T. Rowe Price (TROW) 10-K risk factor changes: FY2019 vs FY2018

[removed: RISKS] [added: RISKS] RELATING TO OUR BUSINESS AND THE FINANCIAL SERVICES [removed: INDUSTRY.][added: INDUSTRY.]

[removed: Our] [added: Our] revenues are based on the market value and composition of the assets under our management, all of which are subject to fluctuation caused by factors outside of our [removed: control.][added: control.]

| • | Investing Trends. Changes in investing trends, particularly investor preference for passive or alternative investment products, and in retirement savings trends, [removed: including the prevalence of defined contribution retirement plans and target date retirement products,] may reduce interest in our products and may alter our mix of assets under management. |

Page [removed: 11][added: 19]

| • | Geo-Political Exposure. Our managed investment portfolios may have significant investments in international markets that are subject to risk of loss from political or diplomatic developments, government policies, civil unrest, currency fluctuations, [added: illiquidity] and [added: capital controls, and] changes in legislation related to foreign ownership. |

A decrease in the value of assets under our management, or an adverse change in their composition, [added: particularly in market segments where our assets are concentrated,] could have a material adverse effect on our investment advisory fees and revenues.

[removed: For any period in which revenues decline, net income and operating margins will likely] decline by a greater proportion because certain expenses will be fixed over that finite period and may not decrease in proportion to the decrease in revenues.

[removed: A] [added: A] significant majority of our revenues are based on contracts with the U.S. mutual funds that are subject to termination without cause and on short [removed: notice.][added: notice.]

[removed: We] [added: We] operate in an intensely competitive industry.

Competitive pressures may result in a loss of customers and their assets or compel us to reduce the fees we charge to clients, thereby reducing our revenues and net [removed: income.][added: income.]

[removed: Many] [added: Some] of these financial institutions have substantially greater resources than we do and may offer a broader range of financial products across more markets.

[removed: Most] [added: Substantially all] of our investment products are available without sales or redemption fees, which means that investors may be more willing to transfer assets to competing products.

[removed: Our] [added: Our] success depends on our key personnel and our financial performance could be negatively affected by the loss of their [removed: services.][added: services.]

[removed: Generally] [added: Generally,] our associates can terminate their employment with us at any time.

[removed: Our] [added: Our] operations are complex and a failure to perform operational processes could have an adverse effect on our reputation and decrease our [removed: revenues.][added: revenues.]

New investment [removed: products we introduce could] [added: strategies, investment vehicles, distribution channels, or other evolutions of our business may] increase the risk that our existing systems may not be adequate to control the risks introduced by such [removed: new investment products.][added: changes.]

[removed: Materialization] [added: If any] of these [removed: risks] [added: factors were to arise it] could disrupt our operations, increase our expenses or result in financial exposure, regulatory inquiry or reputational damage.

[removed: Any] [added: Any] damage to our reputation could harm our business and lead to a loss of revenues and net [removed: income.][added: income.]

[removed: Our] [added: Our] expenses are subject to significant fluctuations that could materially decrease net [removed: income.][added: income.]

[removed: Amendments] [added: Amendments] to Tax Laws may impact the marketability of the products and services we offer our clients or the financial position of the [removed: company.][added: company.]

We are subject to income taxes as well as [removed: non-income based] [added: non-income-based] taxes in both the United States and various foreign jurisdictions.

[removed: Examinations] [added: Examinations] and audits by tax authorities could result in additional tax payments for prior [removed: periods.][added: periods.]

Based on the global nature of our business, from time to [removed: time] [added: time,] we are subject to tax audits in various jurisdictions.

[removed: We] [added: We] have contracted with third-party financial intermediaries that distribute our [removed: investment products in the U.S. and abroad and] [added: investment products and] such relationships may not be available or profitable to us in the [removed: future.][added: future.]

[removed: In addition, some investors rely on third-party financial] planners, registered investment advisers, and other consultants or financial professionals to advise them on the choice of investment adviser and investment product.

[removed: Natural] [added: Natural] disasters and other unpredictable events could adversely affect our [removed: operations.][added: operations.]

Armed conflicts, [added: trade wars, tariffs or sanctions,] terrorist attacks, cyber-attacks, power failures, climate change, and natural disasters could adversely affect our revenues, expenses, and net income by:

We have developed various backup systems and contingency [removed: plans] [added: plans,] but we cannot be assured that those preparations will be adequate in all circumstances that could arise, or that material interruptions and disruptions will not occur.

[removed: Our] [added: Our] investment income and asset levels may be negatively impacted by fluctuations in our investment [removed: portfolio.][added: portfolio.]

All of these investments are subject to investment market [removed: risk] [added: risk,] and our non-operating investment income could be adversely affected by the realization of losses upon the disposition of our investments or the recognition of significant impairments and the recognition of unrealized losses related to T.

[removed: We] [added: We] may review and pursue [removed: acquisition and investment opportunities] [added: strategic transactions] in order to maintain or enhance our competitive position and these could pose [removed: risks.][added: risks.]

We cannot be certain that we will be able to identify, consummate and successfully [removed: integrate acquisitions,] [added: complete such transactions,] and no assurance can be given with respect to the timing, likelihood or business effect of any possible transaction.

[removed: Any strategic transaction can involve a number of risks, including additional demands on our staff; unanticipated problems regarding integration of investor account and investment security recordkeeping, additional or new] regulatory requirements, operating facilities and technologies, and new employees; adverse effects on [added: our] earnings in the event acquired intangible assets or goodwill become impaired; and the existence of liabilities or contingencies not disclosed to or otherwise known by us prior to closing a transaction.

[removed: We] [added: We] are exposed to risks arising from our international [removed: operations.][added: operations.]

[removed: The] [added: The] quantitative models we use may contain errors, which could result in financial losses or adversely impact product performance and client [removed: relationships.][added: relationships.]

[removed: LEGAL] [added: LEGAL] AND REGULATORY [removed: RISKS.][added: RISKS.]

[removed: Compliance] [added: Compliance] within a complex regulatory environment imposes significant financial and strategic costs on our business, and non-compliance could result in fines and [removed: penalties.][added: penalties.]

[removed: Legal] [added: Legal] and regulatory developments in the mutual fund and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund [removed: shareholders.][added: shareholders.]

Future changes could require us to modify or curtail our investment offerings and business [removed: operations,] [added: operations] or impact our expenses and profitability.

| • | There has been substantial regulatory and legislative activity at federal and state levels regarding standards of care for financial services firms, related to both retirement and taxable accounts. [removed: This includes the U.S. Department of Labor’s ("DOL") adoption of a fiduciary rule that was ultimately struck down by the Fifth Circuit Court of Appeals and the SEC’s proposal of a package of related rules and interpretations. The ultimate action] [added: Actions] taken by [removed: the DOL, SEC or other] applicable regulatory or legislative [removed: body] [added: bodies] may impact our business activities and increase our costs. |

For any period in which revenues decline, net income and operating margins will likely

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Significant business changes may require us to update our processes or technology and may increase risk to meeting our business objectives.

Changes to benchmark indices may impact our business.

The manner in which certain reference rates are calculated could impact the investment portfolios we manage.

The withdrawal and replacement of widely used benchmark indices such as the London Interbank Offered Rate (“LIBOR”) with alternative benchmark rates may introduce a number of risks for our business.

The FCA in the U.K., which regulates LIBOR, has announced that it will no longer compel panel banks to submit rates for LIBOR after 2021.

Changes in the method pursuant to which LIBOR is determined or the discontinuance of LIBOR may adversely affect the amount of interest payable or interest receivable on certain portfolio investments.

These changes may also impact the market liquidity and market value of these portfolio investments.

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| • | changes in expenses that are correlated to our assets under management, such as distribution and servicing fees; |

| • | future changes to legal and regulatory requirements and potential litigation; |

In addition, some investors rely on third-party financial

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In addition, we maintain offices with associates in many other global locations such as Sydney, Australia; Hong Kong; Singapore; Tokyo, Japan; and Luxembourg.

From time to time, we consider strategic opportunities, including potential acquisitions, dispositions, consolidations, organizational restructurings, joint ventures or similar transactions, any of which may impact our business.

These initiatives typically involve a number of risks and present financial, managerial and operational challenges to our ongoing business operations.

In addition, acquisitions and related transactions involve risks, including unanticipated problems regarding integration of investor account and investment security recordkeeping, additional or new

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| • | The Federal Reserve Board has adopted final regulations related to non-bank Systemically Important Financial Institutions ("SIFIs"), and other jurisdictions are contemplating similar regulation. At this time, US |

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regulators have not designated mutual funds or traditional asset managers as non-bank SIFIs.

However, if any T.

Rowe Price fund or T.

Rowe Price affiliate was deemed a SIFI, increased regulatory oversight would apply to our business, which may include enhanced capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements.

| • | After the 2008 financial crisis, global regulations on over-the-counter derivatives spearheaded by The Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and European Market Infrastructure Regulation in the European Union ("EU") have imposed clearing, margin, trade reporting, electronic trading and recordkeeping requirements on market participants. Alongside their general stabilizing and risk-reducing effect on the markets, these requirements have introduced operational complexity and additional costs to derivatives portfolios. |

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An externally caused information security incident, such as a

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There have been increasing numbers of publicized cybersecurity incidents in recent years impacting other financial services firms as well as firms in other industries.

Our use of third-party vendors and cloud technologies could heighten this risk.

We consider opportunistic acquisitions to grow existing business, add new technologies, or expand distribution.

| • | The Federal Reserve Board has adopted final regulations related to non-bank Systemically Important Financial Institutions ("SIFIs"), and other jurisdictions are contemplating similar regulation. It has been suggested that large mutual funds, particularly money market funds, should be designated as SIFIs. We do not believe that mutual funds should be deemed SIFIs. Further, we do not believe the SIFI designation was intended for traditional asset management businesses. However, if any T. Rowe Price fund or T. Rowe Price affiliate is deemed a SIFI, increased regulatory oversight would apply, which may include enhanced capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements. |

without additional registration.

If we are required to register, we would be subject to additional regulatory requirements and costs associated with registration.

| • | Global regulations on over the counter derivatives are evolving, including new and proposed regulations under The Dodd-Frank Wall Street Reform and Consumer Protection Act and European Market Infrastructure Regulation relating to central clearing counterparties, trade reporting, and repositories. In addition, the SEC has adopted new regulations that will require mutual funds to adopt liquidity risk management programs with specific requirements for measuring and reporting the liquidity of fund holdings. Uncertainty related to requirements of existing regulations as well as yet to be finalized regulations may have negative impacts on currently offered investment strategies. |

adversely affect the ability of our subsidiaries to expand or maintain their operations if we were unable to make additional investments in them.

Although we maintain insurance coverage that we believe is reasonable, prudent and

[removed: OVERVIEW.][added: OVERVIEW.]

Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in U.S. mutual funds, [added: subadvised funds,] separately managed accounts, [removed: subadvised funds,] and other T.

Rowe Price products include: collective investment trusts, [removed: target date retirement trusts,] open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S.

We are investing in key capabilities, including investment professionals, technologies, and new product offerings; and, most importantly, [removed: are providing] [added: we provide] our clients with strong investment management expertise and service both now and in the future.

In [removed: 2019,] [added: 2020,] we expect to advance our strategic priorities to sustain and deepen our investment talent, add investment capabilities both in terms of new strategies and new investment vehicles, expand capabilities through enhanced technology, and broaden our distribution reach globally.

We currently expect our [removed: 2019] [added: 2020] non-GAAP operating expenses to grow in the range of [removed: 4%] [added: 6%] to [removed: 7%.][added: 9%.]

This expense growth [removed: range factors in] [added: guidance includes] continued investments in the [removed: business,] [added: business and technology capabilities,] our cost optimization efforts, and the [removed: incremental cost] [added: final part] of [added: the phased implementation of] paying for all third-party investment [removed: research as and when implemented.][added: research.]

[removed: MARKET TRENDS.][added: MARKET TRENDS.]

Stocks in developed non-U.S. equity markets [removed: fared worse than] [added: rose strongly but underperformed] U.S. shares.

Emerging markets stocks [removed: performed slightly worse than] [added: underperformed] shares in developed [removed: non-U.S.] markets.

Page [removed: 24][added: 47]

Results of several major equity market indexes for [removed: 2018] [added: 2019] are as follows:

| S&P 500 Index | [removed: (4.4)%] [added: 31.5%] |

| NASDAQ Composite Index(1) | [removed: (3.9)%] [added: 35.2%] |

| Russell 2000 Index | [removed: (11.0)%] [added: 25.5%] |

| MSCI EAFE (Europe, Australasia, and Far East) Index | [removed: (13.4)%] [added: 22.7%] |

| MSCI Emerging Markets Index | [removed: (14.3)%] [added: 18.9%] |

(1) [removed: Returns] [added: *Returns] exclude [removed: dividends][added: dividends*]

[removed: Bond returns] [added: Returns] in developed [removed: non-U.S.] [added: Asian] markets were [removed: negative] [added: broadly positive] in U.S. dollar terms.

Results of several major bond market indexes for [removed: 2018] [added: 2019] are as follows:

| Bloomberg Barclays U.S. Aggregate Bond Index | [removed: —%] [added: 8.7%] |

| JPMorgan Global High Yield Index | [removed: (2.4)%] [added: 14.6%] |

| Bloomberg Barclays Municipal Bond Index | [removed: 1.3%] [added: 7.5%] |

| Bloomberg Barclays Global Aggregate Ex-U.S. Dollar Bond Index | [removed: (2.2)%] [added: 5.1%] |

| JPMorgan Emerging Markets Bond Index Plus | [removed: (5.3)%] [added: 12.6%] |

[removed: ASSETS] [added: ASSETS] UNDER [removed: MANAGEMENT.][added: MANAGEMENT.]

Assets under management ended [removed: 2018] [added: 2019] at [removed: $962.3] [added: $1,206.8] billion, [removed: a decrease] [added: an increase] of [removed: $28.8] [added: $244.5] billion from the end of [removed: 2017.][added: 2018.]

[removed: We had net] [added: Net] cash inflows of $13.2 billion for [removed: 2018, but] [added: 2019, combined with] market [removed: depreciation] [added: appreciation] and [removed: losses, including] [added: income, net of] distributions not reinvested, [removed: lowered] [added: increased] our assets under management by [removed: $42.0] [added: $231.3] billion.

| (in billions) | | [removed: U.S.] [added: U.S.] mutual [removed: funds] [added: funds] | | | | [removed: Subadvised] [added: Subadvised] and separate [removed: accounts] [added: accounts] | | | | [removed: Other] [added: Other] investment [removed: products] [added: products] | | | | [removed: Total] [added: Total] | | |

| Net cash flows before client transfers | | [removed: .3] [added: 7.6] | | | | [removed: (5.5] [added: (.3] | | ) | | [removed: 2.4] [added: 5.9] | | | | [removed: (2.8] [added: 13.2] | | [removed: )] |

| Net cash flows after client transfers | | [removed: (4.6] [added: (15.6] | | ) | | [removed: (5.2] [added: .8] | | [removed: )] | | [removed: 7.0] [added: 28.0] | | | | [removed: (2.8] [added: 13.2] | | [removed: )] |

| Distributions not reinvested | | [removed: (.9] [added: (1.8] | | ) | | — | | | | — | | | | [removed: (.9] [added: (1.8] | | ) |

| Assets under management at December 31, 2016 | | [added: $ |] 514.2 | | | [added: $] | 206.9 | | | [added: $] | 89.7 | | | [added: $] | 810.8 | | [removed: |]

| Net market [removed: appreciation/(depreciation)] [added: appreciation] and [removed: income/ (losses)] [added: income] | | 104.6 | | | | 45.2 | | | | 18.2 | | | | 168.0 | | |

| Net market [removed: appreciation/(depreciation) and income/ (losses)] [added: depreciation, net of income] | | (22.7 | | ) | | (7.8 | | ) | | (8.4 | | ) | | (38.9 | | ) |

| Assets under management at December 31, 2018 | | [removed: $ |] 564.5 | | | [removed: $] | 250.0 | | | [removed: $] | 147.8 | | | [removed: $] | 962.3 | | [added: |]

[removed: (1)In] [added: *(1)In] all three years, the majority of the client transfers were from the T.

Rowe Price collective investment trusts, which are included in other investment [removed: products.][added: products.*]

| (in billions) | | [removed: Equity] [added: Equity] | | | | [removed: Fixed] [added: Fixed] income, including money [removed: market] [added: market] | | | | [removed: Multi-asset(1)] [added: Multi-asset(1)] | | | | [removed: Total] [added: Total] | | |

| Assets under management at December 31, 2016 | | [added: $ |] 450.6 | | | [added: $] | 121.2 | | | [added: $] | 239.0 | | | [added: $] | 810.8 | | [removed: |]

Additionally, approximately one-third of our operating expenses are impacted by financial markets.

U.S. stocks surged in 2019, as equities bounced back strongly from deep losses in the fourth quarter of 2018.

A major driver of market performance was the Federal Reserve’s decision to keep short-term interest rates steady in the first half of the year, then reduce rates three times starting in late July as a “midcycle adjustment” of its monetary policy.

Many other central banks around the world also reduced rates in response to slowing economic growth.

The trade conflict between the U.S. and China was another major driver of market sentiment.

Markets wavered at times through much of the year as both sides announced new tariffs on the other’s goods.

Speculation then arose in the fall that the U.S. and China were close to reaching an agreement, but a preliminary “phase one” trade deal was not reached until December.

European stocks were widely positive.

UK shares advanced more than 21% but lagged the region as Brexit-related uncertainty persisted for most of the year.

Boris Johnson succeeded Theresa May as Prime Minister during the summer, but the House of Commons did not vote in favor of the United Kingdom’s Withdrawal Agreement with the European Union until December, shortly after the Conservative Party decisively won a general election.

Hong Kong underperformed the region with a 10% gain.

Hong Kong’s economy and stock market have been hurt by ongoing protests that were triggered by a controversial extradition bill.

Asian equities were mostly positive in U.S. dollar terms, but most markets significantly lagged strong returns in China and Taiwan.

In emerging Europe, Russian stocks surged about 53%; Turkish stocks lagged with a 12% gain.

In Latin America, stocks in Colombia and Brazil posted very strong returns, but shares in Argentina and Chile fell sharply.

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Global bond returns were broadly positive, as longer-term government bond yields in developed markets declined and various central banks enacted new stimulus measures.

In the U.S., the Federal Reserve reduced the federal funds target rate to a range of 1.50%-1.75% by the end of the year.

The 10-year Treasury note yield decreased from 2.69% to 1.92% at year-end, though above its late-summer lows, which were around 1.50%.

In the U.S., the investment-grade bond market, long-term Treasuries and corporate bonds fared best.

Mortgage-backed securities advanced to a lesser extent, hindered by an increase in mortgage prepayments and refinancing activity.

Municipal bonds did well amid solid demand but slightly underperformed taxable securities.

High yield bonds advanced strongly for the year as investors embraced riskier assets and searched for higher yields because of falling interest rates.

Bonds in developed non-U.S. markets produced positive returns in U.S. dollar terms, as the dollar weakened against most major currencies and government bond yields generally declined.

In the eurozone, the European Central Bank decided to cut its short-term benchmark rate deeper into negative territory in September.

On November 1, the European Central Bank resumed its quantitative easing program and began purchasing €20 billion of securities every month.

Emerging markets debt appreciated strongly in dollar terms.

Bonds denominated in U.S. dollars outperformed local currency debt, as a few key emerging markets currencies declined against the dollar.

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| Client transfers(1) | | (23.2 | | ) | | 1.1 | | | | 22.1 | | | | — | | |

| Net market appreciation and income | | 135.6 | | | | 63.0 | | | | 34.5 | | | | 233.1 | | |

| Change during the period | | 118.2 | | | | 63.8 | | | | 62.5 | | | | 244.5 | | |

| Assets under management at December 31, 2019 | | $ | 682.7 | | | $ | 313.8 | | | $ | 210.3 | | | $ | 1,206.8 | |

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| Net cash flows | | (.2 | | ) | | 3.5 | | | | 9.9 | | | | 13.2 | | |

| Net market appreciation and income(2) | | 159.2 | | | | 8.3 | | | | 63.8 | | | | 231.3 | | |

| Change during the period | | 159.0 | | | | 11.8 | | | | 73.7 | | | | 244.5 | | |

U.S. stocks declined in 2018, the worst year for the U.S. equity market since 2008.

Stocks rose for much of the year, but market volatility-stemming from rising short-term interest rates and heightened global trade tensions, especially between the U.S. and China-was relatively high.

While most major U.S. stock indexes reached all-time highs around the end of the third quarter, equities plunged in the final months of the year, with several indexes falling into or close to bear market territory down at least 20% from recent highs by the end of the year.

The market faltered amid forecasts for slowing corporate earnings growth in 2019 and fears that the Federal Reserve would continue to raise interest rates in 2019 even if indications of softness in the U.S. economy emerge.

Japanese shares dropped almost 13%, as the export-oriented country was hurt by global trade tensions throughout the year and Japan’s economic contraction in the third quarter.

European stocks declined over 14% in U.S. dollar terms amid political turmoil, slowing growth, and global trade tensions.

In Asia, global trade tensions hurt several emerging markets significantly.

In emerging Europe, Turkish stocks plummeted roughly 41% as the lira plunged due to factors such as elevated inflation and tensions with the U.S. In Latin America, Brazilian shares ended the year nearly flat after a fourth-quarter surge on optimism that Brazil’s newly elected president will pursue business-friendly policies and pension reform.

Mexican stocks fell about 15% amid concerns about the governing style of the country’s new president.

Global bond returns were generally negative for the year.

U.S. fixed income performance was mostly flat to negative, as the Federal Reserve raised the federal funds target rate four times.

Treasury yields increased across all maturities; the 10-year Treasury note yield increased from 2.40% to 2.69% during the year but decreased from seven-year highs above 3.20% in early October.

In the investment-grade universe, asset- and mortgage-backed securities posted positive returns, while long-term corporate and Treasury securities declined.

Municipal bonds easily outperformed taxable securities.

High yield bonds fell as credit spreads-the yield differences between higher- and lower-quality bonds-widened due to late-year risk aversion.

While bond yields in some European markets declined and bond prices rose-especially late in the year-as investors fled equity market volatility, the stronger dollar versus the euro and the British pound hurt returns in dollar terms.

Japanese government bond ("JGB") yields were little changed for the year, but a stronger yen versus the dollar lifted JGB returns to U.S. investors.

Dollar-denominated emerging markets debt declined amid poor performance stemming from rising long-term interest rates in some countries and currency weakness in most developing markets.

In an attempt to defend their currencies, some emerging markets central banks were forced to raise short-term interest rates.

Bonds denominated in local currencies performed worse than dollar-denominated debt.

| Assets under management at December 31, 2015 | | $ | 487.1 | | | $ | 198.7 | | | $ | 77.3 | | | $ | 763.1 | |

| Client transfers(1) | | (4.9 | | ) | | .3 | | | | 4.6 | | | | — | | |

| Net market appreciation/(depreciation) and income/ (losses) | | 32.6 | | | | 13.4 | | | | 5.4 | | | | 51.4 | | |

| Change during the period | | 27.1 | | | | 8.2 | | | | 12.4 | | | | 47.7 | | |

| Assets under management at December 31, 2015 | | $ | 439.4 | | | $ | 110.4 | | | $ | 213.3 | | | $ | 763.1 | |

| Net cash flows | | (19.6 | | ) | | 7.6 | | | | 9.2 | | | | (2.8 | | ) |

| Net market appreciation and income(2) | | 30.8 | | | | 3.2 | | | | 16.5 | | | | 50.5 | | |

| Change during the period | | 11.2 | | | | 10.8 | | | | 25.7 | | | | 47.7 | | |

In 2016, subadvised and separate accounts and other investment products' net cash outflows prior to client transfers were largely attributable to institutional and intermediary clients reallocating to passive investments and the impact of our closed investment strategies.

| Target date retirement trusts | 79.7 | | | | 63.7 | | | | 38.3 | | |

| All funds | | 66% | | 75% | | 79% | | 83% |

| Multi-asset funds | | 71% | | 96% | | 88% | | 89% |

| All funds | | 31% | | 46% | | 51% | | 54% |

| Multi-asset funds | | 38% | | 62% | | 66% | | 79% |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

On January 1, 2018, we adopted new accounting guidance related to revenue recognition.

We elected to adopt the new guidance on a retrospective basis, which requires 2017 and 2016 results to be recast to reflect the impact.

Accordingly, the 2017 and 2016 net revenues and operating expenses presented in the table above and in the narrative that follows have been recast to reflect the impact of adopting this new accounting guidance.

The new guidance requires certain revenue related expenses that are incurred in servicing our U.S. mutual funds to be recognized in operating expenses versus being presented net against the related revenues.

[removed: EQUITY] [added: EQUITY] PRICE [removed: RISK.][added: RISK.]

Rowe Price manages its cash and discretionary investments exposure to market risk by diversifying its investments among equity and fixed income [removed: portfolios as well as many domestic and international products.][added: portfolios.]

The potential future loss of value, before any income tax benefits, of these investments at December 31, [removed: 2018] [added: 2019] was determined by using the lower of each product’s lowest net asset value per share during [removed: 2018] [added: 2019] or its net asset value per share at December 31, [removed: 2018,] [added: 2019,] reduced by 10%.

| (in millions) | [removed: Fair] [added: Fair] value [removed: 12/31/2018] [added: 12/31/2019] | | | | [removed: Potential] [added: Potential] lower [removed: value] [added: value] | | | | [removed: Potential loss] [added: Potential loss] | | | | | |

| Seed capital not consolidated | [removed: 139.4] [added: 181.1] | | | | [removed: 125.4] [added: 157.5] | | | | [removed: 14.0] [added: 23.6] | | | | [removed: 10] [added: 13] | % |

| Investments designated as an economic hedge of supplemental savings plan liability | [removed: 381.3] [added: 561.1] | | | | [removed: 343.2] [added: 474.4] | | | | [removed: 38.1] [added: 86.7] | | | | [removed: 10] [added: 15] | % |

| Investment partnerships and other investments held at fair value | $ | [removed: 99.6] [added: 99.7] | | | $ | [removed: 79.8] [added: 82.6] | | | $ | [removed: 19.8] [added: 17.1] | | | [removed: 20] [added: 17] | % |

Upon consolidation of these products, our direct investment is [removed: eliminated] [added: eliminated,] and the net assets of the products are combined in our consolidated balance sheet, together with redeemable non-controlling interests, which represents the portion of the products that is owned by unrelated third-party investors.

Page [removed: 47][added: 49]

[removed: CURRENCY] [added: CURRENCY] TRANSLATION [removed: RISK.][added: RISK.]

Our most significant exposure relates to the translation of the financial statements of our equity method investment in UTI [removed: ($152.4] [added: ($164.5] million at December 31, [removed: 2018).][added: 2019).]

We had a cumulative translation loss, net of tax, of [removed: $48.8] [added: $46.9] million at December 31, [removed: 2018,] [added: 2019,] related to our investment in UTI.

| Discretionary investments | $ | 1,221.8 | | | $ | 1,099.6 | | | $ | 122.2 | | | 10 | % |

| Total | $ | 1,964.0 | | | $ | 1,731.5 | | | $ | 232.5 | | | 12 | % |

| Discretionary investments | $ | 67.8 | | | $ | 58.3 | | | $ | 9.5 | | | 14 | % |

| Seed capital | 1,048.9 | | | | 905.3 | | | | 143.6 | | | | 14 | % |

| Total | $ | 1,116.7 | | | $ | 963.6 | | | $ | 153.1 | | | 14 | % |

| | | | | | | | | | | | | | | |

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The majority of our currency translation risk on our consolidated balance sheet at December 31, 2019, related to cash and non-consolidated investments of $284.6 million that are denominated in foreign currencies.

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| Discretionary investments | $ | 1,399.0 | | | $ | 1,259.1 | | | $ | 139.9 | | | 10 | % |

| Total | $ | 1,919.7 | | | $ | 1,727.7 | | | $ | 192.0 | | | 10 | % |

| Discretionary investments | $ | 19.2 | | | $ | 17.1 | | | $ | 2.1 | | | 11 | % |

| Seed capital | 882.2 | | | | 784.1 | | | | 98.1 | | | | 11 | % |

| Total | $ | 901.4 | | | $ | 801.2 | | | $ | 100.2 | | | 11 | % |

We provide an array of U.S. mutual funds, [added: subadvised funds,] separately managed accounts, [removed: subadvised funds,] and other T.

Rowe Price products include: collective investment trusts, [removed: target date retirement trusts,] open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; and trust services.

Rowe Price [removed: Group] [added: Group, Inc.] corporate holding company structure was established in 2000.

Our core capabilities have enabled us to deliver excellent operating results since our initial public [removed: offering in 1986.][added: offering.]

We maintain a [removed: client-centric] [added: strong corporate] culture that is focused on delivering strong long-term investment performance and world-class service to our clients.

We [removed: have distributed] [added: distribute] our broad array of active investment strategies through a diverse set of distribution channels and vehicles to meet the needs of our [removed: global clients.][added: clients globally.]

Our ongoing financial strength [added: and discipline] has allowed us to take advantage of attractive growth opportunities and invest in key capabilities.

The [removed: market] [added: industry] in which we operate has been evolving quickly and a number of headwinds have arisen over the last few years, including passive [removed: and alternative] investments taking market share from traditional active strategies; [added: continued downward fee pressure; demand for new investment vehicles to meet client needs; and an ever-changing regulatory landscape.]

As such, we [removed: are] [added: have been] responding with several multi-year initiatives that are designed to strengthen our long-term competitive position and to:

| • | Remain a destination of choice for top talent, with a culture of [added: empowerment,] accountability and collaboration. |

[removed: Financial] [added: Financial] Overview / Assets Under [removed: Management][added: Management]

We derive the vast majority of our consolidated net [removed: revenue] [added: revenues] and net income from investment advisory services provided by our subsidiaries, primarily T.

Rowe Price [removed: Associates and] [added: Associates,] T.

Rowe Price International Ltd. Our revenues depend largely on the total value and composition of [added: our] assets under [removed: our] management.

At December 31, [removed: 2018,] [added: 2019,] we had [removed: $962.3] [added: $1,206.8] billion in assets under management, including [removed: $564.5] [added: $682.7] billion in [removed: the] U.S. mutual funds and [removed: $397.8] [added: $524.1] billion in [added: subadvised funds,] separately managed accounts, [removed: subadvised funds,] and other T.

In [removed: 2018,] [added: 2019,] our net cash inflows included [removed: $12.0] [added: $9.8] billion [removed: in] [added: into] our target date retirement products, which provide shareholders with a single, diversified portfolio that invests in underlying U.S. mutual funds or collective investment trusts.

The assets under management in [removed: these] [added: our target date retirement] products totaled [removed: $230.4] [added: $292.4] billion at December 31, [removed: 2018,] [added: 2019,] or [removed: 23.9%] [added: 24.2%] of our managed assets at December 31, [removed: 2018,] [added: 2019,] compared with [removed: 23.6%] [added: 23.9%] at the end of [removed: 2017.][added: 2018.]

| (in billions) | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| Global financial [removed: intermediaries(1)] [added: intermediaries(2)] | $ | [removed: 484.0] [added: 623.0] | | | $ | [removed: 496.9] [added: 484.0] | |

| Individual U.S. investors on a direct basis | [removed: 159.3] [added: 190.7] | | | | [removed: 169.8] [added: 159.3] | | |

| U.S. retirement plan sponsors - full service recordkeeping | [removed: 107.6] [added: 127.7] | | | | [removed: 111.2] [added: 107.6] | | |

| Global [removed: institutions(1)(2)] [added: institutions(2)(3)] | [removed: 211.4] [added: 265.4] | | | | [removed: 213.2] [added: 211.4] | | |

| Total assets under management | $ | [removed: 962.3] [added: 1,206.8] | | | $ | [removed: 991.1] [added: 962.3] | |

| U.S. mutual funds | $ | [removed: 564.5] [added: 682.7] | | | $ | [removed: 606.3] [added: 564.5] | |

| [removed: Other] [added: Subadvised and separate accounts and other] investment [removed: products] [added: products:] | | | | | | | |

| T. Rowe Price collective investment trusts | [removed: 106.0] [added: 158.7] | | | | [removed: 88.9] [added: 106.0] | | |

| T. Rowe Price stable value and variable annuity products | [removed: 20.0] [added: 21.4] | | | | [removed: 19.2] [added: 20.0] | | |

| T. Rowe Price SICAVs and other funds regulated outside the U.S. | [removed: 21.8] [added: 30.2] | | | | [removed: 21.5] [added: 21.8] | | |

| Subadvised and separately managed accounts | [removed: 250.0] [added: 313.8] | | | | [removed: 255.2] [added: 250.0] | | |

| Total [added: subadvised and separate accounts and] other investment products | [removed: 397.8] [added: 524.1] | | | | [removed: 384.8] [added: 397.8] | | |

| Assets under management by account [removed: type(3)] [added: type] | | | | | | | |

| Defined contribution - investment only | $ | [removed: 401.8] [added: 510.6] | | | $ | [removed: 403.3] [added: 401.8] | |

| Defined contribution - full-service recordkeeping | [removed: 101.8] [added: 121.0] | | | | [removed: 103.6] [added: 101.8] | | |

| [removed: Other retirement and deferred] [added: Deferred] annuity [added: and direct retail retirement] assets | [removed: 149.9] [added: 186.0] | | | | [removed: 163.6] [added: 149.9] | | |

| Total [removed: retirement and tax] [added: defined contribution,] deferred [removed: annuity] [added: annuity, and direct retail retirement] assets | [removed: 653.5] [added: 817.6] | | | | [removed: 670.5] [added: 653.5] | | |

| Other | [removed: 308.8] [added: 389.2] | | | | [removed: 320.6] [added: 308.8] | | |

| Equity | $ | [removed: 539.9] [added: 698.9] | | | $ | [removed: 564.1] [added: 539.9] | |

| Fixed income, including money market | [removed: 136.1] [added: 147.9] | | | | [removed: 134.4] [added: 136.1] | | |

| [removed: Multi-Asset(4)] [added: Multi-Asset(1)] | [removed: 286.3] [added: 360.0] | | | | [removed: 292.6] [added: 286.3] | | |

[removed: (1) Includes] [added: *(2)* *Includes] Americas, [removed: EMEA,] [added: Europe Middle East] and [removed: APAC] [added: Africa ("EMEA"), and Asia Pacific ("APAC")] financial intermediaries and [removed: institutions.][added: institutions.*]

Our investments have been focused on increasing our investment professional headcount globally, expanding our product offerings, expanding our global distribution footprint to strengthen our regional relationships and brand, and investing in new technology and the core infrastructure of the firm.

| • | Extend and leverage our retirement expertise globally while becoming an ever more integrated investment solutions provider. |

| • | Embed best practices for sustainability and environmental, social and corporate governance throughout the company. |

| • | Maintain strong processes and controls, which is increasingly important with growing business complexity and regulation. |

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During 2019, market appreciation and income, net of distributions not reinvested, of $231.3 billion combined with net cash inflows of $13.2 billion increased assets under management by $244.5 billion from the end of 2018.

| Total assets under management | $ | 1,206.8 | | | $ | 962.3 | |

| Total assets under management | $ | 1,206.8 | | | $ | 962.3 | |

| Defined contribution retirement assets: | | | | | | | |

| Total defined contribution retirement assets | 631.6 | | | | 503.6 | | |

| Total assets under management | $ | 1,206.8 | | | $ | 962.3 | |

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| | | | | Municipal Ladders | | | | |

| | | | | Quantitative Fixed: Factor Portfolios | | | | |

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commentators, government experts, and market analysts.

* This fund will re-open for new accounts in the second quarter of 2020.

Nearly 70% of our investment advisory fees are earned from our U.S. mutual funds, while about 30% of our investment advisory fees are earned from our other investment portfolios.

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Additionally, we have contractual management fee waivers for certain U.S mutual funds, including nearly all money market funds, which could occur under certain specified circumstances.

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Other investment products include collective investment trusts, open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S. We earn investment management fees from these clients based on, among other things, the specific investment services to be provided and are computed using the value of assets under management at a contracted annual fee rate or the products' effective fee rate for those with a tiered-fee rate structure.

The following table details the services provided by certain of our subsidiaries based on our non-U.S. global investment products:

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| T. Rowe Price Subsidiary | | Products | | Services Provided |

| T. Rowe Price Australia | | AUTs | | Investment management |

| T. Rowe Price UK | | OEICs | | Authorized corporate director |

Rowe Price Hong Kong, as well as T.

Rowe Price Australia and T.

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These include adding to our client-facing associates and investment professionals across the globe, enhancing our technologies, introducing new product offerings, and, most importantly, providing our global clients with strong investment management expertise and service.

a shifting demand from equities to income-oriented solutions as the population ages; pricing pressure; demand for new vehicles to meet client needs; an accelerating regulatory landscape; and a shifting demand from equities to income-oriented solutions as the population ages.

| • | Become an ever more integrated investment solutions provider, leveraging firmwide investment capabilities to meet changing client needs. |

| • | Become a more recognized global partner for retirement-oriented investors. |

| • | Become a more agile company that stays ahead of and capitalizes on disruption. |

While assets under management decreased $28.8 billion from the end of 2017, we had net cash inflows of $13.2 billion for 2018, but market depreciation and losses, including distributions not reinvested, lowered our assets under management by $42.0 billion.

(3) Certain 2017 amounts have been reclassified as additional information became available to enable more appropriate classification.

| | | | | Quantitative Fixed: Style Index | | | | |

on net assets in excess of $20 billion.

We charge fees for investment management to these clients based on, among other things, the specific investment services to be provided.

Rowe Price Australia, provide management company and investment management services, respectively, to our Luxembourg-based SICAVs and FCPs, and AUTs.

Rowe Price International, provide authorized corporate depositor and investment management services, respectively, to our UK-based OEICs.

Our fees for managing these subadvised and separate accounts and other investment products are computed using the value of assets under our management at a contracted annual fee rate.

In addition, we direct considerable marketing efforts to defined contribution plans that invest in mutual funds.

Our branch offices operated outside the U.S. are also registered with and regulated by the local financial authorities.

This matter is in the [removed: early stages] [added: discovery phase] of litigation and we cannot predict the eventual [removed: outcome] [added: outcome,] or whether it will have a material negative impact on our financial results, or estimate the possible loss or range of loss that may arise from any negative outcome.

The complaint alleges that the management fees for the identified funds are excessive because [removed: T.]

This matter is in the discovery phase of litigation and we cannot predict the eventual [removed: outcome] [added: outcome,] or whether it will have a material negative impact on our financial results, or estimate the possible loss or range of loss that may arise from any negative outcome.

The matter has been certified as a class action.

T.

The plaintiffs are seeking certification of the complaint as a class action.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: ANNUAL] [added: ☒ ANNUAL] REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

For the fiscal year ended [removed: December] [added: December] 31, [removed: 2018][added: 2019]

Commission file number [removed: 000-32191][added: 000-32191]

ROWE PRICE GROUP, [removed: INC.][added: INC.]

| [removed: Maryland] [added: Maryland] | | [removed: 52-2264646] [added: 52-2264646] |

[removed: 100] [added: 100] East Pratt [removed: Street, Baltimore, Maryland 21202][added: Street, Baltimore, Maryland 21202]

[removed: (410) 345-2000][added: (410) 345-2000]

| [removed: Common] [added: Common] stock, $.20 par value per [removed: share] [added: share] | [added: TROW] | [removed: The] [added: The] NASDAQ Stock Market [removed: LLC] [added: LLC] |

| (Title of class) | [added: (Ticker symbol)] | (Name of exchange on which registered) |

[removed: \[X\] Yes \[ \]] [added: ☒ Yes ☐] No

[removed: \[ \]] [added: ☐] Yes [removed: \[X\] No][added: ☒ No]

| Large accelerated filer [removed: x] | [added: ☒] | Accelerated filer [removed: ¨] | [added: ☐ |]

| Non-accelerated filer [removed: ¨] (do not check if smaller reporting company) | [added: ☐] | Smaller reporting company [removed: ¨] | [added: ☐ |]

| | Emerging growth company [removed: ¨] | [added: ☐] | [added: |]

The aggregate market value of the common equity (all voting) held by non-affiliates (excludes executive officers and directors) computed using [removed: $116.09] [added: $109.71] per share (the NASDAQ Official Closing Price on June [removed: 29, 2018,] [added: 30, 2019,] the last business day of the registrant’s most recently completed second fiscal quarter) was [removed: $27.6] [added: $25.6] billion.

The number of shares outstanding of the registrant's common stock as of the latest practicable date, February [removed: 12, 2019,] [added: 11, 2020,] is [removed: 236,263,621.][added: 236,041,040.]

DOCUMENTS INCORPORATED BY REFERENCE: In Part III, the Definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders to be filed pursuant to Regulation 14A.

Exhibit index begins on page [removed: 82.][added: 83.]

[removed: | | [PART I](#s6807F3FE4AAE5DE389192DB9D6D90F33) | [2](#s6807F3FE4AAE5DE389192DB9D6D90F33) |][added: PART I]

| ITEM 1A. | [Risk [removed: Factors](#s8E72EB2DC49C51028BC371019DBF3A16)] [added: Factors](#s4F8EF7E8782957968C4392A32352C588)] | [removed: [11](#s8E72EB2DC49C51028BC371019DBF3A16)] [added: [12](#s4F8EF7E8782957968C4392A32352C588)] |

| ITEM 1B. | [Unresolved Staff [removed: Comments](#s26B1326C7A6356DDA4FFB87FF09EB096)] [added: Comments](#s91D0B6BE32845C99BFF4DE473E2CD316)] | [removed: [19](#s26B1326C7A6356DDA4FFB87FF09EB096)] [added: [21](#s91D0B6BE32845C99BFF4DE473E2CD316)] |

| ITEM 2. | [removed: [Properties](#s96D8840EE3B354BAAB2AB0A2394B886F)] [added: [Properties](#s8282F8477E585F26957330C43F59A862)] | [removed: [19](#s96D8840EE3B354BAAB2AB0A2394B886F)] [added: [21](#s8282F8477E585F26957330C43F59A862)] |

| ITEM 3. | [Legal [removed: Proceedings](#sD32D90038793566EAB5AF363A0643210)] [added: Proceedings](#s54DC87B8B58A540FBFB67E636A326FEA)] | [removed: [20](#sD32D90038793566EAB5AF363A0643210)] [added: [21](#s54DC87B8B58A540FBFB67E636A326FEA)] |

| ITEM 4. | [Mine Safety [removed: Disclosures](#s2F126CDF638E5A6C9753632981B39BBC)] [added: Disclosures](#sFD60B68D76DD51E99BE63DD191EBB8EA)] | [removed: [20](#s2F126CDF638E5A6C9753632981B39BBC)] [added: [21](#sFD60B68D76DD51E99BE63DD191EBB8EA)] |

| ITEM. | [Executive Officers of the [removed: Registrant](#sC7D30BBD089C5B82B4A04CB8D640C58C)] [added: Registrant](#s343F721D1C49558CBD518420ABF99B73)] | [removed: [20](#sC7D30BBD089C5B82B4A04CB8D640C58C)] [added: [22](#s343F721D1C49558CBD518420ABF99B73)] |

| ITEM 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s5BD7683FC98F5486A2B510EC8434FA4C)] [added: Securities](#s168795EBB14C5781A1AAEAC1E863349F)] | [removed: [22](#s5BD7683FC98F5486A2B510EC8434FA4C)] [added: [23](#s168795EBB14C5781A1AAEAC1E863349F)] |

| ITEM 6. | [Selected Financial [removed: Data](#s240747DAAC275391BC659DD31F26F95A)] [added: Data](#s1B6CE0B18EF859AA875257A0884313E2)] | [removed: [23](#s240747DAAC275391BC659DD31F26F95A)] [added: [24](#s1B6CE0B18EF859AA875257A0884313E2)] |

| ITEM 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s0566FA7BAD4E5BD292C6BA3030D590A1)] [added: Operations](#s3BCB328ED96C5248BD0FA5CC01C153AA)] | [removed: [24](#s0566FA7BAD4E5BD292C6BA3030D590A1)] [added: [25](#s3BCB328ED96C5248BD0FA5CC01C153AA)] |

| ITEM 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s0385BA2CED525478B01935B351745C59)] [added: Risk](#s9D1D035580015A8F8F900A71B384E4E5)] | [removed: [47](#s0385BA2CED525478B01935B351745C59)] [added: [48](#s9D1D035580015A8F8F900A71B384E4E5)] |

| ITEM 8. | [Financial Statements and Supplementary [removed: Data](#s77D2FAEE6D0B543B8205D4EEEFAF2451)] [added: Data](#s980B254D0D3650B598D24A1A483DCF57)] | [removed: [49](#s77D2FAEE6D0B543B8205D4EEEFAF2451)] [added: [50](#s980B254D0D3650B598D24A1A483DCF57)] |

| ITEM 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sA7759C3F0D4A54A7AEF386BF7DBA0998)] [added: Disclosure](#s71EBD875BD0A500BADDDC337C47D8ECF)] | [removed: [79](#sA7759C3F0D4A54A7AEF386BF7DBA0998)] [added: [80](#s71EBD875BD0A500BADDDC337C47D8ECF)] |

| ITEM 9A. | [Controls and [removed: Procedures](#sEABE29386D405C72B6F551495F6B48B0)] [added: Procedures](#sC49C2E92EAD05ECFA2DD080D856A98EA)] | [removed: [79](#s29A308B3EF435A55AB97AD356C92771A)] [added: [80](#s95639EB4661358618244B32524E0B614)] |

| ITEM 9B. | [Other [removed: Information](#s48E2E7DB2C205D73AFEB40C1D3188F52)] [added: Information](#s55167FD5CB135B23BFB11A7DFEDC8D43)] | [removed: [79](#s112739120A2255BBA370AD7E9363C9BF)] [added: [80](#sC399F8A6A899516A9926326A92047807)] |

| | [PART [removed: III](#s2D68B732C86F5C5EA6A55FC66191A604)] [added: III](#sB8FB42BC999351EC82CEB31C372B6FA7)] | [removed: [82](#s2D68B732C86F5C5EA6A55FC66191A604)] [added: [83](#sB8FB42BC999351EC82CEB31C372B6FA7)] |

| ITEM 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s5C4BD008EF305F4FBAF95E0636A62F72)] [added: Governance](#s0F78EC3FC4B454B8ABA76B8365A44260)] | [removed: [82](#s5C4BD008EF305F4FBAF95E0636A62F72)] [added: [83](#s0F78EC3FC4B454B8ABA76B8365A44260)] |

| ITEM 11. | [Executive [removed: Compensation](#s53143A48AF415D9AAB7D84DA8E38A9B5)] [added: Compensation](#s5122527C0B4558AAAC1477DB80DED086)] | [removed: [82](#s53143A48AF415D9AAB7D84DA8E38A9B5)] [added: [83](#s5122527C0B4558AAAC1477DB80DED086)] |

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OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

T.

☒ Yes ☐ No

☒ Yes ☐ No

| | | | |

| --- | --- | --- | --- |

| | | | |

☐ Yes ☒ No

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| ITEM 1. | [Business](#sDB071C114A77516184C6E58F5486D57B) | [2](#s55166583436B54C1BF6C0C34EEAB0022) |

| | [PART II](#sFC69D9CD63865284A37011F33168BA00) | [23](#sFC69D9CD63865284A37011F33168BA00) |

| | [PART IV](#sDFB60970E33C5944A26E551488C36998) | [83](#sDFB60970E33C5944A26E551488C36998) |

| [SIGNATURES](#s160FCF7834805A21A80EA97F9242D076) | | [87](#s160FCF7834805A21A80EA97F9242D076) |

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10-K 1 a201810k.htm 10-K

T.

| | | |

| --- | --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[X\]

| ITEM 1. | [Business](#s83B3B757BD8B566AB2E5A109E9112BD6) | [2](#s3FBD6930348550FC8E2579A8087EE5A4) |

| | [PART II](#sB5B8008FFE7E5764ADCF9DF934260AF6) | [22](#sB5B8008FFE7E5764ADCF9DF934260AF6) |

| | [PART IV](#s1777ACD290B056138FABA8719E3A18E6) | [82](#s1777ACD290B056138FABA8719E3A18E6) |

| [SIGNATURES](#s13817986B1BE51F28E5CBA645A6568A6) | | [86](#s13817986B1BE51F28E5CBA645A6568A6) |

We lease all our offices outside the U.S. with London and Hong Kong being our largest, as well as our business operations recovery site and innovation center in Maryland, [removed: a sales and client relationship office in San Francisco, and] our technology development center in New York [removed: City.][added: City, and offices in San Francisco and Philadelphia.]

Information concerning our anticipated capital expenditures in [removed: 2019] [added: 2020] and our future minimum rental payments under noncancelable operating leases at December 31, [removed: 2018,] [added: 2019,] is set forth in the capital resources and liquidity and contractual obligations discussions in Item 7 of this Form 10-K.

Page 19

In June 2018, we announced we would be closing our Tampa, Florida customer service call center in June 2019.

[removed: Item.][added: Item.]

Executive Officers of the [removed: Registrant.][added: Registrant.]

The following information includes the names, ages, and positions of our executive officers as of February 13, [removed: 2019.][added: 2020.]

The first [removed: 10] [added: nine] individuals are members of our management committee.

Stromberg [removed: (58),] [added: (59),] President and Chief Executive Officer since [removed: 2016.][added: 2016 and Chairman of the Board of Directors since 2019.]

Dufétel [removed: (38),] [added: (39),] Chief Financial Officer and Treasurer since 2018 and a Vice President since 2017.

Page [removed: 20][added: 22]

Alderson [removed: (56),] [added: (57),] Co-Head of Global Equity since 2017, Head of International Equity from 2009 to 2017, and a Vice President since 2002.

Robert C.T. Higginbotham [removed: (51),] [added: (52),] Head of Global [added: Distribution since 2019, Head of Global] Investment Management Services [removed: since 2018,] [added: from 2018 to 2019,] Head of Global Investment Services from 2012 to 2018, and a Vice President since 2012.

Andrew McCormick [removed: (58),] [added: (59),] Head of Fixed Income from 2019, Head of U.S. Taxable Bond from 2013 to 2018, and a Vice President since 2008.

David [removed: Oestreicher, (51),] [added: Oestreicher (52),] Chief Legal Counsel since 2008, Corporate Secretary since 2012, and a Vice President since 2001.

Sebastien Page [removed: (42),] [added: (43),] Head of Global Multi-Asset and a Vice President since 2015.

[removed: Sharps, (47),] [added: Sharps (48),] Head of Investments since 2018, Group Chief Investment Officer since 2017, Co-Head of Global Equity from 2017 to 2018, Lead Portfolio Manager, Institutional U.S. Large-Cap Equity Growth Strategy from 2001 to 2016, and a Vice President since 2001.

Eric Veiel [removed: (47),] [added: (48),] Co-Head of Global Equity since 2018, Head of U.S. Equity from 2016 to 2018, Director of Equity Research North America from 2014 to 2015, and a Vice President since 2006.

Hiebler [removed: (43),] [added: (44),] Principal Accounting Officer since 2010 and a Vice President since 2009.

[removed: PART II][added: PART II]

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Scott B.

David (52), Head of Individual and Retirement Plan Services and a Vice President since 2011.

| | [removed: 1st quarter] [added: 1st quarter] | | | | [removed: 2nd quarter] [added: 2nd quarter] | | | | [removed: 3rd quarter] [added: 3rd quarter] | | | | [removed: 4th quarter] [added: 4th quarter] | | |

These plans provide for the following issuances of shares of our common stock at December 31, [removed: 2018:][added: 2019:]

| | | [removed: Employee] [added: Employee] and non-employee director [removed: plans] [added: plans] | | | [removed: Employee] [added: Employee] stock purchase [removed: plan] [added: plan] | | | [removed: Total] [added: Total] | |

| Exercise of outstanding options | | [removed: 11,300,393] [added: 7,388,068] | | | — | | | [removed: 11,300,393] [added: 7,388,068] | |

| Settlement of outstanding restricted stock units | | [removed: 6,651,559] [added: 6,775,504] | | | — | | | [removed: 6,651,559] [added: 6,775,504] | |

The outstanding options included in the table above have a weighted-average exercise price of [removed: $69.05.][added: $71.06.]

The following table presents repurchase activity during the fourth quarter of [removed: 2018.][added: 2019.]

| [removed: Month] [added: Month] | | [removed: Total] [added: Total] number [removed: of shares purchased] [added: of shares purchased] | | | [removed: Average price paid] [added: Average price paid] per [removed: share] [added: share] | | | | [removed: Total] [added: Total] number [removed: of shares] [added: of shares] purchased [removed: as part] [added: as part] of [removed: publicly announced program] [added: publicly announced program] | | | [removed: Maximum] [added: Maximum] number [removed: of shares] [added: of shares] that may [removed: yet be] [added: yet be] purchased [removed: under the program] [added: under the program] | |

Of the total number of shares purchased during the fourth quarter of [removed: 2018, 44,511] [added: 2019, 222,824] were related to shares surrendered in connection with employee stock option exercises and [removed: 122,620] [added: 47,556] were related to shares withheld to cover tax withholdings associated with the vesting of restricted stock awards.

We have [removed: 7,480] [added: 7,441] stockholders of record and approximately [removed: 213,000] [added: 290,000] beneficial stockholder accounts held by brokers, banks, and other intermediaries holding our common stock.

Page [removed: 22][added: 23]

[added: Common stock owned outright by our associates and directors,] combined with outstanding vested stock options and unvested restricted stock awards, total [removed: 13%] [added: approximately 8%] of our outstanding stock and outstanding vested stock options at December 31, [removed: 2018.][added: 2019.]

| 2019 | $ | .76 | | | $ | .76 | | | $ | .76 | | | $ | .76 | |

| Future issuances | | 22,213,930 | | | 1,964,676 | | | 24,178,606 | |

| Total | | 36,377,502 | | | 1,964,676 | | | 38,342,178 | |

| October | | 1,156,989 | | | $ | 109.69 | | | 1,155,593 | | | 17,500,047 | |

| November | | 108,595 | | | $ | 120.84 | | | — | | | 17,500,047 | |

| December | | 285,389 | | | $ | 122.63 | | | 125,000 | | | 17,375,047 | |

| Total | | 1,550,973 | | | $ | 112.85 | | | 1,280,593 | | | | |

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The following table details the changes in and status of the Board of Directors’ outstanding publicly announced board authorizations.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Authorization dates | | 12/31/2018 | | | Total Number of Shares Purchased | | | Maximum Number of Shares that May Yet Be Purchased at 12/31/2019 | |

| April 2018 | | 8,655,640 | | | (1,280,593 | ) | | 7,375,047 | |

| February 2019 | | 10,000,000 | | | — | | | 10,000,000 | |

| | | 18,655,640 | | | (1,280,593 | ) | | 17,375,047 | |

| 2017 | $ | .57 | | | $ | .57 | | | $ | .57 | | | $ | .57 | |

| Future issuances | | 20,024,786 | | | 2,340,343 | | | 22,365,129 | |

| Total | | 37,976,738 | | | 2,340,343 | | | 40,317,081 | |

| October | | 2,568,894 | | | $ | 100.36 | | | 2,553,865 | | | 17,276,682 | |

| November | | 727,394 | | | $ | 94.66 | | | 721,129 | | | 16,555,553 | |

| December | | 2,353,584 | | | $ | 90.85 | | | 2,207,747 | | | 14,347,806 | |

| Total | | 5,649,872 | | | $ | 95.67 | | | 5,482,741 | | | | |

The remaining 5,482,741 shares of our common stock purchased during the fourth quarter of 2018 were repurchased pursuant to the Board of Directors’ December 6, 2016, publicly announced authorization.

The maximum number of shares that may yet be purchased as of December 31, 2018, under the Board of Directors’ December 6, 2016, and April 26, 2018, publicly announced authorizations is 14,347,806.

On February 12, 2019, the Board of Directors approved an authorization to repurchase an additional 10 million shares of common stock.

Common stock owned outright by our associates,

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| | [removed: (in] [added: (in] millions, except per-share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | |

| Net revenues(1) | $ | [removed: 5,373] [added: 5,618] | | | $ | [removed: 4,855] [added: 5,373] | | | $ | [removed: 4,285] [added: 4,855] | | | $ | [removed: 4,201] [added: 4,285] | | | $ | [removed: 3,982] [added: 4,201] | |

| Net operating income | $ | [removed: 2,361] [added: 2,387] | | | $ | [removed: 2,109] [added: 2,361] | | | $ | [removed: 1,733] [added: 2,109] | | | $ | [removed: 1,899] [added: 1,733] | | | $ | [removed: 1,891] [added: 1,899] | |

| Net income | $ | [removed: 1,769] [added: 2,249] | | | $ | [removed: 1,581] [added: 1,769] | | | $ | [removed: 1,254] [added: 1,581] | | | $ | [removed: 1,223] [added: 1,254] | | | $ | [removed: 1,230] [added: 1,223] | |

| Net income (loss) attributable to redeemable non-controlling interests | $ | [removed: (69] [added: 118] | [removed: )] | | $ | [removed: 83] [added: (69] | [added: )] | | $ | [removed: 39] [added: 83] | | | $ | [removed: —] [added: 39] | | | $ | — | |

| Net income attributable to T. Rowe Price Group | $ | [removed: 1,838] [added: 2,131] | | | $ | [removed: 1,498] [added: 1,838] | | | $ | [removed: 1,215] [added: 1,498] | | | $ | [removed: 1,223] [added: 1,215] | | | $ | [removed: 1,230] [added: 1,223] | |

| Adjusted net income attributable to T. Rowe Price Group(2) | $ | [removed: 1,807] [added: 1,976] | | | $ | [removed: 1,361] [added: 1,807] | | | $ | [removed: 1,149] [added: 1,361] | | | $ | [removed: 1,160] [added: 1,149] | | | $ | [removed: 1,161] [added: 1,160] | |

| Basic earnings | $ | [removed: 7.41] [added: 8.82] | | | $ | [removed: 6.07] [added: 7.41] | | | $ | [removed: 4.85] [added: 6.07] | | | $ | [removed: 4.74] [added: 4.85] | | | $ | [removed: 4.68] [added: 4.74] | |

| Diluted earnings | $ | [removed: 7.27] [added: 8.70] | | | $ | [removed: 5.97] [added: 7.27] | | | $ | [removed: 4.75] [added: 5.97] | | | $ | [removed: 4.63] [added: 4.75] | | | $ | [removed: 4.55] [added: 4.63] | |

| Adjusted diluted earnings(2) | $ | [removed: 7.15] [added: 8.07] | | | $ | [removed: 5.43] [added: 7.15] | | | $ | [removed: 4.49] [added: 5.43] | | | $ | [removed: 4.39] [added: 4.49] | | | $ | [removed: 4.29] [added: 4.39] | |

| Cash dividends declared(3) | $ | [removed: 2.80] [added: 3.04] | | | $ | [removed: 2.28] [added: 2.80] | | | $ | [removed: 2.16] [added: 2.28] | | | $ | [removed: 4.08] [added: 2.16] | | | $ | [removed: 1.76] [added: 4.08] | |

| Weighted-average common shares outstanding | [removed: 242.2] [added: 235.4] | | | | [removed: 241.2] [added: 242.2] | | | | [removed: 245.5] [added: 241.2] | | | | [removed: 254.6] [added: 245.5] | | | | [removed: 259.6] [added: 254.6] | | |

| Weighted-average common shares outstanding assuming dilution | [removed: 246.9] [added: 238.6] | | | | [removed: 245.1] [added: 246.9] | | | | [removed: 250.3] [added: 245.1] | | | | [removed: 260.9] [added: 250.3] | | | | [removed: 267.4] [added: 260.9] | | |

| | [removed: December 31,] [added: December 31,] | | | | | | | | | | | | | | | | | | |

| Total assets | $ | [removed: 7,689] [added: 9,330] | | | $ | [removed: 7,535] [added: 7,689] | | | $ | [removed: 6,226] [added: 7,535] | | | $ | [removed: 5,107] [added: 6,226] | | | $ | [removed: 5,644] [added: 5,107] | |

| Redeemable non-controlling interests | $ | [removed: 740] [added: 1,121] | | | $ | [removed: 993] [added: 740] | | | $ | [removed: 687] [added: 993] | | | $ | [removed: —] [added: 687] | | | $ | — | |

| Stockholders’ equity | $ | [removed: 6,124] [added: 7,102] | | | $ | [removed: 5,824] [added: 6,124] | | | $ | [removed: 5,009] [added: 5,824] | | | $ | [removed: 4,762] [added: 5,009] | | | $ | [removed: 5,395] [added: 4,762] | |

| Assets under management (in billions) | $ | [removed: 962.3] [added: 1,206.8] | | | $ | [removed: 991.1] [added: 962.3] | | | $ | [removed: 810.8] [added: 991.1] | | | $ | [removed: 763.1] [added: 810.8] | | | $ | [removed: 746.8] [added: 763.1] | |

[removed: (1) Net] [added: *(1)* *Net] revenues [removed: for 2017 and 2016 have] [added: for* *2018* *and* *2017* *have] been adjusted to reflect the adoption of new revenue accounting guidance on January 1, 2018.

Accordingly, net revenues [removed: for 2015 and 2014 have] [added: for* *2016* *and* *2015* *have] not been [removed: adjusted.][added: adjusted.*]

[removed: (2) These] [added: *(2)* *These] items represent non-GAAP financial measures that have been established in order to increase transparency for the purpose of evaluating our core business, for comparing current results with prior period results, and to enable more appropriate comparison with industry peers.

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for the definitions of these measures and the related reconciliation from U.S. [removed: GAAP.][added: GAAP.*]

[removed: (3) Cash] [added: *(3)* *Cash] dividends declared in 2015 includes a special dividend of $2.00 per share that we paid during that [removed: year.][added: year.*]

Page [removed: 23][added: 24]

| | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

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See the New Accounting Guidance section of Note 1 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data for more information about the adoption of this guidance.

| Consolidated Balance Sheets at December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] | [removed: [50](#s96CD31D4C23C5172BD7C29FBE5E4FC3E)] [added: [51](#s58DC7820C918529094F50D5B4E65B2E5)] |

| Consolidated Statements of Income for each of the years in the three-year period ended December 31, [removed: 2018] [added: 2019] | [removed: [51](#s70A3C9EBF4C150759304CFDBE7FD138E)] [added: [52](#s520A399EFA3C5B17949EAA6EBC18854A)] |

| Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, [removed: 2018] [added: 2019] | [removed: [52](#s3216FD11BB015BFDB9EC68E7187E1B0C)] [added: [53](#sF235482A709D50CBAB4037C027BABA09)] |

| Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, [removed: 2018] [added: 2019] | [removed: [53](#s5798A3760880530CB9B9F0FF0F675D47)] [added: [54](#s6C48AA6D31965FCB88F89EF6573B5071)] |

| Consolidated Statements of Stockholders' Equity for each of the years in the three-year period ended December 31, [removed: 2018] [added: 2019] | [removed: [54](#sCC62913F923B5B9C8DBDC017F15905D2)] [added: [55](#sFE903C8CD46759ADA3E1DEF32E299310)] |

[removed: | [Notes to Consolidated Financial Statements](#s64A598AF2B3D57CBBB31AB0EF3BC92D5) | [56](#s64A598AF2B3D57CBBB31AB0EF3BC92D5) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: | [Report of Independent Registered Public Accounting Firm](#s13DF339F83BD57C98D23BED107E41248) | [78](#s13DF339F83BD57C98D23BED107E41248) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

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[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: (in] [added: (in] millions, except share [removed: data)][added: data)]

| | [removed: 12/31/2018] [added: 2019] | | | | [removed: 12/31/2017] [added: 2018] | | | [added: | 2017 | | |]

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash equivalents | $ | [removed: 1,425.2] [added: 1,781.8] | | | $ | [removed: 1,902.7] [added: 1,425.2] | |

| Accounts receivable and accrued revenue | [removed: 549.6] [added: 646.6] | | | | [removed: 565.3] [added: 549.6] | | |

| Investments | [removed: 2,453.4] [added: 2,939.8] | | | | [removed: 1,477.3] [added: 2,453.4] | | |

| Assets of consolidated T. Rowe Price investment products [removed: ($1,392.6] [added: ($1,975.3] million at December 31, [removed: 2018] [added: 2019] and [removed: $1,839.6] [added: $1,392.6] million at December 31, [removed: 2017,] [added: 2018,] related to variable interest entities) | [removed: 1,680.4] [added: 2,276.9] | | | | [removed: 2,048.4] [added: 1,680.4] | | |

| Property and equipment, net | [removed: 661.3] [added: 674.4] | | | | [removed: 652.0] [added: 661.3] | | |

| Other assets | [removed: 253.7] [added: 234.4] | | | | [removed: 224.0] [added: 253.7] | | |

| Total assets | $ | [removed: 7,689.3] [added: 9,330.4] | | | $ | [removed: 7,535.4] [added: 7,689.3] | |

| [removed: LIABILITIES] [added: LIABILITIES] | | | | | | | |

| Accounts payable and accrued expenses | $ | [removed: 228.5] [added: 214.5] | | | $ | [removed: 216.2] [added: 228.5] | |

| Liabilities of consolidated T. Rowe Price investment products [removed: ($22.7] [added: ($27.0] million at December 31, [removed: 2018] [added: 2019] and [removed: $39.5] [added: $22.7] million at December 31, [removed: 2017,] [added: 2018,] related to variable interest entities) | [removed: 38.7] [added: 39.2] | | | | [removed: 55.9] [added: 38.7] | | |

| Accrued compensation and related costs | [removed: 123.3] [added: 112.1] | | | | [removed: 108.5] [added: 123.3] | | |

| Supplemental savings plan liability | [removed: 380.0] [added: 563.4] | | | | [removed: 269.3] [added: 380.0] | | |

| Income taxes payable | [removed: 54.2] [added: 31.8] | | | | [removed: 68.3] [added: 54.2] | | |

| Total liabilities | [removed: 824.7] [added: 1,107.3] | | | | [removed: 718.2] [added: 824.7] | | |

| Redeemable non-controlling interests | [removed: 740.3] [added: 1,121.0] | | | | [removed: 992.8] [added: 740.3] | | |

| [removed: STOCKHOLDERS’ EQUITY] [added: STOCKHOLDERS’ EQUITY] | | | | | | | |

| Preferred stock, undesignated, $.20 par [removed: value— authorized] [added: value—authorized] and unissued 20,000,000 shares | — | | | | — | | |

| Common stock, $.20 par value—authorized 750,000,000; issued [removed: 238,069,000] [added: 235,214,000] shares at December 31, [removed: 2018] [added: 2019] and [removed: 245,111,000] [added: 238,069,000] at December 31, [removed: 2017] [added: 2018] | [removed: 47.6] [added: 47.0] | | | | [removed: 49.0] [added: 47.6] | | |

| Additional capital in excess of par value | 654.6 | | | | [removed: 846.1] [added: 654.6] | | |

| Retained earnings | [removed: 5,464.1] [added: 6,443.5] | | | | [removed: 4,932.9] [added: 5,464.1] | | |

| Accumulated other comprehensive loss | [removed: (42.0] [added: (43.0] | | ) | | [removed: (3.6] [added: (42.0] | | ) |

| Total permanent stockholders' equity | [removed: 6,124.3] [added: 7,102.1] | | | | [removed: 5,824.4] [added: 6,124.3] | | |

| Total liabilities, redeemable non-controlling interests and permanent stockholders’ equity | $ | [removed: 7,689.3] [added: 9,330.4] | | | $ | [removed: 7,535.4] [added: 7,689.3] | |

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: INCOME][added: INCOME]

[removed: (in] [added: (in] millions, except per-share [removed: amounts)][added: amounts)]

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Investment advisory fees | $ | [removed: 4,850.6] [added: 5,112.5] | | | $ | [removed: 4,295.8] [added: 4,850.6] | | | $ | [removed: 3,735.0] [added: 4,295.8] | |

| Administrative, distribution, and servicing fees | [removed: 522.0] [added: 505.4] | | | | [removed: 559.1] [added: 522.0] | | | | [removed: 549.8] [added: 559.1] | | |

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| | 12/31/2019 | | | | 12/31/2018 | | |

| Operating lease assets | 110.8 | | | | — | | |

| Operating lease liabilities | 146.3 | | | | — | | |

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(in millions)

| Net income | $ | 2,248.9 | | | $ | 1,768.7 | | | $ | 1,581.2 | |

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| Common stock-based compensation plans activity: | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| | Common shares outstanding | | | Common stock | | | | Additional capital in excess of par value | | | | Retained earnings | | | | AOCI(1) | | | | Total stockholders’ equity | | | | Redeemable non-controlling interests | | |

| Balances at December 31, 2018 | 238,069 | | | $ | 47.6 | | | $ | 654.6 | | | $ | 5,464.1 | | | $ | (42.0 | ) | | $ | 6,124.3 | | | $ | 740.3 | |

| Net income | — | | | — | | | | — | | | | 2,131.3 | | | | — | | | | 2,131.3 | | | | 117.6 | | |

| Common stock-based compensation plans activity: | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Common shares repurchased | (6,973 | ) | | (1.4 | | ) | | (289.3 | | ) | | (418.1 | | ) | | — | | | | (708.8 | | ) | | — | | |

| Balances at December 31, 2019 | 235,214 | | | $ | 47.0 | | | $ | 654.6 | | | $ | 6,443.5 | | | $ | (43.0 | ) | | $ | 7,102.1 | | | $ | 1,121.0 | |

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We also elected to use certain practical expedients that allowed us to not perform the following: (1) reassess whether expired or existing non-lease contracts that commenced before January 1, 2019 contained an embedded lease, (2) reevaluate the accounting classification of our existing operating leases, and (3) determine whether initial direct costs related to existing leases should be capitalized under this guidance.

On January 1, 2019, we recognized operating lease assets totaling $168.7 million and corresponding operating lease liabilities of $168.7 million related primarily to our real estate leases.

At implementation, we also reclassified $27.7 million in deferred rent liabilities related to these leases, reducing the recognized operating lease assets to $141.0 million.

The adoption did not have a material impact on our results of operations; however, the initial recognition of our operating lease assets and operating lease liabilities on January 1, 2019, represented a non-cash investing activity that affected the amount reported in other changes in assets and liabilities in our unaudited condensed consolidated statements of cash flows.

Additional information on our operating leases is included in Note 7 - Leases.

We will adopt this guidance on January 1, 2020, using the prospective method of adoption.

We do not expect any material impact on our financial position and results of operations in future periods.

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Leases

We review new arrangements at inception to evaluate whether we substantially obtain all the economic benefits of and have the right to control the use of an asset.

If we determine that an arrangement qualifies as a lease, we recognize a lease liability and a corresponding asset on the lease’s commencement date.

The lease liability is initially measured at the present value of the future minimum lease payments over the lease term using the rate implicit in the arrangement or, if not available, our incremental borrowing rate.

An operating lease asset is measured initially at the value of the lease liability less any lease incentives and initial direct costs incurred.

Our leases qualify as operating leases and consist primarily of real estate leases for corporate offices, data centers, and other facilities.

We measure our operating lease liabilities using an estimated incremental borrowing rate as there is no rate implicit in any of our operating lease arrangements.

Since we do not have any outstanding borrowings, we estimate our incremental borrowing rate using an estimated credit rating and available market information.

Additionally, certain of our leases contain options to extend or terminate the lease term that, if exercised, would result in the remeasurement of the operating lease liability.

| | | | | | | | | | | | |

| Changes in accounts receivable and accrued revenue | 12.7 | | | | (101.6 | | ) | | (10.5 | | ) |

| Changes in payables and accrued liabilities | 111.3 | | | | 323.4 | | | | 139.2 | | |

| Balances at December 31, 2015 | 250,469 | | | $ | 50.1 | | | $ | 654.6 | | | $ | 3,970.7 | | | $ | 86.6 | | | $ | 4,762.0 | | | $ | — | |

| Reclassification of T. Rowe Price investment products upon adoption of new accounting guidance on January 1, 2016 | — | | | — | | | | — | | | | 32.5 | | | | (32.5 | | ) | | — | | | | 672.7 | | |

| Cumulative effect adjustment upon adoption of new stock-based compensation guidance on January 1, 2016 | — | | | — | | | | 12.9 | | | | (9.0 | | ) | | — | | | | 3.9 | | | | | | |

| Balances at January 1, 2016 | 250,469 | | | 50.1 | | | | 667.5 | | | | 3,994.2 | | | | 54.1 | | | | 4,765.9 | | | | 672.7 | | |

| Net income | — | | | — | | | | — | | | | 1,215.0 | | | | — | | | | 1,215.0 | | | | 39.0 | | |

| Common shares repurchased | (9,995 | ) | | (2.0 | | ) | | (300.6 | | ) | | (374.3 | | ) | | — | | | | (676.9 | | ) | | — | | |

T.

In order to increase transparency of operating expenses and better align expenses that have similar cost drivers, we have changed, as of January 1, 2018, the presentation of certain line items of our income statement.

In doing so, we have reclassified certain prior year amounts to conform to the 2018 presentation.

These reclassifications are shown along with the impact of the new revenue recognition accounting standard adopted on January 1, 2018, in the New Accounting Guidance section below.

We adopted Accounting Standards Codification Topic 606: Revenue from Contracts with Customers ("ASC 606"), on January 1, 2018, using the retrospective method, which required adjustments to be reflected as of January 1, 2016.

In connection with the adoption of this guidance, we reevaluated all of our revenue contracts and determined that the new guidance does not change the timing of when we recognize revenue.

However, we did conclude that certain fees earned from the U.S. mutual funds associated with our mutual fund transfer agent, accounting, shareholder servicing, and participant recordkeeping activities could no longer be reported net of the expenses paid to third parties that perform such services, as we are deemed, under the guidance, to have control over the services before they are transferred to the U.S. mutual funds.

No transition-related practical expedients were applied.

Certain immaterial balance sheet reclassifications were made to conform to the 2018 presentation and all related note disclosures have been recast.

The impact of ASC 606 and other income statement reclassifications, as previously described, on consolidated statements of income for 2017 and 2016 follows:

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (in millions) | As previously reported | | | | Change in Presentation | | | | Impact of ASC 606 | | | | Recast | | | | As previously reported | | | | Change in Presentation | | | | Impact of ASC 606 | | | | Recast | | |

| Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Investment advisory fees | $ | 4,287.7 | | | $ | — | | | $ | 8.1 | | | $ | 4,295.8 | | | $ | 3,728.7 | | | $ | — | | | $ | 6.3 | | | $ | 3,735.0 | |

| Net revenues | 4,793.0 | | | | — | | | | 61.9 | | | | 4,854.9 | | | | 4,222.9 | | | | — | | | | 61.9 | | | | 4,284.8 | | |

| Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Compensation and related costs | 1,664.9 | | | | — | | | | — | | | | 1,664.9 | | | | 1,494.0 | | | | — | | | | — | | | | 1,494.0 | | |

| Distribution and servicing costs | 147.0 | | | | 107.4 | | | | 8.2 | | | | 262.6 | | | | 141.7 | | | | 85.4 | | | | 6.3 | | | | 233.4 | | |

| Advertising and promotion | 92.0 | | | | — | | | | .4 | | | | 92.4 | | | | 79.9 | | | | — | | | | .3 | | | | 80.2 | | |

| Product-related costs | — | | | | 93.2 | | | | 52.8 | | | | 146.0 | | | | — | | | | 84.8 | | | | 54.9 | | | | 139.7 | | |

| Technology, occupancy, and facility costs(2) | 338.5 | | | | 12.0 | | | | — | | | | 350.5 | | | | 306.2 | | | | 13.7 | | | | (.1 | | ) | | 319.8 | | |

| General, administrative, and other | 491.8 | | | | (212.6 | | ) | | .5 | | | | 279.7 | | | | 401.5 | | | | (183.9 | | ) | | .5 | | | | 218.1 | | |

| Nonrecurring net charge (recoveries) related to Dell appraisal rights matter | (50.0 | | ) | | — | | | | — | | | | (50.0 | | ) | | 66.2 | | | | — | | | | — | | | | 66.2 | | |

| Total operating expenses | 2,684.2 | | | | — | | | | 61.9 | | | | 2,746.1 | | | | 2,489.5 | | | | — | | | | 61.9 | | | | 2,551.4 | | |

| Net operating income | $ | 2,108.8 | | | $ | — | | | $ | — | | | $ | 2,108.8 | | | $ | 1,733.4 | | | $ | — | | | $ | — | | | $ | 1,733.4 | |

(1) The “As previously reported” column aggregates the administrative fees and distribution and servicing fees lines presented in the income statement in prior years.

(2) The “As previously reported” column aggregates the depreciation and amortization of property and equipment and occupancy and facility costs lines presented in the income statement in prior years.

We adopted Accounting Standards Update No. 2016-01 — Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities on January 1, 2018.

This update addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.

After January 1, 2018, the guidance requires substantially all equity investments in non-consolidated entities to be measured at fair value with changes recognized in earnings, except for those accounted for using the equity method of accounting.

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2018.][added: 2019.]

Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures as of December 31, [removed: 2018,] [added: 2019,] are effective at the reasonable assurance level to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, including our Form 10-K annual report, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive and principal financial officers, has evaluated any change in our internal control over financial reporting that occurred during the fourth quarter of [removed: 2018,] [added: 2019,] and has concluded that there was no change during the fourth quarter of [removed: 2018] [added: 2019] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Page [removed: 79][added: 82]

[removed: REPORT] [added: REPORT] OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

Management has evaluated the effectiveness of internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] in relation to criteria described in [removed: Internal] [added: *Internal] Control – Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on management’s assessment, we believe that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2018.][added: 2019.]

KPMG has also expressed an unqualified opinion on the effective operation of our internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

[removed: President and] [added: President,] Chief Executive [removed: Officer][added: Officer, and Chairman of the Board of Directors]

[removed: Dufétel,][added: Dufétel]

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: *Opinion] on Internal Control Over Financial [removed: Reporting][added: Reporting*]

Rowe Price Group, Inc. and subsidiaries’ (the [removed: “Company”)] [added: "Company")] internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: (PCAOB),] the consolidated balance sheets of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively, "the consolidated financial statements"), and our report dated February 13, [removed: 2019,] [added: 2020] expressed an unqualified opinion on those consolidated financial statements.

[removed: Basis] [added: *Basis] for [removed: Opinion][added: Opinion*]

[removed: Definition] [added: *Definition] and Limitations of Internal Control Over Financial [removed: Reporting][added: Reporting*]

[removed: PART III][added: PART III]

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February 13, 2020

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February 13, 2020

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February 13, 2019

Other information required by this item is incorporated by reference from the definitive proxy statement required to be filed pursuant to Regulation 14A [added: not later than 120 days after December 31, 2019] for the [removed: 2019] [added: 2020] Annual Meeting of our stockholders.

Information required by this item is incorporated by reference from the definitive proxy statement required to be filed pursuant to Regulation 14A not later than 120 days after December 31, 2019 for the 2020 Annual Meeting of our stockholders.

[removed: Matters.][added: Matters.]

Information required by this item is incorporated by reference from the definitive proxy statement required to be filed pursuant to Regulation 14A not later than 120 days after December 31, 2019 for the 2020 Annual Meeting of our stockholders.

Information required by this item is incorporated by reference from the definitive proxy statement required to be filed pursuant to Regulation 14A not later than 120 days after December 31, 2019 for the 2020 Annual Meeting of our stockholders.

Information required by [removed: these items] [added: this item] is incorporated by reference from the definitive proxy statement required to be filed pursuant to Regulation 14A [added: not later than 120 days after December 31, 2019] for the [removed: 2019] [added: 2020] Annual Meeting of our stockholders.

[removed: PART IV][added: PART IV]

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