3 arrf fund information - april 2012

THE ASIA RENEWABLE RESOURCES FUNDEstablished in March 2012

Invest in a Green & Sustainable Economy

&ƵŶĚ/ŶĨŽƌŵĂƟŽŶIssued 31 March 2012

THE TREEDOM GROUP LtdCo Number: 082257

A Dedicated Fund of the KMG SICAV - SIF

www.treedom.biz

Treedom Investments - the Global Pathway to Building a Green and Sustainable EconomyEstablished in 2006

/ŵƉŽƌƚĂŶƚ/ŶĨŽƌŵĂƟŽŶ

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Is a Luxembourg domiciled and regulated ^/s ^/& ĨƵŶĚ ĂƉƉƌŽƉƌŝĂƚĞ ĨŽƌ ŝŶƐƟƚƵƟŽŶƐ ĂŶĚ ‘well- informed’ investors only. The Investment KďũĞĐƟǀĞŽĨƚŚĞĨƵŶĚŝƐƚŽƉƌŽǀŝĚĞŐŽŽĚŐƌŽǁƚŚƉŽƚĞŶƟĂůǀŝĂĂƉŽƌƞŽůŝŽŽĨĚŝǀĞƌƐŝĮĞĚĞǆƉŽƐƵƌĞƚŽ ƐŝĂŶ ĨŽƌĞƐƚƌǇ ĂƐƐĞƚƐ ǁŚŝůƐƚ ƉƌŽƚĞĐƟŶŐ ƚŚĞ ŝŶƚĞƌĞƐƚƐŽĨŝŶǀĞƐƚŽƌƐůŽĐĂůĐŽŵŵƵŶŝƟĞƐĂŶĚƚŚĞenvironment.

/ƐĂŶŽƉĞŶĞŶĚĞĚŝŶǀĞƐƚŵĞŶƚĨƵŶĚĂĐƋƵŝƌŝŶŐŚŝŐŚƋƵĂůŝƚǇ ĂŶĚŚŝŐŚǀĂůƵĞ ĨŽƌĞƐƚƌǇĂƐƐĞƚƐĂŶĚ ůĂŶĚŽƉƉŽƌƚƵŶŝƟĞƐ ĂŝŵŝŶŐ ƚŽ ƉƌŽǀŝĚĞ ŝŶǀĞƐƚŽƌƐ ǁŝƚŚƐƚƌŽŶŐŐƌŽǁƚŚƉŽƚĞŶƟĂůŝŶƚŚĞƐŚŽƌƚƚŽŵĞĚŝƵŵƚĞƌŵ ǁŝƚŚ ƚǇƉŝĐĂů ŝŶǀĞƐƚŵĞŶƚ ŚŽƌŝǌŽŶƐ ŽĨ ĐŝƌĐĂ 5 years.

The Asia Renewable Resources Fund

The Asia Renewable Resources Fund has been set up to offer unrivalled returns for equity investors while providing renewable, sustainable and practical long term forestry investments. For centuries we have been exploiting the richness of our planet. Now manufacturers, retailers and consumers recognise that economic growth can no longer mean a growth in the use of our finite natural resources. The ARRF and Treedom Group Ltd are active in one of the world’s truly sustainable industries, Forestry. The ARRF develops forest-based investments with high potential returns and a strong ethical, environmental and socio-economical profile, including community development and Forest Stewardship Council (FSC) certification. The ARRF is targeting above average returns with minimal correlation to traditional asset classes such as bonds and stocks. With rising commodity prices and a growing global demand for forestry products the Asia Renewable Resources Fund offers investors the unique opportunity to gain alternative asset class exposure in a fully regulated and transparent investment vehicle.. The right timing The Asia Renewable Resources Fund offers investors an opportunity to reap the rewards from investments in sustainable and financially lucrative project-based forestry investments; with these investments projected to include forestry, carbon credits, plantation timbers and Oil Seed Trees (OST's). High stable returns The Agro Forestry sector has traditionally been seen as a safe haven for investors during tough economic times. Timber and forest asset classes have been invested in for centuries and are seen as very stable returns because the investors are able to see their assets “growing” due to the organic biological activity. With low correlation to other commodity and asset classes timber and associated products are sheltered to a large degree from economic downturns and offer a prime investment opportunity for primary and secondary investors. As an asset class forestry investment and “agro forestry” in particular offers equity and quasi-equity investors the opportunity to enter a sector which has a stable and predictable return strategy over the short, medium and long terms. The increasing acceptance of the ideas and practices of a sustainable society and sustainable business represents an enormous opportunity for the ARRF and the Treedom Group Ltd. Our long-standing and stringent approach to sustainability, exemplified by our Plant a Tree Today (PATT) charity and our expertise within the renewable resources sector, makes Treedom Group Ltd an increasingly attractive investment opportunity.

Andrew Steel

CEO – Treedom Group Ltd

WELCOME TO A NEW ERA OF SUSTAINABLE INVESTING.

Contents

The Asia Renewable Resources Fund Page 1

/ŶǀĞƐƚŵĞŶƚKďũĞĐƟǀĞƐ WĂŐĞϭ

Managed Forestry Projects Page 3

ĐƋƵŝƐŝƟŽŶ^ƚƌĂƚĞŐǇ WĂŐĞϰ

The Treedom Group of Companies Page 6

Fund Dynamics Page 8

'ĞŶĞƌĂůZŝƐŬWƌŽĮůĞ WĂŐĞϵ

/ŶǀĞƐƚŵĞŶƚ/ŶĨŽƌŵĂƟŽŶ WĂŐĞϭϰ

www.treedom.biz - The Asia Renewable Resources Fund | 1

Investment objective The investment objective of the Asia Renewable

Resources Fund is to achieve long term capital growth

through investment in high value forestry assets and

land opportunities to develop sizeable returns from

forestry operations. The Asia Renewable Resources

Fund may also invest in transferable securities to

enhance liquidity and diversification.

The Asia Renewable Resources Fund will target annual

total returns equal to or greater than the S&P Forestry

index.

Investment Policy The Asia Renewable Resources Fund’s primary objective is to provide capital growth by investing in a

portfolio of agro forestry products and forestry. The

aim is to achieve this through investment as identified

by the Investment Adviser. An independent third party

forestry expert will be retained and paid by the Asia

Renewable Resources Fund and will review the

Investment Adviser’s recommendation and provide their recommendation to the Board of Directors. The

Global Investment Manager also reviews the

Investment Adviser's and forestry expert’s investment recommendation and further provides

recommendation to the Board of Directors of the Fund.

The Board of Directors of the Fund finally reviews the

investment and divestment decision and generally

controls the investment decision process. The

independent third party forestry expert will be

contracted directly to the Asia Renewable Resources

Fund.

Furthermore, the Asia Renewable Resources Fund will

also retain and pay out of its assets the services of an

independent specialist audit firm that will conduct

regular on-site inspections of the assets. The audit firm

will:

a) Provide commentary on the physical state of

the assets i.e. health of the stand, attrition

rates, die back, general form, growth, fire

hazard, evidence of pest or disease, etc.

b) Provide commentary on social and

environmental impacts associated with the

forestry assets. Assessment of forestry assets

will be done on the basis of the principals and

criteria as per the Forest Stewardship Council

(FSC) standards.

c) Provide a written report to the Board of

Directors of the Fund following each site visit

clearly outlining key findings and

recommendations with evidence. Highlight

both real and potential risks and provide clear

advice and recommendations to reduce risk.

d) The frequency of inspections will likely be 6

monthly with a comprehensive full audited

conducted annually and a summary audit 6

months following the comprehensive audit.

Both audits would combine desk based and

field inspections with the days required linked

to the number and location of assets.

e) Conduct meetings with key stakeholders,

community, government, neighbours, etc. to

gauge potential issues and assisting

stakeholders to find a solution in case of

potential claims of stakeholders in a project.

f) Compile a concise visit report that presents

findings, opinions and recommendations;

Offering investment in both long and short term

rotation forestry assets, the aim will be to diversify the

portfolio but not limited to the distinct categories

below.

• Forestry assets producing high value essential

oils – for example Sandalwood oil or Oud oil

• High Value long term timber Assets – such as

teak, mahogany, ebony and rosewood.

• Forestry assets aimed at deriving an annual

income stream such as Milletia Pinnata

primarily for the bio fuels market or Para

Rubber.

The Asia Renewable Resources Fund returns are

generated from agricultural and 'agro-forestry'

opportunities including the cultivation and harvest of a

rare and valuable non-timber product – Aquilaria more

commonly known as 'Agarwood'. This species is used to

produce via steam distillation the very high value

essential oil - Oud; used extensively in the Middle East

and becoming more popular in the perfume industry

now that sustainable sources of the product can be

derived from this CITES (Convention on International

Trade in Endangered Species), protected species.

The Asia Renewable Resources Fund strategy will be to

invest in land opportunities and look to cover a broad

base of forestry species ensuring income will be

derived at multiple junctures and thus not reliant on

large revenues at harvest; which in some cases can be a

lengthy period of time. Investment in new growth

plantations is aimed at significantly increasing

profitability as high growth rates ensure above average

financial performance due to increased and quick asset

growth, however that does not preclude that the

acquisition of existing mature plantations will not be

given due consideration.

THE ASIA RENEWABLE RESOURCES FUND A DEDICATED FUND OF THE KMG SICAV – SIF


The Asia Renewable Resources Fund offers investors an

opportunity to reap the rewards from investments in

sustainable and financially lucrative project-based

forestry investments; with these investments projected

to include forestry, carbon credits, plantation timbers

and Oil Seed Trees (OST's). The Asia Renewable

Resources Fund focus will be on a number of species

indigenous to Asia and includes investments in large

and small-scale forestry projects in the Asia-Pacific

zone. These investments have social components and

the Fund will proactively promote and utilize all the

criteria and indicator concepts for Sustainable Forest

Management (SFM). Appropriately, the Asia Renewable

Resources Fund incorporates certification aspects

within the rules and modalities of the Forest

Stewardship Council (FSC), the Smartwood Programme,

and the Global Forest and Trade Network (GFTN).

Whilst the focus will be on maximising returns from

plantations by owning the complete value chain from

seed to maturity, the option to pursue distressed

nonperforming assets such as poorly managed

plantations that can be turned around with the input of

good management will be given consideration as well

as considering the underlying land assets.

Acquisitions of forestry investments may be made via

joint ventures if it is deemed appropriate.

Voluntary Emission Reductions (VER) or Certified

Emission Reduction (CER) commonly known as Carbon

credits will be pursued where possible under the

appropriate verification standard to derive an

additional income stream from this growing commodity

market.

As part of the overall investment strategy and to assist

with liquidity the Asia Renewable Resources Fund will

hold, between 10% to 20% of the Asia Renewable

Resources Fund’s assets, in transferable securities such

as forestry sector exchange traded funds, and UCIs

(Undertakings for Collective Investments) which have

exposure to the forestry sector.

At its discretion, and on obtaining appropriate advice

from the Investment Adviser, the Board of Directors of

the Fund may, for preservation of assets, cash

management purposes, or when investments are not

currently available or deemed unsuitable by the

Investment Adviser for investment, invest in money

market funds or other liquidity funds ("Liquidity

Funds") or place money in Liquid Assets. It is not

expected that cash will be used as an asset class except

for short term requirements, unless the Board of

Directors of the Fund deem that unusually difficult

expected or actual market conditions require a holding

in cash to protect Shareholder returns.

The Asia Renewable Resources Fund may seek to raise

finance. Finance will be raised to a maximum of 80%

loan to Net Asset Value at individual SPV level but no

more than an aggregate 30% loan to Net Asset Value at

Fund level.

Acquisitions may be acquired through SPV subsidiaries

(the "Subsidiary Companies") and funded by equity and

borrowing at SPV level. Such Subsidiary Companies

shall be organized under such terms that the

investments remain under the control of the Asia

Renewable Resources Fund, particularly with respect to

the exit opportunities and to the custodian, central

administration and auditor requirements in

Luxembourg.

The audit of the accounts of the Asia Renewable

Resources Fund and of Subsidiary Companies, which

are funded for more than 50% by the Asia Renewable

Resources Fund, either by way of equity or of loans will

be carried out under the responsibility of the same

auditor of the Asia Renewable Resources Fund, to the

extent possible. The accounts of these entities are, in

principle, drawn up as of the same date. For the

purposes of the presentation of the accounts of the

Asia Renewable Resources Fund any Subsidiary

Companies will be regarded as transparent and the

accounts will contain a list of all investments held

through such Subsidiary Companies.

The Board of each Subsidiary Company will be generally

composed of at least one director from the Board of

the Global Investment Manager and the Investment

Adviser.

Corporate Governance Treedom’s Senior Management Team and the Board of Directors hold extensive experience and an intimate

understanding of the Forestry, Land Banking and Agri

businesses.

Treedom’s clear governance model is characterised by

an active awareness of risk management. The

transparent, flat management style and continuous

professional development encourages employee

participation in process development and leads to an

intelligent, engaged and stable workforce


Single species versus a multiple species focus? An

identified industry issue with Managed Forestry

Projects and the Forestry companies that inhabit this

space is their exposure to a single species in single

locations.

The Asia Renewable Resources Fund intends to address

any risk concerning the market movement for a single

species by adopting a multiple species approach.

Initially, the advisers will address a number of potential

projects which may include plantations that are

considered as being 'distressed'.

Teak Botanically called Tectona Grandis, the Teak is a native

of the deciduous forests of India and Burma and

naturally its cultivation is encouraged in the forestation

programmes of the Government of India and in the

recent past we have seen Teak grown in large numbers

wherever climatic conditions are favourable for it. It is

mainly grown for its highly valued timber. This long

lifespan is an argument against its cultivation, but

commercially grown Teak is usually thinned from

around years 8-10 and then finally harvested around

years 15-20, which still gives a high return value for the

full tree.

Teak wood is very strong and durable, resists white

ants and contains oil which preserves nails, a property

which enhances its value in the construction and

furniture industries.

Due to heavy deforestation and illegal logging

practices, Teak is now a CITES 5 (Convention on

International Trade in Endangered Species), restricted

species. This essentially means that the trade of Teak

wood is closely monitored. However, illegal logging due

to high demand and increasing prices for hardwood

remains a major threat to this species. Financial

Projections for Teak Plantations targeted for

investment display sustained returns of in excess of

15% annually.

Agarwood Agarwood is a resinous wood that occurs in trees

belonging to the Aquilaria genus, Thymelaeceae family.

Now listed as an endangered species as defined by

CITES, Aquilaria is a fast growing, archaic tropical forest

tree. It is found generally in South and Southeast Asia,

from the foothills of the Himalayas to the forests of

Papua New Guinea. The tree grows in natural forests

up to an altitude of about 1000 metres, with an ideal

altitude of 500 metres. It can grow in a wide range of

soils including poor sandy soil. Agarwood is a tree that

produces an essential oil, namely Oud being a product

that is commonly referred to as 'more expensive than

gold'. Oud Oil is commonly used throughout the

Muslim world as a perfume. In addition, it is used by

the fragrance houses of Europe as a base for their retail

perfume brands. The value of first grade Agarwood is

extremely high. A wide range of qualities and products

are generally available with geographical location and

cultural disposition being the main determinants of

quality. Prices range for lower grade Agarwood from a

low of US$ 1000 per kilo to in excess of US$ 30,000 per

kilo for the higher grades of Agar Oil (Oud) and resinous

wood, thus giving it the name of "liquid gold".

High values for its oil and resinous wood has seen

Aquilaria decimated in natural stands to become an

endangered species in the wild. Managed forestry is

needed to assume control over the commercial

production of Agarwood; this is where Treedom

Investments Ltd., Investment Adviser to the Fund,

comes to the fore with proprietary technology and

controls being applied to its Agarwood projects.

Oil Seed Trees (OSTs) The development of a renewable energy market has

seen a demand for feedstock supply increase – this can

be derived from various trees producing pure plant oil

or from woodchip supply. Grown in correct conditions,

OST's are extraordinary generators of two forms of

biomass. The first is a vegetable oil that can be

chemically reacted to produce biodiesel; while the

second is biomass that can be processed to a number

of renewable energy based end uses.

Development of sources of suitable energy, specifically,

green and renewable, has captured the imagination of

scientists and venture capitalists globally, as they rush

to fill a distinct market gap in a multi-billion dollar

industry. The characteristics of the energy needs for

transportation are unique and currently there are no

technologies capable of providing a feasible liquid fuel

alternative other than bio fuels. Two powerful forces,

the inevitable end of finite fossil fuel resources and the

growing imperative to reduce greenhouse gas

emissions, are creating massive worldwide demand for

alternative, renewable energy sources. As energy and

food prices rise globally, it is becoming increasingly

clear that in the developing world, there are limited

land and supply resources available for bio fuel

production. The residues from OST plantations and

vegetable oil processing can be used as feedstock for a

number of biomass processes including generation of

heat, electricity, biogas or pellets that can be

transported to a point of use and combusted as a

replacement for fossil fuels.

Biodiesel is a renewable, sustainable, non-toxic, rapidly

biodegradable fuel that can be produced from a variety

of oilseed crops. Much of the world’s transport runs on

MANAGED FORESTRY PROJECTS


diesel and all transport can ultimately run on biodiesel.

Biodiesel helps lower particulate exhaust emissions and

can be used without any modification to most existing

diesel engines in combination with petro diesel.

The acquisition price, as with any asset class, plays a

crucial role in determining investment performance.

The Asia Renewable Resources Fund intends to source

projects that include aspects deemed desirable

including country benefit, projected profitability,

carbon aspects, biodiversity, community, flora, fauna,

market potential, risk, security and conservation

potential.

The acquisition process will balance a complex array of

biological, operational, and economic considerations

including a reliable evaluation and projection of the

following:

Timberland inventory data;

Growth and yield of inventory;

Harvest scheduling plans;

Other non-timber revenues;

Timber product mixes and prices;

Silvicultural benefits and costs;

Biomass processing;

Refining of produced oil;

Management costs; Conservation and

environmental services values;

Road and infrastructure costs and expenses;

Land Title;

Environmental, and access issues;

Potential exit strategy.

Valuations The policy and methodology for the determination of

the NAV on a monthly basis to provide a defined and

equitable basis for subscribing and redeeming

shareholders is as follows:

The valuation of the Asia Renewable Resources Fund's

subsidiary companies will be a combination of the

value of the investment (or the contract to buy

investment) held by that subsidiary, less any loans

taken to finance the acquisition of the investment, plus

any cash remaining at each valuation point, plus any

net other assets/liabilities of the Fund and its

subsidiaries at that point, including contingent

liabilities known to the Investment Adviser at the time

of valuation.

Treedom Investments Limited will conduct monthly

updated valuations of timber and other biological

assets within the Fund. Treedom Investments Limited

will comply with International Accounting Standard 41

Agriculture in the valuation of the standing timber and

other biological assets. Dependent on timber species,

focus will be on fair value accounting using market

based prices and net discounted cash flows. On

projects which include land purchase the appropriate

IAS relating to land and buildings will be utilised.

Valuations of assets prior to acquisition or disposal will

be conducted by a Board of Directors appointed

independent third party forestry expert. Forward

looking project financial forecasting will be conducted

by Treedom Investments Limited and reviewed by a

third party forestry expert. An independent specialist

audit firm will also conduct a comprehensive full audit

annually which will include site inspections and a

summary audit 6 months after each full audit.

Valuation time periods and reporting Treedom Investments Limited will build a model to

ascertain the potential asset value (and income) growth

on an annual or lesser time period basis (dependent on

species and product). This will clearly indicate the

growth and income that the asset should be achieving.

For the purpose of the monthly valuation, Treedom

Investments Limited will conduct a comprehensive

valuation of assets, assessing whether and to what

extent the asset values require modification and

provide to the Global Investment Manager the

modified values and the income to be recognised and

included in the profit and loss account.

Treedom Investments Limited will also furnish half-

yearly update reports on the market and any

developments which may have an impact on

valuations.

International Accounting Standard 41 Agriculture ('IAS 41') IAS 41, effective for periods beginning on or after 1

January 2003, introduced fair value accounting for

standing timber, as it did for all biological assets.

IAS 41 prescribes the accounting treatment, financial

statement presentation and disclosures related to

standing timber and other biological assets. The

standard prescribes, among other things, the treatment

for standing timber during its period of growth,

degeneration, production, and procreation and for the

ACQUISITION STRATEGY


initial measurement as agricultural produce, i.e.

harvested timber.

There is a presumption that the fair value of standing

timber can be reliably measured. For assets with no

market-determined prices or values, and for which no

alternative estimates are available, historical cost can

be used, that is, until the fair value becomes

measurable. During the period of growth any change in

the fair value will be recognised through

comprehensive income and included in the profit and

loss of the period in which it arises.

IAS 41 does not prescribe a specific valuation method;

IAS 41 specifies that a preparer must determine the

valuation approach which is most representative for its

forest assets. If market-determined prices or values are

available, it can be assumed that as a preparer,

Treedom Investments Limited will be expected to use

those to estimate the value of their own standing

volume.

However, there may be circumstances where no such

active markets are available to provide prices or values

for standing timber. In the absence of reliable market

prices, Treedom Investments Limited, as the preparer,

will be required to apply valuation techniques, typically

discounted cash flows to give a net present value,

requiring that management make judgments about,

amongst other matters, prices and discount rates.

IAS 41 requires fair value accounting for biological

assets; hence, the reported value of standing timber

should reflect fair value less estimated point-of-sale

costs. As a point of emphasis, land, as distinct from the

trees growing on the land, is accounted for under IAS

16 (Property, Plant and Equipment). IAS 41 allows for

different methods in determining the fair value

estimate: market value is preferred but if reliable

market-based prices are not available, fair value is the

present value of expected net cash flows from the

asset discounted at a current market rate (the

“discounted cash flows” (DCF) method). In some situations historical cost is an allowed treatment.

The most important assumptions used in the DCF-

modelling include harvesting plans, timber prices,

forestry costs, growth rates, and the discount rate.

There are different approaches to determine these key

assumptions due to differences such as those due to

geographic location, silvicultural practices, rotation

periods and species which will drive different modelling

assumptions. A notable other significant difference will

be driven on the basis of timber prices.

Timber price assumptions are fundamental in

estimating fair value. The main assumptions can be

broadly based on either current market prices for

timber or adjusted current market prices. Although

there are other factors, the difference broadly relates

to growth cycles as longer cycles call for an adjustment

method to smooth out short term volatility in market

prices for logs. For plantations in regions with faster

rotation species, there would be a lesser need for

adjusted price assumptions, as current timber prices

would be considered sufficiently reliable for modelling

fair values.


The Treedom Groups of Companies consists of:

Treedom Investments Ltd A Seychelles registered company and

Investment Adviser to the Asia Renewable

Resources Fund. Directors: Andrew Steel,

Steve Griffin. Key staff; David Smith, William

Raper, Patrick Mulcahy, Julian Bulman.

Equitech Ltd A Thailand domiciled entity that will be

appointed by the Investment Adviser to

identify and value prospective projects for

potential investment by the Asia Renewable

Resources Fund. Directors: Andrew Steel. Key

Staff; Steve Griffin and Dr Paiboolya

Gavinlertvatana.

Asia Forestry Management Ltd A Thailand domiciled company that will be


manage plantation and forestry assets held

within the Asia Renewable Resources Fund.

Directors; Andrew Steel, Steve Griffin, Key

Staff: Roger Steinhardt, Dr Paiboolya

Gavinlertvatana.

Asia Forestry Distillery Ltd

A Thailand domiciled company that will be


process and market Oud oil from Agarwood

assets held within the Asia Renewable

Resources Fund. Directors: Andrew Steel,

Steve Griffin. Key Staff: Les Weaver, Roger

Steinhardt.

The PATT Foundation The PATT Foundation is a UK registered

Charity, recognized by the United Nations,

which is within the Treedom Group of

Companies, but will have no working

relationship with the Investment Adviser or

the Asia Renewable Resources Fund except

for receiving donations from Treedom

Investments Limited fees and from Asia

Renewable Resources Fund investors who

opt-in voluntarily.

More details of the relevant entities are below as well

as biographies of the named Directors and key staff

mentioned:

Treedom Investments Limited – Investment Adviser - Forestry Assets Treedom has identified an opportunity arising from an

existing gap in the market for a new and innovative

style of investment Asia Renewable Resources Fund.

Established in 2010 the company brought together a

dedicated team of individuals with over 80 years

combined experience in their various field. Each with

skills specifically relevant to advise on investments in

the forestry sector. It has arisen from the current rapid

adoption of 'green' products and investments by

institutions and individuals. Treedom provides a unique

opportunity to generate returns for investors via the

provision of forestry investment products which, in

parallel, take due regard to people, communities and

the environment.

In summary, Treedom has positioned itself, via a fund

vehicle; to offer a socially responsible investment that

delivers triple bottom line benefits of People, Planet,

Profit by investing in forestry based assets.

Operations: Andrew Steel After a successful career that started in the military,

then subsequently taking up employment

opportunities in the energy sector and then the

forestry sector, Andrew has gained over 15 years of

international management in both areas. A Fellow of

the Institute of Leadership and Management (UK) and a

founder member of The Management Club (TMC) in Sri

Lanka, he is also a member if the Chartered Institute of

Management (UK). Accredited with a Master’s degree in Business Administration from the Sydney Graduate

School of Management, Andrew has previously held

the Chief Executive Officer’s position for a listed Managed Forestry Investment Company and has also

been appointed to the board of Asia Forestry

Management to add an additional dimension on

strategy and to provide the drive and commitment he

gives to everything he is involved in. He is also the

founder of the PATT Foundation a UK registered charity

aimed at social development through reforestation

programmes throughout SE Asia.

Forestry Adviser: David Smith David Smith has over 20 years of valuable ‘leading

edge’ business experience and gained first hand experience in matters of corporate governance and is

adept in all facets of rural land development,

government & community engagement, conservation,

renewable forest managment, associated energy and

financial services markets. David has been a company

director on a number occasions, firstly between 1996 -

1999 (pre-ASX business known as Timber Capital

Limited) and later between 2006 – 2009 (BioEnergy

Australia Pty Ltd & BioForests Ltd).

THE TREEDOM GROUP OF COMPANIES


David was responsible for every aspect of the

plantation estate to 56,000 planted hectares (138,000

acres) of commercial plantation species including Pinus

radiata, various Casuarinas, Grevillea species and Khaya

senegalensus and the protection and conservation of

over 30,000 hectares (74,000 acres) of native

grasslands, open woodland, forest and water courses.

More recently David has for the last 5 years focused

heavily upon the assessment and development of

alternative market opportunities. A worldwide focus on

emerging renewable energy sector opportunities

(including presentations and representations at

international IEA conferences and committee

meetings) has resulted in the development of a number

of exciting commercial projects including; A ‘Carbon and Timber Production’ plantation model to establish

much needed ‘long rotation’ commercial plantations whilst providing a select few large carbon emitters an

important efficient and economic carbon offset

strategy.

Financial Controller: Steve Griffin A qualified Australian CPA. Steve has held senior

Finance positions with Accenture (Asia Pacific Regional

Head of Finance – Financial Services) and Baker &

McKenzie Lawyers (Finance Director – Australia) and,

more recently, roles within the NRMA organisation in

Australia relating to their Mergers & Acquisitions

activity. During 2006 and 2007, Steve held the Chief

Financial Officer’s position for a listed Managed Forestry Investment Company – with operations

throughout the Asia Pacific, Middle East and UK. He

was primarily involved in Initial Project engagement,

Land Procurement, Carbon Support & Registry Services,

& Project Quality Assurance.

Non-Executive Director: William Raper Mr Raper has 25 years advising companies including 12

years in Thailand. Experience includes IPO's,

restructuring and debt, Previous employers include

PriceWaterhouse, Ernst & Young, (Head of

Restructuring Thailand), and Ferrier & Hodgson

(Director Corporate and Financial Restructuring).

Extensively qualified William’s academic credentials include a Master of Commerce (Accounting) N.S.W.

University, Australia.

Non-Executive Director: Patrick Mulcahy Patrick Mulcahy adds a breadth of experience to the

board of directors having previously worked for Arthur

Andersen & Co Ltd holding a range of positions from

senior auditing to group finance director over his

distinguished career, and more recently as the Senior

Vice President Finance, EQUANT NV; a Global B2B data

telecoms company – IPO’d July 1998 on NYSE and Paris Bourse with market cap of $5.5billion, raising $700m.

Adviser Operations - Equitech The company was founded in 2006 and specializes in

‘Forestry Project Development & Management’ to address the markets of Voluntary Carbon Units from

forestry projects and develop sustainable reforestation

projects. EQT has the technical forestry and OST

expertise to bring large-scale projects to life in a

realistic and timely manner. The experience extends to

establishing several forestry “support” programs in addition to building an enviable reputation in the OST

and carbon forestry industries. See website for further

details: www.equitech.biz

Asia Forestry Management: Established in 2007, the

company has established itself as one of Thailand's

leading producers of Oud oil and specialists in the

management of high value essential oil plantations

including specifically Aquilaria. The AFM team has

developed its own technology through research and

development to ensure 100% success on the artificial

inoculation of Aquilaria trees to enable the production

of Oud oil from Thailand's second largest distilling

facility. www.asiaforestry.com

Forestry Adviser (Teak Specialist): Dr Paiboolya Gavinlertvatana Dr. Paiboolya Gavinlertvatana received his Ph.D. in

Agriculture from the University of Minnesota. He

taught at Kasetsart University in Thailand as an

Associate Professor of Agriculture and brings a vast

amount of experience knowledge in forestry operations

to the team. With over 20 years’ experience in tissue

culture technology Dr Pai has diversified experience in

three main industries: forestry, agriculture, and

horticulture specialising in hard-to-propagate

plantation trees such as Teak (Tectona grandis) and

Agarwood (Aquilaria crassna).

Independent Forestry Adviser – ST Muk ST holds an MBA degree from the University of Bath,

UK. Moreover, he is a Certified Public Accountant and

Chartered Accountant. His career started in Malaysia in

1983 with Price Waterhouse. From there he moved up

through a number of private companies to finally reach

the position of Group Chief Executive Officer/Executive

Director of a listed private forestry company in

Malaysia in 1993. ST was responsible for forest

plantations, timber processing, tree plantation

management services, and market research. Later, this

company was sold to an international forest fund in

1997. ST prepared the valuation of the firm and led

negotiations with the funds.

http://www.equitech.biz/

http://www.asiaforestry.biz/


Hedging The performance of the Asia Renewable Resources

Fund may be affected unfavourably, as well as

favourably, by fluctuations in currency rates. Hedging

transactions may be undertaken, but only with a view

to eliminating or reducing interest rate or currency risk.

Long and short term hedging arrangements may be

entered into on behalf of the Asia Renewable

Resources Fund. Derivative instruments may be used

for this purpose.

It will not be the intention of the Global Investment

Manager to use hedging arrangements to generate a

profit for the Asia Renewable Resources Fund. The

objective is to, wherever and to the fullest extent

possible, neutralise the impact of currency fluctuations

for investors in the Dollar Share Class and Euro Share

Class.

Liquidity Strategy The Asia Renewable Resources Fund is open for

redemptions on a monthly basis with a 30 Business

Days prior redemption notice period.

In addition:

As part of its investment strategy, it is expected to

hold between 10% to 20% of the Asia Renewable

Resources Fund assets in liquid assets such as

transferable securities and cash and/or cash

equivalents as described in the investment

objective;

The Asia Renewable Resources Fund may arrange

borrowings, up to 30% loan to net asset value,

which if available, part thereof may be used to

assist liquidity;

Finally the Board of Directors of the Fund may

suspend or postpone to the next valuation day

redemption requests, if at a monthly Valuation

Day the net aggregate redemption requests equal

10% or more of the Fund’s net assets.

Redemption requests made in respect of a particular

Valuation Day will take priority over new redemption

requests received in respect of any subsequent

Valuation Days, i.e. no new redemptions will be

processed until all redemption requests received in

respect of any prior Valuation Day have been satisfied

in full.

Accordingly, redemptions settlement may take place

over one or more Valuation Days and therefore at

different NAV’s per share and prospective investors should be aware that they may be required to bear the

financial risk of their investment for a longer period of

time and Shareholders may be paid out at different

NAV’s per share.

The Directors may use a number of different

arrangements to generate liquidity for outstanding

redemption requests. The Board of Directors of the

Fund will use all reasonable commercial efforts to

satisfy redemption requests, while recognising its

obligation to balance such efforts with the interests of

those Shareholders who remain in the Asia Renewable

Resources Fund. Subject to the fact that redemption

requests will be settled in the order of the Valuation

Days in respect of which they are received, the Board

of Directors of the Fund will not provide preferential

treatment to any redeeming Shareholder and in

considering generating liquidity will always take into

account, with due diligence and in good faith, the

interests of the Asia Renewable Resources Fund and

those Shareholders who have not submitted

redemption requests.

Redemption settlement of Shares may be suspended

for certain periods of time as described above and

under provision of Section 17 of the main Offering

Document.

Investor Profile Investment in the Asia Renewable Resources Fund is

only appropriate for those whose investment

experience is such that they are capable of evaluating

the merits of their prospective investment and have no

need for their investment to be liquid on a daily basis.

Investors should accordingly consult a suitably qualified

professional Adviser if they do not have the

appropriate experience before committing themselves

to an investment in the Asia Renewable Resources

Fund.

Forestry assets have had a close to zero correlation in

the year-to-year variation in their returns with other

major asset classes such as listed stocks, corporate

bonds, and property. At the same time, forestry assets

have been positively correlated with inflation.

Therefore, investors could find that the overall volatility

of their portfolio would be reduced by the addition of

forestry assets. Assets that tend to increase in value

when markets fall, including gold, oil futures, and some

types of hedge funds, are characterised as defensive.

The difference between these and forestry, however, is

that the performance of forestry assets is not market

driven, and so is much less volatile over long periods of

time than other commodities.

Overall, forestry investment assets could improve risk-

adjusted returns for investors who have long-term,

value orientated objectives within a balanced and

diversified portfolio.

Fund Dynamics


Capital Risk Investors will be exposed to stock market fluctuations, and the financial performance of the

companies held within the Asia Renewable Resources Fund's portfolio. Therefore, investors may

see the value of their investment fall as well as rise over time; investors may also receive less than

their original investment. Investors should be aware that investments may be made in emerging

markets which may be subject to additional political and economic risk, which stocks of the target

companies can be negatively impacted by low liquidity, poor transparency and greater financial

risks. As investments may be made globally across any economic sector, there may be investments

that are less liquid and carry greater financial risk and volatility may be higher. However, there

may be greater potential for higher returns. To the extent that the Asia Renewable Resources Fund

invests into other collective investment schemes, these investments may entail a duplication of

certain fees and expenses for the shareholders, for instance the commissions for the custodian,

the administration agent, management / Advisory fees and issue / redemption fees on the level of

invested collective investment schemes.

Valuation risk Forestry values, as with all other investments, are vulnerable to political, legal and economic

issues. The value of the land may also fall or rise. Whenever possible a distressed asset may be

purchased at a discount to market value. However this may not be possible in certain market

conditions and there is a possibility that in a rising or strong market a purchase may be made

where a premium is paid for a plantation. The performance of the Asia Renewable Resources Fund

could be negatively affected by a decline in global timber prices or a reduction in demand. This

could also be apparent in terms of a general decrease in capital values or a reduction of income or

a change in government policies towards exports.

Market circumstances will determine how long it may take to sell prevailing assets and the time-

scales for the success of any sale cannot be pre-determined. Increased supply of products or assets

could entail that due to the price elasticity of demand the price may fall.

Monthly valuations are subject to uncertainty and will depend on the profitability of the project.

Best efforts are made for valuations to be as accurate as possible. An appraisal or a valuation is

only an estimate of value and is not a precise measure of realisable value. Ultimate realisation of

the Market Value of a forestry asset depends to a great extent on economic and other conditions

beyond the control of the Board of Directors of the Fund. Appraised or otherwise determined

values do not necessarily represent the price at which an investment would sell since market price

can only be determined by negotiations between a willing buyer and seller. If the Asia Renewable

Resources Fund were to liquidate a particular investment, the realised value may be more than or

less than the appraised value or other valuation of such asset. The valuation is inherently

subjective due to the individual nature of each plantation. As a result, valuations are subject to

uncertainty. There is no assurance that the valuations of the assets belonging to the Asia

Renewable Resources Fund will reflect actual sale prices, even where any such sales occur shortly

after a valuation date.

Finance and borrowing

The Asia Renewable Resources Fund or any SPV is permitted to utilise borrowings for the purpose

of purchasing investments. The Asia Renewable Resources Fund may borrow significant sums from

banks and other third parties.

Borrowing creates an opportunity for a greater yield and total return, but, at the same time, will

increase the exposure to capital risk and interest costs.

Investors must also remember that where the associated interest costs are greater than such

income and gains, the value of the Asia Renewable Resources Fund may decrease more rapidly

than would otherwise be the case.

Borrowings may multiply the effect of falls and rises in the value of the project investment

portfolio. The facilities granted by the lender may be terminated or altered in certain

circumstances which may adversely affect the Asia Renewable Resources Fund.

Borrowings up to a maximum of 30% loan to value may be obtained. Finance may have to be

GENERAL RISK PROFILE


repaid before any liquidity can be realized and higher gearing may result in a greater number of

asset sales becoming necessary to meet early redemption requirements.

There is a risk that the available credit may be restricted in any period of recession. The lenders (if

any) will have a first charge over the assets and if the value of such assets were to fall significantly,

the lenders may be permitted to realise their security by selling such assets.

Income Risks

The Asia Renewable Resources Fund may not achieve the anticipated returns in the event that the

various commodity prices decrease. The Global Timber Market and subsequent commodity prices

are subject to market forces and therefore fluctuations outside of the Directors control. Adverse

weather conditions such as drought may reflect a decrease in yield in some commodities indirectly

affecting the income revenues from that particular species.

Newly formed entity

The Asia Renewable Resources Fund is a newly formed fund, which has no operating history. There

can be no assurance that the Board of Directors of the Fund will achieve the investment objectives.

There exists a possibility that an Investor could suffer a substantial or total loss as a result of an

investment in the Shares of the Asia Renewable Resources Fund.

Market Risk

The major drivers of future wood demand will be global population, living standards and wood’s cost competitiveness relative to substitute products. The relative cost of wood and wood

substitutes will be largely determined by energy costs. A global population of 10 billion using an

average of 0.6m³ of wood per person per year would require an annual global wood harvest of 6

billion m³ per year. This represents an increase of 2.5 billion m³ more than the 3.5 billion m³

annual global wood harvest of the mid 1990’s. Furthermore, attempts to halt the illegal trade of logs and to promote value added processing of timber in tropical countries, will continue to reduce

the volume of tropical industrial round wood.

Liquidity Risk

The Asia Renewable Resources Fund intends to invest predominately in forestry plantations which

are generally, by their nature, regarded as illiquid assets. It is intended that redemptions of Shares

may be met by employing the mechanisms described under Liquidity Strategy. This may not always

be possible due to the illiquid nature of investments. Redemptions may also be financed by

borrowings by the Asia Renewable Resources Fund, subject always to the availability of such

borrowings. Any borrowings will be made in accordance with the borrowing restrictions detailed in

this Appendix.

As described in the Asia Renewable Resources Fund Appendix, redemption requests may be

suspended where there are a significant number of withdrawal requests received at the same

time, which absorb the cash and cash equivalent reserves of the Asia Renewable Resources Fund

and if assets of the Asia Renewable Resources Fund are not sufficiently liquid.

Political Risk

Southeast Asia is gradually seeing a divergence between those countries that are stable and

developing, and those that are politically and socially volatile, and stagnating economically. Most

have accepted the importance of free markets and respect for private property and institutions

and continue on a course of economic, political and social stability.

Southeast Asia's financial markets were among the world's best performers in 2010. Indonesia led

the pack on growing expectations that it will be awarded an investment grade sovereign rating,

but the Philippines and Malaysia also posted impressive gains, and Thailand staged spectacular

stock market and currency rallies despite the political violence of recent years due to the flood of

hot money that has buoyed the region's markets. Foreign participation in the region's markets is

already relatively high. Foreign investors have largely turned a blind eye to Southeast Asian

political risk in their hunt for high-yield assets.

Government Policies

Investment performance may be affected by changes to government policy in relation to taxes,

exchange rates, legislative changes, land tax, income tax and other government factors. These

factors are generally beyond the control of the Board of Directors of the Fund. Prospective

investors should consult their own professional Advisers as to the implications of their subscribing


for, purchasing, holding, switching or disposing of Shares under the laws of the jurisdictions to

which they may be subject

Changes in applicable laws

The Asia Renewable Resources Fund the Board of Directors of the Fund must comply with various

legal requirements flowing from its ownership of forestry assets, including requirements imposed

by local laws in the jurisdictions in which the asset is located. Should any of those laws change

during the life of the Asia Renewable Resources Fund, the legal requirements to which the Asia

Renewable Resources Fund and the Investors therein may be subject could differ materially from

current requirements. Such changes could lead to increased cost, increased taxation, a decrease in

the value of assets or may require the strategy of the Asia Renewable Resources Fund to be

reviewed, altered or aborted.

Taxation

An investment in the Asia Renewable Resources Fund involves a number of complex tax

considerations including distributions paid across national boundaries. Changes in tax legislation,

or tax treaties could adversely affect the returns from the Asia Renewable Resources Fund to its

Investors. No assurance can be given regarding the actual level of taxation payable by the Fund.

Investors should consult their own tax Advisers on the tax implications for them of investing,

holding and disposing of Shares of the Asia Renewable Resources Fund.

Economic Risks

Changes in economic conditions, including, for example, interest rates, inflation rates,

employment conditions, competition, technological developments, political and diplomatic events

and trends, and tax laws can affect substantially and adversely the business and prospects of the

Fund.

None of these conditions are within the control of the Asia Renewable Resources Fund or the

Board and no assurances can be given that they will anticipate these developments and respond

effectively.

Natural Catastrophe Risks

Wind Storm – Plantations are situated inland, in regions previously unexposed to extreme climatic

conditions. As a result the plantations are not expected to be exposed to hurricane or typhoon

risks however complete surveys as part of the due diligence process will ensure that all risks are

identified if detrimental productivity of the area.

Flood/Tsunami – The Tsunami risk in the plantation areas is negligible due to their location being

so far inland. There is no significant flood risk as a complete feasibility check of all risk aspects of

the plantations will ensure that all risks are mitigated or if deemed uncontrollable deem that the

location is not viable for investment purposes.

Drought/Extreme Heat – SE Asia is not prone to drought conditions and this is not deemed to be a

limiting or risk associated factor.

Earthquake/Volcanic Eruption – The site of plantations selected for investment are not located in

an area subject to seismological activity. Therefore there is no exposure to this risk.

Diseases / Pests

A serious threat to plantations can arise from a massive build-up of a pest or disease. It has been

disputed whether monocultures per se are more susceptible to such devastation than natural

forests In order to minimize the threat of pest and disease a thorough Plantation Health

Surveillance (PHS) program will be developed and enacted upon during the plantation cycle.

The purpose of a (PHS) program is to assist in the maintenance of plantation productivity. Pests,

pathogens, nutritional disorders and other factors can damage tree health, and hence the rate that

trees grow and produce wood.

Regular and systematic surveillance and monitoring of tree health facilitates early detection of

damaging agents and thus early intervention to protect a plantation owner’s investment. A PHS program also provides information on the status, changes and trends in plantation health

useful for long-term management.


General Insect and Disease Control Measures

The control measures applied depend on the insect involved, as well as the extent of the

infestation, and such factors as the age of the tree, etc. Many insect problems are only identified

after severe damage has occurred and by this time it is often too late for control measures to be

effective. Control measures include:

Cultural control - selecting species that are suitable for the site, growing several species of trees

and not planting them too close together. A diverse range of plant species provides food and

habitat for beneficial insects and insectivorous birds. Trees growing in unsuitable conditions may

survive but will be under stress and are far more susceptible to attack by insects than healthy

trees.

Natural or biological control - control of pests by the use of parasitoids, predators and

pathogens. Parasitoids include wasps and flies. Predators include birds, spiders and other insects

such as ladybird beetles, hoverflies, lacewings and assassin bugs. Pathogens include fungi, viruses

and bacteria.

Physical or mechanical control - removing pests by hand and then destroying them. If scale is a

problem, adhesive bands can be placed around the trunk of the tree to catch ants feeding on the

honeydew. Ants prevent predators attacking the scale, so if they are kept away, predators can

then have access to the scale.

Chemical control - it may sometimes be necessary to use chemicals to control insect pests. The

type of chemical used and the timing of its application is critical. Insecticides should only be used

when damage levels become unacceptable. Chemicals can be contact or stomach poisons (which

kill on contact or when ingested) or can be systemic (i.e. they are taken up by the plant, and

insects subsequently feeding on the plant are killed). Systemic insecticides are the most effective

chemicals to use against sap-sucking insects. All insecticides should be used with care as they may

also kill natural insect predators and can be dangerous to people. It is important to identify what

insect is present and the damage it is causing before using chemical control. It is also very

important to only use chemicals that are registered for use against the pest that is being

controlled, and to apply the chemical as per the label directions. Directions for use must be strictly

followed and adequate safety precautions need to taken when handling and using chemicals.

Integrated pest management (IPM) - is a combination of all the above methods of control and is

the key to responsible management of insect pests and diseases.

The relative susceptibility of monocultures to pests and disease is complex ecologically and may

depend on the species and/or local conditions (climate, soil). The influence of diversity on stability

of insect populations depends on what population level is deemed acceptable and plantations will

be risk managed under this protocol.

Forest Fires

The majority of forest fires occur in natural unmanaged forested areas and are in some cases an

essential part of the ecosystem. The risk management programs to be implemented are adequate

firebreaks, lookout towers and trained fire fighters which minimise the risk of damage by fire. As a

result, less than 4% of commercially managed forests have been damaged by fire in the last 10

years. As an example; Teak trees are highly fire resistant due to high silicate content. The Teak tree

is unique in the sense that it is fire resistant after 3-5 years and damage following fire when trees

exceed this age is limited. Other species are susceptible however with adequate measures this risk

is significantly reduced.

Furthermore, the tree tops pack tightly and the shade from these trees creates a ground cover

that prevents the growth of grass and any other plants that could be a source of fire. Treedom will

manage the occurrence of fire to protect human life, welfare, and property through mitigation and

suppression activities. A fire plan will be developed for all plantation sites and regular monitoring

from observational towers and also by land patrol by professionally trained fire-fighting crews will

occur during periods of fire risk.


FSC INTERNATIONAL STANDARD

FSC-STD-01-001 (version 4-0) EN

All plantation development will follow the guidelines of FSC PRINCIPLES AND CRITERIA FOR FOREST

STEWARDSHIP. Sections of Principle 6 and Principle 10 have been inserted below as they are

related to the management of insect pests (Principle 6) and pests, disease and fire management

(Principle 10).

Principle #6: Environmental impact

6.6 Management systems shall promote the development and adoption of environmentally

friendly non-chemical methods of pest management and strive to avoid the use of chemical

pesticides. World Health Organization Type 1A and 1B and chlorinated hydrocarbon pesticides;

pesticides that are persistent, toxic or whose derivatives remain biologically active and accumulate

in the food chain beyond their intended use; as well as any pesticides banned by international

agreement, shall be prohibited. If chemicals are used, proper equipment and training shall be

provided to minimize health and environmental risks.

6.7 Chemicals, containers, liquid and solid non-organic wastes including fuel and oil shall be

disposed of in an environmentally appropriate manner at off-site locations.

Principle #10: Plantations

10.7 Measures shall be taken to prevent and minimize outbreaks of pests, diseases, fire and

invasive plant introductions. Integrated pest management shall form an essential part of the

management plan, with primary reliance on prevention and biological control methods rather than

chemical pesticides and fertilizers. Plantation management should make every effort to move

away from chemical pesticides and fertilizers, including their use in nurseries.

Insurance Coverage

The Investment Adviser constantly reviews the necessity of insurance against a variety of risks,

which may cause a negative impact on the returns to investors in the Fund. The risks of fire,

specified diseases and pest whilst existent are managed to an extent that the losses are negligible.

Any commercial insurance programme would require premium levels per annum which are a

multiple of the losses experienced over the past 14 years. There is no exposure to windstorm,

tsunami, flood, earthquake and volcanic eruption and these risks are not covered. In considering

investment in any country political/country risk is always a consideration. This aspect has been

considered and the view taken that insurance cover is not appropriate in this respect.

Diversification

The investment policy is to diversify risk within this specific asset class, This will be achieved by

investing in a number of plantations in different locations, planted in different years. This will

ensure that physical damage risk is minimised, overall yield from numerous plantations will reduce

volatility of returns and there will be a diversity of revenues streams which will even out any

movements in the commodity price of timber.

The Investment Adviser has identified to the Asia Renewable Resources Fund, geographically

separate plantations and land opportunities, which are widely spread throughout the South East

Asian management area in excess of 100,000 hectares, which are well spread. Implementation of

FSC accreditation on all sites will ensure that the utmost standards within the forestry sector are

maintained.

The Asia Renewable Resources Fund may not accumulate holdings of more than 30% (thirty

percent) in a single investment after the third anniversary of the launch of the the Asia Renewable

Resources Fund. Properties whose economic viabilities are not linked are to be considered as a

separate item of investment for this purpose.


Investment Adviser Treedom Investments Ltd

Global Investment Manager

KMG Capital Markets Luxembourg S.A.

Investment Adviser Fee (payable to the Investment Adviser)

A fee of 2% per annum will be charged against the gross asset value of the fund.

The Asia Renewable Resources Fund Setup Costs

A fee of up to $125,000 may be charged for the setup of the Asia Renewable Resources Fund. This fee will be amortised as an expense to the Asia Renewable Resources Fund over sixty (60) months. Costs for the formation of Subsidiary Companies will also be charged to the Asia Renewable Resources Fund and amortised over sixty (60) months as they are incurred.

Reference Currency USD

Valuation Day Monthly, on the last Luxembourg Business Day of each month.

Subscription Price / Redemption Price

Shareholders will have their Shares allotted at the Net Asset Value per Share as of the relevant Valuation Day less any applicable subscription charge. Shareholders will have their Shares redeemed at the Net Asset Value per Share as of the relevant Valuation Day for Redemption minus any applicable redemption fee charge.

Classes of Shares Class A USD: Class offered to Well Informed and Institutional Investors. Class B USD: Class offered to Well Informed and Institutional Investors. Class A GBP: Class offered to Well-Informed and Institutional Investors. Class B GBP: Class offered to Well Informed and Institutional Investors. Class A EUR: Class offered to Well Informed and Institutional Investors. Class B EUR: Class offered to Well Informed and Institutional Investors. Class I USD: Class offered to Well-Informed Investors specifically accepted by the Board of Directors of the Fund.

Categories of Shares All shares classes will be Capitalisation type shares.

Initial Subscription Period 1st July 2012 to 31st October 2012

Initial Subscription Price All share classes apart from Class I will be issued at 1000 per share in each respective currency. Class I USD: USD 1.00 per Share

Minimum Initial Subscription

Class A USD: 10,000 Class B USD: 10,000 Class A GBP: 10,000 Class B GBP: 10,000 Class A EUR: 10,000 Class B EUR: 10,000 Class I USD: 1,000

INVESTMENT INFORMATION


Minimum Subsequent Subscription

Class A USD: 5,000

Class B USD: 5,000

Class A GBP: 5,000

Class B GBP: 5,000

Class A EUR: 5,000

Class B EUR: 5,000

Class I USD: 1,000

Subscription, redemption and conversion deadline

For subscriptions – Applications must be received at latest at 12 p.m. Luxembourg time

two Business Days prior to the monthly Valuation Day. Applications received by the

Registrar and Transfer Agent after this time are considered for the immediately

following Valuation Day.

For redemptions – Applications must be received at latest at 12 p.m. Luxembourg time

30 Business Days prior to the monthly Valuation Day. Applications received by the

Registrar and Transfer Agent after this time are considered for the immediately

following Redemption Day.

For conversions between the launched Classes of Shares of The Asia Renewable

Resources Fund – Applications must be received at latest at 12 p.m. Luxembourg time

15 Business Days prior to the last Business Day of each relevant quarter (the

"Conversion Day"). Applications received by the Registrar and Transfer Agent after this

time are considered for the immediate following Conversion Day.

Subscription Charge Class A: There will be no subscription charge payable on subscription. Investors will

receive an initial allotment of Shares equivalent to 100% of their subscription amount.

Class B: The Class B Shares will be subject to a maximum subscription charge of 5% of

the amount invested (95% allocation). Such charge will be deducted from the

subscription amount received. The full amount of the subscription charge may be paid

to Intermediaries involved in the offering of Shares.

Class I: There will be no subscription charge payable on subscription. Investors will

receive an initial allotment of Shares equivalent to 100% of their subscription amount.

Share Creation Charge Class A Shares in The Asia Renewable Resources Fund will be subject to a monthly

charge, equal to 0.0834% per month of every subscription amount received, which will

be borne by The Asia Renewable Resources Fund Class A Shares in the form of a Share

Creation Charge and amortised back to The Asia Renewable Resources Fund on a

monthly basis over a period of sixty (60) months from the date of each subscription.

The Share Creation Charge shall apply to all initial subscriptions and any subsequent

subscriptions. The full amount of the Share Creation Charge may be paid to

Intermediaries involved in the offering of Shares.

Class B and Class I Shares are not subject to this charge.

Redemption Charge Class A redemptions will be subject to Redemption Charge, between 5% and Nil, of the

value of the Net Asset Value per Share as of the relevant Valuation Day for

Redemption. This is calculated starting at 5% and reducing by 1% per annum calculated

over a period of 5 years from the date of issue (subscription) of Shares.

Such charge will be deducted from the Net Asset Value per Share as of the relevant

Valuation Day for Redemption in favour of The Asia Renewable Resources Fund.

Directors have the discretion to waive or reduce the Redemption Charge where the


Directors’ deem that to do so would be in the best interests of Shareholders in The Asia

Renewable Resources Fund.

Class B – No redemption charge is applicable.

Class I are not subject to this charge.

Performance Fee The Investment Adviser is also entitled to receive a performance related fee (the

"Performance Fee") based upon the Net Asset Value of shares in The Asia Renewable

Resources Fund.

The Investment Adviser will receive a Performance Fee equal to 20% of any net profits

(realised and unrealised) after a monthly hurdle rate of 0.6667% is achieved. Such fee

will be accrued monthly. The net profit of The Asia Renewable Resources Fund will be

determined as at each Valuation Day by calculating the increase in the Net Asset Value

before redemptions and before any accrual for the Performance Fee; and any

distributions made during the preceding quarter shall be added back. A high water

mark principle will apply. Each Net Asset Value which generates a Performance Fee is a

high water mark. A subsequent Performance Fee in respect of a Share that was in issue

at the date of such high water mark will be payable only if and so far as the subsequent

Net Asset Value exceeds such high water mark as increased at the monthly hurdle rate.

Performance Fees may be payable in respect of Shares issued on a particular Valuation

Day in circumstances where no Performance Fees are payable in respect of Shares

issued on another Valuation Day if the Shares issued on that other date are below their

high watermark price.

The foregoing paragraphs describe how the Performance Fee is calculated. The hurdle

rate of 0.6667% per month is equivalent to a compounded rate in excess of 8% per

annum.

The Investment Adviser will direct 10% of fees earned to the PATT Foundation to

support reforestation efforts globally.

Investors have the option to donate a percentage of their returns back to the PATT

charity.

• Above 8% performance and after payment of performance fees - balance to

go to PATT.

• Above 8% performance and after payment of performance fees - 1 or 2% to go

to PATT.

• 1 or 2 % to go to PATT irrespective of performance.

Reporting Fund Status for UK Investors

It is intended that The Asia Renewable Resources Fund will seek Reporting Fund status

for the purposes of UK tax legislation on the GBP Share Classes.


Disclaimer KMG SICAV – SIF have no intention to make any offer. This document shall be specifically considered as a simple

communication of information on a security or an issuer without securities being offered for purchase or subscription.

The issuer is exempted from the obligation to publish a prospectus within the scope of Part II of Luxembourg law on

prospectuses for securities.

This communication is directed only at institutional investors, professional investors and other well-informed

investors. It should not be distributed to, or relied on by any other investors. The Fund is a Luxembourg Specialised

Investment Funds scheme; it cannot be promoted to investors for whom it has not been deemed appropriate. If you

do not fall into these categories do not read this document.

The information contained herein is confidential and is intended only for the persons to whom it is transmitted to by

KMG SICAV SIF. Any reproduction of this document in whole or in part, or the divulgence of any of its contents,

without the prior written consent of KMG SICAV SIF, is prohibited.

Each interested investor shall be responsible for carrying out his own examination and consulting, if necessary, his

own legal advisers in order to evaluate, in respect to his personal situation, the appropriateness of an investment in

the KMG SICAV – SIF. The investor’s attention is drawn to the fact that the tax treatment that will be applied to investment in the Fund depends on his particular circumstances and may change. Therefore it is recommended that

each investor consult with his tax adviser.

More specifically, the attention of potential investors is drawn to the risks associated with this investment, which are

detailed in the Offering Document and it is strongly recommended that each potential investor consult this Offering

Document. Past yields of similar investments are no indication of future returns on investments that KMG SICAV SIF

will carry out, as past performance is no guarantee of future results. Some legal, tax, or regulatory changes may occur

during the life of the KMG SICAV SIF, and may have an unfavourable effect on the performance of the KMG SICAV SIF.

There is no guarantee that the Fund's targeted returns will be achieved. Hence, potential investors must form their

own opinion on the risks of this investment opportunity prior to taking the decision to invest in the KMG SICAV SIF.

Email: [email protected]

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3 arrf fund information - april 2012

Investor Relations