Benefits of investing in the Dexus Property for Income Fund No.2

Access to trained investment specialists

Investment of the assets of the Fund will be managed by Dexus, a specialist fund manager with considerable experience in property investment markets.

Exposure to commercial real estate

Direct investment in commercial real estate can be difficult and is often beyond the realm of possibility of many retail investors due to the large capital commitment and specialist knowledge that is generally required to invest in this sector.

The Fund provides an ideal way for investors to invest in a diversified and professionally managed portfolio of listed AREITs and UPTs to gain exposure to the benefits of a portfolio of quality commercial real estate. The distributions received predominately come from rental income of the underlying commercial properties that are owned by these property securities.

Income focus

The Fund is focussed on generating consistent income. In order to achieve this objective, the Fund invests in a diversified portfolio of AREITs and UPTs.

Receipt of income

Paying distributions on a monthly basis provides investors with a regular and consistent cash flow.

APN FM intends to make monthly income distributions from the Fund. Distributions may also carry tax deferred, imputation or other tax credits. Distributions may include a capital return component.

Diversification

The Fund invests in listed AREITs as well UPTs. Investing a portion of the Fund's total portfolio in UPTs provides the Fund with a greater range of investment options, and generates potentially higher risk adjusted returns compared to investing purely in AREITs.

Lower risk than the market

The Fund limits exposure to any single investment and those securities that have a higher risk profile (such as those securities that generate earnings with greater risk from international operations, property development or funds management businesses).

Active management

Dexus is an active investment manager. This means that the Fund's investments are selected on the basis of their relative value (taking into consideration price, portfolio quality, management and earnings potential), not on the basis of index weighting.

Risk level

Medium

The Fund is a medium risk investment. This means the risk of your investment falling in the short term is higher than an investment in a managed investment scheme that invests in assets such as cash or fixed interest securities. Conversely, an investment in the Fund over the medium to long term offers potentially higher returns than cash or fixed interest investments.

Investor suitability

Medium to long term investors who are looking for an income focussed investment and the potential for some long term capital growth.    

How the Dexus Property for Income Fund No. 2 works

The Fund primarily invests in a diversified portfolio of Australian Real Estate Investment Trusts (AREITs) and Unlisted Property Trusts (UPTs). The Fund may also invest in cash and fixed interest investments as well as debt securities. The Fund is designed to deliver consistent income, paid monthly, and some capital growth. By investing in a wide range of underlying listed and unlisted real estate investments, investors have access to a wide spread of property-based revenue streams. The Fund's underlying investments are carefully selected by undergoing a highly disciplined investment selection process.

The Fund aims to:

• have a gross annual income yield (before management fees and expenses) that equates to at least 110% of the average yield of the Benchmark;

• have a tax advantaged income component of more than 20% of distributed income (see section 5 of the Product Guide "How Managed Investment Schemes are taxed for further details about taxation); and
• provide investors with a level of capital growth which at least matches increases in the Consumer Price Index.

How we invest your money

Investment strategy

The Fund primarily invests in AREITs and UPTs. The Fund may also invest in cash and fixed interest investments.

The Fund does not invest in direct property. Dexus continually reviews and, if appropriate, re-weights the Fund's investments within its asset allocation parameters with the objective of optimising the Fund's distributable income and delivering lower risk than the market.

The Constitution allows us to borrow on behalf of the Fund. It is our current intention that the Fund will not undertake direct borrowing. However, the entities in which the Fund invest may borrow.

Target asset allocations

(Assets*: Long-term asset allocation ranges / Indicative asset allocation)

• Units or shares in AREITs* (Liquid Assets): 75-90% / 88%

• Units or shares in UPTs* (Illiquid Assets): 5-15% / 10%

• Cash/fixed interest (Liquid Assets): 0-10% / 2%

*The Fund may also invest in securitised mortgage instruments up to a maximum 10% weighting of the Fund. These assets are issued by AREITs or UPTs.

Derivatives

It is the Manager's current policy not to use derivatives for leverage purposes or for speculative activities within the Fund. The Fund may use derivatives for passive investment or risk management purposes. The Manager will inform investors if this policy changes. The entities in which the Fund will invest may use derivatives.