Market Sector Update

• Global real estate securities produced solid absolute returns in the fourth quarter as risk assets benefitted from receding trade and political tensions, accommodative monetary policy and stabilizing leading economic indicators.
• The sector also was supported by the combination of positive operating results and management commentary in the most recent reporting periods and sector-related conferences.
• Global real estate securities outperformed global bond indices, but trailed the broader equity market for the period.
• The sector produced strong returns for the 2019 calendar year, gaining more than 20%, as financial conditions eased for much of the year.

Portfolio Strategy

• The Fund delivered a positive return and outperformed its benchmark for the quarter. Results were impacted by positive contributions from regional allocation and stock selection decisions.
• Regional allocation results largely benefitted from an overweight position to the U.K, which was a top performing region for the quarter. U.K. real estate equities rallied during the period as fears of a possible hard Brexit receded following Prime Minister Boris Johnson’s Conservative party decisive election victory.
• Stock selection results were supported by outperformance in Japan, which stemmed largely from an overweight to the Japanese development focused companies. These companies have benefitted from improving global sentiment, as well as a commitment to improving shareholder returns and capital allocation decisions.
• An overweight position to U.K. real estate companies with exposure to the London office and residential markets also contributed to positive stock selection as these companies were among the greatest beneficiaries from the receding Brexit overhang. An overweight position to Hong Kong also supported relative performance this quarter.
• The Fund’s country allocations were adjusted during the period. Overweight positions to the U.K. and Japan were reduced to more modest overweight positions, and used to transition the Fund’s underweight position to Canada to a market weight. The Fund remained overweight to Hong Kong, underweight to Singapore, Australia and the U.S., and market weight to continental Europe.

Outlook

• Receding trade and political tensions, positively trending leading economic indicators and the combination of stimulative fiscal and accommodative monetary policy efforts should contribute to maintaining easier financial conditions and further stabilization in the global economic growth outlook.
• Real estate operating fundamentals remain solid across much of the globe as most companies remain well positioned with high-quality asset portfolios, flexible financial positions and attractive access to capital. Rising stock prices and falling interest rates in 2019 provided attractive capital to fund external growth initiatives.
• We believe low interest rates, economic growth and easier financial conditions could continue to support a stable operating environment for real estate securities, as well as real estate values.

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 Dec. 31, 2019, 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.

Benjamin Lentz, CFA and Paul Meierdierck, CFA were named co-portfolio managers in January 2020, replacing George J. Noon, CFA, who left the firm

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.