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PRODUCT PROFILE RESEARCH • RESOURCES • R E S U LT S PRINCIPAL GLOBAL INVESTORS Principal Global Property Securities Fund Principal Global Property Securities Fund The Principal Global Property Securities Fund (the Fund) invests primarily in a range of global property securities. The Fund is designed for Australian investors seeking exposure to a diversified portfolio of global property securities with the potential for capital growth over the medium to long term. Investments denominated in foreign currencies are hedged into Australian dollars. Fund Characteristics Turnover • Typically 50% to 100% Size/Number of Positions • Targeted number of holdings: 75-125 • On average the Fund will hold between 85-95 securities Performance Benchmark • FTSE EPRA/NAREIT Developed Index (hedged to Australian dollars) General Investment Guidelines (relative to the benchmark) • Regions: ± 5.0% • Property Sector: ± 15.0% • Individual Stock Weights: ± 5.0% • Expected Tracking Error: <5.0% Cash and Short-term Debt Securities • Up to 25% Why Global Property Securities with Principal Real Estate Investors? Principal Real Estate Investors is the dedicated real estate asset management group of Principal Global Investors. Our real estate capabilities span the spectrum of public and private equity and debt investment alternatives. We have been successfully managing real estate securities since 1998, and have built a reputation for delivering consistent excess returns, over the long term, primarily through bottom-up security selection. Experienced, dedicated team: Our global real estate securities team consists of 14 investment professionals with an average of 14 years experience. They use their specialized knowledge of regional real estate markets to exploit inefficiencies and generate alpha. That knowledge and experience has helped the team build a proven track record of generating consistent excess returns. Consistent and differentiated process: Our investment process integrates both fundamental and quantitative research. We believe the integration of these two independent, but complementary, approaches to securities analysis provides a more robust signal of a stock’s performance potential, and distinguishes our approach from that of other managers. Our fundamental research relies on the professional judgment of our experienced portfolio managers and analysts to provide deep forward-looking perspectives, while our quantitative research provides systematic analysis in an objective, unemotional and repeatable fashion. Our research process, combined with the depth of knowledge and market insight of our property sector specialists, enables us to consistently identify relatively mispriced securities in a variety of market environments. Leveraging cross-asset insights of firm wide resources: The focused experience of the team, and their ability to add value for the Fund, is enhanced by the team’s ability to leverage the broader real estate insights of Principal Real Estate Investors, as well as the global securities intelligence of the Principal Global Equities team. In addition to the cross-asset class sharing of insights, the teams often share research technology, including the Global Research Platform, our proprietary quantitative research tool used by the global real estate securities team and Principal Global Equities. Award winning expertize: The Global Real Estate Securities Fund-I Class, a U.S. Mutual Fund advised by Principal Real Estate Investors, recently received an award in the U.S. from Lipper Inc for Best Global Real Estate Fund Over a 5-Year Period Award, for the second year in a row.1 OUR PORTFOLIO MANAGERS HAVE SPECIALIZED KNOWLEDGE OF REGIONAL REAL ESTATE MARKETS, WHICH— BECAUSE REAL ESTATE IS A HIGHLY LOCALIZED BUSINESS AND MARKETS ARE OFTEN INEFFICIENT—PROVIDES THE POTENTIAL TO EXPLOIT INEFFICIENCIES AND GENERATE ALPHA. WHY GLOBAL PROPERTY SECURITIES? Liquidity Where the Fund Invests Global property securities (which are publicly traded) provide investors of all sizes with access to global real estate markets at lower transaction costs than direct real estate investment/ ownership. Publicly traded real estate securities offer daily pricing, which provides liquidity not typically available from other forms of real estate investment. • A REIT is established as a trust or partnership structure and uses the pooled capital of many investors to purchase and manage income real estate and/or mortgage loans. They are granted special tax exemptions, not being taxed at the company level, but they must distribute at least 90% of their taxable income to investors. 2 • REOCs also invest in income property and/or mortgages and loans but are structured as companies and are taxed like any other corporation and have no mandatory dividend distribution requirements. Diversification benefits Global property securities provide diversification benefits to an investor’s overall portfolio because of their low correlation with the global bonds and equity markets, as well as diversification within the real estate component of their portfolio due to the low correlation among geographic regions. Regular income The Fund invests predominantly (not less than 80% of its assets) in real estate investment trusts (REITs) or real estate operating companies (REOCs) in the United States, and REOC or REIT-like structures in other areas of the world. Both REITs and REOCs are tradable on major markets and exchanges as securities. Security selection begins at the local market level, with analysts making recommendations on assigned securities to the relevant regional portfolio management team, who jointly consider and determine if a stock deserves to be included in the portfolio. We have a total return focus characterized by identifying high quality companies trading at attractive prices. The stocks receiving the highest conviction designation are given the highest level of active weighting within the portfolio, as they represent our best ideas. Principal Global Investors Principal Global Investors, the advisor to the Global Property Securities Fund, is a diversified asset management organization. Principal Real Estate Investors employ more than 200 real estate investment professionals, including a specialized team of 14 responsible for directing and managing our global real estate securities strategies. The US Lipper Fund Award was for best risk-adjusted performance over the five-year period to 31 December 2013.Lipper Inc. is a Thomson Reuters company. The Global Real Estate Securities Fund is only available in the US, and details in relation to it are provided only to demonstrate the investment expertize of the investment adviser. 1 While real estate investments are not immune to recessions, they can continue to provide cash flows in economic downturns. Real estate investments, supported by lease contracts (generally three to 10 years in duration, depending on the property type) can provide a steady income stream from tenants even in economic downturns. Inflation hedge Real estate assets perform well as an inflation hedge because the investment comprises physical as opposed to monetary assets, which lose value as inflation rises. Also, real estate sectors such as office, industrial and retail typically have lease contracts that stipulate how rents are automatically adjusted to compensate for inflation. Principal Global Investors (Australia) Limited ABN 45 102 488 068 AFSL No. 225385 (PGIA) is the issuer and responsible entity of the Fund. Unless you are a wholesale client you cannot invest directly into the Fund. Other investors may access the Fund through an IDPS or similar service. A copy of the relevant Product Disclosure Statement (PDS) is available at HYPERLINK http://www.principalglobal.com/au/index.aspx http://www.principalglobal.com/au/index.aspx or from your IDPS operator. You should consider the PDS in deciding whether to acquire, or continue to hold units in the Fund. The information in this document is general only and is not intended to constitute professional advice or a recommendation to purchase, sell or hold any particular security. It does not take into account your particular investment objectives, financial situation, or needs. You should consider whether an investment in the Fund is appropriate for you in the light of your objectives, financial situations or needs. The information is given in good faith and has been derived from sources believed to be accurate as at the time of inclusion. However, neither PGIA nor any company in the Principal Financial Group gives any representation as to, or warranty of reliability or accuracy nor accepts any responsibility arising in any way including by reason of negligence for errors in or omissions from this document. Neither PGIA nor any company in the Principal Financial Group promises that you will earn any return on any investment or that an investment will gain or retain its value. An investment does not represent deposits in or other liabilities of the manager the Principal Financial Group or any member of the Principal Financial Group. An investment is subject to risks, including possible delays in repayment and loss of income and principal invested. The Principal Financial Group does not in any way guarantee the capital value and/or performance of the Fund. Returns are historical and do not take into account tax and are not adjusted for inflation. Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®)¹ and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Enterprise Capital, LLC; Liongate Capital Management LLP; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Principal Financial Group Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal and assets managed in accordance with investment advice provided by Principal Global Investors through the delivery of a model. Contact Us Principal Global Investors (Australia) Limited (02) 8226 9000 Head of Client Relationship and Marketing Helen de Mestre [email protected] Director, Head of the Third Party Sales Giles Gunesekera [email protected] Director, Institutional Sales Cameron Sinclair [email protected] 1 ”The Principal Financial Group” and “The Principal” are registered trademarks of Principal Financial Services, Inc., a member of the Principal Financial Group. 2 The actual percentage that must be distributed to investors to qualify for the special tax exemption varies by country. Pensions & Investments, “The Best Places to Work in Money Management,” 12/08/2014. WWW.PRINCIPALGLOBAL.COM/AU