Profile: T. Rowe Price Group Inc (TROW.OQ)

T. Rowe Price Group, Inc., February 4, 2000, is a financial services holding company, which provides global investment management services through its subsidiaries to individual and institutional investors in the sponsored T. Rowe Price mutual funds and other investment portfolios, including separately managed accounts, sub-advised funds, and other sponsored investment funds offered to investors outside the United States and through variable annuity life insurance plans in the United States. The Company derives revenue from investment advisory services provided by its subsidiaries, such as T. Rowe Price Associates, Inc. and T. Rowe Price International Ltd. Its revenues depend on the total value and composition of assets under its management. Its assets under management are accumulated from a client base across four distribution channels: third-party financial intermediaries, which distributes its managed investment portfolios in the United States and other countries; individual the United States investors on a direct basis; the United States defined contribution retirement plans, and institutional investors in the United States and other countries. It manages a range of the United States and international stock, blended asset, bond, and money market mutual funds and other investment portfolios.

The Company also offers equity and asset allocation investment strategies, including retirement-date investment portfolios, as well as active, systematic and municipal tax-free management strategies for fixed income investments. Its specialized advisory services include management of stable value investment contracts and a distribution management service for the disposition of equity securities received from third-party venture capital investment pools. It also provides administrative services as ancillary services to its investment advisory clients. These administrative services are provided by its subsidiaries and include mutual fund transfer agent, accounting, distribution, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans investing in its sponsored mutual funds; recordkeeping services for defined contribution retirement plans investing in mutual funds outside the T. Rowe Price complex; brokerage, and trust services.

Price Funds

The Company provides investment advisory, distribution and other administrative services to the Price funds under various agreements. Investment advisory services are provided to each fund under individual investment management agreements, which grant the fund the right to use the T. Rowe Price name. Independent directors and trustees of the Price funds regularly review its fee structures. Investment advisory revenues earned from the Price funds are determined daily based on the net assets managed in each fund. The advisory fee paid monthly by each of the Price funds is computed on a daily basis by multiplying a fund’s net assets by a specific fee rate. For the majority of the Price funds, the fee rate is equal to the sum of a tiered group rate, which is set based on the aggregate net assets of all of the Price funds and an individual fund rate, which is set based on the fund’s specific investment objective.

Each Price fund typically bears all expenses associated with its operation and the issuance and redemption of its securities. In particular, each fund pays investment advisory fees; shareholder servicing fees and expenses; fund accounting fees and expenses; transfer agent fees; custodian fees and expenses; legal and auditing fees; expenses of preparing, printing and mailing prospectuses and shareholder reports to existing shareholders; registration fees and expenses; proxy and annual meeting expenses, and independent trustee or director fees and expenses.

The Company provides advisory-related administrative services to the Price funds through its subsidiaries. T. Rowe Price Services, Inc. provides mutual fund transfer agency and shareholder services, including maintenance of staff, facilities, and technology and other equipment to respond to inquiries from fund shareholders. T. Rowe Price Associates, Inc. provides mutual fund accounting services, including maintenance of financial records, preparation of financial statements and reports, daily valuation of portfolio securities and computation of daily net asset values per share. T. Rowe Price Retirement Plan Services, Inc. provides participant accounting, plan administration and transfer agent services for defined contribution retirement plans, which invests in the price funds. Plan sponsors and participants compensate it for some services while the price funds compensate it for maintaining and administering the individual participant accounts for those plans that invest in the funds. Its trustee services are provided by another subsidiary, T. Rowe Price Trust Company. Through this Maryland-chartered limited-service trust company, it offers collective investment trust funds for investment by qualified retirement plans and serves as trustee for retirement plans and individual retirement accounts (IRAs). Another subsidiary, T. Rowe Price Savings Bank, issues federally insured certificates of deposit. It also provides non-discretionary advisory planning services to fund shareholders and investors through its subsidiary T. Rowe Price Advisory Services. These services are limited in scope and include retirement planning services, such as saving for retirement, transitioning into retirement, and income in retirement. An investment portfolio evaluation service is an integral part of these services. A check-up service is also available to assist an investor in remaining on track to achieve their financial goals.

Other Investment Portfolios

The Company provides investment advisory services to these clients through its subsidiaries on a separately managed or sub-advised account basis and through sponsored investment portfolios, such as collective investment trusts, Luxembourg-based mutual funds, and variable annuity insurance plans. As of December 31, 2011, these portfolios included investment assets, such as the United States stocks, International stocks, Stable value assets, and Bonds and money market securities. It charges fees for investment management to these clients based on, among other things, the specific investment services to be provided. Its fees for managing these investment portfolios are computed using the value of assets under its management at a contracted annual fee rate.