Atlantis China Healthcare Fund

A sub-fund of the Atlantis International Umbrella Fund, an open-ended umbrella unit trust established as a UCITS III and listed in Dublin. The objective
of the fund is to achieve long term capital appreciation through an actively managed portfolio of equity and equity related securities issued by
companies listed on recognised exchanges in Hong Kong, the People’s Republic of China, Singapore, the United States and the United Kingdom,
principally engaged in pharmaceutical, bio-technology, medical devices, healthcare provision and ownership or management of hospitals/nursing
homes, health maintenance organisations or in other health related industries (such as environmental protection which includes water treatment and
waste management) in the People’s Republic of China. The Fund may invest in H shares, Red Chips, P chips and B shares. The Fund will invest in
A shares through the use of structured products such as P-Notes and will also target pre IPO companies through convertible bonds.

Fund Performance - Since Inception

Newsletter %
20

as at 26 February 2010 10
0
Fund Detail -10
Registered for Sale: United Kingdom,
-20
Ireland, The Netherlands and Germany
Status: UCITS III / FSA recognised -30
Domicile: Dublin -40
Listing: Irish Stock Exchange -50
Inception Date: 19 June 2007
Minimum Investment: $100,000 -60
Valuation: Daily -70
Jun 07

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Subscriptions: Daily
Redemptions: Fortnightly
Deadline: 17:00 Dublin, prior business day
Unit Type: Distribution* Source: Atlantis - All figures in US$ as at 26 February 2010
*This fund will apply for distributor status annually
Charges: Management fee – 1% p.a.
Performance fee – 20% of
gains over a 5% hurdle rate Performance Updates
subject to a high water mark.
Redemption fee – 3% charged Issue price: $1.00
on all investments of less than Since
1 years duration. 2% will be NAV per share: $0.9850 Feb % YTD % 1 Year % Inception %
charged thereafter.
Number of shares in issue: 42,936,653 ACHF 6.0 4.3 99.4 -1.5
Prices Available From
Bloomberg – ATCHLTH ID Fund size: $42m
Source: Atlantis - All figures in US$ as at 26 February 2010
ISIN – IE00B1WL3F32 Number of holdings: 23
SEDOL – B1WL3F3
Financial Times – FT Managed funds service
Administrator
Northern Trust International Fund
Administration Services (Ireland) Ltd.
Key Holdings
Georges Court, 54-62 Townsend Street Ticker Stock Industry Asset YTD Price
Dublin 2, Ireland Class Move (%)
Contact: Lorraine Melia
Tel: + 353 1 434 5007 8199 HK Shandong Weigao Medical instruments/devices P-chip +15.8
Fax: + 353 1 670 1185
000538 CH Yunnan Baiyao Traditional Chinese medicine producer A-share -1.2
Joint Sub-Investment Managers
Atlantis Investment Management Ltd. 1099 HK Sinopharm China’s largest pharmaceuticals distributor H-share +26.9
4th Floor, 30-34 Moorgate 2005 HK Lijun International Macrolide antibiotics and intravenous P-chip +8.8
London, EC2R 6DN, UK
Pharmaceutical infusion solutions
+44 (0) 20 7826 9192
587 HK Hua Han Biopharmaceutical Chinese herbal medicine producer P-chip +30.7
Atlantis Investment Management (HK) Ltd.
Room 3501-3503, The Centrium
Source Atlantis - As at 26 February 2010
60 Wyndham Street, Central
Hong Kong SAR
Contact: Yang Liu
Tel: +852 2110 8229 Investment Comment
Marketing Contacts
London
Healthcare Reform Re-emphasised at the National In 2009, total Government investment accounted for
James Alexander People’s Congress nearly 25% of total healthcare expenditure in China, while
james.alexander@atlantis-investment.com China’s Health Minister Chen Zhu urged local the corresponding figure stood at 46% in the US and
Nambia Ferguson Governments to inject more funds into healthcare reform
nambia.ferguson@atlantis-investment.com 56% in Thailand.
Tel: + 44 (0) 20 7638 9192
during the eleventh National People’s Congress this
Fax: + 44 (0) 20 7638 9293 month. Data from the Ministry of Finance shows that the central
Hong Kong Government‘s healthcare investment totaled
Annie Kao Chen emphasised that healthcare is one of the most RMB127.7bn (US$18.7bn) in 2009, up 49.5% YoY, and is
annie@atlantis-hk.com.hk important investments for a country, noting that the set up estimated to reach RMB128.9bn (US$20.3bn) in 2010,
Tel: +852 2110 8220 of a basic medical guarantee system is necessary for
Fax: +852 2110 9378 an 8.8% YoY increase.
China’s sustainable economic development. Healthcare
will also create jobs and promote China’s economic
restructuring process.
Atlantis Investment Management Ltd.
is Authorised and Regulated by the
Financial Services Authority.
China Positions to Become Global Pharmacy
R&D Hub
China is likely to become a key global pharmaceutical
research and development (R&D) hub over the next
few years, according to industry experts at the Asia
Pharma R&D Leaders 2010 Summit in Shanghai.
China’s new drug R&D infrastructure is gearing
towards international standards and it will not be long
before Chinese developed novel drugs enter the global
arena. Around 10 drugs developed by Chinese
companies are presently undergoing clinical trials in the
US and Europe, including the diabetes drug Retaliptin
from Jiangsu Hengrui (CH 600276, in the portfolio).
Officials also pointed out that the reform of public Portfolio Exposure
hospitals should lead to reasonable drug and
treatment prices that farmers can afford. In the Sector Breakdown
meantime, the Government will continue to reduce
Pharmaceutical
hospitals’ reliance on drug revenues. This might raise
concerns over hospitals’ revenue generating ability in Biotech
the short term, as drug price markups as a source of Medical Devices
hospital income will be gradually eliminated. However,
TCM
in the future the source of income for hospitals will
comprise of medical service fees and, to a larger Medical R&D
extent, government subsidies, which will help Environmental
hospitals to explore ways to grow into a more Health Check/
advanced healthcare infrastructure. Hospital Services
Insurance

Food and Beverages

The Chinese Government has been focusing on
innovation to drive economic growth and at present Investment Strategy 0 5 10 15 20 25 30 35
%
has invested around RMB6.0bn (US$878.5m) in
Source: Atlantis - as at 26 February 2010
Pharmaceutical R&D. The Fund performed well in February, recording a
return of 6%. This was helped by the improved
Government promotion, along with the trend of sentiment towards the healthcare industry. We saw Asset Allocation
multinational companies increasing their R&D investors start to build up their positions in the
investments in China, has created a favourable A-share market after the Chinese New Year holiday.
environment for the R&D efforts undertaken by A-shares P-chips
Chinese companies. The Fund held 23 stocks in the portfolio and is 32.1% 32.1% 56.1%
invested in the China A-share market via P-notes,
More Cities to Begin Trial Phase of Hospital 49.2% in Hong Kong listed privately-owned
Reform companies and 13.3% in ADRs listed on NASDAQ.
Support for public hospital reform has become a key The portfolio’s main exposure is to Chinese drugs and H-shares
focus of China’s healthcare policy. traditional and herbal medicines which together 6.4%
account for around 50% of the portfolio. At month Cash
Public hospitals, initially established by the end the top 5 holdings accounted for 35% of the 5.4%
Government to ensure public welfare, have functioned portfolio and top 10 accounted for 55%. The Fund is
more as business entities on the back of insufficient in a good cash position to participate in future IPOs. Source: Atlantis - as at 26 February 2010
Government investment. The profit-oriented mode of We are confident that the core positions capture
operations in public hospitals consequently created a China’s most dynamic and profitable businesses.
bottleneck in their development. Market Capitalisation (US$)
Healthcare is becoming a must-invest theme, %
The guidelines for the trial public hospital reform triggered and supported by massive Government
issued on 23 February have provided, by far, the best >1bn 54.5
policy support, robust demand-driven growth and the
advice on how to keep medical expenditure low and catch-up of the middle-class. We believe it is a long- 500m - 1bn 12.1
improve healthcare services at the same time. play theme and is likely to deliver sustainable earnings 100m - 500m 22.2
that are completely driven by the younger generation, <100m 5.8
According to the guidelines, the Ministry of Health rising living standards across half the population and
(MOH) will expand the trial-stage reform of public accelerating urbanisation. Cash 5.4
hospitals to 16 cities across China in 2010. The
Source: Atlantis - as at 26 February 2010
Government will support the expansion of public The NAV of the Fund reached its launch price of
hospitals in towns, in order to improve farmers’ US$1.00 in early March 2010 after two years and ten
access to healthcare. The reforms aim to upgrade months of ups and downs since June 2007.
more than 2,000 of these hospitals to become grade
two hospitals between 2010 and 2013.

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This newsletter is prepared on behalf of the Atlantis China Healthcare Fund (the “Fund”) by Atlantis Investment Management Limited (“AIML”), Authorised and Regulated by the United Kingdom Financial Services Authority
(“FSA”), and does not constitute an offer of or solicitation to buy units in the Fund (“units”). Any application for units must be made solely on the basis of the Atlantis International Umbrella Fund prospectus. The Fund
is a UCITS III fund domiciled in Ireland. This newsletter is being communicated by AIML only to persons who qualify under MIFID as (a) eligible market counterparties, (b) Per se Professional Clients or (c)exempted
recipients under any of the exemptions to section 21 of FSMA. Investors in the Fund will be unit holders in the Fund and not customers of AIML. As such they are advised that in respect of an investment in the Fund
they will not generally benefit from the protection of FSMA and provisions made there under or the United Kingdom Financial Services Compensation Scheme and will not have access to the United Kingdom Financial
Ombudsman Services in the event of a dispute. In order to invest in units, investors will enter into an agreement with the Fund and will have no rights of cancellation or withdrawal under the cancellation and withdrawal
rules of the FSA. Past performance is not necessarily a guide to the future performance. The value of units in the Fund and the income derived from them may go down. Changes in rates of exchange may be one of
the causes of the value of investment in the Fund to be affected. This newsletter is written for the benefit of the category of persons described above. It is not addressed to any other person and may not be used by
them for any purpose whatsoever. It expresses no views as to the suitability of the investments described herein to the individual circumstances of any recipient.