T. Rowe Price Exchange-Traded Funds Inc.
12/23/2024 | Press release | Distributed by Public on 12/23/2024 15:08
Annual Report by Investment Company (Form N-CSR)
International Equity ETF_INX_ETF1076-045
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: 811-23494
T. Rowe Price Exchange-Traded Funds, Inc.
(Exact name of registrant as specified in charter)
100 East Pratt Street, Baltimore, MD 21202
(Address of principal executive offices)
David Oestreicher
100 East Pratt Street, Baltimore, MD 21202
(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, 2024
Item 1. Reports to Shareholders
(a) Report pursuant to Rule 30e-1
Annual Shareholder Report
October 31, 2024
International Equity ETF (TOUS)
Principal Listing Exchange: NYSE Arca, Inc.
This annual shareholder report contains important information about International Equity ETF ("the fund") for the period of November 1, 2023 to October 31, 2024. You can find the fund's prospectus, financial information on Form N-CSR (which includes required tax information for dividends), holdings, proxy voting information, and other information at www.troweprice.com/prospectus. You can also request this information without charge by contacting T. Rowe Price at 1-800-638-5660 or [email protected]or by contacting your intermediary.
What were the fund costs for the last year?(based on a hypothetical $10,000 investment)
|
Fund name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
|
International Equity ETF
|
$56
|
0.50%
|
What drove fund performance during the past 12 months?
-
Non-U.S. developed markets stocks recorded a double-digit return over the 12-month reporting period as anticipation of interest rate cuts by global central banks outweighed concerns about rising geopolitical tensions and persistent inflation in many markets.
-
Consumer discretionary stocks contributed the most to relative performance versus the MSCI EAFE Index Net due to positive selection and an underweight to the sector, which trailed the index return. Financials helped relative returns largely owing to positive stock selection and an overweight to the sector, which outperformed the benchmark.
-
Information technology detracted the most from relative performance due to adverse stock selection. However, an overweight to the IT sector, which outpaced the benchmark, tempered the impact of negative stock selection. Communication services also weighed on relative returns owing to negative stock selection.
-
The fund seeks to generate strong after-tax returns by using a strategic investment approach leveraging the fundamental research produced by the firm's global analyst team combined with active tax management. Bottom-up stock selection, informed by an awareness of the global macro backdrop and the outlook for specific industries, sectors, and countries, drives the fund's allocations. Financials was the largest overweight sector at period-end, while industrials and business services was the largest underweight.
How has the fund performed?
Cumulative Returns of a Hypothetical $10,000 Investment as of October 31, 2024
|
International Equity ETF (Based on Net Asset Value)
|
Regulatory/Strategy Benchmark
|
|
|
6/14/23
|
10,000
|
10,000
|
|
7/31/23
|
10,208
|
10,207
|
|
10/31/23
|
9,080
|
9,096
|
|
1/31/24
|
10,373
|
10,529
|
|
4/30/24
|
10,747
|
10,791
|
|
7/31/24
|
11,253
|
11,351
|
|
10/31/24
|
11,137
|
11,185
|
202412-4074666, 202412-3916139
ETF1076-052 12/24
Average Annual Total Returns
|
Fund
|
1 Year
|
Since Inception 6/14/23
|
|
International Equity ETF (Based on Net Asset Value)
|
22.65%
|
8.11%
|
|
MSCI EAFE Index Net (Regulatory/Strategy Benchmark)
|
22.97%
|
8.46%
|
The preceding line graph shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The fund's performance information included in the line graph and table above is compared with a regulatory required index that represents an overall securities market (Regulatory Benchmark). In addition, the line graph and table may also include one or more indexes that more closely aligns to the fund's investment strategy (Strategy Benchmark(s)). Due to new SEC Rules on shareholder reporting the fund adopted a new broad-based securities market index, referred to as the Regulatory Benchmark. Market index returns do not include expenses, which are deducted from fund returns. The fund's total return figures reflect the reinvestment of dividends and capital gains, if any. Neither the fund's returns nor the index returns reflect the deduction of taxes that a shareholder would pay on fund distributions or redemptions of fund shares. The fund's past performance is not a good predictor of the fund's future performance.Updated performance information can be found at www.troweprice.com.
What are some fund statistics?
Fund Statistics
- Total Net Assets (000s)$84,491
- Number of Portfolio Holdings176
- Investment Advisory Fees Paid (000s)$400
- Portfolio Turnover Rate41.8%
What did the fund invest in?
Sector Allocation (as a % of Net Assets)
|
Financials
|
23.0%
|
|
Industrials
|
15.9
|
|
Health Care
|
12.9
|
|
Consumer Discretionary
|
9.5
|
|
Consumer Staples
|
8.5
|
|
Information Technology
|
7.6
|
|
Materials
|
6.5
|
|
Energy
|
5.4
|
|
Communication Services
|
5.1
|
|
Other
|
7.9
|
Top Ten Holdings (as a % of Net Assets)
|
Novo Nordisk AS
|
2.3%
|
|
AstraZeneca PLC
|
2.2
|
|
TotalEnergies SE
|
1.9
|
|
Rolls-Royce Holdings PLC
|
1.8
|
|
ASML Holding NV
|
1.6
|
|
Unilever PLC
|
1.5
|
|
UniCredit SpA
|
1.5
|
|
Sanofi SA
|
1.4
|
|
AXA SA
|
1.4
|
|
Roche Holding AG
|
1.4
|
If you invest directly with T. Rowe Price, you can elect to receive future shareholder reports or other important documents through electronic delivery by enrolling at www.troweprice.com/paperless. If you invest through a financial intermediary such as an investment advisor, a bank, retirement plan sponsor or a brokerage firm, please contact that organization and ask if it can provide electronic delivery.
MSCI does not accept any liability for any errors or omissions in the indexes or data, and hereby expressly disclaim all warranties of originality, accuracy, completeness, timeliness, merchantability and fitness for a particular purpose. No party may rely on any indexes or data contained in this communication. Visit www.troweprice.com/en/us/market-data-disclosuresfor additional legal notices & disclaimers.
T. Rowe Price Investment Services, Inc.
100 East Pratt Street
Baltimore, MD 21202
International Equity ETF (TOUS)
Principal Listing Exchange: NYSE Arca, Inc.
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 has determined that Mr. Paul F. McBride qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR.Mr. McBride 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:
| 2024 | 2023 | ||||||||||
|
Audit Fees |
$ | 26,450 | $ | 28,219 | |||||||
|
Audit-Related Fees |
- | - | |||||||||
|
Tax Fees |
- | - | |||||||||
|
All Other Fees |
- | - |
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-ratashare 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-auditservices 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-approvalin advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approvalmay be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approvalfor audit or non-auditservices 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 2-01of 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-auditservices 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 $846,000 and $1,584,000, respectively.
(h) All non-auditservices rendered in (g) above were pre-approvedby the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence.
(i) Not applicable.
(j) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable. The complete schedule of investments is included in Item 7 of this Form N-CSR.
(b) Not applicable.
Item 7. Financial Statements and Financial Highlights for Open-EndManagement Investment Companies.
(a - b) Report pursuant to Regulation S-X.
Financial Statements and Other Information
October 31, 2024
| T. ROWE PRICE | |
| TOUS | International Equity ETF |
| For more insights from T. Rowe Price investment professionals, go totroweprice.com. |
T. ROWE PRICE INTERNATIONAL EQUITY ETF
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
|
Year Ended |
6/14/23(1) Through |
|
| 10/31/24 | 10/31/23 | |
| NET ASSET VALUE | ||
| Beginning of period | $ 22.70 | $ 25.00 |
| Investment activities | ||
| Net investment income(2)(3) | 0.64 | 0.15 |
| Net realized and unrealized gain/loss | 4.49 | (2.45) |
| Total from investment activities | 5.13 | (2.30) |
| Distributions | ||
| Net investment income | (0.13) | - |
| NET ASSET VALUE | ||
| End of period | $ 27.70 | $ 22.70 |
| Ratios/Supplemental Data | ||
| Total return, based on NAV(3)(4) | 22.65% | (9.20)% |
|
Ratios to average net assets:(3) |
||
|
Gross expenses before waivers/payments by Price Associates |
0.50% | 0.50%(5) |
|
Net expenses after waivers/payments by Price Associates |
0.50% | 0.50%(5) |
| Net investment income | 2.35% | 1.60%(5) |
| Portfolio turnover rate(6) | 41.8% | 8.9% |
|
Net assets, end of period (in thousands) |
$ 84,491 | $ 61,282 |
| (1) | Inception date |
| (2) | Per share amounts calculated using average shares outstanding method. |
| (3) | Includes the impact of expense-related arrangements with Price Associates. |
| (4) | Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. Total return is not annualized for periods less than one year. |
| (5) | Annualized |
| (6) | Portfolio turnover excludes securities received or delivered through in-kind share transactions. |
The accompanying notes are an integral part of these financial statements.
1
T. ROWE PRICE INTERNATIONAL EQUITY ETF
October 31, 2024
| PORTFOLIO OF INVESTMENTS‡ | Shares | $ Value |
| (Cost and value in $000s) | ||
| ARGENTINA 0.9% | ||
| Common Stocks 0.9% | ||
| MercadoLibre (USD) (1) | 218 | 444 |
| Tenaris (EUR) | 18,057 | 298 |
| Total Argentina (Cost $627) | 742 | |
| AUSTRALIA 4.6% | ||
| Common Stocks 4.6% | ||
| ANZ Group Holdings | 12,370 | 252 |
| Aristocrat Leisure | 8,399 | 338 |
| BHP Group, Class DI (GBP) (2) | 22,932 | 636 |
| Brambles | 35,016 | 422 |
| Coles Group | 23,773 | 274 |
| Downer EDI | 107,778 | 395 |
| National Australia Bank | 6,546 | 166 |
| Northern Star Resources | 25,414 | 295 |
| Qantas Airways (1) | 58,729 | 311 |
| QBE Insurance Group | 22,518 | 254 |
| Telstra Group | 76,555 | 192 |
| Westpac Banking | 18,253 | 383 |
| Total Australia (Cost $3,507) | 3,918 | |
| AUSTRIA 2.6% | ||
| Common Stocks 2.6% | ||
| BAWAG Group | 13,545 | 1,050 |
| Erste Group Bank | 8,853 | 501 |
| OMV | 10,004 | 414 |
| voestalpine | 9,855 | 205 |
| Total Austria (Cost $1,784) | 2,170 |
2
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| BELGIUM 0.3% | ||
| Common Stocks 0.3% | ||
| Warehouses De Pauw | 11,126 | 265 |
| Total Belgium (Cost $284) | 265 | |
| BRAZIL 0.3% | ||
| Common Stocks 0.3% | ||
| B3 SA - Brasil Bolsa Balcao | 135,700 | 249 |
| Total Brazil (Cost $277) | 249 | |
| CANADA 2.2% | ||
| Common Stocks 2.2% | ||
| Cenovus Energy (2) | 19,825 | 319 |
| Ivanhoe Mines (1) | 11,997 | 159 |
| National Bank of Canada | 4,067 | 388 |
| Shopify, Class A (1) | 3,540 | 277 |
| Sun Life Financial (2) | 9,353 | 518 |
| Suncor Energy | 4,575 | 173 |
| Total Canada (Cost $1,792) | 1,834 | |
| CHINA 0.8% | ||
| Common Stocks 0.8% | ||
| Alibaba Group Holding, ADR (USD) | 4,913 | 482 |
| Futu Holdings, ADR (USD) (1) | 2,033 | 193 |
| Total China (Cost $704) | 675 | |
| DENMARK 2.4% | ||
| Common Stocks 2.4% | ||
| Genmab (1) | 594 | 133 |
| Novo Nordisk, Class B | 17,047 | 1,912 |
| Total Denmark (Cost $1,592) | 2,045 |
3
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| FINLAND 0.5% | ||
| Common Stocks 0.5% | ||
| Sampo, Class A | 9,971 | 442 |
| Total Finland (Cost $419) | 442 | |
| FRANCE 13.8% | ||
| Common Stocks 13.8% | ||
| Airbus | 7,248 | 1,106 |
| ArcelorMittal | 16,607 | 411 |
| AXA | 31,343 | 1,177 |
| BNP Paribas | 6,206 | 424 |
| Capgemini | 1,401 | 243 |
| Cie de Saint-Gobain | 4,729 | 429 |
| Dassault Aviation | 2,021 | 408 |
| Edenred | 5,558 | 180 |
| Engie | 33,891 | 568 |
| Eurofins Scientific | 6,175 | 304 |
| Euronext | 3,535 | 390 |
| Legrand | 3,952 | 446 |
| LVMH Moet Hennessy Louis Vuitton | 960 | 639 |
| Pluxee (1) | 8,363 | 176 |
| Safran | 891 | 202 |
| Sanofi | 11,528 | 1,218 |
| Sartorius Stedim Biotech | 2,154 | 432 |
| Schneider Electric | 862 | 223 |
| Thales | 1,785 | 288 |
| TotalEnergies | 25,966 | 1,629 |
| Verallia | 8,605 | 248 |
| Vinci | 4,714 | 528 |
| Total France (Cost $11,774) | 11,669 |
4
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| GERMANY 8.6% | ||
| Common Stocks 8.6% | ||
| adidas | 696 | 167 |
| Allianz | 2,931 | 923 |
| BASF | 7,142 | 347 |
| Covestro (1) | 5,370 | 340 |
| Daimler Truck Holding | 8,331 | 344 |
| Deutsche Telekom | 35,709 | 1,080 |
| DHL Group | 13,309 | 535 |
| E.ON | 20,236 | 273 |
| Heidelberg Materials | 3,111 | 343 |
| Infineon Technologies | 12,053 | 381 |
| KION Group | 6,022 | 234 |
| Mercedes-Benz Group | 3,985 | 242 |
| Muenchener Rueckversicherungs-Gesellschaft | 667 | 341 |
| SAP | 3,300 | 770 |
| Siemens | 4,906 | 954 |
| Total Germany (Cost $6,552) | 7,274 | |
| HONG KONG 1.4% | ||
| Common Stocks 1.4% | ||
| AIA Group | 98,000 | 773 |
| Galaxy Entertainment Group | 59,000 | 263 |
| HKT Trust & HKT | 135,000 | 168 |
| Total Hong Kong (Cost $1,482) | 1,204 | |
| HUNGARY 0.4% | ||
| Common Stocks 0.4% | ||
| OTP Bank | 7,554 | 376 |
| Total Hungary (Cost $283) | 376 |
5
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| INDIA 0.3% | ||
| Common Stocks 0.3% | ||
| ICICI Bank, ADR (USD) | 9,347 | 284 |
| Total India (Cost $224) | 284 | |
| IRELAND 0.4% | ||
| Common Stocks 0.4% | ||
| Kingspan Group | 3,689 | 326 |
| Total Ireland (Cost $340) | 326 | |
| ITALY 4.8% | ||
| Common Stocks 4.8% | ||
| Davide Campari-Milano | 27,958 | 188 |
| Enel | 111,259 | 844 |
| Ferrari | 825 | 394 |
| Intesa Sanpaolo | 178,865 | 765 |
| Leonardo | 18,750 | 447 |
| Stellantis | 8,940 | 122 |
| UniCredit | 28,675 | 1,269 |
| Total Italy (Cost $3,342) | 4,029 | |
| JAPAN 19.6% | ||
| Common Stocks 19.6% | ||
| Asahi Group Holdings | 43,700 | 525 |
| Chugai Pharmaceutical | 5,500 | 262 |
| Daiwa Securities Group | 20,400 | 133 |
| Fujitsu | 21,000 | 404 |
| Hikari Tsushin | 1,400 | 282 |
| Hitachi | 34,600 | 869 |
| Hoshizaki | 19,100 | 628 |
| Isetan Mitsukoshi Holdings (2) | 12,800 | 190 |
| Kao (2) | 8,300 | 366 |
| KDDI | 10,200 | 318 |
| Keyence | 1,300 | 587 |
6
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| MatsukiyoCocokara | 22,300 | 304 |
| Mitsubishi Chemical Group | 48,300 | 261 |
| Mitsubishi Electric | 23,700 | 417 |
| Mitsubishi Estate | 44,300 | 655 |
| Mitsubishi UFJ Financial Group | 96,200 | 1,014 |
| Mitsui Fudosan | 64,700 | 552 |
| Nippon Sanso Holdings | 13,400 | 465 |
| Nippon Steel | 27,100 | 542 |
| Nippon Telegraph & Telephone | 359,800 | 347 |
| Nomura Real Estate Holdings | 10,300 | 254 |
| ORIX | 28,500 | 600 |
| Panasonic Holdings | 27,800 | 229 |
| Recruit Holdings | 6,600 | 403 |
| Renesas Electronics | 31,100 | 417 |
| Resona Holdings (2) | 41,400 | 273 |
| Sega Sammy Holdings | 11,500 | 216 |
| Seven & i Holdings | 45,800 | 659 |
| Shiseido | 5,200 | 112 |
| Sompo Holdings | 26,200 | 562 |
| Sony Group | 23,400 | 412 |
| Stanley Electric | 11,300 | 193 |
| SUMCO (2) | 24,600 | 235 |
| Sumitomo | 18,000 | 380 |
| Suntory Beverage & Food | 11,500 | 388 |
| Taiheiyo Cement | 15,000 | 327 |
| Takeda Pharmaceutical | 26,700 | 745 |
| Toyota Motor | 50,800 | 875 |
| Yamaha | 15,800 | 128 |
| Total Japan (Cost $15,942) | 16,529 | |
| NETHERLANDS 6.8% | ||
| Common Stocks 6.8% | ||
| AerCap Holdings (USD) | 4,606 | 431 |
| Akzo Nobel | 4,006 | 256 |
7
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| ASML Holding | 1,964 | 1,322 |
| ASR Nederland | 4,451 | 211 |
| BE Semiconductor Industries | 1,809 | 193 |
| Heineken | 6,869 | 563 |
| ING Groep | 52,407 | 889 |
| Koninklijke Ahold Delhaize | 5,319 | 176 |
| Koninklijke KPN | 73,692 | 288 |
| Koninklijke Philips (1) | 26,214 | 690 |
| NN Group | 4,632 | 227 |
| Prosus | 11,460 | 483 |
| Total Netherlands (Cost $5,501) | 5,729 | |
| PORTUGAL 1.4% | ||
| Common Stocks 1.4% | ||
| Galp Energia SGPS | 36,372 | 622 |
| Jeronimo Martins | 29,630 | 575 |
| Total Portugal (Cost $1,117) | 1,197 | |
| SINGAPORE 1.2% | ||
| Common Stocks 1.2% | ||
| DBS Group Holdings | 12,850 | 372 |
| United Overseas Bank | 26,393 | 642 |
| Total Singapore (Cost $866) | 1,014 | |
| SOUTH KOREA 0.7% | ||
| Common Stocks 0.7% | ||
| KT, ADR (USD) | 22,265 | 350 |
| Samsung Electronics | 6,150 | 261 |
| Total South Korea (Cost $693) | 611 | |
| SPAIN 1.1% | ||
| Common Stocks 1.1% | ||
| Amadeus IT Group, Class A | 12,644 | 917 |
| Total Spain (Cost $910) | 917 |
8
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| SWEDEN 1.4% | ||
| Common Stocks 1.4% | ||
| Boliden | 7,235 | 226 |
| Essity Aktiebolag, Class B | 6,893 | 195 |
| Swedbank, Class A | 13,254 | 269 |
| Telefonaktiebolaget LM Ericsson, Class B | 60,498 | 507 |
| Total Sweden (Cost $964) | 1,197 | |
| SWITZERLAND 5.0% | ||
| Common Stocks 5.0% | ||
| Alcon | 1,806 | 166 |
| Cie Financiere Richemont, Class A | 2,816 | 410 |
| Julius Baer Group | 3,923 | 239 |
| Nestle | 6,419 | 607 |
| Novartis | 6,774 | 735 |
| Roche Holding | 3,792 | 1,175 |
| Sonova Holding | 2,423 | 887 |
| Total Switzerland (Cost $4,145) | 4,219 | |
| TAIWAN 1.0% | ||
| Common Stocks 1.0% | ||
| Taiwan Semiconductor Manufacturing | 26,000 | 815 |
| Total Taiwan (Cost $486) | 815 | |
| UNITED KINGDOM 16.8% | ||
| Common Stocks 16.8% | ||
| 3i Group | 7,670 | 315 |
| Amcor (AUD) | 24,890 | 274 |
| Anglo American | 4,328 | 134 |
| AstraZeneca, ADR (USD) | 25,529 | 1,816 |
| Auto Trader Group | 31,498 | 340 |
| Barclays | 242,947 | 745 |
| BP | 139,271 | 681 |
| BT Group (2) | 241,682 | 432 |
9
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| Bunzl | 10,544 | 464 |
| Compass Group | 15,768 | 512 |
| GSK, ADR (USD) | 11,733 | 431 |
| HSBC Holdings | 113,041 | 1,038 |
| Imperial Brands | 32,158 | 970 |
| Informa | 42,269 | 442 |
| Intermediate Capital Group | 13,029 | 346 |
| National Grid | 36,038 | 453 |
| Prudential | 29,099 | 242 |
| Rolls-Royce Holdings (1) | 223,681 | 1,543 |
| Shell | 13,593 | 454 |
| Smiths Group | 12,942 | 255 |
| SSE | 11,029 | 251 |
| Taylor Wimpey | 189,658 | 359 |
| Unilever | 21,357 | 1,303 |
| WPP | 38,452 | 404 |
| Total United Kingdom (Cost $12,107) | 14,204 | |
| SHORT-TERM INVESTMENTS 0.2% | ||
| Money Market Funds 0.2% | ||
| State Street Institutional U.S. Government Money Market Fund, 4.82% (3) | 152,443 | 152 |
|
Total Short-Term Investments (Cost $152) |
152 |
10
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| Shares | $ Value | |
| (Cost and value in $000s) | ||
| SECURITIES LENDING COLLATERAL 3.0% | ||
| Investments in a Pooled Account through Securities Lending Program with State Street Bank and Trust Company 3.0% | ||
| Money Market Funds 3.0% | ||
| T. Rowe Price Government Reserve Fund, 4.86% (3)(4) | 2,518,765 | 2,519 |
| Total Investments in a Pooled Account through Securities Lending Program with State Street Bank and Trust Company | 2,519 | |
| Total Securities Lending Collateral (Cost $2,519) | 2,519 | |
|
Total Investments 102.5% of Net Assets (Cost $80,385) |
$86,605 |
| ‡ | Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; Shares are denominated in the currency of the country presented unless otherwise noted. |
| (1) | Non-income producing. |
| (2) | See Note 4. All or a portion of this security is on loan at October 31, 2024. |
| (3) | Seven-day yield |
| (4) | Affiliated Companies |
| ADR | American Depositary Receipts |
| AUD | Australian Dollar |
| EUR | Euro |
| GBP | British Pound |
| SGD | Singapore Dollar |
| USD | U.S. Dollar |
11
T. ROWE PRICE INTERNATIONAL EQUITY ETF
(Amounts in 000s)
| FORWARD CURRENCY EXCHANGE CONTRACTS |
| Counterparty | Settlement | Receive | Deliver |
Unrealized Gain/(Loss) |
||
| State Street Bank London | 11/4/24 | USD | 255 | SGD | 337 | $- |
|
Net unrealized gain (loss) on open forward currency exchange contracts |
$- |
12
T. ROWE PRICE INTERNATIONAL EQUITY ETF
AFFILIATED COMPANIES
($000s)
The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company that is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the year ended October 31, 2024. Net realized gain (loss), investment income, change in net unrealized gain/loss, and purchase and sales cost reflect all activity for the period then ended.
| Affiliate |
Net Realized Gain (Loss) |
Changes in Net Unrealized Gain/Loss |
Investment Income |
| T. Rowe Price Government Reserve Fund | $- | $- | $-++ |
| Totals | $-# | $- | $-+ |
| Supplementary Investment Schedule | ||||
| Affiliate |
Value 10/31/23 |
Purchase Cost |
Sales Cost |
Value 10/31/24 |
| T. Rowe Price Government Reserve Fund | $- | ¤ | ¤ | $2,519 |
| Total | $2,519^ |
| ++ | Excludes earnings on securities lending collateral, which are subject to rebates and fees as described in Note 4. |
| # | Capital gain distributions from underlying Price funds represented $0 of the net realized gain (loss). |
| + | Investment income comprised $0 of dividend income and $0 of interest income. |
| ¤ | Purchase and sale information not shown for cash management funds. |
| ^ | The cost basis of investments in affiliated companies was $2,519. |
The accompanying notes are an integral part of these financial statements.
13
T. ROWE PRICE INTERNATIONAL EQUITY ETF
October 31, 2024
STATEMENT OF ASSETS AND LIABILITIES
($000s, except shares and per share amounts)
| Assets | |
| Investments in securities, at value (cost $80,385) | $86,605 |
| Receivable for investment securities sold | 2,424 |
| Dividends receivable | 214 |
| Foreign currency (cost $10) | 10 |
| Total assets | 89,253 |
| Liabilities | |
| Obligation to return securities lending collateral | 2,519 |
| Payable for investment securities purchased | 2,206 |
| Investment management and administrative fees payable | 37 |
| Total liabilities | 4,762 |
| NET ASSETS | $84,491 |
| Net Assets Consists of: | |
| Total distributable earnings (loss) | $6,725 |
|
Paid-in capital applicable to 3,050,000 shares of $0.0001 par value capital stock outstanding; 4,000,000,000 shares of the Corporation authorized |
77,766 |
| NET ASSETS | $84,491 |
| NET ASSET VALUE PER SHARE | $27.70 |
The accompanying notes are an integral part of these financial statements.
14
T. ROWE PRICE INTERNATIONAL EQUITY ETF
STATEMENT OF OPERATIONS
($000s)
|
Year Ended |
|
| 10/31/24 | |
| Investment Income (Loss) | |
| Income | |
| Dividend (net of foreign taxes of $224) | $2,279 |
| Securities lending | 3 |
| Total income | 2,282 |
| Investment management and administrative expense | 400 |
| Net investment income | 1,882 |
| Realized and Unrealized Gain / Loss | |
| Net realized gain (loss) | |
| Securities | (656) |
| In-kind redemptions | 960 |
| Forward currency exchange contracts | 11 |
| Foreign currency transactions | 2 |
| Net realized gain | 317 |
| Change in net unrealized gain / loss | |
| Securities | 12,508 |
| Other assets and liabilities denominated in foreign currencies | (6) |
| Change in unrealized gain / loss | 12,502 |
| Net realized and unrealized gain / loss | 12,819 |
| INCREASE IN NET ASSETS FROM OPERATIONS | $14,701 |
The accompanying notes are an integral part of these financial statements.
15
T. ROWE PRICE INTERNATIONAL EQUITY ETF
STATEMENT OF CHANGES IN NET ASSETS
($000s)
|
Year Ended |
6/14/23 Through |
||
| 10/31/24 | 10/31/23 | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net investment income | $1,882 | $300 | |
| Net realized gain (loss) | 317 | (647) | |
| Change in net unrealized gain / loss | 12,502 | (6,288) | |
| Increase (decrease) in net assets from operations | 14,701 | (6,635) | |
| Distributions to shareholders | |||
| Net earnings | (375) | - | |
| Capital share transactions* | |||
| Shares sold | 13,007 | 69,113 | |
| Shares redeemed | (4,124) | (1,196) | |
| Increase in net assets from capital share transactions | 8,883 | 67,917 | |
| Net Assets | |||
| Increase during period | 23,209 | 61,282 | |
| Beginning of period | 61,282 | - | |
| End of period | $84,491 | $61,282 | |
| *Share information | |||
| Shares sold | 500 | 2,750 | |
| Shares redeemed | (150) | (50) | |
| Increase in shares outstanding | 350 | 2,700 |
The accompanying notes are an integral part of these financial statements.
16
T. ROWE PRICE INTERNATIONAL EQUITY ETF
NOTES TO FINANCIAL STATEMENTS
T. Rowe Price Exchange-Traded Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The International Equity ETF (the fund) is a diversified, open-end management investment company established by the corporation. The fund incepted on June 14, 2023. The fund seeks to provide long-term capital growth.
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 CodificationTopic 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.
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 other investment companies 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. Proceeds from litigation payments, if any, are included in either net realized gain (loss) or change in net unrealized gain/loss from securities. Distributions to shareholders are recorded on the ex-dividend date. Income distributions, if any, are declared and paid annually. A capital gain distribution, if any, may also be declared and paid by the fund annually. Dividends and distributions cannot be automatically reinvested in additional shares of the fund.
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
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 provided by an outside pricing service. 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.
Capital Transactions
The fund issues and redeems shares at its net asset value (NAV) only with Authorized Participants and only in large blocks of 50,000 shares (each, a "Creation Unit"). The fund's NAV per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. Eastern time, 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. Individual fund shares may not be purchased or redeemed directly with the fund. An Authorized Participant may purchase or redeem a Creation Unit of the fund each business day that the fund is open in exchange for the delivery of a designated portfolio of in-kind securities and/or cash. When purchasing or redeeming Creation Units, Authorized Participants are also required to pay a fixed and/or variable purchase or redemption transaction fee as well as any applicable additional variable charge to defray the transaction cost to a fund.
Individual fund shares may be purchased and sold only on a national securities exchange through brokers. Shares are listed for trading on NYSE Arca, Inc. and because the shares will trade at market prices rather than NAV, shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount).
New Accounting Guidance
In November 2023, the FASB issued Accounting Standards Update (ASU), ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses. In addition, the ASU clarifies that a public entity with a single reportable segment provide all disclosures required by the ASU and all existing segment disclosures in Topic 280.
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
The amendments under this ASU are effective for fiscal years beginning after December 15, 2023. Management expects that adoption of the guidance will not have a material impact on the fund's financial statements.
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
Fair Value
The fund's financial instruments are valued at the close of the NYSE and 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 fund's Board of Directors (the Board) has designated T. Rowe Price Associates, Inc. as the fund's valuation designee (Valuation Designee). Subject to oversight by the Board, the Valuation Designee performs the following functions in performing fair value determinations: assesses and manages valuation risks; establishes and applies fair value methodologies; tests fair value methodologies; and evaluates pricing vendors and pricing agents. The duties and responsibilities of the Valuation Designee are performed by its Valuation Committee. The Valuation Designee provides periodic reporting to the Board on valuation matters.
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 (including the Valuation Designee's assumptions in determining fair value)
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
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, including exchange-traded funds, 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. 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.
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 Valuation Designee 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 the fund's portfolio securities. Each business day, the Valuation Designee uses information from outside pricing services to evaluate the quoted prices of portfolio securities and, if appropriate, decides whether it is necessary to adjust quoted prices to reflect fair value by reviewing 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 Valuation Designee uses outside pricing services to provide it with quoted prices and information to evaluate or adjust those prices. The Valuation Designee cannot predict how often it will use quoted prices or how often it will determine it necessary to adjust those prices to reflect fair value.
20
T. ROWE PRICE INTERNATIONAL EQUITY ETF
Investments in mutual funds are valued at the mutual fund's closing NAV per share on the day of valuation. Forward currency exchange contracts are valued using the prevailing forward exchange rate. 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.
Investments for which market quotations are not readily available or deemed unreliable are valued at fair value as determined in good faith by the Valuation Designee. The Valuation Designee has adopted methodologies for determining the fair value of investments for which market quotations are not readily available or deemed unreliable, including the use of other pricing sources. Factors used in determining fair value vary by type of investment and may include market or investment specific considerations. The Valuation Designee 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 Designee 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; discounted cash flows; yield to maturity; or some combination. Fair value determinations are reviewed on a regular basis. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions. Fair value prices determined by the Valuation Designee could differ from those of other market participants, and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security.
Valuation Inputs
The following table summarizes the fund's financial instruments, based on the inputs used to determine their fair values on October 31, 2024 (for further detail by category, please refer to the accompanying Portfolio of Investments):
| ($000s) | Level 1 | Level 2 | Level 3 | Total Value |
| Assets | ||||
| Common Stocks | $4,431 | $79,503 | $- | $83,934 |
| Short-Term Investments | 152 | - | - | 152 |
| Securities Lending Collateral | 2,519 | - | - | 2,519 |
| Total | $7,102 | $79,503 | $- | $86,605 |
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
NOTE 3 - DERIVATIVE INSTRUMENTS
During the year ended October 31, 2024, the fund invested in derivative instruments. As defined by GAAP, a derivative is a financial instrument whose value is derived from an underlying security price, foreign exchange rate, interest rate, index of prices or rates, or other variable; it requires little or no initial investment and permits or requires net settlement or delivery of cash or other assets. The fund invests in derivatives only if the expected risks and rewards are consistent with its investment objectives, policies, and overall risk profile, as described in its prospectus and Statement of Additional Information. The fund may use derivatives for a variety of purposes and may use them to establish both long and short positions within the fund's portfolio. Potential uses include to hedge against declines in principal value, increase yield, invest in an asset with greater efficiency and at a lower cost than is possible through direct investment, to enhance return, or to adjust credit exposure. The risks associated with the use of derivatives are different from, and potentially much greater than, the risks associated with investing directly in the instruments on which the derivatives are based.
The fund values its derivatives at fair value and recognizes changes in fair value currently in its results of operations. Accordingly, the fund does not follow hedge accounting, even for derivatives employed as economic hedges. Generally, the fund accounts for its derivatives on a gross basis. It does not offset the fair value of derivative liabilities against the fair value of derivative assets on its financial statements, nor does it offset the fair value of derivative instruments against the right to reclaim or obligation to return collateral. As of October 31, 2024, the fund held foreign exchange derivatives with a fair value of less than $1,000.
Additionally, the amount of gains and losses on derivative instruments recognized in fund earnings during the year ended October 31, 2024, and the related location on the accompanying Statement of Operations is summarized in the following table by primary underlying risk exposure:
| ($000s) | Location of Gain (Loss) on Statement of Operations | |
|
Forward Currency Exchange Contracts |
||
| Realized Gain (Loss) | ||
| Foreign exchange derivatives | $11 |
22
T. ROWE PRICE INTERNATIONAL EQUITY ETF
Counterparty Risk and Collateral
The fund invests in derivatives, such as non-cleared bilateral swaps, forward currency exchange contracts, and/or OTC options, that are transacted and settle directly with a counterparty (bilateral derivatives), and thereby may expose the fund to counterparty risk. To mitigate this risk, the fund has entered into master netting arrangements (MNAs) with certain counterparties that permit net settlement under specified conditions and, for certain counterparties, also require the exchange of collateral to cover mark-to-market exposure. MNAs may be in the form of International Swaps and Derivatives Association master agreements (ISDAs) or foreign exchange letter agreements (FX letters).
MNAs govern the ability to offset amounts the fund owes a counterparty against amounts the counterparty owes the fund (net settlement). Both ISDAs and FX letters generally allow termination of transactions and net settlement upon the occurrence of contractually specified events, such as failure to pay or bankruptcy. In addition, ISDAs specify other events, the occurrence of which would allow one of the parties to terminate. For example, a downgrade in credit rating of a counterparty below a specified rating would allow the fund to terminate, while a decline in the fund's net assets of more than a specified percentage would allow the counterparty to terminate. Upon termination, all transactions with that counterparty would be liquidated and a net termination amount determined. ISDAs typically include collateral agreements whereas FX letters do not. Collateral requirements are determined daily based on the net aggregate unrealized gain or loss on all bilateral derivatives with each counterparty, subject to minimum transfer amounts that typically range from $100,000 to $250,000. Any additional collateral required due to changes in security values is typically transferred the next business day.
Collateral may be in the form of cash or debt securities issued by the U.S. government or related agencies, although other securities may be used depending on the terms outlined in the applicable MNA. Cash posted by the fund is reflected as cash deposits in the accompanying financial statements and generally is restricted from withdrawal by the fund; securities posted by the fund are so noted in the accompanying Portfolio of Investments; both remain in the fund's assets. Collateral pledged by counterparties is not included in the fund's assets because the fund does not obtain effective control over those assets. For bilateral derivatives, collateral posted or received by the fund is held in a segregated account at the fund's custodian. While typically not sold in the same manner as equity or fixed income securities, OTC and bilateral derivatives may be unwound with counterparties or transactions assigned to other counterparties to allow the
23
T. ROWE PRICE INTERNATIONAL EQUITY ETF
fund to exit the transaction. This ability is subject to the liquidity of underlying positions. As of October 31, 2024, no collateral was pledged by either the fund or counterparties for bilateral derivatives.
Forward Currency Exchange Contracts
The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. It may use forward currency exchange contracts (forwards) primarily to protect its non-U.S. dollar-denominated securities from adverse currency movements or to increase exposure to a particular foreign currency, to shift the fund's foreign currency exposure from one country to another, or to enhance the fund's return. A forward involves an obligation to purchase or sell a fixed amount of a specific currency on a future date at a price set at the time of the contract. Although certain forwards may be settled by exchanging only the net gain or loss on the contract, most forwards are settled with the exchange of the underlying currencies in accordance with the specified terms. Forwards are valued at the unrealized gain or loss on the contract, which reflects the net amount the fund either is entitled to receive or obligated to deliver, as measured by the difference between the forward exchange rates at the date of entry into the contract and the forward rates at the reporting date. Appreciated forwards are reflected as assets and depreciated forwards are reflected as liabilities on the accompanying Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded on the accompanying Statement of Operations. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the agreements; that anticipated currency movements will not occur, thereby reducing the fund's total return; and the potential for losses in excess of the fund's initial investment. During the year ended October 31, 2024, the volume of the fund's activity in forwards, based on underlying notional amounts, was generally less than 1% of net assets.
NOTE 4 - 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.
24
T. ROWE PRICE INTERNATIONAL EQUITY ETF
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, 2024, the value of loaned securities was $2,351,000; the value of cash collateral and related investments was $2,519,000.
Other
Purchases and sales of portfolio securities excluding in-kind transactions and short-term securities aggregated $38,625,000 and $32,905,000, respectively, for the year ended October 31, 2024. Portfolio securities received and delivered through in-kind transactions aggregated $8,547,000 and $4,117,000, respectively, for the year ended October 31, 2024.
NOTE 5 - FEDERAL INCOME TAXES
Generally, 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.
25
T. ROWE PRICE INTERNATIONAL EQUITY ETF
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.
Capital accounts within the 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, if any, have no impact on results of operations in net assets. The permanent book/tax adjustments relate primarily to redemptions in kind and the character of income on passive foreign investment companies.
The tax character of distributions paid for the periods presented was as follows:
| ($000s) | ||
| October 31, | October 31, | |
| 2024 | 2023 | |
| Ordinary income (including short-term capital gains, if any) | $375 | $- |
At October 31, 2024, the tax-basis cost of investments, (including derivatives, if any) and gross unrealized appreciation and depreciation were as follows:
| ($000s) | |
| Cost of investments | $80,722 |
| Unrealized appreciation | $9,648 |
| Unrealized depreciation | (3,773) |
| Net unrealized appreciation (depreciation) | $5,875 |
At October 31, 2024, the tax-basis components of accumulated net earnings (loss) were as follows:
26
T. ROWE PRICE INTERNATIONAL EQUITY ETF
| ($000s) | |
| Undistributed ordinary income | $2,235 |
| Net unrealized appreciation (depreciation) | 5,875 |
| Loss carryforwards and deferrals | (1,385) |
| Total distributable earnings (loss) | $6,725 |
Temporary differences between book-basis and tax-basis components of total distributable earnings (loss) arise when certain items of income, gain, or loss are recognized in different periods for financial statement purposes versus for tax purposes; these differences will reverse in a subsequent reporting period. The temporary differences relate primarily to the deferral of losses from wash sales and the realization of gains/losses on passive foreign investment companies. The loss carryforwards and deferrals primarily relate to capital loss carryforwards. Capital loss carryforwards are available indefinitely to offset future realized capital gains.
NOTE 6 - 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 7 - 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
27
T. ROWE PRICE INTERNATIONAL EQUITY ETF
wholly owned subsidiaries, to provide investment advisory services to the fund. The investment management and administrative agreement between the fund and Price Associates provides for an annual all-inclusive fee equal to 0.50% of the fund's average daily net assets. The fee is computed daily and paid monthly. The all-inclusive fee covers investment management services and ordinary, recurring operating expenses but does not cover interest and borrowing expenses; taxes; brokerage commissions and other transaction costs; fund proxy expenses; and nonrecurring and extraordinary expenses.
T. Rowe Price Investment Services, Inc. (Investment Services) serves as distributor to the fund. Pursuant to an underwriting agreement, no compensation for any distribution services provided is paid to Investment Services by the fund.
Cash collateral from securities lending, if any, is invested in the T. Rowe Price Government Reserve Fund (the Price Reserve Fund), a money market fund offered as a short-term investment option to mutual funds, trusts, and other accounts managed by Price Associates or its affiliates and is not available for direct purchase by members of the public. The Price Reserve Fund does not pay investment management fees.
As of October 31, 2024, T. Rowe Price Group, Inc., or its wholly owned subsidiaries, owned 1,979,635 shares of the fund, representing 65% of the fund's net assets.
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, 2024, the fund had no purchases or sales cross trades with other funds or accounts advised by Price Associates.
NOTE 8 - OTHER MATTERS
Unpredictable environmental, political, social and economic events, including but not limited to, environmental or natural disasters, war and conflict (including Russia's military invasion of Ukraine and the conflict in Israel, Gaza and surrounding areas), terrorism, geopolitical developments (including trading and tariff arrangements, sanctions and cybersecurity attacks), and public health epidemics (including the global outbreak of COVID-19) and similar public health threats, may significantly affect the economy and the markets and issuers in which
28
T. ROWE PRICE INTERNATIONAL EQUITY ETF
a fund invests. The extent and duration of such events and resulting market disruptions cannot be predicted. These and other similar events may cause instability across global markets, including reduced liquidity and disruptions in trading markets, while some events may affect certain geographic regions, countries, sectors, and industries more significantly than others, and exacerbate other pre-existing political, social, and economic risks. The fund's performance could be negatively impacted if the value of a portfolio holding were harmed by these or such events. Management actively monitors the risks and financial impacts arising from such events.
29
T. ROWE PRICE INTERNATIONAL EQUITY ETF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of T. Rowe Price Exchange-Traded Funds, Inc. and Shareholders of T. Rowe Price International Equity ETF
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of T. Rowe Price International Equity ETF (one of the funds constituting T. Rowe Price Exchange-Traded Funds, Inc., referred to hereafter as the "Fund") as of October 31, 2024, the related statement of operations for the year ended October 31, 2024 and the statement of changes in net assets and the financial highlights for the year ended October 31, 2024 and for the period June 14, 2023 (inception) through October 31, 2023, including the related notes (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, 2024, the results of its operations for the year ended October 31, 2024 and the changes in its net assets and the financial highlights for the year ended October 31, 2024 and for the period June 14, 2023 (inception) through October 31, 2023 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.
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(CONTINUED)
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, 2024 by correspondence with the custodian 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.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
December 18, 2024
We have served as the auditor of one or more investment companies in the T. Rowe Price group of investment companies since 1973.
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T. ROWE PRICE INTERNATIONAL EQUITY ETF
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/24
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.
The fund's distributions to shareholders included:
For taxable non-corporate shareholders, $2,279,000 of the fund's income represents qualified dividend income subject to a long-term capital gains tax rate of not greater than 20%.
The fund will pass through foreign source income of $2,085,000 and foreign taxes paid of $165,000.
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100 East Pratt Street
Baltimore, MD 21202
Call 1-800-638-5660 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.
T. Rowe Price Investment Services, Inc.
ETF1076-050 12/24
Item 8. Changes in and Disagreements with Accountants for Open-EndManagement Investment Companies.
Not applicable.
Item 9. Proxy Disclosures for Open-EndManagement Investment Companies.
Not applicable.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-EndManagement Investment Companies.
Remuneration paid to Directors is included in Item 7 of this Form N-CSR.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
If applicable, see Item 7.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-EndManagement Investment Companies.
Not applicable.
Item 13. Portfolio Managers of Closed-EndManagement Investment Companies.
Not applicable.
Item 14. Purchases of Equity Securities by Closed-EndManagement Investment Company and Affiliated Purchasers.
Not applicable.
Item 15. Submission of Matters to a Vote of Security Holders.
There has been no change to the procedures by which shareholders may recommend nominees to the registrant's board of directors.
Item 16. 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-CSRwas 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 17. Disclosure of Securities Lending Activities for Closed-EndManagement Investment Companies.
Not applicable.
Item 18. Recovery of Erroneously Awarded Compensation.
Not applicable.
Item 19. Exhibits.
| (a)(1) |
The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. |
|
| (2) |
Listing standards relating to recovery of erroneously awarded compensation: not applicable. |
|
| (3) |
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. |
|
| (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 Exchange-Traded Funds, Inc. | ||||
| By |
/s/ David Oestreicher |
|||
| David Oestreicher | ||||
| Principal Executive Officer | ||||
| Date | December 18, 2024 |
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 18, 2024 |
| By |
/s/ Alan S. Dupski |
|||
| Alan S. Dupski | ||||
| Principal Financial Officer | ||||
| Date |
December 18, 2024 |