Emerging Markets Discovery 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

We believe that EMs are structurally stronger than in the past and will benefit from increased capital expenditure from corporates, which have in recent years largely been spending on maintenance and which now need to ramp up investment spending for expansion. EMs will also likely benefit from the green energy transition as there is greater focus on environmental protection and the need to offset climate change. This in turn is expected to yield many investment opportunities in traditional or "forgotten" sectors. We think this could be the start of a multi-year investment and capital expenditure cycle as companies have been underinvesting while heightened geopolitical tensions could trigger a change in global supply chains to increase their resilience.

�

This favourable economic backdrop should continue to support a "Value" investment style change in emerging markets, in our view. We think the recent outperformance of value stocks over growth stocks is a sustainable trend given that the valuation gap between the two styles remains wide by historical standards.

�

In China, where the portfolio has the largest exposure, the regulatory cycle is cyclical in nature and is approaching an inflexion point. As the cycle fades, we see support emerging from stimulus policies and easing of restrictions. However, such incremental support will likely be selective and will only target certain sectors. An unanticipated slowdown in China is a key risk, but underinvestment in recent years should present an opportunity for traditional industries.

�

We believe there are ample opportunities in EM for us to identify pockets of "forgotten" stocks with asymmetrical risk-return profiles, where fundamental changes or operational improvements may drive a re-rating, with potential downside support from solid balance sheets and/or healthy dividends. The portfolio is designed to take advantage of an expanded and evolving universe of "forgotten stocks" in EM that we believe are under-owned and under-researched by mainstream investors and which have asymmetrical risk-return profiles and positive self-help stories. We think these businesses are poised for positive fundamental change or operational improvements that should lead to higher valuations over time.

Strategy

Fund Summary

We look for signs of positive fundamental change among stable, but unloved, businesses that we believe are facing unwarranted scepticism from investors. Meeting company management is central to our approach, as we aim to identify quality teams with strategic vision, a roadmap for success and the ability to execute. 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.

30-Jun-2022 - Ernest Yeung, Portfolio Manager,

We believe the portfolio is positioned to perform well in a global economy, which has entered a new stage of recovery. The shift towards core value sectors with our overweight positions in traditional economy stocks is leveraged to benefit from themes like higher capital expenditure and the green transition. While we continued our search for "forgotten" stocks with asymmetrical risk-reward and self-help profiles, we also avoided crowded trades like technology, preferring to focus on stocks that we think have been neglected by mainstream investors with the potential for a rerating.��

Real Estate

Real estate is one of our bigger sector overweight positions in the portfolio. While it is part of the "shift towards core value" thesis, our stock selection is also based on earnings improvement potential.

KE Holdings is one of China's largest property brokerage platforms. We bought more shares in the company as we feel it will gain market share due to its strong network and margin improvement as property sector activity recovers.
We bought shares in Brazilian mall developer Multiplan Empreendimentos, which we feel will see strong rental growth momentum as tenant sales gather pace. It has a healthy cash position, stable occupancy levels and good cost control, in our view.

Consumer Staples

The portfolio has a positive bias towards the consumer staples sector due to the non-cyclical nature of demand and its earnings consistency. In a rising rate environment, there is a lower likelihood of a sector re-rating than with higher-beta sectors, and we believe our stock selection will contribute positively. �

We bought shares in South Korean food company CJ Cheiljedang as we believe the company's shares will perform well in an inflationary environment.
Tingyi Holding is a leading food company in China. We purchased shares in the company as we believe its margins will improve as the current environment of commodity inflation will likely fade and following the launch of new premium products.

China

During the quarter, we found some opportunities in China, the portfolio's biggest allocation, as easing lockdown restrictions improved the business outlook. Even as some investors avoided investing in China, we were able to find good investment opportunities here.

We purchased shares in Weichai Power, a leading diesel and truck engine manufacturer in China. We believe the company stands to benefit from increasing capital expenditure in China as well as from relatively loose monetary conditions.
China Oilfield Services is one of the largest Chinese oil services companies. We bought shares in the company as we believe its future prospects are levered to the increase in oil and gas capital expenditures internationally.� ��
We increased our holding in Alibaba Group as we think that the market valuation of this e-commerce giant has priced in a pessimistic scenario. We see the stock benefiting from cost savings, a cyclical rebound, and improved capital allocation.

Financials

The financials sector remains one of our biggest sector allocations despite reducing our exposure during the quarter. We believe EM financials are set to play a crucial role in supporting corporate spending and green energy transition.

Ping An Insurance is one of the largest insurers in China. The environment has been challenging for the company amid lockdowns in major cities; we sold shares in the company as we believe we can find better opportunities elsewhere in the sector.
We sold shares of Brazilian bank Banco Bradesco as we believe it is more exposed to disruption and competition than its peers.
We acquired shares of Yangzijiang Financial as a result of the spin-off from Yangzijiang Shipbuilding. The company's principal businesses are debt investment and investment management.

Team

Ernest Yeung,
Portfolio Manager

Ernest Yeung is a portfolio manager for the Emerging Markets Discovery Equity Strategy at T. Rowe Price.

Portfolio Manager since

2015

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.

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 © 2023 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.

©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.

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.

Real Estate

Consumer Staples

China

Financials

Risks

Typical Investor

Commentary for