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December 31, 2017
PRAFX
PRIKX
ANNUALREPORT
Real Assets Fund
Real Assets Fund– I Class
T. Rowe PRICe
The fund invests in companies that primarily own or develop assets that have physical properties, including commodities, real estate, and energy.
REPORTS ON THE WEB
Sign up for our Email Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information.
HIGHLIGHTS
• Realassetsstocksrecordedmoderateoverallgainsin2017.
• TheRealAssetsFundreturned9.46%and10.47%forthesixand12monthsendedDecember31,2017,respectively,andtraileditsbenchmarksoverbothperiods.
• Weaimtodiversifytheportfolioacrossarangeofunderlyingassetclassesthattendtoperformdifferentlyunderagiveninflationscenario,withthegoaltosmoothreturnsovertimeunderafullrangeofinflationregimes.
• Againstthebackdropofanuncertaininvestmentenvironment,webelievethatabroadlydiversifiedportfolioandacarefulfocusonfundamentalresearchcanenhanceourabilitytomaximizeinvestmentopportunitiesonbehalfofourshareholders.
T. Rowe Price Real Assets Fund
TheviewsandopinionsinthisreportwerecurrentasofDecember31,2017.They are not guarantees of performance or investment results andshouldnotbe takenas investmentadvice. Investmentdecisionsreflectavarietyof factors,and themanagers reserve the right tochange theirviews about individual stocks, sectors, and the markets at any time.As a result, the views expressed should not be relied upon as a fore-castof the fund’s future investment intent.Thereport iscertifiedunderthe Sarbanes-Oxley Act, which requiresmutual funds and other publiccompanies to affirm that, to the best of their knowledge, the informa-tionintheirfinancialreportsisfairlyandaccuratelystatedinallmaterialrespects.
T. Rowe Price Real Assets Fund
Manager’s Letter
1
Fellow Shareholders
Real assets stocks posted moderate overall gains in the 12 months ended
December 31, 2017. Industrial metals stocks outperformed the broader global
equities market as synchronized global economic growth supported stable global
demand and solidified prices. U.S. and global real estate investment trusts (REITs)
advanced modestly, with growth-oriented sectors generally outperforming.
As shown in the Performance Comparison table, the Real Assets Fund returned 9.46% and 10.47% for the six and 12 months ended December 31, 2017, respectively. (Returns for the fund’s I Class may vary due to its different fee structure and other factors.) The fund trailed the broader global equities market, represented by the MSCI All Country World Index, and its combined index portfolio over both periods. All underlying investment portfolios recorded positive
absolute returns in 2017, led by a 19% annual gain in our industrial metals stocks. Our U.S. and global REITs posted the smallest gains at 5% and 8%, respectively.
Please note: Effective January 1, 2018, we changed the underlying components of the fund’s combined index portfolio benchmark. The
MSCI World Select Natural Resources Index replaced both the MSCI All Country World Index Energy and the MSCI All Country World Index Materials. We believe the new index is aligned better with the fund’s underlying natural resources portfolios. The fund’s investment approach remains unchanged.
As we have discussed previously, the Real Assets Fund seeks to provide a buffer against the impact of inflation over time. Although it has stayed at very low levels for several years, global inflation may start to
TotalReturnPeriodsEnded12/31/17 6Months 12Months
RealAssetsFund 9.46% 10.47%
RealAssetsFund–IClass 9.55 10.68
MSCIAllCountryWorldIndex 11.46 24.62
CombinedIndexPortfolio 13.93 16.94
Foradefinitionofthebenchmarks,pleaseseetheglossaryattheendofthisreport.
Performance Comparison
2
edge modestly higher in 2018 amid stronger global economic growth, tighter labor markets, and stable commodity prices. However, any increase would be starting from a very low base, with annual inflation rates in most developed markets in the 2% range. In addition, the Federal Reserve is likely to take whatever steps are necessary to contain inflationary pressures in the U.S. should it become uncomfortable with the size and pace of the increase. Although inflation should remain relatively benign, we believe the current environment speaks to the need for a strategy such as ours, which could provide some protection in environments that could pose headwinds for more traditional stock and bond portfolios.
ECONOMIC AND MARKET ENVIRONMENT
U.S. stocks posted strong gains in 2017, benefiting from synchronized global economic growth and favorable corporate earnings. The Federal Reserve (Fed) raised short-term interest rates three times in 2017,
but the moves were widely expected and did not disrupt equity markets. In December, Congress passed legislation that lowered tax rates for corporations and individuals, and most major stock indexes finished the year near record levels amid expectations that lower taxes would boost U.S. economic growth in 2018.
Outside the U.S., developed equity markets outperformed U.S. shares, buoyed by broad-based global economic growth and healthy global trade. Japanese stocks benefited from an ongoing economic recovery, fueled by strong exports and continued government reform efforts. European equities generated excellent returns, lifted by a deepening economic recovery, broadly accommodative monetary policy, and political stabilization. Emerging markets equities
outperformed developed markets stocks, helped by moderate but stable global economic growth, good global trade, and a better pricing environment for energy and other key commodities.
Real assets equities posted decent overall gains in 2017 but trailed the broader global equities market by a wide margin. Industrial metals rose the most as prices found support in stable global demand. Other natural resources stocks advanced more moderately on strength in energy and materials prices. U.S. and global REITs were positive but generally trailed other segments. The U.S. dollar weakened against most major currencies, which helped returns for dollar-based investors.
U.S.STOCkSPOSTED
STROnggAInSIn
2017,bEnEFITIng
FROMSynChROnIzED
glObAlECOnOMIC
gROWThAnDFAvOR-
AblECORPORATE
EARnIngS.
3
PORTFOLIO REVIEW
Our metals and mining stocks posted strong gains in 2017 as synchronized global economic growth supported stable demand and a modestly weaker U.S. dollar drove metals prices higher. We continue to believe they will be among the most challenged by a long-term supply and demand imbalance in the global natural resources complex. Over the short term, however, they accounted for many of the fund’s top contributors. This included a number of Australian companies, including Rio Tinto and BHP Billiton Limited. Names
exposed to the copper and steel markets were also among our biggest contributors and included Antofagasta (Chile) and Boliden (Sweden). (Please refer to the portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)
Our U.S. REITs generated relatively modest annual gains. Hilton Worldwide Holdings, a manager and owner of hotels around the world, posted very robust returns, benefiting from strong earnings, good cash flow growth, and higher demand expectations following U.S. tax reform. U.S. industrial market vacancy is at the lowest level in
over a decade, and average rents for logistics warehouses continue to increase. Industrial landlords Prologis and DCT Industrial Trust were positive contributors in this space. On the other hand, our mall and shopping center stocks were challenged by weak retail fundamentals and store closures and underperformed the broader real estate market.
PercentofnetAssets 6/30/17 12/31/17
DiversifiedMetalsandMining 10.7% 11.8%
RetailREITs* 12.1 11.6
OfficeREITs* 8.6 9.0
gold 9.1 8.6
ResidentialREITs* 9.4 8.1
Steel 2.3 5.1
OilandgasExplorationandProduction 4.9 5.2
IndustrialREITs* 4.0 4.4
IntegratedOilandgas 4.1 4.1
SpecialtyChemicals 2.4 2.9
OtherandReserves 32.4 29.2
Total 100.0% 100.0%
*Realestateinvestmenttrusts
historicalweightingsreflectcurrentindustry/sectorclassifications.
Industry Diversification
4
Our global REITs performed somewhat better than our U.S. REITs but still trailed the broader global equities market. The fund’s UK holdings were generally positive. Following progress on Brexit negotiations, positions in UNITE, Great Portland Estates, and Derwent London outperformed in the latter part of the year. The fund also benefited from outperformance from holdings in Brazil, including mall owners Iguatemi Empresa de Shopping Centers and Multiplan Empreendimentos Imobiliarios.
Our oil and gas equipment and services names fell sharply for the year in absolute terms. Service companies with exposure to the offshore exploration and production industry weighed heavily on performance as the growing importance of North American shale continues to challenge their growth prospects. The industry accounted for several of our biggest detractors, including Baker Hughes (U.S.), now in the process of merging with global industrial conglomerate GE.
OUTLOOK
We remain somewhat cautious on the outlook for real assets equities. We continue to believe that global commodities are in the initial years of a secular downcycle, driven by a long-term global supply and demand imbalance. That said, we expect periods of cyclical disruption to drive short-term price volatility. In fact, we are now in a period in which synchronized global economic growth and a moderately weaker U.S. dollar have driven up prices for oil and some other commodities. At the same time, however, we believe the market is beginning to recognize the long-term disruptive impact of U.S. shale production volumes.
As a result, our long-term view remains intact: an environment of low prices disrupted by relatively brief periods of outperformance within the larger narrative of a secular downcycle. Industrial metals prices remain structurally challenged by oversupply and demand as China continues on a slower growth path. After lagging broader markets, REITs appear fairly valued relative to earnings expectations and trade at a modest discount to private market net asset values. Real estate fundamentals remain broadly positive, supported by improving economic environments and limited supply.
5
Against the backdrop of changing economic and market environments, we believe that a broadly diversified portfolio of investments and a careful focus on fundamental research can enhance our ability to maximize investment opportunities on behalf of our shareholders.
Respectfully submitted,
Wyatt A. LeePortfolio manager and chairman of the fund’s Investment Advisory Committee
January 24, 2018
The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund’s investment program.
T. Rowe Price Real Assets Fund
6
Risks of Stock Investing
Thefund’ssharepricecanfallbecauseofweaknessinthestockmarkets,aparticularindustry,orspecificholdings.Stockmarketscandeclineformanyreasons,includingadversepoliticaloreconomicdevelopments,changesininvestorpsychology,orheavyinstitutionalselling.Theprospectsforanindustryorcompanymaydeterioratebecauseofavarietyoffactors,includingdisappointingearningsorchangesinthecompetitiveenvironment.Inaddition,theinvestmentmanager’sassessmentofcompaniesheldinafundmayproveincorrect,resultinginlossesorpoorperformanceeveninrisingmarkets.Fundsthatinvestonlyinspecificindustrieswillexperiencegreatervolatilitythanfundsinvestinginabroadrangeofindustries.Therateofearningsgrowthofnaturalresourcescompaniesmaybeirregularsincethesecompaniesarestronglyaffectedbynaturalforces,globaleconomiccycles,andinternationalpolitics.Forexample,stockpricesofenergycompaniescanfallsharplywhenoilpricesdecrease.
Glossary
Combined index portfolio:Anunmanagedstockportfolioconsistingof30%globalnaturalresources(65%MSCIAllCountryWorldIndexEnergyand35%MSCIAllCountryWorldIndexMaterials),20%U.S.realestate(WilshireU.S.RealEstateSecuritiesIndex),20%globalrealestate(FTSEEPRA/nAREITDevelopedIndex),25%globalmetalsandmining(MSCIAllCountryWorldIndexMetals&Mining),and5%preciousmetals(80%MSCIAllCountryWorldIndexIMIgold,20%MSCIAllCountryWorldIndexIMIPreciousMetals&Minerals).
•FTSE EPRA/NAREIT Developed Index:Anindexthattrackstheperformanceofdevelopedmarketrealestatesecurities.
•MSCI All Country World Index Energy:Anindexthattrackstheperformanceofcompaniesengagedintheexplorationandproductionofenergycommodities.
•MSCI All Country World Index IMI Gold:Anindexthattrackstheperformanceofcompaniesengagedintheexplorationandproductionofgold.
•MSCI All Country World Index IMI Precious Metals & Minerals:Anindexthattrackstheperformanceofcompaniesengagedintheexplorationandproductionofpreciousmetalsandminerals.
•MSCI All Country World Index Materials:Anindexthattrackstheperformanceofcompaniesengagedintheexplorationandproductionofbasicmaterials.
•MSCI All Country World Index Metals & Mining:Anindexthattrackstheperformanceofmetalsandminingcompanies.
T. Rowe Price Real Assets Fund
7
Glossary (continued)
•Wilshire U.S. Real Estate Securities Index:AnindexthattrackstheperformanceofpubliclytradedU.S.realestatesecurities.
MSCI All Country World Index:Acapitalization-weightedindexofstocksfromdevelopedandemergingmarketsworldwide.
MSCI World Select Natural Resources Index: anunmanagedindexthatmeasurestheperformanceofU.S.andinternationalstocksengagedintheextractionandproductionofnaturalresources.
Real estate investment trusts (REITs):Publiclytradedcompaniesthatown,develop,andoperateapartmentcomplexes,hotels,officebuildings,andothercommercialproperties.
note:MSCImakesnoexpressorimpliedwarrantiesorrepresentationsandshallhavenoliabilitywhatsoeverwithrespecttoanyMSCIdatacontainedherein.TheMSCIdatamaynotbefurtherredistributedorusedasabasisforotherindicesoranysecuritiesorfinancialproducts.Thisreportisnotapproved,reviewed,orproducedbyMSCI.
T. Rowe Price Real Assets Fund
8
TWENTY-FIVE LARGEST HOLDINGS
Percentof netAssets 12/31/17
RioTinto 3.7%bhPbillitonlimited 3.5RandgoldResources 2.3Prologis 2.3AvalonbayCommunities 2.2
EquityResidential 2.1ggP 1.7SimonPropertygroup 1.5RegencyCenters 1.5SlgreenRealty 1.5
Franco-nevada 1.4EssexPropertyTrust 1.4DouglasEmmett 1.3PublicStorage 1.2Total 1.2
vornadoRealtyTrust 1.2MacerichCompany 1.2nucor 1.1bostonProperties 1.1glencore 1.0
DCTIndustrialTrust 0.9CamdenPropertyTrust 0.9FederalRealtyInvestmentTrust 0.8UrbanEdgeProperties 0.8ExxonMobil 0.8
Total 38.6%
note:Theinformationshowndoesnotreflectanyexchange-tradedfunds(ETFs),cashreserves,orcollateralforsecuritieslendingthatmaybeheldintheportfolio.
Portfolio Highlights
T. Rowe Price Real Assets Fund
9
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE
SixMonthsEnded12/31/17
Best Contributors Worst Contributors
RioTinto 11¢bhPbillitonlimited 11RandgoldResources 3Prologis 3AlexanderandbaldwinInvestments 2boliden 2RegencyCenters 2OccidentalPetroleum 2MacerichCompany 2Total 2
Total 40¢
bakerhughesAge* -3¢AvalonbayCommunities -1AmericanCampusCommunities -1Alexanderandbaldwin -1Fresnillo -1PetraDiamonds -1EssexPropertyTrust -1AdvantageOilandgas -1OsiskogoldRoyalties 0AlSQueensland 0
Total -10¢
*Positionadded.
Portfolio Highlights
T. Rowe Price Real Assets Fund
Performance and Expenses
10
MSCI All Country World Index $21,416
Real Assets Fund $13,431
As of 12/31/17
7/28/10 12/1512/1412/1312/1212/11 12/1712/16
R E A L A S S E T S F U N D
Combined Index $14,530
10,000
12,500
15,000
17,500
20,000
$22,500
12/10
Note: Performance for the I Class will vary due to its differing fee structure. See the returnstable below.
Growth of $10,000
Thischartshowsthevalueofahypothetical$10,000investmentinthefundoverthepast10fiscalyearperiodsorsinceinception(forfundslacking10-yearrecords).Theresultiscomparedwithbenchmarks,whichmayincludeabroad-basedmarketindexandapeergroupaverageorindex.Marketindexesdonotincludeexpenses,whicharedeductedfromfundreturnsaswellasmutualfundaveragesandindexes.
Since InceptionPeriodsEnded12/31/17 Oneyear Fiveyears Inception Date
RealAssetsFund 10.47% 2.71% 4.05% 7/28/10
RealAssetsFund–IClass 10.68 – 11.76 8/28/15
Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end perfor-mance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132, or for I Class shares, 1-800-638-8790. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less. If it did, the performance would be lower.
Averageannualtotalreturnfiguresincludechangesinprincipalvalue,reinvesteddividends,andcapitalgaindistributions.Returnsdonotreflecttaxesthattheshareholdermaypayonfunddistributionsortheredemptionoffundshares.Whenassessingperformance,investorsshouldconsiderbothshort-andlong-termreturns.
Average Annual Compound Total Return
T. Rowe Price Real Assets Fund
11
RealAssetsFund 0.84%
RealAssetsFund–IClass 0.66
Theexpenseratioshownisasofthefund’sfiscalyear-enddateof12/31/16.Thisnumbermayvaryfromtheexpenseratioshownelsewhereinthisreportbecauseitisbasedonadifferenttimeperiodand,ifapplicable,includesacquiredfundfeesandexpensesbutdoesnotincludefeeorexpensewaivers.
Expense Ratio
Fund Expense Example
Asamutualfundshareholder,youmayincurtwotypesofcosts:(1)transactioncosts,suchasredemptionfeesorsalesloads,and(2)ongoingcosts,includingmanagementfees,distributionandservice(12b-1)fees,andotherfundexpenses.Thefollowingexampleisintendedtohelpyouunderstandyourongoingcosts(indollars)ofinvestinginthefundandtocomparethesecostswiththeongoingcostsofinvestinginothermutualfunds.Theexampleisbasedonaninvestmentof$1,000investedatthebeginningofthemostrecentsix-monthperiodandheldfortheentireperiod.
Pleasenotethatthefundhastwoshareclasses:Theoriginalshareclass(InvestorClass)chargesnodistributionandservice(12b-1)fee,andtheIClasssharesarealsoavailabletoinstitutionallyorientedclientsandimposeno12b-1oradministrativefeepayment.Eachshareclassispresentedseparatelyinthetable.
Actual ExpensesThefirstlineofthefollowingtable(Actual)providesinformationaboutactualaccountvaluesandexpensesbasedonthefund’sactualreturns.youmayusetheinformationonthisline,togetherwithyouraccountbalance,toestimatetheexpensesthatyoupaidovertheperiod.Simplydivideyouraccountvalueby$1,000(forexample,an$8,600accountvaluedividedby$1,000=8.6),thenmultiplytheresultbythenumberonthefirstlineundertheheading“ExpensesPaidDuringPeriod”toestimatetheexpensesyoupaidonyouraccountduringthisperiod.
Hypothetical Example for Comparison PurposesTheinformationonthesecondlineofthetable(hypothetical)isbasedonhypotheticalaccountvaluesandexpensesderivedfromthefund’sactualexpenseratioandanassumed5%peryearrateofreturnbeforeexpenses(notthefund’sactualreturn).youmaycomparetheongoingcostsofinvestinginthefundwithotherfundsbycontrastingthis5%hypotheticalexampleandthe5%hypotheticalexamplesthatappearintheshareholderreportsoftheotherfunds.Thehypotheticalaccountvaluesandexpensesmaynotbeusedtoestimatetheactualendingaccountbalanceorexpensesyoupaidfortheperiod.
T. Rowe Price Real Assets Fund
12
Fund Expense Example (continued)
Note:T.RowePricechargesanannualaccountservicefeeof$20,generallyforaccountswithlessthan$10,000.ThefeeiswaivedforanyinvestorwhoseT.RowePricemutualfundaccountstotal$50,000ormore;accountselectingtoreceiveelectronicdeliveryofaccountstatements,transactionconfirmations,prospectuses,andshareholderreports;oraccountsofaninvestorwhoisaT.RowePricePersonalServicesorEnhancedPersonalServicesclient(enrollmentintheseprogramsgenerallyrequiresT.RowePriceassetsofatleast$250,000).Thisfeeisnotincludedintheaccompanyingtable.Ifyouaresubjecttothefee,keepitinmindwhenyouareestimatingtheongoingexpensesofinvestinginthefundandwhencomparingtheexpensesofthisfundwithotherfunds.
youshouldalsobeawarethattheexpensesshowninthetablehighlightonlyyourongoingcostsanddonotreflectanytransactioncosts,suchasredemptionfeesorsalesloads.Therefore,thesecondlineofthetableisusefulincomparingongoingcostsonlyandwillnothelpyoudeterminetherelativetotalcostsofowningdifferentfunds.Totheextentafundchargestransactioncosts,however,thetotalcostofowningthatfundishigher.
beginning Ending ExpensesPaid Accountvalue Accountvalue DuringPeriod* 7/1/17 12/31/17 7/1/17to12/31/17
Investor ClassActual $1,000.00 $1,094.60 $4.33
hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,021.07 4.18
I ClassActual 1,000.00 1,095.50 3.49
hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,021.88 3.36
*Expensesareequaltothefund’sannualizedexpenseratioforthe6-monthperiod,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysinthemostrecentfiscalhalfyear(184),anddividedbythedaysintheyear(365)toreflectthehalf-yearperiod.TheannualizedexpenseratiooftheInvestorClasswas0.82%,andtheIClasswas0.66%.
Real Assets Fund
T. Rowe Price Real Assets Fund
13
Financial Highlights For a share outstanding throughout each period
The accompanying notes are an integral part of these financial statements.
Investor Class
Year Ended
12/31/17
12/31/16
12/31/15
12/31/14
12/31/13
NET ASSET VALUE
Beginning of period
$ 10.74
$ 9.05
$ 10.81
$ 10.82
$ 11.12
Investment activities
Net investment income(1)
0.21
0.13
0.19
0.15
0.16
Net realized and unrealized gain / loss
0.91
1.77
(1.78)
0.01
(2) (0.31)
Total from investment activities
1.12
1.90
(1.59)
0.16
(0.15)
Distributions
Net investment income
(0.17)
(0.21)
(0.17)
(0.17)
(0.15)
NET ASSET VALUE
End of period $ 11.69 $ 10.74 $ 9.05 $ 10.81 $ 10.82
Ratios/Supplemental Data Total return(3) 10.47% 21.02% (14.69)% 1.55% (1.30)%
Ratio of total expenses to average net assets
0.82%
0.84%
0.83%
0.83%
0.85%
Ratio of net investment income to average net assets
1.84%
1.25%
1.87%
1.34%
1.45%
Portfolio turnover rate
65.4%
49.0%
43.0%
42.0%
51.6%
Net assets, end of period
(in millions)
$ 2,906
$ 3,017
$ 4,476
$ 4,325
$ 3,745
(1) Per share amounts calculated using average shares outstanding method. (2) The amount presented is inconsistent with the fund's aggregate gains and losses because of
the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio.
(3) Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions and payment of no redemption or account fees.
T. Rowe Price Real Assets Fund
14
Financial Highlights For a share outstanding throughout each period
The accompanying notes are an integral part of these financial statements.
I Class
Year Ended
12/31/17
12/31/16
8/28/15(1)
Through
12/31/15
NET ASSET VALUE
Beginning of period
$ 10.73
$ 9.05
$ 9.53
Investment activities
Net investment income (loss)(2)
0.22
0.10
0.02(3)
Net realized and unrealized gain / loss
0.92
1.81
(0.33)
Total from investment activities
1.14
1.91
(0.31)
Distributions
Net investment income
(0.19)
(0.23)
(0.17)
NET ASSET VALUE
End of period $ 11.68 $ 10.73 $ 9.05
Ratios/Supplemental Data Total return(4) 10.68% 21.14% (3.23)%(3)
Ratio of total expenses to average net assets
0.66%
0.66% 0.69%
(3)(5)
Ratio of net investment income (loss) to average net assets 1.97%
0.86%
1.37% (3)(5)
Portfolio turnover rate
65.4%
49.0%
43.0%
Net assets, end of period (in thousands)
$ 491,758
$ 324,533
$ 9,328
(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) See Note 5. Excludes expenses in excess of a 0.05% contractual operating expense
limitation in effect through 4/30/18. (4) Total return reflects the rate that an investor would have earned on an investment in the fund
during each period, assuming reinvestment of all distributions and payment of no redemption or account fees. Total return is not annualized for periods less than one year.
(5) Annualized
T. Rowe Price Real Assets Fund December 31, 2017
Portfolio of Investments ‡ Shares/Par $ Value
(Cost and value in $000s)
15
COMMON STOCKS 97.2%
CONSUMER DISCRETIONARY 0.6%
Hotels, Resorts, & Cruise Lines 0.6%
Hilton Worldwide Holdings 243,327 19,432
Total Consumer Discretionary 19,432
CONSUMER STAPLES 0.1%
Packaged Foods & Meats 0.1%
Cal-Maine Foods (1) 119,789 5,325
Total Consumer Staples 5,325
ENERGY 12.8%
Integrated Oil & Gas 4.1%
BP (GBP) 2,832,209 19,869
Chevron 71,300 8,926
ExxonMobil 325,400 27,216
Galp Energia (EUR) 525,393 9,653
Occidental Petroleum 352,272 25,948
Suncor Energy 213,800 7,851
Total (EUR) 722,132 39,862
Total, Rights 1/3/18 (EUR) (1) 715,423 —
139,325
Oil & Gas Equipment & Services 1.3%
Baker Hughes 289,000 9,144
Dril-Quip (1) 57,900 2,762
Frank's International 227,000 1,510
Halliburton 101,600 4,965
Helix Energy Solutions Group (1) 404,419 3,049
Oceaneering International 153,800 3,251
Schlumberger 67,901 4,576
Sentinel Energy Services, Equity Units (1) 226,400 2,257
Subsea 7 (NOK) 159,943 2,396
Tenaris (EUR) 432,469 6,864
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
16
US Silica Holdings 94,000 3,061
43,835
Oil & Gas Exploration & Production 5.2%
Advantage Oil & Gas (CAD) (1) 630,949 2,711
ARC Resources (CAD) 529,500 6,213
Cairn Energy (GBP) (1) 1,313,111 3,784
Canadian Natural Resources 152,200 5,437
Centennial Resource Development, Class A (1) 432,062 8,555
Cimarex Energy 42,348 5,167
Concho Resources (1) 162,400 24,396
Continental Resources (1) 146,700 7,771
Crew Energy (CAD) (1) 550,792 1,380
Devon Energy 115,846 4,796
Diamondback Energy (1) 121,900 15,390
Encana 549,400 7,323
EOG Resources 248,600 26,826
Jagged Peak Energy (1) 291,800 4,605
Kelt Exploration (CAD) (1) 645,300 3,691
Kosmos Energy (1) 956,426 6,551
Lundin Petroleum (SEK) (1) 191,310 4,379
Matador Resources (1) 139,800 4,352
Noble Energy 168,800 4,919
Pioneer Natural Resources 45,400 7,847
RSP Permian (1) 210,700 8,571
Seven Generations Energy, Class A (CAD) (1) 542,864 7,679
Woodside Petroleum (AUD) 218,361 5,618
177,961
Oil & Gas Refining & Marketing 1.1%
Andeavor 162,067 18,531
Delek US Holdings 96,900 3,386
HollyFrontier 142,200 7,283
Marathon Petroleum 112,803 7,443
36,643
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
17
Oil & Gas Storage & Transportation 1.1%
Koninklijke Vopak (EUR) 217,610 9,532
Plains GP Holdings, Class A (1) 210,900 4,629
TransCanada 419,900 20,424
Venture Global LNG, Series C, Acquisition Date: 5/25 – 10/16/17, Cost $2,610 (1)(2)(3) 728 2,746
37,331
Total Energy 435,095
FINANCIALS 0.1%
Asset Management & Custody Banks 0.1%
TPG Pace Energy Holdings, Equity Units (1) 225,000 2,293
Total Financials 2,293
INDUSTRIALS & BUSINESS SERVICES 1.8%
Agricultural & Farm Machinery 0.1%
AGCO 71,900 5,136
5,136
Construction & Engineering 0.2%
Jacobs Engineering Group 53,700 3,542
Valmont Industries 19,900 3,300
6,842
Electrical Components & Equipment 0.4%
ABB (CHF) 180,601 4,837
Legrand (EUR) 77,046 5,923
SGL Carbon (EUR) (1) 98,397 1,340
12,100
Heavy Electrical Equipment 0.1%
Siemens Gamesa Renewable Energy (EUR) 133,798 1,832
Vestas Wind Systems (DKK) 25,845 1,786
3,618
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
18
Industrial Conglomerates 0.1%
Carlisle Companies 39,700 4,512
4,512
Industrial Machinery 0.7%
Andritz (EUR) 69,434 3,918
Krones (EUR) 34,132 4,672
Mueller Water Products, Class A 226,900 2,843
Pentair 104,600 7,387
Sandvik (SEK) 251,613 4,404
23,224
Research & Consulting Services 0.2%
ALS Queensland (AUD) 992,469 5,392
5,392
Total Industrials & Business Services 60,824
MATERIALS 37.4%
Aluminum 1.2%
Granges (SEK) 785,300 8,054
Kaiser Aluminum 29,200 3,120
National Aluminium (INR) 6,120,026 8,218
Nippon Light Metal Holdings (JPY) 2,533,500 7,197
Norsk Hydro (NOK) 2,090,738 15,849
42,438
Commodity Chemicals 0.3%
Orion Engineered Carbons 95,134 2,436
Valvoline 272,554 6,830
9,266
Construction Materials 0.7%
Martin Marietta Materials 21,600 4,775
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
19
Vulcan Materials 136,000 17,458
22,233
Copper 2.6%
Antofagasta (GBP) 1,956,868 26,410
Aurubis (EUR) 66,332 6,157
First Quantum Minerals (CAD) 1,325,800 18,574
Lundin Mining (CAD) 2,475,705 16,465
OZ Minerals (AUD) 790,348 5,614
Sandfire Resources (AUD) 1,062,793 5,698
Southern Copper 174,400 8,275
87,193
Diversified Chemicals 0.8%
BASF (EUR) 80,521 8,827
DowDuPont 192,292 13,695
Incitec Pivot (AUD) 1,542,825 4,675
27,197
Diversified Metals & Mining 11.8%
Anglo American (GBP) 444,486 9,245
BHP Billiton Limited (AUD) 5,170,205 118,764
Boliden (SEK) 770,926 26,364
Glencore (GBP) 6,617,081 34,634
Grupo Mexico, Series B (MXN) 6,416,610 21,189
Hindustan Zinc (INR) 1,257,790 6,067
Independence (AUD) 3,882,067 14,325
Rio Tinto (GBP) 2,374,856 124,579
South32 (AUD) 6,657,413 18,045
Sumitomo Metal Mining (JPY) 226,400 10,358
Teck Resources, Class B 479,000 12,536
Western Areas (AUD) 2,386,459 5,997
402,103
Fertilizers & Agricultural Chemicals 0.7%
Agrium 62,900 7,234
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
20
CF Industries 241,239 10,262
Yara International (NOK) 145,471 6,679
24,175
Gold 8.6%
Acacia Mining (GBP) 354,950 943
Alamos Gold, Class A (CAD) (1) 580,098 3,780
B2Gold (CAD) (1) 3,689,731 11,389
Centamin (GBP) 6,824,429 14,536
Centerra Gold (CAD) (1) 471,100 2,414
Detour Gold (CAD) (1) 279,589 3,287
Evolution Mining (AUD) 11,159,535 23,109
Franco Nevada (CAD) 610,886 48,822
Guyana Goldfields (CAD) (1) 249,359 1,008
Highland Gold Mining (GBP) 480,930 1,108
Kirkland Lake Gold (CAD) 1,037,438 15,904
Klondex Mines (CAD) (1) 2,595,508 6,731
New Gold (1) 1,067,943 3,514
Northern Star Resources (AUD) 5,063,868 24,109
OceanaGold (CAD) 721,522 1,854
Osisko Gold Royalties (CAD) 1,481,073 17,108
Randgold Resources (GBP) 796,780 79,116
Regis Resources (AUD) 2,975,633 9,981
Roxgold (CAD) (1) 946,300 1,054
Royal Gold 46,024 3,779
Saracen Mineral Holdings (AUD) (1) 6,824,428 9,002
Semafo (CAD) (1) 1,311,780 3,726
Tahoe Resources 476,166 2,281
TMAC Resources (CAD) (1) 328,505 2,525
291,080
Industrial Gases 1.1%
Air Products & Chemicals 151,765 24,902
Praxair 88,500 13,689
38,591
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
21
Metal & Glass Containers 0.5%
Ball 286,800 10,856
Vidrala (EUR) 44,302 4,490
15,346
Paper Packaging 0.1%
Orora (AUD) 1,786,316 4,706
4,706
Precious Metals & Minerals 0.7%
Asahi Holdings (JPY) 59,900 1,123
Dundee Precious Metals (CAD) (1) 854,876 2,040
Fresnillo (GBP) 170,320 3,272
Lucara Diamond (CAD) 3,072,376 6,868
Petra Diamonds (GBP) (1) 9,083,265 9,580
22,883
Silver 0.3%
First Majestic Silver (CAD) (1) 316,940 2,138
Fortuna Silver Mines (CAD) (1) 1,275,301 6,656
Silvercorp Metals (CAD) 655,716 1,711
10,505
Specialty Chemicals 2.9%
Akzo Nobel (EUR) 91,487 8,028
Albemarle 16,900 2,161
Axalta Coating Systems (1) 190,437 6,163
Corbion (EUR) 138,766 4,495
Croda International (GBP) 136,923 8,162
GCP Applied Technologies (1) 92,300 2,944
Johnson Matthey (GBP) 56,830 2,355
Koninklijke DSM (EUR) 74,726 7,138
PPG Industries 78,100 9,124
RPM 230,900 12,104
Sherwin-Williams 35,300 14,474
Symrise (EUR) 71,985 6,172
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
22
Umicore (EUR) 221,576 10,491
Victrex (GBP) 137,968 4,913
98,724
Steel 5.1%
Acerinox (EUR) 1,045,589 14,921
Aperam (EUR) 227,487 11,687
Ferrexpo (GBP) 1,049,864 4,145
Labrador Iron Ore Royalty (CAD) (1) 212,000 4,587
NMDC (INR) 4,202,807 9,070
Nucor 588,595 37,423
Outokumpu (EUR) 677,639 6,289
POSCO (KRW) 71,645 22,285
Sanyo Special Steel (JPY) 78,000 1,994
Sims Metal Management (AUD) 617,359 7,551
Steel Dynamics 482,000 20,789
Ternium, ADR 188,500 5,955
Vale (BRL) 940,600 11,395
Voestalpine (EUR) 164,597 9,827
Worthington Industries 134,900 5,944
173,862
Total Materials 1,270,302
REAL ESTATE 41.8%
Diversified Real Estate Activities 1.8%
Hang Lung Properties (HKD) 2,595,000 6,321
Mitsubishi Estate (JPY) 903,500 15,687
Mitsui Fudosan (JPY) 772,600 17,280
Sun Hung Kai Properties (HKD) 1,235,000 20,562
59,850
Diversified Real Estate Investment Trusts 1.2%
Alexander & Baldwin, REIT 182,400 5,060
Canadian Real Estate Investment Trust (CAD) 182,000 6,704
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
23
Concentradora Fibra Danhos (MXN) 3,846,624 5,982
Gecina (EUR) 88,225 16,290
PS Business Parks, REIT 54,200 6,780
40,816
Health Care Real Estate Investment Trusts 0.6%
Healthcare Realty Trust, REIT 635,943 20,426
20,426
Hotel & Resort Real Estate Investment Trusts 1.2%
Host Hotels & Resorts, REIT 674,778 13,394
Pebblebrook Hotel Trust, REIT 230,065 8,552
Sunstone Hotel Investors, REIT 1,161,709 19,203
41,149
Industrial Real Estate Investment Trusts 4.4%
DCT Industrial Trust, REIT 541,334 31,820
EastGroup Properties, REIT 105,568 9,330
Mitsui Fudosan Logistics Park (JPY) 1,913 6,077
Nippon Prologis REIT (JPY) 3,031 6,404
Prologis, REIT 1,221,078 78,772
Pure Industrial Real Estate Trust (CAD) 695,100 3,744
Terreno Realty, REIT 348,096 12,204
148,351
Office Real Estate Investment Trusts 9.0%
Alexandria Real Estate, REIT 161,145 21,044
Boston Properties, REIT 277,395 36,070
Derwent London (GBP) 290,858 12,237
Douglas Emmett, REIT 1,042,734 42,815
Great Portland Estates (GBP) 1,630,710 15,134
Highwoods Properties, REIT 178,444 9,085
Hudson Pacific Properties, REIT 394,488 13,511
Inmobiliaria Colonial Socimi (EUR) 1,006,090 9,987
JBG Smith Properties, REIT 428,350 14,877
Kilroy Realty, REIT 352,337 26,302
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
24
Mori Hills REIT Investment (JPY) 6,601 7,978
Paramount, REIT 443,303 7,026
SL Green Realty, REIT 501,863 50,653
Vornado Realty Trust, REIT 505,763 39,540
306,259
Real Estate Operating Companies 1.7%
Hongkong Land Holdings 1,972,100 13,871
Hufvudstaden, A Shares (SEK) 457,545 7,328
Hysan Development (HKD) 2,338,000 12,391
Iguatemi Empresa de Shopping Centers (BRL) 471,000 5,587
PSP Swiss Property (CHF) 209,400 19,851
59,028
Residential Real Estate Investment Trusts 8.1%
American Campus Communities, REIT 552,897 22,685
AvalonBay Communities, REIT 413,899 73,844
Camden Property Trust, REIT 336,853 31,011
Equity Residential, REIT 1,137,037 72,509
Essex Property Trust, REIT 198,430 47,895
Nippon Accommodations Fund (JPY) 3,319 13,686
UNITE (GBP) 1,326,684 14,423
276,053
Retail Real Estate Investment Trusts 11.6%
Acadia Realty Trust, REIT 703,307 19,243
CapitaLand Mall Trust (SGD) 7,572,900 12,048
Charter Hall Retail REIT (AUD) 2,638,428 8,551
Federal Realty Investment Trust, REIT 217,215 28,848
GGP, REIT 2,418,272 56,563
Kimco Realty, REIT 860,786 15,623
Klepierre (EUR) 132,869 5,840
Macerich Company, REIT 595,382 39,105
Regency Centers, REIT 745,751 51,591
Scentre (AUD) 6,035,851 19,689
Shaftesbury (GBP) 1,057,310 14,905
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
25
Simon Property Group, REIT 300,601 51,625
Taubman Centers, REIT 98,600 6,452
Unibail-Rodamco (EUR) 70,719 17,797
Urban Edge Properties, REIT 1,119,031 28,524
Vicinity Centres (AUD) 5,199,433 11,013
Weingarten Realty Investors, REIT 216,500 7,116
394,533
Specialized Real Estate Investment Trusts 2.2%
CubeSmart, REIT 145,600 4,211
Public Storage, REIT 199,500 41,696
Rayonier, REIT 306,400 9,691
Weyerhaeuser, REIT 562,625 19,838
75,436
Total Real Estate 1,421,901
UTILITIES 1.9%
Electric Utilities 0.8%
American Electric Power 113,400 8,343
Eversource Energy 120,800 7,632
NextEra Energy 2,800 437
Red Electrica (EUR) 336,754 7,559
Westar Energy 67,079 3,542
27,513
Gas Utilities 0.6%
Atmos Energy 184,200 15,821
Italgas (EUR) 946,786 5,777
21,598
Multi-Utilities 0.5%
DTE Energy 12,200 1,336
NiSource 388,700 9,978
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
26
Sempra Energy 39,256 4,197
15,511
Total Utilities 64,622
Total Miscellaneous Common Stocks 0.7% (4) 22,617
Total Common Stocks (Cost $2,524,318) 3,302,411
PREFERRED STOCKS 0.1%
Total Miscellaneous Preferred Stocks 0.1% (4) 4,493
Total Preferred Stocks (Cost $4,799) 4,493
CONVERTIBLE PREFERRED STOCKS 0.4%
CONSUMER STAPLES 0.1%
Agricultural Products 0.1%
Farmers Business Network, Series D, Acquisition Date: 11/3/17 Cost $2,712 (1)(2)(3) 146,876 2,712
Total Consumer Staples 2,712
UTILITIES 0.3%
Electric Utilities 0.2%
NextEra Energy, 6.123%, 8/2/19 125,238 7,134
7,134
Multi-Utilities 0.1%
DTE Energy, 6.50%, 10/1/19 65,050 3,545
3,545
Total Utilities 10,679
Total Convertible Preferred Stocks (Cost $12,205) 13,391
T. Rowe Price Real Assets Fund
Shares/Par $ Value
(Cost and value in $000s)
27
CORPORATE BONDS 0.1%
Felix Energy, VR, 3M USD LIBOR + 6.50%, 5.207%, 8/9/22 Acquisition Date: 8/9/17, Cost $3,015 (2)(3)(5) 3,045,000 3,015
Total Corporate Bonds (Cost $3,017) 3,015
SHORT-TERM INVESTMENTS 1.9%
Money Market Funds 1.9%
T. Rowe Price Treasury Reserve Fund, 1.25% (6)(7) 63,628,092 63,628
Total Short-Term Investments (Cost $63,628) 63,628
Total Investments in Securities
99.7% of Net Assets (Cost $2,607,967) $ 3,386,938
‡ Shares/Par are denominated in U.S. dollars unless otherwise noted. (1) Non-income producing (2)
Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at period-end amounts to $8,473 and represents 0.2% of net assets.
(3) Level 3 in fair value hierarchy. See Note 2. (4)
The identity of certain securities has been concealed to protect the fund while it completes a purchase or selling program for the securities.
(5)
A portion of the position represents an unfunded commitment; a liability to fund the commitment has been recognized. The fund's total unfunded commitment at December 31, 2017, was $1,015 and was valued at $1,005 (0.03% of net assets).
(6) Seven-day yield (7) Affiliated Company
3M USD LIBOR Three month USD LIBOR (London Interbank Offered Rate) ADR American Depositary Receipts AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar CHF Swiss Franc DKK Danish Krone EUR Euro GBP British Pound
T. Rowe Price Real Assets Fund
28
HKD Hong Kong Dollar INR Indian Rupee JPY Japanese Yen
KRW South Korean Won MXN Mexican Peso NOK Norwegian Krone REIT
A domestic Real Estate Investment Trust whose distributions pass-through with original tax character to the shareholder
SEK Swedish Krona SGD Singapore Dollar
VR Variable Rate; rate shown is effective rate at period-end. The rates for certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and based on current market conditions.
T. Rowe Price Real Assets Fund
29
The accompanying notes are an integral part of these financial statements.
Affiliated Companies
($000s) The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company that is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the year ended December 31, 2017. Net realized gain (loss), investment income, change in net unrealized gain/loss, and purchase and sales cost reflect all activity for the period then ended.
Affiliate
Net Realized Gain(Loss)
Change in NetUnrealizedGain/Loss
InvestmentIncome
T. Rowe Price Treasury Reserve Fund $ — $ — $ 667 Totals $ —# $ — $ 667+ Supplementary Investment Schedule Affiliate
Value12/31/16
PurchaseCost
SalesCost
Value12/31/17
T. Rowe Price Treasury Reserve Fund $ 87,082 ¤ ¤ $ 63,628 $ 63,628^
# Capital gain/loss distributions from mutual funds represented $0 of the net realized
gain (loss). + Investment income comprised $667 of dividend income and $0 of interest income. ¤ Purchase and sale information not shown for cash management funds. ^ The cost basis of investments in affiliated companies was $63,628.
T. Rowe Price Real Assets Fund
30
December 31, 2017
The accompanying notes are an integral part of these financial statements.
($000s, except shares and per share amounts)
Statement of Assets and Liabilities
Assets
Investments in securities, at value (cost $2,607,967) $ 3,386,938
Dividends and interest receivable 10,957
Receivable for shares sold 3,218
Foreign currency (cost $1,672) 1,682
Receivable for investment securities sold 1,645
Other assets 2,310
Total assets 3,406,750
Liabilities
Payable for investment securities purchased 2,509
Payable for shares redeemed 2,092
Investment management fees payable 1,794
Due to affiliates 362
Payable to directors 2
Other liabilities 1,817
Total liabilities 8,576
NET ASSETS $ 3,398,174 Net Assets Consist of:
Undistributed net investment income $ 16,137
Accumulated undistributed net realized loss (645,290)
Net unrealized gain 778,999
Paid-in capital applicable to 290,640,057 shares of $0.0001 par value capital stock outstanding; 1,000,000,000 shares authorized 3,248,328
NET ASSETS $ 3,398,174 NET ASSET VALUE PER SHARE Investor Class ($2,906,416,867 / 248,542,145 shares outstanding) $ 11.69
I Class ($491,757,500 / 42,097,912 shares outstanding) $ 11.68
T. Rowe Price Real Assets Fund
($000s)
Statement of Operations
31
The accompanying notes are an integral part of these financial statements.
Year Ended
12/31/17Investment Income (Loss)
Income Dividend $ 88,192 Interest 785 Other 2
Total income 88,979
Expenses Investment management 21,431 Shareholder servicing
Investor Class $ 4,647 I Class 3 4,650
Prospectus and shareholder reports Investor Class 30 I Class 1 31
Custody and accounting 442 Registration 61 Legal and audit 39 Directors 11 Miscellaneous 87
Total expenses 26,752
Net investment income 62,227
Realized and Unrealized Gain / Loss
Net realized gain (loss) Securities 265,825 Foreign currency transactions 266
Net realized gain 266,091
Change in net unrealized gain / loss
Securities 2,939 When-issued sales commitments 15 Other assets and liabilities denominated in foreign currencies 86
Change in net unrealized gain / loss 3,040
Net realized and unrealized gain / loss 269,131
INCREASE IN NET ASSETS FROM OPERATIONS $ 331,358
T. Rowe Price Real Assets Fund
($000s)
32
Statement of Changes in Net Assets
Year Ended
12/31/17 12/31/16Increase (Decrease) in Net Assets
Operations Net investment income $ 62,227 $ 52,349 Net realized gain (loss) 266,091 (69,160) Change in net unrealized gain / loss 3,040 892,801 Increase in net assets from operations 331,358 875,990
Distributions to shareholders
Net investment income Investor Class (41,765) (58,280)
I Class (7,701) (6,682) Decrease in net assets from operations (49,466) (64,962)
Capital share transactions*
Shares sold Investor Class 207,318 367,623
I Class 175,221 431,945 Distributions reinvested Investor Class 41,732 58,226
I Class 7,701 6,681 Shares redeemed Investor Class (606,629) (2,676,617)
I Class (51,120) (142,030) Redemption fees received 37 34 Decrease in net assets from capital share transactions (225,740) (1,954,138)
Net Assets
Increase (decrease) during period 56,152 (1,143,110) Beginning of period 3,342,022 4,485,132
End of period $ 3,398,174 $ 3,342,022
Undistributed net investment income 16,137 3,688
T. Rowe Price Real Assets Fund
33
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
(000s)
Year Ended
12/31/17 12/31/16 *Share information
Shares sold Investor Class 18,696 37,738
I Class 15,763 41,766 Distributions reinvested Investor Class 3,673 5,488
I Class 679 630 Shares redeemed Investor Class (54,809) (256,739)
I Class (4,591) (13,180) Decrease in shares outstanding (20,589) (184,297)
T. Rowe Price Real Assets Fund
34
December 31, 2017
Notes to Financial Statements
T. Rowe Price Real Assets Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end management investment company. The fund seeks to provide long-term growth of capital. The fund has two classes of shares: the Real Assets Fund (Investor Class) and the Real Assets Fund–I Class (I Class). I Class shares generally are available only to investors meeting a $1,000,000 minimum investment or certain other criteria. Each class has exclusive voting rights on matters related solely to that class; separate voting rights on matters that relate to both classes; and, in all other respects, the same rights and obligations as the other class.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation The fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity.
Investment Transactions, Investment Income, and Distributions Investment transactions are accounted for on the trade date basis. Income and expenses are recorded on the accrual basis. Realized gains and losses are reported on the identified cost basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, are recorded as income tax expense. Distributions from REITs are initially recorded as dividend income and, to the extent such represent a return of capital or capital gain for tax purposes, are reclassified when such
T. Rowe Price Real Assets Fund
35
information becomes available. Income distributions are declared and paid by each class annually. Distributions to shareholders are recorded on the ex-dividend date. A capital gain distribution may also be declared and paid by the fund annually.
Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective date of such transaction. The portion of the results of operations attributable to changes in foreign exchange rates on investments is not bifurcated from the portion attributable to changes in market prices. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses.
Class Accounting Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes, investment income, and realized and unrealized gains and losses are allocated to the classes based upon the relative daily net assets of each class. To the extent any expenses are waived or reimbursed in accordance with an expense limitation (see Note 5), the waiver or reimbursement is charged to the applicable class or allocated across the classes in the same manner as the related expense.
Rebates Subject to best execution, the fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the fund in cash. Commission rebates are reflected as realized gain on securities in the accompanying financial statements and totaled $37,000 for the year ended December 31, 2017.
Redemption Fees A 2% fee is assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share.
T. Rowe Price Real Assets Fund
36
In-Kind Redemptions In accordance with guidelines described in the fund’s prospectus, and when considered to be in the best interest of all shareholders, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). Gains and losses realized on in-kind redemptions are not recognized for tax purposes and are reclassified from undistributed realized gain (loss) to paid-in capital. During the year ended December 31, 2017, the fund realized $30,580,000 of net gain on $92,444,000 of in-kind redemptions.
New Accounting Guidance In March 2017, the FASB issued amended guidance to shorten the amortization period for certain callable debt securities, held at a premium. The guidance is effective for fiscal years and interim periods beginning after December 15, 2018. Adoption will have no effect on the fund’s net assets or results of operations.
On August 1, 2017, the fund implemented amendments to Regulation S-X, issued by the Securities and Exchange Commission, which require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Adoption had no effect on the fund’s net assets or results of operations.
Indemnification In the normal course of business, the fund may provide indemnification in connection with its officers and directors, service providers, and/or private company investments. The fund’s maximum exposure under these arrangements is unknown; however, the risk of material loss is currently considered to be remote.
NOTE 2 - VALUATION
The fund’s financial instruments are valued and each class’s net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC.
Fair Value The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated
T. Rowe Price Real Assets Fund
37
certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.
Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value:
Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date
Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads)
Level 3 – unobservable inputs
Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values.
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Valuation Techniques Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC Bulletin Board securities are valued at the mean of the closing bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the closing bid and asked prices for domestic securities and the last quoted sale or closing price for international securities.
For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will affect the value of some or all of its portfolio securities, the fund will adjust the previous quoted prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust quoted prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with quoted prices and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares quoted prices, the next day’s opening prices in the same markets, and adjusted prices.
Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities generally are categorized in Level 2 of the fair value hierarchy despite the availability of quoted prices because, as described above, the fund evaluates and determines whether those quoted prices reflect fair value at the close of the NYSE or require adjustment. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy.
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Debt securities generally are traded in the OTC market. Securities with remaining maturities of one year or more at the time of acquisition are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers the yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Generally, debt securities are categorized in Level 2 of the fair value hierarchy.
Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation and are categorized in Level 1 of the fair value hierarchy. Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value.
Thinly traded financial instruments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded.
Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of an equity investment with limited market activity, such as a private placement or a thinly traded public company stock, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, new rounds of financing, negotiated transactions of significant size between other investors in the company, relevant market valuations of peer companies, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will afford greatest
T. Rowe Price Real Assets Fund
40
weight to actual prices in arm’s length transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation methods such as market-based valuation multiples; a discount or premium from market value of a similar, freely traded security of the same issuer; or some combination. Fair value determinations are reviewed on a regular basis and updated as information becomes available, including actual purchase and sale transactions of the issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from those of other market participants. Depending on the relative significance of unobservable inputs, including the valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy.
Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on December 31, 2017:
($000s) Level 1 Level 2 Level 3 Total Value
Quoted Prices
Significant Observable
Inputs
Significant Unobservable
Inputs
InvestmentsinSecurities,except: $ 63,628 $ — $ — $ 63,628
CommonStocks 1,771,496 1,528,169 2,746 3,302,411
PreferredStocks — 4,493 — 4,493
ConvertiblePreferredStocks — 10,679 2,712 13,391
Corporatebonds — — 3,015 3,015
Total $ 1,835,124 $ 1,543,341 $ 8,473 $ 3,386,938
There were no material transfers between Levels 1 and 2 during the year ended December 31, 2017.
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Following is a reconciliation of the fund’s Level 3 holdings for the year ended December 31, 2017. Gain (loss) reflects both realized and change in unrealized gain/loss on Level 3 holdings during the period, if any, and is included on the accompanying Statement of Operations. The change in unrealized gain/loss on Level 3 instruments held at December 31, 2017, totaled $134,000 for the year ended December 31, 2017.
($000s) Beginning Balance1/1/17
Gain (Loss) During Period
Total Purchases
Ending Balance
12/31/17
InvestmentsinSecurities
CommonStocks $ — $ 136 $ 2,610 $ 2,746
ConvertiblePreferredStocks — — 2,712 2,712
Corporatebonds — (2) 3,017 3,015
Totallevel3 $ — $ 134 $ 8,339 $ 8,473
NOTE 3 - OTHER INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information.
Restricted Securities The fund may invest in securities that are subject to legal or contractual restrictions on resale. Prompt sale of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs.
When-Issued Securities The fund may enter into when-issued purchase or sale commitments, pursuant to which it agrees to purchase or sell, respectively, an authorized but not yet issued security for a fixed unit price, with payment and delivery not due until issuance of the security on a scheduled future date. When-issued securities may be new securities or securities issued through a
T. Rowe Price Real Assets Fund
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corporate action, such as a reorganization or restructuring. Until settlement, the fund maintains liquid assets sufficient to settle its commitment to purchase a when-issued security or, in the case of a sale commitment, the fund maintains an entitlement to the security to be sold. Amounts realized on when-issued transactions are included in realized gain/loss on securities in the accompanying financial statements.
Other Purchases and sales of portfolio securities other than short-term securities aggregated $2,132,603,000 and $2,334,850,000, respectively, for the year ended December 31, 2017.
NOTE 4 - FEDERAL INCOME TAxES
No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.
The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.
Reclassifications to paid-in capital relate primarily to redemptions in kind. Reclassifications between income and gain relate primarily to the character of foreign capital gains taxes. For the year ended December 31, 2017, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets):
Undistributednetinvestmentincome $ (312)
Undistributednetrealizedgain (27,467)
Paid-incapital 27,779
($000s)
T. Rowe Price Real Assets Fund
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Distributions during the years ended December 31, 2017 and December 31, 2016 totaled $49,466,000 and $64,962,000, respectively, and were characterized as ordinary income for tax purposes. At December 31, 2017, the tax-basis cost of investments, including derivatives, and components of net assets were as follows:
Costofinvestments $ 2,686,157
Unrealizedappreciation $ 784,620
Unrealizeddepreciation (83,811)
netunrealizedappreciation(depreciation) 700,809
Undistributedordinaryincome 14,485
Capitallosscarryforwards (568,809)
REITincomedeferrals 3,361
Paid-incapital 3,248,328
netassets $ 3,398,174
($000s)
The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales and the realization of gains/losses on passive foreign investment companies for tax purposes. The fund intends to retain realized gains to the extent of available capital loss carryforwards. Net realized capital losses may be carried forward indefinitely to offset future realized capital gains. During the year ended December 31, 2017, the fund utilized $195,633,000 of capital loss carryforwards. Certain dividends declared by real estate investment trusts (REITs) in December and paid the following January are recognized for tax purposes in the subsequent year (REIT income deferrals) but, for financial reporting purposes, are included in the fund’s dividend income on ex-date.
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35%
T. Rowe Price Real Assets Fund
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of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.265% for assets in excess of $650 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At December 31, 2017, the effective annual group fee rate was 0.29%.
The I Class is subject to an operating expense limitation (I Class limit) pursuant to which Price Associates is contractually required to pay all operating expenses of the I Class, excluding management fees, interest, expenses related to borrowings, taxes, brokerage, and other non-recurring expenses permitted by the investment management agreement, to the extent such operating expenses, on an annualized basis, exceed 0.05% of average net assets. This agreement will continue until April 30, 2018, and may be renewed, revised, or revoked only with approval of the fund’s Board. The I Class is required to repay Price Associates for expenses previously paid to the extent the class’s net assets grow or expenses decline sufficiently to allow repayment without causing the class’s operating expenses (after the repayment is taken into account) to exceed both: (1) the expense limitation in place at the time such amounts were paid; and (2) the class’s current expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver. For the year ended December 31, 2017, the I Class operated below its expense limitation.
In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates provides certain accounting and administrative services to the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the Investor Class and I Class. For the year ended December 31, 2017, expenses incurred pursuant to these service agreements were $86,000 for Price Associates; $112,000 for T. Rowe Price Services, Inc.; and $1,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements.
T. Rowe Price Real Assets Fund
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Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund’s Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the year ended December 31, 2017, the fund was charged $297,000 for shareholder servicing costs related to the college savings plans, of which $225,000 was for services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. At December 31, 2017, approximately 7% of the outstanding shares of the Investor Class were held by college savings plans.
The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest. None of the Spectrum Funds or Retirement Funds invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to special servicing agreements, expenses associated with the operation of the Spectrum Funds and Retirement Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds and Retirement Funds.
Expenses allocated under these special servicing agreements are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended December 31, 2017, the fund was allocated $81,000 of Spectrum Funds’ expenses and $4,100,000 of Retirement Funds’ expenses. Of these amounts, $1,542,000 related to services provided by Price. At period-end, the amount payable to Price pursuant to these special servicing agreements is reflected as Due to Affiliates in the accompanying financial statements. At December 31, 2017, approximately 91% of the outstanding shares of the Investor Class were held by the Spectrum Funds and Retirement Funds.
In addition, other mutual funds, trusts, and other accounts managed by Price Associates or its affiliates (collectively, Price funds and accounts) may invest in the fund and are not subject to the special servicing agreements disclosed above. No Price fund or account may invest for the purpose of exercising management or control over the fund. At December 31, 2017, approximately 94% of the I Class’s outstanding shares were held by Price funds and accounts.
T. Rowe Price Real Assets Fund
46
The fund may invest its cash reserves in certain open-end management investment companies managed by Price Associates and considered affiliates of the fund: the T. Rowe Price Government Reserve Fund or the T. Rowe Price Treasury Reserve Fund, organized as money market funds, or the T. Rowe Price Short-Term Fund, a short-term bond fund (collectively, the Price Reserve Funds). The Price Reserve Funds are offered as short-term investment options to mutual funds, trusts, and other accounts managed by Price Associates or its affiliates and are not available for direct purchase by members of the public. Cash collateral from securities lending is invested in the T. Rowe Price Short-Term Fund. The Price Reserve Funds pay no investment management fees.
The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require, among other things, that such purchase and sale cross trades be effected at the independent current market price of the security. During the year ended December 31, 2017, the aggregate value of purchases and sales cross trades with other funds or accounts advised by Price Associates was less than 1% of the fund’s net assets as of December 31, 2017.
T. Rowe Price Real Assets Fund
47
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of T. Rowe Price Real Assets Fund, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of T. Rowe Price Real Assets Fund, Inc. (the “Fund”) as of December 31, 2017, the related statement of operations for the year ended December 31, 2017, the statement of changes in net assets for each of the two years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2017 and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
T. Rowe Price Real Assets Fund
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Report of Independent Registered Public Accounting Firm (continued)
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodians, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLPBaltimore, MarylandFebruary 20, 2018
We have served as the auditor of one or more investment companies in the T. Rowe Price group of investment companies since 1973.
49
Tax Information (Unaudited) for the Tax Year Ended 12/31/17
WeareprovidingthisinformationasrequiredbytheInternalRevenueCode.Theamountsshownmaydifferfromthoseelsewhereinthisreportbecauseofdifferencesbetweentaxandfinancialreportingrequirements.
Fortaxablenon-corporateshareholders,$54,373,000ofthefund’sincomerepresentsqualifieddividendincomesubjecttoalong-termcapitalgainstaxrateofnotgreaterthan20%.
Forcorporateshareholders,$16,511,000ofthefund’sincomequalifiesforthedividends-receiveddeduction.
AdescriptionofthepoliciesandproceduresusedbyT.RowePricefundsandportfoliostodeterminehowtovoteproxiesrelatingtoportfoliosecuritiesisavailableineachfund’sStatementofAdditionalInformation.youmayrequestthisdocumentbycalling1-800-225-5132orbyaccessingtheSEC’swebsite,sec.gov.
Thedescriptionofourproxyvotingpoliciesandproceduresisalsoavailableonourcorporatewebsite.Toaccessit,pleasevisitthefollowingWebpage:
https://www3.troweprice.com/usis/corporate/en/utility/policies.html
Scrolldowntothesectionnearthebottomofthepagethatsays,“ProxyvotingPolicies.”ClickontheProxyvotingPolicieslinkintheshadedbox.
Eachfund’smostrecentannualproxyvotingrecordisavailableonourwebsiteandthroughtheSEC’swebsite.ToaccessitthroughT.RowePrice,visitthewebsitelocationshownabove,andscrolldowntothesectionnearthebottomofthepagethatsays,“ProxyvotingRecords.”ClickontheProxyvotingRecordslinkintheshadedbox.
Information on Proxy Voting Policies, Procedures, and Records
ThefundfilesacompletescheduleofportfolioholdingswiththeSecuritiesandExchangeCommissionforthefirstandthirdquartersofeachfiscalyearonFormn-Q.Thefund’sFormn-QisavailableelectronicallyontheSEC’swebsite(sec.gov);hardcopiesmaybereviewedandcopiedattheSEC’sPublicReferenceRoom,100FSt.n.E.,Washington,DC20549.FormoreinformationonthePublicReferenceRoom,call1-800-SEC-0330.
How to Obtain Quarterly Portfolio Holdings
T. Rowe Price Real Assets Fund
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T. Rowe Price Real Assets Fund
About the Fund’s Directors and Officers
yourfundisoverseenbyaboardofDirectors(board)thatmeetsregularlytoreviewawidevarietyofmattersaffectingorpotentiallyaffectingthefund,includingperformance,investmentprograms,compliancematters,advisoryfeesandexpenses,serviceproviders,andbusinessandregulatoryaffairs.Theboardelectsthefund’sofficers,whoarelistedinthefinaltable.Atleast75%oftheboard’smembersareindependentofT.RowePriceAssociates,Inc.(T.RowePrice),anditsaffiliates;“inside”or“interested”directorsareemployeesorofficersofT.RowePrice.Thebusinessaddressofeachdirectorandofficeris100EastPrattStreet,baltimore,Maryland21202.TheStatementofAdditionalInformationincludesadditionalinformationaboutthefunddirectorsandisavailablewithoutchargebycallingaT.RowePricerepresentativeat1-800-638-5660.
Independent Directors
Name(Year of Birth)Year Elected*[Number of T. Rowe PricePortfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
bruceW.Duncan(1951)2013[191]
ChiefExecutiveOfficerandDirector(2009toDecember2016),Chairmanoftheboard(January2016topresent),andPresident(2009toSeptember2016),FirstIndustrialRealtyTrust,anownerandoperatorofindustrialproperties;Chairmanoftheboard(2005toSeptember2016)andDirector(1999toSeptember2016),Starwoodhotels&Resorts,ahotelandleisurecompany;Director,bostonProperties(May2016topresent);Director,MarriottInternational,Inc.(September2016topresent)
RobertJ.gerrard,Jr.(1952)2012[191]
AdvisoryboardMember,PipelineCrisis/WinningStrategies,acollaborativeworkingtoimproveopportunitiesforyoungAfricanAmericans(1997topresent)
PaulF.Mcbride(1956)2013[191]
AdvisoryboardMember,vizziaTechnologies(2015topresent)
*Eachindependentdirectorservesuntilretirement,resignation,orelectionofasuccessor.
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T. Rowe Price Real Assets Fund
Independent Directors (continued)
Name(Year of Birth)Year Elected*[Number of T. Rowe PricePortfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
CeciliaE.Rouse,Ph.D.(1963)2012[191]
Dean,WoodrowWilsonSchool(2012topresent);ProfessorandResearcher,PrincetonUniversity(1992topresent);MemberofnationalAcademyofEducation(2010topresent);Director,MDRC,anonprofiteducationandsocialpolicyresearchorganization(2011topresent);ResearchAssociateoflaborStudiesProgram(2011to2015)andboardMember(2015topresent),nationalbureauofEconomicResearch(2011topresent);ChairofCommitteeontheStatusofMinoritygroupsintheEconomicProfession(2012topresent);vicePresident(2015topresent),AmericanEconomicAssociation
Johng.Schreiber(1946)2010[191]
Owner/President,CentaurCapitalPartners,Inc.,arealestateinvestmentcompany(1991topresent);Cofounder,Partner,andCochairmanoftheInvestmentCommittee,blackstoneRealEstateAdvisors,l.P.(1992to2015);Director,generalgrowthProperties,Inc.(2010to2013);Director,blackstoneMortgageTrust,arealestatefinancecompany(2012to2016);DirectorandChairmanoftheboard,brixmorPropertygroup,Inc.(2013topresent);Director,hiltonWorldwide(2013topresent);Director,hudsonPacificProperties(2014to2016)
MarkR.Tercek(1957)2010[191]
PresidentandChiefExecutiveOfficer,ThenatureConservancy(2008topresent)
*Eachindependentdirectorservesuntilretirement,resignation,orelectionofasuccessor.
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T. Rowe Price Real Assets Fund
Inside Directors
Name(Year of Birth)Year Elected*[Number of T. Rowe Price Portfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
EdwardC.bernard(1956)2010[191]
DirectorandvicePresident,T.RowePrice;viceChairmanoftheboard,Director,andvicePresident,T.RowePricegroup,Inc.;Chairmanoftheboard,Director,andvicePresident,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.;ChairmanoftheboardandDirector,T.RowePriceRetirementPlanServices,Inc.;Chairmanoftheboard,ChiefExecutiveOfficer,Director,andPresident,T.RowePriceInternationalandT.RowePriceTrustCompany;Chairmanoftheboard,allfunds
RobertW.Sharps,CFA,CPA**(1971)2017[135]
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
*Eachinsidedirectorservesuntilretirement,resignation,orelectionofasuccessor.**EffectiveApril1,2017,brianC.RogerswasreplacedbyRobertW.Sharpsasaninsidedirector
ofcertainPriceFunds.
Officers
Name (Year of Birth)Position Held With Real Assets Fund Principal Occupation(s)
E.Frederickbair,CFA,CPA(1969)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
Stephenl.bartolini,CFA(1977)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
Darrelln.braman(1963)vicePresidentandSecretary
vicePresident,Pricehongkong,PriceSingapore,T.RowePrice,T.RowePricegroup,Inc.,T.RowePriceInternational,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.
RicharddelosReyes(1975)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.
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T. Rowe Price Real Assets Fund
Officers (continued)
Name (Year of Birth)Position Held With Real Assets Fund Principal Occupation(s)
ShawnT.Driscoll(1975)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
JohnR.gilner(1961)ChiefComplianceOfficer
ChiefComplianceOfficerandvicePresident,T.RowePrice;vicePresident,T.RowePricegroup,Inc.,andT.RowePriceInvestmentServices,Inc.
Stefanhubrich,Ph.D.,CFA(1974)vicePresident
vicePresident,T.RowePriceandT.RowePricegroup,Inc.
ninaP.Jones,CPA(1980)vicePresident
vicePresident,T.RowePriceandT.RowePricegroup,Inc.
PaulJ.krug,CPA(1964)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
DavidM.lee,CFA(1962)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
WyattA.lee,CFA(1971)President
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
CatherineD.Mathews(1963)TreasurerandvicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
Sudhirnanda,Ph.D.,CFA(1959)vicePresident
vicePresident,T.RowePriceandT.RowePricegroup,Inc.
DavidOestreicher(1967)vicePresident
Director,vicePresident,andSecretary,T.RowePriceInvestmentServices,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;ChieflegalOfficer,vicePresident,andSecretary,T.RowePricegroup,Inc.;vicePresidentandSecretary,T.RowePriceandT.RowePriceInternational;vicePresident,PricehongkongandPriceSingapore
SebastienPage(1977)vicePresident
vicePresident,T.RowePriceandT.RowePricegroup,Inc.
Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.
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T. Rowe Price Real Assets Fund
Officers (continued)
Name (Year of Birth)Position Held With Real Assets Fund Principal Occupation(s)
JohnW.Ratzesberger(1975)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany;formerly,northAmericanheadoflistedDerivativesOperation,MorganStanley(to2013)
Shannonh.Rauser(1987)AssistantSecretary
Employee,T.RowePrice
DanielO.Shackelford,CFA(1958)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,andT.RowePriceTrustCompany
CharlesM.Shriver,CFA(1967)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,T.RowePriceInternational,andT.RowePriceTrustCompany
MeganWarren(1968)vicePresident
vicePresident,T.RowePrice,T.RowePricegroup,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;formerly,ExecutiveDirector,JPMorganChase(to2017)
Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.
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F176-050 2/18
STOCK FUNDSDomestic Blue Chip GrowthCapital Appreciation‡
Capital OpportunityDiversified Mid-Cap GrowthDividend GrowthEquity IncomeEquity Index 500Extended Equity Market IndexFinancial ServicesGrowth & IncomeGrowth StockHealth Sciences‡
Media & TelecommunicationsMid-Cap Growth‡
Mid-Cap Value‡
New America GrowthNew EraNew Horizons‡
QM U.S. Small & Mid-Cap Core EquityQM U.S. Small-Cap Growth EquityQM U.S. Value EquityReal EstateScience & TechnologySmall-Cap Stock‡
Small-Cap ValueTax-Efficient Equity Total Equity Market IndexU.S. Large-Cap CoreValue
ASSET ALLOCATION FUNDSBalanced Global AllocationPersonal Strategy BalancedPersonal Strategy GrowthPersonal Strategy IncomeReal AssetsSpectrum GrowthSpectrum IncomeSpectrum InternationalTarget Date Fundsˆ
BOND FUNDSDomestic TaxableCorporate IncomeCredit OpportunitiesFloating RateGNMA High Yield‡
Inflation Protected BondLimited Duration Inflation
Focused BondNew IncomeShort-Term BondTotal ReturnUltra Short-Term BondU.S. Bond Enhanced IndexU.S. High YieldU.S. Treasury IntermediateU.S. Treasury Long-Term
Domestic Tax-FreeCalifornia Tax-Free BondGeorgia Tax-Free BondIntermediate Tax-Free High YieldMaryland Short-Term Tax-Free BondMaryland Tax-Free BondNew Jersey Tax-Free BondNew York Tax-Free BondSummit Municipal IncomeSummit Municipal IntermediateTax-Free High YieldTax-Free IncomeTax-Free Short-IntermediateVirginia Tax-Free Bond
MONEY MARKET FUNDSTaxableCash Reserves1
Government Money2
U.S. Treasury Money2
MONEY MARKET FUNDS (cont.)Tax-FreeCalifornia Tax-Free Money1
Maryland Tax-Free Money1
New York Tax-Free Money1
Summit Municipal Money Market1
Tax-Exempt Money1
INTERNATIONAL/GLOBAL FUNDSStockAfrica & Middle EastAsia OpportunitiesEmerging EuropeEmerging Markets StockEmerging Markets Value StockEuropean Stock Global ConsumerGlobal Growth StockGlobal IndustrialsGlobal Real EstateGlobal StockGlobal Technology‡
International Concentrated EquityInternational DiscoveryInternational Equity IndexInternational StockInternational Value EquityJapanLatin AmericaNew AsiaOverseas StockQM Global Equity
BondDynamic Global BondEmerging Markets BondEmerging Markets Corporate BondEmerging Markets Local Currency BondGlobal High Income BondGlobal Multi-Sector BondInternational BondInternational Bond (USD Hedged)
T.RowePriceInvestmentServices,Inc.100EastPrattStreetbaltimore,MD21202
Thispagecontainssupplementaryinformationthatisnotpartoftheshareholderreport.
T. Rowe Price Mutual Funds
201802-366824
Call 1-800-225-5132 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. ‡Subjecttocertainexceptions,thefundiscurrentlyclosedtonewinvestorsandnewaccounts.
ˆTheTargetDateFundsareinclusiveoftheRetirementFunds,theTargetFunds,andtheRetirementbalancedFund.
1 Retail Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. Beginning October 14, 2016, the Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
2 Government Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.