Market Sector Update

• Global real estate securities rose during the second quarter, but continue to lag year to date. The FTSE EPRA NAREIT Developed Index, the Fund’s benchmark, gained 11% for the period, but trailed the broader equities market.
• Investors appear focused on positive headlines including a broadening of the economic reopening, improving economic data, additional fiscal and monetary support and COVID-19 therapy progress. Global central banks and governments continue to implement significant fiscal and monetary measures to avert liquidity concerns and provide relief to consumers and businesses.
• Real estate securities lagged the broader equity market as rent collection and virus-containment measures remain a focus. Performance varied by geography, property type, balance sheet strength, development exposure and tenant quality.

Portfolio Strategy

• The Fund delivered a positive return and outperformed its benchmark for the quarter.
• Relative performance for the period benefitted from positive stock selection effect in the U.S. and continental Europe.
• In the U.S., outperformance stemmed from an overweight position to the single family rental homes sector, via a position in Invitation Homes, Inc. The sector has proved to be quite resilient since the pandemic-induced downturn, with occupancy improving further within the region. The sector has benefitted from the work from home economy and the desire for more personal space. Positioning in the U.S. shopping center and health care sectors also contributed positively to relative performance.
• In continental Europe, relative performance was driven by an overweight to the German residential sector, via Vonovia SE. The German residential sector and particularly Vonovia have proven to be quite resilient in the COVID downturn. Vonovia reported a strong quarterly update near mid-quarter which highlighted limited impact from the pandemic, strong like-for-like rental growth and reaffirmed full-year investment guidance.
• The Fund’s country allocations were adjusted during quarter. Our market weight position to Canada was transitioned to an overweight position, and its overweight position to the U.S. was increased. The Fund’s overweight position to Hong Kong was reduced to a market weight, and then increased to a modest overweight near quarter-end. Our underweight position to continental Europe and Australia were increased this quarter. Lastly, we slightly increased the overweight position to the U.K. while an overweight position to Japan and underweight position to Singapore were maintained.

Outlook

• Looking ahead, we continue to incorporate a baseline economic outlook that reflects a sharp global recession followed by a U-shaped recovery. As the reopening process broadens, developments with the virus will continue to determine the global economy’s exact growth path.
• From a valuation perspective, the global real estate security universe continues to offer attractive value relative to alternatives. Real estate securities continue to trade at discounts to our net asset value estimates, with certain sectors and regions offering more meaningful discounts.
• We continue to emphasize the strong capital foundations of the vast majority of global real estate securities remains critical for these companies to weather the storm and eventually deliver attractive investment returns as the global economy progresses to normalcy.

The opinions expressed are those of the Fund’s managers are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through June 30, 2020, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.

All information is based on Class I shares.

The FTSE EPRA Nareit Developed Index is an unmanaged index that tracks the performance of listed real estate companies and real estate investment trusts worldwide. It is not possible to invest directly in an index.

Top 10 holdings (%) as of 06/30/2020: Vonovia SE 4.7, Invitation Homes, Inc. 4.0, Prologis, Inc. 3.8, Avalon Bay Communities, Inc. 3.8, Public Storage 3.7, Digital Realty Trust, Inc. 2.9, SBA Communications Corp. Class A 2.5, Welltower, Inc. 2.4, Duke Realty Corporation 2.3, Canadian Apartment Properties 2.1.

The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Because the Fund invests more than 25% of its total assets in the real estate industry, the Fund may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The Fund is non-diversified, meaning that it may invest a significant portion of its total assets in a limited number of issuers, and a decline in value of those investments would cause the Fund's overall value to decline greater than that of a more diversified portfolio. These and other risks are more fully described in the Fund's prospectus. Not all funds or fund classes may be offered at all broker/dealers.