DEC investments are designed to produce the expected returns of its Partners. Traditionally real estate has produced returns, which are midway between low risk treasuries (5.2%)* and high-risk equities (11%)*. Real estate finds its place in the diversified portfolio by providing medium range returns (9.4% unleveraged)* with relatively low risk while providing a hedge against inflation. Real estate tends to prosper, with yields above long term averages, in higher inflation environments when equities, and especially bonds suffer. Real estate represents a tool, which allows the investor with a stated tolerance to risk to achieve "mean variance optimization", a proven principle of diversification theory, which uses non-correlating assets to maximize return and control risk. Simply put, an investor seeks to achieve his return objectives with the smallest risk consistent with his risk tolerance. * Source: Pioneering Portfolio Management by David Swenson, pp 160, 174, 218 and A Random Walk Down Wall Street by Burton G. Milkiel, p. 335. Note also that real estate falls in the middle in terms of its long-term risk characteristics. Using standard deviation, a common measure of risk, treasuries have a standard deviation of 3.4%, real estate 6.9% and equities 20.3%.