� LE T’S T U R N B A C K T H E C L O C K

A C E N T U RY O R S O, S H A L L W E?

Innovation can be found anywhere, even on the shelves of a small country store.

It’s easy to see the forest for the trees once you replant the trees.

Timber can weather any storm, including the economic kind.

INNOVATION CAN BE FOUND

ANYWHERE, EVEN ON THE SHELVES

OF A SMALL COUNTRY STORE.

It was an outpost of progress, the chat

room of its day. It was where everyone

would gather to meet and greet, the

bustling center of commerce.

It was the country general store,

providing everything from petticoats

and plows to fellowship and even justice,

since, on occasion, the general store saw

duty as a courthouse.

The country general store was also the

place where you could get the scoop on

the latest news and the newest products.

The innovations that began to make rural

life “modern” in those days – the telephone,

the electric light, the automobile – were

often introduced to the rural South by

merchants who branched into other

enterprises, such as sawmills

and railroads.

Among these men of energy and vision

were two young mercantile clerks from

Meridian, Mississippi – Richard H.

Molpus and M.H. Henderson. These

two entrepreneurs came to Philadelphia,

a small timber town northwest of

Meridian, to start the Henderson-

Molpus Mercantile Store in 1905,

coincidentally the same year the

railroad arrived.

Philadelphia, at the time, was little more

than a speck on the map, not even a one-

horse town. In fact, it was a one-mule

town. Yet Molpus and Henderson saw

much promise. And their foresight proved

correct. By 1910, their mercantile business

was booming, and the town had too many

sawmills to count.

The Henderson-Molpus Mercantile

Store was more than a dry goods store, of

course. On the shelves, beside the coffee

and 10-penny nails, you’d find all the

materials needed to finish a house, from

the framing boards to the furniture. And

when Philadelphia was hit by a severe

lumber shortage in 1911 – due to very few

logging operations having the ability to

dry and dress lumber – Molpus and

Henderson solved the problem by

starting a small lumberyard, complete

with dry kiln and planer mill.

Over the next few years, the town and

the company continued to prosper. Molpus

even began shipping lumber as far away

as the Great Lakes states. A year-end

inventory conducted near the end of

World War I shows that Molpus Lumber

Company – renamed after Henderson’s

death – had an inventory of eleven million

board-feet of lumber. And, when World

War II came around, Molpus built a

sawmill to boost the

amount of lumber

being processed.

J.C. Garrett, Henderson-Molpus Company Accountant (left),

and R.H. Molpus (right)

As the number of wartime contracts

grew, the enterprise expanded into box

manufacturing to supply the thousands

of wooden ammo boxes needed by U.S.

forces overseas.

Through it all, Richard Hezekiah Molpus

always saw himself as more than a store

clerk or sawmill owner. He was a “big

picture” kind of guy, making sure that over

500 mill workers and loggers had secure

jobs, that the town of Philadelphia had

electricity, and that townspeople could

trade timber for clothes, food, or whatever

other essentials they happened to need.

So begins the story of Molpus Lumber

Company, which you could easily say is

the grandfather of The Molpus Company,

The Molpus Woodlands Group, and

Molpus Timberlands Management.

From the very beginning, this company

has held tightly to the idea that innovative

thinking, combined with opportunity,

leads to success. And, as a timberland

investment management organization,

or TIMO, The Molpus Woodlands

Group is guided by that same spirit of

innovation today. In fact, that visionary

spirit is reflected in the very nature of

timberland investment itself.

Timberland is an innovative investment

for all the right reasons. First of all, it is

an abundant, renewable resource,

and demand has continued to grow

unwaveringly through the decades.

Over the past five years, timberland

has outperformed large and small cap

stocks, real estate, T-bills, and the S&P

500. For the past 15 years, yields have

consistently been in the 8-12% range,

comparable to equity investments. And

for more than a century, the price of

timber has outpaced inflation by an

average of 3.6%.

Yes, Richard Hezekiah Molpus knew

the value of timberlands when it all

began back in 1905. And, in the century

since, the value of those lands has grown

to exceed even his vision.

Richard Hezekiah Molpus (1875

to 1937), co-founder with M.H.

Henderson of the Henderson-Molpus

Mercantile Store in 1905, saw the

business grow from a small country

store to a thriving lumber company

engaged in several other activities,

including serving as the local electric

company and a military ammo box

factory. “Papa Dick,” as he was

known to his eight children and many

grandchildren, also founded The

Crippled Children’s Home in Jackson

(now Blair Batson Pediatric Center),

and served as a Roosevelt delegate to

the Democratic Convention of 1922.

1905 | The Molpus-Henderson Mercantile Store opens its doors, offeringeverything from ladies’ hats to horse wagons. In 1911, the storeeven starts operating a small lumberyard with a dry kiln andplaner mill – to help with the town’s severe lumber shortage.

WOOD YOU BELIEVE?GREAT MOMENTS IN TIMBER, LUMBER, AND WORLD INNOVATION HISTORY.

1905—1935

1905 | Frank Epperson, an inventive eleven-year-old, combines “sodawater powder” with water and puts the mixture out on the backporch on a cold night, leaving in the stir stick. By the next morning,he had created the world’s first Popsicle® – which he’d sell in themillions 18 years later. What’s that have to do with a tree, you ask?Well, no Popsicle would be complete without the handy wooden stick.

Molpus Lumber Company sawmill, circa 1945.

1909 | Henry Ford begins manufacturing the Model T,the first car for the masses. Ford pioneered the modernassembly line, which made its way into other industries, includinglumber. Also notable is the fact that the body of a Ford Model T was made of wood, making it a lot lighter than cars today. While most automobiles now weigh in at around 3,000 pounds, the Tin Lizzie topped out at 1,200.

1916 | Frank Lloyd Wright’s son, John Lloyd Wright, creates Lincoln Logs.®

The log-shaped, interlocking building pieces were inspired by theearthquake-proof foundation of the Imperial Hotel in Tokyo.

1917 | The New York City fire of 1917, set off by a Christmas tree lit withcandles, sparks an idea for young Albert Sadacca. And presto, the 15-year-old invents electric Christmas tree lights.

1931 | Arthur Scott turns a railcar full of “too thick” toilet tissue into the veryfirst paper towels.

1935 | By this time, Molpus Lumber is supplying all the electricity forPhiladelphia. So, when there was a breakdown at the lumberyard, all the lights in town went out.

During the early 20th century, most of

the lumbermen and investors who built

the first large sawmills in the Southeast

only saw value in virgin forestland. Once

trees were cut, they had little use for what

was left. But once again, technological

innovation led to a new age of forest

management and renewal.

It became clear to some landowners

early on that nature, with a little assistance,

can establish a second, even third forest

of young-but-valuable trees. In turn, these

trees might be milled for house-framing

lumber, furniture, and utility poles. So,

they began planting pine seedlings,

growing stands of trees in the favorable

Southern climate that they could take

to market within a few years. Thus was

born the “tree farming” movement,

rapidly assisted by the U.S. government’s

reforestation programs of the Depression,

when many Southern companies started

active forest management.

Meanwhile, Molpus Lumber was

chugging along nicely, too, with the

second generation of the family at the

helm. Returning from service in World

War II, Richard Molpus guided the

IT’S EASY TO SEE THE FOREST FOR THE TREES

ONCE YOU REPLANT THE TREES.

company through several years of

prosperity and expansion. In 1963,

though, the situation took a turn for the

worse when the sawmill was entirely

destroyed by fire. The Molpus family

teetered on the brink of financial ruin,

and employees lived almost hand-to-

mouth. But fortunately, Richard applied

for and received the country’s very first

Small Business Administration loan.

With the loan, he was able to begin

construction on a new mill in 1965,

which ultimately became the

largest sawmill complex east

of the Mississippi River.

That mill, featuring advances such as an

8-knife planer, two double-track kilns,

and an automatic stacker, boosted total

production to 30 million board-feet,

which was shipped to some 21 states.

That’s lumber enough to build 2,500

houses, as they used to say.

At the mill, Richard strived to be a fair

manager, “treating all people with the same

respect, from the lowest man on the

totem pole to the highest.” For instance,

when some Molpus employees retired

before the start of their Social Security,

Richard set up a company fund and sent

checks to those families each month so

they had money to live on.

By the 1970s, Richard began playing

an instrumental role in Mississippi’s

sustainable forest movement. As head

of the Mississippi Forestry Association

in 1974, he was the chief architect of the

Forest Resources Development Act,

ensuring that the industry started planting

more trees than it cut in Mississippi. As

Richard noted at the time, “By cutting

more trees than we are growing, we

are like a person using his principal

instead of his interest. Unless something

is done now, we will be in the red.”

James Allen, of the Mississippi Forestry Commission (above left) and Richard Molpus (above right)

Richard Molpus (below left) and Governor William Waller (below right)

R.H. Molpus’ son, Richard, took over leadership in 1946, following service in

WWII, and dramatically expanded operations of Molpus Lumber by building

one of America’s biggest, most technologically advanced sawmills in 1974. Sales

reached $26,000,000 in 1977. A civic leader who was the prime architect of

the Mississippi Forestry Redevelopment Act, Richard also added the Molpus

Hardwood, Molpus Pulpwood, and Molpus Realty divisions to the company. At

the mill’s 76-year anniversary, he said, “The lumber industry has touched the

lives of Neshoba County families for the past century, and Molpus Lumber is

proud to be a part of that past and excited about the future.”

New boiler tubes for the Molpus dry kiln.

TIMELINE

1939—1974

1970 | Richard Molpus is named president of the Mississippi ForestryAssociation and eventually helps write and pass the forward-thinkingForest Resources Development Act in 1974, putting sustainableforestry into law. Says Molpus at the time, “We have some 61/2

million acres that are not anywhere near producing capacity.”

1974 | Molpus opens the largest, most advanced sawmill east of the MississippiRiver in Morton, Mississippi. Utilizing every bit of the tree down tothe sawdust, the operation churns out 30 million board-feet per year.

1939 | Progress marches on at Molpus Lumber, as huge new boilertubes are installed for the dry kiln.

Thanks to sustainable forestry practices, America starts plantingmore trees than are harvested and has done so every year since.1940 |

Molpus Lumber expands into box production, building woodenammo boxes for U.S. Armed Forces during World War II.

1963 | The Molpus sawmill in Philadelphia is entirely destroyed by fire. Butwith help from the community, and by securing America’s first SBAloan, the company’s able to begin rebuilding in 1965.

1944 |

USING GIS AND GPS TO PINPOINT

THE VERY BEST INVESTMENT.

Back in 1905, going out to survey the land meant exactly that. You went out and walked the fence line

to evaluate the value of a particular parcel of timberland. But now, there’s GIS: Geographic Information

Systems software.

GIS is a powerful tool that allows for the most precise, most effective management of timberland. Here’s

how it works: Data is collected from the air in the form of aerial and satellite photography, and information

is gathered by foresters on the ground using GPS, the Global Positioning System. These high resolution

aerial images and infrared satellite imagery are then utilized to accurately “cruise” timberlands for

information on the size, age, distribution, and even the species of trees within a particular area.

The Molpus Woodlands Group also uses its proprietary Timberland Information Management System

(TIMS), which allows for easy access and analysis of all critical forest management and investment data.

TIMBER CAN WEATHER ANY STORM,INCLUDING THE ECONOMIC KIND.

Most of us think of the early 1900s as

simpler times. But we forget that they

were tougher times as well, particularly

in the 1930s. For several years during

the Depression, in fact, Molpus Lumber

Company had to pay employees not in

money but in coupons that could be used

to purchase goods at the company store.

Through Richard Molpus’ determination

and the dedication of his employees, the

company made it through those lean years,

going on to become the 10th largest

independent lumber mill in the United

States. Perhaps that’s why The Molpus

Woodlands Group is focused today on

timberland investment, an investment

resilient enough to weather both the

good times and the not-so-good.

Dick Molpus, the man who started

The Molpus Woodlands Group in 1996,

notes that timber is a great hedge against

sharp market downturns. “With timber,

the biological and investment growth cycles

are very steady and predictable. If the price

is low, you can simply leave the timber

standing until the price goes up. Timberland

is one of the few proven ways to get bond-

like safety with stock market returns.”

Dick still remembers a piece of advice

his father passed along years ago. “He

told me, ‘You should always trade fairly

and leave a person as happy with his

trade as you are with yours.’ For me,

that’s not just good advice, it’s the way

to do business.”

It’s a business philosophy that this third

generation Molpus has put to smart use,

starting when he served as Secretary of

State, supervising over 600,000 acres of

16th Section land that was set aside in

the early 1800s to raise money for public

schools. The property had been leased for

an unreasonably low price, but by forcing

renegotiation of the below-market leases,

Molpus increased the amount of revenue

from it by $20 million.

And during his time as Secretary of

State, Dick turned that agency from a

tax drain of $200,000 per year into a

profit maker of $2,000,000 a year.

It seemed only natural when, after

completing his third term in public

office, Dick began a timberland

investment management organization.

“Given our family’s history in timber,

and my own experience with The Molpus

Company, I knew precisely where I

wanted to go with this new enterprise,”

said Dick. “From the beginning, we’ve

focused on investment-grade, Southern

pine timberland. That’s what makes

us unique.”

The Molpus Woodlands Group is,

in fact, the only TIMO that invests in

one specific geographic region, the

Southeastern United States. It’s also the

only TIMO with a century of timber-

related knowledge to draw upon. “As

the industry has evolved over time, from

sawmills to lumberyards to timberland

investment, so have we. We’ve been an

active part of that evolution,” notes Dick.

“Of course, we’re not just resting on our

depth of experience. We’re expanding

on it, hiring people who are recognized

experts in timberland investment

management. And we don’t just consult

with foresters and technicians, we are

foresters and technicians.”

What may be even more enticing to

perspective investors is the fact that The

Molpus Woodlands Group is structured

to fully maximize investor returns. “Every

person who works here has an incentive

to make the highest profits for our clients,

because doing so has a direct effect on

their personal bottom line.”

With all that said, Dick Molpus and

the company he founded believe that

timberland has proven to be one of the

most innovative, resilient, strong and

secure investments of the last 100 years.

And the next century will show that it was

just the beginning of great things to come.

“When you look at everything

timberland has to offer – the tax

advantages, the fact that it’s a

renewable, natural resource, its

flexibility and liquidity, its

incredibly low volatility, the

proven track record – timberland

holds potential and possibility like

no other investment out there. And

don’t forget that world demand for

timber is anticipated to grow by

nearly 60% in the next 30 years.

Needless to say, we’re very excited

about the future.”

–Dick Molpus

In 1996, Dick Molpus, Richard’s son, founded The Molpus Woodlands Group

and Molpus Timberlands Management after being Vice President of Manufacturing

for Molpus Lumber Company, and decades of public service, including three terms

as Mississippi’s Secretary of State.

As one of the largest timberland investment management organizations in the

country, The Molpus Woodlands Group has purchased over 1,400000 acres

for investors and is currently managing over 1.000,000 plus acres valued at

approximately $936,000,000.

Timberlands managed by Molpus today are

dominated by Southern pine, including loblolly,

slash, and Virginia.

Southern pine is one of the most popular timber

species due to its great abundance, rapid growth

rate, strength, durability, and overall versatility.

New generations of Southern pine seedlings even offer

superior genetic characteristics, faster growth, and

greater disease resistance.

Then there are benefits to its simply being grown in

the Southeast. The region’s mild winters offer the trees

a growing season that is two-to-four times the national

average and a growth rate of 6-12% per year. Trees

can reach full maturity in 25-30 years, compared to

45-55 years in the Pacific Northwest and 70-100

years in Canada, northern Europe, and Russia.

SINGING THE PRAISES

OF SOUTHERN PINE.

“The magic of timberland investing is that

the return comes not from price appreciation,

like it does for most natural resources such as

gold, silver, oil, and gas, but from biological

growth, buying small trees and giving them

time to grow into more valuable trees.”

–Dick Molpus

FROM TINY SEEDLING TO TALL TREE:THE SCIENCE OF SILVICULTURE.

Silviculture, the care and cultivation of trees, has a tremendous

influence on timberland investment quality. That’s why our staff

of foresters and land managers develops and implements a silvicultural

prescription specific to each new forest. Combinations of mechanical and

chemical site preparation – along with fertilization, weed control, and

genetically improved seedlings – are usually prescribed to cultivate timber

stands. Mid-rotation silvicultural practices, including thinning, fertilization,

and vegetation control, come into play as well in maximizing the growth

potential of every tree.

TIMELINE

1974—1996

1974 | 1974 revisited once again: Richard Molpus delves deeply into real estate, creatingMolpus Realty: “We have been involved for many years in building homes andsubdividing large tracts of land, which we plan to develop in the near future, and our latest project is the 200-acre tract inside Philadelphia.”

With the sale of its Philadelphia, Mississippi mill to Louisiana-Pacific, The MolpusCompany ends an era of mill operation. Richard creates the successor to MolpusLumber, Molpus Forest Products, to continue the company’s forest products legacy.

The final Navstar satellite needed to complete the Global Positioning System islaunched by the U.S. Air Force on June 26. Today, Molpus Woodlands Groupuses GPS technology to survey timberland.

1984 |

1993 |

1974 | Jot this down – the Post-it® Note is born, created by 3M researchers Spencer Silverand Arthur Fry.

The Molpus Company establishes its timberland investment management organization,The Molpus Woodlands Group, setting up headquarters in the Garner-Green House(top right photo) in Jackson, Mississippi. On the National Register of Historic Places,the building was constructed in 1910.

All told, The Molpus Woodlands Group has purchased over 1,400,000 acres forinvestors and is currently managing over 1,000,000 acres valued at $936,000,000.

Molpus Timberlands Management, the division of the company that oversees largeclient holdings in Mississippi, Alabama, Louisiana, Tennessee, and Texas, is located in

Hattiesburg, Mississippi, in the historic Tatum Lumber building (bottom rightphoto). The painstaking restoration of the structure earned a 2004 honor

award from the American Institute of Architects’ Mississippi Chapter.

1996 |

2035 |In the next 30 years, world population is expected to grow by 59%. With thatincrease, there will be greater demand for timber in home construction, disposable paper products, and many other wood-based industries.

2005 |Dick Molpus is inducted into theMississippi Business Hall of Fame.

Sources:

Forestweb.com

Forestry Highlights, The Southern Forest-Based Economic Development Council, 1998

Market Outlook, Southern Forest Products Association, 2003

RISI-Resource Information Systems, Inc., 1999

The Great Idea Finder Web site.

Popsicle® is a registered trademark of Unilever Ice Cream.

Post-it® is a registered trademark of 3M Corporation.

Lincoln Logs® is a registered trademark of Hasbro.

Disclosure:

Information contained in this document is based on data obtained from recognized statistical

sources, user reports, and other sources believed to be reliable. The Molpus Woodlands Group

does not verify such information and does not make representation as to its accuracy or

completeness. All figures and historical projections are supported by The Molpus Woodlands

Group and industry opinion, which are subject to change.

Special thanks to Jim Myers Photography for providing numerous photographs.

The Molpus Woodlands Group, LLC may be referred to as MWG, Molpus, Molpus Woodlands

or Molpus Woodlands Group.