European Smaller Companies 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.

Overview

Manager's Outlook

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

�

At such times, we believe it is even more important to remain focused on fundamental smaller-company research where we can have an edge. While an awareness of the macroeconomic and political environment is necessary, we look to discover those companies that can be much larger in five to 10 years' time whatever transpires.

�

European smaller-company shares have pulled back sharply this year. Even so, recent developments are likely to continue putting pressure on costs, supply chains, and demand, weighing on corporate earnings across most sectors.

�

Central banks have signaled that they are determined to tighten monetary and fiscal policy in Europe and elsewhere, prioritizing the fight to bring down inflation?which we think could persist at a high level for some time? over economic growth. In our view, this could be a less supportive backdrop for equity markets.

�

The multiple dramatic events of the last few years have been a trigger for transformations across many industry structures. 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 considerable uncertainty as to how individual companies are positioned.

�

In these uncertain times, it is important to be prepared for market dislocations triggered by events. The market rotation and volatility are presenting us with some new opportunities, although there are fewer of them in sectors that we think have structural challenges and where we are meaningfully underweight.

�

We are also focused on defending those holdings that have recently been sharply derated but where the business remains fundamentally robust and may even be stronger after recent events. As we enter a slower economic environment, the investment attractions of smaller companies that do have a more sustainable growth outlook should become stronger.

Strategy

Fund Summary

Our approach incorporates intensive, fundamental research seeking to identify small and mid-sized companies capable of sustaining above-average, long-term earnings growth and selling at reasonable prices. We aim to discover attractive companies at an early stage and hold them while they compound appreciably over the long term. 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 - Ben Griffiths, Portfolio Manager,

European smaller company shares ended sharply 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 gains. At the portfolio level, communication services, financials and real estate were the top contributing sectors due to stock selection. An owner of business-to-business media assets was our best performer in communication services. The shares climbed after receiving a bid from a larger rival. Conversely, negative stock picking weighed most on industrials and business services and materials. Our holding in a provider of employee benefits and engagement solutions services underperformed in industrials and business services. Regulatory uncertainty and political volatility in France have weighed on the stock recently, but the main impact on the price was a disappointing set of fiscal year (FY) third-quarter results. The company reported a miss on revenues and guided for higher one-off costs and taxes in FY 2024, prompting some analysts to downgrade their earnings estimates.

31-Jan-2024 - Ben Griffiths, Portfolio Manager,

We maintained a tight focus on risk management and valuations and sought to identify opportunities among cheap high-quality growth companies with strong balance sheets and capable management teams. We trimmed our above-benchmark position in information technology (IT), exiting a provider of IT infrastructure and services, due to a broken investment thesis. We expected the stock to benefit from a structural IT upgrade in Germany but fiscal tightening is restricting the public sector’s ability to expand IT spending. We also reduced our allocation to health care, exiting a drug research alliance and development partnership company after sudden management changes.

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