ARC China Investment Funds - Banque Privée Edmond de ...

VISA 2011/74859-6342-0-PC
L'apposition du visa ne peut en aucun cas servir
d'argument de publicité
Luxembourg, le 2011-05-24
Commission de Surveillance du Secteur Financier
ISSUING DOCUMENT
MARCH 2011
ARC China Investment Funds
Société d'investissement à capital variable - Fonds d'investissement spécialisé
Avocats à la Cour
0093346-0000001 LU:4016712.7

APPLICATIONS FOR SUBSCRIPTION ARE RESERVED TO WELL-INFORMED INVESTORS
WHO, ON THE BASIS OF THIS CONFIDENTIAL ISSUING DOCUMENT, THE ARTICLES AND
THE SUBSCRIPTION FORM, HAVE MADE THEIR OWN ASSESSMENT OF THE CONDITIONS
OF THEIR PARTICIPATION IN THE COMPANY. ACCORDINGLY, IT IS THE
RESPONSIBILITY OF PARTICIPATING INVESTORS TO DETERMINE WHETHER THEIR
RIGHTS AND OBLIGATIONS AS MEMBERS ARE SUITABLE FOR THEM.
Important Information
ARC China Investment Funds (the Company) is offering Shares (the Shares) of several separate sub-funds
(individually a Sub-Fund and collectively the Sub-Funds) on the basis of the information contained in this
issuing document (the Issuing Document) and in the documents referred to herein. No person is authorised
to give any information or to make any representations concerning the Company other than as contained in
the Issuing Document and in the documents referred to herein, and any purchase made by any person on the
basis of statements or representations not contained in or inconsistent with the information and
representations contained in this Issuing Document will be solely at the risk of the purchaser.
The Company is subject to the provisions of the act of 13 February 2007 on specialised investment funds
(the 2007 Act). Hence, the sale of the Shares is reserved to well-informed investors as defined by article 2 of
the 2007 Act (the Well-Informed Investors). The Company will refuse to issue Shares to physical persons
and companies that do not qualify as Well-Informed Investors. The Company will further refuse any transfer
of Shares that would result in Shares being held by a non-Well-Informed Investor. The Company, at its sole
discretion, may refuse the issue or transfer of Shares if there exists no sufficient evidence that the person or
entity to which the Shares should be issued or transferred is a Well-Informed Investor. The Company may, at
its sole discretion, reject any application for subscription of Shares and proceed, at any time, to the
compulsory redemption of all the Shares held by a non-Well-Informed Investor.
This Issuing Document has been prepared solely for the consideration of prospective Well-Informed
Investors in the Company and is circulated to a limited number of Well-Informed Investors on a confidential
basis solely for the purpose of evaluating an investment in the Company. This Issuing Document supersedes
and replaces any other information provided by the initiators and its representatives and agents in respect of
the Company. However, the Issuing Document is provided for information only, and is not intended to be
and must not alone be taken as the basis for an investment decision. By accepting this Issuing Document and
any other information supplied to potential investors by the initiators the recipient agrees that such
information is confidential. Neither it nor any of its employees or advisers will use the information for any
purpose other than for evaluating an investment in the Company or divulge such information to any other
party and acknowledges that this Issuing Document may not be photocopied, reproduced or distributed to
others without the prior written consent of the initiators. Each recipient hereof by accepting delivery of this
Issuing Document agrees to keep confidential the information contained herein and to return it and all related
materials to the Company if such recipient does not undertake to purchase any of the Shares. The
information contained in the Issuing Document and any other documents relating to the Company may not
be provided to persons (other than professional advisers) who are not directly concerned with any investor's
decision regarding the investment offered hereby.
By accepting this Issuing Document, potential investors in the Company are not to construe the contents of
this Issuing Document or any prior or subsequent communications from the Company, the Company's board
of directors (the Board), and director of the Board (the Director) the initiators or any of their respective
officers, members, employees, representatives or agents as investment, legal, accounting, regulatory or tax
advice. Prior to investing in the Shares, potential investors should conduct their own investigation and
analysis of an investment in the Company and consult with their legal advisers and their investment,
accounting, regulatory and tax advisers to determine the consequences of an investment in the Shares and
arrive at an independent evaluation of such investment, including the applicability of any legal sales or
0093346-0000001 LU:4016712.7 1

investment restrictions without reliance on the Company, the Board, the initiators or any of their respective
officers, members, employees, representatives or agents. Neither the Company, the Board, the initiators nor
any of their respective officers, members, employees, representatives or agents accepts any responsibility or
liability whatsoever for the appropriateness of any potential investors investing in the Company. Prospective
investors are urged to request any additional information they may consider necessary or desirable in making
an informed investment decision. Each prospective investor is encouraged, prior to the consummation of
their investment, to ask questions of, and receive answers from, the initiators concerning the Company and
this offering and to request any additional information in order to verify the accuracy of the information
contained in this Issuing Document or otherwise.
The Shares have not been registered under the US Securities Act of 1933, as amended (the "US
Securities Act") or the securities laws of any state or political subdivision of the United States, and
may not be offered, sold, transferred or delivered, directly or indirectly, in the United States or to, or
for the account or benefit of, any US person, except pursuant to an exemption from, or in a transaction
not subject to the registration requirements of the Securities Act and any applicable US state securities
laws. The Company is not registered nor does it intend to register (i) under the US Investment
Company Act of 1940, as amended (the "US Investment Company Act") as an investment company in
reliance on the exemption from such registration pursuant to Section 3(cX7) thereunder. Accordingly,
the Shares are being offered and sold only (i) outside the United States to persons that are (a) other
than US persons as defined in Regulation S under the US Securities Act and (b) not US residents
(within the meaning of the Investment Company Act) in offshore transactions that meet the
requirements of Regulation S under the US Securities Act or (ii) to US persons who are (a) "accredited
investors" (as defined in Rule 501 of Regulation D promulgated under the Securities Act) and (b)
either (I) "qualified purchasers" (within the meaning of Section 2(a)(51) of the Investment Company
Act) or (II) "knowledgeable employees" as such term is defined in Rule 3c-5 of the Investment
Company Act.
The text of the Articles is integral to the understanding of this Issuing Document. Potential investors
should review the Articles carefully. In the event of any inconsistency between this Issuing Document
and the Articles, the Articles shall prevail.
Prior to subscribe for Shares, potential investors should obtain a copy of the subscription form (the
Subscription Form) which contains, inter alia, representations on which the Board may accept a potential
investor's subscription. The Articles, the Subscription Form and related documentation are described in
summary form herein; these descriptions do not purport to be complete and each such summary description
is subject to, and qualified in its entirety by reference to, the actual text of the Articles, the Subscription
Form and related documentation, including any amendment thereto.
No action has been taken which would permit a public offering of the Shares in any jurisdiction where action
for that purpose would be required. The Issuing Document and any other documents relating to the Company
do not constitute an offer or solicitation in any jurisdiction in which an offer or solicitation is not authorised,
or in which the person making the offer or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such an offer or solicitation. Any representation to the contrary is unlawful. No action has
been taken by the initiators or the Company that would permit a public offering of Shares or possession or
distribution of information in any jurisdiction where action for that purpose is required.
Investors should be aware that they may be required to bear the financial risk of their investment for a
significant period of time as investors may not request redemption of their Shares. Additionally, there will be
no public market for the Shares. Accordingly, investors should have the financial ability and willingness to
accept the risks of investing in the Company (including, without limitation, the risk of loss of their entire
investment) and accept that they will have recourse only to the assets of the Compartment in which they
invest as these will exist at any time.
0093346-0000001 LU:4016712.7 2

Certain statements contained in this Issuing Document are forward-looking statements. These forwardlooking
statements are based on current expectations, estimates and projections about the markets in which
the Company will operate, and the beliefs and assumptions of the Company. Words such as "expects",
"anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "forecasts", "projects", variations
of such words and similar expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements. Among the factors that could cause actual
results to differ materially are the general economic climate, inflationary trends, interest rate levels, the
availability of financing, changes in tax and corporate regulations and other risks associated with the
ownership and acquisition of investments and changes in the legal or regulatory environment or that
operation costs may be greater than anticipated.
An investment in the Shares involves significant risks and there can be no assurance or guarantee as to
positive return on any of the Company's investments or that there will be any return on invested capital.
Potential investors should in particular refer in this Issuing Document. The investment objectives are based
on a number of assumptions which the Company believes reasonable, but there is no assurance that the
investment objectives will be realised.
The Board has taken all reasonable care to ensure that the information contained in this Issuing Document is
accurate as of the date as stated herein. Other than as described below, neither the Company, nor the
initiators has any obligation to update this Issuing Document.
Under no circumstances should the delivery of this Issuing Document, irrespective of when it is made, create
an implication that there has been no change in the affairs of the Company since such date. The Board
reserves the right to modify any of the terms of the offering and the Shares described herein. This Issuing
Document may be updated and amended by a supplement and where such supplement is prepared this
Issuing Document will be read and construed with such supplement.
No person has been authorised to give any information or to make any representation concerning the
Company or the offer of the Shares other than the information contained in this Issuing Document and any
other documents relating to the Company, and, if given or made, such information or representation must not
be relied upon as having been authorised by the Company.
Any translation of this Issuing Document or of any other transaction document into any other
language will only be for convenience of the relevant investors having requested such translation. In
the case of any discrepancy due to translation, the English version of the Issuing Document and of any
other transaction document will prevail.
Data protection
Certain personal data of investors (including, but not limited to, the name, address and invested amount of
each investor) may be collected, recorded, stored, adapted, transferred or otherwise processed and used by
the Company, the Board, the initiators or any of their respective officers, members, employees,
representatives or agents. In particular, such data may be processed for the purposes of account and
distribution fee administration, anti-money laundering and terrorism financing identification, maintaining the
register of investors, processing subscription, redemption orders (if any) and payments of dividends to
investors and to provide client-related services. Such information shall not be passed on to any unauthorised
third persons.
The Company may sub-contract to another entity (the Processor) the processing of personal data. The
Company undertakes not to transfer personal data to any third parties other than the Processor except if
required by law or on the basis of a prior consent of the investors.
0093346-0000001 LU:4016712.7 3

Each investor has a right of access to his/her/its personal data and may ask for a rectification thereof in case
where such data is inaccurate or incomplete.
By subscribing to the Shares, each investor consents to such processing of its personal data. This consent is
formalised in writing in the Subscription Form used by the relevant intermediary.
0093346-0000001 LU:4016712.7 4

DIRECTORY
Registered Office
20, boulevard Emmanuel Servais
L-2535 Luxembourg, Grand Duchy of Luxembourg
Board of Directors
Adam Roseman, chairman of the Board, Shanghai
Marco Becker, director, Luxembourg
Franklin Craig, director, Paris
Eudes de Drouas, director, Shanghai
Blaise Hatt-Arnold, director, Geneva
Martin Key, director, Shanghai
Stefan Müller, director, Frankfurt
Investment Manager
ARC China Ltd.
87 Mary Street, George Town
Grand Cayman KYI-9001, Cayman Islands
Depositary Bank and Paying Agent
Banque Privé Edmond de Rothschild Europe
20, boulevard Emmanuel Servais
L-2535 Luxembourg, Grand Duchy of Luxembourg
Domiciliation Agent, Central Administrator, Registrar and Transfer Agent
Banque Privé Edmond de Rothschild Europe
20, boulevard Emmanuel Servais
L-2535 Luxembourg, Grand Duchy of Luxembourg
Auditor
PricewaterhouseCoopers
400, route d'Esch
L-1014 Luxembourg, Grand Duchy of Luxembourg
Legal Adviser as to Luxembourg Law
Allen & Overy Luxembourg
33, avenue John F. Kennedy
L-1855 Luxembourg, Grand Duchy of Luxembourg
0093346-0000001 LU:4016712.7 5

DEFINITIONS
In this Issuing Document, the following terms have the following meanings:
1915 Act the Luxembourg act of 10 August 1915 on commercial
companies as amended from time to time
1993 Act the Luxembourg act of 5 April 1993 on the financial sector, as
amended
2007 Act the Luxembourg act of 13 February 2007 on specialised
investment funds (SIF)
Administrator
Articles
Board
Business Day
Class
Collateral
Company
CSSF
Director
Depositary
EUR
Experienced Investor
the domiciliary agent, central administrator, registrar and
transfer agent which is Banque Privée Edmond de Rothschild
Europe with registered office at 20, boulevard Emmanuel
Servais, L-2520 Luxembourg
the articles of incorporation of the Company
the board of directors of the Company
each day on which the banks are open for general business in
Luxembourg
different types of Shares which are issued within a Sub-Fund
where specific features with respect to placing or redemption
charge, minimum subscription amount, dividend policy or other
specific features may be applicable
investments of a relevant Sub-Fund held in custody by a
relevant broker and which is subject to a security interest in
favor of that broker, the beneficial ownership of investments
given as Collateral may be transferred to the broker and may not
be segregated from other investments belonging to that broker
ARC China Investment Funds SA, SICAV-FIS
the Commission de Surveillance du Secteur Financier, the
financial services market authority in Luxembourg
any director of the Board
the depositary bank and paying agent which is Banque Privée
Edmond de Rothschild Europe SA with registered office at 20,
boulevard Emmanuel Servais, L-2520 Luxembourg
Euro, the single currency of the participating Member States of
the European Economic and Monetary Union
any investor who (i) adheres in writing to the status of
experienced investor and (ii) either (a) commits to invest a
minimum of EUR125,000 in the Company or (b) has obtained
0093346-0000001 LU:4016712.7 6

an assessment by a credit institution within the meaning of
Directive 2006/48/EC, by an investment firm within the
meaning of Directive 2004/39/EC, or by a management
company within the meaning of Directive 2001/107/EC
certifying his/her/its expertise, experience and knowledge in
adequately appraising an investment in the Company
General Meeting
Initial Subscription Period
Institutional Investor
Investment Adviser
Investment Manager
Issuing Document
Late Trading
Liquid Asset
any general meeting of Shareholders of the Company or of a
relevant Sub-Fund or Class
the initial period where Shares can be subscribed at the Initial
Subscription Price as described for each Sub-Fund in its
Schedule
means any investor who qualifies as institutional investor in
accordance with Luxembourg Law
means such entity from time to time appointed as investment
adviser of a particular Sub-Fund as disclosed in the relevant
Schedule by the Investment Manager in accordance with
Section 5 of this Issuing Document
the investment manager which is ARC China Ltd., 87 Mary
Street, George Town, Grand Cayman KYI-9001, Cayman
Islands
this issuing document, as amended from time-to-time
the acceptance of a subscription or redemption order after the
time limit fixed for accepting orders (cut-off time) on the
relevant day and the execution of such order at the price based
on the net asset value applicable to such same day;
any type of assets which embed a low level of risk and volatility
and which ensures a high level of liquidity, e.g. cash, regularly
traded money market instruments and cash equivalent
instruments the residual maturity of which does not exceed 397
days, notes and bonds issued or guaranteed by an OECD
Member State, its local authorities or governmental agencies or
any units or shares issued by a UCI which holds or invests in
such assets
Liquid Equity an equity security that trades on average more than USD 1
million in value per day during the last period of six (6) months
Lock-Up Period
Luxembourg Law
Management Fee
a period during which no redemption of Shares are admitted
the law and regulations applicable in the Grand-Duchy of
Luxembourg
the fee calculated and payable by each Sub-Fund to the
Investment Manager as determined in the relevant Schedule of
each Sub-Fund
0093346-0000001 LU:4016712.7 7

Market Timing
Mémorial C
Net Asset Value
OECD
OTC Market
Part A
Part B
Performance Fee
Pre-IPO Securities
Prime Broker
Professional Investor
Processor
Prohibited Person
Redemption Day
any market timing practice within the meaning of Circular
04/146 or as that term may be amended or revised by the CSSF
in any subsequent circular
Mémorial C, Recueil des Sociétés et Associations
the net asset value of a Sub-Fund as determined in accordance
with the Articles and Section 15 of the Issuing Document
the Organization for Economic Cooperation and Development
the over-the-counter market
the general part of the Issuing Document which describes the
common characteristics and rules applicable for all Sub-Funds
the special part of the Issuing Document which contains for
each Sub-Fund a Schedule determining main features and rules
of the relevant Sub-Fund
the performance fee calculated and payable by a relevant Sub-
Fund to the Investment Manager and which is described for
each Sub-Fund in its Schedule, if any
an offering of a company's shares prior to that company's initial
public offering
a first class financial institution belonging to the categories
listed under article 1 (2) of Directive 2002/47/EC on financial
collateral arrangements (i.e. credit institution within the
meaning of directive 2006/48/EC relating to the taking-up and
pursuit of the business of credit institutions or an investment
firm within the meaning of directive 2004/39/EC on markets in
financial instruments) and who provides various financial
services to the Company implying that the Company's assets are
held in custody with that Prime Broker; the appointment of a
Prime Broker, if any, is specified in the relevant Schedule
any investor who qualifies as professional investors within the
meaning of Annex III to the 1993 Act
any entity such as the Administrator to which the processing of
personal data may be sub-contracted by the Company
any person which is not allowed to invest in the Company either
due to a restriction by Luxembourg or foreign laws and
regulations or due to a decision of the Board; e.g. any investor
who/which does not qualify as a Well-Informed Investor or a
citizen of the United States of America are Prohibited Persons
the Valuation Day as of which Shares are redeemed as more
fully described for each Sub-Fund in the relevant Schedule
0093346-0000001 LU:4016712.7 8

Redemption Price
Reference Currency
Regulated Market
RMB
Schedule
Section
Share
Shareholder
Side Pocket Investments
SP Class
Sub-Fund
Subscription Form
Subscription Price
UCI
USD
Valuation Day
the price at which shares are redeemed before deduction of any
charges, costs, expenses, taxes and redemption fee (if any) as
described for each Sub-Fund in its Schedule
the currency that is used by the Administrator to establish the
consolidated annual report; the Reference Currency is the EUR
a market which operates regularly and which is open to the
public
Yuan Renminbi, the currency of the People's Republic of China
any schedule of Part B dedicated to the description of a relevant
Sub-Fund
any section of this Issuing Document
a share with no par value which has been issued by the
Company within a relevant Sub-Fund, and as the case may be,
within a relevant Class
an investor who has subscribed, received and who holds one or
more Shares
securities which turn out to be illiquid and/or hard to value due
to market reasons
specific class of Shares which may be created by the Board in
order to isolate illiquid and/or hard to value securities from
other assets of a relevant Sub-Fund
separate portfolio of assets established for one or more Classes
of Shares which is invested in accordance with a specific
investment objective as described in Part B; a Sub-Fund has no
legal existence distinct of the Company; however each Sub-
Fund is liable only for the debts, liabilities and obligations
attributable to it
the agreement a relevant investor enters into with the Company
in order to subscribe Shares to be issued by the Company
the aggregate of the initial issue price and the subscription fee
(if any) as described for each Sub-Fund in its Schedule
any type of undertakings for collective investment subject to
Luxembourg Law or to any other law
United States Dollars, the currency of the United States of
America
each day on which the Net Asset Value is determined in
accordance with the Articles and the Issuing Document
0093346-0000001 LU:4016712.7 9

Well-Informed Investor
an well-informed investor within the meaning of article 2 of the
2007 Act; there exist three categories of well-informed investor,
Institutional Investor, Professional Investor and Experienced
Investor; Directors and other persons involved in the
management of the Company are regarded as Well-Informed
Investors
0093346-0000001 LU:4016712.7 10

CONTENTS
DIRECTORY .....................................................................................................................................................5
DEFINITIONS ...................................................................................................................................................6
CONTENTS .....................................................................................................................................................11
PART A: GENERAL INFORMATION ..........................................................................................................12
1. Investment Objectives, Investment Restrictions and Investment Policies ..........................................13
2. General Risk Considerations ...............................................................................................................15
3. Board and Investment Team................................................................................................................21
4. Conflict of Interests .............................................................................................................................24
5. Investment Manager ............................................................................................................................25
6. Depositary ...........................................................................................................................................25
7. Domiciliation Agent, Central Administration, Register and Transfer Agent......................................26
8. Prevention of Money Laundering and Terrorism Financing ...............................................................26
9. Prevention of Market Timing and Late Trading..................................................................................27
10. Shares ..................................................................................................................................................27
11. Issue and Sale of Shares ......................................................................................................................28
12. Redemption of Shares..........................................................................................................................29
13. Data Protection ....................................................................................................................................30
14. Determination of the Net Asset Value.................................................................................................30
15. Distribution Policy ..............................................................................................................................34
16. Charges and Expenses .........................................................................................................................34
17. Taxation...............................................................................................................................................35
18. General Information ............................................................................................................................36
19. Documents Available ..........................................................................................................................38
PART B: SPECIFIC INFORMATION ............................................................................................................39
Schedule 1 - ARC China Investment Funds – Fund I....................................................................40
Schedule 2 - ARC China Investment Funds – Fund II ..................................................................47
Page
0093346-0000001 LU:4016712.7 11

PART A: GENERAL INFORMATION
0093346-0000001 LU:4016712.7 12

1. INVESTMENT OBJECTIVES, INVESTMENT RESTRICTIONS AND INVESTMENT
POLICIES
1.1 Investment Objective
The main objective of the Company is to achieve for its Shareholders an optimum return from
equity, debt and/or a combination of both through investments in eligible assets under the 2007 Act,
while reducing investment risk through diversification. The Company has as investment objective to
achieve, within the investment policy specified for each Sub-Fund, an attractive return on invested
assets and to generate returns through active management of the assets.
A relevant Sub-Fund is entitled to invest in transferable securities including stock-listed equities
(including Liquid Equities), bonds, notes as well as financial instruments and units issued by openended
collective investment undertakings.
Subject to Part B, a relevant Sub-Fund may also be entitled to invest in less liquid securities and
financial instruments including but not limited to Pre-IPO Securities, units issued by closed-ended
collective investment undertakings, private equities and loans as well as any other type of
investments, securitised or not, traded or not, as long as such investments are eligible in the meaning
of the 2007 Act.
A relevant Sub-Fund is entitled to invest in cash, regularly traded money market instruments and
cash equivalent instruments the residual maturity of which does not exceed 397 days and which are
issued by internationally recognised issuers.
On a temporary basis, each Sub-Fund is allowed to hold liquid assets of up to 100% of its Net Asset
Value. Liquid assets in the meaning of this Issuing Document may be any type of assets which
embed a low level of risk and volatility and which ensures a high level of liquidity, e.g. cash,
regularly traded money market instruments and cash equivalent instruments the residual maturity of
which does not exceed 397 days, notes and bonds issued or guaranteed by an OECD Member State,
its local authorities or governmental agencies or any units or shares issued by a collective investment
undertakings which holds or invests in such assets (the Liquid Assets).
A Sub-Fund may be subject to additional investment objectives as set out in the relevant Schedule of
Part B.
1.2 Common Investment Restrictions for all Sub-Funds
Each Sub-Fund has to comply with the following investment restrictions. Each Sub-Fund may be
required to comply with additional investment restrictions as set out in its Schedule of Part B.
Each Sub-Fund has to comply with its investment restrictions within a period of time determined for
each Sub-Fund in its Schedule of Part B.
(a)
Restrictions applicable to investments in securities and financial instruments
A relevant Sub-Fund will, in principle, not invest more than 30% of its assets in securities and
financial instruments of the same nature issued by the same entity. The relevant Schedule of a Sub-
Fund may impose a restriction below 30% of its Net Asset Value.
However, a relevant Sub-Fund is entitled to hold up to the entire issue of a specific security or
financial instrument.
0093346-0000001 LU:4016712.7 13

The restriction set forth in the previous paragraph is not applicable to securities or financial
instruments issued or guaranteed by a member state of the OECD or by one of its local authorities or
by supranational institutions and organisations with European, regional or worldwide scope.
(b)
Restrictions applicable to other type of investments
As more fully described in the relevant Schedule, a relevant Sub-Fund may be authorised to invest in
any other type of investments than securities and financial instruments subject to the condition that
the relevant investment is eligible by the 2007 Act and that its value does in principle not exceed
30% of the Net Asset Value of that relevant Sub-Fund. The relevant Schedule of a Sub-Fund may
impose a restriction below 30% of its Net Asset Value.
(c)
Use of financial derivative instruments and other techniques
Each Sub-Fund may be authorised to make use of financial derivative instruments and other
techniques such securities lending transactions as well as sale with right of repurchase transactions
and repurchase transactions (opérations à réméré and opérations de mise en pension).
The financial derivative instruments may include, amongst others, options, futures and forward
contracts on any type of assets including financial instruments and options on such contracts as well
as swap contracts by private agreement on any type of financial instruments including credit default
swaps.
The maximum total leverage resulting from the use of these derivative financial instruments or
techniques will be set out for each Sub-Fund, if appropriate, in its Schedule. The financial derivative
instruments must be dealt on an organised market (the Regulated Market) or contracted by private
agreement with first class professionals specialised in this type of transactions (the OTC Market).
A Sub-Fund may not borrow to finance margin deposits and a Sub-Fund must ensure an adequate
spread of investment risks by sufficient diversification when opening positions in financial
derivative instruments.
(d)
Borrowings and leverage
Subject to the relevant Schedule of Part B, a relevant Sub-Fund may be permitted to be leveraged by
the use of financial derivative instruments and/or by borrowing of cash and/or securities. Such
leverage may be done temporarily or permanently with the purpose either to cover a shortage of cash
or securities or with the purpose of investment. In all cases, the counterparty will be a first class
professional specialised in this type of transactions.
The borrowings of cash and/or securities are in principle limited to 100% of the net assets of a Sub-
Fund. Consequently, the gross value of the assets of a Sub-Fund may in principle not exceed 200%
of its net assets.
The total leverage involved by the use of financial derivative instruments should in principle not
exceed 100% of the net assets of a relevant Sub-Fund. Consequently, the gross value of the assets of
a relevant Sub-Fund may in principle not exceed by the use of derivatives 200% of its net assets.
The Schedule of a relevant Sub-Fund may impose stricter restrictions on leverage as those
determined in this Section.
0093346-0000001 LU:4016712.7 14

(e)
Rules for uncovered sales of securities
Subject to the relevant Schedule of Part B, a relevant Sub-Fund may be allowed to short securities.
In such a case, the Schedule of the relevant Sub-Fund will specified applicable rules and provide
information on the Prime Broker and the relationship between the Company, the Depositary and the
Prime Broker additional to those mentioned in Section 6 of Part A.
The following rules shall always be followed.
(i)
Short sales shall, in principle, not result in a Sub-Fund holding:
(A)
(B)
an uncovered position on securities which do not qualify as securities. However,
each Sub-Fund may hold uncovered positions on securities which do not qualify as
securities if such securities are liquid and do not represent more than 10% of the
Sub-Fund's assets and
an uncovered position on securities which represents more than 30% of the
securities of the same nature issued by the same issuer.
(ii)
(iii)
(iv)
(v)
The aggregate commitments of a relevant Sub-Fund resulting from the uncovered sales
should in principle not exceed a percentage of the net assets of the relevant Sub-Fund
specified in Part B. If a Sub-Fund enters into uncovered sales, it must hold sufficient assets
enabling it at any time to close the open positions resulting from such uncovered sales.
The uncovered positions of securities for which a Sub-Fund holds adequate coverage are not
considered for the purpose of calculating the total commitments referred to above. It is to be
noted that the fact that a relevant Sub-Fund has granted a security, of whatever nature, on its
assets to third parties to guarantee its obligations towards such third parties, is not to be
considered as adequate coverage for the Sub-Fund's commitments, from the point of view of
that Sub-Fund.
The granting to the Prime Broker of a right of use over the assets of a relevant Sub-Fund is
conditional upon the inclusion of enforceable close-out netting provisions.
The total value of assets over which a right of use may be granted in favour of the Prime
Broker is limited to 140% of the debt of the relevant Sub-Fund towards that Prime Broker.
1.3 Investment Policy
The investment policy of each Sub-Fund is set out in the relevant Schedule of Part B.
2. GENERAL RISK CONSIDERATIONS
An investment in a Sub-Fund involves certain risks relating to the particular Sub-Fund’s structure
and investment objectives which investors should evaluate before making a decision to invest in
such Sub-Fund.
The investments within each Sub-Fund are subject to market fluctuations and to the risks inherent in
all investments; accordingly, no assurance can be given that the investment objective will be
achieved.
0093346-0000001 LU:4016712.7 15

The following is a brief description of certain factors which should be considered along with other
matters discussed elsewhere in this Issuing Document. The following however, does not purport to
be a comprehensive summary of all the risks associated with any Sub-Fund.
2.1 Risks related to the Company's organisation and structure
Risks linked to the dependence on key persons of the Board, the Investment Team, the
Investment Manager and the Investment Advisers: Decisions with respect to the management of
the Company will be made by the Board, as the case may be, in consultation with the Investment
Team. The management of the portfolio of each Sub-Fund is delegated under the supervision of the
Board to the Investment Manager. The Board and the Investment Manager may rely to a large extend
on the advice of one or more Investment Advisers. As a result, the success of the management of a
relevant Sub-Fund for the foreseeable future will depend largely upon the abilities of the Directors,
the members of the Investment Team, the Investment Manager and the Investment Advisers. Key
persons of the Board, the Investment Team, the Investment Manager and the Investment Advisers
may cease to provide their services for the Company, the Investment Manager or the relevant
Investment Adviser. As a result, the knowledge and experience of such a key person will no more be
available for the Company. It can furthermore not be ensured that in such a situation a key person
could timely be replaced.
Risk of early termination: In the event of the early termination of a relevant Sub-Fund, the latter
would have to distribute to the Shareholders their pro-rata interest in the assets of that Sub-Fund. The
Sub-Fund's investments would have to be sold by the Board or distributed in specie to the
Shareholders. It is possible that at the time of such sale or redemption certain investments held by
the Sub-Fund may be worth less than the initial cost of the investment, resulting in a loss to the Sub-
Fund and to its Shareholders. Moreover, in the event the Sub-Fund terminates prior to the complete
amortisation of organisational expenses, any unamortised portion of such expenses will be
accelerated and will be debited (and thereby reduce) amounts otherwise available for distribution to
Shareholders.
Risks involved by changes in applicable law: The Company must comply with various legal
requirements, including securities laws and tax laws as imposed by the jurisdictions under which it
operates. Should any of those laws change over the life of the Company, the legal requirement to
which the Company and its Shareholders may be subject, could differ materially from current
requirements.
Risk related to diverse interests of the investors: The investors may have conflicting investment,
tax and other interests with respect to their investments in the Company. The conflicting interests of
individual investors may relate to or arise from, among other things, the nature of investments made
by the Company, the structuring or the acquisition of investments and the timing of dispositions of
investments. As a consequence, conflicts of interests may arise in connection with decisions made by
the Company, including with respect to the nature or structuring of investments, that may be more
beneficial for one investor than for another investor. In selecting and structuring investments
appropriate for a relevant Sub-Fund, the Board will consider the investment objectives, and as the
case may be other objectives, of the Company and its investors as a whole, i.e. the body of the
Shareholders, not the investment, tax or other objectives of any investor individually.
Counterparty risk: The obligations of the Company on behalf of a relevant Sub-Fund towards the a
broker including, as the case may be, the duly appointed Prime Broker as regards credit and/or other
facilities may be guaranteed by the transfer to the broker of Collateral in the form of securities, cash
or other assets held by that Sub-Fund. The counterparty risk results from the difference between (i)
the value of the assets transferred by the Company, on behalf of a Sub-Fund, to the broker as
security in the context of securities lending or borrowing transactions and (ii) the debt of the
0093346-0000001 LU:4016712.7 16

Company owed, on behalf of a Sub-Fund, to such broker. The broker may sell, lend or use in any
other way the Collateral for its own needs. Although the Company is entitled to receive from the
broker assets equivalent to the Collateral, the Collateral may not be segregated from the other assets
transferred to the broker and will be available for creditors of the broker in case of bankruptcy of the
broker.
Furthermore the Company may engage on behalf of a relevant Sub-Fund in OTC transactions with
banks and/or brokers acting as counterparties. Participants to such markets are not protected against
defaulting counterparties in their transactions because such contracts are not guaranteed by a
clearinghouse.
The Company may also have credit exposure to one or more counterparties by virtue of its
investment positions including via the use of credit default swaps. To the extent that a counterparty
defaults on its obligation and the Company is delayed or prevented from exercising its rights with
respect to the investments in the portfolio of a relevant Sub-Fund, the latter may experience a decline
in the value of its position, loose income and incur costs associated with asserting its rights. Such
risks will increase where the Company uses only a limited number of counterparties for a relevant
Sub-Fund.
Risks involved by performance incentives: The payment of a Performance Fee calculated on the
basis of management results could encourage the Investment Manager to adopt a more risky and
volatile investment approach than if such fees were not applicable.
Custody risks: Securities and other assets of each Sub-Fund are in principle deposited with the
Depositary (and its sub-custody network). Subject to the relevant Schedule of Part B, all or part of a
relevant Sub-Fund's assets may also be safe-kept with a Prime Broker (and its sub-custody network)
subject to the consent of the Company and of the Depositary. These securities and assets may not
always be clearly identified as belonging to the Sub-Fund. In case of default of the Depositary or of
the Prime Broker, there might be problems in achieving the segregation of the Sub-Fund assets from
those of other parties. This might create substantial losses for the Sub-Fund's Shareholders.
Furthermore, the Sub-Fund’s cash and cash equivalents is generally not segregated from the
Depositary's or the Prime Broker’s cash and cash equivalents. Cash and cash equivalents may
therefore be used in its ordinary course of business. Hence, a relevant Sub-Fund may become an
unsecured creditor of the Depositary or the Prime Broker in relation thereto.
Market participant risk: The institutions, including brokerage firms and banks, with which the
Company execute trades, may encounter financial difficulties that impair the operational capabilities
or the capital position of such counterpart. The Company will have no control whatsoever over the
counterparties.
Low level of liquidity: Investors should be aware about the fact that investment in the Company is
long-term oriented and that the redemption of Shares may be subject to specific conditions and
significant constraints. In particular, the Board is entitled to establish within a relevant Sub-Fund or
Class of Shares a Lock-up Period during which no redemption of Shares are admitted. After the
Lock-up Period, Shares may further only be redeemed on a pre-determined frequency (e.g. quarterly)
and subject to a certain number of conditions (e.g. cut-off time). Furthermore the Board is entitled to
defer applications of redemption in the case where the aggregate number of Shares a redemption has
been applied for exceeds 10% of the outstanding Shares of a relevant Sub-Fund or Class. The Board
is also entitled to create side pockets if specific assets turned out to be illiquid and/or hard-to-value
and proceed to a compulsory conversion of Shares into Shares issued by the side pocket. In general,
it is not possible to redeem Shares issued within a side pocket.
0093346-0000001 LU:4016712.7 17

2.2 Risks related to the Company's investments
Foreign exchange/currency risk: A relevant Sub-Fund may invest in assets denominated in a wide
range of currencies. The Net Asset Value of each Class expressed in its respective currency will
fluctuate in accordance with the changes in foreign exchange rate between its currency, the
Reference Currency of the Sub-Fund and the currencies in which the Sub-Fund's investments are
denominated.
Emerging markets: A relevant Sub-Fund may invest into and/or being strongly exposed to the
specificities and evolution of emerging markets. If such an exposure is achieved by acquiring
securities listed on Western Regulated Markets issued by companies located or mainly active in
emerging markets, the performance of the relevant Sub-Fund will also be exposed to the risks linked
to the specific emerging market as described hereafter.
In certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political,
economic or social instability (including risk of war) or diplomatic developments which could affect
investment in those countries. There may be less publicly available information about certain
financial instruments than some investors would find customary and entities in some countries may
not be subject to accounting, auditing and financial reporting standards and requirements comparable
to those to which certain investors may be accustomed. Certain financial markets, while generally
growing in volume, have for the most part, substantially less volume than more developed markets,
and securities of many companies are less liquid and their prices more volatile than securities of
comparable companies in more sizable markets. There are also varying levels of government
supervision and regulation of exchanges, financial institutions and issuers in various countries. In
addition, the manner in which foreign investors may invest in securities in certain countries, as well
as limitations on such investments, may affect the investment operations of a relevant Sub-Fund.
Emerging country debt will be subject to high risk and will not be required to meet a minimum
rating standard and may not be rated for creditworthiness by any internationally recognised credit
rating organisation. The issuer or governmental authority that controls the repayment of an emerging
country’s debt may not be able or willing to repay the principal and/or interest when due in
accordance with the terms of such debt. As a result of the foregoing, a government obligor may
default on its obligations. If such an event occurs, the Company may have limited legal recourse
against the issuer and/or guarantor. Remedies must, in some cases, be pursued in the courts of the
defaulting party itself, and the ability of the holder of foreign government debt securities to obtain
recourse may be subject to the political climate in the relevant country. In addition, no assurance can
be given that the holders of commercial debt will not contest payments to the holders of other
foreign government debt obligations in the event of default under their commercial bank loan
agreements.
Settlement systems in emerging markets may be less well organised than in developed markets. Thus
there may be a risk that settlement may be delayed and that cash or securities of the Company may
be in jeopardy because of failures or of defects in the systems. In particular, market practice may
require that payment shall be made prior to receipt of the security which is being purchased or that
delivery of a security must be made before payment is received. In such cases, default by a broker or
bank through whom the relevant transaction is effected might result in a loss being suffered by the
relevant Sub-Fund investing in emerging market securities.
The Company will seek, where possible, to use counterparties whose financial status is such that this
risk is reduced. However, there can be no certainty that the Company will be successful in
eliminating this risk, particularly as counterparties operating in emerging markets frequently lack the
substance or financial resources of those in developed countries.
0093346-0000001 LU:4016712.7 18

There may also be a danger that, because of uncertainties in the operation of settlement systems in
individual markets, competing claims may arise in respect of securities held by or to be transferred to
the Company. Furthermore, compensation schemes may be non-existent or limited or inadequate to
meet the Company’s claims in any of these events.
Risks related to investments in Pre-IPO Securities: Investing in Pre-IPO Securities tends to be
very risky mainly because the planned initial public offering may never take place. In addition, Pre-
IPO Securities are unregistered and are likely to be very difficult to sell until the public offering is
completed. Pre-IPO Securities are difficult to value. The market risks for investments in Pre-IPO
Securities are partly dependent on the trade-sale and the IPO market. A reduced level of activity on
the trade-sale and the IPO market may have an adverse on the performance of Pre-IPO Securities,
overall influence on the implementation of exit strategies. In view of the different timing of the
information provided to a Sub-Fund, it may be the case that from time to time the Net Asset Value
per Share of a Sub-Fund does not correspond with the actual overall value of the investments.
Consequently, there may be a degree of delay in terms of incorporating information that affects the
valuation of a Pre-IPO Security within the valuation of the Sub-Fund’s assets.
Risks due to a lack of control on the Company's investments: The investments of a relevant Sub-
Fund may represent minority positions these companies, without power to exert significant control
over such portfolio companies' governing or management bodies. Although the Board will monitor
the performance of each investment, the Board will rely significantly on the management and
governing bodies of invested companies, which may include representatives of other investors with
whom the Company is not affiliated and whose interests or views may conflict with those of the
Company.
Risks linked to futures, options and other financial derivative instruments dealt or traded on a
Regulated Market: Futures, options and other derivatives are volatile and involve a high degree of
leverage. The profitability of the Company will depend also on the ability of the General Partner to
make a correct analysis of the market trends, influenced by governmental policies and plans,
international political and economical events, changing supply and demand relationships, acts of
governments and changes in interest rates. In addition, governments may from time to time intervene
on certain markets, particularly currency markets. Such interventions may directly or indirectly
influence the market. Given that only a small amount of margin or a low amount of premium may be
required or paid to trade on futures and option markets, the operations of the portion of the Sub-Fund
will be characterised by a high degree of leverage. As a consequence, a relatively small variation of
the price of the derivative may result in substantial losses for the Sub-Fund and a correlated
reduction of the Net Asset Value of the Sub-Fund.
Risks linked to forwards, swaps, options or other financial derivative instruments dealt or
traded on the OTC Market: The Sub-Fund may enter into one or more forward rate agreements,
forwards, swaps, OTC derivatives in connection either with a hedge or an exposure. OTC derivatives
are not traded on exchanges but rather banks and dealers act as principals by entering into an
agreement to pay and receive certain cash flow over a certain time period, as specified in the OTC
derivative. Consequently, the Sub-Fund is subject to the risk of the counterparty's inability or refusal
to perform according to the terms of the OTC derivative. The OTC derivative market is generally
unregulated by any governmental authority. To mitigate the counterparty risk resulting from such
transactions, the Sub-Fund will enter into such transactions only with highly rated, first class
financial institutions with which it has established ISDA agreements. The use of credit derivative
such as credit default swaps can be subject to higher risk than direct investment in securities. The
market for credit derivative may from time to time be less liquid than the markets for transferable
securities. In relation to credit default swaps where the Sub-Fund buys protection, the Sub-Fund is
subject to the risk of the counterparty of the credit default swaps defaulting. To mitigate the
counterparty risk resulting from credit default swap transactions, the Sub-Fund will only enter into
0093346-0000001 LU:4016712.7 19

credit default swaps with highly rated financial institutions specialised in this type of transaction and
in accordance with the standard terms laid down by the ISDA.
Risks linked to structured financial instruments: Investments in structured financial instruments
include interests in entities organised solely for the purpose of restructuring the investment
characteristics of certain other investments. These investments are purchased by the entities, which
then issue transferable securities backed by, or representing interests in, the underlying investments.
The cash flow on the underlying investments may be apportioned among the newly issued financial
instruments to create transferable securities with different investment characteristics such as varying
maturities, payment priorities or interest rate provisions, and the extent of the payments made with
respect to structured investments depends on the amount of the cash flow on the underlying
investments. Structured financial instruments are subject to the risks associated with the underlying
market or security, and may be subject to greater volatility than direct investments in the underlying
market or security. Structured financial instruments may entail the risk of loss of principal and/or
interest payments as a result of movements in the underlying market or security. In particular,
valuation of structured financial instruments may be complex and biased by various factors such as
the solvability level related to the underlying assets.
Risks linked to the use of leverage: A relevant Sub-Fund may use of leverage, i.e. a borrowing
facility for purchasing securities and assets in excess of the equity value which is available for the
Sub-Fund. If the cost of borrowing is lower than the net return earned on the purchased asset, the
Sub-Fund may increase its performance. However, if the use of leverage exposes the Sub-Fund to
additional risks such as but not limited to (i) greater potential losses on the investment purchase by
using the leverage; (ii) greater interest costs and lower debt coverage in case of increasing interest
rates and/or (iii) premature margin calls which may force the liquidation of some Sub-Fund’s
investments (which may occur at a moment where the investments have been under pressure by the
markets involving the liquidation at prices below the acquisition prices).
Risks related to lending and borrowing of securities: The Company may borrow and lend
securities as part of its investment strategy. In case of borrowing, the Company may have access to
“hard-to-borrow” securities whose costs have to be born by the relevant Sub-Fund and which may
have an impact on the performance of that Sub-Fund. Securities lending may have a positive impact
on the performance of a relevant Sub-Fund in terms of yield enhancement. However, third parties
that borrow securities from a relevant Sub-Fund may not be able to return these securities on first
demand which may cause the Sub-Fund to default on its obligation to other counterparties.
Risks due to short sales: A Sub-Fund may be allowed to take short positions on securities. In such a
case the Sub-Fund may be exposed to price movements in an opposite way as the expected one
which may involved that the Fund is not able to cover the short position. As a result, the Sub-Fund
may theoretically face an unlimited loss. The availability in the market of the borrowed securities
cannot be ensured when necessary to cover such short position.
Risks linked to commodities: the Company may invest indirectly in commodities. Investors should
be aware that investments in commodities involve significant risks. Prices of commodities are
influenced by, among other things, various macro economic factors such as changing supply and
demand relationships, weather conditions and other natural phenomena, agricultural, trade, fiscal,
monetary and exchange control programmes and policies of governments (including government
intervention in certain markets) and other unforeseeable events.
Investments in commodities is countercyclical: the value of investments in commodities is moving in
the opposite direction than the overall economic cycle. Most assets do not benefit from rising
inflation, but commodities usually do. As demand for goods and services increases, the price of
those goods and services usually rises as well, as does the price of the commodities used to produce
0093346-0000001 LU:4016712.7 20

those goods and services. By contrast, stocks and bonds tend to perform better when the rate of
inflation is stable or growing.
3. BOARD AND INVESTMENT TEAM
3.1 Board
The Board is in charge of the overall management and supervision of the Company including the
management of its assets and the placing of the Shares issued by the Company.
The Board has the broadest powers to act in any circumstances on behalf of the Company, subject to
the powers expressly assigned by law and the Articles to the General Meetings.
In particular, the Board is responsible for the investment decision process in relation of the
management of the portfolio of each Sub-Fund. In accordance with Section 5 of Part A, the Board
delegates the management of the portfolio to the Investment Manager. The Investment Manager is
entitled to use the advisory services of one or more Investment Advisers as mentioned in the relevant
Schedule of Part B.
As of the date of this Issuing Document, the Board is composed by the following Directors.
Adam Roseman, Chairman of the Board, Shanghai. Mr Roseman is founder and chairman of ARC
China, Inc., an investment advisory and private equity firm based in Shanghai. Prior to found ARC
China, Inc., Mr. Roseman served as a member of Lehman Brothers' Investment Banking Group and
the Mergers & Acquisitions practice of Barrington Associates. He has executed investment banking
transactions in numerous industries, including traditional and clean energy, media and hospitality,
technology, consumer products, e-Commerce, business services, manufacturing and
telecommunications. He also is a member of Advisory Board of US Doctors for Africa and the
American Democracy Institute, a member of the Clinton Global Initiative, the Board of Governors of
Cedars-Sinai Medical Center, the board of Big Brothers Big Sisters of Los Angeles and is an active
supporter of various other charitable and political organisations. Mr Roseman appeared on numerous
Chinese media outlets, including print and television, discussing China and its interaction with the
international capital markets.
Marco Becker, Director, Luxembourg. Since 2007, Mr Becker is CEO of Prometheus Immobilières
Sàrl, a real estate development and consulting firm in Luxembourg. In 1995, he founded and
developed VEDA Consult, an advisory firm representing foreign companies in Luxembourg. Mr.
Becker started his career in 1978 as an Eurobond trader with Banque Générale du Luxembourg SA
(today BGL Société Anonyme) before joining Hypobank International SA (today Unicredit
Luxembourg SA) where he has been in charge of the bond markets and the new issuers. From 1985
to 1987, Mr. Becker manages the bond portfolio of the Compagnie Monégasque de Banque in
Monaco before joining Shearson Lehman Hutton, a brokerage firm where he has been a financial
consultant and portfolio manager. From 1992 to 1995, he was responsible for the investment fund
division at Compagnie Financière Edmond de Rothschild in Monaco. From 1987 to 1992, Mr Becker
has been registered as a broker for stocks, options and bonds with the New-York Stock Exchange
(NYSE), for commodities, futures and options with the Chicago Board of Trade (CBOT) and for
currencies, metals and options with the Chicago Mercantile Exchange (CME).
Franklin C. Craig, Director, Paris. Mr Craig is an independent financial adviser to Sequoia
Aggressive Growth Fund Limited as well as ARC Semper Investments Limited. Mr. Craig is on the
board of Fairview Asset Management, a Paris-based regulated investment firm. Mr. Craig is also an
adviser to several venture stage companies and fund management firms. Mr. Craig started his career
in 1982 as a broker and analyst with Fahnestock and Co. before joining Cerepfi SA/Alex Brown and
0093346-0000001 LU:4016712.7 21

Sons, Inc. and founding Trinity Capital Partners, an investment bank and money management firm
specialised in equity sales, structured corporate finance equity and distribution of funds. In 1996, he
joined Yorkton Securities where he has been in charge for the sales of US and Canadian equities.
From 2000 to 2008, Mr. Craig was a Senior Vice President with Canaccord Adams Limited where
he was responsible for the sales of Canadian and European equities and actively involved the
origination and structuring of North American and European venture and development capital
financing. Mr Craig graduated from the American University in Paris and holds a B.A. in
international affairs and economics.
Eudes de Drouas, Director, Shanghai. Mr de Drouas is Managing Partner at Meili Partners, an
investment advisory firm that he founded in Shanghai in 2008. He is an investment adviser to the
Global China Fund, a Chinese equities fund, as well as Bouvier Global Opportunities, a diversified
macro fund, both funds being Luxembourg based undertakings for collective investment in
transferable securities (UCITS). Before founding Meili Partners, he has been a portfolio manager at
Bouvier Gestion in Paris where he was initially in charge of managing the portfolios of high net
worth individuals (HNWI) mainly invested in European equities and derivatives. In 2004, he set up
the Global China Fund and an investment team in Shanghai. Before joining Bouvier Gestion, Mr
Drouas has been part of the Pan European equity sales desk at WestLB Panmure - Lazard in London.
Mr Drouas holds a Masters degree in Economics and Business Sciences from the Sorbonne
University in Paris and a MSc. in International Financial Analysis (Hons) from Skema Business
School in France.
Blaise Hatt-Arnold, Director, Geneva. Mr Hatt-Arnold is currently a manager and a member of the
Investment Committee of Semper Gestion, a fund management company providing asset
management services to a number of family offices. Prior joining Semper Gestion, Mr Hatt-Arnold
founded Shangita Sarl, which operates the restaurant chain Café des Bains. Prior to founding
Shangita Sarl, Mr Hatt-Arnold was a currency and interest rate derivatives trader at Lloyds TSB
Bank, where he led his branch to become a top 3 market maker in interest rate derivatives. Also at
Lloyds TSB Bank, Mr Hatt-Arnold was manager and director of the Treasury Products Group, where
he was responsible for the nostro-curve management for various currencies. Mr Hatt-Arnold has
served on the Municipal Council of the city of Geneva and is a founder and partner of August H Sarl
in Paris, which is the fashion house of the Kris van Assche brand.
Martin Key, Director, Shanghai. Mr Key is currently a Senior Vice President with ARC China, an
investment advisory and private equity firm based in Shanghai, where he engages primarily in
investment analysis, due diligence, and portfolio monitoring. Prior to joining ARC China in 2007,
Mr Key was an investment banker in the Syndicated and Leveraged Finance Group at JPMorgan in
New York, where he was primarily engaged in structuring debt financing for healthcare, consumer
products and financial services companies. Mr Key holds a Master of Business Administration
degree from UCLA Anderson School of Management, a Master of Science in Finance degree from
Boston College, and a Bachelor of Science in Business Administration degree from the University of
South Carolina.
Stefan Müller, Director, Frankfurt. Mr Müller is the Founder of Frankfurt Capital Markets
Consulting in Germany, where he advises listed and private companies in their capital markets
matters. Prior to this, Mr Müller was Managing Partner of Proprietary Partners AG, a Swiss portfolio
and fund management company. Mr Müller started his finance career at Dresdner Bank in
Düsseldorf and joined their investment banking unit, Dresdner Kleinwort Benson, in Frankfurt as a
proprietary trader responsible for their world-wide equity activities in growth and emerging markets.
He then joined Equinet AG as Head of Trading. Later he moved to Sal Oppenheim, which at that
time Europe’s largest private owned bank, as Head of Trading. During his time in these banks, Mr
Müller executed more than 100 IPOs and capital increases. Mr Müller is frequently a guest on
0093346-0000001 LU:4016712.7 22

CNBC and Bloomberg and a member of both the supervisory board of Agrarius AG and is the
investment committee of Freudstein GmbH.
Subject to the regulatory approval, the Board may amend any provision of the Issuing Document
(Part A as well as Part B) as follows:
where the change is determined by the Board not to be material, upon decision of the Board;
or
where the change is determined by the Board to be material, only following the consent by
the Shareholders of the relevant Sub-Fund or, as the case may be, by of the Company who
together hold Shares whose aggregate voting rights represent a simple majority of the total
voting rights of that Sub-Fund or, as the case may be, of the Company.
Shareholders will be notified by the Board of all amendments that are adopted without their consent.
No variation may be made to this provision without unanimous consent of all Shareholders.
3.2 Investment Team
The Board created the Investment Team and nominated the following persons as its members. The
Investment Team advises the Board on various matters related to the management of the portfolio of
the Sub-Funds.
For the avoidance of doubt, the Investment Team has only an advisory function and the Board is free
to follow the advice of the Investment Team or not.
Adam Roseman, Shanghai. Mr Roseman is founder and chairman of ARC China, Inc., an
investment advisory and private equity firm based in Shanghai. Prior to found ARC China, Inc., Mr.
Roseman served as a member of Lehman Brothers' Investment Banking Group and the Mergers &
Acquisitions practice of Barrington Associates. He has executed investment banking transactions in
numerous industries, including traditional and clean energy, media and hospitality, technology,
consumer products, e-Commerce, business services, manufacturing and telecommunications. He also
is a member of Advisory Board of US Doctors for Africa and the American Democracy Institute, a
member of the Clinton Global Initiative, the Board of Governors of Cedars-Sinai Medical Center,
the board of Big Brothers Big Sisters of Los Angeles and is an active supporter of various other
charitable and political organisations. Mr Roseman appeared on numerous Chinese media outlets,
including print and television, discussing China and its interaction with the international capital
markets.
Franklin C. Craig, Paris. Mr Craig is an independent financial adviser to Sequoia Aggressive
Growth Fund Limited as well as ARC Semper Investments Limited. Mr. Craig is on the board of
Fairview Asset Management, a Paris-based regulated investment firm. Mr. Craig is also an adviser to
several venture stage companies and fund management firms. Mr. Craig started his career in 1982 as
a broker and analyst with Fahnestock and Co. before joining Cerepfi SA/Alex Brown and Sons, Inc.
and founding Trinity Capital Partners, an investment bank and money management firm specialised
in equity sales, structured corporate finance equity and distribution of funds. In 1996, he joined
Yorkton Securities where he has been in charge for the sales of US and Canadian equities. From
2000 to 2008, Mr. Craig was a Senior Vice President with Canaccord Adams Limited where he was
responsible for the sales of Canadian and European equities and actively involved the origination
and structuring of North American and European venture and development capital financing. Mr
Craig graduated from the American University in Paris and holds a B.A. in international affairs and
economics.
0093346-0000001 LU:4016712.7 23

Eudes de Drouas, Shanghai. Mr de Drouas is Managing Partner at Meili Partners, an investment
advisory firm that he founded in Shanghai in 2008. He is an investment adviser to the Global China
Fund, a Chinese equities fund, as well as Bouvier Global Opportunities, a diversified macro fund,
both funds being Luxembourg based undertakings for collective investment in transferable securities
(UCITS). Before founding Meili Partners, he has been a portfolio manager at Bouvier Gestion in
Paris where he was initially in charge of managing the portfolios of high net worth individuals
(HNWI) mainly invested in European equities and derivatives. In 2004, he set up the Global China
Fund and an investment team in Shanghai. Before joining Bouvier Gestion, Mr Drouas has been part
of the Pan European equity sales desk at WestLB Panmure - Lazard in London. Mr Drouas holds a
Masters degree in Economics and Business Sciences from the Sorbonne University in Paris and a
MSc. in International Financial Analysis (Hons) from Skema Business School in France.
Martin Key, Shanghai. Mr Key is currently a Senior Vice President with ARC China, an investment
advisory and private equity firm based in Shanghai, where he engages primarily in investment
analysis, due diligence, and portfolio monitoring. Prior to joining ARC China in 2007, Mr Key was
an investment banker in the Syndicated and Leveraged Finance Group at JPMorgan in New York,
where he was primarily engaged in structuring debt financing for healthcare, consumer products and
financial services companies. Mr Key holds a Master of Business Administration degree from
UCLA Anderson School of Management, a Master of Science in Finance degree from Boston
College, and a Bachelor of Science in Business Administration degree from the University of South
Carolina.
The investment team will be supported by ARC China’s sourcing and due diligence team of over 30
individuals based throughout China.
4. CONFLICT OF INTERESTS
The Board will enter on behalf of the Company into transactions on an arm's length basis.
The Board is allowed to purchase a relevant security or financial instrument or to invest in a relevant
asset on behalf of a relevant Sub-Fund, although a Director is involved with the issuer of that
security or financial instrument or has an interest in that security, financial instrument or that asset.
A Director may have a mandate and/or being employed by a company or an entity related to an agent
of the Company such as the Investment Manager or an affiliate of the Investment Manager (e.g. a
subsidiary of the Investment Manager) and may in that function benefit from any type of
remuneration or advantage.
Each Director may be involved or assume a mandate and/or an employment with a company or
entity including an investment fund or trust which may be in a competing position with the
Company.
The Company's agents including the Investment Manager may advise or provide services to other
companies and entities including investment funds and trusts.
In particular, a company or an entity related to an agent of the Company such as the Investment
Manager (or an affiliate thereof) may receive fees or benefit from any other type of remuneration or
advantage in relation to various services such as but not limited to investment banking services
provided to companies, a Sub-Fund is directly or indirectly invested or exposed to.
0093346-0000001 LU:4016712.7 24

5. INVESTMENT MANAGER
The Company has appointed ARC China Ltd., 87 Mary Street, George Town, Grand Cayman KYI-
9001, Cayman Islands as its Investment Manager.
The Investment Manager is part of the ARC China Group (the Group) and wholly owned by ARC
China Holdings Limited, the initiator of the Company. The Group enjoys a substantial private and
public sector network throughout China. The Investment Manager has affiliated offices in Shanghai,
Chengdu, and Beijing.
The Investment Manager sources investments through proprietary ideas generated by a substantial
network of professional relationships, advanced screening methods, and through unique
opportunities generated by its merchant banking team.
Subject to the approval of the Board, the Investment Manager may appoint for each Sub-Fund one or
several investment advisers based on its particular knowledge, skills and experience required by the
investment profile of the relevant Sub-Fund. The investment adviser will provide its services under
the costs and the responsibility of the Investment Manager.
The Investment Manager will be remunerated out of the assets of the relevant Sub-Fund as more
fully described for each Sub-Fund in its Schedule in Part B.
6. DEPOSITARY
The Company has appointed Banque Privée Edmond de Rothschild Europe as depositary bank and
paying agent (the Depositary) of the Company’s assets, including its cash, money market
instruments, securities, fund units which will be held either directly or through a third party such as
correspondents, nominees, agents or delegates of the Depositary. The Depositary's liability is not
affected by the fact that it has entrusted all or some of the assets in its custody to a third party.
The Depositary shall be liable to Shareholders for any loss suffered by them as a result of its
wrongful failure to perform its obligations or its wrongful improper performance thereof. The
carrying out its role as depositary bank, the Depositary must act solely in the interest of the
Shareholders.
The relationship between the Company and the Depositary is subject to the terms of a depositary and
bank services agreement with effect as of 9 September 2009. The Company and the Depositary may
terminate this agreement upon ninety (90) days prior written notice.
The Depositary is a credit institution under the 1993 Act.
Subject to Part B, the assets of the Company may, with the consent of and under the supervision of
the Depositary, be deposited with one or more other financial institutions and/or investment firms
which in principle belong to the network of the Depositary. For the purpose of exercising its duty of
supervision, the Depositary may exclusively rely on information received and generated by these
financial institutions or investment firms. The Depositary shall exercise reasonable care in the
approval and the supervision of the these financial institutions or investment firms selected by the
Company. Except for gross negligence on its part, the Depositary shall not be liable for acts or
omissions of these financial institutions or investment firms and/or of their agents.
The Company may appoint for a relevant Sub-Fund one or more Prime Brokers subject to the
consent and supervision of the Depositary and open accounts with such Prime Broker(s).
0093346-0000001 LU:4016712.7 25

In such a case, the Prime Broker must be a first class financial institution belonging to one of the
categories listed under article 1 (2) of the Directive 2002/47/EC on financial collateral arrangements.
Such financial institutions may be credit institutions within the meaning of directive 2006/48/EC
relating to the taking-up and pursuit of the business of credit institutions or investment firms within
the meaning of directive 2004/39/EC on markets in financial instruments). The Prime Broker must
be an experienced institution of good repute and sufficient financial resources. Furthermore the
Prime Broker should be subject to the supervision of a recognized regulatory authority. The
Depositary will carry out on a regular basis due diligence processes in order to ensure that the above
conditions are fulfilled with each appointed Prime Broker. The Depositary will be informed at any
time by the Prime Broker on the assets of a relevant Sub-Fund deposited with the Prime Broker. The
relationship between the Company, the Depositary and the Prime Broker has to be determined in a
written prime brokerage agreement. Part B mentions the Prime Broker(s), if any, selected by the
Board with the consent of the Depositary for the relevant Sub-Fund.
The Depositary, the brokers and the Prime Brokers, if any, will be remunerated out of the assets of
the relevant Sub-Fund as more fully described in Part B.
7. DOMICILIATION AGENT, CENTRAL ADMINISTRATION, REGISTER AND
TRANSFER AGENT
Banque Privée Edmond de Rothschild Europe has been appointed as domiciliation agent, central
administration agent, registrar and transfer agent (the Administrator). The Administrator will carry
out all administrative duties related to the administration of the Company, including the calculation
of the Net Asset Value of the Shares and the provision of accounting services to the Company.
The relationship between the Company and the Administrator is subject to the terms of the
depositary and bank service agreement with effect as of 9 September 2009. The Company and the
Administrator may terminate this agreement upon ninety (90) days prior written notice.
In connection with the calculation of the Net Asset Value, the Administrator relies on information
supplied by third parties (such as administrative or valuation agents) or by the Board. In the absence
of manifest error, the Administrator will not be liable for the accuracy of the relevant information
received or for any errors in the Net Asset Value calculation resulting from the inaccuracy of the
relevant information received by the Administrator. In relation to assets which are not listed, the
Administrator may completely rely on the valuations provided by the Board or by any third party
authorised to that effect by the Board.
The Administrator will be remunerated out of the assets of the relevant Sub-Fund as more fully
described in Part B.
8. PREVENTION OF MONEY LAUNDERING AND TERRORISM FINANCING
Measures aimed towards the prevention of money laundering and terrorism financing require a
detailed verification of an investor's identity in accordance with the applicable laws and regulations
in Luxembourg in relation to anti-money laundering and terrorism financing obligations. The
Company and the Administrator reserve the right to request such information as is necessary to
verify the identity of an investor in conformity with the before mentioned laws and regulations. In
the event of delay or failure by the investor to produce any information required for verification
purposes, the Company (and each of the Intermediary) and the Administrator may refuse to accept
the application and all subscription monies.
0093346-0000001 LU:4016712.7 26

9. PREVENTION OF MARKET TIMING AND LATE TRADING
Market Timing is to be understood as an arbitrage method through which an investor systematically
subscribes and redeems or converts units or shares of the same underlying fund within a short time
period, by taking advantage of time differences and/or imperfections or deficiencies in the method of
determination of the Net Asset Value of the underlying fund.
The Board does not permit practices related to Market Timing. Both the Board and the Administrator
reserve the right to reject subscription orders from an investor who the Board or the Administrator
suspects of using such practices. The Board further reserves the right to take, if appropriate, the
necessary measures to protect the other Shareholders of the Company.
Late Trading is to be understood as the acceptance of a subscription or redemption application after
the time limit fixed for accepting application (cut-off time) on the relevant Valuation Day and the
execution of such order at the price based on the Net Asset Value per Share of the relevant Sub-Fund
applicable to such same day.
Subscriptions and redemptions are dealt with at an unknown Net Asset Value per Share of the
relevant Sub-Fund on the relevant Valuation Day. The cut-off time is determined for each Sub-Fund
in the relevant Part B.
10. SHARES
The Company adopted the structure of an umbrella fund and as such may provide investors the
choice of investment in a range of several separate Sub-Funds each of which relates to a separate
portfolio of eligible assets, as further described in the relevant Part B.
Shares may be issued in one or more Classes in each Sub-Fund which are described in the relevant
Schedule of Part B.
The Board may launch additional Sub-Funds or Classes, the offering terms and conditions of which
will be communicated in due course via an amendment to this Issuing Document.
The net proceeds from the subscriptions are invested in the specific portfolio of assets constituting
the relevant Sub-Fund.
The Board will maintain for each Sub-Fund a separate portfolio of assets. As between Shareholders,
each portfolio of assets will be invested for the exclusive benefit of the relevant Sub-Fund.
The Company constitutes one single legal entity. However, with regard to third parties, in
particular towards the Company's creditors, each Sub-Fund will be exclusively responsible for
all liabilities attributable to it.
The inscription of the Shareholder's name in the register of Shares evidences his/her/it right of
ownership of such registered Shares. A holder of registered Shares will receive a written
confirmation of his/her/it shareholding.
Forms for the transfer of Shares are available at the registered office of the Company. Shares are
freely transferable except to Prohibited Persons which include persons declared by the Board as not
admitted as Shareholder of the Company.
0093346-0000001 LU:4016712.7 27

All Shares must be fully paid-up; they are of no par value and carry no preferential or pre-emptive
rights. Each Share of the Company of any Class to whatever Sub-Fund it belongs is entitled to one
vote at any General Meeting in compliance with Luxembourg Law and the Articles.
Fractional Shares may be issued to the nearest thousandth of a Share, and such fractional Shares will
not be entitled to vote but will be entitled to a participation in the net results and in the proceeds of
liquidation attributable to the relevant Class in the relevant Sub-Fund on a pro rata basis.
11. ISSUE AND SALE OF SHARES
The conditions for an investor to subscribe Shares are determined for each Sub-Fund in the relevant
Schedule of Part B. In particular, the relevant Schedule determines for each Sub-Fund the Initial
Subscription Period.
The Subscription Price per Share of each Class in each Sub-Fund is the total of (i) the Net Asset
Value per Share plus (ii) the subscription fee (if any) as stated for each Class within each Sub-Fund
in the its Schedule. The Subscription Price is available for inspection at the registered office of the
Company.
Issue and sale of Shares is only allowed to Well-Informed Investors in the meaning of article 2 of the
2007 Act. An Institutional Investor, a Professional Investor and any other investor, including a
natural person, if the latter declares in writing his/her/its adhesion to the well-informed investor
status and has invested a minimum amount of EUR125,000 or the equivalent amount in any other
freely convertible currency (the Experienced Investor).
If the investor declares in writing his/her/its adherence to the well-informed status and benefits from
the appreciation, from a credit institution within the meaning of Directive 2006/48/EC, an
investment company within the meaning of Directive 2004/39/EEC or a management company
within the meaning of Directive 2001/107/EC certifying its expertise, experience and its knowledge
to appreciate in an adequate way the investment made in the Company, then he or her may be
allowed to invest in the Company an amount of less than EUR125,000 or the equivalent amount in
any other freely convertible currency.
The requirements of the two previous paragraphs are not required for the directors and for other
persons taking directly or indirectly part in the management of the Company.
Investors whose applications are accepted by the Board (or by the entity duly mandated by the
Board) will be allotted Shares issued on the basis of the Net Asset Value per Share determined as of
the Valuation Day (as defined for each Sub-Fund in its Schedule) following receipt of the application
order provided that such application is received at the registered office of the Company at a time as
defined for each Class within each Sub-Fund in its Schedule.
Payments for Shares will be required to be made in the currency as determined in its Schedule or in
any major freely convertible currency (in which case any currency conversion costs will be borne by
the investor).
The Company reserves the right to reject any application in whole or in part, in which case
subscription monies paid, or the balance thereof, as appropriate, will be returned to the applicant
within ten (10) Business Days thereafter or to suspend at any time and without prior notice the issue
of Shares in one, several or all of the Sub-Funds.
The Company may agree to issue Shares as consideration for a contribution in kind of assets,
provided that such assets comply with the investment objectives, restrictions and policy of the
0093346-0000001 LU:4016712.7 28

elevant Sub-Fund and in compliance with the conditions set forth by Luxembourg Law, in particular
the obligation to deliver a valuation report from the auditor of the Company (réviseur d’entreprises
agréé) which will be available for inspection. Any costs incurred in connection with a contribution
in kind of assets will be borne by the relevant Shareholders.
No Shares of any Sub-Fund will be issued during any period when the calculation of the Net Asset
Value per Share in such Sub-Fund is suspended by the Company, pursuant to the powers reserved to
it by article 13 of the Articles.
In the case of suspension of dealings in Shares the application will be dealt with on the first
Valuation Day following the end of such suspension period.
12. REDEMPTION OF SHARES
The conditions for an investor to redeem Shares are determined for each Sub-Fund in the relevant
Schedule of Part B. In particular, the relevant Schedule determines for the relevant Sub-Fund if the
Lock-up Period (i.e. a period during which no redemption of Shares is possible) has been
established.
Shareholders desiring to have all or any of their Shares redeemed should apply in writing to the
registered office of the Company and the Administrator.
Redemption requests should contain the following information (if applicable): the identity and
address of the Shareholder requesting the redemption, the number of Shares to be redeemed, the
relevant Class (if any), the relevant Sub-Fund and details as to whom payment should be made.
Share certificates in proper form (if any) and all necessary documents to complete the redemption
should be enclosed with such application.
Shareholders whose applications for redemption are accepted will have their Shares redeemed on
any Valuation Day provided that the applications have been received in Luxembourg at a time
defined for each Sub-Fund in the relevant Schedule of Part B.
Shares will be redeemed at the Redemption Price equal to the Net Asset Value per Share of the
relevant Class within the relevant Sub-Fund less a redemption charge (if any), the rate of which is
indicated in the relevant Schedule of Part B.
The payment of the Redemption Price will be made within a period for each Class within each Sub-
Fund as defined in the relevant Schedule of Part B.
Payment will be made by wire to an account indicated by the Shareholder, at such Shareholder's
expense and at the Shareholder's risk.
The Redemption Price will be paid in the currency of the relevant Class, if any, or in the Reference
Currency of the relevant Sub-Fund or in any other freely convertible currency specified by the
Shareholder. In the last case, any currency conversion costs will be borne by the Shareholder. The
redemption price may be higher or lower than the price paid at the time of subscription or purchase.
Shares in any Sub-Fund will not be redeemed if the calculation of the Net Asset Value per Share in
such Sub-Fund is suspended by the Company in accordance with article 13 of the Articles.
If, as a result of any request for redemption, the aggregate Net Asset Value of the Shares held by any
Shareholder would fall below EUR125,000 (or the equivalent amount in any other freely convertible
0093346-0000001 LU:4016712.7 29

currency), the Company may treat such request as a request to redeem the entire shareholding of
such Shareholder.
Furthermore, if as of any Valuation Day redemption requests pursuant to 8.6 of the Articles relate to
more than 10% of the Shares in issue in a specific Sub-Fund, the Board may decide that part or all of
such requests for redemption will be deferred proportionally for such period as the Board considers
to be in the best interests of the Sub-Fund. On one of the next Valuation Days following such period,
these redemption requests will be met on a pro-rata basis in priority to later requests and in
compliance with the principle of equal treatment of Shareholders.
The Articles contain at article 11 provisions enabling the Company to compulsorily redeem Shares
held by Prohibited Persons.
The Company will have the right, if the Board so determines, to satisfy payment of the redemption
price to any Shareholder who agrees, in specie by allocating to the holder investments from the
portfolio of assets set up in connection with such Sub-Fund equal in value (calculated in the manner
described in 12 of the Articles) as of the Valuation Day, on which the redemption price is calculated,
to the value of the Shares to be redeemed. The nature and type of assets to be transferred in such case
will be determined on a fair and reasonable basis and without prejudicing the interests of the other
holders of Shares and the valuation used will be confirmed by a special report of the auditor of the
Company. The costs of any such transfers will be borne by the transferee.
13. DATA PROTECTION
The Company may collect information from a potential investor and a Shareholder from time to time
in order to develop and process the business relationship between the potential investor, the
Shareholder and the Company, and for other related activities. If a potential investor and a
Shareholder fails to provide such information in a form which is satisfactory to the Company, the
Company may restrict or prevent the ownership of Shares in the Company and the Company and the
Administrator will be held harmless and indemnified against any loss arising as a result of the
restriction or prevention of the ownership of Shares.
By completing and returning the Subscription Form, Shareholders consent to the use of personal data
by the Company. The Company may disclose personal data to its agents, service providers or if
required to do so by force of law or regulatory authority. Shareholders will upon written request be
given access to personal data provided to the Company. Shareholders may request in writing the
rectification of, and the Company will upon written request rectify, personal data. All personal data
will not be held by the Company for longer than necessary with regard to the purpose of the data
processing.
The Company may need to disclose personal data to entities located in jurisdictions outside the
European Union, which may not have developed an adequate level of data protection legislation. The
Company will comply with Luxembourg data protection legislation in respect of personal data.
14. DETERMINATION OF THE NET ASSET VALUE
14.1 Calculation and Publication
The Net Asset Value per Share of each Class within the relevant Sub-Fund will be expressed in the
currency of such Class, of such Sub-Fund or in the Reference Currency and will be determined as of
any Valuation Day by dividing the net assets of the Company attributable to the relevant Sub-Fund,
being the value of the portion of assets less the portion of liabilities attributable to such Class within
such Sub-Fund, on any such Valuation Day, by the number of Shares then outstanding, in
0093346-0000001 LU:4016712.7 30

accordance with the valuation rules set forth below. The Net Asset Value per Share may be rounded
up or down to the nearest two (2) decimal points of the unit of the relevant currency as the Board
will determine.
The frequency of the Net Asset Value calculation is detailed for each Sub-Fund in the relevant
Schedule of Part B.
The value of such assets will be determined as follows:
(a)
(b)
The value of any cash on hand or on deposit, bills and demand notes and accounts
receivable, prepaid expenses, cash dividends and interest declared or accrued as aforesaid
and not yet received is deemed to be the full amount thereof, unless in any case the same is
unlikely to be paid or received in full, in which case the value thereof is arrived at after
making such discount as may be considered appropriate in such case to reflect the true value
thereof.
The value of securities or financial instruments listed or dealt in on a Regulated Market will
be valued at the last available price on such markets. If a security is listed or traded on
several markets, the closing price at the market, which constitutes the main market for such
securities, will be determining; the value of securities or financial instruments listed or dealt
on Regulated Markets but whose transferability is subject to specific restrictions may be,
upon the Board's decision, subject to a discount determined in accordance with current
industry standards taking into account various parameters such as but not limited to the
remaining period of that restriction and the level of liquidity.
Upon the Board's decision, Liquid Equities issued by Chinese issuers on a Regulated Market will be
valued at the latest market price as of the Valuation Day. Investments in equities listed on a
Regulated Market but being less liquid than Liquid Equities will be valued at the latest market bid
price as of the Valuation Day.
(c)
(d)
(e)
(f)
In the event that any assets are not listed or dealt in on any Regulated Market, or if, with
respect to assets listed or dealt in on a relevant Regulated Market as aforesaid, the price as
determined pursuant to sub-paragraph (2) or (3) is not representative of the fair market value
of the relevant assets, the value of such assets will be based on the reasonably foreseeable
sales price determined prudently and in good faith by the Board.
The liquidating value of options contracts not traded on exchanges or on other Regulated
Markets will mean their net liquidating value determined, pursuant to the policies
established by the Board, on a basis consistently applied for each different variety of
contracts. The liquidating value of futures, forward or options contracts traded on exchanges
or on other Regulated Markets will be based upon the last available prices of these contracts
on exchanges and Regulated Markets on which the particular futures, forward or options
contracts are traded by the Company; provided that if a futures, forward or options contract
could not be liquidated on the day with respect to which net assets are being determined, the
basis for determining the liquidating value of such contract will be such value as the Board
may deem fair and reasonable.
Units or shares of UCI will be valued at their last determined and available Net Asset Value
or, if such price is not representative of the fair market value of such assets, then the price
will be determined by the Board on a fair and equitable basis and in good faith.
Warrants of listed issuers will in principle be valued in accordance with traditional warrant
valuation methodologies and, upon the Board's decision, subject to a discount determined in
0093346-0000001 LU:4016712.7 31

accordance with current industry standards taking into account various parameters such as
but not limited to the level of liquidity
(g)
All other securities and other assets will in principle be valued either at fair market value or
at lower of cost or market value as determined in good faith pursuant to the procedures
established by the Board.
The value of all assets and liabilities not expressed in the Reference Currency of a Sub-Fund will be
converted into the Reference Currency of such Sub-Fund at rates last quoted by any major bank. If
such quotations are not available, the rate of exchange will be determined in good faith by or under
procedures established by the Board.
The Board, in its discretion, may permit some other method of valuation to be used if it considers
that such valuation better reflects the value of any asset of the Company.
The Net Asset Value per Share of each Class and the issue and redemption prices per Share of each
Sub-Fund may be obtained during business hours at the registered office of the Company.
14.2 Temporary Suspension of the Calculation
The Board may temporarily suspend the determination of the Net Asset Value per Share of any Sub-
Fund and the issue and redemption of its Shares from its Shareholders:
(a)
(b)
(c)
(d)
(e)
(f)
during any period when any of the principal stock exchanges or other markets on which any
substantial portion of the investments of the Company attributable to such Sub-Fund from
time to time is quoted or dealt in is closed otherwise than for ordinary holidays, or during
which dealings therein are restricted or suspended, provided that such restriction or
suspension affects the valuation on the investments of the Company attributable to a Sub-
Fund quoted thereon; or
during the existence of any state of affairs which constitutes an emergency in the opinion of
the Board as a result of which disposals or valuation of assets owned by the Company
attributable to such Sub-Fund would be impracticable; or
during any breakdown in the means of communication normally employed in determining
the price or value of any of the investments of the Company or the current price or values on
any stock exchange or other market in respect of the assets attributable to the Company; or
during any period when the Company is unable to repatriate funds for the purpose of making
payments on the redemption of the Shares or during which any transfer of funds involved in
the realisation or acquisition, of investments or payments due on redemption of Shares
cannot in the opinion of the Board be effected at normal rates of exchange; or
when the Board so decides, provided all Shareholders are treated on an equal footing and all
relevant laws and regulations are applied (i) as soon as an extraordinary General Meeting of
the Company or a Sub-Fund has been convened for the purpose of deciding on the windingup
and liquidation or the merger or absorption of the Company or a Sub-Fund and (ii) when
the Board is empowered to decide on this matter, upon their decision to dissolve or liquidate
or merge or absorb a Sub-Fund.
upon the publication of a notice convening a General Meeting for the purpose of resolving
the winding-up of the Company.
0093346-0000001 LU:4016712.7 32

Any such suspension will be notified to the Shareholders having made an application for
subscription or redemption of Shares for which the calculation of the Net Asset Value has been
suspended.
Such suspension as to any Sub-Fund will have no effect on the calculation of the Net Asset Value
per Share, the issue and redemption of Shares of any other Sub-Fund.
Any request for subscription or redemption will be irrevocable except in the event of a suspension of
the calculation of the Net Asset Value, in which case Shareholders may give notice that they wish to
withdraw their application. If no such notice is received by the Company, such application will be
dealt with on the first Valuation Day, as determined for each relevant Sub-Fund, following the end
of the period of suspension.
14.3 Side Pockets
The Board may decide to designate one or more specified investments that (i) lack a readily
assessable market value, (ii) are hard to value and/or (iii) are illiquid as side pocket investments (the
Side Pocket Investments).
Subject to the regulatory approval and after the Shareholders have duly been informed, the Board is
entitled to compulsory convert on a pro rata portion a part of the outstanding Shares of each Classes
(if any) of the relevant Sub-Fund into the side pocket class (the SP Class) which has newly been
formed by the Board within the relevant Sub-Fund. The SP Class will have an initial Net Asset
Value equal to the fair value (which may be the cost) of such Side Pocket Investments net of any
costs including deferred fees attributable to that SP Class.
The Net Asset Value of the Side Pocket Investments shall not exceed (at the moment of the creation
of the Side-Pocket) 30% of the Net Asset Value of the relevant Sub-Fund.
Any such decision will be taken by the Board with due care and in good faith in the best interest of
the Shareholders. The creation of a side pockets is designed to:
(a)
(b)
(c)
(d)
protect redeeming Shareholders from being paid an amount in respect of these illiquid or
hard to value investments that may be less than their ultimate realisation value;
protect the non-redeeming Shareholders against the disposal of part or all of the most liquid
investments in order to satisfy the then outstanding redemption requests;
protect new investors by ensuring that they are not exposed to these Side Pocket Investments
when subscribing for new Shares in the Sub-Fund; or
avoid a suspension of the calculation of the Net Asset Value (and of subscriptions and
redemptions) on the basis of article 13 of the Articles.
The Shares of the SP Class will be treated as if redeemed as of the date of the compulsory
conversion of the relevant Shares into that SP Class. The Shares of the SP Class will further entitle
their holders to participate on a pro rata basis in the relevant Side Pocket Investments. The Shares of
the SP Class are not redeemable upon request by a relevant Shareholder.
The Board shall have as its priority objective to realise the Side Pocket Investments in the best
interest of the relevant Shareholders which depends, inter alia, on the market conditions. The Side
Pocket Investments should be realised within a reasonable timeframe which shall in principle not
exceed three years starting at the day of the compulsory redemption.
0093346-0000001 LU:4016712.7 33

The Side Pockets Investments will be subject to a separate accounting and the value and liabilities
allocated to the Side Pocket Investments shall be separate from other Classes. For the purpose of
calculating the Net Asset Value of the SP Class, the Side Pockets Investments will either be valued
at the fair value estimated in good faith and with the prudent care of the Board or remained booked
at the value of the relevant Side Pocket Investments when converted into the SP Class.
Given the expected illiquid nature of Side Pocket Investments, the Net Asset Value, if any, of
the Shares of the SP Class cannot be determined with the same degree of certainty as it would
be the case in respect of the Shares of other Classes.
No management fee or performance fee will be attributed to the Shares of the SP Class.
15. DISTRIBUTION POLICY
Each Sub-Fund's principal investment objective is to achieve long term capital growth. The
generation of income will not be an overriding consideration in determining investment policy.
Subject to Part B, the Board reserves however the right to propose the payment of a dividend at any
time.
Dividends not claimed within five (5) years of their due date will lapse and revert to the relevant
Class within the relevant Sub-Fund.
No interest will be paid on a distribution declared by the Company and kept by it at the disposal of
its beneficiary.
16. CHARGES AND EXPENSES
16.1 General
The Company pays out of the assets of the relevant Sub-Fund all expenses payable by the Company
which will include but not be limited to
(a)
(b)
(c)
(d)
(e)
formation and launching expenses (as mentioned under Section 16.2 of Part A below);
fees and expenses payable to the Depositary, the Administrator, the Investment Manager, to
one or more investment adviser(s), if any, to its auditors and accountants, Prime Broker(s), if
any, correspondents of the Depositary, listing agent, if any, pricing agencies and valuation
agents, lawyers, any permanent representatives in places of registration, as well as any other
service provider or agent appointed or employed by the Company;
the remuneration of the directors, agents and officers and their reasonable out-of-pocket
expenses, insurance coverage, and reasonable travelling costs in connection with the
management and the administration of the Company including meetings with issuers of
securities and financial instruments held or contemplated to be held by the Company and
distribution activities;
any fees and expenses involved in the registration and maintaining the registration of the
Company with any governmental agencies or stock exchanges in the Grand Duchy of
Luxembourg and in any other country;
reporting and publishing expenses, including the costs of preparing, printing, advertising and
distributing the Issuing Document, explanatory memoranda, periodical reports or registration
0093346-0000001 LU:4016712.7 34

statements and the costs of any reports to Shareholders, the costs for the publication of the
subscription and redemption prices and/or the Net Asset Value per Share;
(f)
(g)
(h)
(i)
(j)
(k)
(l)
the costs of sourcing investments (excluding overhead expenses) for the relevant Sub-Funds,
including travel to evaluate prospective companies and the costs from finder and referral
fees and other such expenses;
the costs of due-diligences on investments held by the Company or contemplated to be made
by the Company including payments made to the third parties (e.g. a law firm for legal due
diligence; accounting firm for financial due diligence, etc.);
investment execution expenses including drafting of legal documents associated with the
proposed investment including in cases where the investment is not ultimately completed;
the costs of the monitoring of investments including travel expenses to issuers of securities
and instruments held by the Company;
all taxes, duties, governmental and similar charges;
all other operating expenses, including the cost of buying and selling assets, interest, bank
charges and brokerage, postage, telephone and telex; and
the costs related to the dissolution and the liquidation of the Company or of a relevant Sub-
Fund or Class.
The Company may accrue administrative and other expenses of a regular or recurring nature based
on an estimated amount rateably for yearly or other periods.
16.2 Formation and Launching Expenses
Expenses incurred in connection with the incorporation of the Company and the creation of the
initial Sub-Funds, including those incurred in the preparation and publication of the first Issuing
Document, as well as the taxes, duties and any other publication expenses, are estimated at up to
EUR 65,000. These expenses will be borne by the initial Sub-Fund(s) and will be amortised over a
period of five years. Expenses incurred in connection with the creation of any additional Sub-Fund
will be borne by the relevant Sub-Fund and will be written off over a period of five (5) years. Hence,
the additional Sub-Funds will not bear a pro rata of the costs and expenses incurred in connection
with the creation of the Company and the initial issue of Shares, which have not already been written
off at the time of the creation of the new Sub-Funds.
17. TAXATION
The following is based on the Company’s understanding of, and advice received on, certain aspects
of the law and practice currently in force in Luxembourg. There can be no guarantee that the tax
position at the date of this Issuing Document or at the time of an investment will endure indefinitely.
Investors should consult their professional advisers on the possible tax and other consequences
of their subscribing for, purchasing, holding, selling or redeeming Shares under the laws of
their country of incorporation, establishment, citizenship, residence or domicile.
0093346-0000001 LU:4016712.7 35

17.1 Taxation of the Company in Luxembourg
The Company is currently not liable to any Luxembourg tax on profits or income, nor are
distributions paid by the Company liable to any Luxembourg withholding tax. The Company is,
however, liable in Luxembourg to a subscription tax (taxe d'abonnement) of 0.01% per annum of its
Net Asset Value, such tax being payable quarterly on the basis of the value of the aggregate net
assets of the Sub-Funds at the end of the relevant calendar quarter. In case some Sub-Funds are
invested in other Luxembourg investment funds which in turn are subject to the subscription tax, no
subscription tax is due from the Company on the portion of assets invested therein. No stamp duty or
other tax is payable in Luxembourg on the issue of Shares. No Luxembourg tax is payable on the
realised capital appreciation of the assets of the Company.
The Company is liable to an initial capital tax of EUR75 which was paid upon incorporation.
Dividends and interest received by the Company on its investments may be subject to nonrecoverable
withholding or other taxes in the countries of origin.
17.2 Luxembourg Taxation of Shareholders
Under current legislation, Shareholders are not subject to any capital gains, income or withholding
tax in Luxembourg (except for (i) those domiciled, resident or having a permanent establishment in
Luxembourg or (ii) non-residents of Luxembourg who hold more than 10% of the Shares of the
Company and who dispose of all or part of their holdings within 6 months from the date of
acquisition or (iii) in some limited cases, some former residents of Luxembourg who hold more than
10% of the Shares of the Company).
It is expected that Shareholders in the Company will be resident for tax purposes in many different
countries. Consequently, no attempt is made in this Issuing Document to summarise the taxation
consequences for each investor of subscribing, converting (if any), holding, redeeming or otherwise
acquiring or disposing of Shares in the Company. These consequences will vary in accordance with
the law and practice currently in force in a Shareholder's country of citizenship, residence, domicile
or incorporation and with his personal circumstances.
18. GENERAL INFORMATION
18.1 Corporate Information
The Company was incorporated on 9 September 2009 for an unlimited period of time and is
governed by the 1915 Act and by the 2007 Act.
The registered office of the Company is established at 20, boulevard Emmanuel Servais, L-2520
Luxembourg. The Company is registered at the Registre de Commerce et des Sociétés of
Luxembourg under the number B 148237.
The Articles have been filed with the Registre de Commerce et des Sociétés of Luxembourg and are
published in the Mémorial C, Recueil des Sociétés et Associations (the Mémorial C) of 9 October
2009.
The minimum subscribed capital increased by the issuance premiums of the Company, as provided
by article 27 of the 2007 Act, which must be achieved within one (1) year after the date on which the
Company has been authorised as a collective investment undertaking under Luxembourg Law, is
EUR 1,250,000 or the equivalent in any other freely convertible currency. The initial capital of the
Company has been set at EUR 31,000 divided into 31 fully paid-up Shares of no par value.
0093346-0000001 LU:4016712.7 36

In accordance with article 71 of the 2007 Act, the Company is constituted under the form of an
investment company with different Sub-Funds. A separate portfolio of assets is maintained for each
Sub-Fund and is invested in accordance with the investment objective applicable to the relevant Sub-
Fund as more fully described in Part B. As a result, the Company is an umbrella structure enabling
investors to choose between one or more investment objectives by investing in one or more Sub-
Funds.
Furthermore, the Board may issue Shares of different Classes in each Sub-Fund.
The Board may from time to time decide to create further Sub-Funds; in that event, the Issuing
Document will be updated and amended so as to include detailed information on the new Sub-Funds.
The Board may also decide to create further Classes of Shares; in that event the Issuing Document
will be updated and amended as to include detailed information on such new Classes.
The share capital of the Company will be equal, at any time, to the total value of the net assets of all
the Sub-Funds.
18.2 General Meeting and Reporting to Shareholders
Notice of any General Meeting (including those considering amendments to the Articles or the
dissolution and liquidation of the Company or of any Sub-Fund) will be mailed to each registered
Shareholder at least eight (8) days prior to the General Meeting and will be published to the extent
required by Luxembourg Law in the Mémorial C and in any Luxembourg and other newspaper(s)
that the Board may determine.
If the Articles are amended, such amendments will be filed with the Registre de Commerce et des
Sociétés of Luxembourg and published in the Mémorial C.
The Company publishes annually an audited report on its activities and on the management of its
assets; such report will include, inter alia, the combined accounts relating to all the Sub-Funds, a
detailed description of the assets of each Sub-Fund and a report from the Auditor. The first annual
report will be dated as of 31 December 2010.
The aforementioned documents will be sent to registered Shareholders within six (6) months for the
annual reports and copies may be obtained free of charge by any person at the registered office of the
Company.
The accounting year of the Company will commence on the 1 January and will terminate on the 31
December. The first accounting year will start on the date of formation of the Company and will end
on 31 December 2010.
The annual General Meeting takes place in Luxembourg City at a place specified in the notice of
General Meeting on the last Wednesday of the month of June at 14h00. If such day is not a Business
Day, the annual General Meeting shall be held on the next following Business Day. By derogation,
the first annual General Meeting will be held on the first March 2011 at 14h00 at the place specified
in the notice of General Meeting.
The Shareholders of any Sub-Fund or Class may hold, at any time, a General Meeting to decide on
any matters which relate exclusively to that Sub-Fund or Class.
The combined accounts of the Company will be maintained in EUR being the currency of the share
capital (the Reference Currency). The reports of a relevant Sub-Fund or Class may be done in a
0093346-0000001 LU:4016712.7 37

currency other than the Reference Currency as determined in the relevant Schedule of Part B. The
reports of the Company relating to all Sub-Funds will be expressed in the Reference Currency.
18.3 Dissolution and Liquidation of the Company
The Company has been established for an unlimited period of time.
The Company may at any time be dissolved by a resolution of the General Meeting subject to the
quorum and majority requirements applicable for amendments to the Articles.
Whenever the share capital falls below two-thirds of the minimum capital indicated in article 5 of the
Articles, the question of the dissolution of the Company will be referred to a General Meeting by the
Board. The General Meeting, for which no quorum will be required, will decide by the simple
majority of the Shares represented at the General Meeting.
The question of the dissolution of the Company will also be referred to a General Meeting whenever
the share capital falls below one-fourth of the minimum capital set by article 5 of the Articles; in
such event, the General Meeting will be held without any quorum requirement and the dissolution
may be decided by Shareholders holding one-fourth of the Shares represented at the General
Meeting.
The General Meeting must be convened so that it is held within a period of forty (40) days as from
ascertainment that the net assets have fallen below two-thirds or one-fourth of the legal minimum, as
the case may be.
Liquidation will be carried out by one or several liquidators, who may be physical persons or legal
entities, duly approved by the regulatory authority and appointed by the General Meeting, which will
determine their powers and their compensation.
The net proceeds of liquidation corresponding to each Class within each Sub-Fund will be
distributed by the liquidators to the holders of Shares of the relevant Class in the relevant Sub-Fund
in proportion to their holding of such Shares in such Class.
Should the Company be voluntarily or compulsorily liquidated, its liquidation will be carried out in
accordance with the provisions of the 2007 Act. The 2007 Act specifies the steps to be taken to
enable Shareholders to participate in the distribution(s) of the liquidation proceeds and provides for a
deposit in escrow at the Caisse de Consignations in Luxembourg at the time of the close of
liquidation. Amounts not claimed from escrow within the statute of limitation period will be liable to
be forfeited in accordance with the provisions of Luxembourg Law.
19. DOCUMENTS AVAILABLE
Copies of the following documents may be obtained for inspection during usual business hours on
any Business Day at the registered office of the Company:
(a)
(b)
(c)
the Articles;
the depositary and bank services agreement; and
the investment management agreement.
Furthermore, the Issuing Document and the latest reports and accounts referred to under the Section
18.2 of Part A may be obtained at the registered office of the Company.
0093346-0000001 LU:4016712.7 38

PART B: SPECIFIC INFORMATION
0093346-0000001 LU:4016712.7 39

1. INVESTMENT POLICY
1.1 Investment Objectives
SCHEDULE 1 - ARC CHINA INVESTMENT FUNDS – FUND I
The main objective of ARC China Investment Funds - Fund I (the Fund I) is to achieve long-term
and optimal return from the active management of a portfolio mainly composed of long positions in
transferable securities and accessorily of Pre-IPO Securities.
Fund I follows a proven activist investor strategy of making investments in high growth listed
domestic consumption focused businesses in the People's Republic of China that are undervalued
and not achieving appropriate visibility in the financial markets. Initiatives taken after investment
often include placing a new chief financial officer and new independent directors with the issuer and
improving corporate governance, upgrading the auditor of the issuer, cooperating with the issuer to
distribute press releases regarding the state of the business, and, in relevant cases, working with the
issuer to achieve an up-listing to a major Regulated Market. The process of executing the activist
investor strategy may reach duration of up to twelve (12) to eighteen (18) months before fair value is
achieved in the public markets.
The investments of Fund I principally focus on domestic consumption and China oriented businesses
in sectors such as (i) sustainability (including but not limited to energy efficiency, sustainable
materials, waste-to-energy, sanitation, waste water treatment, geothermal, agriculture, and forestry),
(ii) consumer (including but not limited to branded consumer products, retail chains, education,
household products, advertising, entertainment, food supply chain, logistics, and travel) and (iii)
healthcare (including but not limited to hospital management, medical clinics, cosmetic surgery,
dentistry/orthodontics, medical equipment, preventive healthcare, other healthcare services, and
traditional Chinese medicine).
Fund I seeks to select stocks from issuers meeting the following characteristics:
operating in an attractive domestic consumption focused industry;
having strong growth in revenue and net income;
having an attractive valuation in terms of Price-to-Earnings and Enterprise Value to Cash
Flow; and
having an entrepreneurial management team in place that have nurtured the business since
inception.
The Board believes that many listed Chinese companies continue to deliver outstanding operating
results in terms of growth and profitability, but securities issued by these companies generally suffer
from a low level of liquidity in the financial markets due to (i) the cultural and language barriers
existing between the Chinese and Western investors and due to (ii) the lack of professional
management and advisory services required to enhance market credibility.
It is the main objective of Fund I to generate excess return by taking benefit from the inefficiency of
the financial markets in relation to some listed Chinese companies.
Fund I will invest in registered or newly issued unregistered transferable securities issued in the
United States of America (OTCBB, NYSE, NASDAQ), in Canada (TSX), in the United Kingdom
0093346-0000001 LU:4016712.7 40

(AIM, LSE), in Germany (DB), in Australia (ASX), in Hong Kong (SEHK), in Singapore (SGX) and
other locations and exchanges, as well as in Pre-IPO Securities issued by similar companies that the
Investment Manager will endeavour to help list publicly within twelve (12) months of investment.
1.2 Investment Restrictions
Fund I will, in principle, not invest more than 30% of its assets in transferable securities of the same
nature issued by the same entity.
Fund I is entitled to use short-term credit facilities in order to cover a temporary shortage of
liquidity. In principle, the use of short-term credit facilities shall not exceed 25% of the Net Asset
Value of Fund I.
Fund I has to comply with the investments restrictions at the latest ten (10) months after the end of
the Initial Subscription Period.
2. CLASSES OF SHARES
At the date of this Issuing Document, the Board has decided to issue the following types of Classes
within Fund I:
Shares issued within the EUR Class which are denominated in EUR; and
Shares issued within the USD Class which are denominated in USD.
3. SUBSCRIPTION OF SHARES
Applications for subscriptions must be placed at the registered office of the Company not later than
18h00 (CET) on the relevant Valuation Day (the Subscription Day). Applications received after that
time will be processed on the next Valuation Day.
The Subscription Price for Shares will be equal to the Net Asset Value per Share of that Class on the
relevant Valuation Day increased be a subscription fee (if any) of up to 2.50% of the subscription
amount. The Board can decide to reduce or to waive the subscription fee.
Shares may be for the first time subscribed from 9 September 2009 to 31 October 2009 (the Initial
Subscription Period) at an Initial Subscription Price of 1,000 per Share. Payment of the Initial
Subscription Price must be effected for value on the last day of the Initial Subscription Period. After
the Initial Subscription Period, Shares will be issued at the Net Asset Value.
Payment for subscription must be received at least three (3) Business Days after the relevant
Valuation Day.
4. REDEMPTION OF SHARES
Redemption of Shares is not admitted during a period of one (1) year after Fund I has been opened
for subscription (the Lock-up Period).
After the end of the Lock-up Period, i.e. on the 31 October 2010, applications for redemptions are
accepted twice per year. The application of redemption of Shares must be placed at the registered
office of the Company not later than 18h00 (CET) on ninety (90) calendar days prior to 30 April or
31 October of each year. If such a day is not a Business Day then the application for redemption has
0093346-0000001 LU:4016712.7 41

to be placed the precedent Business Day to that day (the Redemption Day). Applications received
after that time will be processed on the following Redemption Day.
Exceptionally, the Board may accept a redemption of Shares as of another Valuation Day (including
a Valuation Day within the Lock-up Period) as the Redemption Day subject to the conditions that (i)
sufficient liquidity is available to execute the redemption of Shares and (ii) that at the sole discretion
of the Board the interests of the remaining Shareholders may not be harmed.
The Redemption Price will be equal to the Net Asset Value per Share of Fund I on the relevant
Valuation Day. No redemption fee will be charged.
Payment for redemptions will be made within five (5) Business Days from the calculation of the Net
Asset Value.
If redemption requests relate to more than 10% of the Shares in issue of Fund I, the Board may
decide that part or all of such requests for redemption will be deferred proportionally for such period
as the Board considers to be in the best interests of Fund I. Under exceptional circumstances, at the
discretion of the Board, a partial payment in kind is possible.
5. CONVERSION OF SHARES
Shares of Fund I cannot be converted into Shares of another Sub-Fund.
6. NET ASSET VALUE CALCULATION
The Net Asset Value per Share is calculated, under the overall responsibility of the Board, as of the
last calendar day of each month (Valuation Day) and in principle for the first time as of 30
November 2009.
The Net Asset Value will be available at the registered office of the Company and of the
Administrator within five (5) Business Days after it has been calculated.
7. INVESTMENT ADVISER
Pursuant to an investment advisory agreement effective as of 1 January 2011 the Investment
Manager has appointed, with the consent of the Company, ARC China Advisors (Hong Kong)
Limited, 17th Floor, Edinburgh Tower, The Landmark, Queen's Road Central, Central Hong Kong,
People's Republic of China, as the Investment Adviser of Fund I.
Subject to the advisory agreement between the Investment Manager and the Investment Adviser and
under the overall supervision of the Investment Manager, the Investment Adviser will, amongst
others, provide advisory services, conduct and provide support in the day to day management of the
portfolio of Fund I. The Investment Adviser will furthermore advise on the investment policy and
the investment sources and identify, conduct research and evaluate potential investments,
divestments and reinvestments.
0093346-0000001 LU:4016712.7 42

8. PRIME BROKER
No Prime Broker has been appointed by the Board for Fund I.
9. REMUNERATION OF THE INVESTMENT MANAGER, THE DEPOSITARY, THE
ADMINISTRATOR AND THE INVESTMENT ADVISER
The Investment Manager will receive out of the assets of Fund I a Management Fee of 1.50% p.a.
based on the Net Asset Value as calculated and accrued at each Valuation Day. The Management
Fee will be paid quarterly.
Furthermore the Investment Manager will receive a Performance Fee of 20.00% of the total net
return calculated and accrued at each Valuation Day. The Performance Fee will be paid annually.
The Performance Fee is subject to a high-water-mark and a hurdle rate at a fixed rate of five hundred
basis points.
The Performance Fee is calculated on the basis of the Net Asset Value after deduction of all
expenses, liabilities including the Management Fee (but excluding the Performance Fee), and is
adjusted to take into account all subscriptions and redemptions of Shares.
If Shares are redeemed on a day other than the day on which the Performance Fee is paid while a
relevant provision has been made for that Performance Fee, the Performance Fee (the relevant
provision has been made for and which is attributable to the redeemed Shares) will be paid at the end
of the period even if the provision for the Performance Fee is no longer made at that day.
The Depositary as well as the Administrator are entitled to receive out of the assets of Fund I a fee
calculated in accordance with customary banking practice in Luxembourg and payable quarterly in
arrears. In addition, these service providers are entitled to be reimbursed by Fund I for their
reasonable out-of-pocket expenses and disbursements and for the charges of any correspondents.
The Investment Adviser is entitled to receive a fee out of the fees paid to the Investment Manager.
10. SPECIFIC RISK WARNINGS
Fund I is focused on securities and other type of assets issued by or strongly related to companies
which operate in China. Investment in Fund I will involve certain risks that are not typically
associated with investments in the securities issued by companies which operate in more developed
markets. These risks (and efforts to mitigate these risks, whether or not successful) may increase
expenses of Fund I, adversely affect the investment program, the strategy and the performance of
Fund I.
10.1 Economic Factors
General economic conditions may affect the activities of Fund I. Interest rates, general levels of
economic activity, price evolution of securities and participation by other investors in the markets
where Fund I is exposed to may affect the value and the number of investments made by Fund I.
The Chinese economy may perform favourably or unfavourably compared with more developed
economies in such respects as growth of gross domestic product, rate of inflation, currency controls,
currency appreciation or depreciation, capital reinvestment, resource self-sufficiency and balance of
payments. The Chinese economy is generally dependent upon international trade and, accordingly,
may be affected adversely by protective trade barriers and economic conditions in the countries with
which they trade.
0093346-0000001 LU:4016712.7 43

10.2 Political, Social and other Risks
Fund I may be exposed to the direct and indirect consequences of political, economic, social,
diplomatic or other factors in China. Certain parts of China may face economic, social and/or
political instability resulting from, among other things, (i) changes in governmental policies; (ii)
adverse relations with other countries; or (iii) public health issues (such as the outbreak of severe
acute respiratory syndrome in 2002-2003).
There is also the possibility of nationalization, expropriation or confiscatory taxation, governmental
regulation, social instability or diplomatic developments that could adversely affect the Chinese
economy or the value of the investments of Fund I. In addition, it may be difficult to obtain and
enforce a judgment in courts within China, compared with the European Union or other more
developed regions.
The Chinese government may participate to a significant degree, through ownership interests or
regulation, in local business, potentially exercising a controlling influence in certain sectors of the
economy. For example, despite China's ongoing transition to a market-driven economy, the Chinese
government continues to own directly or indirectly a substantial portion of China's productive assets
and plays a significant role in regulating development through industrial policies, taxation, allocating
resources, regulating payments of foreign currency obligations, imposing credit policies on
commercial banks and setting monetary policy. Many reform-oriented policies and measures are
unprecedented or experimental, may cause fiscal deficits, inflation, or other economic imbalances,
and may or may not be reversed, suspended, delayed or improved over time.
10.3 Legal Risks
Although the Board does not intend to directly invest in China, the investments of Fund I may
indirectly be exposed to Chinese law. It may not be excluded that Fund I needs to resort to the
Chinese legal system for settlement of disputes. China lacks a fully-developed legal system and the
body of commercial law and practice typically found in countries with more sophisticated market
economies. Laws and regulations, in particular those concerning foreign investment and taxation,
can change quickly and unpredictably. The judicial and civil procedures in China are complex and
may be unwieldy. Courts in China may lack experience in commercial dispute resolution, may be
subject to political or other influence, and many of the procedural remedies for enforcement and
protection of legal rights found in more developed jurisdictions may not be available in China. The
extent to which local parties and entities, including local governmental agencies, will recognise the
contractual and other rights of the parties with which they deal is uncertain. The Company may
therefore be unable to protect and enforce its rights (including with respect to legal and management
control) against local governmental and private entities to the extent it would in jurisdictions with
more developed legal systems. In addition, it may be more difficult, time-consuming and expensive
to obtain and/or enforce a judgment in a court in China, compared with more developed countries.
10.4 Risks related to Taxation
The Chinese government continues to revise its tax laws, and is reported to be renegotiating certain
tax treaties. Therefore, there may be changes in Chinese or other tax laws, treaties and regulations, or
interpretations of such laws, treaties and regulations that may turn out to be adverse to the
performance of Fund I. Tax laws and practice in China are at an early stage of development and are
not as clearly established as in Western nations. The taxation system in China may be subject to
varying interpretations, frequent changes and inconsistent enforcement at the federal, regional and
local levels.
0093346-0000001 LU:4016712.7 44

There can be no assurance that the structure of the Company or any investments by Fund I is taxefficient
for any particular investor. Prospective investors are urged to consult their own tax advisers
with reference to their specific tax situations. Neither the Company, nor the Board, his members and
the Company's agents or their respective advisers takes any responsibility for providing advice to
any investor.
10.5 Foreign Currency Transactions
It may be expected that substantially all investments made by Fund I are exposed to China, and that
at least a significant part of the income and gains received by the issuers of securities Fund I is
invested in will be denominated in RMB. Changes in foreign currency exchange rates may affect the
value of the portfolio of Fund I. Governmental policies may result in artificially pegged exchange
rates that may distort the results of and returns on portfolio investments. Moreover, Fund I will incur
costs in connection with conversions between various currencies, although the Board reserves the
right to implement a hedging strategy in regards to currency risks.
In addition to managing the exchange rate between the RMB and other currencies, the Chinese
government may impose controls on the convertibility of RMB into foreign currencies and the
remittance of currency out of China in certain circumstances. Certain remittance or currency
exchanges may require filing and approval from appropriate governmental authorities. This system
could be changed at any time by executive decisions of the State Council. Furthermore, the State
Administration of Foreign Exchange has a significant degree of administrative discretion and
authority to promulgate specific administrative rules in implementing the laws, and has discretion to
limit convertibility of current account payments out of China.
10.6 Accounting, Disclosure Standards and other Information
The availability of information within China, including information concerning its economy and the
issuers of securities Fund I is invested in generally is more limited than is the case in the European
Union or other more developed economies. The accounting, auditing and financial reporting
standards and practices may not be equivalent to those employed in the European Union or other
developed economies and may differ in fundamental respects. There is typically less information
available about companies in China than about companies in the European Union or other developed
economies.
10.7 Lack of Transparency
Companies in China are not generally subject to uniform accounting, auditing and financial reporting
standards, practices and disclosure requirements comparable to those of more developed countries.
In particular, the assets and profits appearing on the financial statements of a company operating in
China may not reflect its financial position or results of operations in the way they would be
reflected had such financial statements been correctly prepared in accordance with generally
accepted accounting principles or international financial reporting standards. In addition, for
companies that keep accounting records in local currency, inflation accounting rules in parts of
China require, for both tax and accounting purposes, that certain assets and liabilities be restated on
the company's balance sheet in order to express items in terms of currency of constant purchasing
power. As a result, financial data may be materially affected by restatements for inflation and may
not accurately reflect the real condition of real estate, companies and securities markets. In addition,
the value of an investment may differ from that reported by Fund I. The ability to conduct due
diligence in connection with the investment of Fund I and to monitor these investment may be
adversely affected by these factors.
0093346-0000001 LU:4016712.7 45

10.8 Business Practice
Business practices and ethics in China may be different to those in more developed countries. In
particular, the incidence and extent of corruption, in both the public and the private sphere, may be
significantly higher in China. There may be a higher risk of fraud in China when compared with
other countries with higher levels and traditions of transparency and accountability.
0093346-0000001 LU:4016712.7 46

1. INVESTMENT POLICY
1.1 Investment Objectives
SCHEDULE 2 - ARC CHINA INVESTMENT FUNDS – FUND II
The main objective of ARC China Investment Funds – Fund II (the Fund II) is to achieve long-term
and optimal return from the active management of a portfolio with a minimum of 50% and a target
in principle of 70% in Liquid Equities and the remaining portion in a combination of less liquid
transferable securities and Pre-IPO Securities.
Fund II follows a value-focused investment strategy of making investments in high growth listed
domestic consumption focused businesses in the People's Republic of China that are undervalued
and not achieving appropriate visibility in the financial markets.
The investments of Fund II are principally focused on domestic consumption and China oriented
businesses in sectors such as (i) sustainability (including but not limited to energy efficiency,
sustainable materials, waste-to-energy, sanitation, waste water treatment, geothermal, agriculture,
and forestry), (ii) consumer (including but not limited to branded consumer products, retail chains,
education, household products, advertising, entertainment, food supply chain, logistics, and travel)
and (iii) healthcare (including but not limited to hospital management, medical clinics, cosmetic
surgery, dentistry/orthodontics, medical equipment, preventive healthcare, other healthcare services,
and traditional Chinese medicine). The Company will be regionally agnostic on its investments
throughout China.
Fund II seeks to select stocks of issuers meeting the following characteristics:
operating in an attractive domestic consumption focused industry;
having strong growth in revenue and net income;
having an attractive valuation in terms of Price-to-Earnings and Enterprise Value to Cash
Flow; and
having an entrepreneurial management team in place that have nurtured the business since
inception.
The Board expects in principle to allocate 70% and in practice no less than 50% of the Net Asset
Value to Liquid Equities issued by Chinese companies traded on exchanges principally in the United
States of America (NYSE, NASDAQ), in Hong Kong (SEHK), and in other locations and exchanges
(the Liquid Strategy).
The remaining portion of the Net Asset Value will be allocated to less liquid securities (the Illiquid
Strategy) which are
registered or newly issued unregistered transferable securities issued by Chinese companies
in the United States of America (OTCBB, NYSE, NASDAQ), in Canada (TSX), in the
United Kingdom (AIM, LSE), in Germany (DB), in Australia (ASX), in Hong Kong
(SEHK), in Singapore (SGX), and in other locations and exchanges; and
Pre-IPO Securities issued by similar companies that the Investment Manager will endeavour
to help list publicly within twelve (12) months of investment.
0093346-0000001 LU:4016712.7 47

The Illiquid Strategy intends to take a portion of its profit from the arbitrage opportunity that exists
due to the lack of sufficient market liquidity for some listed Chinese companies. It is the main
objective of the Illiquid Strategy to generate excess return by taking benefit from the inefficiency of
the financial markets in relation to the listed Chinese companies. Initiatives taken after investment
often include placing a new chief financial officer and new independent directors with the issuer and
improving corporate governance, upgrading the auditor of the issuer, cooperating with the issuer to
distribute press releases regarding the state of the business, and, in relevant cases, working with the
issuer to achieve an up-listing to a major exchange. The process of executing the activist investor
strategy may reach duration of up to twelve (12) to eighteen (18) months before fair value is
achieved in the public markets.
The Board believes that many listed Chinese companies continue to deliver outstanding operating
results in terms of growth and profitability, but the securities issued by these companies generally
suffers from a low level of liquidity in the financial markets due to (i) the cultural and language
barriers existing between the Chinese and Western investors and due to (ii) the lack of professional
management and advisory services required to enhance market credibility.
1.2 Investment Restrictions
Fund II will, in principle, not invest more than 20% of its Net Asset Value in transferable securities
of the same nature issued by the same entity.
Fund II may be authorised to invest in any other type of investments than transferable securities
subject to the condition that the relevant investment is eligible by the 2007 Act and that its value
does in principle not exceed 20% of its Net Asset Value.
Fund II is entitled to use short-term credit facilities in order to cover a temporary shortage of
liquidity. In principle, the use of short-term credit facilities will not exceed 20% of the Net Asset
Value of Fund II.
The borrowings of cash and/or securities are in principle limited to 20% of the net assets of Fund II.
Consequently, the gross value of the assets of Fund II may in principle not exceed 120% of its net
assets.
The total leverage involved by the use of financial derivative instruments should in principle not
exceed 20% of the net assets of Fund II. Consequently, the gross value of the assets of Fund II may
in principle not exceed by the use of derivatives 120% of its net assets.
Fund II has to comply with the investments restrictions at the latest ten (10) months after the end of
the Initial Subscription Period.
2. CLASSES OF SHARES
At the date of this Issuing Document, the Board has decided to issue the following types of Classes
within Fund II:
Shares issued within the EUR Class which are denominated in EUR; and
Shares issued within the USD Class which are denominated in USD.
0093346-0000001 LU:4016712.7 48

3. SUBSCRIPTION OF SHARES
Applications for subscriptions must be placed at the registered office of the Company not later than
18h00 (CET) on the relevant Valuation Day (the Subscription Day). Applications received after that
time will be processed on the next Valuation Day.
The Subscription Price for Shares will be equal to the Net Asset Value per Share of that Class on the
relevant Valuation Day increased by a subscription fee (if any) of up to 2.50% of the subscription
amount. The Board can decide to reduce or to waive the subscription fee.
Shares may be for the first time subscribed from 1 February 2011 to 31 March 2011 (the Initial
Subscription Period) at an Initial Subscription Price of EUR 1,000 per Share. Payment of the Initial
Subscription Price must be effected for value on the last day of the Initial Subscription Period. After
the Initial Subscription Period, Shares will be issued at the Net Asset Value.
Payment for subscription must be received at least three (3) Business Days after the relevant
Valuation Day.
4. REDEMPTION OF SHARES
Redemption of Shares is not admitted during a period of one (1) year after Fund II has been opened
for subscription (the Lock-up Period). In the event of an early redemption, the redemption penalty
will begin at 5.0% with a decrease of 1.0% per ninety (90) day period.
After the end of the Lock-up Period, i.e. on the 31 March 2012, applications for redemptions are
accepted at the end of each calendar month for thirty (30) days from that date. The application of
redemption of Shares must be placed at the registered office of the Company not later than 18h00
(CET) thirty (30) calendar days prior to the month end of the desired redemption date. If such a day
is not a Business Day then the application for redemption has to be placed the precedent Business
Day to that Redemption Day. Applications received after that time will be processed on the
following Redemption Day.
Exceptionally, the Board may accept a redemption of Shares as of another Valuation Day (including
a Valuation Day within the Lock-up Period) as the Redemption Day subject to the conditions that (i)
sufficient liquidity is available to execute the redemption of Shares and (ii) that at the sole discretion
of the Board the interests of the remaining Shareholders may not be harmed.
The Redemption Price will be equal to the Net Asset Value per Share of Fund II on the relevant
Valuation Day. No redemption fee will be charged.
Payment for redemptions will be made within five (5) Business Days from the calculation of the Net
Asset Value.
If redemption requests relate to more than 10% of the Shares in issue of Fund II, the Board may
decide that part or all of such requests for redemption will be deferred proportionally for such period
as the Board considers to be in the best interests of Fund II. Under exceptional circumstances, at the
discretion of the Board, a partial payment in kind is possible.
5. CONVERSION OF SHARES
Shares of Fund II cannot be converted into Shares of another Sub-Fund.
0093346-0000001 LU:4016712.7 49

6. NET ASSET VALUE CALCULATION
The Net Asset Value per Share is calculated, under the overall responsibility of the Board, as of the
last calendar day of each month (Valuation Day) and in principle for the first time as of 30 April
2011.
The Net Asset Value will be available at the registered office of the Company and of the
Administrator within five (5) Business Days after it has been calculated.
7. INVESTMENT ADVISER
Pursuant to the investment advisory agreement effective as of 1 February 2011, the Investment
Manager has appointed, with the consent of the Company, ARC China Advisors (Hong Kong)
Limited, 17th Floor, Edinburgh Tower, The Landmark, Queen's Road Central, Central Hong Kong,
People's Republic of China, as the Investment Adviser of Fund II.
Subject to the advisory agreement between the Investment Manager and the Investment Adviser and
under the overall supervision of the Investment Manager, the Investment Adviser will, amongst
others, provide advisory services, conduct and provide support in the day to day management of the
portfolio of Fund II. The Investment Adviser will furthermore advise on the investment policy and
the investment sources and identify, conduct research and evaluate potential investments,
divestments and reinvestments.
8. PRIME BROKER
No Prime Broker has been appointed by the Board for Fund II.
9. REMUNERATION OF THE INVESTMENT MANAGER, THE DEPOSITARY, THE
ADMINISTRATOR AND THE INVESTMENT ADVISER
The Investment Manager will receive out of the assets of Fund II a Management Fee of 2.00% p.a.
based on the Net Asset Value as calculated and accrued at each Valuation Day. The Management
Fee will be paid quarterly.
Furthermore the Investment Manager will receive a Performance Fee of 20.00% of the total net
return calculated and accrued at each Valuation Day. The Performance Fee will be paid annually and
is subject to a high-water-mark.
The Performance Fee is calculated on the basis of the Net Asset Value after deduction of all
expenses, liabilities including the Management Fee (but excluding the Performance Fee) and is
adjusted to take into account all subscriptions and redemptions of Shares.
If Shares are redeemed on a day other than the day on which the Performance Fee is paid while a
relevant provision has been made for that Performance Fee, the Performance Fee (the relevant
provision has been made for and which is attributable to the redeemed Shares) will be paid at the end
of the period even if the provision for the Performance Fee is no longer made at that day.
The Depositary as well as the Administrator are entitled to receive out of the assets of Fund II a fee
calculated in accordance with customary banking practice in Luxembourg and payable quarterly in
arrears. In addition, these service providers are entitled to be reimbursed by Fund II for their
reasonable out-of-pocket expenses and disbursements and for the charges of any correspondents.
The Investment Adviser is entitled to receive a fee out of the fees paid to the Investment Manager.
0093346-0000001 LU:4016712.7 50

10. SPECIFIC RISK WARNINGS
Fund II is focused on Liquid Equities, transferable securities and other type of assets issued by or
strongly related to companies which operate in China. Investment in Fund II will involve certain
risks that are not typically associated with investments in the securities issued by companies which
operate in more developed markets. These risks (and efforts to mitigate these risks, whether or not
successful) may increase expenses of Fund II adversely affect the investment program, strategy and
performance of Fund II.
10.1 Economic Factors
General economic conditions may affect the activities of Fund II. Interest rates, general levels of
economic activity, the price evolution of securities and participation by other investors in the
markets Fund II is exposed to may affect the value and number of investments made by Fund II or
considered for prospective investment.
The Chinese economy may perform favourably or unfavourably compared with more developed
economies in such respects as growth of gross domestic product, rate of inflation, currency controls,
currency appreciation or depreciation, capital reinvestment, resource self-sufficiency and balance of
payments. The Chinese economy is generally dependent upon international trade and, accordingly,
may be affected adversely by protective trade barriers and economic conditions in the countries with
which they trade.
10.2 Political, Social and other Risks
Fund II may be exposed to the direct and indirect consequences of political, economic, social,
diplomatic or other factors in China. Certain parts of China may face economic, social and/or
political instability resulting from, among other things (i) changes in governmental policies; (ii)
adverse relations with other countries; or (iii) public health issues (such as the outbreak of severe
acute respiratory syndrome in 2002-2003).
There is also the possibility of nationalization, expropriation or confiscatory taxation, governmental
regulation, social instability or diplomatic developments that could adversely affect the Chinese
economy or the value of investments of Fund II. In addition, it may be difficult obtain and enforce a
judgment in courts within China, compared with the European Union or other more developed
regions.
The Chinese government may participate to a significant degree, through ownership interests or
regulation, in local business, potentially exercising a controlling influence in certain sectors of the
economy. For example, despite China's ongoing transition to a market-driven economy, the Chinese
government continues to own directly or indirectly a substantial portion of China's productive assets
and plays a significant role in regulating development through industrial policies, taxation, allocating
resources, regulating payments of foreign currency obligations, imposing credit policies on
commercial banks and setting monetary policy. Many reform-oriented policies and measures are
unprecedented or experimental, may cause fiscal deficits, inflation, or other economic imbalances,
and may or may not be reversed, suspended, delayed or improved over time.
10.3 Legal Risks
Although the Board does not intend to directly invest in China, the investments of Fund II may
indirectly be exposed to Chinese law. It may not be excluded that Fund II needs to resort to the
Chinese legal system for settlement of disputes. China lacks a fully-developed legal system and the
body of commercial law and practice typically found in countries with more sophisticated market
0093346-0000001 LU:4016712.7 51

economies. Laws and regulations, in particular those concerning foreign investment and taxation,
can change quickly and unpredictably. The judicial and civil procedures in China are complex and
may be unwieldy. Courts in China may lack experience in commercial dispute resolution, may be
subject to political or other influence, and many of the procedural remedies for enforcement and
protection of legal rights found in more developed jurisdictions may not be available in China. The
extent to which local parties and entities, including local governmental agencies, will recognise the
contractual and other rights of the parties with which they deal is uncertain. The Company may
therefore be unable to protect and enforce its rights (including with respect to legal and management
control) against local governmental and private entities to the extent it would in jurisdictions with
more developed legal systems. In addition, it may be more difficult, time-consuming and expensive
to obtain and/or enforce a judgment in a court in China, compared with more developed countries.
10.4 Risks related to Taxation
The Chinese government continues to revise its tax laws, and is reported to be renegotiating certain
tax treaties. Therefore, there may be changes in Chinese or other tax laws, treaties and regulations, or
interpretations of such laws, treaties and regulations that may turn out to be adverse to Fund II's
performance. Tax laws and practice in China are at an early stage of development and are not as
clearly established as in Western nations. The taxation system in China may be subject to varying
interpretations, frequent changes and inconsistent enforcement at the federal, regional and local
levels.
There can be no assurance that the structure of the Company or any investments by Fund II is taxefficient
for any particular investor. Prospective investors are urged to consult their own tax advisers
with reference to their specific tax situations. Neither the Company, nor the Board, his members and
the Company's agents or their respective advisers takes any responsibility for providing advice to
any investor.
10.5 Foreign Currency Transactions
It may be expected that substantially all investments made by Fund II are exposed to China, and that
at least a significant part of the income and gains received by the issuers of securities Fund II is
invested in, will be denominated in RMB. Changes in foreign currency exchange rates may affect the
value of the portfolio of Fund II. Governmental policies may result in artificially pegged exchange
rates that may distort the results of and returns on portfolio investments. Moreover, Fund II will
incur costs in connection with conversions between various currencies, although the Board reserves
the right to implement a hedging strategy in regards to currency risks.
In addition to managing the exchange rate between the RMB and other currencies, the Chinese
government may impose controls on the convertibility of RMB into foreign currencies and the
remittance of currency out of China in certain circumstances. Certain remittance or currency
exchanges may require filing and approval from appropriate governmental authorities. This system
could be changed at any time by executive decisions of the State Council. Furthermore, the State
Administration of Foreign Exchange has a significant degree of administrative discretion and
authority to promulgate specific administrative rules in implementing the laws, and has discretion to
limit convertibility of current account payments out of China.
10.6 Accounting, Disclosure Standards and other Information
The availability of information within China, including information concerning its economy and the
issuers of securities Fund II is invested in, generally is more limited than is the case in the European
Union or other developed economies. The accounting, auditing and financial reporting standards and
practices may not be equivalent to those employed in the European Union or other developed
0093346-0000001 LU:4016712.7 52

economies and may differ in fundamental respects. There is typically less information available
about companies in China than about companies in the European Union or other developed
economies.
10.7 Lack of Transparency
Companies in China are not generally subject to uniform accounting, auditing and financial reporting
standards, practices and disclosure requirements comparable to those of more developed countries.
In particular, the assets and profits appearing on the financial statements of a company operating in
China may not reflect its financial position or results of operations in the way they would be
reflected had such financial statements been correctly prepared in accordance with generally
accepted accounting principles or international financial reporting standards. In addition, for
companies that keep accounting records in local currency, inflation accounting rules in parts of
China require, for both tax and accounting purposes, that certain assets and liabilities be restated on
the company's balance sheet in order to express items in terms of currency of constant purchasing
power. As a result, financial data may be materially affected by restatements for inflation and may
not accurately reflect the real condition of real estate, companies and securities markets. In addition,
the value of an investment may differ from that reported by Fund II. The ability to conduct due
diligence in connection with the investment of Fund II and to monitor these investment may be
adversely affected by these factors.
10.8 Business Practice
Business practices and ethics in China may be different to those in more developed countries. In
particular, the incidence and extent of corruption, in both the public and the private sphere, may be
significantly higher in China. There may be a higher risk of fraud in China when compared with
other countries with higher levels and traditions of transparency and accountability.
0093346-0000001 LU:4016712.7 53