December 16, 2013

Dean Tenerelli Dean Tenerelli, manager of the T. Rowe Price European Stock Fund (PRESX).

The T. Rowe Price European Stock Fund is investing in the region’s burgeoning recovery. The fund aims to create long-term growth by investing in the common stocks of European companies. Portfolio Manager Dean Tenerelli believes that careful management of the eurozone’s sovereign debt crisis has revived exports and contributed to a recovery in consumer confidence, which should fuel economic growth in the years ahead. “The restructuring measures are working,” Tenerelli says, “and I think the region is going to emerge much stronger than it was before the troubles began.”

T. Rowe Price European Stock Fund

Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, visit troweprice.com/esf. The fund’s expense ratio as of its fiscal year ended October 31, 2012, was 1.00%.

Capitalizing on the Downturn

The European debt crisis sparked a sharp sell-off in the region’s equity markets, which resulted in attractive valuations for many high-quality companies caught in the broader downdraft. In the meantime, much-needed structural reforms have begun to ease the limitations on European firms’ ability to compete globally and provided an important tailwind for many of these companies. “Europe is filled with great companies that generate good cash flow,” Tenerelli says. “A combination of renewed economic growth, improved consumer confidence, and favorable valuations points to a number of attractive stocks, particularly in the luxury goods, media, and financial sectors.”

During the early stages of the debt crisis, Tenerelli and his team focused on opportunities in the region’s more stable economies, including Germany and the Scandinavian countries. More recently, they have identified good values in Southern Europe, particularly Spain and Italy. “Markets and businesses sold off irrationally during the crisis,” Tenerelli says, “so we were able to buy some of the best companies in Europe.”

Backed by Experience

Tenerelli, who has managed the fund since 2005, makes allocation decisions with the help of a team of experienced researchers, including 22 European analysts. These efforts have rewarded investors. The fund outperformed its competitors for the 1-, 3-, 5-, and 10-year periods ended September 30, 2013. “We expect Europe’s recovery to be powerful,” Tenerelli says. “That’s why the fund has so much exposure to companies that do business in the region—to take advantage of the potential turnaround.”

This fund is subject to general stock and bond market risks. The fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. These risks include currency risk—the effects of negative currency exchange rates. To the extent the fund has investments in emerging market countries, it will be subject to more abrupt and severe price declines.

Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions.

Source for Lipper data: Lipper Inc.