US Impact 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.

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Overview

Performance - Net of Fees

Past performance is not a reliable indicator of future performance.

30-Nov-2022 - Shawn T. Driscoll, Portfolio Manager,

U.S. stocks rose in November, supported by a lower-than-expected inflation reading for October and indications that the Federal Reserve could slow the pace of its rate increases. At the portfolio level, the information technology sector contributed the most to relative performance due to favourable stock choices. Shares of a certain semiconductor company benefitted from ongoing positive sentiment around consensus-beating quarterly earnings and positive guidance reported at the end of October. The consumer discretionary sector supported results further due to stock selection and an underweight allocation. Our lack of exposure to the energy sector also contributed to relative results, as energy was one of the worst-performing sectors for the month. Conversely, the industrials and business services sector detracted the most from relative performance due to stock selection, notably within the professional services industry, although an overweight allocation to the sector tempered losses. The financials sector also held back relative results thanks to unfavourable security choices and an underweight position.

30-Jun-2022 - Shawn T. Driscoll, Portfolio Manager,

Within the portfolio, our positioning is mainly driven by fundamental, stock-specific views. The turbulent environment offered us the opportunity to upgrade the quality of our holdings within certain sectors. During the quarter, we selectively added to high-quality names with attractive valuations and strong balance sheets. Conversely, we trimmed names where we did not have complete confidence in their balance sheets or where we found better risk/reward ideas. We will continue to look for high-quality companies that have opportunities to increase their market share or that have barriers to entry around their business that will allow them to grow organically in a variety of market environments.

Health Care

We have a favorable view of the health care sector as we believe the space offers compelling long-term return algorithms, low business model volatility, and relatively stable growth potential that can perform well over the long term. We favor companies that are well positioned to take advantage of long-term trends by offering highly innovative products. We have found intriguing investment opportunities in health care providers and services and biotechnology industries, among others.

HCA Healthcare is the largest publicly traded hospital operator in the U.S. We sold out of our holding, as we saw the lucrative benefits that HCA had derived from the coronavirus pandemic begin to wane, and we wanted to book profits and reinvest in a higher conviction name, albeit another COVID beneficiary, Quest Diagnostics.
Quest Diagnostics is one of the largest independent clinical laboratories and diagnostic testing companies in the U.S. Given its scale, Quest was and is a central player in COVID testing. We appreciate management's focus on sustaining growth rates while transitioning the business to a post-COVID environment. We believe Quest has opportunities to leverage their advanced diagnostic capabilities as well as to grow their direct consumer testing franchise.
Within biotechnology, we eliminated our position in AbbVie in favor of Regeneron Pharmaceuticals. Regeneron is a commercial-stage biotechnology company with an attractive biologic treatment portfolio and drug pipeline anchored by blockbusters: retinal disease treatment Eylea and Dupixent, a monoclonal antibody used to treat allergic diseases. Recently, the firm reached an agreement with Sanofi to acquire the full global rights to Libtayo, another promising immuno-oncology drug franchise that Regeneron hopes to extend.

Financials

Within financials, we focus on owning high-quality companies that have strong balance sheets, leading industry positions, and diversified revenue streams. We have positioned the portfolio here to benefit from a rising property and casualty upcycle as well as short-term rate variability. Our largest industry weights are in insurance and banks.

We bought Progressive, a property and casualty insurance carrier and major player in the personal auto insurance market. We believe that Progressive's competitive advantages, including its low expense ratio, superior data and analytics, and excellent management systems, provide it with higher underwriting leverage and stronger margin potential that, in our view, should drive consistent return growth and a deserved premium valuation versus peers.
We view swapping out our position in Bank of New York Mellon for a new holding in JPMorgan Chase as a quality upgrade at an attractive risk/reward trade-off within financials. JPMorgan Chase is one of the four largest money center banks in the U.S. with an even mix of retail and wholesale businesses. We favor JPMorgan's scale, robust loan growth, attractive fee businesses, relatively conservative underwriting, and experienced management team in an uncertain macro backdrop.

Utilities

We like the utilities sector because many of the companies offer durable earnings growth potential and strong free cash flow and have longer-term opportunities to benefit from an increase in renewable energy generation and electric grid modernization. Over the quarter, our exposure to the sector increased in both absolute and relative terms.

On a recent pullback in June, we initiated a position in Ameren, an electric and gas utility company serving Missouri and Illinois. We think that Ameren is a high-quality utility with a long runway for growth, as it has a solid management team, constructive�regulatory jurisdictions, multiple areas for upside optionality including renewables, and a top-tier balance sheet, and, in our view, is well-positioned for an inflationary environment.
We substantially sold down our holding in XCEL Energy and used the funds to purchase Ameren, which we view as an upgrade in quality in the utility space.

Communication Services

The communication services sector comprises a wide range of media, entertainment, and telecommunication services companies. We increased our underweight in the sector during the period. Our exposure is concentrated within the interactive media and services industry through Alphabet.

We eliminated Charter Communications in favor of other ideas with more upside potential. We felt that Charter may struggle to grow its subscriber base as competition in the space increases.

30-Nov-2022 - Shawn T. Driscoll, Portfolio Manager,

Within the portfolio, our positioning is mainly driven by fundamental, stock-specific views. The turbulent environment has offered us the opportunity to upgrade the quality of our holdings within certain sectors. Over the month, we sold some shares of consumer staples, which represents one of our largest absolute sector weightings. One of our largest holdings in this space is a consumer goods company that specialises in a wide range of personal care and hygiene products. We also purchased shares of multi-utilities companies within utilities, one of our smaller absolute sector weightings.

30-Jun-2022 - Shawn T. Driscoll, Portfolio Manager,

HCA Healthcare is the largest publicly traded hospital operator in the U.S. We sold out of our holding, as we saw the lucrative benefits that HCA had derived from the coronavirus pandemic begin to wane, and we wanted to book profits and reinvest in a higher conviction name, albeit another COVID beneficiary, Quest Diagnostics.
Quest Diagnostics is one of the largest independent clinical laboratories and diagnostic testing companies in the U.S. Given its scale, Quest was and is a central player in COVID testing. We appreciate management's focus on sustaining growth rates while transitioning the business to a post-COVID environment. We believe Quest has opportunities to leverage their advanced diagnostic capabilities as well as to grow their direct consumer testing franchise.
Within biotechnology, we eliminated our position in AbbVie in favor of Regeneron Pharmaceuticals. Regeneron is a commercial-stage biotechnology company with an attractive biologic treatment portfolio and drug pipeline anchored by blockbusters: retinal disease treatment Eylea and Dupixent, a monoclonal antibody used to treat allergic diseases. Recently, the firm reached an agreement with Sanofi to acquire the full global rights to Libtayo, another promising immuno-oncology drug franchise that Regeneron hopes to extend.
We bought Progressive, a property and casualty insurance carrier and major player in the personal auto insurance market. We believe that Progressive's competitive advantages, including its low expense ratio, superior data and analytics, and excellent management systems, provide it with higher underwriting leverage and stronger margin potential that, in our view, should drive consistent return growth and a deserved premium valuation versus peers.
We view swapping out our position in Bank of New York Mellon for a new holding in JPMorgan Chase as a quality upgrade at an attractive risk/reward trade-off within financials. JPMorgan Chase is one of the four largest money center banks in the U.S. with an even mix of retail and wholesale businesses. We favor JPMorgan's scale, robust loan growth, attractive fee businesses, relatively conservative underwriting, and experienced management team in an uncertain macro backdrop.
On a recent pullback in June, we initiated a position in Ameren, an electric and gas utility company serving Missouri and Illinois. We think that Ameren is a high-quality utility with a long runway for growth, as it has a solid management team, constructive�regulatory jurisdictions, multiple areas for upside optionality including renewables, and a top-tier balance sheet, and, in our view, is well-positioned for an inflationary environment.
We substantially sold down our holding in XCEL Energy and used the funds to purchase Ameren, which we view as an upgrade in quality in the utility space.
We eliminated Charter Communications in favor of other ideas with more upside potential. We felt that Charter may struggle to grow its subscriber base as competition in the space increases.

30-Jun-2022 - Shawn T. Driscoll, Portfolio Manager,

Shares of discount retailer Dollar General advanced double digits this quarter, bucking the downward spiral of consumer discretionary stocks overall. The company, known for its rural neighborhood footprint, broad selection of merchandise, and value-based off-price strategy, released solid earnings in May that exceeded expectations for topline revenue and earnings. Same-store sales increased as consumers, squeezed by inflation and higher gas prices, depended more on shopping at their local Dollar General. We continue to like the company's below-average cyclicality, strong value proposition of low prices and convenience, and shareholder-friendly capital deployment.
Despite a pullback in April?after releasing disappointing first-quarter earnings facing tough year-ago comparables?shares of specialty retailer O'Reilly Automotive outperformed the overall consumer discretionary sector over the period. Given the firm's pricing power, competitively advantaged supply chain and distribution capabilities, and strong positioning in the nondiscretionary auto parts market, we think that O'Reilly should benefit as consumers are keeping their existing vehicles longer, and we believe that the firm has the potential to enhance its competitive position by gaining market share through its recently introduced pricing initiative.
Broadridge Financial Solutions is a technology solutions provider that manages mandated investor communications, such as proxy distribution and voting, for corporate issuers, institutional investors, and broker-dealers. Amid the volatile macro backdrop, Broadridge delivered steady growth and fiscal third-quarter earnings that beat expectations. Management stated that the firm is on track to deliver full-year earnings toward the higher end of its target range and�reiterated its ability to drive continued margin expansion along with topline growth. In our view, Broadridge is set up well to benefit from secular tailwinds in bank/brokerage outsourcing, which should support ongoing business momentum.
KLA is a capital equipment company that provides testing and control systems for the semiconductor industry. Shares of KLA held up better than pure semiconductor names through the current sell-off, as the firm was able to navigate through supply chain issues and a challenging backdrop to deliver margins and earnings ahead of consensus. We believe that KLA remains well positioned given that the ever-rising complexity in the space should continue to drive the need for KLA's systems to enhance productivity.

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Past performance is not a reliable indicator of future performance.

Source for performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures.

Daily performance data is based on the latest available NAV.

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.

Please note that the Fund typically has a risk of high volatility.

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.

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.

Attribution Data: Analysis represents the total performance of the portfolio as calculated by the FactSet attribution model and is inclusive of other assets that that will not receive a classification assignment in the detailed structure shown. Returns will not match official T. Rowe Price performance because FactSet uses different exchange rate sources and does not capture intra-day trading. Performance for each security is obtained in the local currency and, if necessary, is converted to U.S. dollars using an exchange rate determined by an independent third party. Figures are shown with gross dividends reinvested.

Sources: Copyright © 2021 FactSet Research Systems Inc. All rights reserved. MSCI/S&P GICS Sectors; Analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses the MSCI/S&P Global Industry Classification Standard (GICS) for sector and industry reporting. Each year, MSCI and S&P make changes to the GICS structure. The last change occurred on September 28, 2018. T. Rowe Price will adhere to all future updates to GICS for prospective reporting.

The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc, ("MSCI") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and is licensed for use by [Licensee]. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or impIied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any or such standard or classification, Without limiting any or the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

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.

©2023 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Citywire Data Source: Citywire – where the fund manager is rated by Citywire, the rating is based on the manager’s 3-year risk adjusted performance. For further information on ratings methodology, please visit www.aboutcitywire.com.

Health Care

Financials

Utilities

Communication Services

Risks

Typical Investor