• Risks Regarding the Funds
• Fees, Expenses and Other Charges Related to the Funds

In making a contribution to any of our funds (collectively in this document, the “Partnerships”), investors are expected to fully understand the details of the following risks and other matters.

There are specific risks involved in contributing to the Partnerships that are associated with investing mainly in unlisted companies. Unlisted companies, in which the Partnerships mainly invest, have a higher degree of risk and uncertainty than listed companies, including a higher risk of bankruptcy, a higher degree of financial instability, more limited human and managerial resources, and more limited research and development abilities. As a result, the nature of these companies is such that they are easily affected by changes in the Japanese economy and economic trends, as well as by trends and competitors in the industries to which the companies and their customers belong. It is possible that the Partnerships will not be able to recover their investments because, for example, a portfolio company sells off its business or goes bankrupt, its business does not develop as initially planned, or its financial condition deteriorates. In addition, there is no guarantee that the Partnerships will be able to exit investment positions in the invested business entities through IPO, an organizational restructuring with a third party, M&A, etc. Even if the shares of the invested business entities are listed or the invested business entities are subject to an M&A, there is no guarantee that the sale of the shares will cover the investment costs. Furthermore, compared to the shares of listed companies, the shares of unlisted companies have more drawbacks including uncertainty regarding the accuracy of information on the issuers and significantly less liquidity; therefore if the Partnerships sell the shares of an unlisted portfolio company before the company goes public, the price at which the shares are sold may be less than the investment cost. The Partnerships’ investment profits may be adversely affected and the principal contributions may be lost as a result of the realization of these risks specific to investing in unlisted companies.

The Partnerships invest in securities which have fluctuating prices, such as shares issued by companies that are mainly domestic or foreign unlisted companies. The Partnerships’ investment profits may be adversely affected and the principal contributions may be lost as a result of being affected by price movements of underlying shares or exchange rate fluctuations if the Partnerships invest in shares issued by foreign companies.

The Partnerships’ investment profits may be adversely affected and the principal contributions may be lost as a result of a change in the management or financial status of the issuer of the underlying shares or a change in an outside party’s valuation of them. The issuers of underlying shares invested in by the Partnerships are mainly unlisted companies, and so the shares have a substantial credit risk compared to shares issued by listed companies.

Under the terms of the Partnership Agreements, no partner may transfer their partnership interest to any person without the prior written approval of the general partner, except in the case of a transfer to the general partner or any other limited partner, and therefore the recovery of the contributions may be restricted. In the case of transferring the partnership interest, the consideration for such transfer may be less than the amount corresponding to the equity interests of the latest partnership assets and the principal contributions may be lost.

The contribution amounts are non-refundable, except through distributions of the partnership assets as set forth in the Partnership Agreements. If the partnership assets are to be distributed due to the withdrawal of a partner from any of the Partnerships, because the Partnerships invest in unlisted and illiquid shares or other securities, no withdrawing partner may request a refund of amounts corresponding the amount which the Partnerships have already invested out of its equity interests amount under the Partnership Agreements. A partner that withdraws from any of the Partnerships is entitled to receive a refund of an amount equal to one half of the amount of the cash or cash equivalent partnership assets prorated in accordance with its equity interests. In such cases, the principal contributions may be substantially lost.

In general terms, investors contributing to the Partnerships bear the fees, expenses and other charges described below.

Fees, expensesand other charges that investors indirectly bear during the management period in proportion to their respective equity interests:
Management Fee	Up to 3.15% (3.0% excluding tax) per annum of the commitment amount (in the case of Partnerships using the capital call method; hereinafter the same) or contribution amount (in the case of Partnerships using a lump sum method; hereinafter the same), and for some Partnerships, up to 0.315% (0.3% excluding tax) per annum of the total partnership assets as an administration fee. The amount above includes the custodian fee for The Nomura Trust and Banking Co., Ltd. With respect to Partnerships established in July 2007, the amount of the management fee is up to 2.8875% (2.75% excluding tax) per annum of the commitment amount or the contribution amount and will be reduced every 2 years from and including 2013.
Success Fee	Up to 21.0% (20.0% excluding tax) of the profit of each business year.
Organizational Expense	Actual expenses, up to 0.21% (0.2% excluding tax) of the commitment amount or the contribution amount.
Other expenses incurred in connection with operating the businesses of the fund, such as expenses for acquiring or administrating the partnership assets, audit expenses, fees for experts such as attorneys: the amount cannot be shown because it will be incurred based on the actual amount.

Charges and other expenses that investors directly bear in subscribing after the subscription period for additional contributions:
Up to 1.05% (1.0% excluding tax) per annum of the commitment amount or contribution amount in respect of the equity interests to be acquired.

The aggregate amount of the fees, etc. to be borne by investors are the sum of the fees, etc. described above.

Note:
The risks and charges above are given with a typical JAFCO’s fund in mind. Rates of charges and other expenses shown are the maximum rates to be collected in respect of the Partnerships that we manage. Risks and charges may vary among the Partnerships. When contributing to any of the Partnerships, prospective investors are therefore expected to refer in advance to the solicitation material of the relevant Partnerships.

JAFCO Co., Ltd.
Financial Instrument Firm: Director-General of Kanto Local Finance Bureau (Kinsho) No. 1693
Member of Japan Investment Advisers Association, TypeⅡFinancial Instruments Firms Association