Q2 2026 Fund Commentary

Commentary and opinions are provided by T. Rowe Price Group Inc.

Market commentary

Global equities advanced strongly during the second quarter of 2026, supported by resilient corporate earnings, continued enthusiasm around artificial intelligence (AI)-related investments and improving investor risk appetite. Gains were accompanied by renewed inflation and growth concerns, as Middle East tensions, higher energy prices and rising bond yields contributed to a period of volatility.

Globally, central banks generally maintained a cautious policy stance as persistent inflation pressures and energy-market volatility delayed the path toward easing monetary policy. The European Central Bank and the Bank of Japan were notable exceptions, with both raising their policy interest rates during the quarter in response to renewed inflation risks. In China, policymakers introduced additional measures to support economic growth amid softer domestic demand.

The U.S. economy grew at an annualized rate of 2.1% in the first quarter of 2026, rebounding from 0.5% growth in the fourth quarter of 2025. Headline inflation rose 4.2% year over year in May, and core inflation rose 2.9%. The unemployment rate stood at 4.2% in June 2026. At its June meeting, the U.S. Federal Reserve Board (Fed) held the federal funds rate unchanged at a range of 3.50% to 3.75%. New Fed Chair Kevin Warsh struck a more hawkish tone, with policymakers’ projections shifting toward the possibility of rate hikes rather than cuts. Ten of the 11 GICS sectors posted positive returns, led by information technology, industrials and financials, while energy lagged.

Performance

SK Hynix Inc. contributed to the Fund’s performance. The out-of-benchmark holding advanced as continued investment in AI infrastructure supported strong demand for high-bandwidth memory, with tight industry supply and improving memory chip pricing reinforcing expectations for continued earnings growth. Micron Technology Inc. contributed to performance. The overweight holding gained as AI-driven memory chip demand reinforced expectations for a favourable supply-demand environment, with improving pricing in higher-value memory products used in AI applications. Intel Corp. contributed to performance. The overweight holding appreciated as investors responded positively to progress on the company’s operational turnaround, foundry roadmap and ability to participate more meaningfully in the expanding AI and advanced semiconductor ecosystem.

An overweight allocation to the information technology sector and an underweight allocation to the communication services sector contributed to performance.

Advanced Micro Devices Inc. detracted from the Fund’s performance. The underweight holding advanced as continued investment in AI infrastructure supported expectations for sustained demand across the accelerator and data centre market, alongside improving confidence in the company’s competitive positioning within AI computing. Agnico Eagle Mines Ltd. detracted from performance. The out-of-benchmark holding declined as gold equities came under pressure following a period of strong outperformance, with investors rotating toward higher-growth areas of the market. Canadian Natural Resources Ltd. detracted from performance. The out-of-benchmark holding declined as energy prices moderated from earlier highs and geopolitical risk premiums eased.

An overweight allocation to the materials and energy sectors detracted from performance.

Portfolio activity

There were no significant trades disclosed during the quarter.

Outlook

In the sub-advisor’s view, investment decisions continue to be driven by bottom-up fundamentals rather than macroeconomic forecasts, with capital reallocated toward areas where the long-term risk/reward profile has become more attractive. AI remains the Fund’s highest-conviction theme, and the sub-advisor believes AI has moved beyond infrastructure spending alone, with growing evidence that investments are generating tangible productivity gains. In the sub-advisor’s view, demand for AI infrastructure, including compute, memory, storage and networking, could remain supported over the long term.

Within the AI ecosystem, the Fund remains positioned toward businesses enabling the continued expansion of computing infrastructure. The sub-advisor continues to see opportunities across the broader hardware ecosystem, while remaining selective within large-capitalization technology companies and cautious toward software companies, where long-term industry economics and competitive dynamics are less certain. More recently, the sub-advisor reduced the Fund’s exposure to gold-related investments following a period of strong performance, believing much of the gold sub-sector’s improving outlook may already be reflected in valuations, and directed capital toward select financials and other companies benefiting from evolving capital allocation trends. The Fund has also selectively broadened exposure outside the U.S., particularly where businesses benefiting from technology investment and AI-related demand trade at more attractive valuations than comparable U.S. peers.