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) |
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| 100 East Pratt Street, Baltimore, MD 21202 |
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| (Address of principal executive offices) |
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| 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, 2015
Item 1. Report to Shareholders
| Institutional Africa & Middle East Fund | October 31, 2015 |
| ● | African and Middle Eastern equity markets declined in the one-year period ended October 31, 2015, amid slowing growth in emerging countries and commodity price weakness that weighed heavily on exporters of natural resources.
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| ● | Your fund fell sharply but fared roughly the same as its benchmark in our 6- and 12-month reporting periods.
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| ● | In the last six months, we trimmed some of our bank holdings in Gulf Cooperation Council countries and reduced exposure to Nigeria and Kenya. On the other hand, we increased exposure to Egypt, whose economy is recovering, and South Africa, where we are finding opportunities in the consumer and health care sectors, in particular.
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| ● | We continue to believe that there is much more to Africa and the Middle East than just oil. We believe the region still has a robust long-term outlook, driven by attractive demographics and rising urbanization and infrastructure investment, as well as a strong asset base in natural resources. |
The views and opinions in this report were current as of October 31, 2015. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects.
Manager’s Letter
T. Rowe Price Institutional Africa & Middle East Fund
Dear Investor
African and Middle Eastern equity markets declined in the one-year period ended October 31, 2015, amid slowing growth in emerging countries and commodity price weakness that weighed heavily on exporters of natural resources. Most of the full-year losses occurred in just the last six months. A stronger U.S. dollar versus various currencies in the region—driven by expectations that the U.S. Federal Reserve would soon begin raising short-term interest rates—exacerbated losses in dollar terms. Oil-producing Gulf Cooperation Council (GCC) markets fell sharply as oil prices plunged, pressuring economies and government revenues. In sub-Saharan Africa, OPEC member Nigeria faced similar challenges. South African shares declined in U.S. dollar terms as the economy struggled, although lower energy costs are reducing inflationary pressures. In Northern Africa, Egyptian and Moroccan shares dropped about 20% for the year.
Your fund returned -18.05% in the last six months and -18.02% in the year ended October 31, 2015. As shown in the Performance Comparison table, the fund matched its benchmark in the last six months and performed marginally better than the benchmark for the full fiscal year. Over the last year, good stock selection in Saudi Arabia, the United Arab Emirates (UAE), Qatar, and Egypt helped the fund’s relative performance. Some of our UK-based holdings with operations in Africa and the Middle East also held up well, but stock selection in South Africa worked against us. Country allocations in aggregate detracted from our relative results, especially our South Africa underweight and our Egypt overweight.
Portfolio Review
Gulf Cooperation Council
Saudi Arabia
The Saudi market returned about -26% in both our 6- and 12-month reporting periods. Saudi Arabia, which earns about 90% of its income from oil exports, has thus far weathered the steep decline in oil prices by using its strong reserve base to protect investments in certain strategic areas of the economy. As part of King Salman’s economic drive to diversify the kingdom away from its heavy dependence on oil, Saudi Arabia began allowing qualified foreign institutions to invest directly in its stock market in mid-June. Your fund has been investing in Saudi Arabia via participation notes (P-notes) for several years, and we currently hold several companies that we believe will perform well in the medium to long term, in areas such as financial services, travel services, catering, food products, and health care.
In the financials sector, our investments in Banque Saudi Fransi, Samba Financial, and Saudi British Bank lost value over the last year, in part due to the overall economic impact of lower oil prices. We trimmed these holdings due to asset quality concerns, especially after the king sanctioned a major construction company—which has large exposure to Saudi banks—following a deadly September crane accident in Mecca. However, we believe these are high-quality banks with favorable long-term prospects. When U.S. interest rates rise, they should also benefit from higher lending rates, as the Saudi riyal is pegged to the U.S. dollar. (Please refer to the fund’s portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)
Food products companies Savola and Almarai should benefit over time from increasing Saudi consumption. Regrettably, these holdings also declined in our fiscal year. Savola specializes in food manufacturing in several regional markets and operates grocery retail stores almost entirely in the kingdom, but due to some issues with its stores, we trimmed our position. We have higher conviction in food and dairy producer Almarai, a quality company with sustainable growth and a prominent brand name.
In the consumer discretionary sector, we own Herfy Food Services, which operates a fast-food chain, and Al Tayyar Travel Group. Herfy outperformed Al Tayyar, as the company continued opening new locations at a brisk pace. We decided to trim our Herfy position because its valuation seemed full, and because it has become the most concentrated quick-service restaurant in Saudi Arabia. Al Tayyar tumbled as falling oil prices affected Gulf economies and tourism. However, it is well positioned to benefit from the development of Mecca and the fast growth of religious tourism in the kingdom over time.
United Arab Emirates
The UAE market returned about -18% in the last six months and -21% over the last year. The UAE remains a regional hub, which is favorable for tourism and trade, but the emirates have also been hurt by the global oil price decline. The property market has been strong over the last few years, but the cycle has turned to the downside, as indicated by lower transaction volumes and lower sale prices. Given those factors plus a weaker global macro backdrop, we would not be surprised to see various UAE companies reduce their 2016 earnings estimates in the months ahead.
Banks in the UAE have generally produced better financial results than many of their GCC peers this year, but that, unfortunately, did not translate into broad gains. We trimmed our positions in Emirates NBD, Abu Dhabi Commercial Bank, and First Gulf Bank in the last six months but are maintaining some exposure. Even if earnings growth in 2016 is weaker, the banks are well capitalized and have attractive dividend yields. In addition, they should remain key beneficiaries of economic growth as Dubai prepares to host a World Expo in 2020.
Our other UAE holdings include Emaar Properties and air freight and logistics company Aramex. We trimmed these positions in recent months. Global ports operator DP World was one of the fund’s top full-year absolute performance contributors. The company is bringing new capacity online this year to its massive Jebel Ali port in Dubai to accommodate continued regional growth. In addition, DP World is looking to expand into Iran once sanctions are lifted.
Qatar
The Qatari stock market returned approximately -9% in the last six months and -17% over the last year. Like other GCC countries, Qatar has been affected by the oil price collapse. We owned only two Qatari companies at the end of October: Qatar National Bank and Gulf Warehousing. The former declined in value over the last year, but it is the most profitable and most conservative bank in Qatar, and we believe it has the capital, funding, and sovereign support to withstand a tougher macro backdrop. Gulf Warehousing was a top contributor in our fiscal year. The warehousing situation in Qatar is a bottleneck, as preparations for the 2022 World Cup soccer tournament continue, and the company is continuing to invest in new assets to meet this demand, with several projects underway.
Africa
South Africa
In dollar terms, South African stocks fell almost 18% in the last six months and 13% in the year ended October 31, 2015. Much of these losses reflect rand weakness versus the dollar. The South African economy remains sluggish, and we expect growth in the next couple of years to be subdued. The country continues to struggle with various macro problems, including high unemployment and inflation, big budget and trade deficits, periodic labor unrest, and electricity supply shortages that are having a larger impact on growth than originally estimated. In addition, the country seems to be politically paralyzed: There is a general recognition of the problems, but the leadership and the will to implement the necessary reforms are lacking.
While South Africa has its challenges, and while we believe other African and Middle Eastern countries offer greater growth opportunities, the country does have some core strengths, including a developed banking system and some of the best management teams in the entire emerging markets universe. In addition, many South African companies offer exposure to other sub-Saharan economies. In the last six months, we increased our South Africa allocation in absolute terms—thus decreasing our underweight versus the benchmark—as we took advantage of broad market weakness to add to several high-quality names, including retailers Mr Price and Woolworths Holdings. While economic growth is uninspiring, low-end consumers are by some measures in the best financial shape in several years, helped by lower energy costs, and these retailers are poised to benefit. We also added to our position in insurer Sanlam and added a position in telecommunications company Vodacom Group, which is showing earnings improvement and revenue growth and has been widening its subscriber base. Another new portfolio holding is Mediclinic International, South Africa’s third-largest hospital group, which also has exposure to Switzerland and Dubai and is looking to make inroads in Abu Dhabi. On the other hand, we eliminated several South African holdings because of weaker outlooks stemming from factors such as currency weakness, lower metals prices, or increasing competition.
Sub-Saharan Africa
We had a few small investments in countries such as Uganda, Tanzania, and Zambia at the end of October. In response to a weaker macro environment in Nigeria and other factors, we eliminated several Nigerian holdings in the last six months, resulting in an underweight versus the benchmark. We maintained a position in Nigerian Breweries, a high-quality company that we believe will benefit from beer consumption growth in the years ahead.
In Kenya, which represented 4% of assets, stocks returned approximately -24% and -16% in our 6- and 12-month reporting periods. Most of our Kenyan holdings declined over the last year, and we have trimmed our positions due to macroeconomic concerns. Mobile telecom company Safaricom, however, was one of the fund’s larger contributors to absolute performance in the last year despite faring poorly in the last six months. Safaricom has had a remarkable run in the last few years and is, in our opinion, more than just a conventional telecom stock. Almost every Kenyan adult subscribes to the company’s mobile money transfer service, and the company’s future growth could be driven by wider Kenyan use of this service to purchase goods and services.
Egypt
Egyptian stocks returned about -19% and -21% in our 6- and 12-month reporting periods. We raised our exposure to Egypt in the last six months, as the economic backdrop continues to improve, helped by declining oil and commodity prices and a recovery in Europe. We accomplished this by increasing our stake in a few companies and by adding Integrated Diagnostics Holdings to the portfolio. This is a well-run, cash-generating health care business with pricing power and low to moderate competition. We eliminated other Egyptian holdings, including OCI, a producer of nitrogen-based fertilizer, in the last six months.
UK Companies Operating in Africa and the Middle East
As of October 31, we had close to 6% of assets invested in UK companies with operations in Africa and the Middle East. These investments help us diversify the portfolio and provide exposure to markets that may not be directly accessible through local-listed equities. Our UK-listed holdings include Investec, a South African asset manager and investment bank; Petra Diamonds, which operates primarily in South Africa; and Egyptian gold mining company Centamin. In July, we reestablished a position in Jordan-based Hikma Pharmaceuticals following a share price correction that brought valuations down to more reasonable levels. The company has a solid position in the U.S. market for injectable drugs and in the Middle East and North Africa market for branded generic drugs. We think a couple of Hikma’s recent acquisitions are underappreciated by the market and will materially boost its medium-term earnings power. While we did not own Hikma throughout the entire 12-month period, it was actually one of the fund’s top absolute contributors to performance for the year.
Outlook
The Africa and Middle East region has struggled along with other emerging regions as oil prices have fallen sharply since mid-2014. While oil exporters in the GCC and in sub-Saharan Africa are clearly facing headwinds as a result, oil-importing countries, including South Africa, are benefiting from reduced inflation pressure and the ability of consumers to increase their discretionary spending. While we have made some portfolio adjustments to reflect the likelihood that oil prices will remain “lower for longer,” we continue to believe that there is much more to Africa and the Middle East than just oil. We believe the region still has a robust long-term outlook, driven by attractive demographics, rising urbanization and infrastructure investment, and a strong asset base in natural resources.
While growth in emerging markets is generally slowing, many African and Middle Eastern markets continue to grow at high rates, driven by structural domestic demand. This is translating into strong corporate earnings growth that we believe can be sustained by various businesses in the years ahead. Given the challenging global environment and the broad negative view that many investors currently have toward emerging markets, we believe it is more important than ever to use our proprietary research to find the best long-term growth candidates in Africa and the Middle East while pruning or eliminating portfolio holdings whose prospects are becoming less appealing.
As always, we would like to remind our investors that this fund has a high risk/return profile. Because of its narrow geographic focus and relatively small number of holdings, this fund can be extremely volatile and should represent only a small portion of a long-term investor’s well-diversified portfolio.
Respectfully submitted,
Oliver Bell
Portfolio manager
November 25, 2015
The portfolio manager has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund’s investment program.
| 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, limited geographic region, or emerging markets 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.
S&P Emerging/Frontier ME & Africa BMI ex IL: An index that includes all of the daily priced, free-float market cap that S&P covers across the Middle East and Africa, excluding Israel.
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.
Portfolio Highlights
Performance and Expenses
T. Rowe Price Institutional Africa & Middle East Fund
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 may include a broad-based market index and 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.
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.
Financial Highlights
T. Rowe Price Institutional Africa & Middle East Fund
The accompanying notes are an integral part of these financial statements.
Portfolio of Investments‡
T. Rowe Price Institutional Africa & Middle East Fund
October 31, 2015
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities
T. Rowe Price Institutional Africa & Middle East Fund
October 31, 2015
($000s, except shares and per share amounts)
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Institutional Africa & Middle East Fund
($000s)
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Institutional Africa & Middle East Fund
($000s)
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Institutional Africa & Middle East Fund
October 31, 2015
T. Rowe Price Institutional International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The Institutional Africa & Middle East Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund commenced operations on April 30, 2008. The fund seeks long-term growth of capital by investing primarily in the common stocks of companies located (or with primary operations) in Africa and the Middle East.
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.
Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. 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. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid annually. Capital gain distributions, if any, are generally 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 date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses.
Redemption Fees A 2% fee is 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 are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share.
New Accounting Guidance In May 2015, FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). The ASU removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient and amends certain disclosure requirements for such investments. The ASU is effective for interim and annual reporting periods beginning after December 15, 2015. Adoption will have no effect on the fund’s net assets or results of operations.
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.
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) has been established 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, in its judgment, materially 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, 2015:
There were no material transfers between Levels 1 and 2 during the year ended October 31, 2015.
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 T. Rowe Price institutional 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; at period-end, approximately 63% of the fund’s net assets were invested in emerging markets and 30% in frontier markets. 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.
Participation Notes The fund may invest in participation notes, through which a counterparty provides exposure to common stock, in the form of an unsecured interest, in markets where direct investment by the fund is not possible or preferable. Participation notes provide the economic benefit of common stock ownership to the fund, while legal ownership and voting rights are retained by the counterparty. Although participation notes are usually structured with a defined maturity or termination date, early redemption may be possible. Risks associated with participation notes include the possible failure of a counterparty to perform in accordance with the terms of the agreement, inability to transfer or liquidate the notes, potential delays or an inability to redeem before maturity under certain market conditions, and limited legal recourse against the issuer of the underlying common stock.
Other Purchases and sales of portfolio securities other than short-term securities aggregated $125,932,000 and $168,405,000, respectively, for the year ended October 31, 2015.
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. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.
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.
Distributions during the years ended October 31, 2015 and October 31, 2014, were characterized for tax purposes as follows:
At October 31, 2015, 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. The fund intends to retain realized gains to the extent of available capital loss carryforwards. Because the fund is required to use capital loss carryforwards that do not expire before those with expiration dates, all or a portion of its capital loss carryforwards subject to expiration could ultimately go unused. During the year ended October 31, 2015, the fund utilized $4,270,000 of capital loss carryforwards. The fund’s available capital loss carryforwards as of October 31, 2015, expire as follows: $3,543,000 in fiscal 2017 and $13,535,000 in fiscal 2019. Further, $12,809,000 of the fund’s available capital loss carryforwards are subject to certain limitations on amount or timing of use related to an ownership change.
NOTE 5 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in which it invests. Additionally, certain foreign currency transactions are subject to tax, and 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. Taxes incurred on the purchase of foreign currencies are recorded as realized loss on foreign currency transactions. 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. At October 31, 2015, the fund had no deferred tax liability attributable to foreign securities and no foreign capital loss carryforwards.
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 subadvisory 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 1.00% of the fund’s average daily net assets. The fee is computed daily and paid monthly.
The fund was also subject to a contractual expense limitation through February 28, 2015. During the limitation period, Price Associates was required to waive its management fee and pay the fund for any expenses, excluding interest, taxes, brokerage commissions, and extraordinary expenses, that would otherwise cause the fund’s ratio of annualized total expenses to average net assets (expense ratio) to exceed its expense limitation of 1.25%. 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 expense ratio to exceed its expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver. For the year ended October 31, 2015, the fund operated below its expense limitation.
In addition, the fund has entered into service agreements with Price Associates and a wholly owned subsidiary of Price Associates (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, 2015, expenses incurred pursuant to these service agreements were $153,000 for Price Associates and $1,000 for T. Rowe Price Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements.
The fund may invest in the T. Rowe Price Reserve Investment Fund, the T. Rowe Price Government Reserve Investment Fund, or the T. Rowe Price Short-Term Reserve Fund (collectively, the Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The Price Reserve Investment 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. The Price Reserve Investment Funds pay no investment management fees.
NOTE 7 - BORROWING
To provide temporary liquidity, the fund may borrow from other T. Rowe Price-sponsored mutual funds under an interfund borrowing program developed and managed by Price Associates. The program permits the borrowing and lending of cash at rates beneficial to both the borrowing and lending funds. Pursuant to program guidelines, loans totaling 10% or more of a borrowing fund’s total assets require collateralization at 102% of the value of the loan; loans of less than 10% are unsecured. During the year ended October 31, 2015, the fund incurred $1,000 in interest expense related to outstanding borrowings on six days in the average amount of $6,108,000 and at an average annual rate of 1.22%. At October 31, 2015, there were no borrowings outstanding.
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 Africa & Middle East Fund
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price Institutional Africa & Middle East Fund (one of the portfolios comprising T. Rowe Price Institutional International Funds, Inc., hereafter referred to as the “Fund”) at October 31, 2015, the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and confirmation of the underlying fund by correspondence with the transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
December 15, 2015
| Tax Information (Unaudited) for the Tax Year Ended 10/31/15 |
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 $15,327,000 from long-term capital gains, subject to a long-term capital gains tax rate of not greater than 20%.
For taxable non-corporate shareholders, $2,186,000 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 $4,865,000 and foreign taxes paid of $347,000.
| 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 website, troweprice.com. To access it, click on the words “Social Responsibility” at the top of our corporate homepage. Next, click on the words “Conducting Business Responsibly” on the left side of the page that appears. Finally, click on the words “Proxy Voting Policies” on the left side of the page that appears.
Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above to reach the “Conducting Business Responsibly” page. Click on the words “Proxy Voting Records” on the left side of that page, and then click on the “View Proxy Voting Records” link at the bottom of the page that appears.
| How to Obtain Quarterly Portfolio Holdings |
The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330.
| 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 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 | | |
| | |
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 |
| | |
William R. Brody, M.D., Ph.D. (1944)
2009 [179] | | President and Trustee, Salk Institute for Biological Studies (2009 to present); Director, BioMed Realty Trust (2013 to present); Director, Novartis, Inc. (2009 to 2014); Director, IBM (2007 to present) |
| | |
Anthony W. Deering (1945)
1991 [179] | | Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director, Brixmor Real Estate Investment Trust (2012 to present); Director and Advisory Board Member, Deutsche Bank North America (2004 to present); Director, Under Armour (2008 to present); Director, Vornado Real Estate Investment Trust (2004 to 2012) |
| | |
Donald W. Dick, Jr. (1943)
1989 [179] | | Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present) |
| | |
Bruce W. Duncan (1951)
2013 [179] | | President, Chief Executive Officer, and Director, First Industrial Realty Trust, an owner and operator of industrial properties (2009 to present); Chairman of the Board (2005 to present) and Director (1999 to present), Starwood Hotels & Resorts, a hotel and leisure company |
| | |
Robert J. Gerrard, Jr. (1952)
2012 [179] | | Chairman of Compensation Committee and Director, Syniverse Holdings, Inc., a provider of wireless voice and data services for telecommunications companies (2008 to 2011); Advisory Board Member, Pipeline Crisis/Winning Strategies, a collaborative working to improve opportunities for young African Americans (1997 to present) |
| | |
Karen N. Horn (1943)
2003 [179] | | Limited Partner and Senior Managing Director, Brock Capital Group, an advisory and investment banking firm (2004 to present); Director, Eli Lilly and Company (1987 to present); Director, Simon Property Group (2004 to present); Director, Norfolk Southern (2008 to present) |
| | |
Paul F. McBride (1956)
2013 [179] | | Former Company Officer and Senior Vice President, Human Resources and Corporate Initiatives, Black & Decker Corporation (2004 to 2010) |
| | |
Cecilia E. Rouse, Ph.D. (1963)
2012 [179] | | 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, National Bureau of Economic Research’s Labor Studies Program (2011 to present); Member, President’s Council of Economic Advisers (2009 to 2011); Chair of Committee on the Status of Minority Groups in the Economic Profession, American Economic Association (2012 to present) |
| | |
John G. Schreiber (1946)
2001 [179] | | Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present); Director, General Growth Properties, Inc. (2010 to 2013); Director, Blackstone Mortgage Trust, a real estate financial company (2012 to present); Director and Chairman of the Board, Brixmor Property Group, Inc. (2013 to present); Director, Hilton Worldwide (2013 to present); Director, Hudson Pacific Properties (2014 to present) |
| | |
Mark R. Tercek (1957)
2009 [179] | | President and Chief Executive Officer, The Nature Conservancy (2008 to present) |
| | |
*Each independent director serves until retirement, resignation, or election of a successor. |
| 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 |
| | |
Edward C. Bernard (1956)
2006 [179] | | Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board, Director, and President, T. Rowe Price Investment Services, Inc.; Chairman of the Board and Director, T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, and Director, T. Rowe Price International; Chairman of the Board, Chief Executive Officer, Director, and President, T. Rowe Price Trust Company; Chairman of the Board, all funds |
| | |
Brian C. Rogers, CFA, CIC (1955)
2006 [125] | | Chief Investment Officer, Director, and Vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company |
| | |
*Each inside director serves until retirement, resignation, or election of a successor. |
| 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 | | Company’s Representative, Director, and Vice President, Price Hong Kong; Director and Vice President, Price Singapore and T. Rowe Price International; Vice President, 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; formerly, student, The University of Chicago Booth School of Business (to 2012); Investment Consultant–Middle East and North Africa Investment Team, International Finance Corporation–The World Bank Group (to 2010) |
| | |
Harishankar Balkrishna (1983)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, intern, T. Rowe Price (to 2010) |
| | |
Peter J. Bates, CFA (1974)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
Oliver D.M. Bell, IMC (1969)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Head of Global Emerging Markets Research, Pictet Asset Management Ltd. (to 2011) |
| | |
R. Scott Berg, CFA (1972)
Executive Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
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; formerly, Director, EMEA Macroeconomic Research and Strategy (to 2012); Independent Financial Advisor, Global Source (to 2010) |
| | |
Tala Boulos (1984)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Vice President, CEEMEA Corporate Credit Research, Deutsche Bank (to 2013) |
| | |
Darrell N. Braman (1963)
Vice President | | Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, T. Rowe Price Investment 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.; formerly, Director, Bank of America Merrill Lynch and Co-head of credit and convertibles research team in Hong Kong (to 2010) |
| | |
Archibald Ciganer Albeniz, CFA (1976)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
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 |
| | |
Laurent Delgrande (1971)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Portfolio Manager, Fidelity International Limited (to 2014) |
| | |
Michael Della Vedova (1969)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Shawn T. Driscoll (1975)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
Bridget A. Ebner (1970)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
Mark J.T. Edwards (1957)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
David J. Eiswert, CFA (1972)
Executive Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Mark S. Finn, CFA, CPA (1963)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
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. |
| | |
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 |
| | |
Richard L. Hall (1979)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Financial Attaché, U.S. Department of Treasury, International Affairs Division (to 2012) |
| | |
Steven C. Huber, CFA, FSA (1958)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
Stefan Hubrich, Ph.D., CFA (1974)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
Arif Husain, CFA (1972)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Director/Head of UK and Euro Fixed Income, AllianceBernstein (to 2013) |
| | |
Dominic Janssens (1965)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
Randal S. Jenneke (1971)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Senior Portfolio Manager, Australian Equities (to 2010) |
| | |
Yoichiro Kai (1973)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Andrew J. Keirle (1974)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Paul J. Krug (1964)
Vice President | | Vice President, T. Rowe Price 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 |
| | |
David M. Lee, CFA (1962)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
Patricia B. Lippert (1953)
Secretary | | Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. |
| | |
Christopher C. Loop, CFA (1966)
Vice President | | Vice President, T. Rowe Price Group, Inc., and 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 |
| | |
Catherine D. Mathews (1963)
Treasurer and Vice President | | Vice President, T. Rowe Price and T. Rowe Price Trust Company |
| | |
Jonathan H.W. Matthews, CFA (1975)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
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 |
| | |
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 and T. Rowe Price Group, Inc. |
| | |
Sridhar Nishtala (1975)
Vice President | | Vice President, Price Singapore and T. Rowe Price Group, Inc. |
| | |
Jason Nogueira, CFA (1974)
Executive Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
David Oestreicher (1967)
Vice President | | 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; Chief Legal Officer, Vice President, and Secretary, T. Rowe Price Group, Inc.; Vice President and Secretary, T. Rowe Price and T. Rowe Price International; Vice President, Price Hong Kong and Price Singapore |
| | |
Michael D. Oh, CFA (1974)
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; formerly, Vice President, Moody’s Investors Service (to 2010) |
| | |
Oluwaseun A. Oyegunle, CFA (1984)
Vice President | | Vice President, T. Rowe Price International; formerly, student, The Wharton School, University of Pennsylvania (to 2013); Summer Investment Analyst, T. Rowe Price International (2012); Analyst, Asset & Resource Management Limited (to 2012); Analyst, Vetiva Capital Management Limited (to 2011) |
| | |
Gonzalo Pángaro, CFA (1968)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Craig J. Pennington, CFA (1971)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Global Energy Analyst, Insight Investment (to 2010) |
| | |
John W. Ratzesberger (1975)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; formerly, North American Head of Listed Derivatives Operation, Morgan Stanley (to 2013) |
| | |
Christopher J. Rothery (1963)
Executive Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
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 |
| | |
Deborah D. Seidel (1962)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc. |
| | |
Robert W. Sharps, CFA, CPA (1971)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
John C.A. Sherman (1969)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Robert W. Smith (1961)
Vice President | | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
| | |
Gabriel Solomon (1977)
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 and T. Rowe Price Group, Inc. |
| | |
David A. Stanley (1963)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Taymour R. Tamaddon, CFA (1976)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Group, Inc. |
| | |
Ju Yen Tan (1972)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
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 |
| | |
Verena Wachnitz, CFA (1978)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Christopher S. Whitehouse (1972)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
J. Howard Woodward, CFA (1974)
Vice President | | Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International |
| | |
Ernest C. Yeung, CFA (1979)
Vice President | | Vice President, Price Hong Kong and T. Rowe Price Group, Inc. |
| | |
Jeffrey T. Zoller (1970)
Vice President | | Vice President, T. Rowe Price and T. Rowe Price Trust Company |
| |
| Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. |
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 $2,366,000 and $2,159,000, 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 registrant’s second fiscal quarter 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. 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/ Edward C. Bernard |
| | Edward C. Bernard |
| | Principal Executive Officer |
| | |
| Date December 15, 2015 | | |
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/ Edward C. Bernard |
| | Edward C. Bernard |
| | Principal Executive Officer |
| | |
| Date December 15, 2015 | | |
| | |
| | |
| By | /s/ Catherine D. Mathews |
| | Catherine D. Mathews |
| | Principal Financial Officer |
| | |
| Date December 15, 2015 | | |
