Continental European Equity Fund

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

The listed funds are not an exhaustive list of funds available. Visit www.funds.troweprice.com to see the full range of funds offered by T. Rowe Price, including those that consider environmental and social characteristics as part of their investment process. For up to date information regarding any T. Rowe Price fund's investment strategy, please see the relevant fund KID and prospectus.

The FTSE Developed Europe ex UK 100% Hedged to USD Net Tax Index returns for the Qh (USD) share class have been restated by the benchmark administrator due to an error in its calculation. As a consequence, incorrect data relating to this benchmark has been referenced in the Fund’s reporting since 31st March 2020. For more information, please contact your T. Rowe Price Relationship Manager.

Overview

Manager's Outlook

The investment environment continues to be marked by a high degree of geopolitical and economic uncertainty. The range of potential outcomes for consumer and industrial confidence and expenditure, inflation, and central bank actions is still wide.

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At such times, we believe it is even more important to remain focused on fundamental company research where we feel we can have an edge. While an awareness of the macroeconomic and political environment is necessary, our goal is to construct a portfolio that prospers over the medium term whatever transpires.

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European equity valuation levels have pulled back sharply this year but still are not what one would describe as "cheap." Recent developments are putting pressure on costs, supply chains, and demand, which is likely to weigh on corporate earnings across most sectors this year.

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Central banks have signaled they are determined to continue tightening monetary and fiscal policy in Europe and elsewhere, prioritizing the fight to bring down inflation over economic growth. This is a less supportive backdrop for equities, probably for the rest of this year, but the pressure to tighten policy as sharply may lessen should economies stall?and there are signs that this is already happening.

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The multiple dramatic events of the last few years have been a trigger for transformations across many industry structures. For example, we are witnessing profound changes in the fields of sustainability and biologics. This is a dynamic that we consciously look to exploit, and we are focused on identifying those companies that will be material beneficiaries of these forces. Genuine insights here will be valuable as the market is wrestling with a lot of uncertainty as to how individual companies are positioned.

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In these uncertain times, we must be prepared for market dislocations triggered by events. The market rotation and volatility are presenting us with an increasing number of new opportunities. We are also focused on defending those holdings that have recently been derated but where the business remains fundamentally robust and may even be stronger after recent events. If we do enter a slower economic environment, then the investment attractions of companies that do have a more sustainable growth outlook should become stronger.

Strategy

Fund Summary

We leverage our strong research team to identify companies with durable business models that we believe are positioned firmly on the right side of change, or those companies undergoing idiosyncratic changes which in our view will help deliver improving shareholder returns. Disciplined portfolio construction focuses on those stocks with the most compelling risk/reward profiles. 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.

OUR VIEWS ON EUROPE

Performance - Net of Fees

Past performance is not a reliable indicator of future performance.

31-Jul-2024 - Tobias Mueller, Portfolio Manager,

European shares ended higher in July, buoyed by generally positive corporate earnings and optimism about falling interest rates. Still, political jitters and escalating trade tensions between the European Union and China curbed the gains. At the portfolio level, health care, industrials and business services and materials were the bottom-performing sectors due to stock picking. In health care, our investment in a Danish multinational biopharmaceuticals company performed worst. The shares fell sharply on competition concerns after a rival drugmaker said an early-stage trial of its obesity drug yielded positive results. In addition, the latter company outperformed in the sector, which further eroded relative returns because we do not hold the stock. Conversely, our choice of securities in consumer discretionary and financials was supportive due the modest positive effects from stock picking. Our holding in a luxury sportswear company performed best in consumer discretionary. The shares received a boost from a rival company that pre-announced positive results, with good performance in China, and lifted its outlook for sales growth in fiscal year 2024.

31-Jan-2024 - Tobias Mueller, Portfolio Manager,

In this inflationary environment, we aim to hold companies that exhibit pricing power or that are outright inflation beneficiaries at reasonable multiples. In consumer discretionary, we initiated a position in a producer of luxury watches and jewellery whose stock we expect to rerate as its high-end brands drive organic growth. We adjusted our health care holdings. We exited a Germany-based drug research company after unexpected management changes threw its turnaround strategy into question. We invested in a company that operates in the chronic care medical products industry that we believe could increase market share in the US.

Past performance is not a reliable indicator of future performance.

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