UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-05833
| T. Rowe Price Institutional International Funds, Inc. |
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| (Exact name of registrant as specified in charter) |
| 100 East Pratt Street, Baltimore, MD 21202 |
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| (Address of principal executive offices) |
| David Oestreicher |
| 100 East Pratt Street, Baltimore, MD 21202 |
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| (Name and address of agent for service) |
Registrant’s telephone number, including area code: (410) 345-2000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2019
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Institutional Global Focused Growth Equity Fund |
October 31, 2019 |
Beginning on January 1, 2021, as permitted by SEC regulations, paper copies of the T. Rowe Price funds’ annual and semiannual shareholder reports will no longer be mailed, unless you specifically request them. Instead, shareholder reports will be made available on the funds’ website (troweprice.com/prospectus), and you will be notified by mail with a website link to access the reports each time a report is posted to the site.
If you already elected to receive reports electronically, you will not be affected by this change and need not take any action. At any time, shareholders who invest directly in T. Rowe Price funds may generally elect to receive reports or other communications electronically by enrolling at troweprice.com/paperless or, if you are a retirement plan sponsor or invest in the funds through a financial intermediary (such as an investment advisor, broker-dealer, insurance company, or bank), by contacting your representative or your financial intermediary.
You may elect to continue receiving paper copies of future shareholder reports free of charge. To do so, if you invest directly with T. Rowe Price, please call T. Rowe Price as follows: IRA, nonretirement account holders, and institutional investors, 1-800-225-5132; small business retirement accounts, 1-800-492-7670. If you are a retirement plan sponsor or invest in the T. Rowe Price funds through a financial intermediary, please contact your representative or financial intermediary or follow additional instructions if included with this document. Your election to receive paper copies of reports will apply to all funds held in your account with your financial intermediary or, if you invest directly in the T. Rowe Price funds, with T. Rowe Price. Your election can be changed at any time in the future.
| T. ROWE PRICE INSTITUTIONAL GLOBAL FOCUSED GROWTH EQUITY FUND |
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HIGHLIGHTS
| ■ | The Institutional Global Focused Growth Equity Fund returned 17.67% during the period and widely outperformed both its benchmark, the MSCI All Country World Index Net, and its Lipper peer group average. |
| ■ | Relative performance was aided by stock selection in financials and health care and an underweight allocation to energy. On the negative side, holdings in consumer discretionary and an underweight to real estate weighed on relative returns. At the regional level, stock selection in North America and developed Europe helped relative performance the most. No regions detracted on a relative basis for the period. |
| ■ | In terms of positioning, our largest overweights versus the benchmark are in information technology, health care, and consumer discretionary. These are areas where we feel significant innovation and disruption have created compelling opportunities for accelerating return on capital. On the other hand, we continue to maintain significant underweights in consumer staples and industrials and business services, where we think valuations are stretched and there are fewer opportunities for high-quality growth. Regionally, our allocation to North America decreased, while our exposure to developed Europe and emerging markets increased. |
| ■ | Overall, we remain constructive on global equities and continue to take advantage of market volatility to move into better ideas. With a longer-term investment horizon and willingness to be contrarian, we believe it is critical to look beyond today’s near-term challenges in order to identify tomorrow’s opportunities in an environment that could look very different from the one that has prevailed in recent years. |
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CIO Market Commentary
Dear Investor
Global markets recovered from a tumultuous start to deliver solid results for your fund’s fiscal year, the 12-month period ended October 31, 2019. The U.S. Federal Reserve switched course and joined other dovish central banks around the world to support markets following a sharp sell-off in December. This action, combined with better-than-feared corporate earnings, helped propel many equity indices during the year to double-digit gains. The S&P 500 Index reached an all-time high, and Europe’s Stoxx 600 Index was trading near a record close at the end of the period. Growth stocks in the U.S. were the strongest performers, but nearly all developed markets and most emerging markets also delivered strong gains.
The U.S. dollar finished with mixed results versus other currencies during the 12-month reporting period. A relatively strong greenback versus the euro weighed on returns for U.S. investors in European securities, for example, while a stronger yen boosted the returns of Japanese stocks in U.S. dollar terms.
During the period, investors faced worries about the U.S.-China trade dispute, Brexit, and a slowdown in global manufacturing. However, stocks were resilient, and the worst-case geopolitical scenarios failed to play out. Trade rhetoric has become more conciliatory and negotiators have made modest progress; the UK received another Brexit extension until January 31 to work out the terms of its departure from the European Union; and our economists believe that some manufacturing indicators, while still weak, appear poised for a recovery.
The actions by the Federal Reserve and other central banks to stimulate economic growth played a key role in sustaining market sentiment during the period. As evidence of slowing global growth began to mount, the Fed signaled early in the year that it would take steps to sustain the economic expansion, and central bank policymakers followed through with quarter-percentage-point rate cuts in July, September, and October and took steps to maintain liquidity in short-term lending markets.
The European Central Bank (ECB) also acted to address flagging growth. The ECB lowered its benchmark deposit rate deeper into negative territory and announced that it plans to buy €20 billion of bonds per month starting in November 2019 as it restarts its quantitative easing program.
Falling yields fueled a strong rally in the bond market and also aided equity results as companies benefited from lower borrowing costs and investors sought higher returns. Dividend-paying stocks in sectors such as real estate outperformed as investors searched for higher-income opportunities.
The yield on the 30-year Treasury bond hit a record low in August, falling below the 2% mark for the first time, and the benchmark 10-year Treasury note’s yield dipped to its lowest level since 2016. Despite being at or near record lows, Treasuries offered higher yields than bonds in many foreign markets, especially in Europe and Japan, where government bond yields were often in negative territory. (Bond prices and yields move in opposite directions.)
Looking ahead to 2020, we remain optimistic that the U.S. will avoid a recession in the new year, but we believe that further progress in U.S.-China trade talks will be a key factor in sustaining positive market sentiment. A reduction in trade barriers could help corporate earnings rebound and provide a lift to the manufacturing sector.
In the months ahead, our team of portfolio managers, analysts, and economists will be following the trade talks and the U.S. presidential elections, along with other developments that could affect market performance. Our teams in London and Hong Kong have provided us with important insights into Brexit and the protests in the Chinese territory over the past 12 months. We expect twists and turns along the way with each of these events, but we believe our approach to fundamental research around the globe will continue to add value in the year ahead.
Thank you for your continued confidence in T. Rowe Price.
Sincerely,
Robert Sharps
Group Chief Investment Officer
Management’s Discussion of Fund Performance
INVESTMENT OBJECTIVE
The fund seeks long-term growth of capital through investments primarily in the common stocks of established companies throughout the world, including the U.S.
FUND COMMENTARY
How did the fund perform in the past six months?
The Institutional Global Focused Growth Equity Fund returned 17.67% in the 12 months ended October 31, 2019. The fund widely outperformed both the MSCI All Country World Index Net benchmark and the Lipper Global Multi-Cap Growth Funds Average. (Past performance cannot guarantee future results.)
What factors influenced the fund’s performance?
From a sector perspective, the fund’s relative outperformance was aided by our stock selection in the financials and health care sectors and an underweight to energy. Conversely, stock selection in consumer discretionary and an underweight to real estate weighed on relative returns. At the regional level, holdings in emerging markets and developed Europe were the most beneficial to relative performance.
Within the financials sector, our position in London Stock Exchange was the largest relative contributor. The UK-based exchange benefited from increased market volatility and solid earnings results over the period. We think the company is poised for accelerating growth driven by its OTC clearing business, and, as owners of the FTSE/Russell indices, the company is also benefiting from the active to passive trend in investing. (Please refer to the fund’s portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)
Health care was another area of relative strength. Exact Sciences benefited from the momentum of Cologuard, its early screening test for colon cancer, helped by its three-year co-promotion agreement with Pfizer. Shares of Japanese pharmaceutical company Chugai Pharmaceutical trended higher over the year, helped by the strong launch of hemophilia drug Hemlibra that was discovered by the company and has been licensed to Roche for distribution outside of Japan.
Conversely, holdings in consumer discretionary weighed on relative returns, most notably our position in luxury digital marketplace platform Farfetch. Shares sank in August following the firm’s quarterly earnings release. While the company reported strong revenue growth, profitability remained weak, which alarmed investors. We subsequently eliminated our position.
Our underweight to the real estate sector was another drag on relative performance. We do not generally favor real estate given the limited growth profiles in the space. We are being carefully contrarian in the one name we own in the sector, Derwent London, a UK real estate investment trust that has been pressured by Brexit uncertainty but owns some of the best long-term office assets in London.
How is the fund positioned?
As always, our trading activity during the period was mainly driven from the bottom up. The portfolio’s sector and region allocations are primarily a result of individual stock considerations but are also influenced, to a lesser degree, by macroeconomic and geopolitical considerations. That being said, we believe we are heading toward a macroeconomic crossroads, particularly regarding themes around the regulatory landscape for near-monopolistic technology companies and U.S.-China trade. Consequently, we have been attempting to position the portfolio in such a way that we can participate in any positive-resolution-driven rally (such as a trade deal) while dampening the negative effects of any deteriorating factors.
At the end of October, the fund’s largest overweight by far was in information technology—which also experienced the largest allocation gain over the period—followed by health care and consumer discretionary. These are sectors where we feel that innovation and disruption have created compelling opportunities for us to own high-quality growth names at attractive prices. On the other hand, our most significant underweights were in consumer staples and industrials and business services, areas where we feel valuations are more stretched and where there are fewer opportunities for companies to produce accelerating return on capital.
Information technology remains the fund’s largest sector allocation, and we also increased our overweight significantly over the period. We have high conviction in the sector, as this is an area where rapid market share shifts mean growth companies are plentiful regardless of the broader macroeconomic environment. That being said, increasing regulatory scrutiny and concerns about privacy have been a cloud over the big internet companies in recent months, and we are managing our position sizes in names such as Facebook and Amazon.com in light of these risks. We also trimmed our position in Google parent Alphabet, although it remains a top holding in the portfolio. We have a sizable weighting in semiconductor stocks that provides us with exposure to growing automotive, industrial, and smartphone end markets. While we eliminated some names such as Taiwan Semiconductor Manufacturing and Ams, we added a variety of new positions, including Samsung Electronics and Apple. We initiated positions in Advanced Micro Devices and Applied Materials, which provide solutions and designs to semiconductor manufacturers. We think both companies stand to benefit from the slowing of Moore’s Law, which will require increased capital expenditures to continue to advance down the node size. We also added some compelling names in software, including Atlassian, ServiceNow, and Temenos.
Our most significant reductions occurred in industrials and business services and consumer staples. In the former, we eliminated names like Allegion, Northrop Grumman, Boeing, and Japanese temporary staffing agency Recruit Holdings. Our reduction in consumer staples was almost entirely due to our elimination of European personal care and tissue manufacturer Essity. The stock performed well for us, and with our thesis largely played out, we chose to move on from the stock.
Regionally, our positioning is the result of fundamental, bottom-up stock selection. While we’ve moderated our exposure to North America during the period and are underweight the region, it still makes up the majority of our geographic allocation at approximately 50% of assets. Our largest overweight relative to the MSCI benchmark is to emerging markets, where valuations remain attractive, although not as attractive as they were in early 2018. We are also modestly overweight Europe as we have taken advantage of increasing regional pessimism to add to our exposure.
What is portfolio management’s outlook?
As we have mentioned in the past, the world continues to pass through an ongoing cycle of crisis, response, improvement, and complacency (CRIC). Brexit, Middle East discord, and unrest in Hong Kong are largely being viewed as marginal issues in comparison with the headline-grabbing trade dispute between the U.S. and China, but they have added to geopolitical uncertainty and the volatility we’ve seen in equity markets. Considering the significance of the challenges at hand, especially surrounding trade, we have been somewhat surprised by the lack of a meaningful response from world leaders.
Accommodative central bank action throughout much of the developed world, however, has helped to begin stabilizing deteriorating economic fundamentals as 2019 closes. Even though we are not expecting a sustained economic lift into 2020, we are also not calling for a recession next year in what still looks to be a grinding and oscillating global macroeconomic environment. It seems likely that interest rates and inflation will continue to trend downward, in part, because disruption is so prevalent. Technology is unlocking capacity in every industry, and automation and excess energy have led us to a world of abundance. Markets are being shaped by the low-growth and low-inflation environment, and selectivity has become ever more critical for equity investors.
On the macro front, we think the most powerful responses would be a U.S.-China trade deal and meaningful Chinese stimulus, both of which we think are realistically possible over the next six to nine months. We are positioning the portfolio to participate in such a scenario. We have faded some of our more defensive names while adding to stocks that are (1) gaining market share in their respective end markets and (2) cyclically depressed, which we view as offensive in the current market environment. We have added to several tech industrial names that participate in automation and robotics and that are trading at increasingly attractive valuations. Our exposure in semiconductors reflects many secular growth companies, albeit with degrees of cyclical characteristics and earnings drivers that the market is discounting. We have been defending our Chinese internet names in prudent weights, and they should perform well if some of the clouds around China lift, even if only partly. While our underweight to the U.S. is largely a result of our stock picking, we think the U.S. is likely to lag during the next upcycle. We are also going to start lapping the initial disruptions that trade caused a year ago, and if economic activity does not materially deteriorate, we should see some level of stabilization in global economic data.
Overall, we remain constructive on global equities and continue to take advantage of market volatility to move into better ideas. With a longer-term investment horizon and willingness to be contrarian, we believe it is critical to look beyond today’s near-term challenges in order to identify tomorrow’s opportunities in an environment that could look very different from the one that has prevailed in recent years.
The views expressed reflect the opinions of T. Rowe Price as of the date of this report and are subject to change based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.
RISKS OF INTERNATIONAL INVESTING
Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Funds investing in a single country or in a limited geographic region tend to be riskier than more diversified funds. Risks can result from varying stages of economic and political development; differing regulatory environments, trading days, and accounting standards; and higher transaction costs of non-U.S. markets. Non-U.S. investments are also subject to currency risk, or a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
BENCHMARK INFORMATION
Note: 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.
GROWTH OF $1 MILLION
This chart shows the value of a hypothetical $1 million investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with benchmarks, which include a broad-based market index and may also include a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes.
AVERAGE ANNUAL COMPOUND TOTAL RETURN
FUND EXPENSE EXAMPLE
As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period.
Actual Expenses
The first line of the following table (Actual) provides information about actual account values and actual expenses. You may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information on the second line of the table (Hypothetical) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher.
QUARTER-END RETURNS
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
| NOTES TO FINANCIAL STATEMENTS |
T. Rowe Price Institutional International Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The Institutional Global Focused Growth Equity Fund (the fund) is a diversified, open-end management investment company established by the corporation. The fund seeks long-term growth of capital through investments primarily in the common stocks of established companies throughout the world, including the U.S.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation The fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Certain prior year amounts in the accompanying financial statements and financial highlights have been restated to conform to current year presentation.
Investment Transactions, Investment Income, and Distributions Investment transactions are accounted for on the trade date basis. Income and expenses are recorded on the accrual basis. Realized gains and losses are reported on the identified cost basis. Income tax-related interest and penalties, if incurred, are recorded as income tax expense. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the asset received. Distributions to shareholders are recorded on the ex-dividend date. Income distributions, if any, are declared and paid annually. A capital gain distribution may also be declared and paid by the fund annually.
Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective date of such transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is not bifurcated from the portion attributable to changes in market prices.
Redemption Fees Prior to April 1, 2019, a 2% fee was assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees were withheld from proceeds that shareholders received from the sale or exchange of fund shares. The fees were paid to the fund and were recorded as an increase to paid-in capital. The fees may have caused the redemption price per share to differ from the net asset value per share.
In-Kind Redemptions In accordance with guidelines described in the fund’s prospectus, and when considered to be in the best interest of all shareholders, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). Gains and losses realized on in-kind redemptions are not recognized for tax purposes and are reclassified from undistributed realized gain (loss) to paid-in capital. During the year ended October 31, 2019, the fund realized $9,950,000 of net gain on $36,706,000 of in-kind redemptions.
New Accounting Guidance In March 2017, the FASB issued amended guidance to shorten the amortization period for certain callable debt securities held at a premium. The guidance is effective for fiscal years and interim periods beginning after December 15, 2018. Adoption will have no effect on the fund’s net assets or results of operations.
Indemnification In the normal course of business, the fund may provide indemnification in connection with its officers and directors, service providers, and/or private company investments. The fund’s maximum exposure under these arrangements is unknown; however, the risk of material loss is currently considered to be remote.
NOTE 2 - VALUATION
The fund’s financial instruments are valued and its net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC.
Fair Value The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.
Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value:
Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date
Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads)
Level 3 – unobservable inputs
Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values.
Valuation Techniques Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC Bulletin Board securities are valued at the mean of the closing bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the closing bid and asked prices for domestic securities and the last quoted sale or closing price for international securities.
For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will affect the value of some or all of its portfolio securities, the fund will adjust the previous quoted prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust quoted prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with quoted prices and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares quoted prices, the next day’s opening prices in the same markets, and adjusted prices.
Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities generally are categorized in Level 2 of the fair value hierarchy despite the availability of quoted prices because, as described above, the fund evaluates and determines whether those quoted prices reflect fair value at the close of the NYSE or require adjustment. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy.
Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation and are categorized in Level 1 of the fair value hierarchy. Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value.
Thinly traded financial instruments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded.
Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of an equity investment with limited market activity, such as a private placement or a thinly traded public company stock, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, new rounds of financing, negotiated transactions of significant size between other investors in the company, relevant market valuations of peer companies, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will afford greatest weight to actual prices in arm’s length transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation methods such as market-based valuation multiples; a discount or premium from market value of a similar, freely traded security of the same issuer; or some combination. Fair value determinations are reviewed on a regular basis and updated as information becomes available, including actual purchase and sale transactions of the issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from those of other market participants. Depending on the relative significance of unobservable inputs, including the valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy.
Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on October 31, 2019 (for further detail by category, please refer to the accompanying Portfolio of Investments):
Following is a reconciliation of the fund’s Level 3 holdings for the year ended October 31, 2019. Gain (loss) reflects both realized and change in unrealized gain/loss on Level 3 holdings during the period, if any, and is included on the accompanying Statement of Operations. The change in unrealized gain/loss on Level 3 instruments held at October 31, 2019, totaled $29,000 for the year ended October 31, 2019. During the year, transfers out of Level 3 include securities acquired as a result of a corporate action.
NOTE 3 - OTHER INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information.
Emerging and Frontier Markets The fund may invest, either directly or through investments in other T. Rowe Price funds, in securities of companies located in, issued by governments of, or denominated in or linked to the currencies of emerging and frontier market countries. Emerging markets, and to a greater extent frontier markets, generally have economic structures that are less diverse and mature, and political systems that are less stable, than developed countries. These markets may be subject to greater political, economic, and social uncertainty and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Such securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. Investing in frontier markets is significantly riskier than investing in other countries, including emerging markets.
Restricted Securities The fund may invest in securities that are subject to legal or contractual restrictions on resale. Prompt sale of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs.
Securities Lending The fund may lend its securities to approved borrowers to earn additional income. Its securities lending activities are administered by a lending agent in accordance with a securities lending agreement. Security loans generally do not have stated maturity dates, and the fund may recall a security at any time. The fund receives collateral in the form of cash or U.S. government securities. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities; any additional collateral required due to changes in security values is delivered to the fund the next business day. Cash collateral is invested in accordance with investment guidelines approved by fund management. Additionally, the lending agent indemnifies the fund against losses resulting from borrower default. Although risk is mitigated by the collateral and indemnification, the fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities, collateral investments decline in value, and the lending agent fails to perform. Securities lending revenue consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower, compensation to the lending agent, and other administrative costs. In accordance with GAAP, investments made with cash collateral are reflected in the accompanying financial statements, but collateral received in the form of securities is not. At October 31, 2019, the value of loaned securities was $827,000; the value of cash collateral and related investments was $844,000.
Other Purchases and sales of portfolio securities other than short-term securities aggregated $53,993,000 and $84,358,000, respectively, for the year ended October 31, 2019.
NOTE 4 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes.
The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.
Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The permanent book/tax adjustments have no impact on results of operations or net assets and relate primarily to redemptions in kind and the recharacterization of distributions. For the year ended October 31, 2019, the following reclassification was recorded:
Distributions during the years ended October 31, 2019 and October 31, 2018, were characterized for tax purposes as follows:
At October 31, 2019, the tax-basis cost of investments and components of net assets were as follows:
The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales and the realization of gains/losses on passive foreign investment companies for tax purposes.
NOTE 5 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in which it invests. Additionally, capital gains realized upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes are computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital gains. Taxes attributable to income are accrued by the fund as a reduction of income. Current and deferred tax expense attributable to capital gains is reflected as a component of realized or change in unrealized gain/loss on securities in the accompanying financial statements. To the extent that the fund has country specific capital loss carryforwards, such carryforwards are applied against net unrealized gains when determining the deferred tax liability. Any deferred tax liability incurred by the fund is included in either Other liabilities or Deferred tax liability on the accompanying Statement of Assets and Liabilities.
NOTE 6 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a sub-advisory agreement(s) with one or more of its wholly owned subsidiaries, to provide investment advisory services to the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee equal to 0.65% of the fund’s average daily net assets. The fee is computed daily and paid monthly.
The fund is subject to a contractual expense limitation through the expense limitation date indicated in the table below. During the limitation period, Price Associates is required to waive its management fee and pay the fund for any expenses (excluding interest; expenses related to borrowings, taxes, and brokerage; and other non-recurring expenses permitted by the investment management agreement) that would otherwise cause the fund’s ratio of annualized total expenses to average net assets (net expense ratio) to exceed its expense limitation. The fund is required to repay Price Associates for expenses previously waived/paid to the extent its net assets grow or expenses decline sufficiently to allow repayment without causing the fund’s net expense ratio (after the repayment is taken into account) to exceed the lesser of: (1) the expense limitation in place at the time such amounts were waived; or (2) the fund’s current expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver. Pursuant to this agreement, expenses were waived/paid by and/or repaid to Price Associates during the year ended October 31, 2019 as indicated in the table below. Including this amount, expenses previously waived/paid by Price Associates in the amount of $654,000 remain subject to repayment by the fund at October 31, 2019. Any repayment of expenses previously waived/paid by Price Associates during the period would be included in the net investment income and expense ratios presented on the accompanying Financial Highlights.
In addition, the fund has entered into service agreements with Price Associates and a wholly owned subsidiary of Price Associates, each an affiliate of the fund (collectively, Price). Price Associates provides certain accounting and administrative services to the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. For the year ended October 31, 2019, expenses incurred pursuant to these service agreements were $70,000 for Price Associates and less than $1,000 for T. Rowe Price Services, Inc. All amounts due to and due from Price, exclusive of investment management fees payable, are presented net on the accompanying Statement of Assets and Liabilities.
The fund may invest its cash reserves in certain open-end management investment companies managed by Price Associates and considered affiliates of the fund: the T. Rowe Price Government Reserve Fund or the T. Rowe Price Treasury Reserve Fund, organized as money market funds, or the T. Rowe Price Short-Term Fund, a short-term bond fund (collectively, the Price Reserve Funds). The Price Reserve Funds are offered as short-term investment options to mutual funds, trusts, and other accounts managed by Price Associates or its affiliates and are not available for direct purchase by members of the public. Cash collateral from securities lending is invested in the T. Rowe Price Short-Term Fund. The Price Reserve Funds pay no investment management fees.
The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require, among other things, that such purchase and sale cross trades be effected at the independent current market price of the security. During the year ended October 31, 2019, the aggregate value of purchases and sales cross trades with other funds or accounts advised by Price Associates was less than 1% of the fund’s net assets as of October 31, 2019.
NOTE 7 - SUBSEQUENT EVENT
At a Board of Directors meeting held on July 31, 2019, the Board approved the reorganization of the fund into the T. Rowe Price Global Stock Fund (Acquiring fund). On November 25, 2019 (Closing Date), the reorganization was consummated and the Acquiring fund acquired all of the assets and liabilities of the fund in exchange for I Class shares of the Acquiring fund, creating a combined fund with blended holdings of both funds. Effective on the Closing Date, the fund ceased operations.
Report of Independent Registered Public Accounting Firm
To the Board of Directors of T. Rowe Price Institutional International Funds, Inc. and
Shareholders of T. Rowe Price Institutional Global Focused Growth Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of T. Rowe Price Institutional Global Focused Growth Equity Fund (one of the funds constituting T. Rowe Price Institutional International Funds, Inc., hereafter referred to as the “Fund”) as of October 31, 2019, the related statement of operations for the year ended October 31, 2019, the statement of changes in net assets for each of the two years in the period ended October 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2019 and the financial highlights for each of the five years in the period ended October 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
December 17, 2019
We have served as the auditor of one or more investment companies in the T. Rowe Price group of investment companies since 1973.
TAX INFORMATION (UNAUDITED)
We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. Where applicable, we include amounts for the tax year ended 10/31/2019 and for the subsequent tax period end November 25, 2019, the Closing Date (see Note 7 - Subsequent Event of the Notes to Financial Statements).
The fund’s distributions to shareholders included:
| ■ | $1,585,000 and $257,000 from short-term capital gains for the tax year ended 10/31/19 and the subsequent tax period ended 11/25/19, respectively. |
| ■ | $4,477,000 and $2,296,000 from long-term capital gains for the tax year ended 10/31/19 and the subsequent tax period ended 11/25/19, respectively. |
For taxable non-corporate shareholders, $222,000 and $13,000 represent the fund’s qualified dividend income for the tax year ended 10/31/19 and the subsequent tax period ended 11/25/19, respectively.
For corporate shareholders, $191,000 and $11,000 qualify for the dividends-received deduction for the tax year ended 10/31/19 and the subsequent tax period ended 11/25/19.
INFORMATION ON PROXY VOTING POLICIES, PROCEDURES, AND RECORDS
A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information. You may request this document by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov.
The description of our proxy voting policies and procedures is also available on our corporate website. To access it, please visit the following Web page:
https://www.troweprice.com/corporate/en/utility/policies.html
Scroll down to the section near the bottom of the page that says, “Proxy Voting Policies.” Click on the Proxy Voting Policies link in the shaded box.
Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through T. Rowe Price, visit the website location shown above, and scroll down to the section near the bottom of the page that says, “Proxy Voting Records.” Click on the Proxy Voting Records link in the shaded box.
HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS
Effective for reporting periods on or after March 1, 2019, a fund, except a money market fund, files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Prior to March 1, 2019, a fund, including a money market fund, filed a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. A money market fund files detailed month-end portfolio holdings information on Form N-MFP with the SEC each month and posts a complete schedule of portfolio holdings on its website (troweprice.com) as of each month-end for the previous six months. A fund’s Forms N-PORT, N-MFP, and N-Q are available electronically on the SEC’s website (sec.gov).
ABOUT THE FUND’S DIRECTORS AND OFFICERS
Your fund is overseen by a Board of Directors (Board) that meets regularly to review a wide variety of matters affecting or potentially affecting the fund, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and business and regulatory affairs. The Board elects the fund’s officers, who are listed in the final table. At least 75% of the Board’s members are independent of the Boards of T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates; “inside” or “interested” directors are employees or officers of T. Rowe Price. The business address of each director and officer is 100 East Pratt Street, Baltimore, Maryland 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-638-5660.
| INDEPENDENT DIRECTORS(a) | ||
| Name (Year of Birth) Year Elected [Number of T. Rowe Price Portfolios Overseen] |
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years | |
| Teresa Bryce Bazemore (1959) 2018 [188] |
President, Radian Guaranty (2008 to 2017); Chief Executive Officer, Bazemore Consulting LLC (2018 to present); Director, Chimera Investment Corporation (2017 to present); Director, Federal Home Loan Bank of Pittsburgh (2017 to present) | |
| Ronald J. Daniels (1959) 2018 [188] |
President, The Johns Hopkins University(b) and Professor, Political Science Department, The Johns Hopkins University (2009 to present); Director, Lyndhurst Holdings (2015 to present) | |
| Bruce W. Duncan (1951) 2013 [188] |
Chief Executive Officer and Director (January 2009 to December 2016), Chairman of the Board (January 2016 to present), and President (January 2009 to September 2016), First Industrial Realty Trust, an owner and operator of industrial properties; Chairman of the Board (2005 to September 2016) and Director (1999 to September 2016), Starwood Hotels & Resorts, a hotel and leisure company; Member, Investment Company Institute Board of Governors (2017 to present); Member, Independent Directors Council Governing Board (2017 to present); Senior Advisor, KKR (November 2018 to present); Director, Boston Properties (May 2016 to present); Director, Marriott International, Inc. (September 2016 to present) | |
| Robert J. Gerrard, Jr. (1952) 2012 [188] |
Advisory Board Member, Pipeline Crisis/Winning Strategies, a collaborative working to improve opportunities for young African Americans (1997 to 2016); Chairman of the Board, all funds (July 2018 to present) | |
| Paul F. McBride (1956) 2013 [188] |
Advisory Board Member, Vizzia Technologies (2015 to present); Board Member, Dunbar Armored (2012 to 2018) | |
| Cecilia E. Rouse, Ph.D. (1963) 2012 [188] |
Dean, Woodrow Wilson School (2012 to present); Professor and Researcher, Princeton University (1992 to present); Director, MDRC, a nonprofit education and social policy research organization (2011 to present); Member, National Academy of Education (2010 to present); Research Associate of Labor Studies Program at the National Bureau of Economic Research (2011 to 2015); Board Member, National Bureau of Economic Research (2011 to present); Chair of Committee on the Status of Minority Groups in the Economic Profession of the American Economic Association (2012 to 2018); Vice President (2015 to 2016), Board Member, American Economic Association (2018 to present) | |
| John G. Schreiber (1946) 2001 [188] |
Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder, Partner, and Cochairman of the Investment Committee, Blackstone Real Estate Advisors, L.P. (1992 to 2015); Director, Blackstone Mortgage Trust, a real estate finance company (2012 to 2016); Director and Chairman of the Board, Brixmor Property Group, Inc. (2013 to present); Director, Hilton Worldwide (2007 to present); Director, Hudson Pacific Properties (2014 to 2016); Director, Invitation Homes (2014 to 2017); Director, JMB Realty Corporation (1980 to present) | |
| Mark R. Tercek(c) (1957) 2009 [0] |
President and Chief Executive Officer, The Nature Conservancy (2008 to present) | |
| (a)All information about the independent directors was current as of February 19, 2019, unless otherwise indicated, except for the number of portfolios overseen, which is current as of the date of this report. | ||
| (b)William J. Stromberg, president and chief executive officer of T. Rowe Price Group, Inc., the parent company of the Price Funds’ investment advisor, has served on the Board of Trustees of Johns Hopkins University since 2014 and is a member of the Johns Hopkins University Board’s Compensation Committee. | ||
| (c)Effective February 15, 2019, Mr. Tercek resigned from his role as independent director of the Price Funds. | ||
| INSIDE DIRECTORS | ||
| Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] |
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years | |
| David Oestreicher (1967) 2018 [188] |
Chief Legal Officer, Vice President, and Secretary, T. Rowe Price Group, Inc.; Director, Vice President, and Secretary, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President and Secretary, T. Rowe Price, T. Rowe Price Hong Kong (Price Hong Kong), and T. Rowe Price International; Vice President, T. Rowe Price Japan and T. Rowe Price Singapore (Price Singapore); Principal Executive Officer and Executive Vice President, all funds | |
| Robert W. Sharps, CFA, CPA** (1971) 2017 [188] |
Director and Vice President, T. Rowe Price; Vice President, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; Vice President Institutional International Funds | |
| *Each inside director serves until retirement, resignation, or election of a successor. | ||
| **Mr. Sharps replaced Edward A. Wiese as director of the domestic fixed income Price Funds effective January 1, 2019. | ||
| OFFICERS | ||
| Name (Year of Birth) Position Held With Institutional International Funds |
Principal Occupation(s) | |
| Ulle Adamson, CFA (1979) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Roy H. Adkins (1970) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Christopher D. Alderson (1962) President |
Director and Vice President, T. Rowe Price International; Vice President, Price Hong Kong, Price Singapore, and T. Rowe Price Group, Inc. | |
| Kennard W. Allen (1977) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Paulina Amieva (1981) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Malik S. Asif (1981) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Ziad Bakri, M.D., CFA (1980) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Harishankar Balkrishna (1983) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Sheena L. Barbosa (1983) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Peter J. Bates, CFA (1974) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Oliver D.M. Bell (1969) Executive Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| R. Scott Berg, CFA (1972) Executive Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Steven E. Boothe, CFA (1977) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Peter I. Botoucharov (1965) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Tala Boulos (1984) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Darrell N. Braman (1963) Vice President and Secretary |
Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc. | |
| Carolyn Hoi Che Chu (1974) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Archibald Ciganer Albeniz, CFA (1976) Vice President |
Director and Vice President, Price Japan; Vice President, T. Rowe Price Group, Inc. | |
| Richard N. Clattenburg, CFA (1979) Executive Vice President |
Vice President, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Michael J. Conelius, CFA (1964) Executive Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company | |
| Richard de los Reyes (1975) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Iona Dent, CFA (1991) Vice President |
Employee, T. Rowe Price; formerly, Associate, Equity Research, Deutsche Bank (to 2018) | |
| Maria Elena Drew (1973) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Executive Director, Goldman Sachs Asset Management (to 2017) | |
| Shawn T. Driscoll (1975) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Alan S. Dupski, CPA (1982) Assistant Treasurer |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Bridget A. Ebner (1970) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| David J. Eiswert, CFA (1972) Executive Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Mark S. Finn, CFA, CPA (1963) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Aaron Gifford, CFA (1987) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Strategist, Morgan Stanley & Co. LLC (to 2017) | |
| John R. Gilner (1961) Chief Compliance Officer |
Chief Compliance Officer and Vice President, T. Rowe Price; Vice President, T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc. | |
| Gary J. Greb (1961) Vice President |
Vice President, T. Rowe Price, T. Rowe Price International, and T. Rowe Price Trust Company | |
| Paul D. Greene II (1978) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Benjamin Griffiths, CFA (1977) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Amanda B. Hall, CFA (1985) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Richard L. Hall (1979) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Nabil Hanano, CFA (1984) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Jeffrey Holford, Ph.D., ACA (1972) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Managing Director, Jeffries Financial Group (to 2018) | |
| Stefan Hubrich, Ph.D., CFA (1974) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Arif Husain, CFA (1972) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Randal S. Jenneke (1971) Vice President |
Vice President, T. Rowe Price Group, Inc. | |
| Nina P. Jones, CPA (1980) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Yoichiro Kai (1973) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Jai Kapadia (1982) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Andrew J. Keirle (1974) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Paul J. Krug, CPA (1964) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Christopher J. Kushlis, CFA (1976) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Mark J. Lawrence (1970) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Johannes Loefstrand (1988) Vice President |
Vice President, T. Rowe Price International | |
| Anh Lu (1968) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Sebastien Mallet (1974) Executive Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Jennifer Martin (1972) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Daniel Martino, CFA (1974) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Catherine D. Mathews (1963) Principal Financial Officer, Vice President, and Treasurer |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Raymond A. Mills, Ph.D., CFA (1960) Executive Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company | |
| Eric C. Moffett (1974) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Tobias F. Mueller (1980) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Sudhir Nanda, Ph.D., CFA (1959) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Joshua Nelson (1977) Executive Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company | |
| Jason Nogueira, CFA (1974) Executive Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Kenneth A. Orchard (1975) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Oluwaseun A. Oyegunle, CFA (1984) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Gonzalo Pángaro, CFA (1968) Executive Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| John W. Ratzesberger (1975) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Shannon H. Rauser (1987) Assistant Secretary |
Assistant Vice President, T. Rowe Price | |
| Federico Santilli, CFA (1974) Executive Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Sebastian Schrott (1977) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Bin Shen, CFA (1987) Vice President |
Employee, T. Rowe Price | |
| John C.A. Sherman (1969) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Gabriel Solomon (1977) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Scott D. Solomon, CFA (1981) Vice President |
Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | |
| Joshua K. Spencer, CFA (1973) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Taymour R. Tamaddon, CFA (1976) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Dean Tenerelli (1964) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Eric L. Veiel, CFA (1972) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | |
| Rupinder Vig (1979) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Partner, Egerton Capital (to 2016) | |
| Zenon Voyiatzis (1971) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Managing Director, UBS Global Asset Management (to 2015) | |
| Verena Wachnitz, CFA (1978) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Dai Wang (1989) Vice President |
Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | |
| Megan Warren (1968) Vice President |
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; formerly, Executive Director, JPMorgan Chase (to 2017) | |
| Christopher S. Whitehouse (1972) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Marta Yago (1977) Vice President |
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International | |
| Ernest C. Yeung, CFA (1979) Vice President |
Director and Vice President, Price Hong Kong; Vice President, T. Rowe Price Group, Inc. | |
| Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. | ||
Item 1. (b) Notice pursuant to Rule 30e-3.
Not applicable.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant’s Board of Directors/Trustees has determined that Mr. Bruce W. Duncan qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Duncan is considered independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) – (d) Aggregate fees billed for the last two fiscal years for professional services rendered to, or on behalf of, the registrant by the registrant’s principal accountant were as follows:
Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant’s financial statements and specifically include the issuance of a report on internal controls and, if applicable, agreed-upon procedures related to fund acquisitions. Tax fees include amounts related to services for tax compliance, tax planning, and tax advice. The nature of these services specifically includes the review of distribution calculations and the preparation of Federal, state, and excise tax returns. All other fees include the registrant’s pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant’s Board of Directors/Trustees.
(e)(1) The registrant’s audit committee has adopted a policy whereby audit and non-audit services performed by the registrant’s principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) – (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50 percent of the hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $2,330,000 and $2,767,000, respectively.
(h) All non-audit services rendered in (g) above were pre-approved by the registrant’s audit committee. Accordingly, these services were considered by the registrant’s audit committee in maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The registrant’s principal executive officer and principal financial officer are aware of no change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is attached.
(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(3) Written solicitation to repurchase securities issued by closed-end companies: not applicable.
(b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Institutional International Funds, Inc.
| By | /s/ David Oestreicher | |||||
| David Oestreicher | ||||||
| Principal Executive Officer | ||||||
| Date | December 17, 2019 | |||||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By | /s/ David Oestreicher | |||||
| David Oestreicher | ||||||
| Principal Executive Officer | ||||||
| Date | December 17, 2019 | |||||
| By | /s/ Catherine D. Mathews | |||||
| Catherine D. Mathews | ||||||
| Principal Financial Officer | ||||||
| Date | December 17, 2019 | |||||