PRUDENTIAL GLOBAL REAL ESTATE FUND SEPTEMBER 30, 2017

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1 PGIM INVESTMENTS Bringing you the investment managers of Prudential Financial, Inc. PRUDENTIAL GLOBAL REAL ESTATE FUND MARKET REVIEW NORTH AMERICA Real estate investment trusts (REITs) should experience continued improvement in operating fundamentals and are expected to deliver high single digit dividend and 5% - 7% cash flow growth in the next 12 months. We expect forward 12-month same store net operating income (NOI) of REITs to be 3.5% to 4.0%, a level above the long-term average. However, given the peak occupancy levels, we would expect much of the growth to come from rental rate increases and not occupancy gains. From a relative valuation perspective, REITs ended the quarter trading approximately in-line with net asset value (NAV), compared to a 2.8% premium historically. Core real estate trades at an 11% discount to NAV. Certain sectors are trading at very wide discounts relative to their historical levels. Regional malls presently trade at a 33% discount to NAV while historically they have traded in-line with NAV. The office sector is at a 14% discount to NAV versus a 3% historical premium to NAV. Implied cap rate spreads of REITs relative to the 10-year Treasury remain wide at roughly 360 bps. It is important to note that during the last peak in 2007, this spread turned negative with REIT implied cap rates below the 10-year treasury yield. The current level of spread provides REITs with a cushion if interest rates increase, as spreads could contract without any deterioration in real estate value. Additionally, REIT cash flow multiples remain 2x below the S&P 500 earnings multiple; this is the most attractive level since the credit crisis in REIT rental rates in aggregate are expected to continue to improve for the remainder of At this point in the cycle, we would expect the majority of revenue growth to come from rental growth versus occupancy gains. Supply is expected to remain muted in most markets and property types, with the exception of apartments, self-storage and certain hotel markets. Apartment supply additions are beginning to moderate and 2018 supply additions are expected to decelerate in many markets. Employment centers that focus on technology, healthcare, and media/entertainment are expected to deliver relatively strong jobs growth. We will continue to monitor technology dependent markets for any signs of decelerating demand growth. We are more constructive on energy related markets as oil prices show stability and jobs growth in markets like Houston is stabilizing. The disruption created by Hurricane Harvey in Houston may benefit self-storage and apartment REITs through an upward shift in the demand curve. With a dividend yield of 4.2% and estimated earnings growth of 5% to 7% in the next 12 months, REITs are poised to deliver a consensus return of approximately 10%, assuming no expansion or contraction in the earnings multiple. However, given continued economic and government policy concerns, volatility spikes remain likely. U.S. REITs offer a valuable combination of income and growth in a volatile market. We will continue to monitor the real estate cycle as well as demand for real estate from pension funds and sovereign wealth funds. We will continue to monitor government policy initiatives of the new administration especially tax reform and infrastructure spending. The market continues to revise its expectations around the timing and magnitude of policy change. Additionally, we will continue to monitor high yield debt spreads to see if there are any impacts on real estate debt spreads. Additionally, net asset value matters and large discounts in the core property types are likely to get resolved or arbitraged. Merger and acquisition activity has picked up and is expected to continue for the remainder of 2017, particularly if small capitalization REITs continue to trade at discounts to private real estate value. We believe the best opportunities are stock specific across all sectors; however, we remain cautious on the retail sector and have further reduced our retail position on relative strength. It is a stock picker s market and given economic volatility and mergers and acquisitions (M&A) activity, 2017 is a good environment for active investment management. We have selectively added in the single-family housing sector as valuations have reverted to attractive levels relative to growth. We have added to our west coast office overweight based on attractive valuations and continued strong fundamentals. We have reduced our position in New York City Office companies due to some supply headwinds. We have reduced our underweight to self-storage as a result of demand shifts created by hurricane disruption. We have reduced our apartment overweight given recent outperformance and more fair valuation levels. We have reduced our healthcare positions based on supply concerns for assisted living facilities and tenant/operator credit concerns in skilled nursing and assisted living. EUROPE The European market had largely emerged from the shadows of political uncertainty that clouded the horizon at the start of Elections in the Netherlands and France did not produce any negative surprises for markets. However, the German elections at the end of September failed to deliver the clear positive outcome the markets had been hoping for. In addition, a constitutional crisis has unexpectedly erupted in Spain at the beginning of October over potential Catalan independence, returning political risk to the spotlight in Europe and leading to an equity market correction. However, Eurozone economic indicators continue to improve slowly and the monetary policy backdrop remains loose. While some concerns about the eventual roadmap for unwinding European Central Bank

2 (ECB) quantitative easing exist, the overall economic and real estate environment in Europe is modestly positive. The exception to this benign environment appears to be the UK, where the process of the UK s exit from the EU only began at the end of March. Confusion over the UK s negotiating position has been heightened by the uncertain election outcome at the beginning of June and a weakened political position for the governing party. European real estate stocks are still offering discounts to private market values. Europe was trading at an average 10.5% one year forward discount to NAV at the end of September. While significant discounts to NAV above 20% are still available in the UK, we maintain our underweight position to the London office sector in particular due to the high degree of uncertainty surrounding the process of the UK s exit from the European Union and its economic (and possibly political) consequences. Rents and values have begun falling in the London office market and we expect the downward trend to continue as financial services occupiers continue to announce plans for job moves following Brexit. Announcements by financial institutions about moving specific functions that will need to remain within an EU country after Britain s exit have already been made, with Frankfurt, Dublin, and Paris the main destinations so far. We continue to look for attractively valued stocks in continental Europe that will benefit from the positive economic momentum and supportive monetary policy. Investment market demand remains strong in Europe from private capital, exerting modest further downward pressure on cap rates, especially in the core and core-plus assets in the more liquid markets. Retail stocks have been under some pressure in Europe (though less so than in the U.S.) as the online channel grows in importance, but underlying conditions for owners of better retail assets in Europe are still reasonably solid and recent share price weakness is starting to offer some investment opportunities. Real estate fundamentals look solid across continental Europe. New supply is generally under control and there is evidence of at least modest rental growth in most markets. The backdrop of monetary policy is expected to remain supportive for some time. We maintain our overweight positions on Ireland, Germany, and Sweden as we look for emerging opportunities elsewhere in continental Europe. ASIA PACIFIC Despite having generated 11.3% (in USD terms), we continue to see value, notwithstanding rising interest rates, that could pose a challenge to REITs. Several themes would be favorable in the coming months: strategic review/asset disposal on the back of strong capital appreciation (HK office/retail), flight-to-quality (SG office), and conducive monetary policy (JP developers). Japanese developers trade at a significant discount to their historical valuations as well as to the Japan REITs (JREITs). In terms of implied cap rates, the Japanese developers currently trade bps higher than the underlying market cap rates, reflecting significant mispricing. We note the developers have presold the majority of their launched condominiums and are achieving higher office rents in their new office project completions. We expect this to underpin 6% earnings growth per annum through From a catalyst standpoint, we believe the prospect for quicker Fed hikes (leading to renewed Yen weakness) and the potential uptick in the Consumer Price Index (CPI) will underpin developer share prices. A stronger economic recovery would support office and residential demand. We are positive on the developers given their leverage to an economic recovery. We are, however, selective on the JREITs, due to their valuations and lower expectations of monetary easing. JREITs trade at implied cap rates that are bps below their underlying cap rates -- in line with their historical trading range. Our preference is with the hotel and retail JREITs on the premise that they will benefit most from an improving tourism landscape, offering both organic and acquisition growth. We are positive on Australian core commercial property fundamentals with the passive Australia REITs (AREITs) trading at an average 1.08x price to net tangible assets (P/NTA), significantly below the x P/NTA levels witnessed last year. Recent asset sales by the AREITs were at greater than a 10% premium to book values, further reinforcing underlying AREIT valuations. Despite cycle-low risk-free rates, we note that current cap rates are trading at much higher spreads ( bps) to the risk-free rate, providing a significant buffer in the event of any cap rate expansion this year. Our preference is with the prime office names that benefit from improving fundamentals and retail AREITs that either offer international growth or domestic non-discretionary retail resilience. Hong Kong developers trade at close to minus one standard deviation from historical mean valuations. However, we maintain our underweight due to negative sector catalysts. Our preference lies in the large cap developers that are significantly discounted relative to asset fundamentals. From a macro standpoint, we envisage increasing uncertainty for China as it navigates between economic rebalancing and the need to ensure stable growth. The impact to the Hong Kong developers will be two-fold: greater volatility in terms of sales and volumes for their Chinese residential portfolios and negative investor perception on their China exposure. Incremental housing cooling measures imposed by the Hong Kong Government, in an effort to rein in record home prices, act as a further negative. In Singapore, we are underweight the developers as valuations have priced in a lot of positives. Even for the REITs, we have chosen to be in the office and industrial sectors that offer resilient yield despite increasing supply conditions. Singapore REITs (SREITs) have outperformed regional peers so far this year (+21.0% in USD terms, vs +2.9% for AREITs and -7.7% for JREITs), with the average dividend yield compressed to about 6%, from 6.7% at the beginning of the year. The dividend yield spread has also compressed by 40 bps over the same period. On the other hand, REITs in other markets such as Japan have seen the dividend yield spread expand by about 67 bps over the same period. As a result, the SREITs dividend yield spread (387 bps) is now lower than JREITs (392 bps), compared to 102 bps higher at the start of the year. It remains to be seen if investors will continue to favor the SREITs and accept an even lower dividend yield spread going forward. In the near-term, there remains elevated risk that share price movements will be dictated by macro news flow, with rising trade protectionism and Fed hike uncertainty being the two major unknowns. Within our individual sectors, a sharper rise in sovereign bond yields could negatively impact regional REIT valuations. A weaker U.S. dollar/stronger Yen could derail economic momentum in Japan and impact underlying demand for condos and office space. On the other hand, lowered expectations of Fed hikes and an easing in monetary conditions would be viewed positively for the Hong Kong developers.

3 QUARTER The Fund outpaced the benchmark for the third quarter. Europe and Asia had relatively neutral impacts on results while North America outperformed. The U.S. saw favorable performance this quarter due to positive stock selection in the residential sector and to a lesser degree, the healthcare sector. An overweight position to the diversified sector also gave a boost to performance. The retail sector was the largest detractor of performance in the U.S. portion of the Fund. Lastly, Canada had a negative impact on results. Performance from the Asia Pacific region had little impact on relative performance. Hong Kong performed well due to favorable stock selection but it was somewhat offset by a weak showing by Singapore. Europe neither contributed nor detracted from performance for the third quarter. Ireland and Germany made strong contributions to performance due to their overweight position, versus the benchmark. However, weak stock selection In France offset the gains.

4 AVERAGE ANNUAL RETURN AS OF 9/30/2017 Total Returns (without sales charges) YTD 1-year 3-year 5-year 10-year Since 05/05/1998 Prudential Global Real Estate Fund Z FTSE EPRA/NAREIT Developed Real Estate Net Index SEC Standardized Returns (with sales charges) Prudential Global Real Estate Fund Z Past performance does not guarantee future results. Current performance may be lower or higher than the past performance data quoted. Investment return and principal value will fluctuate so that an investor s shares, when redeemed, may be worth more or less than original cost. For the most recent month-end performance go to pgiminvestments.com. There is no sales charge for Class Z shares. Gross operating expense: Class Z, 0.94%. Class Z shares are available to individual investors through certain retirement and mutual fund wrap and asset allocation programs, and to institutions at an investment minimum of $5,000,000. Performance by share class may vary. Other classes, which contain either a sales load or a contingent deferred sales charge, are also available. These additional expenses could lower the total fund return of a particular share class. Please see the prospectus for additional information about fees and expenses and investor eligibility requirements. Annualized returns without sales charges describe the return to the investor before any sales charges are imposed. SEC standardized return describes the return to the investor after maximum sales charges are imposed. All returns assume share price changes, as well as the compounding effect of reinvested dividends and capital gains. Returns may reflect fee waivers and/or expense reimbursements. Without such, returns would be lower. Performance by share class may vary. Investing in real estate poses certain risks related to overall and specific economic conditions as well as risks related to individual property, credit, and interest-rate fluctuations. The Fund may involve additional risks due to its narrow focus; is nondiversified, so a loss resulting from a particular security or sector will have a greater impact on the Fund's return; invests in foreign securities, which are subject to currency fluctuation and political uncertainty; and derivative securities, which may carry market, credit, and liquidity risks. These risks may result in greater share price volatility. There is no guarantee the Fund's objective will be achieved. Emerging markets are countries that are beginning to emerge with increased consumer potential driven by rapid industrial expansion and economic growth. Investing in emerging markets is very risky due to the additional political, economic and currency risks associated with these underdeveloped geographic areas. Real estate investment trusts (REITs) may not be suitable for all investors. There is no guarantee a REIT will pay distributions given the inherent risks associated with the market. A REIT may fail to qualify as a REIT as defined in the Tax Code, which could affect operations negatively. There is no guarantee a REIT's investment objectives will be achieved. S&P Developed Property Net Index is a free-float, weighted, unmanaged index comprised of public real estate companies that meet certain free-float market capitalization, trading volume, and other criteria with dividends reinvested after tax. S&P Developed Property Gross Total Return Index is a free-float, weighted, unmanaged index comprised of public real estate companies that meet certain free-float market capitalization, trading volume, and other criteria with dividends reinvested without the deduction of withholding tax applied to nonresident institutions that do not benefit from double taxation treaties. S&P United Kingdom Property Index is a free-float, weighted, unmanaged index comprised of public real estate companies within the United Kingdom that meet certain free-float market capitalization, trading volume, and other criteria with dividends reinvested without the deduction of withholding tax applied to nonresident institutions that do not benefit from double taxation treaties. S&P 500 Index is an unmanaged market capitalization-weighted index of 500 stocks of large U.S. companies. S&P 500 Index is an unmanaged market capitalization-weighted index of 500 stocks of large U.S. companies. The FTSE EPRA/NAREIT Developed Real Estate Net Index is unmanaged and designed to track the performance of listed real estate companies and REITs worldwide. MSCI US REIT Index is a free float-adjusted market capitalization index that is comprised of equity REITs. The index is based on MSCI USA Investable Market Index (IMI) its parent index which captures large, mid and small caps securities. Hang Seng Index is a free-float adjusted market capitalization-weighted stock market index in Hong Kong. Shanghai Composite Index is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. S&P/ASX 200 Index (AS51) is a market-capitalization weighted and float-adjusted stock market index of Australian stocks listed on the Australian Securities Exchange from Standard & Poor's. Nikkei (NKY), short for Japan's Nikkei 225 Stock Average, is a price-weighted index comprised of Japan's top 225 blue-chip companies on the Tokyo Stock Exchange. S&P Europe Property BMI Index is the investible universe of publicly traded property companies in Europe. This is a subindex of the S&P Global Property Index which comprises more than 500 constituents from 36 countries. An investment cannot be made directly in an index. J-REITs are REITs listed on the Tokyo Stock Exchange. S-REITs are REITs listed on the Singapore Exchange. A-REITs are REITs listed on the Australian Exchange. Shanghai Hong Kong Connect is a cross-boundary investment channel that connects the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Central is the central business district of Hong Kong. Shenzhen Hong Kong Connect is a cross-boundary investment channel that connects the Shenzen Stock Exchange and the Hong Kong Stock Exchange. Abenomics is a nickname for the multi-pronged economic program of Japanese Prime Minister Shinzō Abe. Abenomics seeks to remedy two decades of stagnation by increasing the nation s money supply, boosting government spending and enacting reforms to make the economy more competitive. Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector. Net Operating Income (NOI) reflects income after operating expenses are deducted, but before income taxes and interest are deducted. Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment s cost. Macroeconomics is the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity. Brexit refers to Britain s departure from the European Union. Sovereign Wealth Fund consists of pools of money derived from a country s reserves, which are set aside for investment purposes that will benefit the country s economy and citizens. Spreads are the difference in yields of an asset class compared against treasury bonds or another benchmark bond measure. Consumer Price Index (CPI) is a measure that examines the weighted average of price of a basket of consumer goods and services, such as transportation, food, and medical care. Quantitative Easing is an unconventional monetary policy in which a central bank purchases government securities or other

5 securities from the market in order to lower interest rates and increase the money supply. Standard deviation is a measure of the dispersion of a set of data from its mean. The views expressed herein are those of PGIM Real Estate investment professionals at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. PGIM is the primary asset management business of Prudential Financial, Inc. PGIM Real Estate is PGIM s real estate investment advisory business and operates through PGIM, Inc., a registered investment advisor. Prudential, PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. The information contained herein is provided by PGIM Real Estate. This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality of such information. Distribution of this information to any person other than the person to whom it was originally delivered and to such person s advisers is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of its contents, without the prior consent of PGIM Real Estate, is prohibited. Certain information in this document has been obtained from sources that PGIM Real Estate believes to be reliable as of the date presented; however, PGIM Real Estate cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PGIM Real Estate has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to its completeness or accuracy. Any information presented regarding the affiliates of PGIM Real Estate is presented purely to facilitate an organizational overview and is not a solicitation on behalf of any affiliate. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services. These materials do not constitute investment advice and should not be used as the basis for any investment decision. These materials do not take into account individual client circumstances, objectives or needs. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management is intended to describe PGIM Real Estate efforts to monitor and manage risk but does not imply low risk. Consider a fund s investment objectives, risks, charges, and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the fund. Contact your financial professional for a prospectus and summary prospectus. Read them carefully before investing. Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. PGIM Real Estate, is a unit of PGIM, Inc. (PGIM), a registered investment advisor. PIMS and PGIM are Prudential Financial companies Prudential Financial, Inc. and its related entities. PGIM Real Estate, PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. Mutual Funds: Are not insured by the FDIC or any federal government agency May lose value Are not a deposit of or guaranteed by any bank or any bank affiliate Expiration: 1/31/2018