Putting clients first has been our firm's guiding principle since our founding in 1937. For 75 years, our associates—beginning with our founder, Thomas Rowe Price, Jr.—have sought to inspire client confidence with disciplined decision-making and a consistent focus on long-term success.

Demonstrating our guiding principle in action, the stories shared in this report explore how we attract and develop talent, describe the strengthening of our global capabilities, highlight the depth of our collaborative approach to investment management, and underscore our commitment to improving the quality of life in our communities.

A history of acting on our values
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  • 5,372 ASSOCIATES. 1 COMMITMENT.
    We seek to attract talented associates who share our commitment to helping clients achieve their long-term goals.
    "When I meet young people, or interview potential associates, I like to ask what they're passionate about," says Georgette Kiser, head of Enterprise Solutions and Capabilities. "Because if T. Rowe Price can find talented, passionate individuals who are also intellectually curious and results-driven, I'm confident we can create long-term success for our clients."
    Global associates as of 12/31/12
  • "When I meet young people, or interview potential associates, I like to ask what they're passionate about," says Georgette Kiser, head of Enterprise Solutions and Capabilities. "Because if T. Rowe Price can find talented, passionate individuals who are also intellectually curious and results-driven, I'm confident we can create long-term success for our clients."

    Kiser is emblematic of managers across the organization. They are deeply committed to helping ensure T. Rowe Price has the best and brightest minds working with, and on behalf of, our clients.

    This fulfills a basic need—building a global team capable of meeting both current and future business objectives. But it also serves the higher purpose of perpetuating the firm's client-centric culture.

    "Our success as an organization depends on talented people collaborating to add durable value for clients," notes Blair Slaughter, head of Talent, Learning, and Organizational Development. "Throughout the firm, we develop associates who act in ways that are consistent with our culture of collaboration, excellence, and client focus."

    Several firm-wide initiatives are designed specifically to strengthen our integrated talent management strategy. Among these are:

    The Undergraduate Fellowship Program, which identifies outstanding math and science majors to start their careers at T. Rowe Price with two years of rotations in our investment divisions.

    The Corporate Mentoring Program, through which senior leaders help develop the leadership and management skills of our high-potential, early career managers.

    The Women's Roundtable and the Ethnic Diversity Roundtable, both of which support the firm in creating value for clients by increasing our ability to attract, advance, and retain talented and diverse associates.

    Our talent assessment, development, and succession planning processes, which help guide the identification and development of young talent and help prepare our future leadership.

    "We strive to preserve our core values and make talent development the responsibility of every manager," says Jim Kennedy, CEO and president, T. Rowe Price Group.

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    The Real Magic...
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    Talent and Values
  • 13 COUNTRIES. 1 APPROACH.
    In locations around the globe, our approach to expanding investment, service, and operational capabilities is thoughtful, disciplined, and informed by the needs of clients.
    "T. Rowe Price has investment and client service offices in 13 countries around the world, including operational hubs in the United States, London, and Hong Kong," explains London-based Chris Alderson, head of International Equity.

    Living locally enables portfolio managers and research analysts to gain firsthand access to local investment ideas and allows client service professionals to keep close to our clients. At the same time, regional operational hubs provide the efficiency, flexibility, and quality necessary to develop and maintain an effective global operating platform.
  • "T. Rowe Price has investment and client service offices in 13 countries around the world, including operational hubs in the United States, London, and Hong Kong," explains London-based Chris Alderson, head of International Equity.

    Living locally enables portfolio managers and research analysts to gain firsthand access to local investment ideas and allows client service professionals to keep close to our clients. At the same time, regional operational hubs provide the efficiency, flexibility, and quality necessary to develop and maintain an effective global operating platform.

    In each global location, our associates strive to consistently deliver a superior experience for our clients—anchored in the core principles and values that have guided our firm for 75 years.

    That means the firm must continually invest to develop business processes, systems, resources, and physical infrastructure to ensure our professionals worldwide have reliable data, information, and investment intelligence at their disposal around the clock. It also means leveraging the operational capabilities and expertise of the global organization wherever possible, rather than replicating each function in every office.

    "If you stop to think about it, that's a tremendous benefit to clients," notes Hiroaki Endo, head of Japanese Sales and Client Service. "We're all working from a single operating platform, and we've got tremendous teams supporting us from Baltimore, London, and Hong Kong. But at the local level, we've got the expertise in place to serve clients' immediate needs—reporting, compliance, trading—while also making face-to-face connections and researching local investment ideas."

    Our approach is rooted in the firm's client-centric philosophy, concludes Ed Bernard, vice chairman, T. Rowe Price Group. "At the outset of every potential engagement, we ask ourselves three fundamental questions that must be answered with a high level of conviction before we take the next step. Will it help our clients achieve their long-term goals? Can we offer durable value? And does this opportunity make sense in the context of our fiduciary responsibilities?"

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    Forming Interconnected Perspectives
  • 426 INVESTMENT PROFESSIONALS. 1 OBJECTIVE.
    Collaborative teams help our portfolio managers focus on a single objective—making sound investment decisions on behalf of clients.
    In a complex, interconnected world economy, an established global research platform is just one part of a successful investment management strategy. The investment team must also bring a collective, interdisciplinary approach to its research efforts.

    "A highly collaborative culture helps our portfolio managers and analysts spot connections others have missed," observes Mike Gitlin, head of Fixed Income. "For our clients, we apply those insights across multiple regions, sectors, and asset classes."
    Global investment professionals as of 12/31/2012
  • In a complex, interconnected world economy, an established global research platform is just one part of a successful investment management strategy. The investment team must also bring a collective, interdisciplinary approach to its research efforts.

    "A highly collaborative culture helps our portfolio managers and analysts spot connections others have missed," observes Mike Gitlin, head of Fixed Income. "For our clients, we apply those insights across multiple regions, sectors, and asset classes."

    The eurozone crisis provides a case in point. In early 2012, softening growth in the emerging and developed worlds, in conjunction with fiscal and structural weakness in the eurozone, threatened to drag the overall global economy back into recession. In light of the heightened risk to our clients, T. Rowe Price equity and fixed income analysts developed an integrated response.

    Sovereign Analyst Ken Orchard began by sharing his thoughts on the crisis with his immediate colleagues. As time went on, however, his updates turned into a weekly briefing to a wider audience of investment staff. Eventually, the effort to bring the firm's analysts together expanded to include open, formal and informal meetings, as well as scheduled updates from fixed income analysts during equity calls.

    In the spring of 2012, our equity and fixed income analysts traveled to Spain to meet with local bankers, central bankers, regulators, and the treasury. The trip not only helped each of them develop a more comprehensive understanding of the situation on the ground, it also highlighted the benefits of ongoing coordination.

    Based on a shared view of the global economic outlook and the collaborative efforts of our research teams, our portfolio managers had a complete view of investment conditions that helped them make the best decisions for our clients.

    As the story evolves, T. Rowe Price analysts continue to work thoughtfully and collectively to stay ahead of future developments.

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    A Culture of Collaboration
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    It All Starts With an Idea
  • 1 WORLD. 1 RESPONSIBILITY.
    We believe working actively to improve the quality of life in our communities is our corporate social responsibility.
    T. Rowe Price has a longstanding commitment to corporate social responsibility. Our associates contribute not only financial assistance, but also their time, energy, and expertise to a wide range of charitable organizations. In addition, the T. Rowe Price Foundation1 supports our global communities through direct grants and a generous employee matching gift program.
  • T. Rowe Price has a longstanding commitment to corporate social responsibility. Our associates contribute not only financial assistance, but also their time, energy, and expertise to a wide range of charitable organizations. In addition, the T. Rowe Price Foundation* supports our global communities through direct grants and a generous employee matching gift program.

    In 2012, in order to demonstrate our commitment to acting on our values—and with our 75th anniversary as a catalyst—the firm extended its philanthropic reach. Through our Give to 75 program:

    Our 5,372 associates were challenged to volunteer 75,000 hours in their local communities. This challenge was met with enthusiasm and exceeded, with 59% of associates volunteering—resulting in 106% more hours volunteered in 2012 than 2011.

    $5.8 million in grants and matching gifts were awarded by the T. Rowe Price Foundation in 2012—with $750,000 of this total directed to supporting 75th anniversary initiatives and associate volunteerism.

    Three major Foundation grants supported Junior Achievement; Free The Children; and Project Cycle, a pilot teacher coaching program in Baltimore, Maryland.

    To encourage associate volunteerism, the Foundation enhanced its 2012 Volunteer Service Grants program, resulting in a significant increase in associate-driven grants to nonprofits.

    Other 75th anniversary grants were awarded to nonprofit organizations near the firm's offices in Australia, the United Kingdom, and the United States (Colorado, Florida, and Maryland).

    Our Books for Kids program donated thousands of books to children's literacy organizations across the globe.

    "At T. Rowe Price, giving back to our communities is not only valued, it reflects the firm's guiding principle—always putting the needs of others ahead of our own," concludes Renee Christoff, head of Corporate Social Responsibility.

    Learn more about our Corporate Social Responsibility efforts.

    *The T. Rowe Price Foundation, while funded by the firm, is a separate legal entity with its own Board of Directors.

    Our Community Commitment
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    Let's Create A Team
"In essence, 2012 was a better year
than it felt."
Brian C. Rogers
Chairman and CIO
James A.C. Kennedy
CEO and President

Dear Stockholder:

Seventy-five years and one guiding principle: putting clients first. This year's annual report looks at why we've done what we've done for the last 75 years. By meeting our clients' needs, delivering strong investment performance, and providing outstanding client service, we have built a successful company that is a great place for clients to invest, a great place to work, and a great company in which to invest.

Our 75th anniversary year was notable for the dichotomy between how investors felt about their investments and how those investments actually performed. The year began with a minute-by-minute focus on the eurozone financial crisis and ended with a play-by-play account of the fiscal cliff negotiations in Washington. We had a lengthy presidential campaign and witnessed the frothy Facebook IPO. Despite all this, and the ebb and flow of the news cycle, virtually all asset classes and markets provided positive returns for the year. In essence, 2012 was a better year than it felt.

Our common stock trades on The NASDAQ
Global Select Market under the symbol TROW.

Selected Consolidated Financial Data

(in millions, except per-share data)

  • Full Financial Information (PDF)
    .7 MB
  • Selected Consolidated Financial Data
    and Common Stock Performance (PDF) .5 MB
    Stockholder Letter (PDF) 1.1 MB
2008 2009 2010 2011 2012
Net revenues $ 2,116 $ 1,867 $ 2,367 $ 2,747 $ 3,023
Net operating income $ 849 $ 702 $ 1,037 $ 1,227 $ 1,364
Net income $ 491 $ 434 $ 672 $ 773 $ 884
Net cash provided by operating activities $ 742 $ 536 $ 733 $ 948 $ 884
Per common share information
   Basic earnings $ 1.89 $ 1.69 $ 2.60 $ 3.01 $ 3.47
   Diluted earnings $ 1.81 $ 1.65 $ 2.53 $ 2.92 $ 3.36
   Cash dividends declared $ 0.96 $ 1.00 $ 1.08 $ 1.24 $ 2.361
Weighted-average common shares
   outstanding 259.3 255.9 257.2 255.6 253.4
Weighted-average common shares
   outstanding assuming dilution 269.9 262.3 265.1 263.3 261.0
Balance sheet data at December 31
   Total assets $ 2,819 $ 3,210 $ 3,642 $ 3,770 $ 4,203
   Stockholders' equity $ 2,489 $ 2,882 $ 3,297 $ 3,421 $ 3,846
Assets under management at
   December 31 (in billions) $ 276.3 $ 391.3 $ 482.0 $ 489.5 $ 576.8

Common Stock Performance

Our common stock trades on The NASDAQ Global Select Market under the symbol TROW. This chart compares the total cumulative return on our common stock to that of the indexes for the NASDAQ Financial Stocks and the S&P 500. For purposes of this presentation, we assume that $100 was invested in our common stock and each of the indexes on December 31, 2007, and that all subsequent dividends have been reinvested. We have calculated this information based on data provided by The NASDAQ Stock Market to its listed companies and data obtained from Standard & Poor's website (standardandpoors.com).

The following chart presents our common stock prices as ranges for each quarter over the past two years. Closing prices are indicated.
Our Board of Directors
oversees our business strategy and affairs.

Dwight S. Taylor
Retired President
COPT Development & Construction
Services, LLC
Director since 2004

Dwight S. Taylor has been an independent director of Price Group since 2004, is chairman of the Executive Compensation Committee, and is a member of the Audit Committee. From 1998 to 2009, he was the president of COPT Development & Construction Services, LLC, a commercial real estate developer that is a subsidiary of Corporate Office Properties Trust. Mr. Taylor is also a director of MICROS Systems, Inc., a provider of information technology for the hospitality and retail industry.

Donald B. Hebb, Jr.
Chairman
ABS Capital Partners
Director since 1999

Donald B. Hebb, Jr., has been an independent director of Price Group since 1999 and serves on the Nominating and Corporate Governance and Executive Compensation Committees. Mr. Hebb is the chairman and, from 1990 until 2007, was the managing general partner of ABS Capital Partners, a private equity firm.

Mary K. Bush
President
Bush International, LLC
Director since 2012

Ms. Bush became an independent director and a member of the Executive Compensation Committee of Price Group effective October 22, 2012, and has served as the president of Bush International, LLC, which advises U.S. corporations and foreign governments on international capital markets, strategic business, and economic matters, since 1991. She is also a senior managing director of Brock Capital Group, a corporate advisory and consulting firm. Previously, Ms. Bush has served as head of the Federal Home Loan Bank System, head of international finance at Fannie Mae, and the U.S. government's representative on the International Monetary Fund Board. Ms. Bush serves on the Boards of Directors of Discover Financial Services, ManTech International Corporation, and Marriott International, Inc.

Brian C. Rogers
Chairman, Chief Investment Officer,
and Portfolio Manager
T. Rowe Price Group, Inc.
Director since 1997

Brian C. Rogers has been a director of Price Group since 1997, the chairman of the Board since 2007, the chief investment officer since 2004, a vice president since 1985, and an employee since 1982. He is a member of the Executive Committee. Mr. Rogers earned an A.B. from Harvard University and an M.B.A. from Harvard Business School.

Dr. Alfred Sommer
Dean Emeritus and University Distinguished Service Professor
Johns Hopkins Bloomberg School of Public Health
Director since 2003

Dr. Alfred Sommer has been an independent director of Price Group since 2003, is the chairman of the Nominating and Corporate Governance Committee, and serves on the Executive Compensation Committee. From 1990 to September 2005, he was the dean of the Johns Hopkins Bloomberg School of Public Health, where he is now dean emeritus and continues as a professor of epidemiology, ophthalmology, and international health. Dr. Sommer also is a director of Becton, Dickinson and Company, a medical technology company.

James A.C. Kennedy
Chief Executive Officer and President
T. Rowe Price Group, Inc.
Director since 1996

James A.C. Kennedy has been a director of Price Group since 1996, the chief executive officer and president since 2007, the director of the equity division of Price Associates from 1997 through 2006, the director of equity research from 1987 through 1999, a vice president since 1981, and an employee since 1978. He is chairman of the Executive Committee.

Mr. Kennedy served as a director or trustee of 23 of the Price fund companies until April 2006. Mr. Kennedy earned an A.B. from Princeton University and an M.B.A. from Stanford University, Graduate School of Business. He has also earned the Chartered Financial Analyst accreditation.

J. Alfred Broaddus, Jr.*
Retired President
Federal Reserve Bank of Richmond
Director since 2004

J. Alfred Broaddus, Jr., has been an independent director of Price Group since 2004 and is a member of the Executive, Audit, and Executive Compensation Committees. He is the immediate past president of the Federal Reserve Bank of Richmond from which he retired in August 2004. Mr. Broaddus also is a director of Markel Corporation, a specialty insurer; and Owens & Minor, Inc., a distributor of medical and surgical supplies.

Edward C. Bernard
Vice Chairman and President
T. Rowe Price Investment Services, Inc.
Director since 1999

Edward C. Bernard has been a director of Price Group since 1999; the vice chairman since 2007; a vice president since 1989; the director of the company's distribution, client service, technology, and communications activities since 2006; and an employee since 1988. Mr. Bernard earned his B.A. from Brown University and M.B.A. from New York University.

James T. Brady
Mid-Atlantic Managing Director
Ballantrae International Ltd.
Director since 2003

James T. Brady has been an independent director of Price Group since 2003 and is the chairman of the Audit Committee and a member of the Executive Compensation Committee. He has been the Mid-Atlantic managing director of Ballantrae International Ltd., a management consulting firm, since 1999. Mr. Brady is a director of McCormick & Company, Inc., a manufacturer, marketer, and distributor of spices and seasonings.

Robert F. MacLellan
Non-Executive Chairman
Northleaf Capital Partners
Director since 2010

Robert F. MacLellan has been an independent director of Price Group since September 8, 2010, and serves on the Audit and Executive Compensation Committees. He is non-executive chairman of Northleaf Capital Partners, Canada's largest independent global private equity fund manager and advisor. Previously, Mr. MacLellan served as chief investment officer of TD Bank Financial Group where he was responsible for overseeing the management of investments for The Toronto-Dominion Bank, its Employee Pension Fund, TD Mutual Funds, and TD Capital Group. Mr. MacLellan serves on the Board of Directors for Yellow Media, Inc. He also serves on the advisory committee of Toronto-based Birch Hill Equity Partners.

Anne Marie Whittemore
Partner
McGuireWoods LLP
Director since 1995

Anne Marie Whittemore has been an independent director of Price Group since 1995 and serves on the Nominating and Corporate Governance Committee as well as the Executive Compensation Committee. Ms. Whittemore is a partner in the law firm of McGuireWoods LLP and is a director of Albemarle Corporation, a manufacturer of specialty chemicals, and Owens & Minor, Inc., a distributor of medical and surgical supplies.

Freeman A. Hrabowski III, Ph.D.
President
University of Maryland, Baltimore County
Director since 2013

Freeman A. Hrabowski, III, has served as President of UMBC (The University of Maryland, Baltimore County) since 1992. His research and publications focus on science and math education, with special emphasis on minority participation and performance. In 2008, he was named one of America's Best Leaders by U.S. News & World Report. In 2009, TIME magazine named him one of America's 10 Best College Presidents. He serves as a consultant to the National Science Foundation, the National Institutes of Health, the National Academies, and universities and school systems nationally. He also serves on the boards of the Alfred P. Sloan Foundation, France-Merrick Foundation, Marguerite Casey Foundation (Chair), The Urban Institute, McCormick & Company, and the Baltimore Equitable Society.

Edward C. Bernard
Vice Chairman and President
T. Rowe Price Investment Services, Inc.
Director since 1999

James T. Brady
Mid-Atlantic Managing Director
Ballantrae International Ltd.
Director since 2003

J. Alfred Broaddus, Jr.*
Retired President
Federal Reserve Bank of Richmond
Director since 2004

Mary K. Bush
President
Bush International, LLC
Director since 2012

Donald B. Hebb, Jr.
Chairman
ABS Capital Partners
Director since 1999

Freeman A. Hrabowski III, Ph.D.
(not shown)
President
University of Maryland, Baltimore County
Director since 2013

James A.C. Kennedy
Chief Executive
T. Rowe Price Group, Inc.
Director since 1996

Robert F. MacLellan
Non-Executive Chairman
Northleaf Capital Partners
Director since 2010

Brian C. Rogers
Chairman, Chief Investment
Officer, Portfolio Manager
T. Rowe Price Group, Inc.
Director since 1997

Dr. Alfred Sommer
Dean Emeritus and University
Distinguished Service Professor
Johns Hopkins Bloomberg School
of Public Health
Director since 2003

Dwight S. Taylor
Retired President
COPT Development & Construction
Services, LLC
Director since 2004

Anne Marie Whittemore
Partner
McGuire Woods, LLP
Director since 1995

* J. Alfred Broaddus will not stand for reelection at the 2013 Annual Meeting

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design, and any combination thereof, are all trademarks or
registered trademarks of T. Rowe Price Group, Inc.

© 2013 T. Rowe Price