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)
Registrants telephone number, including area code: (410) 345-2000
Date of fiscal year end: December 31
Date of reporting period:
December 31, 2023
Item 1. Reports to Shareholders
(a) Report pursuant to Rule 30e-1
ANNUAL REPORT
December 31, 2023
|
T.
ROWE PRICE |
TMSL
|
Small-Mid
Cap ETF |
|
For
more insights from T. Rowe Price investment professionals, go to troweprice.com. |
T. ROWE PRICE SMALL-MID CAP ETF
HIGHLIGHTS
■
|
U.S. small-cap and mid-cap
stocks advanced in 2023, despite spending most of the year out of favor in an extremely narrow market, thanks to a late-period rally primarily influenced by the Federal Reserve signaling the conclusion of its rate-hike campaign and the initiation of
rate cuts in 2024. |
■
|
The Small-Mid Cap ETF
outperformed the Russell 2500 Index and its secondary benchmark, the Lipper Mid-Cap Core Funds Index, from inception on June 14, 2023, through December 31, 2023. |
■
|
Stock selection within
industrials and business services added value. In health care, stock choices boosted relative returns, though our overweight allocation modestly mitigated those gains. Conversely, security selection in utilities detracted. |
■
|
We employ
fundamental research and active, bottom-up stock selection to construct a portfolio of reasonably valued companies with high-quality characteristics within the U.S. small- and mid-cap universes. We value companies with attractive relative valuation,
improving earnings and cash flow, high return on capital, attractive operating margins, and sound balance sheet and financial management. |
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include:
■
|
Timely delivery of
important documents |
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|
Convenient access to
your documents anytime, anywhere |
■
|
Strong security
protocols to safeguard sensitive data |
If you
invest through a financial intermediary such as an investment advisor, a bank, or a brokerage firm, please contact that organization and ask if it can provide electronic documentation.
T. ROWE PRICE SMALL-MID CAP ETF
Market Commentary
Dear
Shareholder
Global stock and bond
indexes were broadly positive during 2023 as most economies managed to avoid the recession that was widely predicted at the start of the year. Technology companies benefited from investor enthusiasm for artificial intelligence developments and led
the equity rally, while fixed income benchmarks rebounded late in the year amid falling interest rates.
For the 12-month period, the
technology-oriented Nasdaq Composite Index rose about 43%, reaching a record high and producing the strongest result of the major benchmarks. Growth stocks outperformed value shares, and developed market stocks generally outpaced their emerging
markets counterparts. Currency movements were mixed over the period, although a weaker dollar versus major European currencies was beneficial for U.S. investors in European securities.
Within the S& P 500 Index, which
finished the year just short of the record level it reached in early 2022, the information technology, communication services, and consumer discretionary sectors were all lifted by the tech rally and recorded significant gains. A small group of
tech-oriented mega-cap companies helped drive much of the market’s advance. Conversely, the defensive utilities sector had the weakest returns in the growth-focused environment, and the energy sector also lost ground amid declining oil prices.
The financials sector bounced back from the failure of three large regional banks in the spring and was one of the top-performing segments in the second half of the year.
The U.S. economy was the strongest among
the major markets during the period, with gross domestic product growth coming in at 4.9% in the third quarter, the highest since the end of 2021. Corporate fundamentals were also broadly supportive. Year-over-year earnings growth contracted in the
first and second quarters of 2023, but results were better than expected, and earnings growth turned positive again in the third quarter. Markets remained resilient despite a debt ceiling standoff in the U.S., the outbreak of war in the Middle East,
the continuing conflict between Russia and Ukraine, and a sluggish economic recovery in China.
Inflation remained a concern, but investors
were encouraged by the slowing pace of price increases as well as the possibility that the Federal Reserve was nearing the end of its rate-hiking cycle. The Fed held rates steady after raising its short-term lending benchmark rate to a target range
of 5.25% to 5.50% in July,
T. ROWE PRICE SMALL-MID CAP ETF
the highest level since March 2001, and at its final
meeting of the year in December, the central bank indicated that there could be three 25-basis-point rate cuts in 2024.
The yield of the benchmark 10-year U.S.
Treasury note briefly reached 5.00% in October for the first time since late 2007 before falling back to 3.88% by period-end, the same level where it started the year, amid cooler-than-expected inflation readings and less-hawkish Fed rhetoric. Fixed
income benchmarks were lifted late in the year by falling yields. Investment-grade and high yield corporate bonds produced solid returns, supported by the higher coupons that have become available over the past year, as well as increasing hopes that
the economy might be able to avoid a recession.
Global economies and markets showed
surprising resilience in 2023, but considerable uncertainty remains as we look ahead. Geopolitical events, the path of monetary policy, and the impact of the Fed’s rate hikes on the economy all raise the potential for additional volatility. We
believe this environment makes skilled active management a critical tool for identifying risks and opportunities, and our investment teams will continue to use fundamental research to help identify securities that can add value to your portfolio
over the long term.
Thank you for
your continued confidence in T. Rowe Price.
Sincerely,
Robert Sharps
CEO and President
T. ROWE PRICE SMALL-MID CAP ETF
Management’s Discussion of Fund Performance
INVESTMENT OBJECTIVE
The fund seeks to provide long-term capital
growth.
FUND COMMENTARY
How did the fund perform over the reporting
period?
The Small-Mid Cap ETF
returned 12.23% from inception through December 31, 2023. The fund outperformed the Russell 2500 Index and its secondary benchmark, the Lipper Mid-Cap Core Funds Index. (Past performance cannot guarantee future
results.)
What factors
influenced the fund’s performance?
Our active, bottom-up stock selection
allowed us to build a portfolio of reasonably valued companies with high-quality characteristics within the small- and mid-cap universes, with our stock selection having generated alpha in all but one sector since inception.
PERFORMANCE COMPARISON
|
Total
Return |
Periods
Ended 12/31/23 |
6
Months |
Since
Inception 6/14/23 |
Small-Mid
Cap ETF (Based on Net Asset Value) |
9.64%
|
12.23%
|
Small-Mid
Cap ETF (At Market Price)* |
9.51
|
12.23
|
Russell
2500 Index |
7.93
|
9.66
|
Lipper
Mid-Cap Core Funds Index |
7.04
|
9.59
|
*Market returns
are based on the midpoint of the bid/ask spread at market close (typically, 4 p.m. ET) and do not represent returns an investor would have received if shares were traded at other times.
T. ROWE PRICE SMALL-MID CAP ETF
Favorable stock selection within
industrials and businesses services had the most significant impact on relative performance. Our position in Rolls-Royce, a power systems company serving the civil aerospace, military, marine, and energy sectors, added value during the period.
Shares moved higher as the company reported better-than-expected guidance in its midyear trading update and continued to demonstrate operational improvement under new management. We believe these improvements can help drive margin growth and,
combined with the ongoing air travel recovery, give the potential for significant earnings and free cash flow improvement for the company that the market does not yet appreciate.
Our stock choices within health care also
added value. Biotechnology was the health care subsector with the highest contribution to performance, with stock selection in several key names, including Biohaven, Insmed, and Cerevel Therapeutics, adding to returns. Our position in Molina
Healthcare, a large managed care services provider with most of its business coming through Medicaid programs, also benefited returns. The company maintained its earnings targets despite a challenging backdrop for managed care operators, as medical
loss ratio rose, with elective procedures increasing costs spent on medical claims. We like the company’s high-quality management team, differentiated organic and inorganic growth runways, and multiple sources of earnings upside.
Within the energy sector, our stock choices
boosted relative returns, particularly within the offshore exploration segment, though our overweight allocation to the sector dampened those gains. Our view that the offshore exploration space was emerging from underinvestment and would benefit
from increased demand, particularly internationally, pushed returns higher. Shares of TechnipFMC, the only company that offers a fully integrated subsea oil exploration service, moved higher as the company benefited from increased investment in its
industry and a scarcity of capable rigs, which allows for elevated day rates. We believe TechnipFMC is well positioned for margin improvement, order growth, and accelerating cash flows as its integrated product offering is increasingly attractive to
clients and it enjoys an attractive pricing power in its industry.
Conversely, stock selection in utilities
detracted, making it the only sector within the portfolio that did not outperform the benchmark. Our underweight position in Vistra Corp., a Texas-based electricity and power generation company, detracted as leverage to rising natural gas prices
during the period drove its share price higher.
T. ROWE PRICE SMALL-MID CAP ETF
How is the fund positioned?
Small- and mid-cap companies are at earlier
stages in their development cycle, which provides the opportunity to invest in businesses with potentially higher growth prospects over longer durations with a modest increase in risk exposure versus their larger-cap peers. The portfolio management
team applies a wide set of valuation metrics and techniques to identify companies in the small- and mid-cap universe with attractive long-term, risk-adjusted profiles. Given that the market was extremely narrow for much of 2023, with down-cap
companies out of favor for most of the period, we were able to take advantage of pulling higher quality names into our universe and to construct the portfolio at an opportune time, with many stocks out of favor and at constructive
valuations.
We aim to outperform the
benchmark by owning a diversified portfolio of stocks
SECTOR DIVERSIFICATION
|
Percent
of Net Assets |
|
6/30/23
|
12/31/23
|
Industrials
and Business Services |
20.0%
|
19.6%
|
Information
Technology |
16.8
|
16.1
|
Financials
|
13.0
|
15.5
|
Health
Care |
14.9
|
12.6
|
Consumer
Discretionary |
10.5
|
11.1
|
Energy
|
4.7
|
6.2
|
Materials
|
4.6
|
4.8
|
Real
Estate |
4.9
|
4.7
|
Consumer
Staples |
3.9
|
3.9
|
Communication
Services |
3.1
|
2.6
|
Utilities
|
2.8
|
2.3
|
Other
and Reserves |
0.8
|
0.6
|
Total
|
100.0%
|
100.0%
|
Historical
weightings reflect current industry/sector classifications.
T. ROWE PRICE SMALL-MID CAP ETF
with attractive prospects instead of making large,
concentrated investments in a small number of stocks.
The portfolio’s largest overweight
relative to the Russell 2500 Index is in information technology. Our largest industry allocation is in software, where top holdings include Dynatrace—an application performance management company with a strong reputation and competitive lead
in its space—and Zscaler, a software-as-a-service provider that allows companies to securely connect employees to the internet, that we view as, fundamentally, the best-positioned company among peers. In semiconductors and semiconductor
equipment, our largest position is MKS Instruments. We believe the company sits in an attractive part of the semiconductor and advanced electronics value chain, serving as a critical supplier to manufacturers and equipment companies as roughly 85%
of all semiconductor chips are manufactured using the company’s technology. One of the portfolio’s top positions, Western Digital, also falls in this space. Western Digital is the leading provider of storage technology, including hard
disk drives and NAND solid-state drives, which we believe is a growing industry, and we are constructive on potential operational improvements to help close the gap to industry peers.
Our second-largest overweight relative to
the benchmark is in energy, where our overweight bets are concentrated around the offshore exploration space, which we find attractive given the ongoing benefits from an expected cycle of capital expenditures in the industry and resulting elevated
day rates. In addition to TechnipFMC, we have a large position in Tidewater, the global leader in offshore support vessels. We believe the company can continue to benefit from the ongoing reinvestment upcycle with higher day rates helping to drive
margins, and a purchase of additional vessels during the year could prove transformational as demand for its services continues to rise. In the oil, gas, and consumable fuels industry, our top bet is in Cameco, the world’s largest uranium
producer. Due to ongoing support for nuclear as a clean source of energy, uranium prices rebounded to 15-year highs in 2023 given supply constraints and elevated demand. We believe the company can realize idiosyncratic benefits as it announced
significant production increases along with rising contract volumes and sales, which can improve its cost structure.
Our next largest relative overweight is in
the health care sector. The portfolio’s largest position in the sector is in Select Medical Holdings, a Pennsylvania-based hospital conglomerate. We are encouraged by the company’s path to margin improvement in its long-term acute care
hospital division, creating a valuation dislocation relative to market expectations, and it boasts a strong and savvy management team with a track record of delivering value to shareholders.
T. ROWE PRICE SMALL-MID CAP ETF
Our top position at year-end was in News
Corp, a large international media conglomerate. We believe that the company trades at an attractive valuation given the breadth of its assets, the sums of which greatly exceed the current share price and create optionality around potential sales of
assets that can boost returns.
What is
portfolio management’s outlook?
The economy has demonstrated unexpected
resilience, surpassing the expectations of most investors. Recognizing that policy rates have likely peaked in this tightening cycle, we anticipate that the market will broaden out and reward our long-term-oriented conviction toward investing behind
quality companies with durable growth and strong fundamentals in the small- and mid-cap space. We remain confident that meaningful allocations across a well-diversified range of industries and businesses within the information technology,
financials, and health care sectors positions the portfolio to capitalize on secular growth trends.
While our investment universe rallied in
the last two months of 2023 due to economic data and central bank messaging that interest rates were likely to fall in 2024, the small- and mid-cap space was out of favor in an extremely narrow market for most of the year, presenting opportunities
to build positions in high-conviction names that the market overlooked at attractive valuations. We believe this gives the portfolio meaningful upside, given the idiosyncratic nature of our investments, all of which have growth drivers that give
them the potential to perform in any macroeconomic backdrop. We continue to maintain a cautious approach, given the likelihood for interest rates to fall more slowly than the market anticipates, uncertainty heading into a contentious presidential
election in the U.S., and high geopolitical tensions across most of the world. Regardless of what lies ahead, we remain confident in our bottom-up stock selection process and continue to approach our opportunity set with a focus on long‐term
investment horizons and best-in-class businesses that are trading at attractive valuations.
The views expressed reflect the opinions of T. Rowe Price as of
the date of this report and are subject to change based on changes in market, economic, or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.
T. ROWE PRICE SMALL-MID CAP ETF
RISKS OF INVESTING IN THE FUND
RISKS OF STOCK INVESTING
Principal Risks
As with any fund, there is no guarantee
that the fund will achieve its objective(s). The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund, which may be even greater during periods of market
disruption or volatility, are summarized as follows:
Mid-cap stocks. Investments in securities issued by mid-cap companies are likely to be more volatile than investments in securities issued by larger companies. Medium-sized companies may have less seasoned management, narrower product
lines, and less capital reserves and liquidity than larger companies and more sensitive to economic, market, and industry changes.
Small-cap stocks. Investments in securities issued by small-cap companies are likely to be more volatile than investments in securities issued by larger companies. Small-cap companies often have less experienced management, narrower
product lines, more limited financial resources, and less publicly available information than larger companies. In addition, smaller companies are typically more sensitive to changes in overall economic conditions, and their securities may be
difficult to trade.
Market
conditions. The value of the fund’s investments may decrease, sometimes rapidly or unexpectedly, due to factors affecting an issuer held by the fund, particular industries, or the overall securities markets. A
variety of factors can increase the volatility of the fund’s holdings and markets generally, including political or regulatory developments, recessions, inflation, rapid interest rate changes, war or acts of terrorism, natural disasters, and
outbreaks of infectious illnesses or other widespread public health issues, such as the coronavirus pandemic and related governmental and public responses. Certain 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. Government intervention in markets may impact interest rates, market volatility, and security
pricing. These adverse developments may cause broad declines in market value due to short-term market movements or for significantly longer periods during more prolonged market downturns.
T. ROWE PRICE SMALL-MID CAP ETF
BENCHMARK INFORMATION
Note: Portions of the mutual fund
information contained in this report was supplied by Lipper, a Refinitiv Company, subject to the following: Copyright 2024 © Refinitiv. All rights reserved. Any copying, republication or redistribution of Lipper content is expressly prohibited
without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Note: London Stock Exchange Group plc and
its group undertakings (collectively, the “LSE Group”). © LSE Group 2024. . FTSE Russell is a trading name of certain of the LSE Group companies. FTSE®” “Russell®”, “FTSE Russell® is/are a
trade mark(s) of the relevant LSE Group companies and is/are used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE
Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the
relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication. The LSE Group is not responsible for the formatting or configuration of this material or for any
inaccuracy in T. Rowe Price’s presentation thereof.
T. ROWE PRICE SMALL-MID CAP ETF
PORTFOLIO HIGHLIGHTS
TWENTY-FIVE LARGEST HOLDINGS
|
Percent
of Net Assets |
|
12/31/23
|
News
Corp |
1.6%
|
FleetCor
Technologies |
1.3
|
Stanley
Black & Decker |
1.3
|
TechnipFMC
|
1.3
|
Textron
|
1.3
|
Western
Digital |
1.2
|
Popular
|
1.1
|
Dynatrace
Holdings |
1.0
|
Fifth
Third Bancorp |
1.0
|
MKS
Instruments |
1.0
|
Select
Medical Holdings |
0.9
|
Tidewater
|
0.9
|
Zscaler
|
0.9
|
Huntington
Ingalls Industries |
0.8
|
PTC
|
0.8
|
RenaissanceRe
Holdings |
0.8
|
Rexford
Industrial Realty |
0.8
|
Western
Alliance Bancorp |
0.8
|
WestRock
|
0.8
|
Coca-Cola
Consolidated |
0.7
|
Esab
|
0.7
|
Fair
Isaac |
0.7
|
Lamar
Advertising |
0.7
|
OneMain
Holdings |
0.7
|
SS&C
Technologies Holdings |
0.7
|
Total
|
23.8%
|
Note: The
information shown does not reflect any exchange-traded funds (ETFs), cash reserves, or collateral for securities lending that may be held in the portfolio.
T. ROWE PRICE SMALL-MID CAP ETF
GROWTH OF $10,000
This chart 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 result is compared with benchmarks, which include a broad-based market index and may also include a peer
group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes.
Small-Mid Cap ETF
Note: See the Average Annual Compound Total
Return table.
*Since 6/30/23.
T. ROWE PRICE SMALL-MID CAP ETF
AVERAGE ANNUAL COMPOUND TOTAL RETURN
Period
Ended 12/31/23 |
Since
Inception 6/14/23 |
Small-Mid
Cap ETF (Based on Net Asset Value) |
12.23%*
|
Small-Mid
Cap ETF (At Market Price) |
12.23*
|
The fund's performance information
represents only past performance and is not necessarily an indication of future results. Current performance may be lower or higher than the performance data cited. Share price, principal value, and return will vary, and you may have a gain or loss
when you sell your shares. Market returns are based on the midpoint of the bid/ask spread at market close (typically, 4 p.m. ET) and do not represent returns an investor would have received if shares were traded at other times. For the most
recent month-end performance, please visit our website (troweprice.com).
This table shows how the fund would have
performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns
do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. Past performance cannot guarantee future
results.
*Returns for periods of less
than one year are not annualized.
PREMIUM/DISCOUNT
INFORMATION
The frequency at which the
daily market prices were at a discount or premium to the fund’s net asset value is available on the fund’s website (troweprice.com).
EXPENSE RATIO
The expense
ratio shown is as of the fund’s most recent prospectus. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, includes acquired fund fees and expenses but
does not include fee or expense waivers.
T. ROWE PRICE SMALL-MID CAP ETF
FUND EXPENSE EXAMPLE
As a shareholder, you may incur two types of
costs: (1) transaction costs, such as brokerage commissions on purchases and sales, and (2) ongoing costs, including management 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 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 expenses based on the fund’s actual returns. 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 brokerage commissions paid on purchases and sales of shares. 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.
T. ROWE PRICE SMALL-MID CAP ETF
Small-Mid Cap ETF
|
Beginning
Account Value 7/1/23 |
Ending
Account Value 12/31/23 |
Expenses
Paid During Period* 7/1/23 to 12/31/23 |
Actual
|
$1,000.00
|
$1,096.40
|
$2.91
|
Hypothetical
(assumes 5% return before expenses) |
1,000.00
|
1,022.43
|
2.80
|
*
|
Expenses
are equal to the fund’s annualized expense ratio for the 6-month period (0.55%), multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (184), and divided by the days in
the year (365) to reflect the half-year period. |
T. ROWE PRICE SMALL-MID CAP ETF
For a share outstanding throughout the period
|
6/14/23
(1) Through |
|
12/31/23
|
NET
ASSET VALUE |
|
Beginning
of period |
$
25.00 |
Investment
activities |
|
Net
investment income(2) (3) |
0.15
|
Net
realized and unrealized gain/loss |
2.90
|
Total
from investment activities |
3.05
|
Distributions
|
|
Net
investment income |
(0.09)
|
NET
ASSET VALUE |
|
End
of period |
$ 27.96
|
Ratios/Supplemental
Data |
Total
return, based on NAV(3) (4) |
12.23%
|
Ratios
to average net assets:(3) |
|
Gross
expenses before waivers/payments by Price Associates |
0.55%
(5) |
Net
expenses after waivers/payments by Price Associates |
0.55%
(5) |
Net
investment income |
1.09%
(5) |
Portfolio
turnover rate(6) |
14.5%
|
Net
assets, end of period (in thousands) |
$
67,109 |
(1) |
Inception
date |
(2) |
Per
share amounts calculated using average shares outstanding method. |
(3) |
See
Note 6 for details to 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 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.
T. ROWE PRICE SMALL-MID CAP ETF
December 31, 2023
PORTFOLIO OF INVESTMENTS‡ |
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
|
|
|
COMMON
STOCKS 99.4% |
COMMUNICATION
SERVICES 2.6% |
Entertainment
0.2% |
|
|
Endeavor
Group Holdings, Class A |
5,484
|
130
|
|
|
130
|
Interactive
Media & Services 0.5% |
|
|
Match
Group (1) |
4,864
|
178
|
Pinterest,
Class A (1) |
3,814
|
141
|
|
|
319
|
Media
1.9% |
|
|
News,
Class B |
41,918
|
1,078
|
Nexstar
Media Group |
1,561
|
245
|
|
|
1,323
|
Total
Communication Services |
|
1,772
|
CONSUMER
DISCRETIONARY 11.1% |
Automobile
Components 1.2% |
|
|
Autoliv
|
1,802
|
199
|
BorgWarner
|
2,953
|
106
|
Magna
International |
3,155
|
186
|
Patrick
Industries |
2,953
|
296
|
|
|
787
|
Automobiles
0.3% |
|
|
Rivian
Automotive, Class A (1) |
9,378
|
220
|
|
|
220
|
Diversified
Consumer Services 0.7% |
|
|
Bright
Horizons Family Solutions (1) |
3,497
|
330
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Duolingo
(1) |
715
|
162
|
|
|
492
|
Hotels
Restaurants & Leisure 3.9% |
|
|
Accel
Entertainment (1) |
8,066
|
83
|
Arcos
Dorados Holdings, Class A |
17,723
|
225
|
Bloomin'
Brands |
6,233
|
175
|
Boyd
Gaming |
2,884
|
180
|
Churchill
Downs |
1,413
|
191
|
Darden
Restaurants |
570
|
94
|
Domino's
Pizza |
892
|
368
|
DraftKings
(1) |
10,670
|
376
|
MGM
Resorts International (1) |
3,259
|
145
|
Travel
Leisure |
2,382
|
93
|
Vail
Resorts |
556
|
119
|
Wendy's
|
8,458
|
165
|
Wingstop
|
906
|
232
|
Wynn
Resorts |
1,622
|
148
|
|
|
2,594
|
Household
Durables 1.1% |
|
|
La-Z-Boy
|
2,326
|
86
|
NVR
(1) |
59
|
413
|
PulteGroup
|
2,216
|
229
|
|
|
728
|
Specialty
Retail 2.4% |
|
|
Academy
Sports & Outdoors |
1,048
|
69
|
Bath
& Body Works |
5,637
|
243
|
Burlington
Stores (1) |
1,071
|
208
|
Five
Below (1) |
1,141
|
243
|
Floor
& Decor Holdings, Class A (1) |
1,501
|
168
|
Tractor
Supply |
951
|
205
|
Ulta
Beauty (1) |
390
|
191
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Williams-Sonoma
|
1,554
|
314
|
|
|
1,641
|
Textiles,
Apparel & Luxury Goods 1.5% |
|
|
Deckers
Outdoor (1) |
604
|
403
|
Ralph
Lauren |
2,898
|
418
|
Steven
Madden |
4,568
|
192
|
|
|
1,013
|
Total
Consumer Discretionary |
|
7,475
|
CONSUMER
STAPLES 3.9% |
Beverages
0.9% |
|
|
Celsius
Holdings (1) |
2,033
|
111
|
Coca-Cola
Consolidated |
513
|
476
|
|
|
587
|
Consumer
Staples Distribution & Retail 1.4% |
|
|
BJ's
Wholesale Club Holdings (1) |
2,597
|
173
|
Casey's
General Stores |
537
|
147
|
Dollar
General |
1,340
|
182
|
Performance
Food Group (1) |
2,397
|
166
|
US
Foods Holding (1) |
6,400
|
291
|
|
|
959
|
Food
Products 1.2% |
|
|
Darling
Ingredients (1) |
6,250
|
311
|
Flowers
Foods |
10,964
|
247
|
Tyson
Foods, Class A |
4,422
|
238
|
|
|
796
|
Personal
Care Products 0.4% |
|
|
elf
Beauty (1) |
1,859
|
269
|
|
|
269
|
Total
Consumer Staples |
|
2,611
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
ENERGY
6.2% |
Energy
Equipment & Services 3.8% |
|
|
Expro
Group Holdings (1) |
22,029
|
351
|
Liberty
Energy, Class A |
16,405
|
298
|
Noble
|
4,757
|
229
|
Oceaneering
International (1) |
8,135
|
173
|
TechnipFMC
|
43,049
|
867
|
Tidewater
(1) |
8,513
|
614
|
|
|
2,532
|
Oil,
Gas & Consumable Fuels 2.4% |
|
|
APA
|
3,086
|
111
|
Cameco
|
10,016
|
432
|
Chesapeake
Energy |
4,327
|
333
|
Diamondback
Energy |
1,949
|
302
|
Ovintiv
|
4,476
|
196
|
Range
Resources |
7,854
|
239
|
|
|
1,613
|
Total
Energy |
|
4,145
|
FINANCIALS
15.5% |
Banks
5.6% |
|
|
East
West Bancorp |
4,544
|
327
|
Fifth
Third Bancorp |
19,998
|
690
|
First
BanCorp/Puerto Rico |
15,169
|
250
|
Hancock
Whitney |
4,264
|
207
|
Huntington
Bancshares |
29,174
|
371
|
Popular
|
8,631
|
708
|
Synovus
Financial |
4,521
|
170
|
Webster
Financial |
7,490
|
380
|
Western
Alliance Bancorp |
8,140
|
536
|
Zions
Bancorp |
3,240
|
142
|
|
|
3,781
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Capital
Markets 2.5% |
|
|
Cboe
Global Markets |
951
|
170
|
FactSet
Research Systems |
551
|
263
|
Jefferies
Financial Group |
4,741
|
192
|
LPL
Financial Holdings |
1,407
|
320
|
Main
Street Capital |
3,103
|
134
|
Morningstar
|
1,082
|
310
|
Tradeweb
Markets, Class A |
2,525
|
229
|
Virtus
Investment Partners |
270
|
65
|
|
|
1,683
|
Consumer
Finance 0.7% |
|
|
OneMain
Holdings |
10,044
|
494
|
|
|
494
|
Financial
Services 4.1% |
|
|
Banco
Latinoamericano de Comercio Exterior SA, Class E |
3,910
|
97
|
Corebridge
Financial |
18,937
|
410
|
Equitable
Holdings |
8,325
|
277
|
Essent
Group |
3,467
|
183
|
Euronet
Worldwide (1) |
328
|
33
|
FleetCor
Technologies (1) |
3,026
|
855
|
Global
Payments |
1,264
|
161
|
Jackson
Financial, Class A |
3,128
|
160
|
Payoneer
Global (1) |
23,690
|
124
|
Voya
Financial |
5,676
|
414
|
|
|
2,714
|
Insurance
2.6% |
|
|
Everest
Re Group |
807
|
285
|
Hanover
Insurance Group |
963
|
117
|
Hartford
Financial Services Group |
3,949
|
317
|
Kemper
|
3,970
|
193
|
Reinsurance
Group of America |
1,956
|
317
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
RenaissanceRe
Holdings |
2,682
|
526
|
|
|
1,755
|
Total
Financials |
|
10,427
|
HEALTH
CARE 12.6% |
Biotechnology
4.8% |
|
|
ACADIA
Pharmaceuticals (1) |
4,561
|
143
|
Akero
Therapeutics (1) |
1,726
|
40
|
Alkermes
PLC (1) |
1,455
|
40
|
Alnylam
Pharmaceuticals (1) |
504
|
96
|
Ascendis
Pharma, ADR (1) |
940
|
118
|
Biohaven
(1) |
4,251
|
182
|
Blueprint
Medicines (1) |
2,576
|
238
|
Cerevel
Therapeutics Holdings (1) |
4,566
|
194
|
Exact
Sciences (1) |
2,045
|
151
|
Genmab,
ADR (1) |
2,393
|
76
|
Immuneering,
Class A (1) |
3,470
|
26
|
Insmed
(1) |
6,089
|
189
|
Ionis
Pharmaceuticals (1) |
3,347
|
169
|
Karuna
Therapeutics (1) |
864
|
273
|
Kymera
Therapeutics (1) |
3,410
|
87
|
Legend
Biotech, ADR (1) |
1,423
|
86
|
Morphic
Holding (1) |
1,467
|
42
|
Neurocrine
Biosciences (1) |
1,332
|
176
|
Prothena
(1) |
2,019
|
73
|
RAPT
Therapeutics (1) |
1,560
|
39
|
Relay
Therapeutics (1) |
7,152
|
79
|
Replimune
Group (1) |
3,250
|
27
|
REVOLUTION
Medicines (1) |
4,040
|
116
|
Sage
Therapeutic (1) |
2,632
|
57
|
Sarepta
Therapeutics (1) |
975
|
94
|
Ultragenyx
Pharmaceutical (1) |
2,938
|
141
|
Vaxcyte
(1) |
2,271
|
143
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Xencor
(1) |
3,313
|
70
|
Zentalis
Pharmaceuticals (1) |
2,905
|
44
|
|
|
3,209
|
Health
Care Equipment & Supplies 2.3% |
|
|
Baxter
International |
6,978
|
270
|
Cooper
|
316
|
119
|
Dentsply
Sirona |
11,743
|
418
|
Hologic
(1) |
2,714
|
194
|
Lantheus
Holdings (1) |
931
|
58
|
Merit
Medical Systems (1) |
527
|
40
|
STERIS
|
621
|
136
|
Teleflex
|
1,262
|
315
|
|
|
1,550
|
Health
Care Providers & Services 2.5% |
|
|
AMN
Healthcare Services (1) |
395
|
30
|
Cardinal
Health |
1,415
|
143
|
Molina
Healthcare (1) |
1,091
|
394
|
Select
Medical Holdings |
26,996
|
634
|
Tenet
Healthcare (1) |
4,086
|
309
|
Universal
Health Services, Class B |
1,130
|
172
|
|
|
1,682
|
Life
Sciences Tools & Services 1.4% |
|
|
Avantor
(1) |
7,936
|
181
|
Bio-Techne
|
970
|
75
|
Charles
River Laboratories International (1) |
1,559
|
369
|
ICON
(1) |
330
|
93
|
Medpace
Holdings (1) |
600
|
184
|
Repligen
(1) |
325
|
58
|
|
|
960
|
Pharmaceuticals
1.6% |
|
|
Catalent
(1) |
5,892
|
265
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Elanco
Animal Health (1) |
18,295
|
273
|
Prestige
Consumer Healthcare (1) |
1,634
|
100
|
Structure
Therapeutics, ADR (1) |
986
|
40
|
Viatris
|
32,892
|
356
|
|
|
1,034
|
Total
Health Care |
|
8,435
|
INDUSTRIALS
& BUSINESS SERVICES 19.6% |
Aerospace
& Defense 3.2% |
|
|
Curtiss-Wright
|
1,028
|
229
|
Howmet
Aerospace |
6,795
|
368
|
Huntington
Ingalls Industries |
1,980
|
514
|
Rolls-Royce
Holdings (GBP) (1) |
48,525
|
185
|
Textron
|
10,918
|
878
|
|
|
2,174
|
Building
Products 2.5% |
|
|
A
O Smith |
795
|
65
|
Advanced
Drainage Systems |
399
|
56
|
Armstrong
World Industries |
1,669
|
164
|
Builders
FirstSource (1) |
1,707
|
285
|
Carlisle
Cos |
847
|
265
|
Fortune
Brands Innovations |
2,150
|
164
|
Owens
Corning |
1,320
|
196
|
Trex
(1) |
2,395
|
198
|
UFP
Industries |
2,058
|
258
|
|
|
1,651
|
Commercial
Services & Supplies 1.2% |
|
|
Brink's
|
2,560
|
225
|
Clean
Harbors (1) |
2,313
|
404
|
GEO
Group (1) |
18,887
|
204
|
|
|
833
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Construction
& Engineering 1.7% |
|
|
AECOM
|
849
|
78
|
API
Group (1) |
4,355
|
151
|
Comfort
Systems USA |
1,494
|
307
|
EMCOR
Group |
982
|
212
|
WillScot
Mobile Mini Holdings (1) |
8,302
|
369
|
|
|
1,117
|
Electrical
Equipment 0.9% |
|
|
Acuity
Brands |
759
|
156
|
Atkore
(1) |
1,582
|
253
|
Hubbell
|
654
|
215
|
|
|
624
|
Ground
Transportation 0.9% |
|
|
JB
Hunt Transport Services |
1,926
|
385
|
Landstar
System |
1,133
|
219
|
|
|
604
|
Machinery
4.6% |
|
|
Blue
Bird (1) |
3,842
|
104
|
Enerpac
Tool Group |
2,504
|
78
|
EnPro
Industries |
350
|
55
|
Esab
|
5,721
|
495
|
Graco
|
685
|
59
|
Hillenbrand
|
2,188
|
105
|
IDEX
|
464
|
101
|
Lincoln
Electric Holdings |
1,036
|
225
|
Middleby
(1) |
2,355
|
347
|
Mueller
Water Products, Class A |
10,454
|
150
|
Stanley
Black & Decker |
9,061
|
889
|
Terex
|
2,693
|
155
|
Timken
|
3,697
|
296
|
|
|
3,059
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Passenger
Airlines 0.3% |
|
|
Southwest
Airlines |
7,971
|
230
|
|
|
230
|
Professional
Services 3.6% |
|
|
ASGN
(1) |
2,183
|
210
|
Booz
Allen Hamilton Holding |
1,827
|
234
|
Broadridge
Financial Solutions |
1,370
|
282
|
FTI
Consulting (1) |
726
|
145
|
Kforce
|
1,047
|
71
|
Korn
Ferry |
4,135
|
245
|
Leidos
Holdings |
3,013
|
326
|
Paylocity
Holding (1) |
1,078
|
178
|
SS&C
Technologies Holdings |
7,684
|
469
|
Verra
Mobility (1) |
9,856
|
227
|
|
|
2,387
|
Trading
Companies & Distributors 0.7% |
|
|
SiteOne
Landscape Supply (1) |
1,861
|
303
|
Watsco
|
311
|
133
|
|
|
436
|
Total
Industrials & Business Services |
|
13,115
|
INFORMATION
TECHNOLOGY 16.1% |
Electronic
Equipment, Instruments & Components 1.4% |
|
|
Belden
|
2,791
|
216
|
CTS
|
6,031
|
264
|
Jabil
|
2,871
|
366
|
Littelfuse
|
260
|
69
|
|
|
915
|
IT
Services 1.2% |
|
|
Akamai
Technologies (1) |
1,936
|
229
|
Amdocs
|
2,666
|
234
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
GoDaddy,
Class A (1) |
3,206
|
341
|
|
|
804
|
Semiconductors
& Semiconductor Equipment 3.7% |
|
|
Axcelis
Technologies (1) |
980
|
127
|
Diodes
(1) |
2,907
|
234
|
Entegris
|
2,951
|
354
|
Lattice
Semiconductor (1) |
2,952
|
204
|
MKS
Instruments |
6,397
|
658
|
Monolithic
Power Systems |
362
|
228
|
Photronics
(1) |
7,384
|
232
|
Skyworks
Solutions |
2,036
|
229
|
SMART
Global Holdings (1) |
2,058
|
39
|
Teradyne
|
1,415
|
153
|
|
|
2,458
|
Software
8.5% |
|
|
A10
Networks |
9,058
|
119
|
Appfolio,
Class A (1) |
449
|
78
|
Bill
Holdings (1) |
1,037
|
85
|
Box
(1) |
8,945
|
229
|
Confluent,
Class A (1) |
7,191
|
168
|
Descartes
Systems Group (1) |
4,400
|
370
|
DocuSign
(1) |
4,344
|
258
|
Dolby
Laboratories, Class A |
1,366
|
118
|
Dynatrace
(1) |
11,741
|
642
|
Fair
Isaac (1) |
390
|
454
|
Gen
Digital |
17,800
|
406
|
HubSpot
(1) |
261
|
152
|
Manhattan
Associates (1) |
836
|
180
|
Monday.com
(1) |
884
|
166
|
PTC
(1) |
3,240
|
567
|
Qualys
(1) |
1,128
|
221
|
Samsara,
Class A (1) |
6,830
|
228
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Teradata
(1) |
5,181
|
225
|
Tyler
Technologies (1) |
1,032
|
431
|
Zscaler
(1) |
2,856
|
633
|
|
|
5,730
|
Technology
Hardware, Storage & Peripherals 1.3% |
|
|
Pure
Storage, Class A (1) |
2,813
|
100
|
Western
Digital (1) |
15,241
|
798
|
|
|
898
|
Total
Information Technology |
|
10,805
|
MATERIALS
4.8% |
Chemicals
1.5% |
|
|
CF
Industries Holdings |
4,645
|
369
|
RPM
International |
2,872
|
321
|
Westlake
Chemical |
2,160
|
302
|
|
|
992
|
Construction
Materials 0.4% |
|
|
Summit
Materials, Class A (1) |
5,703
|
219
|
Vulcan
Materials |
202
|
46
|
|
|
265
|
Containers
& Packaging 1.4% |
|
|
Avery
Dennison |
1,166
|
236
|
Ball
|
3,296
|
189
|
WestRock
|
12,250
|
509
|
|
|
934
|
Metals
& Mining 1.2% |
|
|
Hudbay
Minerals |
24,451
|
135
|
Reliance
Steel & Aluminum |
1,259
|
352
|
Steel
Dynamics |
2,708
|
320
|
|
|
807
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Paper
& Forest Products 0.3% |
|
|
West
Fraser Timber |
2,420
|
207
|
|
|
207
|
Total
Materials |
|
3,205
|
REAL
ESTATE 4.7% |
Hotel
& Resort REITs 0.3% |
|
|
DiamondRock
Hospitality, REIT |
10,969
|
103
|
Host
Hotels & Resorts, REIT |
7,318
|
142
|
|
|
245
|
Industrial
REITs 0.8% |
|
|
Rexford
Industrial Realty, REIT |
9,666
|
542
|
|
|
542
|
Office
REITs 0.3% |
|
|
Vornado
Realty Trust, REIT |
6,924
|
196
|
|
|
196
|
Residential
REITs 0.5% |
|
|
Equity
LifeStyle Properties, REIT |
2,718
|
192
|
Sun
Communities, REIT |
1,239
|
165
|
|
|
357
|
Retail
REITs 0.7% |
|
|
Brixmor
Property Group, REIT |
8,482
|
198
|
Regency
Centers, REIT |
3,793
|
254
|
|
|
452
|
Specialized
REITs 2.1% |
|
|
CubeSmart,
REIT |
4,482
|
208
|
Iron
Mountain, REIT |
2,736
|
192
|
Lamar
Advertising, Class A, REIT |
4,501
|
478
|
Rayonier,
REIT |
6,885
|
230
|
T. ROWE PRICE SMALL-MID CAP ETF
|
Shares
|
$
Value |
(Cost
and value in $000s) |
|
|
Weyerhaeuser,
REIT |
8,024
|
279
|
|
|
1,387
|
Total
Real Estate |
|
3,179
|
UTILITIES
2.3% |
Electric
Utilities 1.1% |
|
|
Evergy
|
8,455
|
441
|
FirstEnergy
|
7,417
|
272
|
|
|
713
|
Independent
Power & Renewable Electricity Producer 0.2% |
|
|
Vistra
|
3,463
|
134
|
|
|
134
|
Multi-Utilities
1.0% |
|
|
Ameren
|
3,354
|
242
|
CenterPoint
Energy |
8,852
|
253
|
NiSource
|
7,149
|
190
|
|
|
685
|
Total
Utilities |
|
1,532
|
Total
Common Stocks (Cost $59,982) |
|
66,701
|
SHORT-TERM
INVESTMENTS 0.6% |
Money
Market Funds 0.6% |
|
|
State
Street Institutional U.S. Government Money Market Fund, 5.32% (2) |
379,442
|
379
|
Total
Short-Term Investments (Cost $379) |
|
379
|
Total
Investments in Securities 100.0% of Net Assets (Cost $60,361) |
|
$67,080
|
|
|
‡
|
Shares
are denominated in U.S. dollars unless otherwise noted. |
(1)
|
Non-income
producing. |
(2)
|
Seven-day
yield |
T. ROWE PRICE SMALL-MID CAP ETF
ADR
|
American
Depositary Receipts |
REIT
|
A
domestic Real Estate Investment Trust whose distributions pass-through with original tax character to the shareholder |
GBP
|
British
Pound |
The accompanying notes are an integral part of these financial
statements.
T. ROWE PRICE SMALL-MID CAP ETF
December 31, 2023
STATEMENT OF ASSETS AND LIABILITIES
($000s, except shares and per share
amounts)
Assets
|
|
Investments
in securities, at value (cost $60,361) |
$
67,080 |
Dividends
receivable |
58
|
Total
assets |
67,138
|
Liabilities
|
|
Investment
management and administrative fees payable |
29
|
Total
liabilities |
29
|
NET
ASSETS |
$
67,109 |
Net
assets consists of: |
|
Total
distributable earnings (loss) |
$
6,299 |
Paid-in
capital applicable to 2,400,000 shares of $0.0001 par value capital stock outstanding; 4,000,000,000 shares authorized |
60,810
|
NET
ASSETS |
$67,109
|
NET
ASSET VALUE PER SHARE |
$
27.96 |
The accompanying notes are an integral part of these financial
statements.
T. ROWE PRICE SMALL-MID CAP ETF
STATEMENT OF OPERATIONS
($000s)
|
6/14/23
Through |
|
12/31/23
|
Investment
Income (Loss) |
|
Dividend
income (net of foreign taxes of $1) |
$
332 |
Investment
management and administrative expense |
111
|
Net
investment income |
221
|
Realized
and Unrealized Gain / Loss |
|
Net
realized gain (loss) |
|
Securities
|
(423)
|
In-kind
redemptions |
56
|
Net
realized loss |
(367)
|
Change
in net unrealized gain / loss on securities |
6,719
|
Net
realized and unrealized gain / loss |
6,352
|
INCREASE
IN NET ASSETS FROM OPERATIONS |
$6,573
|
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE SMALL-MID CAP ETF
STATEMENT OF CHANGES IN NET ASSETS
($000s)
|
6/14/23
Through |
|
12/31/23
|
Increase
(Decrease) in Net Assets |
|
Operations
|
|
Net
investment income |
$
221 |
Net
realized loss |
(367)
|
Change
in net unrealized gain / loss |
6,719
|
Increase
in net assets from operations |
6,573
|
Distributions
to shareholders |
|
Net
earnings |
(218)
|
Capital
share transactions* |
|
Shares
sold |
61,961
|
Shares
redeemed |
(1,207)
|
Increase
in net assets from capital share transactions |
60,754
|
Net
Assets |
|
Increase
during period |
67,109
|
Beginning
of period |
-
|
End
of period |
$67,109
|
*Share
information |
|
Shares
sold |
2,450
|
Shares
redeemed |
(50)
|
Increase
in shares outstanding |
2,400
|
The accompanying notes are an integral part of these financial
statements.
T. ROWE PRICE SMALL-MID CAP 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 Small-Mid Cap 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 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
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. Distributions from REITs are initially recorded as dividend income and, to the extent such represent a return of capital or capital gain for tax purposes, are reclassified when such information becomes available. 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.
T. ROWE PRICE SMALL-MID CAP 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). 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. (NYSE Arca) 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). The fund’s shares are ordinarily valued as of the close of regular trading (normally 4:00 p.m. Eastern time) on each day that the NYSE Arca is open.
New Accounting Guidance
In June 2022, the FASB issued Accounting
Standards Update (ASU), ASU 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is
not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments under this ASU are effective for fiscal years beginning after December 15, 2023; however, the fund opted to
early adopt, as permitted, effective December 1, 2022. Adoption of the guidance did not have a material impact on the fund’s financial statements.
T. ROWE PRICE SMALL-MID CAP ETF
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)
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
T. ROWE PRICE SMALL-MID CAP ETF
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.
Investments in mutual funds are valued at
the mutual fund’s closing NAV per share on the day of valuation. 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
T. ROWE PRICE SMALL-MID CAP ETF
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 December 31, 2023 (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 |
$66,516
|
$185
|
$—
|
$66,701
|
Short-Term
Investments |
379
|
—
|
—
|
379
|
Total
|
$66,895
|
$185
|
$—
|
$67,080
|
NOTE 3 – OTHER
INVESTMENT TRANSACTIONS
Purchases and
sales of portfolio securities excluding in-kind transactions and short-term securities aggregated $20,563,000 and $5,515,000, respectively, for the period ended December 31, 2023. Portfolio securities received and delivered through in-kind
transactions aggregated $46,504,000 and $1,201,000, respectively, for the period ended December 31, 2023.
T. ROWE PRICE SMALL-MID CAP ETF
NOTE 4 – FEDERAL INCOME
TAXES
Generally, no provision for
federal income taxes is required since the fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in
accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes.
The fund files U.S. federal, state, and
local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but
which can be extended to six years in certain circumstances.
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 or net assets. The
permanent book/tax adjustments relate primarily to redemptions in kind.
The tax character of distributions paid for
the periods presented was as follows:
($000s)
|
|
|
December
31, |
|
2023
|
Ordinary
income (including short-term capital gains, if any) |
$218
|
At December 31,
2023, the tax-basis cost of investments, (including derivatives, if any) and gross unrealized appreciation and depreciation were as follows:
($000s)
|
|
Cost
of investments |
$60,361
|
Unrealized
appreciation |
$
7,698 |
Unrealized
depreciation |
(979)
|
Net
unrealized appreciation (depreciation) |
$
6,719 |
At December 31, 2023, the tax-basis
components of accumulated net earnings (loss) were as follows:
T. ROWE PRICE SMALL-MID CAP ETF
($000s)
|
|
Undistributed
ordinary income |
$
4 |
Net
unrealized appreciation (depreciation) |
6,719
|
Loss
carryforwards and deferrals |
(424)
|
Total
distributable earnings (loss) |
$6,299
|
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. The loss carryforwards and deferrals primarily relate to capital loss carryforwards. Capital loss
carryforwards are available indefinitely to offset future realized capital gains.
NOTE 5 – FOREIGN
TAXES
The fund is subject to foreign
income taxes imposed by certain countries in which it invests. Additionally, capital gains realized upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes are
computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital gains. Taxes attributable to income are accrued by the fund as a reduction of income. Current and deferred tax
expense attributable to capital gains is reflected as a component of realized or change in unrealized gain/loss on securities in the accompanying financial statements. To the extent that the fund has country specific capital loss carryforwards, such
carryforwards are applied against net unrealized gains when determining the deferred tax liability. Any deferred tax liability incurred by the fund is included in either Other liabilities or Deferred tax liability on the accompanying Statement of
Assets and Liabilities.
NOTE 6 – RELATED PARTY
TRANSACTIONS
The fund is managed by T.
Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). The investment management and administrative agreement between the fund and Price Associates provides for an all-inclusive annual
fee equal to 0.55% 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
T. ROWE PRICE SMALL-MID CAP ETF
borrowing expenses; taxes; brokerage commissions and other
transaction costs; fund proxy expenses; and nonrecurring and extraordinary expenses. All costs related to organization and offering of the fund are borne by Price Associates.
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.
As of December 31, 2023, T. Rowe Price
Group, Inc., or its wholly owned subsidiaries, owned 1,983,473 shares of the fund, representing 83% 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 period ended December 31, 2023, the fund had no purchases or sales cross trades with other funds or accounts advised by Price
Associates.
NOTE 7 – OTHER
MATTERS
Unpredictable events such as
environmental or natural disasters, war and conflict, terrorism, geopolitical events, and public health epidemics and similar public health threats may significantly affect the economy and the markets and issuers in which the fund invests. Certain
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 global outbreak of COVID-19 and related
governmental and public responses have led and may continue to lead to increased market volatility and the potential for illiquidity in certain classes of securities and sectors of the market either in specific countries or worldwide.
In February 2022, Russian forces entered
Ukraine and commenced an armed conflict, leading to economic sanctions imposed on Russia that target certain of its citizens and issuers and sectors of the Russian economy, creating impacts on Russian-related stocks and debt and greater volatility
in global markets.
T. ROWE PRICE SMALL-MID CAP ETF
In March 2023, the banking industry
experienced heightened volatility, which sparked concerns of potential broader adverse market conditions. The extent of impact of these events on the US and global markets is highly uncertain.
These are recent examples of global events
which may have a negative impact on the values of certain portfolio holdings or the fund’s overall performance. Management is actively monitoring the risks and financial impacts arising from these events.
T. ROWE PRICE SMALL-MID CAP 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 Small-Mid Cap 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 Small-Mid Cap ETF (one of the funds constituting T. Rowe Price Exchange-Traded Funds, Inc., referred to hereafter as the "Fund") as of December 31, 2023, and the
related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period June 14, 2023 (inception) through December 31, 2023 (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 December 31, 2023, and the results of its operations, changes in its net assets, and the financial
highlights for the period June 14, 2023 (inception) through December 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 audit. 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 audit 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.
T. ROWE PRICE SMALL-MID CAP ETF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(CONTINUED)
Our audit 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 audit 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 December 31, 2023 by correspondence with the custodian. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
February 16, 2024
We have served as the auditor of one or
more investment companies in the T. Rowe Price group of investment companies since 1973.
T. ROWE PRICE SMALL-MID CAP ETF
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED
12/31/23
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, $273,000 of the fund’s income represents qualified dividend income subject to a long-term capital gains tax rate of not greater than 20%.
For corporate shareholders,
$251,000 of the fund’s income qualifies for the dividends received deduction.
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 1-800-638-5660 or by accessing the SEC’s website, sec.gov.
The description of our proxy voting
policies and procedures is also available on our corporate website. To access it, please visit the following Web page:
https://www.troweprice.com/corporate/en/utility/policies.html
Scroll down to the section near
the bottom of the page that says, “Proxy Voting Policies.” Click on the Proxy Voting Policies link in the shaded box.
Each fund’s most recent annual
proxy voting record is available on our website and through the SEC’s website. To access it through T. Rowe Price, visit the website location shown above, and scroll down to the section near the bottom of the page that says, “Proxy
Voting Records.” Click on the Proxy Voting Records link in the shaded box.
HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS
The fund files a complete schedule of
portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT is available electronically on the SEC’s
website (sec.gov). In addition, most T. Rowe Price funds disclose their first and third fiscal quarter-end holdings at troweprice.com.
TAILORED SHAREHOLDER REPORTS FOR MUTUAL FUNDS AND EXCHANGE
TRADED FUNDS
In October 2022, the
Securities and Exchange Commission (SEC) adopted rule and form amendments requiring Mutual Funds and Exchange-Traded Funds to transmit concise and visually engaging streamlined annual and semiannual reports that highlight key information to
shareholders. Other information, including financial statements, will no longer appear in
T. ROWE PRICE SMALL-MID CAP ETF
the funds’ shareholder reports but will be
available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024.
T. ROWE PRICE SMALL-MID CAP ETF
Liquidity Risk Management Program
In accordance with Rule 22e-4 (Liquidity
Rule) under the Investment Company Act of 1940, as amended, the fund has established a liquidity risk management program (Liquidity Program) reasonably designed to assess and manage the fund’s liquidity risk, which generally represents the
risk that the fund would not be able to meet redemption requests without significant dilution of remaining investors’ interests in the fund. The fund’s Board of Directors (Board) has appointed the fund’s investment adviser, T. Rowe
Price Associates, Inc. (Adviser), as the administrator of the Liquidity Program. As administrator, the Adviser is responsible for overseeing the day-to-day operations of the Liquidity Program and, among other things, is responsible for assessing,
managing, and reviewing with the Board at least annually the liquidity risk of each T. Rowe Price fund. The Adviser has delegated oversight of the Liquidity Program to a Liquidity Risk Committee (LRC), which is a cross-functional committee composed
of personnel from multiple departments within the Adviser.
The Liquidity Program’s principal
objectives include supporting the T. Rowe Price funds’ compliance with limits on investments in illiquid assets and mitigating the risk that the fund will be unable to timely meet its redemption obligations. The Liquidity Program also includes
a number of elements that support the management and assessment of liquidity risk, including an annual assessment of factors that influence the fund’s liquidity and the periodic classification and reclassification of a fund’s investments
into categories that reflect the LRC’s assessment of their relative liquidity under current market conditions. Under the Liquidity Program, every investment held by the fund is classified at least monthly into one of four liquidity categories
based on estimations of the investment’s ability to be sold during designated time frames in current market conditions without significantly changing the investment’s market value.
As required by the Liquidity Rule, at a
meeting held on July 24, 2023, the Board was presented with an annual assessment that was prepared by the LRC on behalf of the Adviser and addressed the operation of the Liquidity Program and assessed its adequacy and effectiveness of
implementation, including any material changes to the Liquidity Program and the determination of each fund’s Highly Liquid Investment Minimum (HLIM). The annual assessment included consideration of the following factors, as applicable: the
fund’s investment strategy and liquidity of portfolio investments during normal and reasonably foreseeable stressed conditions, including whether the investment strategy is appropriate for an open-end fund, the extent to which the strategy
involves a relatively concentrated portfolio or large positions in particular issuers, and the use of borrowings for investment purposes and derivatives; short-term and long-term cash flow projections covering both normal and reasonably foreseeable
stressed conditions; and holdings of cash and cash equivalents, as well as available borrowing arrangements.
For the fund and other T. Rowe Price
funds, the annual assessment incorporated a report related to a fund’s holdings, shareholder and portfolio concentration, any borrowings during the period, cash flow projections, and other relevant data for the period of April 1, 2022, through
March 31, 2023. The report described the methodology for classifying a fund’s investments (including any derivative transactions) into one of four liquidity
T. ROWE PRICE SMALL-MID CAP ETF
categories, as well as the percentage of a fund’s
investments assigned to each category. It also explained the methodology for establishing a fund’s HLIM and noted that the LRC reviews the HLIM assigned to each fund no less frequently than annually.
During the period covered by the annual
assessment, the LRC has concluded, and reported to the Board, that the Liquidity Program continues to operate adequately and effectively and is reasonably designed to assess and manage the fund’s liquidity risk.
T. ROWE PRICE SMALL-MID CAP ETF
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. The directors who are also employees or officers of T. Rowe Price are considered to be “interested” directors as defined in Section 2(a)(19) of the 1940 Act
because of their relationships with T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates. The business address of each director and officer is 100 East Pratt Street, Baltimore, Maryland 21202. The Statement of Additional Information
includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-638-5660.
INDEPENDENT DIRECTORS(a)
Name
(Year of Birth) Year Elected [Number of T. Rowe Price Portfolios Overseen] |
Principal
Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years |
Teresa
Bryce Bazemore (1959) 2020 [209] |
President
and Chief Executive Officer, Federal Home Loan Bank of San Francisco (2021 to present); Chief Executive Officer, Bazemore Consulting LLC (2018 to 2021); Director, Chimera Investment Corporation (2017 to 2021); Director, First
Industrial Realty Trust (2020 to present); Director, Federal Home Loan Bank of Pittsburgh (2017 to 2019) |
Melody
Bianchetto (1966) 2023 [209] |
Vice
President for Finance, University of Virginia (2015 to 2023) |
Bruce
W. Duncan (1951) 2020 [209] |
President,
Chief Executive Officer, and Director, CyrusOne, Inc. (2020 to 2021); Chair of the Board (2016 to 2020) and President (2009 to 2016), First Industrial Realty Trust, owner and operator of industrial properties; Member, Investment Company
Institute Board of Governors (2017 to 2019); Member, Independent Directors Council Governing Board (2017 to 2019); Senior Advisor, KKR (2018 to 2022); Director, Boston Properties (2016 to present); Director, Marriott International, Inc.
(2016 to 2020) |
Robert
J. Gerrard, Jr. (1952) 2020 [209] |
Chair
of the Board, all funds (July 2018 to present) |
T. ROWE PRICE SMALL-MID CAP ETF
INDEPENDENT DIRECTORS(a) (continued)
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 |
Paul
F. McBride (1956) 2020 [209] |
Advisory
Board Member, Vizzia Technologies (2015 to present); Board Member, Dunbar Armored (2012 to 2018) |
Mark
J. Parrell (1966) 2023 [209] |
Board
of Trustees Member and Chief Executive Officer (2019 to present), President (2018 to present), Executive Vice President and Chief Financial Officer (2007 to 2018), and Senior Vice President and Treasurer (2005 to 2007), EQR; Member,
Nareit Dividends Through Diversity, Equity & Inclusion CEO Council and Chair, Nareit 2021 Audit and Investment Committee (2021); Advisory Board, Ross Business School at University of Michigan (2015 to 2016); Member, National
Multifamily Housing Council and served as Chair of the Finance Committee (2015 to 2016); Member, Economic Club of Chicago; Director, Brookdale Senior Living, Inc. (2015 to 2017); Director, Aviv REIT, Inc. (2013 to 2015); Director, Real
Estate Roundtable and the 2022 Executive Board Nareit; Board of Directors and Chair of the Finance Committee, Greater Chicago Food Depository |
Kellye
L. Walker (1966) 2021 [209] |
Executive
Vice President and Chief Legal Officer, Eastman Chemical Company (April 2020 to present); Executive Vice President and Chief Legal Officer, Huntington Ingalls Industries, Inc. (January 2015 to March 2020); Director, Lincoln Electric
Company (October 2020 to present) |
(a)All information about the independent directors was current as of December 31, 2022, unless otherwise indicated, except for the number of portfolios overseen, which is current as
of the date of this report.
T. ROWE PRICE SMALL-MID CAP ETF
INTERESTED DIRECTORS(a)
Name
(Year of Birth) Year Elected [Number of T. Rowe Price Portfolios Overseen] |
Principal
Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years |
David
Oestreicher (1967) 2020 [209] |
Director,
Vice President, and Secretary, T. Rowe Price, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Director and Secretary, T. Rowe Price Investment Management, Inc.
(Price Investment Management); Vice President and Secretary, T. Rowe Price International (Price International); Vice President, T. Rowe Price Hong Kong (Price Hong Kong), T. Rowe Price Japan (Price Japan), and T. Rowe Price Singapore
(Price Singapore); General Counsel, Vice President, and Secretary, T. Rowe Price Group, Inc.; Chair of the Board, Chief Executive Officer, President, and Secretary, T. Rowe Price Trust Company; Principal Executive Officer and Executive
Vice President, all funds |
Eric
L. Veiel, CFA (1972) 2022 [209] |
Director
and Vice President, T. Rowe Price; Vice President, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; Vice President, Global Funds |
(a)All information about the interested directors was current as of December 31, 2022, unless otherwise indicated, except for the number of portfolios overseen, which is current as
of the date of this report.
OFFICERS
Name
(Year of Birth) Position Held With Exchange-Traded Funds, Inc. |
Principal
Occupation(s) |
Christopher
P. Brown (1977) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Armando
(Dino) Capasso (1974) Chief Compliance Officer and Vice President |
Chief
Compliance Officer and Vice President, T. Rowe Price and Price Investment Management; Vice President, T. Rowe Price Group, Inc.; formerly, Chief Compliance Officer, PGIM Investments LLC and AST Investment Services, Inc. (ASTIS) (to 2022); Chief
Compliance Officer, PGIM Retail Funds complex and Prudential Insurance Funds (to 2022); Vice President and Deputy Chief Compliance Officer, PGIM Investments LLC and ASTIS (to 2019) |
Timothy
Coyne (1967) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Vincent
Michael DeAugustino (1983) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
T. ROWE PRICE SMALL-MID CAP ETF
OFFICERS (continued)
Name
(Year of Birth) Position Held With Exchange-Traded Funds, Inc. |
Principal
Occupation(s) |
Anna
Alexandra Dreyer, Ph.D., CFA (1981) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Alan
S. Dupski, CPA (1982) Principal Financial Officer, Vice President, and Treasurer |
Vice
President, Price Investment Management, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Cheryl
Emory (1963) Assistant Secretary |
Assistant
Vice President and Assistant Secretary, T. Rowe Price; Assistant Secretary, T. Rowe Price Group, Inc., Price Investment Management, Price International, Price Hong Kong, Price Singapore, T. Rowe Price Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe Price Trust Company |
Joseph
B. Fath, CPA (1971) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
David
Giroux (1975) Executive Vice President |
Vice
President, Price Investment Management, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Paul
Greene II (1978) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Cheryl
Hampton, CPA (1969) Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; formerly, Tax Director, Invesco Ltd. (to 2021); Vice President, Oppenheimer Funds, Inc. (to 2019) |
Ann
M. Holcomb, CFA (1972) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Thomas
J. Huber, CFA (1966) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Stephon
Jackson, CFA (1962) Co-president |
Director
and President, Price Investment Management; Vice President, T. Rowe Price Group, Inc. |
Benjamin
Kersse, CPA (1989) Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Trust Company |
Paul
J. Krug, CPA (1964) Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Robert
M. Larkins, CFA (1973) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
John
D. Linehan, CFA (1965) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
T. ROWE PRICE SMALL-MID CAP ETF
OFFICERS (continued)
Name
(Year of Birth) Position Held With Exchange-Traded Funds, Inc. |
Principal
Occupation(s) |
Jodi
Love (1977) Executive Vice President |
Vice
President, Price Investment Management and T. Rowe Price Group, Inc.; formerly, Managing Director, Jennison Associates LLC (to 2019) |
Paul
M. Massaro, CFA (1975) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Robert
P. McDavid (1972) Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Investment Management, T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company |
Colin
McQueen (1967) Executive Vice President |
Vice
President, Price Investment Management and T. Rowe Price Group, Inc.; formerly, Senior Investment Manager, Global Equities, Sanlam FOUR Investments UK Limited (to 2019) |
Joshua
Nelson (1977) Co-president |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., Price International, and T. Rowe Price Trust Company |
Jason
Nogueira, CFA (1974) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Alexander
S. Obaza (1981) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Donald
J. Peters (1959) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Fran
M. Pollack-Matz (1961) Vice President and Secretary |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company |
Jason
Benjamin Polun, CFA (1974) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Sebastian
Schrott (1977) Executive Vice President |
Vice
President, T. Rowe Price Group, Inc., and Price International |
Richard
Sennett, CPA (1970) Assistant Treasurer |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Gabriel
Solomon (1977) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc. |
Peter
Stournaras (1973) Executive Vice President |
Vice
President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Managing Director and Chief Portfolio Strategist, JP Morgan Private Bank (to 2020) |
T. ROWE PRICE SMALL-MID CAP ETF
OFFICERS (continued)
Name
(Year of Birth) Position Held With Exchange-Traded Funds, Inc. |
Principal
Occupation(s) |
Taymour
R. Tamaddon, CFA (1976) Executive Vice President |
Vice
President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company |
Ellen
York (1988) Vice President |
Vice
President, Price Investment Management and T. Rowe Price |
Unless otherwise noted, officers have been employees of T. Rowe
Price or Price International for at least 5 years.
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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.
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
registrants 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
registrants principal accountant were as follows:
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2023 |
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2022 |
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Audit Fees |
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$25,357 |
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$ |
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Audit-Related Fees |
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- |
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Tax Fees |
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- |
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All Other Fees |
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- |
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Audit fees include amounts related to the audit of the registrants 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 registrants 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 registrants pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the registrants Board of Directors/Trustees.
(e)(1) The
registrants audit committee has adopted a policy whereby audit and non-audit services performed by the registrants 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 accountants
engagement to audit the registrants financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountants full-time, permanent employees.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrants 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 $1,524,000 and $2,037,000, respectively.
(h) All non-audit services rendered in
(g) above were pre-approved by the registrants audit committee. Accordingly, these services were considered by the registrants audit committee in maintaining the principal accountants
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.
There has been no change to the procedures by which shareholders may recommend
nominees to the registrants board of directors.
Item 11. Controls and Procedures.
(a) The registrants principal executive officer and principal financial officer have evaluated the registrants disclosure controls
and procedures within 90 days of this filing and have concluded that the registrants 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 registrants principal
executive officer and principal financial officer are aware of no change in the registrants 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 registrants internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for
Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
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.
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T. Rowe Price Exchange-Traded Funds, Inc. |
By |
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/s/ David Oestreicher |
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David Oestreicher |
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Principal Executive Officer |
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Date |
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February 16, 2024 |
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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.
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By |
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/s/ David Oestreicher |
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David Oestreicher |
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Principal Executive Officer |
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Date |
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February 16, 2024 |
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By |
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/s/ Alan S. Dupski |
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Alan S. Dupski |
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Principal Financial Officer |
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Date |
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February 16, 2024 |
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