RMK GLOBAL TIMBERLAND RESOURCES FUND EXECUTIVE SUMMARY AND CASH FLOW ANALYSISRMK Global Timberland Resources Fund
Goal
Provide the investor with a geographically diversified investment of internationally certified
commercial timberland operations grown for sale to traditional and non-traditional wood-using
industries.
Philosophy
RMK Timberland Group believes in diversification. It is why we are organized around a Portfolio
Management structure, building portfolios to meet our clients' needs. It is also why we expanded
our initial operations from southern U.S. pines to include Appalachian hardwoods, softwoods and
hardwoods in the U.S. Lake States region, and eucalyptus and various pine species in Uruguay and
BraziL It is why we also look at micro-regions within larger areas to manage risk through
diversification. Lastly, it is why we diversify portfolios with different age trees (emerging,
established and mature), as different age trees are used to make different products sold into different
markets.
We recognized the fundamental benefit of diversification outside the U.S. and, after extensive due
diligence, began investing in South America in 2005. Our professionals have traveled throughout
the world, analyzing markets on four continents.
It is because of this background that RMK Timberland Group's next commingled portfolio, the
RMK Global Timberland Resources Fund (the "Global Fund"), will be a truly global portfolio. As
noted in the attached pages, the Global Fund will be invested in three to four continents. One
component of the Global Fund (the "U.S. Fund") will be invested only in U.S. timberland. The
other component (the "International Fund") will be invested in Latin America, Central and Eastern
Europe and Southern Africa.
Expected real returns are estimated at 9-11%, before investment management fees.
Flexibility
We have designed the Global Fund to accommodate investors wishing to manage their level of
exposure to the U.S. timberland investment market. Accordingly, investors can select the U.S. /
non-U.S. allocation that best fits their needs. An investor's commitment to the Global Fund will
identify the portion of their investment, if any, to be committed to the U.S. Fund and which portion,
if any, to be designated for the International Fund; anywhere from 0-100% can be targeted for U.S.
timberland properties and 0-100% for properties located outside the U.S.
Global Timberland Resources Fund
A summa�y of the material terms of the Global Fund appears below. The terms described
below are equally applicable to both the U.S. Fund and International Fund.
Term of Investment Twelve years. Liquidation may be completed by the end of the 12tn
year; however, the term may be extended for up to three additional
one-year periods.
Acquisition Size The Fund may acquire properties ranging from a minimum of $1
million to 30% of the Fund's capitalization. The wide range is due to
the smaller size of some potential international purchases. Both fee
and lease ownership will be considered.
Investment Structure
Leverage
100 percent equity ownership.
None planned, but allowed if needed to fund earnest money deposits.
Certification All fee-owned plantations will apply for certification for sound
management and sustainability, using an internationally recognized
certification system.
Markets
Carbon Trading
Cash Calls
Distributions
Investment Structure
Diversification
Minimum Investment
Management Fee
Markets will include traditional pulp and solid-wood using industries,
and other developing markets such as chips and wood pellets for
energy.
It will be the intention to add incremental return, where possible, by
qualifying newly established plantations for carbon-trading.
Cash calls with 10-day notice will be made as necessary to fund
purchases during the Fund's acquisition stage.
Cash may be reinvested or distributed during the term of the
investment at the Trustee's discretion.
U.S. Fund Specifications
A Delaware Limited Liability Company. Base currency is the dollar.
Invested 100% in U.S. timberland. Primary participation in Emerging
& Established Growth age classes. Investments in at least two U.S.
geographic timber markets.
$5 million.
Annual management fee of 1.0% of the fair market value of the
Fund's assets, charged quarterly in arrears.
Performance Fee
20% of the Fund's earnings, net of expenses, in excess of an
annualized 6% real rate of return. The calculation of the incentive fee
will be made every three years based on realized gains.
International Fund Specifications
Investment Structure A Luxembourg Mutual Investment Fund — Specialised Investment
Fund (Fonds Commun de Placement-Fonds d'Investissement
Specialise). Base currency is the Euro.
Diversification Invested 100% in non-U.S. timberland. We anticipate that
approximately 55-65% of the Fund will be invested in Latin America,
15-20% in Central and Eastern Europe, and 15-20% in Southern
Africa. Specific countries under consideration include:
Minimum Investment
Management Fee
Performance Fee
Latin America: Including but not limited to Brazil, Chile, Mexico,
Uruguay, Paraguay and Argentina
Southern Africa: Including but not limited to South Africa,
Mozambique and Swaziland
Central and Eastern Europe: Including but not limited to Bulgaria,
Poland, Romania, Germany, Czech Republic and Hungary
Up to 10% of the portfolio can be invested in other opportunistic
markets.
€5 million.
Annual management fee of 1.25% of the fair market value of the
Fund's assets, charged quarterly in arrears.
20% of the Fund's earnings, net of expenses, in excess of an
annualized 10% real rate of return. The calculation of the incentive
fee wi11 be made every three years based on realized gains.
This Executive Summa�y is not an offer to sell securities. Any sale of securities in the
Global Fund will be made pursuant to the Confidential Offering Memorandum for the U.S. Fund
and Information Memorandum for the International Fund. These documents, along with ancilla�y
documentation for either portion of the Global Fund, will be provided to you. In particular, the
Limited Liability Company Agreement of the U.S. Fund and the o�ganizational document for the
International Fund will control the operation of the Global Fund, and you should therefore review
each document carefully before investing.
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