summary of the terms and conditions of the issue after the conversion ...... 13 1.1 License for issue and fund size ...... 13 1.2 Fund Type and Operation Term ...... 13 2. Operation of VFMVFA Fund ...... 14 3. Investment Objectives, Strategy and Restrictions of VFMVFA ...... 15 4. Risk factors ...... 20 V. THE TRADING MECHANISM FOR VFMVFA OPEN-ENDED FUND ...... 22

1. VFMVFA account trading information ...... 22 2. General principles for trading orders at the trading cycles ...... 22 3. Valuation method of the net asset value ...... 23 4. Subscription orders ...... 24 5. Redemption orders ...... 24 6. Switching Orders ...... 25 7. Partial redemption, suspension of trading of open-ended fund transactions ...... 25 8. Non-commercial transactions (gift, present, inheritance, transfer of ownership…) ...... 26 9. Authorized person from the investors ...... 26 10. Other regulations on the VFMVFA’s subscription process ...... 27 11. Invalid trading ...... 27 VI. GENERAL INFORMATION ABOUT FUND MANAGEMENT COMPANY, CUSTODIAN BANK AND OTHER RELATED SERVICE PROVIDERS ...... 28

1. General Information about Fund Management Company (VFM) ...... 28 1.1 Introduction to the Board of Management of VietFund Management (VFM) ...... 29 1.2 Introduction to the Board of Directors of VietFund Management (VFM) ...... 29 1.3 Introduction on the Management Staff of VFMVFA Fund ...... 29 2. Custodian Bank ...... 29 3. Auditing Company ...... 29 4. Authorized Service Provider ...... 29 VII. DISTRIBUTORS ...... 30 3

VIII. VALUATION AND ANNOUNCEMENT OF NET ASSET VALUE ...... 30 IX. FEES AND EXPENSES ...... 33

1. Fees paid by investors ...... 33 2. Fees paid by the fund ...... 34 2.1 Management fee ...... 34 2.2 Depository and supervision fee ...... 35 3. Operating rates ...... 37 3.1 Operating cost rate of the fund ...... 37 3.2 Turnover rate of the fund’s portfolio ...... 38 X. ESTIMATION ON THE FUND’S INVESTMENT PERFORMANCE AND DIVIDEND POLICY ...... 38

1. Estimation On The Fund’s Investment Performance ...... 38 2. Dividend Policy ...... 38 XI. CONFLICT OF INTEREST ...... 38 XII. LEGAL BASIS ...... 39 XIII. REPORTING REGIME ...... 39 XIV. CONTACT ADDRESSES FOR INQUIRIES ...... 40 XV. UNDERTAKING ...... 40 XVI. APPENDICES ...... 40

ANNEX 1: LIST OF APPOINTED DISTRIBUTORS AND LOCATIONS PROVIDING VIETNAM ACTIVE FUND (VFMVFA) PROSPECTUS ...... 41

I. KEY PERSONS RESPONSIBLE FOR THE PROSPECTUS CONTENT 1. Issuing Organization VIETFUND MANAGEMENT (VFM) Establishment License: No. 45/UBCK-GP granted by the SSC dated January 08, 2009. Address: Unit 1701-04, 17th Floor, Melinh Point Tower, 02 Ngo Duc Ke St., Ben Nghe Ward, District 1 HCMC, Vietnam Tel: (84.8) 3825 1488 Fax: (84.8) 3825 1489

Mr. DOMINIC SCRIVEN : Chairman of VietFund Management (VFM) Mr. TRAN THANH TAN : CEO of VietFund Management (VFM) Mr. NGUYEN MINH DANG KHANH : Financial Director of VietFund Management (VFM)

We hereby certify that the information and figures contained herein are thoroughly collected, investigated, true and accurate. 2. Custodian Bank Legal Representative: Mr. SUMIT DUTTA Position: CEO of HSBC Bank (Vietnam) This Prospectus is part of the initial public offering documents which is written by VietFund Management (VFM) and certified by HSBC Bank (Vietnam). We ensure that the analysis, evaluation and choice of words in this Prospectus have been made reasonably and carefully based on the information and data provided by HSBC Bank (Vietnam). .

II. TERMS/ DEFINITIONS

The following terms and abbreviated terms shall be defined and used throughout this Prospectus: “Vietnam Active Fund” (hereinafter referred to as “VFMVFA”) means the securities investment fund incorporated under the Law on Securities passed by the National Assembly of the Socialist Republic of Vietnam on 29th June 2006 and other related regulatory documents and subject to the administrative control of the State Securities Commission (SSC).

(hereinafter referred to as ”VietFund Management (VFM)“), a join stock “VietFund Management (VFM)” company which the founders are Dragon Capital Management and Saigon Thuong Tin Commercial Joint Stock Bank, is incorporated under the License No. 45/UBCK-GP dated January 08, 2009, issued by the SSC, and conducting capital mobilization for and the management of VFMVFA Fund.

(Hereinafter referred to as Sacombank), means a commercial joint stock “Saigon Thuong Tin Commercial bank, established under the license No. 0006/NH-GP dated 05/12/1991 Joint Stock Bank – Sacombank” issued by State Bank of Vietnam under the banking law of Vietnam and a founding shareholder of VFM.

(Hereinafter referred to as DCM) means a limited liability company “Dragon Capital Management established under the laws of British Virgin Islands, is a member of Limited” Dragon Capital Group and is a founding shareholder of VFM.

(are also known as Distributors) defined as a capable entity operating in “Distribution agent” the fields of securities, finance, and banking, to be designated by the fund management company to distribute non-exclusive VFMVFA fund certificates subject to the Contract for distribution of fund certificates.

HSBC bank (Vietnam) Limited (hereafter referred to HSBC Bank). HSBC “Custodian Bank” bank is wholly-owned foreign bank, incorporated according to establishment certificate No 235/GP-NHNN by The State Bank of Vietnam, Law of credit institutions licensed on 08 September 2008 and licensed Securities Custody Operation Certificate No 18/UBCK-QLKD by The State Securities Commission on 18 March 2008, and Document No 2369/UBCK-QLKD by The State Securities Commission on 17 December 2008 about the approval of transferring Custody Operation Certificate of HSBC Bank (Vietnam), implementing operations: safe-keeping, custody securities, agreements, documents relevant to fund’s assets and supervising Fund’s operation simultaneously. Rights and obligations of supervisory bank are defined at chapter V in this Prospectus.

is an independent company which is approved by the SSC and appointed “Auditing Company” by the General Meeting of Investors, of Vietnam Active Fund performing the auditing of the Fund’s annual assets.

(hereinafter referred to as “HOSE”) means a state-owned corporate entity “HCMC Stock Exchange” organized as a one-member limited liability company, operating under the Law on Securities, the Law on Enterprise, its Charter, and related statutory regulations.

“Hanoi Stock Exchange” (hereinafter referred to as HNX) means a state-owned corporate entity organized as a one-member limited liability company, an independent 6

unit with its own stamp, operating under the Law on Securities, the Law on Enterprise, its Charter, and related statutory regulations.

means the documents or electronic data publicizing objective, truthful and “Prospectus” accurate information about the offer for sale or listing of VFMVFA Fund Certificates.

Defined as the charter, adopted by the investors at the General Meeting “Fund’s Charter” of Investors, to be prepared in accordance with the relevant regulations of the Vietnamese laws, for governing the organization and operation of VFMVFA Fund.

“Supervisory Contract” is the contract signed between the fund management company and the Custodian Bank of VFMVFA.

are domestic, overseas individuals and institutional who hold VFMVFA “Investors” Fund certificates.

Defined as a regular or irregular general meeting of investors where “General Meeting of Investors” investors are entitled to vote, to pass important matters relating to VFMVFA Fund. It is the supreme power of VFMVFA Fund.

Defined as representatives of investors elected by the General Meeting of “Board of the Fund Representatives” Investors to act on their behalf to supervise the operations of the Fund, the Fund Management Company (VFM) and the Custodian Bank.

Defined as the total capital in cash, as recorded in the Fund Charter, “Fund’s Charter Capital” contributed by all investors at the initial public offering.

Defined as the Charter Capital which is divided into equal units with par “Fund unit” value of VND10,000 per unit at its initial issue, each of which shall represent an equal proportion of profit and capital of the Fund.

(hereinafter referred to as the “fund certificate”) means the securities “VFMVFA fund certificate” issued by VFM on behalf of VFMVFA Fund, which certify lawful rights and benefits of investors with regard to the assets or capital of the Fund as counted in a proportion equal to the Fund’s unit contributed to the charter capital of VFMVFA Fund by such investors.

“Subscription price” is a price that investors must pay fund management company. The subscription price shall be determined by the net asset value per a fund unit as of the fund certificate trading day plus subscription fee.

“Redemption price” Redemption price is the price of a fund unit, that Fund Management company must pay investors, is determined by the net asset value per a fund unit as of the fund certificate Trading day minus redemption fee.

“Subscription fee” is the fee that investors must pay when buying a fund unit.Such fee is counted as a percentage of the subscription amount of a fund unit and payable upon the issuance.

“Redemption fee” is the fee that investors must pay when selling a fund unit. Such fee is substracted from the redeeed amount and payable as the fund pays to investors and counted as a percentage of the redeemed amount.

“Management Fee” Defined as the fee payable to the Fund Management Company for its provision of fund management service as defined in Article 1.4, Chapter IX of the Prospectus.

“Fiscal Year” Defined as a period of twelve months which commences on the beginning of the 1st of January and ends on the end of the 31st of December according to calendar year. The first fiscal year of Vietnam Active Fund is calculated from the day on which it is officially issued a license by the SSC until the end of the 31st of December of the same year. In case that the period from the day the fund is issued a license by the SSC to the end of the 31st of December of the same year is less than 90 days, the first accounting period shall be calculated from the day on which it is officially issued a license by the SSC until the end of the 31st of December of the next year.

“Net Asset Value of the Fund” (Hereinafter referred to as NAV) is the total value of assets and investments owned by the VFMVFA minus liabilities of the VFMVFA at the time of valuation.

“Valuation Day” means the date the fund management company determines the net asset value of one fund Certificate. The valuation day is determined every Friday of the week.

“Trading day” means the date when the fund management company, on behalf of the funds, issues or repurchases open-ended fund certificates as required by the investors by sending orders through appointed distribution agents before the Cut-off time.

“Cut-off Time” means the deadline for distribution agents to receive trading orders from investors that shall be executed on fund certificate trading days

Cut – off time is 10:30 am on T-1 whereas T is the Valuation day and Trading day

“Fund adminstration service” is a service that the fund management company authorize to a service provider to undertake the following services: - Make accounting records of transactions of a Fund: record the changes of cash inflows and outflows of the Fund; - Preparing the Fund's financial statements; coordinating with and assisting Fund's auditing organizations in performing audits for the Fund; - Determining the Fund's net asset value, the net asset value per fund certificate unit in accordance with legal regulations and the Fund's Charter; - Carrying out other activities in accordance with legal regulations and the Fund's Charter.

“Transfer agency service” is a service that the fund management company authorize to a service provider to undertake the following services: - Preparing and managing the Main Register of investors; opening, tracking and managing the system of investors’ trading accounts, omnibus accounts; confirming the ownership of open-ended fund 8

certificates; - Making records of subscription orders, redemption orders, switching orders of investors; carry out the ownership transfer of fund certificates; updating Main Registers; - Supporting investors in implementation of rights related to the ownership of fund certificates of investors; - Maintaining the communication channel with investors, distribution agents, state competent authorities and other competent organizations; - Distributing to investors financial statements, fund operations reports, prospectus, simplified prospectus, trading account statements, transaction confirmations and other documents required to be provided for investors;

“Related person” as defined in Article 34 of Article 6 of the Securities Law No. 70/2006/QH11 passed June 29, 2006 by National Assembly of Socialist Republic of Vietnam.

“Other definitions” Other definitions (if any) shall be construed as set forth in the law on securities and other relevant documents.

III. INVESTMENT OPPORTUNITIES 1. Vietnam Macro Economy After experiencing a lot of turbulences in 2010-2011 and prolonged difficulties in 2012, the economy made positive improvements in 2013, restoring confidence in its recovery and bright prospect for a new phase of growth Recovery of industrial production and GDP • Thanks to the easing monetary policy and supportive packages, the economy has improved its stability and come to a real recovery. Accordingly, GDP grew at 5.4% in 2013, slightly higher than 5% in 2012. • This growth rate was supported by the recovery of industrial production and the surge of service sector with respective growths of 5.4% and 6.6%. In addition, the trend of GDP expansion is favorable in which it grew by 6.0% in the last quarter compared with 5.54%, 5%, and Source: The General Statistics Office 4.76% in the previous three quarters. • Manufacturing activity expanded and recovered in the last six months of 2013. Accordingly, the HSBC Purchasing Manager Index (PMI) reached 51.8 in December, the highest level since 4/2011. The index registered at above 50 in the last 4 months, indicating expansion of manufacturing activity. • Thanks to positive effects of cuts in policy rates and other stimulus packages, manufacturing has maintained a good trend of improvement. Additionally, stronger growths of major export destinations (the United States, Europe, Japan) and the resumption of local demand have laid a stronger foundation for industrial production Source: Markit Economics

and will continue into 2014.

Rebound of retail sales • Retail sales has rebounded slightly since 3/2013 after falling hard in early 2013. If it is adjusted for inflation, retail sales grew at 5.6%, lower than that of 2012 but with positive trend. Local demand has since picked up and gained more momentum. • Amid controlled inflation and economic recovery, retail sales is expected to have significant improvement in 2014.

Source: The General Statistics Office Inflation at 10-year low • Inflation stablized in the last three months after a big surge in September when the consumer price index (CPI) reached 0.51% in December, bringing the annual index to 6.04% compared with end of 2012. Controlled inflation has helped stabilize the macro condition, restore confidence in the local currency, and maintain low volatility of the USD/VND exchange rate. • Global inflation is expected to be low in the first half of 2014. However, local inflation will bear more effects from local factors such as the change in fiscal policy and the adjustment of key fuel items and electricity. Therefore, inflation in 2014 is expected to be around 6%.

Source: The General Statistics Office 10

Increased investment for growth Source: HSC, • In 2013, total investment fell to the lowest level in 12 years, registering at 30.4% GDP, leading to slow economic growth in the last 3 years. The government has planned to enhance public spending for infrastructure with additional 170 trillion for highway and other important infrastructure projects in 2014-2016. Besides, stronger foreign direct investment and revival of local production are expected to increase private investment. These will be new sources for economic growth in the medium term. VFM Decent credit growth and controlled nonperforming Loans • Lending activity picked up in the fourth quarter after increasing at slow pace in the early of the year amid more risk averse by banks, low demand, and still high interest rates. Accordingly, credit increased in 8.8% for the whole year after falling in the first two months. Although this performance was under the 12% expectation, it is a decent growth rate in the current economic environment. • With average lending rate falling to 12% in 2013 from 15% in the end of 2012 and economic activity warming up, lending activity is expected to accelerate in 2014, reaching around 12%-14%. In addition, non-performing

loans are being curbed and resolved to help facilitate Source: The State Bank of Vietnam further lending by banks. Export in the spotlight and stabilized currency • Excellent export perfromance has emerged as a spotlight of the economy since 2012 and continued into 2013. Accordingly, export rose to $132.2 billion, or 15.4% in 2013. Thanks to good record of attracting foreign direct investment and high disbursement in the last years, foreign invested companies have become key players in export, accounting for 2/3 of export value with a 22.4% growth, far eclipsing the local sector who registered just 3.5% growth. • Trade surplus reached $900 million in 2013. Strong current account in 2012 and 2013 has lifted foreign Source: The General Statistics Office reserves to more than $32 billion from $20 billion in 2012. Consequently, exchange rate was stable in 2013 and is expected to have low volatility in 2014. Rising foreign investment • In the last 6 years, registration of foreign direct investment has soared and disbursement has been strong, leading to excellent export performance and economic growth. In addition, the structure of foreign investment has been shifted to manufacturing instead of property and hospitality projects as it did in 2006-2007. Economic recovery, Vietnam’s potential entry into Trans-Pacific Partnership (TPP) and an attractive stock market will help boost foreign direct investment and portfolio investment in Source: The General Statistics Office the coming year. This will in turn help accelerate economic activity, stablize the currency, and develop local capital market.

2. Investment opportunities from quantitative analysis - Investing through Trend Following The quantitative analysis investment method began in the 1980’s in the U.S., based on the principle of using mathematical computer models to find profitable opportunities from volumes of information and masses of data. The data analyzed may consist of fundamental and technical analysis data. The profit and risk levels of quantitative analysis investment models do not correlate to the profit and risk levels of traditional investment models. From the time it became popular in the 1980’s, the quantitative investment model has developed quickly with advances in computing and applied scientific research into investing, along with the successes of quantitative investment funds. According to statistics, approximately half of all hedge fund assets are now managed by quantitative analysis methods. Over half the total number of buy and sell orders on large stock markets are issued from quantitative models. All the leading investment banks have a professional quantitative investment department. Leading world universities have regular forum discussions around the issues of quantitative analysis. Four investment strategies around the world currently use quantitative methods: - Market trend investments – Trend Following; - Investments into derivatives – Derivatives/Convertible Bonds; - Trading totally based upon computer systems/Trading on high frequencies – Algorithmic/High frequency Trading; and - Trading based upon relative statistical spreads – Statistical Arbitrage/Statistical Trading. These four strategies can use high or low financial leverage, market directional or market neutral strategies. On the Vietnamese markets, with no specific regulations on short selling and undeveloped derivatives, Trend Following is the only investment strategy with the potential for success. 2.1 About the Trend Following quantitative investment strategy Trend Following is one of the basic quantitative investment strategies. This strategy is founded on the principle of market’s general rising (buying) or falling trends (selling), with these trends being clear and long-term. At the same time, positive results can ultimately also be achieved when these general trends are isolated or not present and the market enters a period of fluctuation (sideways). Besides these main principles, risk management strategies through stop loss, asset allocation and investment diversification regimes are still quantified and applied. In terms of investment results, this model has, and is, being widely used across the global investment community. A classic example of success is the “Turtle” Trend following investment strategy model, established by Richard Dennis and William Eckard. This system is being used successfully by many investment funds and banks around the world, for example, MAN Fund with USD 40 billion in assets under management, Chesapeake Capital is another with over USD 1 billion in assets under management and managed by Jerry Parker, a disciple of Richard Dennis and William Eckard. 2.2 Trend Following quantitative investment strategy in Vietnam A number of scientific research papers have proven that Trend Following quantitative investment strategies are more effective in emerging markets like China, Malaysia, Thailand, etc., compared to developed markets like the U.S., Europe, etc. because fluctuations in emerging markets are larger and general market trends are clearer. Investment opportunities in Vietnam using this investment model have considerable potential to deliver highly effective investments from strong fluctuations in uncertain markets, with improving liquidity and the gradual appearance of broad general trends. However, the implementation of Trend Following investment in Vietnam has some limitations which can influence investment outcomes, such as limited data, no regime for short selling to take advantage of falling market trends and other underdeveloped financial markets (like foreign exchange, interest and commodities markets) in order to undertake diversification. VFM has researched and is currently using the Trend Following investment strategy on Vietnam’s stock markets successfully, while minimizing the limitations noted above by applying Artificial Intelligence and 12

Information Theory tools to the investment model. With these successful steps, the outlook for the quantitative analysis strategy in Vietnam’s markets into the future is very great. IV. INFORMATION ABOUT VFMVFA FUND

1. Summary of the terms and conditions of the issue after the conversion QUỸ ĐẦU TƯ NĂNG ĐỘNG VIỆT NAM (VFMVFA) - Vietnamese name of the issuing organization

- Issuing organization: Vietnam Active Fund - Abbreviation VFMVFA Fund - Form of the fund Public open-ended fund - Type of investors Domestic and foreign individuals, institutions - Term of the Fund No limit - Currency Vietnam dong

- Investment objectives/strategy The main objective of VFMVFA would be to capture medium to long-term capital appreciation on Vietnam market, accompanied by capital preservation during adverse market conditions, based on the main strategy of trend-following.

- Form of ownership: booking entry

Place of issuance: VietFund Management (VFM) Head office Unit 1701-04, 17th Floor, Me Linh Point Building, 02 Ngo Duc Ke St, Dist 1, Ho Chi Minh city, Vietnam Hanoi Branch Unit 903, 9th Floor, Pacific Palace, Ly Thuong Kiet St, Dist Hoan Kiem, Ha Noi, Vietnam Related partners to the issue: Issuing organization : Vietnam Active Fund (VFMVFA) Issuing representative : Vietfund Management Custodian Bank : HSBC (Vietnam) Proposed auditing company : Ernst&Young Co., Ltd. or KPMG Co., Ltd or Price WaterCooperHouse (PWC) Distributing agents : VFMVFA’s fund certificates shall be distributed through designated agents as listed in Annex 1 of the Prospectus. Investors can obtain many open-ended trading accounts at different appointed Distributors and shall be restrained to trade on the holdings of one particular trading account. 1.1 License for issue and fund size The conversion of VFMVFA fund from closed-ended fund to open-ended fund is authorized by the SSC under license No. 03/GCN-UBCK dated April 04, 2013 1.2 Fund Type and Operation Term VFMVFA is a public open-ended securities investment fund converted from a closed-ended fund managed by VFM throughout its operation term, unless it is transferred to be managed by another fund management company or pre-maturely dissolved subject to the decision of the General Meeting of Investors.

Operation term of VFMVFA is not limited and valid from the date the Fund receives its adjusted license from the SSC.

2. Operation of VFMVFA Fund Below is the past performance of VFMVFA fund’s investment operation. All the measures represent the fund performance which includes measures on NAV, dividend, expenses, asset turnover, and risk of VFMVFA, VN- Index and HNX-Index in the reporting period. VFMVFA‘s profit has already included dividend, interest from term deposit and bond and has already been subtracted the operation expenses (management and supervising fee etc.); however, this does not include all the fees relating open-ended fund operation (subscription, redemption, switching fee etc.). The past performance of the fund shall not guaranteed future performance.

2010 2011 2012 31/12/2013 Fund size (bil VND dong) 24.0 24.0 24.0 14.9 NAV (bil VND dong) 221.4 171.7 172.2 107.7 NAV/unit (VND dong) 9,209.3 7,139.5 7,163.5 7,217.5 NAV/unit maximum 52 weeks (VND dong) 10,332.5 9,783.4 7,641.6 7,483.9 NAV/unit minimum 52 weeks (VND dong) 8,438.6 7,136.1 6,866.3 6,866.1 Total expense (bil VND dong) 4.6 5.0 4.9 3.7 Expense/ Average Assets ratio (%) 2.1 2.6 2.8 3.2 Asset turnover (%) 243.3 177.2 111.8 102.0

Return since inception (2 April 2010) (%) VN-Index (%) (7.9) (28.6) (28.4) (27.8) HNX-Index (%) (5.1) (31.1) (19.0) (1.1) (30.4) (64.2) (65.2) (58.7) Annual growth (%) VN-Index (%) (7.9) (22.5) 0.3 0.8 HNX-Index (%) (5.1) (27.5) 17.7 22.0

Risk-Adjusted Return Measures

Standard Deviation (%)

VFMVFA 14.6 11.8 9.3 9.8 VN-Index 18.7 20.7 19.4 17.1 HNX-Index 31.4 22.9 26.0 16.3 Maximum Drawdown (%)

VFMVFA 18.3 27.1 11.3 8.3 VN-Index 22.9 33.4 23.1 11.3 HNX-Index 48.8 50.4 39.5 14.0

Risk/return ratio: Sharpe ratio VFMVFA (1.3) (3.0) (0.9) (0.6) VN-Index (0.8) (2.0) 0.4 0.9 HNX-Index (1.6) (3.2) (0.3) 0.7 Return to maximum drawdown VFMVFA VN-Index (0.4) (0.8) 0.0 0.1 HNX-Index (0.2) (0.8) 0.8 2.0 (0.6) (1.0) (0.1) 1.3 14

3. Investment Objectives, Strategy and Restrictions of VFMVFA

3.1 Investment Objectives

The main objective of VFMVFA would be to capture medium to long-term capital appreciation on Vietnam market, accompanied by capital preservation during adverse market conditions, based on the main strategy of trend-following. Vietfund Management manages VFMVFA based on the current enforced regulations. In addition, the fund’s investment target can be adjusted up to the resolution from fund holders meeting. The adjustment would be always in accordance with Vietnamese law and reported to State Securities Committee.

3.2 Investment Strategy

In order to achieve the above-mentioned investment objective, VFMVFA employs a proprietary trend- following-based-model. Trend-following is a quantitative investment approach that relies on statistical models and computer database for utilization of medium and long-term moves that appear to incontrovertibly experience in various markets. The system aims to work on the market trend mechanism, ie. buy during upward trends and conversely sell during downward trends. Since short-selling is not yet allowed in Vietnam, trend-following methodology applied by VFMVFA is not capable of enjoying the profits from both sides of the stock market as with the original trend-following system, ie. buy in an up-trend and sell-short in a down-trend. However, the systems still retain the capacity for profiting from market trends in both directions once the short-sale limitation is uplifted. Trend-followers do not aim to forecast market levels but rather jump on the trend and ride it. Besides, this methodology seeks to provide returns that are uncorrelated to traditional “buy and hold” investment style as trend-following maintains the mechanism for capital preservation during adverse market conditions.

3.3 Investment Structure

VFMVFA Fund shall be allowed to invest in the following assets: a) Deposits at commercial bank as stipulated by banking laws; b) Money market instruments, foreign currencies, valuable papers, transferable instruments in accordance with banking laws; c) Government bonds, bonds underwritten by the Government and municipal bonds including government bonds repo trading by the Ministry of Finance; d) Shares listed, shares registered for trading, listed bonds of issuers that are established and operating in accordance with the law of Vietnam; e) Derivatives listed, traded on Stock Exchanges only for hedging purposes; f) Assets arising from the execution of any rights attached to a share; g) Other assets as stipulated with the Vietnam law and approved in writing by the General Investors’ Meeting. Currently, due to the immature development of market conditions in Vietnam compared to other markets such as interest rate, foreign exchange, commodities etc., VFMVFA shall not invest in any other assets except listed shares, government bonds in the near future. However, VFMVFA Fund shall open to invest in unlisted shares and other assets if the market is allowed by law and satisfied liquidity condition.

3.4 Investment areas

With a strategy of investing in shares with high liquidity, VFMVFA’s investment area by industry can be changed from time to time depending on liquidity level of shares in the market. VFMVFA’s proposed investment areas will be divided into 14 industry sectors with percentage ratios depending on the liquidity of the market and the investment ratio shall not violate those in the investment restrictions stipulated at article 2.7 of this chapter in this Prospectus. The industry categories includes: 15

- Banking – Financial services - Food and beverages - Materials - Infrastructure – Real Estate - Utility - Energy - Retailing - Consumer Goods - Insurance - Capital Goods - Pharmaceuticals - Transportation - Services - Textiles - Automobiles and components

3.5 Investment restrictions

1. VFMVFA’s portfolio shall be in accordance to the investment objectives and structures as stated Article 3.3, Chapter IV in the Prospectus. 2. VFMVFA’s Portfolio shall include shares of at least six (06) issuers and follow the following conditions: a. The open ended fund shall not be allowed to invest more than forty nine percent (49%) of the fund’s total asset value in assets as stipulated in points a, b, Clause 1, Article 3.3 of Chapter IV in this Prospectus; b. The open ended fund shall not be allowed to invest more than thirty percent (30%) of the fund’s total asset value in assets set out in points a, b, d, e, Clause 1, Article 3.3 of Chapter IV, and these assets are shares, pre-listing bonds, issued by the company operated under the Vietnam law and issued by the same company or by a group of companies that have crossing ownership relations, in which the investment in derivatives securities equals the committed value of the contract as stipulated in point c, Clause 2, Chapter VIII; c. The open ended fund shall not be allowed to invest more than twenty percent (20%) total asset value of fund in securities in circulation of an issuer, including all valuable papers, transferable instruments, bonds, voting shares and non-voting preferable shares, convertible bonds (except government bonds); d. Do not invest in an issuer exceeding ten percent (10%) of the total value of outstanding securities of that organization. e. The open ended fund shall not be allowed to invest more than ten percent (10%) of its total asset value in assets which are shares, pre-listing bonds, issued by the company operated under the Vietnam law; f. The total value of big investment items in the fund’s investment portfolio shall not exceed forty percent (40%) of the fund’s total asset value; g. At any point of time, the total committed value in derivatives securities transactions, outstanding loans and other payables of fund shall not exceed net asset value of fund; h. The open ended fund shall not be allowed to invest in securities investment funds, shares of securities investment companies that are set up and operate in Vietnam; i. Open ended fund shall not be allowed to directly invest in real estates, precious stones and metals. 3. Except stipulated at point g, h, i Clause 2, Article 3.5, Chapter IV in this Prospectus, VFMVFA’s investment structure may vary with 15% compared to the limits prescribed at point 2 in this article, and only due to the following reasons: a) The fluctuation of the market prices of assets in the fund’s investment portfolio; 16

b) Making legitimate payments of the fund; c) Executing trading orders of investors ; d) Consolidating, merging, and acquiring issuers; e) The new fund has just been licensed or has not operated for 06 months from the date on which the certificate of the fund establishment registration is issued, due to the splitting, consolidation, or merger of the funds. f) The fund is in the process of dissolution. 4. Fund management companies must adjust the investment portfolio to meet the investment limits prescribed above within 03 months, from the date on which the variation occurs. 5. In case variation is caused by the inconformity with the investment limits prescribed by law of the fund’s charter, the fund management company is be responsible for adjusting the portfolio within 15 days from the date on which the variation occurs and shall incur the costs of these transactions and losses (if any). The profit (if any) must be immediately recorded. 6. Fund management companies may only invest in deposit and monetary instruments as regulated at point a, b, Clause 1, article 3.3, Chapter IV of this Prospectus, issued at banks approved in writing by the board of representatives of the fund.

3.6 Lending, borrowing, repo and margin transactions

1. Fund management companies may not use the capital and assets of the fund to give or underwrite any loan, except for the investments in deposit prescribed the Fund Charter; 2. Fund management companies may not take loans to sponsor activities of the fund, except for short– term loans to defray necessary costs of the fund. The total value of short–term loans must not exceed 5% of the net asset values of the fund at any time and the longest loan term is 30 days. 3. Fund management companies may not use the fund’s assets to make margin transactions (taking loans to purchase securities) for the fund or other organizations and individuals; may not use the fund’s assets to make false transactions or give securities loans. 4. VFMVFA may repurchase Government bonds in accordance with the regulations of the Ministry of Finance on the management of Government bond transactions.

3.7 Investment Selection Method

VFMVFA determines the general market direction and generates trade signals based on pre-programmed algorithm for: (i) buy/sell indicators (ii) risk management. (iii) money management

This is for the purpose of comprising a full, professional trading system. This mechanical trend following model for timing the market is anticipated to flash a major buy/sell signals 3-4 times a year. This buy/sell signal would be a buy/sell signal on the overall market, but not a signal on individual stocks in the market. So the actual stocks held in the VFMVFA will always be a basket which is a close proxy to the VN-Index The first element of the system allows for: (i) automated initiation of a trade to enter in the market shortly after the upward trend confirmed by the model; (ii) automated exit the profitable trade once the previous trend turns to the opposite direction .

The money management element of the system allows for the position size of a trade over the course of the trend so as to balance the maximization of the growth rate of the capital and the minimization of the risk of ruin. The information theory is utilized to develop the money management and risk management system for VFMVFA. The risk management element of the system allows for: (i) cut-loss rule during the losing periods when the system produces false buy signal as the determined up-trend turns out to be counter-trend; (ii) re-enter rule when the system generate false cut-loss signal as the trend re-establishes so as not to miss the next trend. (iii) elimination rule when shares obtain a higher default risk or trading halt risk.

Besides, the optimization of parameters of model variables is also undertaken for (1) minimizing the deviations of buy/sell realms from the peak/trough for more effective buy/sell signals; (2) preventing too many “whipsaw losses”; (3) trading size reduction in case of technical counter indicators. The optimization methods used is derived from the machine learning technique. This model is back-tested using historical data on proprietary computer software to ensure the robustness of the strategy so as to survive different market scenarios. The back-testing is performed in-sample and out-of-sample. In conducting a back-test, issues such as transaction costs and slippage are taken into account to reflect the most realistic situation. We conduct a “unit testing” as we test each trading strategy as a stand-alone unit. That is to split VFMVFA portfolio into sub-portfolios. a. Buy/ Sell indicators: In order to ascertain the state of the market and to uncover the good buy/sell signals on the Vietnam stock market, technical indicators based on price, volume, and volatility, and fundamental indicator based on interest rate were examined. Buy/sell indicators are included as the followings but not limited to: • Price indicators: As the main concern, the market price tells you what the market is doing. Promising trading rules based on price have been identified, including but not limited to ¾ Simple moving average crossover: A moving average can be thought of as rolling mean or running average. It is used with time series data to smooth out short-term fluctuations and highlight longer-term trends. We buy when the short-term moving average crosses above long- term moving average or price crosses above a percent variation from the moving average, as upward momentum is confirmed; and sell in the reverse direction as downward momentum is confirmed. ¾ Regression slope based indicator: We use the time series regression slope of moving average of price to gauge the momentum of the market, i.e. the rate of increase or decrease in the market. If the market is trending up, the slope should be significantly positive, and vice versa. This indicator is essential since momentum analysis gives us clues about the underlying health of a market. For example a market may be in an uptrend but if the rate of increase in the market is slowing that could be a sign that the market is about to reverse course. ¾ Parabolic SAR: This indicator takes into account the highest value reached by the price during the uptrend or the lowest value during a downtrend. At each step within a trend, the SAR is updated based on the previous SAR calculation. As the price of the stock rises/falls, SAR will rise/fall as well, first slowly and then picking up speed and accelerating with the trend. Therefore, as a rule, buy when the SAR appears below the price and sell when the SAR appears above the price.

¾ Donchian channel breakout: The highest high and lowest low over the last period time intervals form the upper and lower boundaries of the channel. Any breakout of this price range will signal buy (price breaking above) or sell (price breaking below). • Volume indicators: This is the second basic building block for trading strategy as it can identify the trending state of the market. Following are some key potential trading rules based on volume information. ¾ Moving average of volume: As a general rule, volume slowly increases in the direction of a trend and a volume spike can indicate the end of a trend and declining volume can reflect a soon to die move. We buy when the five-day rate of change of moving average of volume becomes positive and sell when it becomes negative ¾ Market breadth indicator: Advancers/decliners ratio of the past 60 trading days is calculated to signify the overall market health. For example, if the index is still moving up but over 50% of individual shares are moving down that could mean that the increase in the market is about to slow down. We buy for a large ratio that significant larger than 1 as it indicates a strong market performance (positive market momentum), and sell for a ratio that near to 0 as it represents a weak performance (negative market momentum). • Volatility indicators: Volatility provides additional confirmation of price behavior, along with volume. Such effective volatility-based-trading-rules are as follows ¾ Bollinger band: This indicator is to provide a relative definition of high and low and to identify relative extremes in volatility, and hence trend. We study two ways of using Bollinger band as (1) trend confirmation signal and (2) trend reversal signal. As a trend confirmation, buy(sell) when price breaks out of the upper band (lower band) and the band width is increasing. As a trend reversal, buy (sell) when price breaks out of the lower band (upper band) and the band width is decreasing. ¾ Historical volatility: We use two types historical volatility based on standard deviation of closing prices. The first one is the relative historical volatility and second one is the absolute historical volatility. As with relative volatility, markets that have extremely low short-term volatility readings compared to their longer-term readings have a high likelihood of exploding (i.e., making a large move), however the direction is unsure. Therefore, it has to be used in conjunction with trend-filtering-systems. As with absolute volatility, the indicator is asymmetric and only gives good buy signal, hence it has to be incorporated with other indicators. The buy signal goes by “If historical volatility is higher than a pre-determined level for a number of period and then drops below that level, then buy the market” • Fundamental indicators: VFMVFA quantitative model integrates both technical analysis indicators and fundamental analysis indicators related to macroeconomic conditions, thus making it more advanced than technical analysis. Interest rate is presumably considered as having an effect on stock market. We use short-term interest rate spread and long-term interest rate spread to build indictors for the model. The first one is considered to reflect the banking system liquidity, and thus having negative relationship with the stock market; whilst the second one is regarded as a so-called yield curve that indicates long-term expectation of investors on the overall macroeconomic conditions, and hence having positive relationship with the stock market etc. b. Money Management & Risk Management VFMVFA focuses more attention to researching the vital topics of money management and risk management as it can result in a dramatic difference in NAV performance over longer time periods due to the dramatic effect of compounding over time. With an effective money management and risk management, the growth in the equity curve is smoothed out. • Money management system: This determines how much money to put at risk at any time based on the trading edge of the model so as to balance between maximization of the growth rate of the capital and minimization of the risk of ruin. In order to build such money management system, we 19

utilize the information theory, which was first developed by Bell Labs scientist Claude Shannon to improve the reliability of communication over voice and wireless phone lines. A key measure of information in the theory is known as entropy, expressed as the average number of bits needed for communication. The more reliable the information is, the higher the information rate for a given channel capacity. Shannon’s theory also considers equivocation—the chance the message is wrong—and shows you must subtract equivocation from the channel capacity to determine the information rate. Information in the stock market setting is consistent with the idea of equivocation in a sense that true information is also probabilistic because information is something the market does not already know. Therefore, information theory has application to money management in stock market in a sense that it tells us precisely how to take the best guess in the face of partial information on how reliable buy/sell signals from the quantitative model are so as to adequately allocate capital to each of the “sub portfolios” associated with each buy/sell strategy. • Risk management system: This system possesses the stop loss mechanism to reduce investment risk when the strategies incur whipsaw or when market has crisis. Besides, the mechanism re-entering the market is also set to reduce the possibility of buying a higher price than the original purchase price before the false cut-loss signal. On the other hand, risk management mechanism also develops technical counter indicators to determine time to reduce investment weight in unfavorable market. The system is set through optimization method based on Artificial intelligence - Machine learning and Evolutionary Algorithms. Besides, VFMVFA Fund has followed and set an elimination rule for those shares with high default risk or trading halt risk by feeding constantly fundamental data and trading alert at stock exchanges. Evolutionary algorithms simulate biological evolution to find the best answers for the problems of high complexity. The decisive factor of this method is the ability to adapt to changing market conditions. 3.8 Shortcoming of VFMVFA model

This mechanical trend-following system is prone to losses when the market “whipsaws”. In a buy whipsaw situation the momentum technical indicator flashes a “buy” signal as the market appears to start a new uptrend, but then the market reverses back to the stop loss point, causing the trader to sell out the position. On the other hand, cut-loss whipsaw exits the position entirely but finally the market begins a genuine uptrend movement and the system re-enters into the long position. The fund’s overall returns are diminished versus a passive buy-and-hold strategy because of the loss taken the first time the market hits the stop loss point. An effective way to avoid whipsaw losses and to ensure a more smooth growth in the fund’s capital value is to use a variety of collaborating indicators. This can be done by synthesizing several collaborating technical indicators and to form them into a scoring system to produce one indicator. Trading decisions are then made off that market health indicator. Besides, there is a research issue in Vietnam related to limited price history, whilst any kind of quantitative trading system works better with lots of data. The mechanism for trend-following to work best is using one to two very simple trading systems applied to many different markets. This is not feasible in Vietnam. The alternative way is to get some diversification by trading many different systems on the same market. We optimize this situation by researching indicators that really work and put emphasis on effective money management and risk management to enhance the performance of the fund.

4. Risk factors Any investments in a fund shall not be guaranteed or undertaken to be guaranteed, by any bank or organization or the Fund, to ensure to achieve set investment objectives. Investments in a securities investment fund should be meant to pursue long-term profits; and therefore, Investors should not expect short-term returns from their investments. Though this Prospectus does not cover all risks relating to making investment on the Fund, Investors are recommended to pay attention to the key risk factors mentioned herein prior to making decision on investment in VFMVFA.

4.1 Market risk This type of risks occurs when the assets the Fund invests decrease in value wholly or partially within a period of time, and may cause the fall of the whole market due to their domino effect; and thus, go beyond VFM’s control. However, the Fund has risk management regimes in place like stop loss and asset allocation in order to minimize market risks. 4.2 Quantitative model risks This risk arises when there are large market fluctuations which affect the efficiency of the investment model. However, the model applied to the VFMVFA Fund has been researched and tested (back testing) to be capable of accommodating many different market conditions (robustness). At the same time, a correcting mechanism has been constructed which is aimed at providing for large and complex market changes. 4.3 Market liquidity risks One of the crucial factors for the Fund is to enter or exit the market at the appropriate times. Therefore market liquidity is important to the Fund’s profits. The Fund’s Trend Following and quantitative analysis investment models use algorithms aimed at predicting market peaks and bottoms. These are points where liquidity remains quite good, satisfying investment requirements and realization of profit. 4.4 Basic data risk As Vietnam's Stock markets have just on 10 years of historical data, the data on the influences of the economic cycle on the securities markets is not voluminous. This is a systemic risk outside the control of the Fund Management Company. The model has been tested on the basis of the oldest possible data separated into small cycles to test potential adjustments to the Model. 4.5 Counterparty risk Counterparty risk is the risk that the counterparty will not live up to its contractual obligations. In Vietnam there are currently no the intermediary financial institutions to determine credit rating of enterprises and economic organizations. To ensure structural VFMVFA’s assets are allocated according to the objectives and strategies, open ended fund regulation and maintain high liquidity, VFMVFA Fund will invest in government bonds, bonds are guaranteed by the Government, local government bonds, repo and cash holdings as fund appears sell signal. The government bonds and bonds guaranteed by the government, local government bonds have high liquidity so they have virtually no counterparty risk. For repo, besides setting weight constraint for counterparty, VFMVFA Fund will select the partners with strong financial strength and prestige to perform transactions in order to minimize the counterparty risk. 4.6 Legal risk Since Vietnam officially began operating a market-oriented economy at the beginning of 1990s, the Government has, and continues to, perfect the legal framework for securities and securities markets. Securities, securities investment funds and securities market operations were amended by legal documents issued in 1998. In 2006, faced with an exploding securities market and imminent entry into the WTO, the Government instituted several regulations, including the Law on Securities, guidance decrees, operating statutes, etc. However, legal risks remain whilst the Government continues the process of adjusting and perfecting the legal framework governing securities and the operations of the securities markets. These adjustments may influence the VFMVFA Fund’s operations in the future. 4.7 Redemption risk Following Open-Ended Fund mechanism, investors can order to redeem VFMVFA’s fund unit for cash. Therefore, there is a chance that a significant amount of redemption orders could negatively effect on market price of the fund’s assets, especially in low liquidity period of the market, and in turn reduce actual proceeds for investors or delay the redemption process because of partial redemption. 21

In case of force majeure, investors might not be able to redeem VFMVFA’s fund units if regulators impose a trading suspension on VFMVFA’s fund units. Fund Management Company hold rights to only execute a part of total redemption orders or execute all of total redemption order in a longer timeline according to Chapter X, article 4.6 – “Partial redemption, trading suspension of open-ended fund transactions” in this prospectus. When the execution of investors’ redemption orders would be longer compared to regulations due to above reasons, Fund Management Company shall have announcements on the reasons and the anticipating execution time to investors. 4.8 Conflict of interest risk The Fund Management Company shall face conflicts of interest between the investment funds and other investment products which it manages. This is not a systemic risk and can be controlled through the establishment of an internal “information firewall” (Chinese Wall) aimed at minimizing the conflicts of interest between the investment fund and other financial products being managed by the Fund Management Company. 4.9 Tax Investors shall fulfill any tax obligations arises during the trading of open-ended fund units as stipulated by Laws. Any tax obligations related to the investors shall not be reflected directly in the total VFMVFA operation performance.

V. THE TRADING MECHANISM FOR VFMVFA OPEN-ENDED FUND 1. VFMVFA account trading information Investors should prepare all the required documents for account opening at appointed Distributors before executing any trade: • The existing investors before the conversion have not opened the trading account for open-ended fund shall receive the Confirmation of ownership on VFMVFA fund certificates by VietFund Management (VFM). Investors should prepare all the required documents for account opening including “Account opening application form” and “Confirmation of ownership on VFMVFA fund certificates” and other related documents. • The new investors should prepare all the required documents for account opening including “Account opening application form” and other related documents.

2. General principles for trading orders at the trading cycles a. Trading time Trading frequency shall be arranged periodically on Friday. If the trading day falls in a public holiday, the trading shall be carried on the next trading day. In the case of the next trading day also falls on a public holiday, the trading shall be carried on the working day right after the first trading day was falled on the public holiday. The Fund management company shall announce to investors, distribution agents and other related service providers about details of the trading schedule and the Cut-off time whenever the public holiday is coming on our website or emails. The fund management company shall announce, update the increasing of trading frequency in the prospectus and disclosure under the law. The fund management company will update this amending to the fund charter at the closest annual general meeting. The reducing of trading frequency shall be approved by the general investors meeting and the trading frequency are not less than two (02) times in one (01) months. b. Cut-off time Is 10:30 am on T-1 (every Thursday) whereas T is the Valuation day and Trading day;

Is the latest time that distribution agents receive any Subscription/Redemption/Switching orders and confirmation on the subscription money transfer to the Fund account on the trading day; If the trading orders arrive after the Cut-off time, this order shall be canceled in the registered trading cycle and shall be moved to the next consecutive trading cycle upon investor’s request. If the Cut-off day falls in a holiday, the Cut-off day shall be carried on the previous working day. The Fund management company shall announce to investors, distribution agents and other related service providers about details of the trading schedule and the Cut-off time whenever the holiday is coming on our website or emails. c. Cancelling orders All investors shall have the right to cancel the trading orders (subscription, redemption, switching) before Cut - off time. If the cancellation request arrives after the Cut - Off time, the cancellation request is considered as an invalid order; No partial cancellation of trading orders shall be allowed; The cancellation requests shall be made with the Distribution Agents at which investors have previously registered the trading orders and have before the Cut - Off time. In case the investors cancel the Subscription orders after transferring money to the Funds' account and before the Cut - off time, this subscription amount shall be transferred back to investors within five (05) business days since the Valuation date (T day). Any bank fees arise from the transfer shall be borne by the investors. d. Confirmation period: Within three (03) days from the date on which fund certificates are traded (T+3), the Transfer Agent shall be responsible for updating full and accurate information on post-trading holdings of investors named in the Main Registers and providing such information for Distributors to send to such investors the trading confirmations. e. Redemption payment period : Within five (05) days from Trading day (T+5), the transfer agency shall transfer the redemption payments directly to investors' bank accounts from the fund account after receiving the trading confirmation. f. Trading account maintaining period and trading odd fund certificates: Incase investors’ trading accounts obtain a zero outstanding balance with no trading activities within one (01) year, the Fund management shall automatically inactive these accounts until investors request to activate accounts again and update new information at Distribution Agents. 3. Valuation method of the net asset value Trading value of VFMVFA fund unit is the net asset value (NAV) per unit which is determined at Trading/Valuation date (T day) and the net asset value used to calculated the trading value of VFMVFA fund shall be announced to investors within one (01) business day from the T day on the fund management company’s website, distribution agents or other means of public announcement as per current regulation on the stock market. Trading value of a fund unit is determined as follows: - Subscription price is a price that investors must pay fund management company. The subscription price shall be determined by the net asset value per a fund unit as of the fund certificate trading day plus subscription fee. - Redemption price: Redemption price is the price of a fund unit, that Fund Management company must pay investors, is determined by the net asset value per a fund unit as of the fund certificate Trading day minus redemption fee as the Fund Charter.

The net asset value of the Fund shall be determined on the Friday of every week and announced to investors within one (01) business day on the fund management company’s website, distribution agents or other means of public announcement as per current regulation on the stock market. 4. Subscription orders • Investors can only trade the fund certificates only investors open the trading account for VFMVFA Fund at appointed Distributors. • Minimum required subscription amount is VND1,000,000 (one million Vietnam dong). • Investors shall complete request via internet, telephone, fax based on the ability of authorized Distributors. This form must comply with the regulations on electronic transactions and securities. The original copy shall be sent to the authorized distributors before the cut-off time. • Subscription orders must be filled and sent to Distributing agents before the Cut-off time. Investors must confirm that the subscription money is transfered to the VFMVFA Fund account at Custodian Bank before the Cut-off time. • Investors/ authorized person shall pay the subscription money with the bank tranfer information as follows:

- Fund name : VIETNAM ACTIVE FUND (VFMVFA) - Account number : as stated for each appointed Distributors in Annex I - Bank name : HSBC Viet Nam - Amount : Subscription fee - Content : [Investor’s name/ID] [Fund trading account] [to subscribe VFMVFA]

• In case the actual payment for subscription amount is less than or greater than the registered subscription amount and equal or greater than minimum required subscription amount, then the allotted number of fund units are determined by the actual payment amount. Investors shall authorize to the Fund management company to adjust the trading orders to comply with this requirement. • In case the actual payment for subscription amount leads to the alloted unit less than minimum maintaining units (100) units, these units are considered odd units. • The number of fund certificates that investor shall receive after the subscription shall be alloted as the following formula:

Number of fund certificates Subscription amount x (1- Subscription fee (%)) = received NAV per unit at the Trading day • Number of allotted fund units can be rounded down to two decimal places. • Investors pay subscription payments by directly transferring from investors' bank account or from the authorized person’s bank account to the Fund account at Custodian Bank in Vietnam dong. 5. Redemption orders • Redemption orders must be fullfilled in the “Redemption Request” and sent to Distribution agents before the Cut-off time. • Investors shall complete request via internet, telephone, fax based on the ability of authorized Distributors. This form must comply with the regulations on electronic transactions and securities. The original copy shall be sent to the authorized distributors before the cut-off time. • The redemption units must be equal or greater than five units (05 units) or the remaining units. • In case the registered redemption units cause remaining units in the account less than the required account maintaining units, investors must redeem all the units in account at the same trading cycle.

• The redemption order can not be redeemed or only be partially redeemed as regulation at Chapter V, article 7 – “Partial redemption, suspension of trading of open-ended fund transactions” in this prospectus. • Redemption amount shall be calculated at the following formula:

Redemtion = Number of redeemed fund certificate x NAV per unit at Trading day x (1–Redemption fee(%)) amount received

• Redemption payments shall be made by directly transferring to investors' bank accounts in Vietnam dong within five (05) days from Trading day (T+5). • Any bank fee arises from the transfer of the redemption payment shall be borne by investors. • Investors shall comply with all the tax obligations (if any) for the redemption orders per current legal regulations. 6. Switching Orders All Investors shall have the right to switch between different funds if the Fund Management company has more than two open - ended funds with the same Transfer Agency. The Fund management company shall update all information on the switching regulations to the investors on the website of the fund management company and Distribution agents. 7. Partial redemption, suspension of trading of open-ended fund transactions 1. The fund management company shall be allowed to satisfy part of an investor’s subscription, redemption or switching orders under the following circumstances: a. The total value of redemption orders (including redemption orders for switch) minus the total value of subscription orders (including subscription orders for switch) on the trading day of fund certificates exceeds ten percent (10%) of the net asset value of that fund; or b. The implementation of all of the investors’ redemption orders shall lead to the fact that: - The net asset value of the fund is lower than VND fifty (50) billion. In this case, the fund management company can partially execute the redemption/switching orders until the net asset value reaches exact fifty (50) billion. c. The selling of securities in the portfolio for cash to satisfy the redemption orders cannot be executed due to the following circumtances: - The lack of market liquidity which cannot satisfy the redemption orders; - One (or more) securities in the VFMVFA portfolio is suspended trading due to the Decision from the Securities Exchanges. 2. For the remaining part of redemption/switching orders that were partly executed as mentioned in Point 1 of Article 4.6 above, the fund management shall apply the pro-rata principle for fund certificates allotment as follows: • The executed value shall be allotted to all investors registered at the same trading cycle, ensuring the pro-rata between the executed value and the registered value so that the total value of redemption at the trading day shall not violate the conditions for partial redemption regulated at Point (a) and (b), Article 1 above. The number of redeemed fund certificates in this case shall be calculated as the following formula: = ∗ ∑ Whereas:

• Xi: The actual redeemed fund certificates that an investor can redeem (or number of fund certificates are actually executed in the redemption order). Number of allotted fund units can be rounded down to two decimal places; SLDKi: Number of fund certificates that an investor has registered to redeem; SLTT: Total number of fund certificates that the Fund management can actually satisfy the redemption orders. ∑ SLDKi : Total number of fund certificates that investors have registered to redeem in one trading cycle.

• The unredeemed orders and those orders come after the Cut-off shall be automatically canceled in the same trading cycle. If investors wish to fulfill their redemption orders, investors must redeem again in the next trading cycle. • Announcement on the unredeemed orders or partial redemption orders or canceled orders shall be updated to investors after the trading day. 3. Open-ended fund certificate transactions may be suspended in where one of following events happens: • Force majeure condition; • It is impossible to determine the net asset value of the fund at the Trading day due to the Securities Exchange suspense securities trading in the fund’s portfolio. • Other cases as prescribed in the fund’s charter or the State Securities Commission deems necessary. Duration for suspension of fund certificate trading shall be set out in the fund’s charter, but shall not exceed ninety (90) days from the last fund certificate trading day. Within maximum period of thirty (30) days, from the end of suspension of fund certificate trading period as provided above, the Fund management company shall organize an investors’general meeting to consult investors of the dissolution, segregation of the fund or the extension of the suspension duration. Within the time frame to convene the investors’ general meeting, if the reasons for such suspension of fund certificate trading end, the fund management company may cancel the convention of the investors’ general meeting. 8. Non-commercial transactions (gift, present, inheritance, transfer of ownership…) • All of VFMVFA non-commercial transactions (gift, present, inheritance, transfer of ownership…) to an individual/institution shall be executed at appointed Distribution Agents • Investors must provide all the necessary documents to complete the non-commercial transaction as applicable laws before the Cut-off time of each trading cycle. • Investors shall not be charged any non-commercial transaction fee from the fund management company. • Investors shall be responsible to fulfill any tax duty arise from the non-commercial transaction as applicable laws. 9. Authorized person from the investors • Investor shall authorize an individual to execute all the Subscription/Redemption/Switching/Canceling orders of the VFMVFA fund. • The authorized person for foreign investors in Vietnam shall meet all the requirements stipulated at point 6, Article 9, Decision 213/2012/TT-BTC dated December 06, 2012 regarding to the investment activities of foreign investors in Vietnam stock market.

• Investor shall fullfil the information of authorized person in the “Account opening form” for VFMVFA Fund and submitt all the required documents to the appointed Distributors. The authorized person’s information shall not be changed until the investor re-registers again this information at the Distributor. 10. Other regulations on the VFMVFA’s subscription process • The investor who is a local individual/institutional shall pay the subscription payment for VFMVFA fund certificates by transferring the subscription money directly to the Fund account. • The non – authorized person (as in the “Account Opening Application form”) shall not be able to execute the subscription nor transfer the subscription money to the Fund account by any mean. • The investor who is a foreign individual/institutional according to description in Decision No. 121/2008/QD-BTC issued by Ministry of Finance and Decision No. 03/2004/TT-NHNN issued by State Bank shall transfer the subscription money directly from his/her CCA (capital contributed account) account to the Fund account. Investor shall provide the confirmation of the CCA account from the bank for Distributor at the time he/she opens the trading account for VFMVFA. • The transfer of the subscription money from any other bank account than the CCA account shall be considered an invalid order. The foreign investor shall be responsible for the VFMVFA subscription money not from the CCA account as stipulated by the laws. 11. Invalid trading The following trading shall be considered as an invalid trading: 11.1 Invalid subscription orders a. The investor/authorized person transfers the subscription money after the Cut – off time.

b. Subscription orders arrive after the Cut-off time c. The investor/authorized person transfers the subscription money with transfer descriptions which are not contained one or all of the following bold information: • [Investor name] [open-ended trading account number] subscribe [Fund name] d. The investor/authorized person transfers the subscription money without placing the subscription order at the distribution agents before the Cut – off time. e. The third person but not the authorized person transfers the subscription money. f. The investor/authorized person subscribes less than the required subscription amount (VND1,000,000) one million Vietnam dong. • The management company shall conduct the Custodian bank to transfer back the subscription money for those invalid subscription orders to the transferer’s account based on the transferred bank’s information • Any bank fee arises from the transfer shall be borne by the investors. • The subscription amount shall be transferred back to the investors within five (05) business days since the Valuation date (T day). Any bank fee arises from the transfer shall be borne by the investors. 11.2 Invalid redemption orders a. The redeemed fund units are more than the available fund units. b. Redemption orders arrive after the Cut-off time c. The redeemed fund units which cause the remaining fund unit in the account is greater than zero (0) and less than the required account maintaining units as regulated in the Fund Charter except those odd units trading as stated in Article 1, point f, Chapter V of this Prospectus. d. Redemption orders are placed after the Cut-off time. 27

VI. GENERAL INFORMATION ABOUT FUND MANAGEMENT COMPANY, CUSTODIAN BANK AND OTHER RELATED SERVICE PROVIDERS 1. General Information about Fund Management Company (VFM) VFM was established in July 2003, initially as a joint-venture company of the two leading financial institutions which are Dragon Capital – a British intergrated investment firm centred on the emerging financial markets of Vietnam and Sacombank – one of the largest commercial banks in Vietnam. To affirm the strength of the fund management firm as well as our commitment to the quality of the services, since January 2009, the company has conversed its legal status as Vietnam Investment Fund Management Joint Stock Company. In 2010, VFM has been approved to raise its charter capital to VND229.5 billion by the SSC under the changing license No. 79/UBCK-GP, dated November 04, 2010. Presently with new operating model, VFM has utilized Dragon Capital’s centralized, experienced, renowned, potential and sustainable resources together with other strategic partners comprising well-known financial organisations in the stock markets. All converge in synergy to create more competitive advantages for VFM on Vietnam financial markets. At present, VFM is managing total assets of over 2,000 billion (as of 31/12/2013) through its products such as Vietnam Securities Investment Fund (VFMVF1) incepted in May 2004, Vietnam Growth Investment Fund (VFMVF2) incepted in Dec 2006, Vietnam Blue-chips Fund (VFMVF4), Vietnam Active Fund (VFMVFA), Vietnam Bond Fund (VFMVFB) and asset management services incepted in June 2008, entrusted by over 6,000 domestic and foreign corporate as well as individual investors. We are currently managing these funds: Vietnam Securities Investment Fund - VF1: VF1 is Vietnam's first closed-end public fund which initial chartered capital of VND300bn was raised within ten days, listing on the HSX in November 2004. After two consecutive years of profit, VF1 was raised from VND 300bn to VND500bn in 2006 and from VND500bn to VND1000bn in 2007. VF1 is considered one of the most liquid securities in the stock market. On October 08, 2013, VFMVF1 is successfully converted to open-ended fund with the largest converted AUM in the Vietnam Stock market. Vietnam Growth Investment Fund - VF2: This is the first member fund managed by VFM. VF2 was established in December 2006 by 15 big partners comprising companies in finance, banking industries, listed companies, and the FMO, a financial institution of the Government of the Netherlands. The initial mobilized capital of VF2 is VND 400 billion which increased to VND 963.9 billion in December 2006. VF2 to be extended till 2014. Vietnam Blue-chips Investment Fund - VF4: VF4 is our second closed-end fund and listed on the HOSE. With an initial chartered capital of VND806.46bn in total capital of VND8,000 billion, and 10 years of operation. VFMVF4 is also converted to open-ended fund on December 16, 2013. VFMVFA - Vietnam Active Fund: VFA is the first active fund on the Vietnamese stock market using the quantitative analysis model to conduct strategic investments. Total capital is VND240.4 billion. VFMVFA is the first closed-ended fund converted to open-ended fund in Vietnam. VFMVFA is also converted to open-ended fund on April 18, 2013 VFMVFB – Vietnam Bond Fund: VFMVFB is the first bond fund managed by VietFund Management with the initial chartered capital of 100 billion Vietnam Dong. VFMVFB Fund is consulted by Dragon Capital experts in fixed income market. The discretionary portfolios management: is designed solution specifically for organizations and high net worth individuals with specialized investment strategies according to requirements through discussing, consulting, analyzing for each investment objective. Information relating to VFM’s operations in the past shall not be implied as a way to ensure its future operation results.

1.1 Introduction to the Board of Management of VietFund Management (VFM) Mr. Dominic Scriven Chairman Mr. Tran Thanh Tan Vice Chairman cum CEO Mr. Le Hoang Anh Member Mr. Pham Khanh Lynh Member/ Business Development Deputy CEO Mrs. Luong Thi My Hanh Member/ Investment Deputy CEO Details of each member in the Board of Management of VFM shall be referenced via VFM’s website at www.vinafund.com 1.2 Introduction to the Board of Directors of VietFund Management (VFM) Mr. Tran Thanh Tan CEO Mr. Pham Khanh Lynh Deputy CEO Mrs. Luong Thi My Hanh Deputy CEO Mr.Tran Le Minh Deputy CEO Mr. Nguyen Minh Dang Khanh Deputy CEO cum Financial Director Details of each member in the Board of Directors of VFM shall be referenced via VFM’s website at www.vinafund.com 1.3 Introduction on the Management Staff of VFMVFA Fund Mrs. Luong Thi My Hanh VFMVFA Portfolio Manager, cum Investment Deputy CEO Besides, there will be many more professional analysts to join in researching and analyzing investments and securities in order to optimize the entire portfolio. 2. Custodian Bank HSBC (Vietnam) is located at: Metropolitan Building, 235 Dong khoi, Dist 1 Ho Chi Minh city Tel: (84-8) 3829 2288, Fax: (84-8) 6256 3635 HSBC bank is wholly-owned foreign bank, incorporated according to establishment certificate No 235/GP- NHNN by The State Bank of Vietnam, Law of credit institutions licensed on 08 September 2008 and licensed Securities Custody Operation Certificate No 18/UBCK-QLKD by The State Securities Commission on 18 March 2008, and Document No 2369/UBCK-QLKD by The State Securities Commission on 17 December 2008 about the approval of transferring Custody Operation Certificate of HSBC Bank (Vietnam), implementing operations: safe-keeping, custody securities, agreements, documents relevant to fund’s assets and supervising Fund’s operation simultaneously. 3. Auditing Company Each year, VFM submits a list of at least two auditing companies to the Board of Representative of the Fund for its selection to audit VFMVFA. The selected auditor shall conduct annual auditing of VFMVFA’s assets as well as VFM’s management to ensure that investors shall be provided with accurate figures and data. The proposed auditor for VFMVFA can be either PWC, KPMG or Ernst & Young Vietnam Co., Ltd. 4. Authorized Service Provider Authorized service provider operates: Fund accounting and Transfer Agency HSBC (Vietnam) is located at: Metropolitan Building, 235 Dong khoi, Dist 1 Ho Chi Minh city Tel: (84-8) 3829 2288, Fax: (84-8) 6256 3635 29

HSBC bank is wholly-owned foreign bank, incorporated according to establishment certificate No 235/GP- NHNN by The State Bank of Vietnam, Law of credit institutions licensed on 08 September 2008 and licensed Securities Custody Operation Certificate No 18/UBCK-QLKD by The State Securities Commission on 18 March 2008, and Document No 2369/UBCK-QLKD by The State Securities Commission on 17 December 2008 about the approval of transferring Custody Operation Certificate of HSBC Bank (Vietnam), VII. DISTRIBUTORS VFMVFA’s fund certificates shall be distributed through designated agents as listed in Annex 1 of the Prospectus. VIII. VALUATION AND ANNOUNCEMENT OF NET ASSET VALUE 1. Valuation of the Net asset value • The net asset value of the fund and the net asset value of a fund unit must be certified by the supervisory bank. The value certification must be made in writing, or the access via the electronic information system of the supervisory bank is approved by the fund management company. If the valuation is incorrect, the supervisory bank must notify and request the fund management company to adjust it within 24 hours. • The net asset value of the Fund shall be evaluated weekly and verified by Supervisory Bank. Within 03 working days from the date of valuation, the net asset value of the fund and net asset value of a fund unit shall be posted on the websites of the fund management company, relevant service providers, distributors and mass media in accordance with the regulations on information disclosure in the stock market. • The fund management company may authorize relevant service providers to determine the net asset value of the fund, the net asset value of a fund unit based on the price offered by quotation service providers. The fund management company is responsible for inspecting, supervising in order to ensure that the determination of the net asset value is accurate and in compliance with laws. • The net asset value of a fund unit is the net asset value of the fund divided by the total number of circulating fund units on the trading day closest to the valuation day. The net asset value shall be rounded according to regulations on accounting and auditing. The residual amount after the rounding shall be included in the fund. 2. Principles of Valuation Method of the Net Asset Value a. Date of valuation The Fund’s NAV is valuated on the weekly and monthly basis. The valuation date is on every Friday (for weekly term) and on the first day of the next month (for monthly term). In case the fund management company changes the valuation date, the company shall get the approval from the Board of Representative before execution. In case the valuation date of weekly term falls in a holiday, the valuation date shall be carried on the next working day right after. For monthly term, the valuation date is always on the first day of the next month regardless it falls in a holiday. b. Method of valuation The NAV means total asset values owned by VFMVFA, subtracts its related liabilities (such as brokerage fees, Custodian Bank fees, administrative duties, valuation fees, bank interests, if any etc.) at date prior to the valuation date. Asset value is determined by market value or reasonable price (in the absence of market value or the market price is highly volatile under the provisions of fund’s valuation Manual which is approved in written by the Board of Presentatives). The valuation is specified as follows: No. Type of asset Principle for valuation of the transactions on the market Cash and cash equivalents, money market instruments

1. Cash (VND) Cash balance on date before the valuation date Foreign currency The value is convertible into VND according to prevailing exchange 2. rate at credit entities which are permitted to do business in foreign exchange on date prior to the valuation date Term deposit Deposit value plus unpaid interest as of the date prior to the 3. valuation date Treasury bills, bank notes, commercial papers, transferable deposit Purchase price plus accrued interest as of the date prior to the 4. certificates, bonds with the valuation date time to maturity of less than 3 months and discounted money market instruments Bonds - Quoted price or other name (clean price), depending on the internal regulations of the Stock Exchange , on the trading system of the Stock Exchange for Outright Bond transaction on date having latest transactions prior to valuation date plus accrued interest; - In case of no transaction in more than two (02) weeks until valuation date or or only have transactions with abnormal 5. Listed bonds flunctuation of price according to Valuation Manual ‘s regulations which approved in writing by fund representative board, it shall be valued according to the following order: + Price determined by the method which is approved by the fund representative board (detailed in the Valuation Manual); + Purchase price plus accumulated interest; + Face value plus accumulated interest. It shall be valued according to the following order: + Quoted price or other name (clean price), depending on the internal regulations of the Stock Exchange , on quotation systems plus coupon accrued to the date prior to valuation date; 6. Unlisted bonds + Price determined by the method which is approved by the fund representative board (detailed in the Valuation Manual); + Purchase price plus accrued interest; + Face value plus accrued interest. Shares - Closed price (or other name depending on internal regulations of the Stock Exchange) on date having latest transaction prior to valuation date; - In case of no transaction in more than two (02) weeks until the date prior to the valuation date, it shall be valued according to the Shares listed on Ho Chi following order: 7. Minh City or Hanoi Stock + Closed price (or other name depending on internal regulations of Exchange the Stock Exchange) on date having latest transaction within 12 months prior to valuation date; + Purchase price (cost price); + Book value; + Price determined by the method which was approved by the fund representative board. Shares suspended to It shall be prioritized prices as the following order: 8. transact, or cancelled listing + Book value; or transaction registration + Face value; 31

+ Price determined by the method which was approved by the fund representative board. It shall be prioritized prices as the following order: Shares of organizations - 80% of liquidating value of such shares on latest date of preparing 9. falling into winding-up or balance sheet prior to valuation date; bankruptcy - Price determined by the method which was approved by the fund representative board. Derivative securities Closed price on latest previous transaction date prior to valuation 10. Listed derivative securities date Listed derivative securities Price determined by the method which was approved by the fund 11. without transaction within representative board. two weeks or more Commitment value of Regulated in item 3 below of this article 12. derivative contracts Other assets Other permitted investment Price determined by the method which which is allowed by law and 13. assets approved by the fund representative board. Note : ‐ Bond Quoted price: In case there are more than 1 outright transaction on trading system on date having latest transaction prior to valuation date, leading to there are more than 1 quoted price, weighted average quoted price ( for Outright transactions only) will be used. ‐ Accrued interest is the interest which is calculated from the latest date for paying interest to the date prior to valuation date; ‐ Book value of a share is determined on basis of audited and viewed latest financial statement. ‐ Date means calendar days. ‐ Methods determined details in Valuation Manual. • VFMVFA’s total payable liabilities include its debts or obligations up to the date prior to valuation date, and valuation methods for all such payable liabilities and obligations must be certified by the Custodian Bank in accordance with relevant laws. The fund’s NAV = Fund’s total assets – Fund’s total liabilities payable The NAV per fund unit value is equal to the fund’s net asset value divided by total in-circulation units at the transaction date prior to the valuation date, and shall be taken to 2 decimals. c. Commitment value from derivative contracts • Commitment value (global exposure) is the value converted to money which securities investment funds/companies are parties with the obligation of contract implementation. The commitment value is determined upon the market value of outstanding assets, payment risks, market changes and the time necessary for position liquidation. • In calculating the commitment value, fund management company may apply: - Net offset principle of derivative position (reverse) for the same outstanding security, for example the purchase position of XYZ securities call option reduces (makes up) the commitment value from the sale position of XYZ securities call option; - Net offset principle of derivative position and spot delivery position of the same security, for example the purchase position (holding) of XYZ securities makes up (reduces) the commitment value deriving from the sale position of XYZ securities call option ; - Other principles according to the international practice ensure the risk administration.

No. Type of assets Commitment value

1 Stock option (purchase of The market value of option position1 is adjusted by delta coefficient put option, sale of put of option = Number of contracts x Volume of shares per contract x option, sale of call option) current market value of share x delta coefficient2 2 Bond option (purchase of Market value of option position3 is adjusted by delta coefficient of put option, sale of put option = Number of contracts x nominal value x current market option, sale of call option) price of bonds x delta coefficient 3 Index future contract Market value of future position = Number of contracts x value calculated on an index point x current index level 4 Bond future contract Market value of future position = Number of contracts x value of contracts calculated under notional value x market value of the cheapest transferable bonds 5 Other contracts Upon the model selected by the fund management company, agreed with the supervisory bank and approved by the fund representative board.

Note: 1 If the fund holds long position, the market value may be adjusted to increase premium. 2 Delta coefficient is the simple derivative of option price over underlying securities price. In the simple case, the delta coefficient may be considered 1. In case of complex option, the delta coefficient shall be determined by fund management companies, supervisory banks after being approved by the Fund Representative Board. 3 If the fund holds long position, the market value may be adjusted to increase premium.

IX. FEES AND EXPENSES 1. Fees paid by investors 1.1 Subscription fee at trading cycles • Subscription fee is the fee that investors pay to the Fund management company when buying a fund unit. This fee shall be payable upon the issuance and counted as a percentage of the subscription amount. • Subscription fee is deducted against subscription amount before calculating the number of fund units distributed. • Subscription fee shall be apllied as the following:

The subscription amount (VND) Subscription fee

From 1,000,000 to 200,000,000 1% of the subscription amount

From above 200,000,000 to 500,000,000 0.75% of the subscription amount

From above 500,000,000 to 5,000,000,000 0.5% of the subscription amount

From above 5,000,000,000 to 10,000,000,000 0.25% of the subscription amount

Above 10,000,000,000 0.2% of the subscription amount

In case that the fund management company obtains regulations causing the change in the subscription fee during a fixed period of time, the company shall announce on website of VFM and distribution agencies or under law. If there are more regulations on fees applicable at the same time, the provisions beneficial to investors will prevail. 1.2 Redemption fee

• Redemption fee is the fee that investors must pay to the Fund management company when selling a fund unit at the next subsequent trading cycles. Such fee is subtracted from redeemed amount and payable as the fund pays to investors and counted as a percentage of the redeemed amount. • Redemption fee at trading cycles shall be applied as the following:

The holding period since the subscription date (day) Redemtion fee

To 90 1.5% of the redeemed amount

From 91 đến 365 0.75% of the redeemed amount

From 366 đến 730 0.5% of the redeemed amount

From 731 0% of the redeemed amount

For existing investors in the final list on the delisting date (11 March 2013): Redemption fee is 0.5% of the redeemed amount. This fee will be applied to 18 April 2015. In case that the fund management company obtains regulations causing the change in the subscription fee during a fixed period of time, the company shall announce on website of VFM and distribution agencies or under law. If there are more regulations on fees applicable at the same time, the provisions beneficial to investors will prevail. 1.3 Switching fee • Investors shall pay to the Fund management company switching fee when placing switching order at trading cycle after the conversion of VFMVFA. • Investors shall not pay any subscription or redemption fee for the switching units. • Switching fee shall be 0.2% of the trading amount of the switched fund. 2. Fees paid by the fund 2.1 Management fee • The maximum management fee is 2% of VFMVFA’s NAV per fiscal year. This fee is paid to VFM for carrying out fund management services for VFMVFA. This fee applied for each period will be determined by VFM which ensures that the total amount of management fee and other fee paid by the fund to VFM complied with law. VFM shall notify the changing management fee to the Board of Representatives and Custodian bank, and update in latest Prospectus. Management fee applicable for the period immediately after the fund conversion will be announced at the AGM. • The monthly fee is the total fee calculated (accrued) at valuation cycles in a month. • Management fee for VFMVFA at each valuation cycle is calculated as below: • Management fee = management fee per year applicable for the charging period x NAV on the day prior to the valuation day x actual days in the valuation cycle/ actual days in a year (365 or 366) • In case that the fund shall valuate NAV monthly, the monthly management fee is calculated as below: • Monthly management fee = [management fee per year applicable for the charging period x NAV on the day prior to the valuation day of the first valuation cycle in the month x actual remaining days from the begining of the month to the day prior to the valuation day/ actual days in a year (365 or 366)] + total management fees of the remaining valuation cycles in the month + [management fee per year applicable for the charging period x NAV on the day prior to the valuation day of the last valuation cycle in the month x actual remaining days in the month/ actual days in a year (365 or 366)]

2.2 Depository and supervision fee • Depository and supervision fee shalll be paid to the Custodian Bank for providing the Custodian Bank services and detailed in the Supervisory contract. Such fee is calculated at every valuation cycle based on the NAV of day prior to the valuation day and payable every month. The monthly fee is the total fee calculated (accrued) at every valuation cycle in a month. • The supervision fee is 0.02% of NAV per year. • The depository is 0.06% of NAV per year. • The above fee does not include other fees such as fee payable to Depository center, legal fee, mailing fee, etc. • The monthly fee is the total fee calculated (accrued) at valuation cycles in a month. • Depository and supervision fee for VFMVFA at each valuation cycle is calculated as below: Depository and supervision fee (not include securities trading fee) = % Depository and supervision fee (year) x NAV on the day prior to the valuation day x actual days by calendar of the valuation cycle/ actual days in a year (365 or 366) • In case that the fund shall valuate NAV monthly, the monthly Depository and supervision fee is calculated as below: Monthly Depository and supervision fee (not include securities trading fee) = [% Depository and supervision fee (year) x NAV on the day prior to the valuation day of the first valuation cycle in the month x actual remaining days from the begining of the month to the day prior to the valuation day/ actual days in a year (365 or 366)] + total Depository and supervision fees of the remaining valuation cycles in the month + [% Depository and supervision fee (year) x NAV on the day prior to the valuation day of the last valuation cycle in the month x actual remaining days in the month/ actual days in a year (365 or 366)] 2.3 Fee related to the transactions of the fund • Transaction fees paid to the depository bank - Securities transaction fee is VND 150,000 / an offer to buy / sell securities but do not exceed 0.15% NAV / year on the average NAV of the valuation cycles in a month and is adjusted monthly. - The monthly fee is the total fee calculated (accrued) at valuation cycles in a month. • Other transaction costs - Includes expenses payable for securities firms, law firms, asset valuation companies and other service providers related to assets transactions of the Fund. - These costs will be paid according to the actual transactions. 2.4 Fund administration fee • The fund administration fee shall be paid to the fund admiration service provider by the VFMVFA fund. • The fund administration fee is 0.035% of NAV per year and payable monthly. The monthly fee is the total fee calculated (accrued) at every valuation cycle in a month. • Fund administration fee for VFMVFA at each valuation cycle is calculated as below: Fund administration fee = [% fund administration fee (year) x NAV on the day prior to the valuation day x actual days by calendar of the valuation cycle/ actual days in a year (365 or 366) • In case that the fund shall valuate NAV monthly, the monthly fund administration fee is calculated as below: Monthly fund administration fee = [% fund administration fee (year) x NAV on the day prior to the valuation day of the first valuation cycle in the month x actual remaining days from the beginning of the month to the day prior to the valuation day/ actual days in a year (365 or 366)] + total fund administration fees of the remaining valuation cycles in the month + [%fund administration fee (year) x NAV on the day

prior to the valuation day of the last valuation cycle in the month x actual remaining days in the month/ actual days in a year (365 or 366) 2.5 Transfer agency fee The transfer agency fee shall be paid to the transfer agency service provider by the VFMVFA fund. The transfer agency includes services stated in the VFMVFA’s Fund Charter.(clause 2, Article 42 of Fund Charter). Include 2 types of fee as follows: 1. Fee based on NAV: • The transfer agency fee is 0.04% of NAV per year, calculated (accrued) at every valuation cycle in a month and payable monthly. • The transfer agency fee for VFMVFA at each valuation cycle is calculated as below: The transfer agency fee = [% transfer agency fee (year) x NAV on the day prior to the valuation day x actual days by calendar of the valuation cycle/ actual days in a year (365 or 366) • In case that the fund shall valuate NAV monthly, the monthly transfer agency fee is calculated as below: Monthly transfer agency fee = [% transfer agency fee (year) x NAV on the day prior to the valuation day of the first valuation cycle in the month x actual remaining days from the begining of the month to the day prior to the valuation day/ actual days in a year (365 or 366)] + total transfer agency fees of the remaining valuation cycles in the month + [% transfer agency fee (year) x NAV on the day prior to the valuation day of the last valuation cycle in the month x actual remaining days in the month/ actual days in a year (365 or 366) • Subscription/ Redemption/ Switching fee is 0.03% per transaction value and payable every month. For the first year, redemption fee is 0.12% of the redeemed amount • Subscription/ Redemption/ Switching fee at each trading cycle is calculated as below: Subscription/ Redemption/ Switching fee at each trading cycle = % Subscription/ Redemption/ Switching fee x transaction value 2. Fee based on actual amount arises, including: • Yearly investor account maintenance is VND15,000 per investor and opening Distributor account is VND1,000,000 per Distributor. • Other fees such as mass maling is VND100,000 per investor etc. • All these fees shall be consolidated and payable every month. Fees and paying method shall be regulated in the subcontract between the fund management company and the transfer agency service provider. Total minmum and maximum fee of supervising, depository, fund adminstration and transfer agency fee: Total minimum fee of supervising, depository, fund administration and transfer agency fee is VND 50,000,000 (fifty million Vietnam dong) per month (details in Agreement between FMC and Service Provider) • Total maximum fee of supervising, depository, transaction fee of the Fund’s asset paid to Supervisory Bank, fund administration and transfer agency fee is 0.45% per month.

• Total costs will be recalculated and adjusted monthly. 2.6 Other expenses and fees Other expenses and fees include:

1. Asset management fees paid to the fund management company; 2. Expenses for fund assets depository and supervision fees paid to the Custodian Bank; 3. Fund administration fees, transfer agent fees and other fees Fund management company has to pay to relevant service providers; 4. Expenses and fees relating to auditing services for the Fund; 5. Legal advisory fee, quotation fee and other reasonable fees for the Fund; 6. Expenses relating to printing, publication, and information of the Fund’s activities, issuance of prospectus, simplified prospectus, financial reports, annual reports, trading confirmation statements, account statements, and other documents for investors, expenses for fund public announcement;expenses for organizing and convening of General Meeting of Investors and Board of Representatives; 7. Reasonable, valid brokerage fee relating to the transactions of the Fund’s assets; 8. Expenses for engaging independent organizations to provide valuation, asset valuation services for the Fund; 9. Expenses for amending the Charter for the benefit of Investors; 10. Remuneration for the Board of Representatives; 11. Other reasonable, valid fees and expenses as decided by the Board of Representatives; 12. Insurance expenses (if applicable) 13. Administration fee (fee for issuance certificate); 14. Tax, cost, and fee payable in accordance with the laws; 15. Interest payable from loans incurred by the Fund in accordance with the laws and the Charter; 16. Other reasonable, valid fees and expenses in accordance with the laws. 3. Operating rates 3.1 Operating cost rate of the fund Operating costs of the fund shall include the following after-tax costs: a. The cost of asset management paid to the fund management company; b. The cost of fund’s asset depository and supervision paid to the Supervisory Bank; c. The cost of fund administration, transfer agent and other costs paid by the Fund management company to relevant service providers; d. Other fees includes the following fees: - Expenses and fees relating to auditing services for the Fund; - Legal advisory fee, quotation fee and other reasonable fees for the Fund and compensation fees for the Board of Representatives; - Expenses relating to printing, publication, and information of the Fund’s activities, issuance of prospectus, simplified prospectus, financial reports, annual reports, trading confirmation statements, account statements, and other documents for investors, expenses for fund public announcement;expenses for organizing and convening of General Meeting of Investors and Board of Representatives; - Reasonable, valid brokerage fee relating to the transactions of the Fund’s assets; Within 45 days from the end of Q2 and Q4 every year, the fund management shall disclose information about the fund’s operating cost rate as well as the fund’s portfolio turnover rate on the websites of the fund management company and distributors after these values are verified by the Supervisory Bank.

Operating cost rate of the fund is determined by the following formula:

Total operating cost x 100% Operating cost rate (%) = Average net asset value of the fund in the period

Average net asset value of the fund in the period is the total net asset value of the Fund at the valuation days is divided by number of valuation day in the period. In case the fund has been operated under one year, the operating cost rate shall be determined as follows:

Total operating cost x 365 x 100%

Operating cost rate (%) = Average net asset value of the fund in the reporting period × number of days of operation of the fund (from the licensing date )

3.2 Turnover rate of the fund’s portfolio Within the operation period, the Fund shall arise any fees related to stock trading fee in the stock market (“turnover”). The more the quantity and value of stock trading are, the more the trading fees; hence, these shall affect the overall performance of VFMVFA. The turnover rate of portfolio is an indicator which reflects the result of trading activities on the Fund’s investment performance. Turnover rate of the fund’s portfolio is determined as follows:

Turnover rate of the portfolio (Total value of purchase in the period + total value of sales in the period) x100% (%) = 2 x Average net asset value of the fund in the year In case the fund has operated under one year, the turnover rate of the fund’s portfolio shall be determined as follows: (Total value of purchase in the period + total value of sale in the Rate of turnover of the fund’s period) x 365 x 100% portfolio (%) = 2 x Average net asset value of the fund in the reporting period x number of days of operation of the fund is (from the licensing date)

Within 45 days from the end of Q2 and Q4 every year, the fund management shall disclose information about the fund’s portfolio turnover rate on the websites of the fund management company and distributors after these values are verified by the Supervisory Bank. VFM shall provide reports on VFMVFA Fund’s operating rates shall be updated periodically (if there is a change) as well as updated in this Prospectus.

X. ESTIMATION ON THE FUND’S INVESTMENT PERFORMANCE AND DIVIDEND POLICY 1. Estimation On The Fund’s Investment Performance Any estimation and forecasts on macroeconomy in this Prospectus shall not warranty for the Fund’s future investment performance. 2. Dividend Policy The annual profit distribution is based on proposals of the BOR and approved by the General Meeting of investors.

XI. CONFLICT OF INTEREST 1. In order to minimize conflict of interest between Funds managed by VFM, or between Fund and the Fund Management Company, VFM shall execute the followings: • Separate the investment strategies and objectives of each fund managed by VFM;

• Separate VFM’s assets from the Fund’s assets and the investors’ assets entrusted to VFM for its management; separate assets of the funds managed by VFM. 2. All securities transactions of members of the Board of Management, Investment Council, Chairman of the Fund Manager, members of the Board of Directors, Inspection Committee, the compliance officer, fund management practitioners and staff of the manager of the Fund shall be reported to the internal audit department both prior to or after such transactions, as required by law. 3. An internal system for controlling and managing risks has been established to ensure that any conflict of interests arising within the Fund Manager shall be under control. XII. LEGAL BASIS The incorporation and operation of VFMVFA and other relevant matters are governed by the: • Law on Securities passed by the National Assembly of the Social Republic of Vietnam, on 29 June 2006 and effective as from 01 January 2007; • Law No. 62/2010/QH12 dated 24 November 2010 by the National Assembly amending, supplementing a number of articles of Law on securities, and effective as from 01 July 2011; • Decree No. 58/2012/ND-CP dated 20 July 2012 by the Government detailing and guiding a number of articles of the Law on Securities and the Law Amending and Supplement a Number of Articles of the Law on Securities and effective as from 15 September 2012; • Decree No. 58/2012/ND-CP dated 23 September 2013 by the Government on sanctioning of administrative violations in domain of securities and securities market; • Circular No. 217/2013/TT-BTC dated 31 December 2013 by the Ministry of Finance guiding the sanction of administrative violations in domain of securities and securities market, and effective as from 01 March 2014; • Circular 183/2011/TT-BTC dated 16 December 2011 by the Ministry of Finance guiding the establishment and management of the open-ended Fund; • Circular 212/2012/TT-BTC dated 05 December 2012 by the Ministry of Finance guiding the establishment, organization and operation of the fund management company; • Circular 125/2011/TT-BTC dated 05 September 2011 by the Ministry of Finance on Accounting Guidelines apply to the fund management company; • Circular No. 198/2012/TT-BTC dated 15 November 2012 by the Ministry of Finance promulgating the accounting regime applicable to open ended Fund; • Circular No. 213/2012/TT-BTC dated 06 December 2012 by the Ministry of Finance guiding the activities of foreign investors on the stock market; • Decision No. 15/2008/QD-BTC dated 27 March 2008 by the Ministry of Finance issuing Regulations on Securities practise; • Circular No. 147/2012/TT-BTC dated 10 September 2012 by the Ministry of Finance to amend and supplement a number of articles of "Securities Regulation practice" is attached under Decision No. 15/2008/QĐ-BTC 27 March 2008 of the Ministry of Finance; • Circular No.52/2012/TT-BTC dated 05 April 2012 by the Ministry of Finance guiding for disclosure of information on the stock market; • Other relevant legal documents. XIII. REPORTING REGIME VFM shall prepare periodical reports for VFM and VFMVFA and send to the SSC as stipulated by the applicable laws. Annual audited financial statements and other Fund operational reports shall be sent to the members of VFMVFA’s Board of Representative and published on its website freely via VFM’s website at www.vinafund.com or at appointed Distributors. 39

Reporting on Fund’s performance shall be posted as follows: - NAV report: posted after one (01) day since the Valuation date; - The Fund’s investment performance shall be posted periodically by monthly, quarterly and yearly as stipulated by the applicable laws.

XIV. CONTACT ADDRESSES FOR INQUIRIES VIETFUND MANAGEMENT Head office in Ho Chi Minh City

• Address: 17th Floor, MeLinh Point Tower, 02 Ngo Duc Ke St., Ben Nghe Ward, District 1, HCMC, Vietnam

• Tel: (84.8) 3825 1488 Fax: (84.8) 3825 1489 • Email: [email protected] • Website: www.vinafund.com Hanoi Branch Office

• Suite 903, 9th Floor, HCO Building, 44B Ly Thuong Kiet St., Hoan Kiem District, Hanoi, Vietnam • Tel: (84.4) 3942 8168 Fax: (84.4) 3942 8169 All inquiries shall be answered at VFMVFA Distributors. Distributors List is attached in Annex 2 of the official Prospectus.

XV. UNDERTAKING VFM shall hereby undertake, in its good faith, to bear full liability for the accuracy and authenticity of the contents in this Prospectus and other documents as attached herein.

XVI. APPENDICES 1. Appointed Distributors List The Fund management company representative TRAN THANH TAN CEO (Signed and seal)

ANNEX 1: LIST OF APPOINTED DISTRIBUTORS AND LOCATIONS PROVIDING VIETNAM ACTIVE FUND (VFMVFA) PROSPECTUS (applied when the VFMVFA Fund receives its conversion license from the SSC) VFMVFA (Vietnam Active Fund certificate) shall be distributed through the following appointed distributors: 1. VIETFUND MANAGEMENT (VFM) Bank Account for subscription order: 001045939004 Head office in Ho Chi Minh City o Address: 17th Floor, MeLinh Point Tower, 02 Ngo Duc Ke St., Ben Nghe Ward, District 1, HCMC, Vietnam o Tel: (84.8) 3825 1488 o Fax: (84.8) 3825 1489 o Email: [email protected] o Website: www.vinafund.com 2. HO CHI MINH SECURITIES CORPORATION – HSC Bank Account for subscription order: 001045939005 Head office in Ho Chi Minh City o Address : : 5-6 Floor, A&B Tower, 76 Le Lai, Ben Thanh Ward, Dist 1, HCM o Điện thoại : (08) 3823 3299 o Fax : (08) 3823 3301 Ha Noi Branch o Address : 4-5 Floor , 66A Tower, Tran Hung Dao St., Dist Hoan Kiem, Ha Noi o Tel : (04) 3922 4693 o Fax : (04) 3933 4822 3. VIET CAPITAL SECURITIES COMPANY – VCSC Bank Account for subscription order: 001045939008 Head office in Ho Chi Minh City o Address : Bitexco Finance Building, 15th Floor, 02 Hai Trieu, District 1, HCMC o Tel : (08) 3914 3588 o Fax : (08) 3914 3209 Ha Noi Branch o Address : Capital building, 109 Tran Hung Dao, Hoan Kiem District, Ha Noi o Tel : (04) 6262 6999 o Fax : (04) 6278 2688 4. VIET DRAGON SECURITIES CORPORATION – VDSC Bank Account for subscription order: 001045939007 Head office in Ho Chi Minh City o Address : VietDragon Building, 141 Nguyen Du, District 1, HCMC o Tel : (08) 6299 2006 o Fax : (08) 6291 7986

5. KIS VIETNAM SECURITIES CORPORATION – KIS Bank Account for subscription order: 001045939006 Head office in Ho Chi Minh City o Address : 3th Floor, Maritime Bank Building, 180-192 Nguyen Cong Tru, Nguyen Cong Tru Ward, District 1, HCMC. o Tel : (08) 3914 8585 o Fax : (08) 3821 6898 Ha Noi Branch o Address : 6th , CTM Building, 299 Cau Giay, Cau Giay District, Ha Noi o Tel : (04) 974 4448 o Fax : (04) 974 4501 6. FPT Securities Joint Stock Company - FPTS Bank Account for subscription order: 001045939009 Head office in Ha Noi o Address : 2nd Floor, 71 Nguyen Chi Thanh, Dong Da District, Ha Noi o Tel : 04 3773 7070 o Fax : 04 37739058 Branch office in Ho Chi Minh City o Address : 3rd Floor, Ben Thanh Times Square Building, 136-138 Le Thi Hong Gam, Nguyen Thai Binh Ward, District 1, HCMC o Tel : (84-8) 6.290 8686 / 3.915 2626 o Fax : (84-8) 6.291 0607