Global Technology 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

Manager's Outlook

Global markets whipsawed this period as investors tried to make sense of the evolving developments across the geopolitical and economic landscapes, furthered by the war in Ukraine. In addition, we saw a continuation of the macro-driven style headwinds in equity markets that have negatively impacted technology stocks since the U.S. Federal Reserve's hawkish pivot in late 2021. While stock prices have changed dramatically, fundamentals have for the most part remained on track, in our opinion. During the period, high-growth technology stocks were punished as the markets seemed to value near-term cash flows above all else.

Our holdings have remained consistent throughout this volatile period, something that speaks to our level of conviction. While some companies have transitioned to a post-pandemic economy better than others, we are encouraged by the durable growth trends that we see. In enterprise IT, for example, budgets are expected to grow as companies continue their digital transformations. Many of the software stocks we own stand to benefit from the innovative solutions these companies develop to help organizations increase agility, collaboration, and competitiveness. The strength in the enterprise also benefited the secular trend in cloud computing, which showed signs of acceleration in the period. Several of our investments in internet and semiconductors are tied to the very real benefits they provide in compute and storage given the unprecedented growth rate of data. Finally, we are reassured by the increasing success of disruptors in the electric vehicle market as they stake out positions to capture large and fast-growing demand across the globe.

The upward swing in technology stock prices during the week of the Fed's first rate hike in more than four years was encouraging. Now that the Federal Reserve has achieved "lift off" and there is perhaps a bit more certainty surrounding the trajectory of interest rates, it is our hope that the market can go back to focusing on fundamentals. In the meantime, our analysts continue to react to market opportunities as they present themselves while positioning the portfolio to outperform in the long term.

Strategy

Fund Summary

Seeks companies that benefit from rapid advances in technology and offer significant opportunities for long-term growth.

31-Mar-2022 - Alan Tu, Portfolio Manager,

While the market was less focused on bottom-up fundamentals and more focused on broad factor movements, we believe the portfolio is well positioned for medium-term outcomes and that its fundamental approach will eventually be rewarded. Our research indicates that the major trends that we invest behind remain strong. Nevertheless, we continued to look for areas where we can reduce our exposure to unpaid risk.

Software

We bought shares of companies focused on building innovative solutions to help businesses better manage the growing volume and variety of data and develop collaboration tools to increase efficiencies.

We bought shares in Snowflake, a cloud data warehousing platform. We like Snowflake's cloud native architecture, adept management team, and opportunities to penetrate a large and growing market driven by increasing investments in machine learning and artificial intelligence.

Semiconductors

In semiconductors, we sold share of our core holdings and maintained an underweight position. Based on our research, we think this industry is late in its business cycle.

Seeking to reduce risk, we sold shares in Taiwan Semiconductor Manufacturing, a leading-edge process foundry, to balance risk and reward. We see this firm outgrowing competitors through incremental outsourcing from manufacturers and design houses.
We sold shares in ASML Holding, the dominant supplier of extreme ultraviolet lithography equipment used in the fabrication of semiconductors. We believe that there may be near-term changes in inventories that may affect its stock price.

Internet

Seeking to balance risk and reward, we sold share in consumer internet, especially companies facing regulatory risks or increased competition.

We sold shares of Sea seeking to better match risk and reward. Sea is an internet platform focused on gaming, social media, e-commerce, digital wallet, and digital finance. While we are attracted to Sea's ability to lead secular trends within fast-growing markets, we will monitor how the company evolves its growth strategy to potentially leverage new sources of cash.
We sold shares of Tencent Holdings, China's largest video game and social media platform, seeking to balance risk and return as the company tries to find ways to regain momentum amid rising competition and ongoing regulatory interventions. We appreciate Tencent's global position, its savvy management team, and its solid basis for long-term growth.

Media & Entertainment

Slowing growth and increased competition caused us to sell certain media and video gaming stocks.

We expected to see Netflix's strong slate of programming draw in more new subscribers than it did in the fourth quarter. Instead, the company missed subscriber addition estimates and guided for a sub-par first quarter, settling on a lower-than-expected revenue trajectory. We sold it in favor of other opportunities.
We sold shares in Roblox during the period seeking to better align risk and reward. We are attracted to the powerful social network effects Roblox utilizes in drawing in new active users and creators. This sets up a positive feedback loop and helps the platform widen its moat, expand its addressable market, and potentially deliver durable earnings.

Industrials

Supply chain problems continued to hamper electric vehicle (EV) makers' ability to meet robust demand, with some models requiring months-long delivery wait times. Adding to these woes, the war in Ukraine and associated trade conflicts caused supply shortages and rising prices for the raw materials needed in lithium batteries used to power EVs.

We sold shares of Tesla seeking to manage our position size. We appreciate that Tesla is the lead disruptor in the electric vehicle market, leveraging its advantages in manufacturing, software, and brand. We expect it to eventually be able to move down the cost curve and unlock new parts of the market while increasing unit margins.

Team

Dom Rizzo,
Portfolio Manager

Dominic Rizzo is the portfolio manager of the Global Technology Equity Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Portfolio Manager since

2022

Years at T. Rowe Price

Years investment experience

Benchmark Data Source: MSCI. MSCI index returns are shown with reinvestment of dividends after the deduction of withholding taxes. MSCI and its affiliates and third party sources and providers (collectively, “MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

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, taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures. Past performance is not a reliable indicator of future performance.

Daily performance data is based on the latest available NAV. Performance returns for share classes less than 1 year old (and associated benchmarks) are cumulative rather than annualised.

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.

The Funds are sub-funds of the T. Rowe Price Funds OEIC, an investment company with variable capital incorporated in England and Wales which is registered with the UK Financial Conduct Authority 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 in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with 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 and via www.troweprice.com.

IA Sector: Many UK funds are grouped into sectors by the Investment Association (the “IA”) (the trade body that represents UK investment managers), to help investors to compare funds with broadly similar characteristics. Investors may compare the fund against the performance of the Technology & Telecommunications sector. This sector represents the average performance of certain funds that invest at least 80% of their assets in technology and telecommunications sectors as defined by major index providers. It can therefore serve as a method of comparing the fund’s performance with other funds that have broadly similar characteristics. The fund is not constrained to or managed in line with this sector. Source for IA Sector Data: © Morningstar. All Rights Reserved.

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

This material being furnished is for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. 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.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

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The specific securities identified and described in this report do not represent all of the securities purchased, sold, or recommended for the OEIC 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 © 2020 FactSet Research Systems Inc. All rights reserved. Analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses a custom structure for sector and industry reporting for this product.

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.

¹ Please note that the Ongoing Charges figure is inclusive of the Management Charge and is charged per annum.

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.

Software

Semiconductors

Internet

Media & Entertainment

Industrials

Risks

Typical Investor

Commentary for