It has been a very difficult market for equities, in general, and international real estate stocks, specifically. The benchmark Dow Jones Wilshire Global ex-US Real Estate Securities Index declined -9.1% during the second quarter and is off -15.4% year-to-date. All markets had negative returns for the quarter. Japan, Turkey, and Singapore declined the least. The Fund has significant holdings in Japan and Singapore. Spain, Sweden, and Italy declined the most during the quarter. The Fund has no holdings in any of those three markets. The Fund has substantial allocations to Asia, where we believe real estate fundamentals are the strongest.

In a bear market, the question investors always ask is “when will it end”? It is difficult to say, but the benchmark index has already declined -33% from peak levels, so the valuations of many stocks owned by the Fund are at or near historically low levels. Once fundamentals improve, real estate securities are likely to come out of the bear market.