1. Principal Global Investors Wealth Management February 2008 Giles Gunesekera Director, Head of Third Party Sales

2. Agenda

Global Markets, the Economy and US Housing

Is Corporate America Vulnerable?

Product innovation how is the market evolving?

Where to from here?

3.

Global Markets, the Economy and US Housing

4. Where are Global Interest Rates Headed? Source: FACTSET and Principal Global Investors 5. US No Longer the Engine of Global Growth Source: Economic Intelligence Unit, JPMorgan and Principal Global Investors 6. Modest Inflationary Pressures Remain in the Global System Source: FACTSET and Principal Global Investors 7. The Subprime Debacle: Is it Overdone? Source: Principal Global Investors 8. Index returns over 10 years Source: Bloomberg 9.

Is Corporate America Vulnerable?

10. Credit Spreads (US Corporate Quality Spread Aaa vs Baa) Source: Moodys & Principal Global Investors 11. Leverage Ratios Are Low Source: DB Global Markets Research, FACTSET 12. Coverage Ratios Are Solid Source: DB Global Markets Research, FACTSET 13. Low Default Rates Modest Rise Forecast Source: Merrill Lynch, Moodys and Principal Global Investors. % 14. Stockmarket Returns Source: Principal Global Investors 15. Stockmarket Conditions US stock market does not look overvalued: PE is lower than mid-90s average, earnings growth is solid, suggesting low risk of major correction. % PE Ratio Source: Principal Global Investors S&P 500 Price Earnings Ratio S&P 500 Earnings Per Share % change over 12 mths 16.

Product innovation how is the market evolving?

17. Global significance of the industry 18. Private Wealth in Asia Pacific Source: Consensus Economics 19. Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2007-2017) *Source: Consensus Economics, BT Funds Management 20. Case study - AustraliaYouthfully vibrant! 21. The Australian advantage

Australia's retail funds management market has been described by US-based Cerulli Associates as ;

" the most sophisticated retail funds management marketplace outside of theUS ".

A recent report by Boston Consulting Group said thatAustralia is home to the world's fastest growing high-net-worth investor market.

22. Growth and characteristics of the Australian Funds Management Industry

Growthprimarily attributable to:

Low barriers to entry:sophisticated investors, mature market and efficient regulatory regime.

Government mandated retirement income scheme, Superannuation

Characteristicsof the market include:

77% of the market is dominated by 30 managers

Of the top 30 managers, 17 are foreign owned and manage 46%

Leading domestic funds managers are connected to Banks

Increase in demand for alternative assets:hedge funds; infrastructure investment, listed and unlisted property

23. The Case for Property Securities 24. Risk-Adjusted Performance 1 January 1998 31 December 2007 Sharpe Ratio Source: FTSE EPRA/NAREIT Global Index, MSCI World Equity Index, JPMorgan Global Bond Index 25. Gross Dividend Yield by Country as of 31 December 2007 Source: FACTSET 26. Increasing Opportunity Set As of January 2007 Source: UBS Investment Research Global Real Estate Handbook 27. A More Efficient Portfolio Portfolio A 0% Global Property Securities, 55% Global Equities, 45% Bonds Portfolio B 10% Global Property Securities ,50% Global Equities, 40% Bonds Portfolio C 20% Global Property Securities, 45% Global Equities, 35% Bonds 28. What is risk? Domestic indices now biased towards global titans Source: FACTSET Jan 2008 France Germany Japan UK USA Europe (ex-UK) World 29. Why is diversification important? Source:FACTSET/IRESS at 31 December 2007 Global investment opportunities are enormous Marketcapitalisationin A$ billion 30. The importance of diversification 31. Why is diversification important? Increasing pressure to invest offshore Coca-Cola Procter & Gamble Nescaf none of these global brands are owned by Australian companies, but they all feature in our daily lives As consumers, have been buying offshore for many years 32. Why is diversification important? Markets are volatile S&P 500 Bear Markets in the Past 35 Years -48% -20% -27% -48% - 36% 29% 58% 38% 44% -60 -40 -20 0 20 40 60 80 1969 - 70 1973 - 74 1980 - 82 1990 2000 - 06 % Peak to trough price index change Subsequent 12 month price index change Source : Bloomberg 65% Trough to 28 February 2006 33. Why is diversification important? Source : Bloomberg/IRESS US MARKET REACTION TO CRISES -30 -20 -10 0 10 20 30 40 50 60 Pearl Harbour Korean War JFK Assasination Iraq Invades Kuwait Terrorist Attack on US % Peak to trough after crisis 1 year later from trough 2 years later from trough 135 days 30 days 1 day 60 days 11 days S&P500 Index 22 April 2004 from trough 34. Why is diversification important? The roller coaster of investor emotion Source : Frank Russell 35. Why is diversification important? Source : ING Funds Managment 36. The Power of Asset Allocation 91.5% asset allocation 1.8% market timing 4.6% selection of individual investments 2.1% other More than 91% of pension plans returns depended on theirasset allocations.* *Source: Determinants of Portfolio Performance II: An Update, Brinson, Singer, Beebower, Financial Analysts Journal, May-June 1991. Past performance cannot guarantee future results. 37. Global product trends

Increasing global asset focus (including emerging markets)

Higher concentrated & volatility & alpha products

More benchmark customisation or unaware behaviour

Performance fees

Increased prevalence of long / short (equity & credit)

Multi-managers growing / changing shape

Alternative asset classes

Structured products (SP, ETF, managed accounts)

After-tax considerations

38.

Where to from here?

39. Corporate outlook

Underlying credit fundamentals remain solid:

• • corporate balance sheets remain strong in aggregate

• • attractive valuation levels

• • solid upgrade/downgrade ratio

• • continuing low default rates

40. Economic Outlook

Economic fundamentals are sound:

• • US housing in extended slowdown, but offset by resilience in Europe, UK and emerging markets

• • Global growth solid & supported by low rates

• • US Federal Reserves to cut interest rates again

• • Stability will return to financial system under watchful eye of central banks

• • Liquidity is available

41. Summary - key influences on the industry

Longer investment horizons (retirement of retirement)

More sophisticated portfolio construction techniques

• Drive for diversification, Risk budgets, Core / satellite philosophy

More efficient implementation (focus on fees & taxes)

Greater customisation (products & portfolios)

Greater product choices available (wholesale, global sources)

Improved information and transparency and tools

42. Discussion time 43. Disclosures The information in this document has been derived from sources believed to be accurate as of December 2007.It contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. The information it contains does not take account of any investor's investment objectives, particular needs or financial situation. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions in this document.All figures shown in this document are in U.S. dollars unless otherwise noted.Issued in Australia by Principal Global Investors (Australia) Limited ( ABN 45 102 488 068; AFS Licence No: 225 385 ), which is regulated by the Australian Securities and Investments Commission. 2005 Principal Financial Services, Des Moines, IA 50392 USA. "The Principal Financial Group" and "The Principal" are registered trademarks of Principal Financial Services Inc, a member of the Principal Financial Group. "Principal Global Investors" is a service mark of Principal Financial Services Inc. The responsible entity and issuer of the Principal Property Securities Fund Fund (ARSN 104 037 425) is Principal Global Investors (Australia) Limited. You should consider the Product Disclosure Statement available from us and assess whether this product fits your investment objectives, particular needs and financial situation before making any investment decision. Future performance and the capital value of the Fund are not guaranteed. Investors are reminded that the Funds returns can be volatile, reflecting rises and falls in the value of underlying assets.