PRAFX Real Assets Fund PRIKX Real Assets Fund– I Classindividual.troweprice.com/gcFiles/pdf/arraf.pdf · · 2017-10-01Proof #4 T. Rowe Price Real Assets Fund Manager s Letter

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.

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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.

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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.

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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.


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.


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.


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


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


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


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.


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


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.


14

Financial Highlights For a share outstanding throughout each period


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


Shares/Par $ Value


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


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.


29


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.


30

December 31, 2017


($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


($000s)

Statement of Operations

31


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


($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


33


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)


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


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.


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


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.


38

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


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


42

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)


43

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%


44

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.


45

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.


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.


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.


48

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


50


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.

51


Independent Directors (continued)

Name(Year of Birth)Year Elected*[Number of T. Rowe PricePortfolios Overseen]


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.

52


Inside Directors

Name(Year of Birth)Year Elected*[Number of T. Rowe Price Portfolios Overseen]


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


Stephenl.bartolini,CFA(1977)vicePresident


Darrelln.braman(1963)vicePresidentandSecretary

vicePresident,Pricehongkong,PriceSingapore,T.RowePrice,T.RowePricegroup,Inc.,T.RowePriceInternational,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.

RicharddelosReyes(1975)vicePresident


Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.

53


Officers (continued)


ShawnT.Driscoll(1975)vicePresident


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


PaulJ.krug,CPA(1964)vicePresident


DavidM.lee,CFA(1962)vicePresident


WyattA.lee,CFA(1971)President


CatherineD.Mathews(1963)TreasurerandvicePresident


Sudhirnanda,Ph.D.,CFA(1959)vicePresident


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



54


Officers (continued)


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


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)


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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.

Documents

PRAFX Real Assets Fund PRIKX Real Assets Fund– I Classindividual.troweprice.com/gcFiles/pdf/arraf.pdf · · 2017-10-01Proof #4 T. Rowe Price Real Assets Fund Manager s Letter