Bo Co Thng Nin

Qu [u t Cn bng Prudential

Prudential Balanced Fund

Annual Report 2007

Cng ty Qun l Qu [u t Prudential Vit Nam Prudential Vietnam Fund Management Company Tng 23, Trung tm Thng mi Si Gn 37 Tn [c Thng, Q.1, TP. H Ch Minh, Vit Nam T +84 8 910 1660 F +84 8 910 5613 W www.pru-fund.com.vn E prufund@prudential.com.vn

Mc lc
Contents

Thng {ip ca Tng Gim {c CEO Message Nhn li nn Kinh t v Th trng Economic and Market Review Tng quan v Kinh t v Th trng Economic and Market Outlook Ban [i din Qu The Fund Representative Board Bo co ca Ban Qun l Qu Fund Manager 's report Bo co ti chnh Financial Statements Cng ty Qun l Qu [u t Prudential Vietnam Prudential Vietnam Fund Management Company Ghi ch Disclaimer

4 8 14 20 26 38 74 76

gip bn c {c tim

nng tng trng vn v thu nhp {nh k

Qu [u T Cn Bng Prudential

Thng {ip ca Tng Gim {c

CEO Message

Annual Report 2007

04
Dear Investors, On behalf of Prudential Vietnam Fund Management Company and the Fund Representatives Board, I am pleased to dedicate this first annual report of Prudential Balanced Fund to all current and future investors of Prudential Balanced Fund with ticker symbol PRUBF1. While 2006 was the first year of Vietnam entry into WTO, year 2007 will be remembered for several significant events, which continue to make Vietnam a rising star among new emerging markets in the world: Vietnam stock prices continued to push ahead despite central bank tightening and deteriorating conditions on the global stock market. Vietnam stock market grew in size and depth with record IPOs and new share issuances in total amount of VND 90,000 billion (US$5.6 billion). Strong economic fundamentals supported the rise of prices of real assets such as stocks and properties, as the central bank pursued its policy to keep the value of the VND currency low along side with the US dollar. During 2007, the disciplined investment process of our investment teams produced a superior return to investors of PRUBF1 Fund, with a NAV Return of 16.6% compared to a return of 12.7% of the Fund's Benchmark, which was pre-established by the Fund Representative Board (FRB) at 65% Fixed Income and 35% Equities. The disciplined investment strategy of PRUBF1 has allowed a payment of a reasonably high dividend rate of 15%, as agreed by a majority of unitholders, for the period starting October 2006 until December 2007. With regard to the outlook for 2008, we are concerned about global market uncertainties and a high inflation in Vietnam. It will be a challenge for the government to control price inflation while achieving high economic growth During periods of uncertain economic and market conditions, the PRUBF1 Fund is better positioned among all investment funds in Vietnam, as the Fund will aim at providing to investors a stable return coming from the Fund's bond portfolio, while giving to investors opportunities for capital appreciation with a portfolio of carefully selected Vietnamese stocks. Over the long term, we expect inflation to decline. As a result, interest rates will ease and stock prices will rise again along with the strong economy. Knh gi Qu Nh {u t, Thay mt Cng ty Qun l Qu [u t Prudential Vit Nam v Ban [i din Qu, ti rt vinh d gi {n cc Nh [u t hin ti cng nh tng lai ca Qu [u t Cn bng Prudential (vi m hiu l PRUBF1) bn Bo co Thng nin {u tin ca Qu. Nm 2006 l nm {u tin Vit Nam gia nhp WTO v nm 2007 cng l mt nm {ng nh vi nhiu s kin quan trng tip tc khng {nh v th ca Vit Nam nh mt ngi sao sng trong s cc th trng {ang ni trn th gii: Gi c phiu ti Vit Nam tip tc gia tng mc d Ngn hng Nh Nc tht cht chnh sch tin t v tnh hnh th trng c phiu trn th gii thay {i theo chiu hng khng tt. Th trng c phiu Vit Nam tng trng c v lng v cht vi nhng {t cho bn c phiu ln {u ra cng chng (IPO) vi khi lng c phiu mi vi tng gi tr 90.000 t {ng (tng {ng 5,6 t { la M). Nn tng kinh t mnh { lm gia tng gi c ti sn nh c phiu v nh {t, vi s h tr ca Ngn hng Nh nc tip tc chnh sch gim gi {ng Vit Nam theo { la M. Trong nm 2007, hot {ng {u t c tnh k lut cao ca {i ng chuyn gia {u t ca chng ti { mang li li nhun {ng k cho cc Nh [u t ca Qu PRUBF1, vi Thu nhp trn Gi tr ti sn rng l 16,6% so vi t sut li nhun chun ca Qu l 12,7%, nh { {c Ban [i din Qu xc {nh trc vi 65% Cng c n v 35% C phiu. Chin lc {u t k lut ca Qu PRUBF1 { {em li li nhun { { c th tr mt t l c tc kh quan l 15%, trong giai {on t thng 10 nm 2006 {n thng 12 nm 2007, t l ny { {c {a s nh {u t chp thun. Hng {n nm 2008, chng ti lo ngi v nhng bt n trn th trng ton cu v lm pht gia tng ti Vit Nam. Chnh ph phi {i din vi thch thc l kim sot lm pht trong khi vn mun {t {c mc tiu tng trng kinh t cao. Trong giai {on th trng cng nh nn kinh t {ang c nhiu bin {ng, Qu PRUBF1 c v th tt hn trong s cc qu {u t ti Vit Nam, v Qu PRUBF1 s tip tc thc hin mc tiu mang li cho nh {u t thu nhp n {nh t tri phiu cng vi c hi tng trng vn t nhng c phiu { {c la chn k cng. V di hn, chng ti d {on lm pht s gim. Theo {, mc li sut s gim xung v gi chng khon s li tng theo { pht trin mnh m ca nn kinh t.

CEO Message

Thng {ip ca Tng Gim {c

Pham Ngoc Bich, CFA Acting Chief Executive Officer

ng Phm Ngc Bch, CFA Quyn Tng Gim {c

Nhn li nn Kinh t v Th trng

Economic and Market Review

Annual Report 2007

08
While 2006 was the first year of Vietnam entry into WTO, year 2007 will be remembered for several significant events in Vietnam's economy and stock markets: Vietnam economy continued to grow strongly at 8.48% in 2007, mainly thanks to a strong increase of exports and investment spending continue to dominate economic activity. Foreign Direct Investments continued to flow into Vietnam with a record US$20.3 billion, nearly doubled that of 2006.
Vietnam GDP growth
REAL GDP GROWTH T^NG TRNG GDP 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Economic and Market Review

Trong nm 2006, Vit Nam gia nhp WTO v trong nm 2007 cng l mt nm {ng nh vi nhiu s kin quan trng ca th trng chng khon cng nh ton b nn kinh t Vit Nam: Kinh t Vit Nam tip tc tng trng mnh m mc cao 8,48% trong nm 2007, ch yu nh xut khu tng v chi tiu {u t tip tc chim t trng cao trong cc hot {ng kinh t. [u t trc tip nc ngoi tip tc { vo Vit Nam mc k lc l 20,3 t { la M, gn gp {i nm 2006.
Tng trng GDP ca Vit Nam

Nhn li nn Kinh t v Th trng

YEAR Source: General Statistics of Vietnam

N^M Ngun: Tng cc thng k Vit Nam

FDIs Vietnam 2001-2007

IN BILLION USD TRIU [-LA M

[u t trc tip nc ngoi 2001-2007

25.0

25.0

20.0

20.0

15.0

15.0

10.0

10.0

5.0

5.0

0.0 2001 2002 2003 2004 2005 2006 2007

YEAR Source: General Statistics of Vietnam Registered FDIs Distrubute FDIs

0.0 2001 2002 2003 2004 2005 2006

N^M Ngun: Tng cc thng k Vit Nam

FDI {ng k

FDI gii ngn

2007

Annual Report 2007

10
In the first 2 months of 2007, the Vietnam stock market as represented by the VN-Index increased by 55%, reaching a peak of 1,170 in early March 2007. Then in April 2007, the market sharply retreated to trade in a volatile range of 900-1,000 during the rest of the year to close at 927 at year-end.
VN index and volume since October 5, 2006
Index 1,400 1,200 1,000 800 600 400 500,000 200 0 200 0 T.10/2006 1,500,000 Volume 2,500,000 Index 1,400 1,200 1,000 800 600 400 500.000 1.500.000

Economic and Market Review

Trong 2 thng {u nm 2007, th trng chng khon Vit Nam (th hin qua ch s VN-Index) { tng 55%, {t {nh {im 1.170 vo {u thng 3/2007. Sau { vo thng 4/2007, th trng st gim {t ngt v dao {ng trong khong 900-1.000 trong nhng thng cn li ca nm v dng li mc 927 vo cui nm.
Ch s VN-Index v khi lng giao dch 5/10/2006 - 31/12/2007
Khi lng giao dch 2.500.000

Nhn li nn Kinh t v Th trng

2,000,000

2.000.000

1,000,000

1.000.000

Oct-06

Dec-06

Feb-07

May-07

Jul-07

Oct-07 Volume

Dec-07 Index

T.12/2006

T.2/2007

T.5/2007

T.7/2007

T.10/2007

T.12/2007 Index

Khi lng giao dch

January 2007 was the first effective date of Vietnam's new Laws on Securities. In June 2007, State Bank of Vietnam issued Instruction No.3 to tighten the quantity of bank loans for securities investments. Finally in November 2007, the law on Personal Income Taxes was passed. New IPOs and new share issuance during 2007, reached VND 90,000 billion, three times more than in 2006. Most significant IPOs during 2007 were IPOs of Phu My Fertilizer Company, Bao Viet Group, PetroVietnam Finance Company and the record size IPO of VietcomBank. Total number of listed companies on both the HoSE and HASTC increased to 251 from 194 in 2006. At the same time, global equity market conditions deteriorated during 2007, as the Sub-Prime Credit crisis amplified in the USA and Europe, resulting in a banking crisis worldwide and a possible global recession in 2008. Tightening lending conditions initiated by the State Bank of Vietnam, record amounts of new IPOs and share issuance and global market uncertainties contributed to a highly volatile market in most 2007 both for stocks and bonds.

Lut chng khon mi ca Vit Nam bt {u c hiu lc vo thng 1/2007. Thng 6/2007, Ngn hng Nh nc Vit Nam ban hnh ch th s 03 tht cht cc khon cho vay {u t chng khon. Lut thu thu nhp c nhn cng { {c thng qua vo thng 11/2007. Nhng {t cho bn c phiu ra cng chng (IPO) v pht hnh c phiu mi trong nm 2007 {t tng tr gi 90.000 t {ng Vit Nam, gp 3 ln nm 2006. Nhng {t IPO quan trng nht trong nm 2007 l ca Cng ty [m Ph M, Tp {on Bo Vit, Cng ty Ti chnh Du Kh Vit Nam v IPO chim k lc v tng gi tr ca Vietcombank. Tng s cng ty nim yt trn S Giao dch Chng khon thnh ph H Ch Minh v H Ni tng t 194 vo nm 2006 ln {n 251. [ng thi, th trng c phiu ton cu cng xu {i trong nm 2007 do tc {ng ca khng hong tn dng bt {ng sn ti Hoa K v Chu u dn {n khng hong ngn hng ton cu v kinh t ton cu c th b suy thoi trong nm 2008. Tht cht {iu kin cho vay theo ch th ca Ngn hng Nh nc Vit Nam, gi tr k lc ca nhng {t IPO v pht hnh c phiu mi v tnh hnh bt n trn th trng ton cu { gp phn lm cho th trng c phiu v tri phiu bin {ng mnh trong nm 2007.

Tng quan v Kinh t v Th trng

Economic and Market Outlook

Annual Report 2007

14
We forecast a strong economy in 2008, growing at 8.7% per year, near the government target of 9% p.a. CPI inflation was announced at 12.6% in December 2007 and will likely increase further in early 2008. In this environment, investors will continue to be attracted by real assets such as properties and gold and less attracted by equities. Chng ti d bo kinh t tng trng trong nm 2008 mc 8,7%/nm gn vi mc tiu do Chnh ph { ra l 9% hng nm. Ch s lm pht {c cng b vo thng 12/2007 l 12,6% v c th tng cao hn na vo {u nm 2008. Trc tnh hnh {, nh {u t s tip tc b thu ht vo cc loi ti sn khc nh bt {ng sn v vng nhiu hn l c phiu.

Economic and Market Outlook

CPI% (YEAR ON YEAR)

Tng quan v Kinh t v Th trng

Vietnam CPI %
CH S GI< TIU DNG (THEO TNG N^M)

Ch s gi tiu dng Vit Nam

16 14 12 10 8 6 4 2 0 -2

16 14 12 10 8 6 4 2 0 -2 1999 2000 2001 2002 2003 2004 2005 2006 2007

1999

2000

2001

2002

2003

2004

2005

2006

YEAR Source: General Staticstic of Vietnam

N^M Ngun: Tng cc thng k Vit Nam

Poor infrastructures, a shortage of qualified human resources and other bottlenecks will limit the country's ability to absorb record inflows of foreign investment capital. The Government's main challenge will continue to be able to convert foreign currencies into VND for domestic investment purposes, while maintaining the VND at a low level and controlling money supply growth to prevent inflation from rising. The Government has announced that it will push ahead for total equitization of some 1,500 remaining SOEs in 2008 and 2009. The stock market will further develop with more IPOs and share issuances in 2008, such as SABECO, HABECO, MOBIFONE, providing many more liquid large size investment opportunities, which will attract the attention of international investors.

C s h tng yu km, thiu nhn lc c cht lng v cc ch tc khc s hn ch kh nng tip nhn ngun vn {u t nc ngoi cao hn na ca Vit Nam. Thch thc ch yu ca Chnh ph l kh nng chuyn {i ngoi t sang tin {ng Vit Nam { {p ng nhu cu {u t trong nc, trong khi vn phi gi vng tin {ng Vit Nam mc thp v kim sot s gia tng ca ngun cung tin t { ngn chn lm pht. Chnh ph { thng bo s {y mnh tin trnh c phn ha 1.500 doanh nghip nh nc cn li trong nm 2008 v 2009. Th trng chng khon s pht trin hn na vi cc {t IPO v pht hnh c phiu mi trong nm 2008, nh SABECO, HABECO, MOBIFONE, mang li thm nhiu c hi {u t ln c tnh thanh khon cao, thu ht s quan tm ca cc nh {u t quc t.

2007

Annual Report 2007

16
We expect a rocky year for Vietnam stock market, as the government will focus on fighting inflation and the country's leading companies will face increasing profit margin pressure from increased operating costs and international competition. Overall, the stock markets will likely pause during the year, making its valuation more attractive for long term investors. Over the longer term, we are optimistic that Vietnamese equity prices will rise again as the economy remains fundamentally strong. During periods of uncertain economic and market conditions, the PRUBF1 Fund is best positioned among all listed funds in Vietnam to continue to provide to investors, with a stable return coming from the Fund's Vietnamese bond portfolio, while giving to investors opportunities for capital appreciation with a portfolio of carefully selected Vietnamese stocks. Our equity strategy will continue to focus on selecting stocks according to our proven selection criteria, namely stocks of companies with a leadership position in their industry, a strong management team and board of directors with strong experience, a relatively large market capitalization, good market liquidity with a reasonable valuation. Chng ti d {on th trng chng khon s bin {ng nhiu trong nm nay do Chnh ph tp trung hn ch lm pht v cc cng ty hng {u s b gim li nhun v chi ph hot {ng v cnh tranh quc t gia tng. Nhn chung, th trng chng khon s c nhng khong lng trong nm lm cho gi th trng chng khon s r hn. V lu di, chng ti lc quan rng gi c phiu Vit Nam s li tip tc tng trng. Trong giai {on th trng cng nh nn kinh t {ang c nhiu bin {ng, Qu PRUBF1 {ang pht huy v th vt tri so vi cc qu nim yt khc ti Vit Nam tip tc mang li cho nh {u t thu nhp n {nh t tri phiu Vit Nam cng vi c hi tng trng vn t nhng c phiu { {c la chn k cng. Chin lc {u t c phiu ca chng ti tip tc tp trung n lc vo vic la chn cc c phiu theo cc tiu chun chn lc { {c minh chng ca mnh, { l c phiu ca nhng cng ty {ang gi v tr {u ngnh v nm trong cc ngnh c tim nng tng trng tt, c {i ng lnh {o gii v hi {ng qun tr giu kinh nghim, gi tr vn ha trn th trng tng {i ln, tnh thanh khon chp nhn {c v {c {nh gi ph hp.

Economic and Market Outlook

Tng quan v Kinh t v Th trng

Ban [i din Qu
The Fund Representative Board

Annual Report 2007

20
As the Fund was licensed by SSC on October 5, 2006, the Fund Representative Board (FRB) convened its first meeting soon after on October 9, 2006. Qu PRUBF1 {c UBCKNN cp php ngy 05/10/2006. Ban [i din Qu (B[D) triu tp cuc hp {u tin ngy 09/10/2006.

The Fund Representative Board

Cc thnh vin B[D {u tin gm: The original FRB members were: Mr. Dinh Ba Thanh, an individual investor, chairman of the FRB Mr. Le Van Be, representing Military Bank Mr. Nguyen Van Hao, representing Prudential Vietnam Assurance Company Mr. Le Chi Hieu, representing Thu Duc House Co. Mr. Bui Thanh Nhon, representing Bio Pharmachemie Co. Mr. Tran Le Nguyen, representing Kinh Do Foods Co. Mr. Nguyen Xuan Son, representing PetroVietnam Finance Co. (HCMC Branch). In December 2006, Mr. Bui Thanh Nhon resigned for personal reasons. Mr. Truong Dinh Khoi, an individual investor from Da Nang has been elected by the Investors to replace Mr. Nhon in July 2007. The FRB has convened its meeting quarterly to discuss and supervise the activities of the Fund as well as PVFMC in managing the Fund and HSBC as supervisory bank. ng [inh B Thnh, Nh [u t c nhn, ch tch Ban [i din Qu ng L Vn B, {i din Ngn hng Thng Mi C Phn Qun [i ng Nguyn Vn Ho, {i din Cng ty TNHH Bo Him Nhn Th Prudential Vit Nam ng L Ch Hiu, {i din Cng ty C phn Pht Trin Nh Th [c ng Bi Thnh Nhn, {i din Cng ty Lin Doanh Bio Pharmachemie ng Trn L Nguyn, {i din Cng ty C Phn Kinh [ ng Nguyn Xun Sn , {i din Cng ty Ti Chnh Du Kh Vit Nam - Chi Nhnh TP. HCM Thng 12/2006, ng Bi Thnh Nhn t chc v l do c nhn. ng Trng [nh Khi, nh {u t c nhn [ Nng, {c cc nh [u t bu thay th cho ng Nhn vo thng 07/2007. B[D triu tp cc cuc hp hng qu { tho lun v gim st hot {ng ca Qu, Cng ty Qun l Qu [u t Prudential Vit Nam v Ngn hng gim st HSBC.

Ban [i din Qu

Ni dung chnh Main contents 1. October 9, 2006. No. of Members: 5/7 First meeting of the FRB, decided the expenses of the FRB, selection of service provider for valuation of OTC shares and bonds, investment strategy for 2006/2007, benchmark ratio of fixed income and equities in PRUBF1 portfolio. 2. January 11, 2007. No. of Members: 5/6 Review of Fund performance, announcement of the resignation of Mr. Bui Thanh Nhon. 1. Ngy 9/10/2006, s thnh vin hin din: 5/7 Cuc hp {u tin ca B[D quyt {nh chi ph ca B[D, chn la cc nh cung cp dch v {nh gi cc c phiu cha nim yt v tri phiu, chin lc {u t nm 2006/2007, xc {nh t sut li nhun chun ca cng c n v c phiu trong danh mc {u t ca Qu PRUBF1. 2. Ngy 11/01/2007, s thnh vin hin din: 5/6 Xem xt cc hot {ng ca Qu, thng bo ng Bi Thnh Nhn t chc.

Annual Report 2007

22
3. April 18, 2007. No. of Members: 6/6 Review of Fund performance, announcement of the resignation of a fund manager (Andy Ho) and appointment of a new fund manager (Mr. Tran Le Khanh), preparations for selection FRB candidate to replace Mr. Nhon. 4. June 6, 2007. No. of Members: 6/6 Written resolution to obtain Investors' opinion in selecting Mr. Truong Dinh Khoi as new FRB member. 5. September 17, 2007. No. of Members: 5/7 Announcement of new FRB member (Mr. Truong Dinh Khoi), outsourcing of Registrar service to HSBC, review of current Fund Charter and propose new Fund Charter to comply with new regulations. 6. January 8, 2008. No. of Members: 5/7 Review of Fund performance in 2007, discussions on 2007 dividend, new Fund Charter review by FRB. 3. Ngy 18/04/2007, s thnh vin hin din: 6/6 Xem xt hot {ng ca Qu, thng bo tin t chc ca ngi {iu hnh qu (Andy Ho) v b nhim ngi {iu hnh qu khc (ng Trn L Khnh), chun b la chn ng vin thay th ng Nhn. 4. Ngy 06/06/2007, s thnh vin hin din: 6/6 Vn bn quyt {nh xin kin cc Nh [u t { la chn ng Trng [nh Khi l thnh vin mi B[D. 5. Ngy 17/09/2007, s thnh vin hin din: 5/7 Cng b thnh vin B[D mi (ng Trng [nh Khi), thu dch v Lu k ca Ngn hng HSBC, xem xt ni dung [iu L Qu c v d tho [iu L Qu mi ph hp vi cc quy {nh mi. 6.Ngy 8/01/2008, s thnh vin hin din: 5/7 [nh gi hot {ng ca Qu nm 2007, tho lun v vic chia c tc nm 2007, xem xt [iu L Qu mi.

The Fund Representative Board

Ban [i din Qu

Cc thnh vin B[D {ng nhim gm: Current FRB members are: Mr. Dinh Ba Thanh, an individual investor, chairman of the FRB Mr. Le Van Be, representing Military Bank Mr. Nguyen Van Hao, representing Prudential Vietnam Assurance Company Mr. Le Chi Hieu, representing Thu Duc House Co. Mr. Tran Le Nguyen, representing Kinh Do Foods Co. Mr. Nguyen Xuan Son, representing PetroVietnam Finance Co. (HCMC Branch) Mr. Truong Dinh Khoi, an individual investor FRB members come from all the parts of Vietnam. Mr. Be is from Hanoi, Mr. Khoi from Da Nang and the rest of the FRB members are from HCMC. They are also experts in their areas of expertise. Mr. Thanh is a respectable businessman. Mr. Hao and Mr. Son are from financial institutions. Mr. Hieu represents a leading property company. Mr. Be is an experienced leader in banking sector. Mr. Khoi is a very successful investor. ng [inh B thnh, Nh [u t c nhn, ch tch Ban [i Din Qu ng L Vn B, {i din Ngn hng Thng Mi C Phn Qun [i ng Nguyn Vn Ho, {i din Cng ty TNHH Bo Him Nhn Th Prudential Vit Nam ng L Ch Hiu, {i din Cng ty C phn Pht Trin Nh Th [c ng Trn L Nguyn, {i din Cng ty C Phn Kinh [ ng Nguyn Xun Sn, {i din Cng ty Ti Chnh Du Kh Vit Nam - Chi Nhnh TP. HCM ng Trng [nh Khi, Nh [u t c nhn Thnh vin ca B[D {n t khp Vit Nam. ng B H Ni, ng Khi t [ Nng v cc thnh vin cn li ti TP.HCM. B[D {u l cc chuyn gia nhiu kinh nghim cc lnh vc ca mnh. ng Thnh l doanh nhn thnh {t. ng Ho v ng Sn lm vic ti cc doanh nghip ti chnh. ng Hiu {i din cho mt cng ty bt {ng sn. ng B l lnh {o {y kinh nghim trong ngnh ngn hng. ng Khi l nh {u t c nhn rt thnh cng.

Bo co ca Ban Qun l Qu
Fund Manager's Report

Annual Report 2007

26
Investment Activities from October 5, 2006 until December 31, 2007 We have deployed on the stock and bond markets, a total trading value of VND 800 billion from the initially raised capital. Our active participation on the market has produced positive results, as our initial capital has grown from VND 500 billion to VND 667 billion by year end 2007. We realized an income of VND134 billion (interest income inclusive), mainly by selling stocks such as REE, VNM, FPT, BVS, SSI, STB, etc. During 2007, we increased the Fund's allocation to Equities from 29% in December 2006 to 47% of the fund in December 2007. Cc hot {ng {u t giai {on 05/10/2006 - 31/12/2007 Chng ti trin khai mua v bn c phiu v tri phiu vi tng gi tr mua bn l 800 t {ng t ngun vn huy {ng ban {u. Vic tham gia tch cc vo th trng { cho kt qu kh quan, nng tng s vn {u t ban {u t 500 t {ng ln {n 667 t {ng vo cui nm 2007. Thu nhp t hot {ng {u t { thc hin l 134 t {ng (bao gm c thu nhp tin li) ch yu t ngun bn c phiu nh REE, VNM, FPT, BVS, SSI, STB Nm 2007, chng ti tng phn b ti sn {i vi C phiu t 29% trong thng 12/2006 ln 47% vo thng 12/2007
Thng 12/2007

Fund Manager's Report

Bo co ca Ban Qun l Qu

December 2007

29% 47% 47%

29% 53% 71%

December 2006

Thng 12/2006 71%

53%

Fixed income Equity

Cng c n C phiu

Performance Results We are pleased to report that the return of the NAV of PRUBF1 fund has exceeded its Benchmark Return, as shown in following chart:
PRUBF1 return compared to benchmark
RETURN 50% 40% 30% 20% 10% 0% -10% -20% 10/2006-12/2006 2007 PERIOD NAV return Benchmark return Outperformance

Kt qu hot {ng: Chng ti xin bo co T sut li nhun ca Gi Tr Ti Sn Rng ca Qu PRUBF1 vt qu T sut li nhun chun, theo nh bng di {y:
So snh T sut li nhun Gi tr Ti sn rng v T sut li nhun chun
T SUT LI NHUN T sut li nhun gi tr ti sn rng T sut li nhun chun (TSLNC) T l vt so vi TSLNC 50% 40% 30% 20% 10% 0% -10% -20% 10/2006-12/2006 2007 GIAI [O]N

Annual Report 2007

28
Benchmark return
RETURN
95%

Fund Manager's Report

T sut li nhun chun

T SUT LI NHUN 100% 80% 60% 40% 20% 0%
12.50% 43% 23.30% 7.10% 13.70% 95%

100% 80% 60% 40% 20% 0%

43% 23.30% 12.50% 7.10% 13.70%

Bo co ca Ban Qun l Qu

10/2006-12/2006

2007

PERIOD

10/2006-12/2006

2007

GIAI [O]N

VN-Index return 5-year Vietnam Govement bond return Benchmark return (*) (*) Pre-established by the Fund Representative Board (FRB) at 65% Vietnam 5-Year Government Bond Return + 35% VNI-Index Return

Ch s VN-Index Li nhun t tri phiu chnh ph k hn 5 nm T sut li nhun chun (*) (*) do Ban [i din Qu ch {nh T sut sinh li 65% t tri phiu chnh ph VN k hn 5 nm + 35% Li nhun t VN-Index.

Investment Income during period from October 5, 2006 until December 31, 2007: During the period, we achieved a total profit from investments of VND 167 billion, including Interest Income of VND 46 billion, Realized Profits of VND 88 billion and Unrealized Profits of VND 54 billion. Total expenses incurred in the Fund during the period was VND21 billion.
PRUBF1 investment income (Billion VND)

Thu nhp t {u t giai {on 05/10/2006 - 31/12/2007: Tng li nhun t {u t l 167 t {ng, bao gm Thu nhp tin li 46 t {ng, Thu nhp t cc hot {ng {u t { thc hin 88 t {ng v Thu nhp t cc hot {ng {u t cha thc hin 54 t {ng. Tng chi ph ca qu l 21 t {ng trong giai {on ni trn.
Thu nhp t {u t ca qu PRUBF1 thng 10/2006 {n 12/2007 (triu {ng)

54 29%

46 24%

54 29%

46 24%

88 47%

Interest income Realized profit on investment Unrealized profit

Thu nhp tin li Thu nhp t cc hor {ng {u t { thc hin Thu nhp t cc hor {ng {u t cha thc hin

88 47%

ng Trn L Khnh - Gim {c [u t Mr. Tran Le Khanh - Investment Director

Annual Report 2007

30
Net Asset Value (NAV) during 2007
20,000 18,000 16,000 14,000 12,000 10,000 8,000 Jan-07 Mar-07 Apr-07 May-07 Jun-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

Fund Manager's Report

Gi Tr Ti Sn Rng (NAV) trong nm 2007:

20,000 18,000 16,000 14,000 12,000 10,000 8,000 T.01-07 T.03-07 T.04-07 T.05-07 T.06-07 T.08-07
Gi tr ti sn rng trn mi {n v Qu

Bo co ca Ban Qun l Qu
T.09-07 T.10-07 T.11-07 T.12-07

Price per Unit

NAV per Unit

Gi th trng trn mi {n v Qu

Portfolio Structure During 2007, on average the portfolio structure consisted of Listed Stocks (28%), OTC Stocks (14%), Bonds (51%) and Cash (3%).
Porfolio structure
2% 3% 28%

Danh mc {u t: Trong nm 2007, danh mc {u t phn b bnh qun nh sau: C phiu nim yt (28%), C phiu cha nim yt (14%), tri phiu (51%) v tin mt (3%)
Phn b danh mc {u t
2% 3% 28%

51% 3%

14%

Equity - listed Equity - OTC Equitization Bonds Term deposit Private placement

C phiu nim yt C phiu cha nim yt C phn ha Tri phiu Tin gi ngn hng c k hn [u t trc tip

51% 3%

14%

Industry sector
0% 13% 6% 3% 10% 18% 31 December 2007 14% 0% 6% 30% Finance Agriculture Manufacturing Consumer Electricity Construction Transportation Technology Logistics Health Ti chnh Nng nghip Sn xut Tiu dng [in lc Xy dng Vn ti Cng ngh Kho vn Sc khe 13% 6% 3% 10% 18% 31/12/2007 0% 0% 6%

Phn nghnh

30%

14%

Annual Report 2007

32
Investment Profiles S lc cc cng ty {c Qu PRUBF1 {u t vo:

SAIGON PAPER
Established in 1997, Saigon Paper transformed into JSC in June 2003. Growth revenue during the past 5 years achieved 56% p.a. Average growth revenue for the next 5 years is estimated at 70% p.a.
Market Capitalization Total Revenue Net Profit ROE EPS Growth P/E P/B VND1,123.57bn VND 403bn VND 31bn 5.06% 22% 25.61 1.78

CNG TY C PHN GIY S>I GN

Thnh lp nm 1997, Cng ty C phn Giy Si gn chuyn sang m hnh c phn thng 6/2003. Tc { tng trng doanh thu bnh qun 5 nm qua {t 56%/nm v d kin tng trng bnh qun 70%/nm trong 5 nm ti.
Vn ho th trng Doanh thu Li nhun sau thu T sut li nhun trn vn ch s hu Mc tng trng ca thu nhp trn mt c phiu T l gi trn thu nhp rng T l gi trn gi tr s sch VND 1.123,57 t VND 403 t VND 31 t 5,06% 22% 25,61 1,78

EXIMBANK
One of Vietnam leading Import/Export banks, with 64 branches in Vietnam and correspondent banking arrangements with 720 banks in 65 countries. (Financial statements in December 2006)
Market Capitalization Total Assets Net Profit ROE EPS P/E P/B VND 12,600bn (US$788m) VND 33,721bn (US$2.1bn) VND 463bn 7.3% VND 1.654 (par value: VND 10,000) 27 2

NGN H>NG THNG M]I C PHN XUT NHP KHU VIT NAM
Eximbank, mt trong nhng ngn hng xut nhp khu hng {u, vi 64 chi nhnh ti Vit Nam, c tha thun vi 720 ngn hng ti 65 quc gia khc. (Bo co ti chnh thng 12/2006)
Vn ho th trng Tng ti sn Li nhun sau thu T sut li nhun trn vn ch s hu T l thu nhp trn mt c phiu T l gi trn thu nhp rng T l gi trn gi tr s sch VN[ 12.600 t (US$788 triu) VN[ 33.721 t (US$ 2,1 t) VN[ 463 t 7,3% VN[ 1,654 (c phiu mnh gi: VN[ 10.000) 27 2

Annual Report 2007

34
PETRO VIETNAM FERTILIZERS AND CHEMICALS COMPANY
PetroVietnam Fertilizers and Chemicals Company (PVFCCo), a subsidiary of PetroVietnam Oil and Gas, occupies 40% of fertilizers market share in country, and a 70% market share in Mekong Delta. PVFCCo plays an important role in agriculture and has contributed to the stabilization of the fertilizer market. (Financial statements in December 2006)
Market Capitalization Total Revennue Net Profit ROE EPS Growth P/E P/B VND 22,500bn N/A 30.7% 25% 20% 19.3 4.8

CNG TY C PHN PHN []M V> HO< CHT DU KH

Cng ty C phn Phn [m v Ha Cht Du Kh (PVFCCo), thnh vin ca Tp [on Du Kh Quc Gia Vit Nam, chim 40% th phn phn bn trn ton quc, v 70% ti khu vc [ng Bng Sng Cu Long. PVFCCo {ng vai tr quan trng trong phc v nng nghip v gp phn bnh n th trng phn bn. (Bo co ti chnh thng 12/2006)
Vn ha th trng Doanh thu Li nhun sau thu T sut li nhun trn vn ch s hu Mc tng trng ca thu nhp trn 1 c phiu T l gi trn thu nhp rng T l gi trn gi tr s sch VND 22.500 t Cha c s liu 30,7% 25% 20% 19,3 4,8

ASIAN COMMERCIAL BANK

Vietnam leading retail bank, with the target customers of individual & SME clients, with 117 branches in Vietnam and correspondents banking arrangements with 651 banks in 74 countries
Market Capitalization Total Revennue Net Profit ROE EPS Growth P/E P/B VND34,979bn (US$2,186m) N/A VND1,681bn (unconsolidated profit) 27.5% 42.8% 20.57 5.7

NGN H>NG < CHU

ACB, ngn hng thng mi c phn hng {u Vit Nam, vi khch hng mc tiu l c nhn, doanh nghip va v nh, c tng cng 117 chi nhnh khp Vit Nam v tha thun hp tc vi 651 ngn hng {i tc ti 74 quc gia.
Vn ha th trng Tng ti sn Li nhun sau thu T sut li nhun trn vn ch s hu Mc tng trng ca thu nhp trn 1 c phiu T l gi trn thu nhp rng T l gi trn gi tr s sch VND34.979 t (US$2.186 triu) Cha c s liu VND1.681 t (s liu cha hp nht) 27,5% 42,8% 20,57 5,7

SAIGON SECURITIES INC.

Vietnam largest securities firm, consistently a market leader, with the market capitalization of about US$1 billion and a staff of nearly 300 people in 2007. Not only SSI's reputation is well known domestically but also internationally.
Market Capitalization Total Revennue Net Profit ROE EPS Growth P/E P/B VND20,159bn VND1,185.29bn VND858.55bn 21.15% 47.80% 23.48 4.96

CNG TY C PHN CHNG KHO<N S>I GN

Cng ty chng khon tm c nht, lun dn {u th trng, cng vi quy m vn 1 t {-la M v gn 300 cn b nhn vin (tnh {n thi {im nm 2007). Uy tn ca SSI khng ch trong nc m { thc s vn ra th trng th gii.
Vn ha th trng Doanh thu Li nhun sau thu T sut li nhun trn vn ch s hu Mc tng trng ca thu nhp trn 1 c phiu T l gi trn thu nhp rng T l gi trn gi tr s sch VND20.159 t VND1.185,29 t VND858,55 t 21,15% 47,80% 23,48 4,96

Bo co ti chnh
Financial Statements

Annual Report 2007

38
Prudential Balanced Fund (PRUBF1) General Information Registration Establishment Certificate 02/UBCK-GPQDT 19 July 2006 Fund Establishment Certificate 06/UBCK-DKQDT 5 October 2006 The Registration Establishment Certificate and the Fund Establishment Certificate were issued by the State Securities Commission. The Fund's operating life, as defined in the Fund Charter and in the Registration Establishment Certificate, is 7 years from the date of the certificate. Fund Representative Committee Mr. Dinh Ba Thanh Chairman Mr. Le Chi Hieu Member Mr. Truong Dinh Khoi Member Mr. Nguyen Xuan Son Member Mr. Nguyen Van Hao Member Mr. Le Van Be Member Mr. Tran Le Nguyen Member Fund Manager Prudential Vietnam Securities Investment Fund Management Company Limited Supervising Bank The HongKong and Shanghai Banking Corporation Limited Ho Chi Minh City Branch Auditors KPMG Limited Qu [u t Cn bng Prudential (PRUBF1) Thng tin chung Giy chng nhn {ng k thnh lp 02/UBCK-GPQ[T ngy 19 thng 7 nm 2006 Giy chng nhn lp qu 06/UBCK-[KQ[T ngy 5 thng 10 nm 2006 Giy chng nhn {ng k thnh lp v Giy chng nhn lp qu do y ban Chng khon Nh nc cp. Thi gian hot {ng ca Qu, nh { {c {nh ngha trong [iu L Qu v trong Giy chng nhn {ng k thnh lp l 7 nm, k t ngy cp giy chng nhn. Ban [i Din Qu ng [inh B Thnh ng L Ch Hiu ng Trng [nh Khi ng Nguyn Xun Sn ng Nguyn Vn Ho ng L Vn B ng Trn L Nguyn

Financial Statements

Bo co ti chnh

Ch tch Thnh vin Thnh vin Thnh vin Thnh vin Thnh vin Thnh vin

Cng ty Qun l Qu Cng ty TNHH Qun l Qu [u t Chng khon Prudential Vit Nam Ngn hng Gim st Ngn hng Hng Kng v Thng Hi Chi nhnh Thnh ph H Ch Minh [n v kim ton Cng ty TNHH KPMG

Annual Report 2007

40
REPORT OF THE INDEPENDENT AUDITORS To the Investors Prudential Balanced Fund (PRUBF1) Scope We have audited the accompanying balance sheet of Prudential Balanced Fund (the Fund) as of 31 December 2007 and the related statements of income, change in equity and cash flows for the period from 5 October 2006 to 31 December 2007, as set out on the following pages. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing and International Standards on Auditing accepted in Vietnam. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Audit opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Prudential Balanced Fund as of 31 December 2007 and the results of its operations and its cash flows for the period from 5 October 2006 to 31 December 2007 in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System, Decision No. 63/2005/QD-BTC issued by the Ministry of Finance dated 14 September 2005 on promulgation of accounting system of securities investment funds and accounting principles generally accepted in Vietnam. B<O C<O CA KIM TO<N VIN [C LP Knh gi cc Nh {u t Qu [u t Cn bng Prudential (PRUBF1) Phm vi kim ton Chng ti { kim ton bng cn {i k ton {nh km ca Qu [u t Cn bng Prudential (Qu) ti ngy 31 thng 12 nm 2007, bo co kt qu hot {ng {u t, bo co thay {i vn ch s hu, v bo co lu chuyn tin t lin quan cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007, {c trnh by sau {y. Vic lp v trnh by cc bo co ti chnh ny thuc trch nhim ca Ban Qun L Qu. Trch nhim ca chng ti l {a ra kin v cc bo co ti chnh ny cn c trn kt qu kim ton ca chng ti. Chng ti { thc hin cng vic kim ton theo cc Chun mc Kim ton Vit Nam v cc Chun mc Kim ton Quc t {c chp thun ti Vit Nam. Cc chun mc ny yu cu chng ti phi lp k hoch v thc hin cng vic kim ton { c {c s bo {m hp l rng cc bo co ti chnh khng cha {ng cc sai st trng yu. Cng vic kim ton bao gm vic kim tra, trn c s chn mu, cc bng chng xc minh cho cc s liu v cc gii trnh trn bo co ti chnh. Cng vic kim ton cng bao gm vic {nh gi cc nguyn tc k ton {c p dng v cc c tnh trng yu ca Ban Qun L Qu, cng nh vic {nh gi cch trnh by tng qut ca cc bo co ti chnh. Chng ti cho rng cng vic kim ton { cung cp nhng c s hp l lm cn c cho kin ca chng ti. kin kim ton Theo kin chng ti, cc bo co ti chnh { phn nh hp l, trn tt c cc phng din trng yu, v tnh hnh ti chnh ca Qu [u t Cn bng Prudential (PRUBF1) ti ngy 31 thng 12 nm 2007, kt qu hot {ng {u t v lu chuyn tin t cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007 ph hp vi cc Chun mc K ton Vit Nam, H thng K ton Vit Nam, Quyt {nh s 63/2005/Q[-BTC do B Ti chnh ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon v cc nguyn tc k ton {c p dng ph bin ti Vit Nam.

Financial Statements

Bo co ti chnh

KPMG Limited Vietnam Investment Licence No: 863/GP Audit Report No: 07-01-230

Cng ty TNHH KPMG Vit Nam Giy php [u t s: 863/GP Bo co Kim ton s: 07-01-230

John T. Ditty
CPA No. N0555/KTV General Director Ho Chi Minh City

Tran Dinh Vinh

CPA No. 0339/KTV

John T. Ditty
Chng ch Kim ton vin s: N0555/KTV Tng Gim {c - Chi nhnh TP. H Ch Minh

Trn [nh Vinh

Chng ch Kim ton vin s: 0339/KTV

Annual Report 2007

42
Statement by the Chairman of the Fund Representative Committee Prudential Balanced Fund (PRUBF1) Bo co ca Ch tch Ban [i Din Qu Qu [u T Cn bng Prudential (PRUBF1)

Financial Statements

I, Dinh Ba Thanh, being the Chairman of the Fund Representative Committee and on behalf of the investors of Prudential Balanced Fund (the Fund), do hereby approve the attached financial statements of the Fund for the period from 5 October 2006 to 31 December 2007, which have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System, Decision No. 63/2005/QD-BTC issued by the Ministry of Finance dated 14 September 2005 on promulgation of accounting system of securities investment funds and accounting principles generally accepted in Vietnam. On behalf of the investors

Ti, [inh B Thnh, Ch tch ca Ban [i Din Qu v thay mt cho cc Nh [u t ca Qu [u t Cn bng Prudential (Qu), ph duyt cc bo co ti chnh {nh km sau ca Qu cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007, {c lp theo cc Chun mc K ton Vit Nam, H thng K ton Vit Nam, Quyt {nh s 63/2005/Q[-BTC do B Ti chnh ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon v cc nguyn tc k ton {c p dng ph bin ti Vit Nam. Thay mt cho cc nh {u t

Bo co ti chnh

[inh B Thnh Ch tch Dinh Ba Thanh Chairman

Annual Report 2007

44
Prudential Balanced Fund (PRUBF1) Balance sheet at 31 December 2007 Qu [u T Cn Bng Prudential (PRUBF1) Bng cn {i k ton ngy 31 thng 12 nm 2007

Financial Statements

Bo co ti chnh
31/12/2007 VN[ 23.618.290.757

Code A - ASSETS Cash at banks Investments in securities Receivables from investment activities Other receivables TOTAL ASSETS B - RESOURCES I - LIABILITIES Payables relating to investment activities Payables to Fund Manager and Supervising Bank Other payables II - EQUITY Contributed capital from investors Retained profits TOTAL RESOURCES Supervising Bank 300 311 315 318 400 410 420 430 110 120 130 131 200

Note

31/12/2007 VND A - T>I S@N 23,618,290,757 Tin gi ngn hng [u t chng khon Phi thu t hot {ng {u t Phi thu khc TNG T>I S@N B - NGUN VN 9,829,229,059 I - N PH@I TR@ Phi tr t cc hot {ng {u t Phi tr cho Cng ty Qun l Qu v Ngn hng Gim st Phi tr khc II - VN CH S HU Vn gp t cc nh {u t Li nhun cha phn phi TNG NGUN VN Ngn hng Gim st

M s

Thuyt minh

110 120 130 131 200 12 3

12 3

645,219,129,802 6,148,841,205 2,250,000,000 677,236,261,764

645.219.129.802 6.148.841.205 2.250.000.000 677.236.261.764

300 311 315 318 400 410 420 430 6 4 5

9.829.229.059 4.002.679.380 5.610.725.079 215.824.600 667.407.032.705 500.000.000.000 167.407.032.705 677.236.261.764

4 5

4,002,679,380 5,610,725,079 215,824,600 667,407,032,705

500,000,000,000 167,407,032,705 677,236,261,764

Fund Manager

Cng ty Qun l Qu

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

Vu Hoang Tan
Chief Accountant

Pham Ngoc Bich

Chief Executive Officer

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

V Hong Tn
K ton trng

Phm Ngc Bch

Tng gim {c {iu hnh

Annual Report 2007

46
Prudential Balanced Fund (PRUBF1) Statement of income for the period from 5 October 2006 to 31 December 2007 Code A - REALISED OPERATING PROFIT I - Realised income from investment activities Dividends income Interest income from bonds Interest income from bank deposits Gains on securities trading Other income II - Expenses Fund management and performance fees Asset supervision and management fees Expenses for fund meetings and conferences Audit fees Other expenses III - Net realised operating profit for the period B - UNREALISED PROFIT I - Unrealised gains Revaluation gains on securities investments II - Unrealised losses Revaluation losses on securities investments III - Net unrealised operating profit for the period Net profit for the period Supervising Bank 60 61 70 71 80 60,519,652,664 60,519,652,664 (6,317,005,596) (6,317,005,596) 54,202,647,068 167,407,032,705 Fund Manager 10 11 12 13 14 18 30 31 32 33 34 38 50 7 133,900,658,637 1,200,212,100 39,277,349,317 6,820,664,399 86,595,736,026 6,696,795 (20,696,273,000) (19,333,262,231) (520,110,093) (399,319,909) (208,195,000) (235,385,767) 113,204,385,637 Note
Period from 5/10/2006 to 31/12/2007 (VND)

Financial Statements

Qu [u T Cn Bng Prudential (PRUBF1) Bo co kt qu hot {ng {u t cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007 M s A - KT QU@ HO]T [NG [\ THC HIN I - Thu nhp t hot {ng {u t { thc hin Thu nhp t c tc Thu nhp t li tri phiu Thu nhp t tin li gi ngn hng Thu nhp t hot {ng mua bn chng khon Thu nhp khc II - Chi ph Ph qun l qu v thng hot {ng Ph gim st v qun l ti sn Chi ph hp v {i hi ca qu Chi ph kim ton Chi ph khc III - Li nhun thun { thc hin trong k B - KT QU@ HO]T [NG CHA THC HIN I - Thu nhp cha thc hin Thu nhp do {nh gi li khon {u t chng khon II - L cha thc hin L do {nh gi li khon {u t chng khon III - Li nhun thun cha thc hin trong k Li nhun thun trong k Ngn hng Gim st 60 61 70 71 80 60.519.652.664 60.519.652.664 (6.317.005.596) (6.317.005.596) 54.202.647.068 167.407.032.705 Cng ty Qun l Qu 10 11 12 13 14 18 30 31 32 33 34 38 50 7 133.900.658.637 1.200.212.100 39.277.349.317 6.820.664.399 86.595.736.026 6.696.795 (20.696.273.000) (19.333.262.231) (520.110.093) (399.319.909) (208.195.000) (235.385.767) 113.204.385.637 Thuyt minh
Giai {on t 5/10/2006 {n 31/12/2007 (VN[)

Bo co ti chnh

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

Vu Hoang Tan
Chief Accountant

Pham Ngoc Bich

Chief Executive Officer

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

V Hong Tn
K ton trng

Phm Ngc Bch

Tng gim {c {iu hnh

Annual Report 2007

48
Prudential Balanced Fund (PRUBF1) Statement of changes in equity for the period from 5 October 2006 to 31 December 2007 Qu [u T Cn bng Prudential (PRUBF1) Bo co thay {i vn ch s hu cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007

Financial Statements

Bo co ti chnh

Contributed capital VND

Retained profits VND

---

Total VND
--

Vn gp VN[

Li nhun cha phn phi VN[

Tng cng VN[

Balance at 5 October 2006 Capital contribution in cash from investors Net profit for the period Balance at 31 December 2007

S d ti ngy 5 thng 10 nm 2006 Vn gp bng tin mt t cc nh {u t Li nhun thun trong k S d ti ngy 31 thng 12 nm 2007

--

--

--

500,000,000,000 --

--167,407,032,705

500,000,000,000 167,407,032,705

500.000.000.000 --

--167.407.032.705

500.000.000.000 167.407.032.705

500,000,000,000

167,407,032,705

667,407,032,705

500.000.000.000

167.407.032.705

667.407.032.705

Supervising Bank

Fund Manager

Ngn hng Gim st

Cng ty Qun l Qu

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

Vu Hoang Tan
Chief Accountant

Pham Ngoc Bich

Chief Executive Officer

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

V Hong Tn
K ton trng

Phm Ngc Bch

Tng gim {c {iu hnh

Annual Report 2007

50
Prudential Balanced Fund (PRUBF1) Statement of cash flows for the period from 5/10/2006 to 31/12/2007 Period from 5/10/2006 to 31/12/2007 (VND) CASH FLOWS FROM OPERATING ACTIVITIES Net profit for the period Adjustments for Dividends income Gains on securities trading Interest income Unrealised revaluation gains on securities investments Unrealised revaluation losses on securities investments Operating loss before changes in working capital Increase in receivables from investment activities Increase in current liabilities Interest received Dividends received Deposits for acquisitions of securities Acquisitions of securities investments Proceeds from securities trading Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from capital contribution Net cash generated from financing activities Net cash flows during the period/Cash and cash equivalents at the end of the period Supervising Bank 500,000,000,000 500,000,000,000 (1,200,212,100) (86,595,736,026) (46,098,013,716) (60,519,652,664) 6,317,005,596 (20,689,576,205) (6,148,841,205) 9,829,229,059 46,098,013,716 1,200,212,100 (2,250,000,000) (800,542,382,830) 296,121,636,122 (476,381,709,243) 167,407,032,705 LU CHUYN TIN T HO]T [NG [U T Li nhun thun trong k [iu chnh cho cc khon Thu nhp t c tc Thu nhp t bn chng khon Thu nhp tin li Thu nhp do {nh gi li khon {u t chng khon L do {nh gi li khon {u t chng khon L t hot {ng {u t trc nhng thay {i vn lu {ng Tng khon phi thu t hot {ng {u t Tng n ngn hn Tin li thu {c C tc thu {c Tin cc mua chng khon Tin mua chng khon Tin thu {c t bn chng khon Tin thun chi cho hot {ng {u t LU CHUYN TIN T HO]T [NG T>I CHNH Tin thu t vn gp Tin thun thu t hot {ng ti chnh Lu chuyn tin thun trong k/ Tin v cc khon tng {ng tin cui k Ngn hng Gim st 500.000.000.000 500.000.000.000 23.618.290.757 Cng ty Qun l Qu (1.200.212.100) (86.595.736.026) (46.098.013.716) (60.519.652.664) 6.317.005.596 (20.689.576.205) (6.148.841.205) 9.829.229.059 46.098.013.716 1.200.212.100 (2.250.000.000) (800.542.382.830) 296.121,636.122 (476.381.709.243) 167.407.032.705 Qu [u T Cn bng Prudential (PRUBF1) Bo co lu chuyn tin t cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007 Giai {on t 5/10/2006 {n 31/12/2007 VN[

Financial Statements

Bo co ti chnh

23,618,290,757 Fund Manager

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

Vu Hoang Tan
Chief Accountant

Pham Ngoc Bich

Chief Executive Officer

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

V Hong Tn
K ton trng

Phm Ngc Bch

Tng gim {c {iu hnh

Annual Report 2007

52
Prudential Balanced Fund (PRUBF1) Notes to the financial statements for the period from 5 October 2006 to 31 December 2007 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. Background Prudential Balanced Fund (the Fund) is incorporated in Vietnam as a securities investment mutual fund under Registration Establishment Certificate No. 02/UBCK-GPQDT dated 19 July 2006 and Fund Establishment Certificate No. 06/UBCK-DKQDT dated 5 October 2006 issued by the State Securities Commission of Vietnam. The Registration Establishment Certificate is valid for 7 years from the date of the certificate. The Fund received the Listing Approval No. 02/UBCK-GPNY from the State Securities Commission of Vietnam which allows its fund units to be listed and traded on the Ho Chi Minh Stock Exchange under the stock code namely PRUBF1. The maximum total capital of the Fund as stipulated in the Registration Establishment Certificate is VND500 billion. The amount of each fund unit, an equal division of the total capital of the Fund, is VND10,000. Total maximum number of fund units is 50,000,000. The Fund is managed by Prudential Vietnam Securities Investment Fund Management Company Limited, an investment management company incorporated in Vietnam, and supervised by The HongKong and Shanghai Banking Corporation Limited - Ho Chi Minh City Branch. 2. Summary of significant accounting policies The following significant accounting policies have been adopted by the Fund in the preparation of these financial statements. (a) Basis of financial statement preparation The financial statements, expressed in Vietnam Dong (VND), have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System, Decision No. 63/2005/QD-BTC issued by the Ministry of Finance dated 14 September 2005 on promulgation of accounting system of securities investment funds and accounting principles generally accepted in Vietnam. The financial statements are prepared on the historical cost basis, except as discussed in Note 2(e). The accounting policies set out below have been consistently applied by the Fund during the period. Thuyt minh bo co ti chnh cho giai {on t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007 Cc thuyt minh ny l b phn hp thnh v cn {c {c {ng thi vi cc bo co ti chnh {nh km. 1. Thng tin c bn Qu [u t Cn bng Prudential (Qu) l qu {u t chng khon cng chng {c thnh lp ti Vit Nam theo Giy chng nhn {ng k thnh lp s 02/UBCK-GPQ[T ngy 19 thng 7 nm 2006 v Giy chng nhn lp qu s 06/UBCK-[KQ[T ngy 5 thng 10 nm 2006 do y ban chng khon Nh nc Vit Nam cp. Giy chng nhn {ng k thnh lp c gi tr trong vng 7 nm k t ngy cp giy chng nhn. Qu { nhn {c Giy php nim yt s 02/UBCK-GPNY do y ban chng khon Nh nc Vit Nam cp, cho php chng ch Qu {c nim yt v giao dch ti Trung tm Giao dch Chng khon Thnh ph H Ch Minh vi m chng khon l PRUBF1. Tng s vn ti {a ca Qu {c quy {nh trong Giy chng nhn {ng k thnh lp l 500 t VN[. Mnh gi chng ch qu, chia {u theo tng vn ca Qu, l 10.000 VN[. S chng ch qu ti {a {c pht hnh l 50.000.000. Qu {c qun l bi Cng ty TNHH Qun l Qu [u t Chng khon Prudential Vit Nam, mt cng ty qun l qu {u t {c thnh lp ti Vit Nam, v {c gim st bi Ngn hng Hng Kng v Thng Hi - Chi nhnh Thnh ph H Ch Minh. 2. Tm tt nhng chnh sch k ton ch yu Sau {y l nhng chnh sch k ton ch yu {c Qu p dng trong vic lp cc bo co ti chnh ny. (a) C s lp bo co ti chnh Cc bo co ti chnh {c trnh by bng {ng Vit Nam (VN[), {c lp theo cc Chun mc K ton Vit Nam, H thng K ton Vit Nam, Quyt {nh s 63/2005/Q[-BTC do B Ti chnh ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon v cc nguyn tc k ton {c p dng ph bin ti Vit Nam. Cc bo co ti chnh {c lp trn c s gi gc, ngoi tr nhng vn { {c trnh by Thuyt minh 2(e). Cc chnh sch k ton trnh by sau {y {c Qu p dng mt cch nht qun trong sut k k ton.

Financial Statements

Bo co ti chnh

Annual Report 2007

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(b) Fiscal year The first fiscal period of the Fund is from 5 October 2006 to 31 December 2007. Succeeding fiscal years will be from 1 January to 31 December. (c) Foreign currency transactions Monetary assets and liabilities denominated in currencies other than VND are translated into VND at rates of exchange ruling at the balance sheet date. Transactions in currencies other than VND during the period have been translated into VND at rates approximating those ruling at the transaction dates. All realised and unrealised foreign exchange differences are recorded in the statement of income. (d) Cash and cash equivalents Cash comprises cash balances and call deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. (e) Investments The Fund recognises investments on the date it becomes a party to the contractual provisions of the investments (trade date accounting). In accordance with Decision No. 63/2005/QD-BTC issued by the Ministry of Finance dated 14 September 2005 on promulgation of accounting system of securities investment funds, the Fund is required to measure its investments at fair value at each reporting date. To implement Decision No. 63/2005/QD-BTC dated 14 September 2005, the Fund has adopted the following accounting policies for recognition and measurement of its investments: Investments are initially stated at cost. Subsequent to initial recognition, all investments are measured at fair value. Gains and losses arising from the changes in the fair value of the investments are presented in the statement of income in the period in which they arise. The fair value of investments traded in active markets is based on quoted market prices at the balance sheet date. Certain investments made by the Fund are traded in over the counter market. The fair value of these investments is determined by reference to the average price at the balance sheet date obtained from several independent parties. (b) Nm ti chnh K ti chnh {u tin ca Qu t ngy 5 thng 10 nm 2006 {n ngy 31 thng 12 nm 2007. Nhng nm ti chnh tip theo s bt {u t ngy 1 thng 1 {n ngy 31 thng 12. (c) Cc giao dch bng ngoi t Cc khon mc ti sn v n phi tr c gc bng {n v tin t khc VN[ {c quy {i sang VN[ theo t gi hi {oi ca ngy kt thc nin { k ton. Cc giao dch bng cc {n v tin khc VN[ trong k {c quy {i sang VN[ theo t gi hi {oi ti ngy giao dch. Tt c cc khon chnh lch t gi cha thc hin v { thc hin {c hch ton vo bo co kt qu hot {ng trong k. (d) Tin v cc khon tng {ng tin Tin bao gm tin mt v tin gi ngn hng khng k hn. Cc khon tng {ng tin l cc khon {u t ngn hn c tnh thanh khon cao, c th d dng chuyn {i sang mt lng tin xc {nh, khng c nhiu ri ro v thay {i gi tr v {c s dng cho mc {ch {p ng cc cam kt chi tin ngn hn hn l cho mc {ch {u t hay l cc mc {ch khc. (e) [u t Qu ghi nhn cc khon {u t vo ngy Qu k kt hp {ng {u t (k ton theo ngy giao dch). Theo Quyt {nh s 63/2005/Q[-BTC do B Ti chnh Vit Nam ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon, Qu phi {nh gi li cc khon {u t vo cui k bo co theo gi tr hp l. [ thc hin theo Quyt {nh s 63/2005/Q[BTC, Qu p dng cc chnh sch k ton sau {y { ghi nhn v {nh gi cc khon {u t: Ban {u cc khon {u t {c ghi nhn theo gi gc. Sau ghi nhn ban {u, tt c cc khon {u t {c xc {nh theo gi tr hp l. Cc khon li hay l do thay {i gi tr hp l ca cc khon {u t {c ghi nhn trong bo co kt qu hot {ng {u t trong k pht sinh. Gi tr hp l ca cc khon {u t giao dch trn th trng nim yt {c xc {nh da vo gi th trng nim yt ti ngy lp bng cn {i k ton. Gi tr hp l ca cc khon {u t giao dch trn th trng chng khon phi tp trung, {c xc {nh da vo gi giao dch bnh qun ti ngy lp bng cn {i k ton thu thp t mt s t chc {c lp.

Financial Statements

Bo co ti chnh

Annual Report 2007

56
(f) Accounts receivable Receivables from investment activities and other receivables are stated at cost less allowance for doubtful debts. (g) Accounts payables Payables relating to investment activities and other payables are stated at their cost. (h) Provisions A provision is recognised if, as a result of a past event, the Fund has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (i) Taxation Under current regulations in Vietnam, the Fund is not subject to corporate income tax. (j) Interest income and dividend income Interest income is recognised in the statement of income as the interest accrues unless collectibility is in doubt. Dividend income is recognised when the right to receive payment is established. (k) Related companies Parties are considered to be related if one party has the ability, directly or indirectly, to control other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. (l) Off balance sheet items Amounts which are defined as off balance sheet items under the Decision No. 63/2005/QD-BTC dated 14 September 2005 issued by the Ministry of Finance on promulgation of accounting system of securities investment funds and Vietnamese Accounting System are disclosed in the relevant notes to these financial statements. (m) Nil balances Items or balances required by the Decision No. 63/2005/QD-BTC issued by the Ministry of Finance dated 14 September 2005 on promulgation of accounting system of securities investment funds and Vietnamese Accounting System that are not shown in these financial statements indicate nil balances. (f) Khon phi thu Khon phi thu t hot {ng {u t v phi thu khc {c phn nh theo nguyn gi tr {i d phng phi thu kh {i. (g) Khon phi tr Khon phi tr lin quan {n hot {ng {u t v phi tr khc {c phn nh theo nguyn gi. (h) D phng D phng {c ghi nhn khi, do kt qu ca mt s kin trong qu kh, Qu c mt ngha v php l hoc lin {i m c th {c c tnh mt cch tin cy v tng {i chc chn rng Qu phi s dng cc li ch kinh t trong tng lai { thanh ton ngha v {. D phng {c xc {nh bng cch chit khu cc lung tin d tnh trong tng lai theo li sut trc thu phn nh {c s {nh gi hin ti ca th trng v gi tr thi gian ca {ng tin v nhng ri ro gn lin vi khon n phi tr {. (i) Thu Theo lut hin hnh ca Vit Nam, Qu khng phi np thu thu nhp doanh nghip. (j) Thu nhp li v thu nhp c tc Thu nhp li {c ghi nhn trong bo co kt qu hot {ng {u t ngay khi li pht sinh trn c s trch trc tr khi cc khon li ny kh thu hi. Thu nhp c tc {c ghi nhn khi quyn {c nhn khon thanh ton c tc {c hng. (k) Cng ty lin quan Cc bn {c xem l bn lin quan nu bn { c kh nng, trc tip hoc gin tip, kim sot bn kia hoc c nh hng trng yu {i vi bn kia khi ra cc quyt {nh ti chnh v hot {ng. Cc bn cng {c xem l bn lin quan nu cc bn chu s kim sot chung hoc nh hng trng yu chung. (l) Cc ch tiu ngoi bng cn {i k ton Cc ch tiu ngoi bng cn {i k ton, nh {c {nh ngha trong Quyt {nh s 63/2005/Q[-BTC do B Ti chnh ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon v H thng k ton Vit Nam {c trnh by trong cc thuyt minh lin quan ca cc bo co ti chnh ny. (m) S d bng khng Cc khon mc hoc s d, quy {nh bi Quyt {nh s 63/2005/Q[BTC do B Ti chnh ban hnh ngy 14 thng 9 nm 2005 v ch { k ton ca qu {u t chng khon v H thng K ton Vit Nam, nu khng {c trnh by trong bo co ti chnh ny {c xem l c s d bng khng.

Financial Statements

Bo co ti chnh

Annual Report 2007

58
3. Receivables from investment activities 31 December 2007 VND Interest receivables from bonds Stock dividends 6,073,445,000 75,396,205 6,148,841,205 Li tri phiu phi thu C tc tr bng c phiu phi thu 3. Phi thu t hot {ng {u t 31/12/2007 VN[ 6.073.445.000 75.396.205 6.148.841.205

Financial Statements

Bo co ti chnh

4. Payables relating to investment activities 31 December 2007 VND Purchases awaiting settlement 4,002,679,380

4. Phi tr cho cc hot {ng {u t 31/12/2007 VN[ Khon {u t mua ch thanh ton 4.002.679.380

In accordance with the Fund's policy of trade date accounting for regular way purchase transactions, purchases awaiting settlement represent amounts payable for securities purchased, but not yet settled. 5. Payables to Fund Manager and Supervising Bank 31 December 2007 VND Management fees payable to Fund Manager Performance fees payable to Fund Manager Supervising fees payable to Supervising Bank 2,244,636,796 3,329,874,751 36,213,532 5,610,725,079 6. Contributed capital from investors The Fund's authorised and contributed legal capital is VND500 billion, equivalent to 50,000,000 fund units at VND10,000 per unit. As at 31 December 2007, the Fund's authorised legal capital has been fully contributed by the investors.

Theo chnh sch k ton theo ngy giao dch ca Qu {i vi cc giao dch mua thng thng, khon {u t mua ch thanh ton l cc khon phi tr khi mua chng khon, nhng cha thanh ton. 5. Phi tr cho cng ty Qun l qu v Ngn hng gim st 31/12/2007 VN[ Ph qun l qu phi tr cho Cng ty Qun l qu Thng hot {ng phi tr cho Cng ty Qun l qu Ph gim st phi tr cho Ngn hng Gim st 2.244.636.796 3.329.874.751 36.213.532 5.610.725.079 6. Vn gp t cc nh {u t Vn php {nh {c duyt v { gp ca Qu l 500 t VN[, tng {ng 50.000.000 chng ch qu vi mnh gi l 10.000 VN[ mi chng ch qu. Ti ngy 31 thng 12 nm 2007, vn php {nh {c duyt ca Qu {u t { {c cc nh {u t gp {.

Annual Report 2007

60
7. Fund management and performance fees Period from 5 October 2006 to 31 December 2007 VND Management fees Performance fees 16,003,387,480 3,329,874,751 19,333,262,231 Under the Fund Management Agreement, the Fund Manager receives a management fee monthly in arrears of 2%/12 of the net assets attributable to the holders of the fund units on the last valuation day of the month. The Fund Manager also receives a performance fee in relation to any financial year if (i) the net assets value per unit at the end of such year exceeds its par value (VND10,000) and (ii) the performance of the Fund for that year exceeds a pre-determined benchmark, as defined in the Fund Charter, agreed upon between the Fund and the Fund Manager. The fee shall be payable in the first month of the following financial year. 8. Significant transactions with related parties During the period there were the following significant transactions with related parties: Period from 5 October 2006 to 31 December 2007 VND 16,003,387,480 3,329,874,751 Ph qun l Thng hot {ng 7. Ph qun l v thng hot {ng Giai {on t 5/10/2006 {n 31/12/2007 VN[ 16.003.387.480 3.329.874.751 19.333.262.231 Theo Hp {ng Qun l Qu, Cng ty Qun l Qu s nhn ph qun l qu hng thng bng 2%/12 thng trn gi tr ti sn rng ca Qu {c xc {nh vo ngy cui thng. Cng ty Qun l Qu cng {c nhn khon thng hot {ng lin quan {n bt k nm ti chnh no nu (i) gi tr ti sn rng ca mt chng ch qu vo cui nm ny vt qu mnh gi (10.000 VN[) v (ii) kt qu hot {ng {u t ca Qu vt qu mt mc { {c xc {nh trc. Khon ph ny {c tr trong thng {u tin ca nm ti chnh tip theo. 8. Cc giao dch ch yu vi cc bn lin quan Cc giao dch ch yu vi cc bn lin quan trong k nh sau: Giai {on t 5/10/2006 {n 31/12/2007 VN[ 16.003.387.480 3.329.874.751

Financial Statements

Bo co ti chnh

Bn lin quan Cng ty TNHH Qun l Qu [u t Chng khon Prudential Vit Nam

Quan h Cng ty qun l qu

Tnh cht giao dch Ph qun l qu Thng hot {ng

Related Party Prudential Vietnam Securities Investment Fund Management Company

Relationship Fund Manager

Nature of transaction Fund management fees Performance fees

Annual Report 2007

62
9. Indices Period from 5 October 2006 to 31 December 2007 I - Investment ratios Securities investments/Net assets Shares investments/Net assets Listed shares/Net assets Unlisted shares/Net assets Bonds/Net assets Cash and equivalents/Net assets Average income/Net assets Average expenses/Net assets II - Market ratios Number of fund units as at 31 December 2007 Net assets per fund unit as at 31 December 2007 (VND) 10. Report on assets 31 December 2007 VND Cash at banks Investments in securities Listed shares Unlisted shares Bonds Receivables from investment activities Other receivables Total assets Payables relating to investment activities Payables to Fund Manager and Supervising Bank Other payables Total liabilities Net assets Number of fund units Net assets per fund unit 23,618,290,757 645,219,129,802 208,918,972,500 103,071,077,302 333,229,080,000 6,148,841,205 2,250,000,000 677,236,261,764 (4,002,679,380) (5,610,725,079) (215,824,600) (9,829,229,059) 667,407,032,705 50,000,000 13,348 Tin gi ngn hng [u t chng khon C phiu nim yt C phiu cha nim yt Tri phiu Phi thu t hot {ng {u t Phi thu khc Tng ti sn Phi tr cho cc hot {ng {u t Phi tr cho Cng ty Qun l qu v Ngn hng Gim st Phi tr khc Tng n phi tr Gi tr ti sn thun S lng chng ch qu Gi tr ti sn thun mt {n v qu 50,000,000 13,348 16.003.387.480 96.68% 46.75% 31.30% 15.44% 49.93% 3.54% 28.18% 3.10% I - Cc ch s v tnh hnh hot {ng {u t [u t chng khon / Gi tr ti sn thun [u t c phiu / Gi tr ti sn thun C phiu nim yt / Gi tr ti sn thun C phiu cha nim yt / Gi tr ti sn thun Tri phiu / Gi tr ti sn thun Tin v khon tng {ng tin / Gi tr ti sn thun Thu nhp bnh qun / Gi tr ti sn thun Chi ph bnh qun / Gi tr ti sn thun II - Cc ch s v th trng S lng chng ch qu ti ngy 31 thng 12 nm 2007 Gi tr ti sn thun mt {n v qu ti ngy 31 thng 12 nm 2007 thng 12 nm 2007 10. Bo co ti sn 31/12/2007 VN[ 23.618.290.757 645.219.129.802 208.918.972.500 103.071.077.302 333.229.080.000 6.148.841.205 2.250.000.000 677.236.261.764 (4.002.679.380) (5.610.725.079) (215.824.600) (9.829.229.059) 667.407.032.705 50.000.000 13.348 50.000.000 13.348 9. Mt s ch tiu Giai {on t 5/10/2006 {n 31/12/2007 16.003.387.480 96,68% 46,75% 31,30% 15,44% 49,93% 3,54% 28,18% 3,10%

Financial Statements

Bo co ti chnh

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64
11. Report on changes in net assets Period from 5 October 2006 31 December 2007 VND Net assets as at 5 October 2006 Changes in net assets during the period Changes in net assets from investment activities during the period Contributed capital Net assets as at 31 December 2007 12. Report on investment portfolios Fair value per Fair value as at unit as at Units 1 December 2007 1 December 2007 Items % VND VND 645,219,129,802 96.68% Investments in securities I - Listed shares 208,918,972,500 31.30% 12. Bo co danh mc {u t Gi tr th trng mt {n v ngy 31/12/2007 VN[ Tng gi tr th trng ngy 31/12/2007 VN[ -667,407,032,705 167,407,032,705 500,000,000,000 667,407,032,705 Gi tr ti sn thun ti ngy 5 thng 10 nm 2006 Thay {i gi tr ti sn thun trong k Thay {i gi tr ti sn thun do hot {ng {u t trong k Vn gp t cc nh {u t Gi tr ti sn thun ti ngy 31 thng 12 nm 2007 11. Bo co thay {i gi tr ti sn thun Giai {on t 5/10/2006 {n 31/12/2007 VN[ -667.407.032.705 167.407.032.705 500.000.000.000 667.407.032.705

Financial Statements

Bo co ti chnh

Loi

S lng

[u t chng khon I - C phiu nim yt

645.219.129.802 96,68% 208.918.972.500 31,30%

Asia Commercial Bank 110,330 164,000 18,094,120,000 2.71% An Giang Fisheries Import & Export Joint Stock Company 30,630 83,000 2,542,290,000 0.38% Bao Minh Insurance Corporation 105,400 79,400 8,368,760,000 1.25% Binh Minh Plastic Joint Stock Company 45,200 165,000 7,458,000,000 1.12% Bao Viet Securities Company 3,000 210,000 630,000,000 0.09% HCMC Infrastructure Investment Joint Stock Company 22,230 64,000 1,422,720,000 0.21% Hau Giang Pharmaceutical Company 6 234,000 1,404,000 0.00% Corporation for Financing and Promoting Technology 5 223,000 1,115,000 0.00% General Forwarding & Agency Corporation 52,830 133,000 7,026,390,000 1.05%

Asia Commercial Bank 110.330 164.000 18.094.120.000 2,71% An Giang Fisheries Import & Export Joint Stock Company 30.630 83.000 2.542.290.000 0,38% Bao Minh Insurance Corporation 105.400 79.400 8.368.760.000 1,25% Binh Minh Plastic Joint Stock Company 45.200 165.000 7.458.000.000 1,12% Bao Viet Securities Company 3.000 210.000 630.000.000 0,09% HCMC Infrastructure Investment Joint Stock Company 22.230 64.000 1.422.720.000 0,21% Hau Giang Pharmaceutical Company 6 234.000 1.404.000 0,00% Corporation for Financing and Promoting Technology 5 223.000 1.115.000 0,00% General Forwarding & Agency Corporation 52.830 133.000 7.026.390.000 1,05%

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66
Tan Tao Industrial Park Corporation 75,200 126,000 9,475,200,000 Kinh Do Corporation 50,000 194,000 9,700,000,000 1.42% 1.45% 0.40% 1.18% 1.54% 1.61% 1.23% 2.64% 0.97% 0.29% 2.45% 1.16% 1.25% 0.49% 2.86% 1.28% 1.19% 0.47% 1.45% 0.09% 0.20% Tan Tao Industrial Park Corporation 75.200 126.000 9.475.200.000 Kinh Do Corporation 50.000 194.000 9.700.000.000 1,42% 1,45% 0,40% 1,18% 1,54% 1,61% 1,23% 2,64% 0,97% 0,29% 2,45% 1,16% 1,25% 0,49% 2,86% 1,28% 1,19% 0,47% 1,45% 0,09% 0,20%

Financial Statements

Bo co ti chnh

Minh Phu Seafood Joint Stock Company 44,100 60,000 2,646,000,000 North Kinh Do Food Joint Stock Company 44,664 176,000 7,860,864,000 Tien Phong Plastic Company 90,000 113,900 10,251,000,000 Petro Vietnam Drilling 70,800 152,000 10,761,600,000 Refrigeration Electrical Engineering Corporation 60,000 137,000 8,220,000,000 Saigon Securities Inc 105,000 168,000 Saigon Commercial Bank 99,161 65,500 17,640,000,000 6,495,045,500

Minh Phu Seafood Joint Stock Company 44.100 60.000 2.646.000.000 North Kinh Do Food Joint Stock Company 44.664 176.000 7.860.864.000 Tien Phong Plastic Company 90.000 113.900 10.251.000.000 Petro Vietnam Drilling 70.800 152.000 10.761.600.000 Refrigeration Electrical Engineering Corporation 60.000 137.000 8.220.000.000 Saigon Securities Inc 105.000 168.000 Saigon Commercial Bank 99.161 65.500 17.640.000.000 6.495.045.500

Taicera Enterprise Company Limited 68,320 28,600 1,953,952,000 Tan Tien Plastic Packaging Joint Stock Company 154,252 106,000 16,350,712,000 Vincom Joint Stock Company 50,000 155,000 Vietnam Dairy Products Company 50,190 166,000 7,750,000,000 8,331,540,000

Taicera Enterprise Company Limited 68.320 28.600 1.953.952.000 Tan Tien Plastic Packaging Joint Stock Company 154.252 106.000 16.350.712.000 Vincom Joint Stock Company 50.000 155.000 Vietnam Dairy Products Company 50.190 166.000 7.750.000.000 8.331.540.000

Vietnam Tanker Joint Stock Company 55,000 59,500 3,272,500,000 Petro Vietnam Fertilizer and Chemicals Company 258,000 74,000 19,092,000,000 Hoa Phat Group 90,000 95,000 8,550,000,000 Tuong An Vegetable Oil Joint Stock Company 64,770 123,000 7,966,710,000 Ha Tien 1 Cement Joint Stock Company 68,300 46,300 3,162,290,000 Nam Viet Corporation (Navico) 21,580 90,000 9,700,000,000 Da Nang Rubber Joint Stock Company 5,000 123,000 615,000,000 Dry Cell & Storage Battery Joint Stock Company 19,670 68,000 1,337,560,000

Vietnam Tanker Joint Stock Company 55.000 59.500 3.272.500.000 Petro Vietnam Fertilizer and Chemicals Company 258.000 74.000 19.092.000.000 Hoa Phat Group 90.000 95.000 8.550.000.000 Tuong An Vegetable Oil Joint Stock Company 64.770 123.000 7.966.710.000 Ha Tien 1 Cement Joint Stock Company 68.300 46.300 3.162.290.000 Nam Viet Corporation (Navico) 21.580 90.000 9.700.000.000 Da Nang Rubber Joint Stock Company 5.000 123.000 615.000.000 Dry Cell & Storage Battery Joint Stock Company 19.670 68.000 1.337.560.000

Annual Report 2007

68
II - Unlisted shares 103,071,077,302 15.45% II - C phiu cha nim yt 103.071.077.302 15,45%

Financial Statements

Dien Quang Joint Stock Company 28,000 268,700 7,523,600,000 1.13% Vietnam Export Import Commercial Joint Stock Bank 4,943 6,608,300 32,664,826,900 Saigon Paper Joint Stock Company 500,000 55,280 27,640,081,835 Saigon Western Beer Joint Stock Company 145,000 77,200 Intresco Joint Stock Company 60,000 140,700 Au Lac Joint Stock Company 11,194,000,000 8,442,000,000 4.90% 4.14% 1.68% 1.26% 1.70% 0.27% 0.37%

Dien Quang Joint Stock Company 28.000 268.700 7.523.600.000 1,13% Vietnam Export Import Commercial Joint Stock Bank 4.943 6.608.300 32.664.826.900 Saigon Paper Joint Stock Company 500.000 55.280 27.640.081.835 Saigon Western Beer Joint Stock Company 145.000 77.200 Intresco Joint Stock Company 60.000 140.700 Au Lac Joint Stock Company 11.194.000.000 8.442.000.000 4,90% 4,14% 1,68% 1,26% 1,70% 0,27% 0,37%

Bo co ti chnh

161,000 70,500 11,350,500,000 Vietnam Tourism Company 14,500 124,443 1,804,417,567 Development Investment Construction Company 40,191 III - Bonds TBA101016 25,000 TBA101021 25,000 CII 10.3 090714 153,000 61,000 2,451,651,000

161.000 70.500 11.350.500.000 Vietnam Tourism Company 14.500 124.443 1.804.417.567 Development Investment Construction Company 40.191 III - Tri phiu TBA101016 25.000 TBA101021 25.000 CII 10.3 090714 153.000 61.000 2.451.651.000

333,229,080,000 49.93%

333.229.080.000 49,93%

997,332 997,198 100,000

24,933,292,500 24,929,957,500 15,300,000,000 50,000,000,000 50,401,800,000

3.74% 3.74% 2.29% 7.49% 7.55%

997.332 997.198 100.000

24.933.292.500 24.929.957.500 15.300.000.000 50.000.000.000 50.401.800.000

3,74% 3,74% 2,29% 7,49% 7,55%

EVN 9.6 081116 50 1,000,000,000 BID10406 500,000 100,804 QH062128 1,700,000 Other net assets Cash and equivalents Total net assets

EVN 9.6 081116 50 1.000.000.000 BID10406 500.000 100.804 QH062128 1.700.000 Ti sn thun khc Tin v cc khon tng {ng Tng gi tr ti sn thun

98,626 167,664,030,000 25.12% (1,430,387,854) (0.21%) 23,618,290,757 667,407,032,705 3.54% 100%

98.626 167.664.030.000 25,12% (1.430.387.854) (0,21%) 23.618.290.757 667.407.032.705 3,54% 100%

Annual Report 2007

70
All the above investee companies are incorporated in Vietnam. The Fund does not seek to participate in day-to-day financial and operating policy decisions of the investee companies. Accordingly, the Fund does not intend to exert a controlling or significant influence over the investee companies and therefore, the Fund's investments are recorded on the basis set out in Note 2(e), rather than being consolidated or equity accounted. 13. Corresponding figures There are no corresponding figures as this is the first set of financial statements prepared by the Fund since its incorporation. Tt c cc cng ty {c {u t trn {u thnh lp ti Vit Nam. Qu khng tham gia vo cc quyt {nh v chnh sch ti chnh v hot {ng hng ngy ca cc cng ty {c {u t. V th, Qu khng c {nh kim sot hay thc thi nh hng trng yu no {n cc cng ty {c {u t v do vy, cc khon {u t ca Qu {c ghi nhn da trn c s nu trong Thuyt minh 2(e), thay v phi hp nht bo co ti chnh hay k ton khon {u t theo phng php vn ch s hu. 13. S liu so snh Khng c s liu so snh do {y l bo co ti chnh {u tin {c lp k t khi thnh lp Qu.

Financial Statements

Bo co ti chnh

Supervising Bank

Fund Manager

Ngn hng Gim st

Cng ty Qun l Qu

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

Vu Hoang Tan
Chief Accountant

Pham Ngoc Bich

Chief Executive Officer

Bui Thu Thuy

Deputy Head of HSBC Securities Services Vietnam

V Hong Tn
K ton trng

Phm Ngc Bch

Tng gim {c {iu hnh

Cng ty Qun l Qu [u t Prudential Vit Nam

Prudential Vietnam Fund Management Company

Annual Report 2007

74
Established in May 2005, Prudential Vietnam Fund Management Company (PVFMC) is a leading international fund management firm with the largest investor base in Vietnam. PVFMC was established as a wholly-owned subsidiary of Prudential Vietnam, which is Vietnam's leading insurance company. PVFMC operates closely with Prudential Corporation Asia (PCA), one of the largest asset management companies in terms of assets sourced in Asia excluding Japan and M&G, a leading UK and European fund manager. PVFMC applies a long-term value-oriented investment philosophy to its investment funds and portfolios for both institutional and retail clients who are domiciled both offshore and onshore in Vietnam, with total assets under management currently exceeding US$1.4 billion (as of 31 December 2007). The local investment team has been develop since 1999, with an established track record in managing Vietnamese fixed income, Vietnamese listed and OTC equities, Indochina private equity and property portfolios, on the same global investment platform as PCA, which operates locally in 13 markets in Asia. Thnh lp vo thng 5/2005, Cng ty Qun l Qu [u t Prudential Vit Nam (PVFMC) l cng ty qun l qu quc t hng {u vi s lng nh {u t ln nht ti Vit Nam. PVFMC l {n v trc thuc Prudential Vit Nam - Cng ty Bo him Nhn th hng {u ti Vit Nam. PVFMC phi hp hot {ng cht ch vi Prudential Chu < ("PCA"), mt trong nhng cng ty qun l ti sn ln nht tnh theo ti sn c ngun gc ti Chu < ngoi tr Nht Bn v M&G, cng ty qun l qu hng {u ti Chu u v Vng quc Anh. PVFMC p dng nguyn tc {u t theo {nh hng gi tr trong di hn {i vi cc qu v danh mc {u t cho cc nh {u t c nhn v nh {u t t chc trong v ngoi nc, vi tng ti sn hin {ang qun l tr gi trn 1,4 t { la M (tnh {n 31/12/2007). [i ng chuyn gia {u t ngay ti Vit Nam { {c hnh thnh v pht trin t nm 1999, vi thnh tch qun l {u t tri phiu, c phiu nim yt v cha nim yt, {u t tha thun v bt {ng sn trong vng [ng Dng, hot {ng trn cng mt nn tng {u t ton cu m PCA {ang p dng ti 13 th trng ti Chu <.

Prudential Vietnam Fund Management Company

Cng ty Qun l Qu [u t Prudential Vit Nam

Annual Report 2007

76
This information is not an offer or solicitation of an offer for the purchase of units in the Fund and is intended only for existing shareholders of the Fund. It may not be published, circulated, reproduced or distributed in whole or part without the written consent of Prudential Vietnam Fund Management Private Limited Company (PVFMC). Whilst we have taken reasonable care to ensure that the information contained in this material is true and not misleading, we cannot guarantee its accuracy or completeness. You should not act on it without independently verifying its contents. Any opinion or estimate contained in this material is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objective, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty is given and no liability is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion estimate. Past performance of the Investment Manager and any forecasts are not indicative of the future or likely performance of the Investment Manager. The value and income from investments may fall or rise. The projections or forecasts on the economy, securities markets or the economic trends of the markets targeted by the Fund are not indicative of the future or likely performance of the Fund. Prudential Vietnam Fund Management Private Limited Company (PVFMC) is owned by Prudential Vietnam Assurance Private Limited, which is ultimately owned by Prudential plc. of the United Kingdom. PVFMC and Prudential plc. are not affiliated with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.

Disclaimer

Nhng thng tin nu trong ti liu ny khng nhm mc {ch cho mi mua chng ch qu {u t v ch { dnh cho cc nh {u t hin hu. Nhng thng tin ny khng {c php cng b, pht hnh, sa cha hoc ph bin tng phn hoc ton b nu khng {c Cng ty Qun l Qu [u t Prudential Vit Nam (PVFMC) {ng trc bng vn bn. Chng ti lun n lc cung cp nhng thng tin trung thc v khch quan trong ti liu ny; tuy nhin, chng ti khng {m bo gii thiu {y { nhng thng tin m cc nh {u t mong mun. Cc nh {u t nn cn nhc k cng trc khi s dng nhng thng tin ny. Mi kin v c tnh nu trong ti liu ny {u c th thay {i m khng cn phi thng bo trc. Chng ti khng nghin cu, tm hiu mc tiu {u t, tnh trng ti chnh hoc cc nhu cu c th ca mi c nhn hoc nhm ngi no nhn {c ti liu ny. Do {, chng ti khng {m bo v khng chu trch nhim v mi thua l trc tip hoc gin tip xy ra cho mi c nhn hoc nhm ngi no s dng nhng thng tin hoc c tnh nu trong ti liu ny vo mc {ch {u t. Kt qu hot {ng trong qu kh ca cc nh Qun l qu {u t v mi d {on khng phi l c s { {m bo nhng kt qu tng t trong tng lai. Gi tr v thu nhp t hot {ng {u t c th tng hoc gim. Nhng d {on hoc d bo v ton b nn kinh t, th trng chng khon hoc xu hng pht trin ca nhng th trng m qu {u t {ang nhm {n khng phi l c s { {m bo qu {u t ny s {t {c nhng kt qu tng t trong tng lai. Cng ty Qun l Qu [u t Prudential Vit Nam (PVFMC) l mt cng ty trc thuc cng ty TNHH Bo him Nhn th Prudential Vit Nam, thuc s hu ca Tp {on Prudential Anh Quc. PVFMC v tp {on Prudential Anh Quc khng c mi quan h g vi cng ty Prudential Financial, Inc., mt cng ty c tr s chnh ti M.

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