Global Real Estate Securities Fund

Capital at risk. Past performance is not a guarantee or a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

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Overview

Manager's Outlook

With the prospect of higher interest rates and fuel prices leading to a consumer slowdown, we have tilted the portfolio toward sectors where rents can grow at or above the pace of inflation as a result of favorable demand and supply dynamics. These segments include apartments, industrial warehouses, and self-storage. We are also selectively maintaining our overweight position in hotels given that a pickup in business travel from a low base can offset any potential weakness in leisure travel going forward. Hotels in Japan and China should also benefit from an eventual reopening of borders, and we have exposure to hotel companies in both these markets. ��

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We are cautiously optimistic for global real estate returns in the second half of 2022, especially after the year-to-date correction. Valuations on cash flow metrics are now generally in line with long-term averages, with the prospects of healthy earnings growth in sub-sectors with pricing power. Coastal apartment REITs in North America continue to benefit from a return to work and low supply in several key cities. We also have a significant bet in single family residential REITs where a tight housing market and a stickier customer base should underpin solid rental growth. Industrial warehouses is one of our biggest sub-sector overweights; several cities, such as Shanghai, Sydney, Los Angeles, and Hong Kong, have a scarcity of city center industrial land, leading to above-average rental growth. Additionally, consumer preferences for same-day or next-day delivery has led to high demand for prime locations.

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Self-storage is another sector we are positive on given relatively resilient demand driven by customers' life events, and the length of rentals continues to increase with supply building slower than expected. Self-storage landlords can also reset rents ahead of inflation since rates are adjusted on a weekly or monthly basis. While work from home will continue to be an obstacle for office demand, we selectively own Grade A office landlords in supply-constrained cities such as Hong Kong and London. In cities such as London we are already seeing a green premium for Grade A environmentally-friendly office buildings versus Grade B assets.

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We believe investing in the global real estate market offers inflation-protection potential, especially given our focus on sub-sectors that have pricing power driven by improving demand or falling supply. �We remain constructive on the earnings potential for several property types in the second half of 2022 and 2023 driven by rising rents and falling supply. Additionally, we expect to see a continued divergence in performance between high-quality Grade A real estate versus Grade B assets. We believe our well-located real estate holdings are positioned to benefit from these trends. �

Strategy

Fund Summary

We seek to make well-timed investments in undervalued real estate companies, favouring high quality real estate in land-constrained markets. We aim to identify real estate with a high asset base potential to build a well-diversified portfolio. The promotion of environmental and/or social characteristics is achieved through the fund's commitment to maintain at least 10% of the value of its portfolio invested in Sustainable Investments, as defined by the SFDR. Additionally, we apply a proprietary responsible screen (exclusion list). The manager is not constrained by the fund’s benchmark, which is used for performance comparison purposes only.

Performance - Net of Fees

Past performance is not a guarantee or a reliable indicator of future results.

31-Jan-2026 - Jai Kapadia Co-Portfolio Manager,

Global real estate stocks delivered mostly positive results in January. Within the portfolio, unfavourable stock selection in US companies was the largest detractor from relative results. Our lack of exposure to a real estate investment trust (REIT) and an industrial firm meaningfully hurt relative results as both companies generated robust returns in January. Stock picking in Canadian real estate companies also hindered results as our position in a commercial real estate services firm was especially detrimental. Investors may have been concerned about some of the company’s merger and acquisition activity during the month. Conversely, stock picks paired with an overweight to Belgian real estate companies contributed to relative returns. Here, our position in a healthcare REIT advanced following the Belgian government’s approval of the company’s merger with another firm. Stock picks coupled with an overweight to Hong Kong also aided relative performance as Hong Kong was the best-performing developed real estate market during January. Shares of a real estate management and development firm surged thanks to strong sales at the company’s newest development. A major rebound in the Hong Kong housing market also provided a favourable backdrop.

31-Jan-2024 - Jai Kapadia Portfolio Manager,

The US, Japan, the UK, and Australia represent our largest country allocations. During the month, we continued to find opportunities where we feel valuations may be underestimating the durability of growth or turnaround potential within the company. In the US, we added to our position in a leading data centre colocation company. We believe the firm will command a pricing premium in a fast-growing industry. We also increased our stake in an American industrial property landlord with significant global scale, as we believe that the company is well positioned to benefit from supply chain reconfiguration and growth in e-commerce.

Past performance is not a guarantee or a reliable indicator of future results

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents and/or key information document (KID) in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors. They can also be found along with a summary of investor rights in English at www.troweprice.com. The Management Company reserves the right to terminate marketing arrangements.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

Before deciding to invest in the fund, you should read the offering document/prospectus (including its investment objectives, policies and any risk warnings) which are available and may be obtained from any appointed distributors.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

Benchmark: Investors may use the benchmark to compare the fund’s performance. The benchmark has been selected because it is similar to the investment universe used by the investment manager and therefore acts as an appropriate comparator. The investment manager is not constrained by any country, sector and/or individual security weightings relative to the benchmark and has complete freedom to invest in securities that do not form part of the benchmark.

Disclosure on Vendor Indices can be found here.

Risks

Typical Investor