Guinness Alternative Energy Fund

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1 A pureplay approach to a long-term investment theme Manager s Update

2 Disclosure This report is primarily designed to inform investors or potential investors about recent developments in the alternative energy markets invested in by the. It also provides information about the Fund portfolio, including recent activity and performance. As such for regulatory purposes it falls within the definition of a financial promotion (Financial Services and Markets Act 2000 Article 4(1)) and we wish to draw your attention to the risk warnings on the last page of this document and the following statements: This document sets out both facts relating to the alternative energy market and our own interpretation. Any investment decision should take account of the subjectivity of the comments contained in the report. This document is provided for information only and all the information contained in it is believed to be reliable but may be inaccurate or incomplete; any opinions stated are honestly held at the time of writing, but are not guaranteed. The content of the document should not therefore be relied upon. This document should not be construed as a recommendation to buy or sell individual securities. Issued by: Guinness Asset Management Limited, 14 Queen Anne s Gate, London SW1H 9AA Authorised and regulated by the Financial Services Authority

3 Latest News Matthew Page, CFA Edward Guinness The month started well, with President Obama including supporting alternative energy as one of his top priorities for his second term in office. Ernest Moniz has been appointed US Energy Secretary and Gina McCarthy has been appointed head of the Environmental Protection Agency. As Obama appointees they are likely to be supportive of alternative energy but we note that both have historically been supporters of natural gas, both as competition for and as an enabler of alternative energy technologies. China announced that it is imposing emission limits for air pollution on March 1st. This is part of a steadily increasing programme of support for alternative energy technologies. Carbon prices have been depressed to the point where they do not contribute that meaningfully to the business cases or financing for alternative energy projects. To address this, the EU voted in favour of carbon backloading, but an insufficient majority means action will be pushed back later into Europe has introduced an $83.65/tonne antidumping duty on imports of bioethanol from the US. All such tariffs are ultimately unhelpful in advancing the biofuels industry globally. German government ministers are trying to slow down growth of renewables subsidies in Germany, as a result of high commercial and residential electricity prices. Notwithstanding the high electricity prices being paid, German baseload power rates are at new lows. This is ultimately challenging for all participants in the German electricity market but it shows signs of the positive impact of renewables on overall electricity costs. To effect this, the German Environmental minister Altmeier is looking to slow alternative energy cost growth in Germany in conjunction with Finance Minister Roesler. Solar Recovery in solar panel installation in Europe, adding to solid demand in the US, Japan and China, has helped bolster prices, with small price increases for modules, cells and polysilicon. Europe has announced that solar modules from China are to be registered. This is potentially the first step in imposing a tariff on them which would be a drag on industry growth. We believe that once there is clarity on tariffs to be imposed in Europe and China on solar products, the industry will be able to address those and focus on lowering costs and increasing volumes installed. RWE s CEO has said that he expects that Germany will tear down the 52GW limit for FIT installations that was set by the German government. This implies that he believes we will see strong unsubsidised demand for Solar in Germany. Saudi Arabia have announced a plan to install 54GW of solar and wind by 2032 and 24GW by They currently have just 10MW of solar power installed. Company progress A number of the solar manufacturers have announced strong demand growth for Q and higher growth expectations for SMA Solar expects an earlier return to profitability than previously expected and we are seeing signs that volumes are picking up across the solar industry.

4 Latest News Of concern in the portfolio, Vestas has announced layoffs of 10% of its Colorado blade manufacturing staff. Suntech has made progress towards refinancing its convertible bond by resolving its claims against a third party for fraud, but has removed CEO Zhenrong Shi from the board to enable refinancing discussions to proceed. Overall, February was a volatile month, with investors bedding down the gains of the last three months. We are becoming cautiously optimistic that there will be better clarity on the outlook for the sector by later this year, which we believe will support stock price rises in the sector.

5 Performance The was up 1.4% in February Better performers in February were a mix of Asian renewables utilities, wind turbine manufacturers and a US solar company China Datang Renewables, Sunpower, Huaneng Renewables, Gamesa and Vestas. The Asian solar names gave back some of their gains from the previous month and as a result the poorest performers were Suntechm Acciona, Trina Solar, JA Solar and Yingli Green Energy. Total returns as at 28 February 2013 (in US dollars) Past performance should not be taken as an indicator of future performance. Performance stated below is in US dollars; returns in other currencies may be higher or lower as a result of currency fluctuations. Returns to YTD 1 year 3 year 5 year 10 year annualised annualised annualised Fund +13.7% -12.2% -18.5% -24.2% n/a Wilderhill Clean Energy Index +7.5% -21.4% -21.2% -26.0% -6.3% Wilderhill New Energy Innovation +10.0% -7.3% -13.8% -17.8% +3.6% Calendar year returns Fund -67.4% +38.7% -21.5% -41.9% -13.2% Wilderhill Clean Energy Index -69.9% +29.8% -4.8% -50.5% -17.6% Wilderhill New Energy Innovation -60.5% +41.2% -13.7% -39.6% -4.2% The fund was launched on and therefore no longer-term performance data are available. Fund performance refers to the B Class shares which are targeted at retail investors. Sector breakdown Geographic breakdown Geothermal 3.03% Efficiency 10.32% Biofuels Hydro 2.36% 5.82% Cash 3.34% Solar 27.97% Asia 31.04% Latin America 3.07% Cash 3.34% Europe 36.31% Wind 47.17% North America 26.04% * The WilderHill Clean Energy Index is a modified equal dollar weighted index comprised of publicly traded companies whose businesses stand to benefit substantially from societal transition toward the use of cleaner energy and conservation. ** The WilderHill New Energy Global Innovation Index is a modified dollar weighted index of publicly traded companies active in renewable and low-carbon energy, and which stand to benefit from responses to climate change and energy

6 Important Information & Risk Factors The is an equity fund. Investors should be willing and able to assume the risks of equity investing. The value of the Fund's portfolio changes daily and can be affected by changes in currencies, interest rates, general market conditions and other political, social and economic developments, as well as specific matters relating to the companies in whose securities the fund invests. Investments in the fund carries with it a degree of risk and investors should read the risk factors section in the prospectus before investing. This document is provided for information only and all the information contained in it is believed to be reliable but may be inaccurate or incomplete; any opinions stated are honestly held at the time of writing, but are not guaranteed. The contents of the document should not therefore be relied upon. It is not an invitation to make an investment nor does it constitute an offer for sale The full Fund documentation contains more complete and detailed information of risk, fees, charges and expenses that are to be borne by an investor. The documentation should be read carefully before investing. The full documentation needed to make an investment, including the Prospectus, the Simplified Prospectus and the Application Form are available, free of charge, from the Manager: Capita Financial Managers (Ireland) Limited, 2 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland or the Promoter and Investment Manager: Guinness Asset Management Ltd, 14 Queen Anne's Gate, London SW1H 9AA. Documentation is also available from the website. This document should not be distributed to Retail Clients who are resident in countries where the Fund is not regis- THIS INVESTMENT IS NOT FOR SALE TO U.S. PERSONS The is a sub-fund of Guinness Asset Management Funds PLC (the Company ), an open-ended umbrella-type investment company, incorporated in Ireland and authorised and supervised by the Central Bank of Ireland. The Fund has been approved by the Financial Services Authority for sale in the UK. The Company and the Fund have been recognised in the UK by the FSA pursuant to section 264 of the FSMA. Guinness Asset Management Ltd is authorised and regulated by the Financial Services Authority. The prospectus for Switzerland, the simplified prospectus for Switzerland, the articles of association, the annual and semi-annual reports, as well as the list of the buying and selling transactions can be obtained free of charge from the representative in Switzerland, Carnegie Fund Services S.A., 11, rue du Général-Dufour, 1204 Geneva, Switzerland, Tel , Fax: , The paying agent is Banque Cantonale de Genève, 17 Quai de l'ile, 1204 Geneva, Switzerland The value of this investment and any income generated by it, may fall as well as rise as a result of the market and currency fluctuations and an investor may not get back the amount they invest. CONTACTING US Investment Manager Manager & Investor Services Guinness Asset Management Ltd Capita Financial Administrators (Ireland) Limited 14 Queen Anne s Gate Montague House London SW1H 9AA Adelaide Road Dublin 2 Ireland T: +44 (0) T: E: info@guinnessfunds.com Telephone calls maybe recorded and monitored.