VIETNAM EQUITY HOLDING | 2008 ANNUAL REPORT VIETNAM’S #1 PERFORMING EQUITY FUND TABLE OF CONTENT Company Overview 3 Board of Directors 4 Equity Market Overview 6 Performance Review 6 Financial Highlights 7 Portfolio Holding 9 Report of the Board of Directors 14 Auditor’s Report 15 Consolidated Balance Sheet 16 Consolidated Statement of Changes in Equity 17 Consolidated Statement of Income 17 Consolidated Statement of Cash Flows 18 Notes to the Consolidated Financial Statements 19 COMPANY OVERVIEW ABOUT THE CompanY INVESTMENT OBJECTIVE Vietnam Equity Holding (“VEH” or the “Company”) is an exempted The principal investment objective of the Vietnam Equity Holding is to company incorporated in the Cayman Islands on August 9, 2007. The seek capital appreciation of its assets by making equity investments Company was listed on the Frankfurt Stock Exchange on November in companies with significant exposure to Vietnam. Specifically, 30, 2007. VEH was placed as the top performing Vietnam equity the Company has invested in and will continue to invest in equity focused fund in 2008 by LCF Rothschild. Report (LCF Rothschid securities of listed and private companies, over-the-counter (“OTC”) Report December 31, 2009) companies, and/or in debt securities. The Company seeks to invest The Company is managed by Saigon Asset Management in a diversified and balanced portfolio that would achieve above Corporation (“SAM or the “Investment Manager”), an exempted average returns at an acceptable level of risk, give rise to long-term company incorporated under the laws of the Cayman Islands. For and short-term returns, and be capable of yielding recurrent earnings more information please visit www.saigonam.com and/or capital gains. Corporate Information Structure Cayman Islands registered closed-end investment company Launch date August 9, 2007 Total Net Asset Value Euro 39.5mn (as of December 31, 2008) Duration 5 Years Listed Frankfurt Stock Exchange (FSE) & Xetra Annual Management Fee 2% of NAV NAV Frequency Monthly Performance Fee 20% of gains over 8% hurdle with a high water mark Investment Manager Saigon Asset Management Auditor Grant Thornton (Vietnam) Company Ltd Legal Counsel Reed Smith LLP Appleby Administrator/ Custodian Deutsche Bank (Cayman) Ltd/ Deutsche Bank AG (Ho Chi Minh City Branch, Vietnam) TRADING Market FSE and Xetra Clearing Euroclear or Clearstream Settlement Euroclear or Clearstream ISIN KYG936251043 WKN AOW12V Bloomberg Symbol 3MS:GR Reuters Symbol 3MS.DE Price Provider/ 886 AG (www.886ag.de) Designated Sponsor/Market Maker Jefferies International Limited Enquiries [email protected] SAIGON ASSET MANAGEMENT VIETNAM EQUITY HOLDING 2009 ANNUAL REPORT | 3 | BOARD OF DIRECTORS DR. LEE G. LAM MR. Howard I. GOLDEN, ESQ Chairman and Independent Non-executive Director Director Dr. Lee G. Lam is an experienced CEO, company director and Howard I. Golden, Esq. a U.S. Citizen, is the Chairman of the Board investment banker and has over 26 years of international of Worldwide Opportunity Fund (Cayman) Ltd. (“WWOF”) a multi class corporate management, governance and finance experience in international investment fund and the President of Terra Partners, the telecommunications, media and technology, consumer/retail, Ltd an investment management company he founded in 1989. Terra property and financial services sectors in the Asia Pacific region. Dr. manages money for institutional and qualified investors in a number Lam holds a Bachelor of Science in Mathematics and Sciences, a of countries. He has been investing in stock markets since 1977 Master of Science in Systems Science, and a Master of Business and has specialized in global investing since 1991. Mr. Golden has Administration, all from the University of Ottawa in Canada, a Post- a B.A. in Economics, an M.B.A. in International Marketing and a graduate Diploma in Public Administration from Carleton University in Juris Doctorate, all from the University of Wisconsin, Madison. Mr. Canada, a Post-graduate Diploma in English and Hong Kong Law and Golden began practicing law in 1972, and has been actively investing a Bachelor of Law (Hons) from Manchester Metropolitan University in stock markets since 1977. Mr. Golden has lectured on closed- in the U.K., a PCLL in law (and has completed the Bar Course) end funds in London and Prague and at various business schools, from the City University of Hong Kong, and a Doctor of Philosophy including Harvard and University of Chicago. He has been quoted from the University of Hong Kong. He is Chairman of Monte Jade as an expert in Transition Capital Markets and corporate governance Science and Technology Association of Hong Kong, and serves as in The Economist, The Financial Times, The New York Times, The an independent or non-executive director of several publicly-listed International Herald Tribune, Newsweek, Prague Business Journal companies and investment funds in the Asia Pacific region. Having and Business Central Europe, among other publications. He was served as a Part-time Member of the Central Policy Unit of the asked to participate in a project created by Columbia University Government of the Hong Kong Special Administrative Region for and Nobel Prize winner Joseph Stiglitz to provide a textbook guiding two terms, Dr. Lam is a Member of the Jilin Province Committee of journalists reporting on emerging markets. His article on corporate the Chinese People’s Political Consultative Committee (CPPCC), a governance, translated into five languages, can be accessed at Member of the Hong Kong Institute of Bankers, a Board Member of http://www-1.gsb.columbia.edu/ipd/j_contrib.html. the East-West Center Foundation, a Member of the Young Presidents’ Mr. Golden also currently serves as the Chairman of the Board Organization, a Fellow of the Hong Kong Institute of Directors and a of Directors of The Romanian Investment Fund, AGNI Systems Member of its Corporate Governance Committee, a Member of the Ltd., a Bangladesh ISP listed on the Dhaka Stock Exchange, and General Committee and the Corporate Governance Committee of the Reconstruction Capital II, an AIMS listed investment fund concentrating Chamber of Hong Kong Listed Companies, an Adjunct Professor at on Romania and Bulgaria. He also serves on the Boards of Vietnam the Hong Kong Baptist University School of Business, and a Visiting Equity Holding and Vietnam Property Holding, two closed end funds Professor at the School of Economics & Management of Tsinghua trading on the Frankfurt Stock Exchange. He was previously Chairman University in Beijing. He is fluent in English, Cantonese, Chiu Chow, of the Board of The Kazakhstan Investment Fund and the Romanian Mandarin, and Vietnamese. Growth Fund, both Cayman Island domiciled investment funds listed on the Dublin Stock Exchange and served on the Board of Directors of Framlington Bulgarian Fund until the fund’s voluntary dissolution. His tenure on these boards was a result of his activist policy, which involves close and direct supervision of large investments. | 4 | VIETNAM EQUITY HOLDING 2009 ANNUAL REPORT SAIGON ASSET MANAGEMENT BOARD OF DIRECTORS MR. LOUIS NGUYEN Director Louis Nguyen has over 20 years of experience in investment management and mergers and acquisitions. Mr. Nguyen has been investing in Vietnam since 2003 and currently the Chairman and CEO of Saigon Asset Management (SAM). Prior to founding SAM, Mr. Nguyen was Managing Director at VinaCapital, an investment management firm in Vietnam with approximately $2 billion under management. He was also Founding General Partner of IDG Ventures Vietnam, a $100 million venture capital fund. Prior to 2003, Mr. Nguyen was actively working in the U.S. as Vice President at Intelligent Capital, a mergers and acquisitions firm based in San Francisco, California. Prior to that, he was Partner at Osprey Ventures, a $100 million venture capital fund based in Menlo Park, California. Mr. Nguyen has extensive operating experience as a Controller at NEC Computer Systems Division in Sacramento, California, where he was responsible for the division’s post merger integration with Packard Bell, a $5 billion transaction. Prior to NEC, he was a financial manager at Apple Computer in Cupertino, California, where he participated in restructuring analysis, cost controls, and total quality management (TQM) at the Fremont Manufacturing facilities, the most automated computer factory in the world at the time. Prior to that, Mr. Nguyen was with KPMG in Silicon Valley, California, where he specialized in audit and M&A advisory work. He is the founder of Asia-Silicon Valley Connection, a networking organization with over 3,000 members consisting of technology entrepreneurs, senior executives, and venture investors. Mr. Nguyen is currently Chairman of the WTO Committee, American Chamber of Commerce in Ho Chi Minh City. He is also the Chairman of Saigon Asset Management Foundation, a U.S. nonprofit organization which provides assistance to the underprivileged in Vietnam. Mr. Nguyen received a Bachelor of Science in Accounting from San Jose State University, California. He is fluent in English and Vietnamese SAIGON ASSET MANAGEMENT VIETNAM EQUITY HOLDING 2009 ANNUAL REPORT | 5 | EQUITY MARKET OVERVIEW PERFORMANCE REVIEW It was in 2006 when Vietnam emerged as one of the best performing The Company’s Net Asset Value (“NAV”) per share decreased by markets in the world, returning almost 150 percent. In 2007, the 24.1% in 2008, from EUR2.39 to EUR1.81. This compares with a VN Index experienced several corrections, dropping 21% from its decline in the Vietnam Index (“VNI”) of 66% over the same period. March peak of 1,170 points. In early 2008, the market further eroded Despite the suboptimal NAV performance, VEH was placed when the government intervened in order to cool the overheating the best performing equity focused Vietnam fund in 2008 by economy by limiting bank lending for securities to 20 percent of LCF Rothschild. their charter capital. After more sharp corrections related to the 2008 witnessed unprecedented declines across the global government’s efforts to curb inflation and cut the trade deficit, the markets.