Vision Opportunity China Fund Ltd Interim Results -2-

In terms of stock market performance, the Company's portfolio companies fell 39.6% during the six month period ending 31 March 2011. This underperformance far exceeds that of any index and may be attributed to the concentrated, illiquid nature of VOC's portfolio. The fact that reverse merger companies have been especially affected during this period is certainly a contributing factor to the decline in value.

Realisations

During the period, we realised proceeds from the sale of the Company's entire position in China Security & Surveillance Technologies (CSR). CSR is a company that provides the design, installation and service of complex security systems in China. We invested $8.0 million (at a price of $4.00 per share) in the company last May as a part of a larger financing. CSR has been among the more liquid names in the Company's portfolio, typically trading 1-2 million shares per day in the open market. While the growth of their business has been impressive, CSR has been criticised for the large amount of accounts receivable on its balance sheet. As a consequence, CSR has traded at quite low multiples for some time. During January 2011, the CEO announced his intent to take the Company private in a management buyout, offering $6.50 per share. CSR is one of several firms presently looking to 'go private', presumably in an attempt to relist on another more amenable market at a later date. Whatever the reason, the share price of CSR remained significantly below the proposed price. When full-year results for CSR were released showing little change in the accounts receivable situation, we decided to look for an opportunity to exit. Shortly thereafter, we were able to sell VOC's entire holding for $10.2 million, achieving a 41% IRR on the investment. Recent company announcements suggest that the management buyout appears to be proceeding at a price of $6.50, though the shares remain at a 20-25% discount in the market.

We also sold all but a stub warrant position in Keyuan Petrochemicals (KEYP). VOC invested $2.0 million in April 2010 as part of a larger financing. We realised proceeds of $2.7 million in the sale. Having traded at up to a 10x forward multiple, we felt that in the current environment the company was about fully-valued.

The most controversial component of VOC's portfolio during this period was the Company's holding in China Integrated Energy (CBEH). CBEH is a vertically integrated producer, wholesale distributor and retail seller of biodiesel and petroleum-based fuels in China. CBEH was the Company's third-largest holding accounting for 12.1% of the Company's NAV at 30 September 2010 and, at 31 March 2011, was VOC's 4th-largest holding accounting for 4.4% of the Company's NAV. VOC had invested a total of $14.7 million in CBEH, through a combination of both direct investments and open market purchases. Potential issues regarding CBEH first came to light in late summer 2010 when one of the research reports was especially critical of Sherb & Co., the Company's then auditor. Considering this matter significant, we encouraged management to upgrade their auditor to one of the 'big four'. The company agreed and, in December 2010, announced that it had retained KPMG to conduct its 2010 audit.

The US-listed China sector remained under pressure and the share price of CBEH drifted back down to about $6.00 by early March 2011. With the expectation of favourable earnings to be announced any day, when combined with the relatively good trading volume, we felt that selling the position would be premature. Then, on the eve of CBEH's filing of its annual report on the Form 10-K, an anonymous short-seller's research report levelled serious allegations against the company, including, among other things, that the chairman had enriched himself personally through self dealing transactions.

In addition to launching special diligence initiatives, we engaged management directly and received reasonable explanations responding to the most damning allegations. However, the company's public response was weak and failed to effectively rebut the charges. About 12 days later, a second report emerged that included video footage suggesting a biodiesel refinery owned by CBEH purportedly operating at full capacity was in fact idle.

CBEH responded more forcefully this time, announcing that the independent board members had commissioned Deloitte and Pillsbury (et al) to conduct a full independent review of the business.

Throughout this period, VCA was conducting behind-the-scenes diligence on CBEH. These efforts failed to restore our confidence in the company and as such we decided to realise as much of the Company's investment as we could. By 31 March, VOC holding of CBEH were down to 1,290,061 shares and sales proceeds totalled $5.1 million during the six months ending 31 March 2011. VOC further realised $1.8 million in sales proceeds before the stock was halted from trading by NASDAQ on 20 April 2011, leaving the Company with a holding of 475,859 CBEH shares. Subsequently, additional filings by CBEH noted the resignation of Deloitte and the other firms hired to conduct the special investigation, the resignation of the independent director serving as the audit committee chairman (although the vacancy has since been filled), the withdrawal of the 2010 Form 10-K and resignation by KPMG, and the resignation of the CFO.

Following these events, VOC has written the value of its remaining position in CBEH to zero. All told, through our recent sales and earlier efforts, we were able to realise 82.1% of the Company's total investment in CBEH. Any further realisations of CBEH, regardless of the value, are likely to be delayed for some time.

Throughout the period, we were also able to make several small sales of the Company's portfolio holdings and open market trades that netted an additional $1.1 million in cash for the portfolio.

Portfolio Positions

At the date of this report, the Company's portfolio consists of four major positions, six minor positions and cash.

Shengkai Innovations (VALV) is engaged in the business of designing and manufacturing ceramic industrial valves and valve components. As at 31 March, VALV represented 43.6% of the Company's portfolio. Commercial production at VALV's new manufacturing facility has proceeded as scheduled and has reached full capacity based on a one-shift operation in December 2010. Management has reiterated its revenue guidance of between US$93.0 million to US$95.0 million and raised its non-GAAP net income guidance to between US$31.0 million and US$34.0 million (excluding non-cash changes in the fair value of instruments and share-based compensation costs) for the fiscal year ended 30 June 2011. In November and December 2010, VALV closed two secondary public offerings at US$5.50 per share for total net proceeds of approximately US$17.5 million, net of all offering costs. VOC did not participate in these offerings.

QKL Stores (QKLS) operates a chain of supermarkets and hypermarkets in Northern China. As at 31 March, QKLS represented 29.0% of the Company's portfolio. QKLS fell short of its new stores guidance during the quarters ended 31 December 2010 and 31 March 2011, opening five and six new stores, respectively, instead of the expected seven new stores for each quarter. However, during the first four months of 2011, QKLS had opened a total of 11 new stores, which is close to its guidance of 12 new stores for 2011. As of 27 April 2011, QKLS had 54 store locations with an aggregate total of approximately 306,000 sq. metres of store space. This is comprised of 35 supermarkets, 15 hypermarkets and four department stores.

China Gerui Advanced Materials (CHOP) is a manufacturer of specialty steel products. As at 31 March, CHOP represented 9.2% of the Company's portfolio. Originally planned to be completed by October 2010, construction of CHOP's two new cold-rolled, wide-strip steel production lines (150,000 metric tons of total annual capacity) and a new chromium plating line (200,000 metric tons of cold-rolled steel processing capacity) experienced delays related to severe flooding in North China over the summer season. The new chromium plating line started normal operations in March 2011, while the two new cold-rolled production lines are expected to commence production in the second quarter of fiscal year 2011. In March 2011, CHOP received proceeds of US$77.6 million when investors exercised 15.5 million warrants which were originally issued in March 2009.

China Ceramics Corporation Limited (CCCL) is a manufacturer of ceramic tiles for both residential and commercial buildings. As at 31 March, CCCL represented 3.8% of the Company's portfolio. During the three months ended 31 December 2010, CCCL completed the first phase of expansion at its Hengda facilities, increasing the facility's annual capacity from 28 million to 32.3 million sq metres of ceramic tiles. As of the beginning of 2011, the combined annual production capacity of the Hengda and Hengdali facilities was 42.2 million sq metres. CCCL expects to further expand its capacity to 72.0 million sq metres by the end of 2011 and 86.0 million sq metres by the end of 2012. CCCL was also ranked in Fujian's Top 300 Enterprises in 2010 by the Fujian Evaluation Center and the Fujian Enterprise Evaluation Association.

VOC also has small share holdings (less than 2% of NAV each) in Wuhan General Group (WUHN), Jingwei International (JNGW), Global Education & Technology Group (GEDU) and Concord Medical Services Holdings Limited (CCM) and holds small warrant positions in Keyuan Petrochemicals (KEYP) and Tianyin Pharmaceuticals (TPI), accounting for a combined total of 4.1% of the portfolio.

The Way Forward

While it is a heart-breaking conclusion to reach after so many years of hard work and dedication, we support the Board's decision to move to an orderly realisation of the Company's investments and return of surplus cash to shareholders.

Adam Benowitz

Chief Investment Officer, Senior Managing Director

Vision Capital Advisors

Date: 23 May 2011