PRAFX Real Assets Fund PRIKX Real Assets Fund– I Class · PDF fileReal Assets Fund Real Assets Fund– ... • We aim to diversify the portfolio across a range of underlying asset

Proof #3

June 30, 2017

PRAFX

PRIKX

SEMIANNUALREPORT

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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REPORTS ON THE WEB

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HIGHLIGHTS

• Realassetsstocksrecordedmodestoverallgainsinthefirstsixmonthsof2017.

• TheRealAssetsFundadvanced0.93%forthesix-monthperiodendedJune30,2017,andunderperformeditsbenchmarks.

• Weaimtodiversifytheportfolioacrossarangeofunderlyingassetclassesthattendtoperformdifferentlyunderagiveninflationscenario,seekingtosmoothreturnsovertimeunderafullrangeofinflationregimes.

• Againstthebackdropofanuncertaininvestmentenvironment,webelievethatabroadlydiversifiedportfolioandacarefulfocusonfundamentalresearchcanenhanceourabilitytomaximizeinvestmentopportunitiesonbehalfofourshareholders.

T. Rowe Price Real Assets Fund

The views and opinions in this report were current as of June 30, 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.

http://www.troweprice.com

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Manager’s Letter

1

Fellow Shareholders

Real assets stocks posted modest overall gains in the six months ended June 30,

2017. U.S. and international real estate investment trusts (REITs) recorded solid

gains in most major markets, supported by improving global economic growth, good

demand, and limited supply in key segments. After rallying in late 2016 and early

2017, energy stocks weakened as increased North American shale production resulted

in increased supplies and renewed pricing pressures. The Real Assets Fund reflected

the challenging investment backdrop and generated a slim gain for the semiannual

reporting period.

As shown in the Performance Comparison table, your fund returned 0.93% for the six months ended June 30, 2017. (Returns for the fund’s I Class shares may vary due to its different fee structure and other factors.) The Real Assets Fund trailed the MSCI All Country World

Index, which represents the broader global equities market, and its combined index portfolio, a custom blended benchmark that we believe provides a more appropriate performance comparison. Our global real estate stocks and precious metals equities advanced modestly in absolute terms for the semiannual

reporting period. Nevertheless, they were the fund’s largest gainers in a challenging environment. Our industrial metals were slightly positive, while U.S. real estate holdings were roughly flat. The fund’s natural resources allocation declined modestly.

Six-MonthPeriodEnded6/30/17 TotalReturn

RealAssetsFund 0.93%

RealAssetsFund–IClass 1.03

MSCIAllCountryWorldIndex 11.82

CombinedIndexPortfolio 2.64

Foradefinitionofthebenchmarks,pleaseseetheglossaryattheendofthisreport.

Performance Comparison

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The Real Assets Fund seeks to provide a buffer against the impact of inflation over time. Since the fund’s inception, however, we have seen little risk that inflation is poised to rise significantly. Our view has not changed meaningfully. Driven by rising energy prices, inflation edged higher in the latter half of 2016 and into 2017 and peaked at a 2.7% annualized rate in February. Since then, however, increased oil production renewed the downward pressure on energy prices, and inflation steadily declined.

Of the numerous pro-growth initiatives proposed by the Trump administration, lower taxes, higher fiscal spending, and protectionist trade policies have the potential to increase inflationary pressures. However, we have seen little substantive progress on these proposals. Ongoing White House controversies and a highly contentious political atmosphere suggest that legislative approval will be a challenging process. As a result, the eventual size and scope of these policies, as well as their ultimate impact, remain unknown. We believe the Federal Reserve (Fed) will take the steps necessary to contain inflationary pressures should they arise. However, the current environment speaks to the need for a strategy such as ours, which may provide some protection in environments that could pose headwinds for more traditional stock and bond portfolios.

ECONOMIC AND MARKET ENVIRONMENT

U.S. stocks generated solid gains in the first six months of 2017, continuing the rally that started in the wake of Donald Trump’s presidential election victory in November 2016. Hopes for lower taxes, higher infrastructure spending, and regulatory reform supported investor sentiment, as did a strong first-quarter earnings season. Markets were relatively unfazed by lackluster first-quarter economic growth and a pair of interest rate hikes by the Fed. The large-cap S&P 500 Index advanced more than 9% for the six-month reporting period. Large-cap U.S. stocks outpaced mid-caps and small-caps, while growth stocks outperformed value shares across all market capitalizations.

International developed markets stocks outperformed U.S. shares, with a weaker U.S. dollar versus major non-U.S. currencies boosting returns for U.S. investors. European stocks gained 15% in dollar terms, helped by the region’s modest but ongoing economic recovery and broadly

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accommodative monetary policies from the European Central Bank. UK shares trailed with a 10% gain as the government prepared to start formal Brexit negotiations with the European Union. Japanese shares rose roughly 10% as the economy expanded 0.3% in the first

quarter. Improving global growth and a weaker yen versus last year helped Japan’s exports, while spending by consumers, businesses, and government increased. Emerging markets stocks rallied approximately 18% as signs of economic recovery worldwide instilled more confidence in the global growth outlook.

Real assets stocks were modestly positive in the first half of 2017 but underperformed global equities by a wide margin. On the plus side, U.S. and international REITs recorded solid gains in most major markets. The U.S. underperformed other developed markets, as the retail space dealt with stiff headwinds from e-commerce, while Japan was the only major market to decline amid investor concerns about a lack of policy support from the Bank of Japan. Gains from REITs were largely offset by weakness in our natural resources

stocks. Energy stocks, in particular, declined as a spike in oil prices was met by a sharp increase in North American shale production that renewed the downward pressure on prices.

PORTFOLIO REVIEW

Our portfolio of global REITs advanced modestly in absolute terms for the period. Stock selection in Canada was the largest positive contributor to results, and out-of-benchmark positioning in Mexico and Brazil was also beneficial. Brookfield Canada Office Properties was taken private by its parent company at a 25% premium to where the shares had been trading before the announcement. Mexico’s Concentradora Fibra Danhos rebounded strongly after poor performance following the U.S. election in late 2016. Solid operating fundamentals combined with reduced fears about a repeal of NAFTA drove the stock’s rally. Brazilian mall owners Iguatemi Empresa de Shopping Centers and Multiplan Empreendimentos Imobiliarios were also positive contributors. Brazil’s central bank cut interest rates several times as inflation fell to a near 10-year low, and there

REAlASSETS

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are early signs that the country’s economy is starting to emerge from a deep recession. (Please refer to the portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)

The fund’s portfolio of U.S. REITs was roughly flat in a period marked by the impact of online retailers. Strong e-commerce demand benefited fundamentals for our industrial/distribution REITs, where we favor properties near populated areas and the final destination for delivered goods. The exceptionally strong performance of Terreno Realty was a

highlight for the period, as investors recognized the merits of the company’s exclusive focus on six major metropolitan markets. We also saw broad strength in our other industrial holdings, including Eastgroup Property, Prologis, and DCT Industrial Trust. We experienced the flip-side of e-commerce growth, as shopping centers were punished by concerns about competition from online retailers. Kimco Realty, Weingarten Realty, Urban Edge Properties, and Regency Centers all detracted from results. Over the long term, we believe there is room for both retail formats—online and traditional brick-and-mortar—to coexist in a world of omnichannel consumption.

Our natural resources stocks declined for the period. U.S.-based oil and gas exploration and production companies weighed heavily on results as oil prices resumed their slide, with Pioneer Natural

PercentofnetAssets 12/31/16 6/30/17

RetailREITs* 14.5% 12.1%

diversifiedMetalsandMining 11.0 10.7

ResidentialREITs* 7.8 9.4

gold 8.4 9.1

OfficeREITs* 8.6 8.6

OilandgasExplorationandProduction 6.1 4.9

IntegratedOilandgas 3.9 4.1

IndustrialREITs* 3.4 4.0

SpecialtyChemicals 2.1 2.4

SpecializedREITs* 2.0 2.4

OtherandReserves 32.2 32.3

Total 100.0% 100.0%

*Realestateinvestmenttrusts

historicalweightingsreflectcurrentindustry/sectorclassifications.

Industry Diversification

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Resources, EOG Resources, and Continental Resources among the portfolio’s largest detractors. Low oil prices translate into low input costs for specialty chemical producers, which performed well for the fund. Croda International (UK) was a positive contributor. We were encouraged to see good organic growth in the company’s personal care business, as well as a cyclical recovery in its performance technologies division. Industrial gas company Linde (Germany) was another strong performer. The company announced solid first-quarter results, and shares increased further after news that Linde and Praxair (U.S.) reached a formal agreement to merge.

OUTLOOK

We remain somewhat cautious on the outlook for real assets equities. Energy and commodity prices are likely to remain challenged

given ongoing concerns about a long-term global supply/demand imbalance across the global commodities complex. The Trump administration has pledged to increase U.S. infrastructure spending, but the likelihood, timing, and scope of any policy initiative is uncertain, and its ultimate impact on industrial-related commodities is unknown. We are confident that the energy industry will remain challenged over the long term. Despite OPEC’s (Organization of Petroleum Exporting Countries) continued efforts to limit production, oil prices have been challenged by

additional supply, as highly efficient, low-cost North American shale producers respond to rising prices with increased production.

Demand for industrial metals is expected to remain subdued as China continues on a slower growth path, driven by a shift away from industrial production in favor of domestic consumption. Fundamentals for developed markets REITs remain positive, supported by modestly improving economic environments and limited supply outside the U.S. While REITs remain sensitive to rising interest rates, they should be supported over the near term if U.S. interest rate policy normalization proceeds at a modest pace.

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Against the backdrop of an uncertain investment environment, 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

July 25, 2017

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.

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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%MSCIAllCountryWorldIndexIMIgoldand20%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.

•Wilshire U.S. Real Estate Securities Index:Anindexthattrackstheperformanceofpubliclytradedu.S.realestatesecurities.

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Glossary (continued)

MSCI All Country World Index:Acapitalization-weightedindexofstocksfromdevelopedandemergingmarketsworldwide.

Real estate investment trusts (REITs):Publiclytradedcompaniesthatown,develop,andoperateapartmentcomplexes,hotels,officebuildings,andothercommercialproperties.

note:MSCImakesnoexpressorimpliedwarrantiesorrepresentationsandshallhavenoliabilitywhatsoeverwithrespecttoanyMSCIdatacontainedherein.TheMSCIdatamaynotbefurtherredistributedorusedasabasisforotherindicesoranysecuritiesorfinancialproducts.Thisreportisnotapproved,reviewed,orproducedbyMSCI.

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TWENTY-FIVE LARGEST HOLDINGS

Percentof netAssets 6/30/17

RioTinto 3.8%bhPbillitonlimited 2.9AvalonbayCommunities 2.6RandgoldResources 2.4EquityResidential 2.4

Prologis 2.3EssexPropertyTrust 1.8ggP 1.7SimonPropertygroup 1.6SlgreenRealty 1.6

AgnicoEagleMines 1.6RegencyCenters 1.5PublicStorage 1.4vornadoRealtyTrust 1.4vulcanMaterials 1.3

douglasEmmett 1.2Total 1.2Fresnillo 1.2bostonProperties 1.2Franco-nevada 1.1

MacerichCompany 1.0FederalRealtyInvestmentTrust 0.9CamdenPropertyTrust 0.9kilroyRealty 0.9Arconic 0.9

Total 40.8%

note:Theinformationshowndoesnotreflectanyexchange-tradedfunds(ETFs),cashreserves,orcollateralforsecuritieslendingthatmaybeheldintheportfolio.

Portfolio Highlights

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CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE

SixMonthsEnded6/30/17

Best Contributors Worst Contributors

hiltonWorldwideholdings 10¢RioTinto 3Prologis 3AvalonbayCommunities 2EssexPropertyTrust 2Franco-nevada 2glencore** 2kinrossgold** 1POSCO** 1hongkonglandholdings 1

Total 27¢

MacerichCompany -2¢Arconic* -2SimonPropertygroup -2kimcoRealty -2vornadoRealtyTrust -2RegencyCenters -1OccidentalPetroleum -1urbanEdgeProperties -1FederalRealtyInvestmentTrust -1bakerhughesagE -1

Total -15¢

*Positionadded. **Positioneliminated.

Portfolio Highlights

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Performance and Expenses

MSCI All Country World Index $19,215

Real Assets Fund $12,271

As of 6/30/17

7/28/10 6/166/156/146/136/12 6/17

R E A L A SSE TS F U N D

Combined Index Portfolio $12,753

10,000

12,500

15,000

17,500

20,000

$22,500

Note: Performance for the I Class will vary due to its differing fee structure. See the returns table below.

6/11

Growth of $10,000

Thischartshowsthevalueofahypothetical$10,000investmentinthefundoverthepast10fiscalyearperiodsorsinceinception(forfundslacking10-yearrecords).Theresultiscomparedwithbenchmarks,whichmayincludeabroad-basedmarketindexandapeergroupaverageorindex.Marketindexesdonotincludeexpenses,whicharedeductedfromfundreturnsaswellasmutualfundaveragesandindexes.

Since InceptionPeriodsEnded6/30/17 Oneyear Fiveyears Inception date

RealAssetsFund 2.64% 2.69% 3.00% 7/28/10

RealAssetsFund–IClass 2.83 – 9.63 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

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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.

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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* 1/1/17 6/30/17 1/1/17to6/30/17

Investor ClassActual $1,000.00 $1,009.30 $4.09

hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,020.73 4.11

I ClassActual 1,000.00 1,010.30 3.29

hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,021.52 3.31

*Expensesareequaltothefund’sannualizedexpenseratioforthe6-monthperiod,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysinthemostrecentfiscalhalfyear(181),anddividedbythedaysintheyear(365)toreflectthehalf-yearperiod.TheannualizedexpenseratiooftheInvestorClasswas0.82%,andtheIClasswas0.66%.

Real Assets Fund

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T. Rowe Price Real Assets FundUnaudited

Financial Highlights For a share outstanding throughout each period

Investor Class

6 Months Ended

6/30/17

Year Ended

12/31/16 12/31/15 12/31/14 12/31/13 12/31/12 NET ASSET VALUE

Beginning of period

$ 10.74 $ 9.05 $ 10.81 $ 10.82 $ 11.12

$ 10.26

Investment activities

Net investment income(1)

0.11

0.13

0.19

0.15

0.16

0.16

Net realized and unrealized gain / loss

(0.01)

1.77

(1.78)

0.01(2)

(0.31)

1.00

Total from investment activities

0.10

1.90

(1.59)

0.16

(0.15)

1.16

Distributions

Net investment income

– (0.21) (0.17) (0.17) (0.15)

(0.16)

Net realized gain

– – – – – (0.11)

Tax return of capital

– – – – – (0.03) Total distributions

– (0.21) (0.17) (0.17) (0.15)

(0.30)

NET ASSET VALUE

End of period $ 10.84 $ 10.74 $ 9.05 $ 10.81 $ 10.82 $ 11.12

Ratios/Supplemental Data Total return(3) 0.93% 21.02% (14.69)% 1.55% (1.30)% 11.35%

Ratio of total expenses to average net assets

0.82%

(4) 0.84%

0.83%

0.83%

0.85%

0.86%

Ratio of net investment income to average net assets

2.03%

(4) 1.25%

1.87%

1.34%

1.45%

1.45%

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The accompanying notes are an integral part of these financial statements.

6 Months Ended

6/30/17

Year Ended

12/31/16 12/31/15 12/31/14 12/31/13 12/31/12 Ratios/Supplemental Data (continued) Portfolio turnover rate

36.1% 49.0% 43.0% 42.0% 51.6%

41.4%

Net assets, end of period

(in millions)

$ 2,886 $ 3,017 $ 4,476 $ 4,325 $ 3,745

$ 2,910

(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 of 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. Total return is not annualized for periods less than one year.

(4) Annualized

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I Class

6 Months Ended

6/30/17

Year Ended

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 (2)

0.12

0.10

0.02(3)

Net realized and unrealized gain / loss

(0.01)

1.81

(0.33)

Total from investment activities

0.11

1.91

(0.31)

Distributions

Net investment income

–

(0.23) (0.17)

NET ASSET VALUE

End of period $ 10.84 $ 10.73 $ 9.05

Ratios/Supplemental Data Total return(4) 1.03% 21.14% (3.23)% (3)

Ratio of total expenses to average net assets

0.66%(5)

0.66% 0.69%

(3)(5)

Ratio of net investment income to average net assets

2.22%(5)

0.86% 1.37%

(3)(5)

Portfolio turnover rate

36.1%

49.0%

43.0%

Net assets, end of period (in thousands) $ 409,422 $ 324,533

$ 9,328

(1) Inception date. (2) Per share amounts calculated using average shares outstanding method. (3) See Note 5. Excludes expenses waived (0.23% of average net assets) related to the contractual

operating limit 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

Proof #3

T. Rowe Price Real Assets FundUnaudited June 30, 2017

Portfolio of Investments ‡ Shares/Par $ Value

(Cost and value in $000s)

17

First Page Footer

COMMON STOCKS 96.9%

CONSUMER DISCRETIONARY 0.7%

Automotive Retail 0.2%

Murphy USA (1) 80,600 5,973

5,973

Hotels, Resorts, & Cruise Lines 0.5%

Hilton Worldwide Holdings 268,208 16,589

16,589

Total Consumer Discretionary 22,562

CONSUMER STAPLES 0.2%

Packaged Foods & Meats 0.2%

Pilgrim's Pride (1) 120,600 2,644

Sanderson Farms 41,800 4,834

Total Consumer Staples 7,478

ENERGY 12.1%

Integrated Oil & Gas 3.7%

Chevron 62,400 6,510

ExxonMobil 325,600 26,285

Galp Energia (EUR) 630,095 9,548

Occidental Petroleum 400,472 23,976

Royal Dutch Shell, B Shares (GBP) 288,634 7,749

Suncor Energy 202,800 5,922

Total (EUR) 822,118 40,816

120,806

Oil & Gas Equipment & Services 1.9%

Aker Solutions (NOK) (1) 747,606 3,383

Baker Hughes 331,700 18,081

Dril-Quip (1) 51,800 2,528

Frank's International 229,100 1,899

Proof #3


Shares/Par $ Value


18

Halliburton 121,300 5,181

Oceaneering International 154,700 3,534

SBM Offshore (EUR) 246,475 3,948

Schlumberger 107,901 7,104

Tenaris (EUR) 917,803 14,330

US Silica Holdings 122,100 4,333

64,321

Oil & Gas Exploration & Production 5.1%

Advantage Oil & Gas (CAD) (1) 647,749 4,381

ARC Resources (CAD) 594,900 7,780

Cairn Energy (GBP) (1) 1,619,891 3,637

Canadian Natural Resources 162,500 4,686

Centennial Resource Development, Acquisition Date: 12/28/16 Cost $278 (1)(2) 19,200 289

Centennial Resource Development, Class A (1) 449,362 7,109

Cimarex Energy 45,448 4,273

Comstock Resources (1) 151,175 1,069

Concho Resources (1) 158,700 19,287

Continental Resources (1) 216,000 6,983

Diamondback Energy (1) 73,000 6,483

Encana 723,300 6,365

EOG Resources 258,000 23,354

Hess 106,600 4,677

Jagged Peak Energy (1) 310,600 4,146

Kelt Exploration (CAD) (1) 789,900 3,825

Kosmos Energy (1) 993,226 6,367

Lundin Petroleum (SEK) (1) 211,221 4,071

Matador Resources (1) 189,200 4,043

Parsley Energy, Class A (1) 236,140 6,553

Pioneer Natural Resources 114,200 18,224

RSP Permian (1) 169,500 5,470

Seven Generations Energy, Class A (CAD) (1) 479,264 8,208

Proof #3


Shares/Par $ Value


19

Woodside Petroleum (AUD) 267,935 6,146

167,426

Oil & Gas Refining & Marketing 0.6%

Marathon Petroleum 349,703 18,300

Tesoro Petroleum 19,267 1,803

20,103

Oil & Gas Storage & Transportation 0.8%

Enbridge 142,037 5,655

Koninklijke Vopak (EUR) 207,958 9,637

TransCanada 182,200 8,685

Venture Global, Series C, Acquisition Date: 5/25/17 Cost $2,376 (1)(2)(3) 666 2,376

26,353

Total Energy 399,009

INDUSTRIALS & BUSINESS SERVICES 3.4%

Aerospace & Defense 1.2%

Arconic 1,243,308 28,161

Hexcel 202,972 10,715

38,876

Agricultural & Farm Machinery 0.2%

AGCO 81,100 5,465

5,465

Construction & Engineering 0.3%

Granite Construction 114,100 5,504

Valmont Industries 21,200 3,172

8,676

Proof #3


Shares/Par $ Value


20

Electrical Components & Equipment 0.2%

Legrand (EUR) 88,909 6,213

6,213

Heavy Electrical Equipment 0.1%

Gamesa (EUR) 113,288 2,424

Vestas Wind Systems (DKK) 27,953 2,582

5,006

Industrial Conglomerates 0.1%

Carlisle Companies 44,600 4,255

4,255

Industrial Machinery 1.3%

Andritz (EUR) 69,919 4,218

Flowserve 205,300 9,532

Krones (EUR) 41,465 4,807

Mueller Water Products, Class A 315,200 3,682

Pentair 133,200 8,863

Sandvik (SEK) 713,175 11,228

42,330

Total Industrials & Business Services 110,821

MATERIALS 33.5%

Aluminum 0.1%

Kaiser Aluminum 26,959 2,386

2,386

Commodity Chemicals 0.3%

Orion Engineered Carbons 96,034 1,916

Valvoline 306,954 7,281

9,197

Proof #3


Shares/Par $ Value


21

Construction Materials 1.6%

Buzzi Unicem (EUR) 125,155 3,121

Martin Marietta Materials 23,500 5,230

Vulcan Materials 338,980 42,942

51,293

Copper 0.9%

Antofagasta (GBP) 1,062,863 11,089

First Quantum Minerals (CAD) 297,200 2,514

Lundin Mining (CAD) 1,506,405 8,561

Southern Copper 241,000 8,346

30,510

Diversified Chemicals 0.5%

EI du Pont de Nemours 162,500 13,116

Incitec Pivot (AUD) 1,484,618 3,894

17,010

Diversified Metals & Mining 10.7%

BHP Billiton Limited (AUD) 5,426,564 96,723

Boliden (SEK) 1,014,665 27,736

Compass Minerals 106,656 6,965

Dowa Holdings (JPY) 2,736,347 20,755

Grupo Mexico, Series B (MXN) 8,806,610 24,743

Hindustan Zinc (INR) 1,428,763 5,792

Independence (AUD) 4,225,073 10,220

Korea Zinc (KRW) 53,404 21,281

Rio Tinto (GBP) 2,943,378 124,657

South32 (AUD) 7,007,623 14,432

353,304

Fertilizers & Agricultural Chemicals 1.1%

Agrium 175,600 15,890

CF Industries 399,139 11,160

OCI (EUR) (1) 99,327 2,187

Proof #3


Shares/Par $ Value


22

Yara International (NOK) 166,972 6,279

35,516

Gold 9.1%

Acacia Mining (GBP) 1,363,674 5,301

Agnico Eagle Mines 1,149,469 51,864

AngloGold Ashanti (ZAR) 79,429 775

Argonaut Gold (CAD) (1) 953,908 1,743

Asanko Gold (CAD) (1) 1,432,827 2,199

B2Gold (CAD) (1) 2,216,398 6,238

Centamin (GBP) 5,746,718 11,608

Continental Gold (CAD) (1) 728,241 2,145

Endeavour Mining (CAD) (1) 492,623 8,502

Evolution Mining (AUD) 8,945,572 16,603

Franco-Nevada (CAD) 521,353 37,618

Goldcorp 249,544 3,222

Guyana Goldfields (CAD) (1) 477,937 2,241

New Gold (1) 4,253,486 13,526

Northern Star Resources (AUD) 1,701,023 6,223

OceanaGold (CAD) (1) 3,854,974 11,623

Osisko Gold Royalties (CAD) 1,389,754 16,986

Randgold Resources (GBP) 882,910 78,346

Regis Resources (AUD) 1,813,450 5,277

Richmont Mines (CAD) (1) 341,523 2,660

Royal Gold 95,200 7,442

Semafo (CAD) (1) 1,138,961 2,626

Sibanye Gold (ZAR) 1,476,205 1,696

Wesdome Gold Mines (CAD) (1) 922,029 2,169

298,633

Industrial Gases 1.3%

Air Liquide (EUR) 30,700 3,795

Air Products & Chemicals 178,065 25,474

Linde (EUR) 41,183 7,839

Proof #3


Shares/Par $ Value


23

Praxair 49,000 6,495

43,603

Metal & Glass Containers 0.5%

Ball 282,700 11,933

Vidrala (EUR) 66,236 4,704

16,637

Paper Packaging 0.4%

Bemis 117,400 5,430

International Paper 34,300 1,941

Orora (AUD) 2,129,945 4,681

12,052

Precious Metals & Minerals 1.6%

Fresnillo (GBP) 2,023,660 39,228

Lucara Diamond (CAD) (1) 2,860,508 6,088

Petra Diamonds (GBP) (1) 5,649,576 8,037

53,353

Silver 0.7%

Fortuna Silver Mines (CAD) (1) 456,836 2,237

Pan American Silver 1,168,257 19,650

Silvercorp Metals 655,667 2,085

23,972

Specialty Chemicals 2.4%

Akzo Nobel (EUR) 125,207 10,889

Axalta Coating Systems (1) 80,500 2,579

Corbion (EUR) 153,027 4,894

Croda International (GBP) 165,302 8,371

PolyOne 69,200 2,681

PPG Industries 86,500 9,512

RPM 333,400 18,187

Sherwin-Williams 27,700 9,722

Proof #3


Shares/Par $ Value


24

Symrise (EUR) 68,488 4,859

Umicore (EUR) 49,373 3,434

Victrex (GBP) 223,487 5,460

80,588

Steel 2.3%

Acerinox (EUR) (1) 457,416 6,273

Fortescue Metals Group (AUD) 949,965 3,803

Maruichi Steel Tube (JPY) 686,340 19,968

NMDC (INR) 3,105,288 5,201

Nucor 424,395 24,560

Reliance Steel & Aluminum 236,247 17,201

77,006

Total Materials 1,105,060

MISCELLANEOUS 0.1%

Miscellaneous 0.1%

TPG Pace Energy Holdings, Equity Units (1) 227,000 2,370

Total Miscellaneous 2,370

REAL ESTATE 43.8%

Diversified Real Estate Activities 2.0%

Alexander & Baldwin 164,600 6,811

Mitsubishi Estate (JPY) 808,500 15,113

Mitsui Fudosan (JPY) 769,700 18,441

Sun Hung Kai Properties (HKD) 1,395,000 20,493

Wharf Holdings (HKD) 570,700 4,722

65,580

Diversified Real Estate Investment Trusts 1.1%

Canadian Real Estate Investment Trust (CAD) 153,600 5,433

Concentradora Fibra Danhos (MXN) 4,745,753 8,506

Gecina (EUR) 95,367 14,969

Proof #3


Shares/Par $ Value


25

PS Business Parks, REIT 61,200 8,102

37,010

Health Care Real Estate Investment Trusts 0.7%

Healthcare Realty Trust, REIT 631,700 21,573

21,573

Hotel & Resort Real Estate Investment Trusts 1.2%

Host Hotels & Resorts, REIT 690,100 12,608

Pebblebrook Hotel Trust, REIT 264,300 8,521

Sunstone Hotel Investors, REIT 1,199,073 19,329

40,458

Industrial Real Estate Investment Trusts 4.0%

DCT Industrial Trust, REIT 461,200 24,647

EastGroup Properties, REIT 105,400 8,832

Mitsui Fudosan Logistics Park (JPY) 1,930 5,768

Nippon Prologis REIT (JPY) 3,059 6,511

Prologis, REIT 1,273,282 74,665

Terreno Realty, REIT 347,179 11,686

132,109

Office Real Estate Investment Trusts 8.6%

Alexandria Real Estate, REIT 174,400 21,010

Boston Properties, REIT 309,400 38,062

Derwent London (GBP) 255,487 8,831

Douglas Emmett, REIT 1,073,600 41,022

Great Portland Estates (GBP) 1,329,964 10,353

Highwoods Properties, REIT 192,300 9,752

Hudson Pacific Properties, REIT 305,981 10,462

Kilroy Realty, REIT 379,400 28,512

Mori Hills REIT Investment (JPY) 7,608 9,354

Paramount, REIT 479,900 7,678

SL Green Realty, REIT 509,200 53,873

Proof #3


Shares/Par $ Value


26

Vornado Realty Trust, REIT 480,100 45,081

283,990

Real Estate Operating Companies 2.2%

Hongkong Land Holdings 2,324,200 17,104

Hufvudstaden, A Shares (SEK) 430,578 7,145

Hysan Development (HKD) 2,356,000 11,244

Iguatemi Empresa de Shopping Centers (BRL) 571,300 5,677

Inmobiliaria Colonial (EUR) (1) 1,036,863 9,046

Multiplan Empreendimentos (BRL) 97,179 1,915

PSP Swiss Property (CHF) 217,355 20,336

72,467

Residential Real Estate Investment Trusts 9.5%

American Campus Communities, REIT 559,700 26,474

AvalonBay Communities, REIT 448,500 86,188

Boardwalk Real Estate Investment Trust (CAD) 148,577 5,448

Camden Property Trust, REIT 343,700 29,390

Equity Residential, REIT 1,177,500 77,515

Essex Property Trust, REIT 227,502 58,529

Nippon Accommodations Fund (JPY) 3,602 15,052

Unite (GBP) 1,443,699 12,203

310,799

Retail Real Estate Investment Trusts 12.1%

Acadia Realty Trust, REIT 725,900 20,180

CapitaLand Mall Trust (SGD) 8,073,600 11,579

Charter Hall Retail REIT (AUD) 2,791,719 8,728

Federal Realty Investment Trust, REIT 238,800 30,182

GGP, REIT 2,351,186 55,394

Kimco Realty, REIT 787,400 14,449

Klepierre (EUR) 332,022 13,608

Macerich Company, REIT 593,900 34,482

Regency Centers, REIT 799,267 50,066

Scentre (AUD) 5,199,452 16,165

Proof #3


Shares/Par $ Value


27

Shaftesbury (GBP) 1,370,764 17,372

Simon Property Group, REIT 335,200 54,222

Taubman Centers, REIT 110,300 6,568

Unibail-Rodamco (EUR) 46,876 11,812

Urban Edge Properties, REIT 1,109,050 26,318

Vicinity Centres (AUD) 7,335,763 14,475

Weingarten Realty Investors, REIT 393,100 11,832

397,432

Specialized Real Estate Investment Trusts 2.4%

Public Storage, REIT 225,200 46,961

Rayonier, REIT 289,700 8,335

Weyerhaeuser, REIT 738,680 24,746

80,042

Total Real Estate 1,441,460

UTILITIES 2.0%

Electric Utilities 0.8%

Edison International 117,000 9,148

Eversource Energy 46,100 2,799

PG&E 95,000 6,305

Red Electrica (EUR) 358,744 7,505

Westar Energy 35,200 1,867

27,624

Gas Utilities 0.6%

Atmos Energy 197,600 16,391

Italgas (EUR) 577,651 2,913

19,304

Independent Power Producers & Energy Traders 0.1%

NRG Energy 115,100 1,982

1,982

Proof #3


Shares/Par $ Value


28

Multi-Utilities 0.5%

CMS Energy 102,200 4,727

National Grid (GBP) 604,850 7,494

NiSource 188,600 4,783

17,004

Total Utilities 65,914

Total Miscellaneous Common Stocks 1.1% (4) 37,548

Total Common Stocks (Cost $2,626,260) 3,192,222

CONVERTIBLE PREFERRED STOCKS 0.3%

UTILITIES 0.3%

Electric Utilities 0.2%

NextEra Energy 136,388 7,218

7,218

Multi-Utilities 0.1%

DTE Energy 73,350 3,971

3,971

Total Utilities 11,189

Total Convertible Preferred Stocks (Cost $10,476) 11,189

CORPORATE BONDS 0.1%

Agrium, 3.50%, 6/1/23 3,252,000 3,339

CF Industries, 5.375%, 3/15/44 1,517,000 1,358

Total Corporate Bonds (Cost $4,642) 4,697

Proof #3


Shares/Par $ Value


29

SHORT-TERM INVESTMENTS 1.2%

Money Market Funds 1.2%

T. Rowe Price Treasury Reserve Fund, 0.99% (5)(6) 38,907,964 38,908

Total Short-Term Investments (Cost $38,908) 38,908

Total Investments in Securities

98.5% of Net Assets (Cost $2,680,286) $ 3,247,016

‡ 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 $2,665 and represents 0.1% 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) Seven-day yield (6) Affiliated Company

AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar CHF Swiss Franc DKK Danish Krone EUR Euro GBP British Pound 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 ZAR South African Rand

Proof #3


30


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 which is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the six months ended June 30, 2017. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate

PurchaseCost

SalesCost

InvestmentIncome

Value6/30/17

Value12/31/16

T. Rowe Price Treasury Reserve Fund ¤ ¤ $ 278 $ 38,908 $ 87,082

Totals $ 278 $ 38,908 $ 87,082 ¤ Purchase and sale information not shown for cash management funds.

Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 38,908

Dividend income 278 Interest income —

Investment income $ 278

Realized gain (loss) on securities $ —

Capital gain distributions from mutual funds $ —

Proof #3

31


($000s, except shares and per share amounts)

Statement of Assets and Liabilities

Assets

Investments in securities, at value (cost $2,680,286) $ 3,247,016

Receivable for investment securities sold 109,116

Foreign currency (cost $16,516) 16,679

Receivable for shares sold 10,653

Dividends and interest receivable 6,724

Cash 4,332

Other assets 28,959

Total assets 3,423,479

Liabilities

Payable for investment securities purchased 49,721

Payable for shares redeemed 48,277

Investment management fees payable 1,768

Due to affiliates 351

Payable to directors 3

Other liabilities 28,369

Total liabilities 128,489

NET ASSETS $ 3,294,990 Net Assets Consist of:

Undistributed net investment income $ 38,316

Accumulated undistributed net realized loss (676,585)

Net unrealized gain 566,817

Paid-in capital applicable to 304,018,742 shares of $0.0001 par value capital stock outstanding; 1,000,000,000 shares authorized 3,366,442

NET ASSETS $ 3,294,990

Proof #3

32



Statement of Assets and Liabilities

NET ASSET VALUE PER SHARE

Investor Class ($2,885,568,689 / 266,238,204 shares outstanding) $ 10.84

I Class ($409,421,652 / 37,780,538 shares outstanding) $ 10.84

Proof #3


($000s)

Statement of Operations

33

6 Months Ended

6/30/17Investment Income (Loss)

Income Dividend $ 47,510 Interest 664 Other 2

Total income 48,176

Expenses Investment management 10,831 Shareholder servicing

Investor Class 2,355 I Class 2 2,357

Prospectus and shareholder reports Investor Class 13 I Class 1 14

Custody and accounting 227 Registration 30 Legal and audit 19 Directors 6 Miscellaneous 64

Total expenses 13,548

Net investment income 34,628

Proof #3


($000s)

Statement of Operations

34


6 Months Ended

6/30/17 Realized and Unrealized Gain / Loss

Net realized gain (loss) Securities 207,259 Foreign currency transactions 70

Net realized gain 207,329

Change in net unrealized gain / loss

Securities (209,302) When-issued sales commitments 15 Other assets and liabilities denominated in foreign currencies 145

Change in net unrealized gain / loss (209,142)

Net realized and unrealized gain / loss (1,813)

INCREASE IN NET ASSETS FROM OPERATIONS $ 32,815

Proof #3


($000s)

35

Statement of Changes in Net Assets

6 Months Ended

6/30/17

Year Ended

12/31/16 Increase (Decrease) in Net Assets

Operations Net investment income $ 34,628 $ 52,349 Net realized gain (loss) 207,329 (69,160) Change in net unrealized gain / loss (209,142) 892,801 Increase in net assets from operations 32,815 875,990

Distributions to shareholders

Net investment income Investor Class – (58,280) I Class – (6,682)

Decrease in net assets from distributions – (64,962) Capital share transactions*

Shares sold Investor Class 140,898 367,623 I Class 96,571 431,945

Distributions reinvested Investor Class – 58,226 I Class – 6,681

Shares redeemed Investor Class (303,334) (2,676,617) I Class (14,015) (142,030)

Redemption fees received 33 34 Decrease in net assets from capital share transactions (79,847) (1,954,138)

Net Assets

Decrease during period (47,032) (1,143,110) Beginning of period 3,342,022 4,485,132

End of period $ 3,294,990 $ 3,342,022

Proof #3


($000s)

36


Statement of Changes in Net Assets

6 Months Ended

6/30/17

Year Ended

12/31/16

Undistributed net investment income 38,316 3,688

*Share information

Shares sold Investor Class 12,792 37,738 I Class 8,796 41,766

Distributions reinvested Investor Class – 5,488 I Class – 630

Shares redeemed Investor Class (27,536) (256,739) I Class (1,262) (13,180)

Decrease in shares outstanding (7,210) (184,297)

Proof #3

37


Notes to Financial Statements

T. Rowe Price Real Assets Fund (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 Income and expenses are recorded on the accrual 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, would be recorded as income tax expense. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. 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 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.

Proof #3

38


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 date of the transaction. 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.

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 $18,000 for the six months ended June 30, 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.

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 six months ended June 30, 2017, the fund realized $21,680,000 of net gain on $64,602,000 of in-kind redemptions.

Proof #3

39


New Accounting Guidance In October 2016, the Securities and Exchange Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements related to periods ending on or after August 1, 2017; adoption will have no effect on the fund’s net assets or results of operations.

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 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.

Proof #3

40


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.

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.

Proof #3

41


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 port-folio 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.

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.

Proof #3

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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 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.

Proof #3

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Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on June 30, 2017:

($000s) Level 1 Level 2 Level 3 Total Value

Quoted Prices

Significant Observable

Inputs

Significant Unobservable

Inputs

InvestmentsinSecurities,except: $ 38,908 $ — $ — $ 38,908

CommonStocks 1,902,446 1,287,400 2,376 3,192,222

ConvertiblePreferredStocks — 11,189 — 11,189

Corporatebonds — 4,697 — 4,697

Total $ 1,941,354 $ 1,303,286 $ 2,376 $ 3,247,016

There were no material transfers between Levels 1 and 2 during the six months ended June 30, 2017.

Following is a reconciliation of the fund’s Level 3 holdings for the six months ended June 30, 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.

($000s) Beginning Balance1/1/17

Gain (Loss) During Period

Total Purchases

Ending Balance

6/30/17

InvestmentsinSecurities

CommonStocks $ — $ — $ 2,376 $ 2,376

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.

Proof #3

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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 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 $1,190,429,000 and $1,247,342,000, respectively, for the six months ended June 30, 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 amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of the date of this report.

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. As of December 31, 2016, the fund had $764,393,000 of available capital loss carryforwards.

Proof #3

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At June 30, 2017, the cost of investments for federal income tax purposes was $2,750,159,000. Net unrealized gain aggregated $496,944,000 at period-end, of which $610,808,000 related to appreciated investments and $113,864,000 related to depreciated investments.

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% 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 June 30, 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 to exceed the I Class limit in effect at the time of the waiver. However, no repayment will be made more than three years after the date of a payment or waiver. For the six months ended June 30, 2017, the I Class operated below its expense limitation.

Proof #3

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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. For the six months ended June 30, 2017, expenses incurred pursuant to these service agreements were $41,000 for Price Associates; $61,000 for T. Rowe Price Services, Inc.; and less than $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.

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 six months ended June 30, 2017, the fund was charged $147,000 for shareholder servicing costs related to the college savings plans, of which $113,000 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 June 30, 2017, approximately 6% 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 the 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.

Proof #3

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Expenses allocated under these special servicing agreements are reflected as shareholder servicing expenses in the accompanying financial statements. For the six months ended June 30, 2017, the fund was allocated $45,000 of Spectrum Funds’ expenses and $2,075,000 of Retirement Funds’ expenses. Of these amounts, $801,000 related to services provided by Price. At period-end, the amount payable to Price pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. At June 30, 2017, approximately 91% of the outstanding shares of the Investor Class were held by the Spectrum Funds and Retirement Funds, and approximately 4% of the outstanding shares of the I Class were held by the Target 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 June 30, 2017, approximately 57% of the I Class’s outstanding shares were held by Price funds and accounts.

The fund may invest in the T. Rowe Price Government Reserve Fund, the T. Rowe Price Treasury Reserve Fund, or the T. Rowe Price Short-Term Fund (collectively, the Price Reserve Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. 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. 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 six months ended June 30, 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 June 30, 2017.

Proof #3

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Information on Proxy Voting Policies, Procedures, and Records

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.

How to Obtain Quarterly Portfolio Holdings

ThefundfilesacompletescheduleofportfolioholdingswiththeSecuritiesandExchangeCommissionforthefirstandthirdquartersofeachfiscalyearonFormn-q.Thefund’sFormn-qisavailableelectronicallyontheSEC’swebsite(sec.gov);hardcopiesmaybereviewedandcopiedattheSEC’sPublicReferenceRoom,100FSt.n.E.,Washington,dC20549.FormoreinformationonthePublicReferenceRoom,call1-800-SEC-0330.

Proof #3

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Approval of Investment Management Agreement

Eachyear,thefund’sboardofdirectors(board)considersthecontinuationoftheinvestmentmanagementagreement(AdvisoryContract)betweenthefundanditsinvestmentadvisor,T.RowePriceAssociates,Inc.(Advisor).Inthatregard,atanin-personmeetingheldonMarch6–7,2017(Meeting),theboard,includingamajorityofthefund’sindependentdirectors,approvedthecontinuationofthefund’sAdvisoryContract.AttheMeeting,theboardconsideredthefactorsandreachedtheconclusionsdescribedbelowrelatingtotheselectionoftheAdvisorandtheapprovaloftheAdvisoryContract.TheindependentdirectorswereassistedintheirevaluationoftheAdvisoryContractbyindependentlegalcounselfromwhomtheyreceivedseparatelegaladviceandwithwhomtheymetseparately.

Inprovidinginformationtotheboard,theAdvisorwasguidedbyadetailedsetofrequestsforinformationsubmittedbyindependentlegalcounselonbehalfoftheindependentdirectors.InconsideringandapprovingtheAdvisoryContract,theboardconsideredtheinformationitbelievedwasrelevant,including,butnotlimitedto,theinformationdiscussedbelow.TheboardconsiderednotonlythespecificinformationpresentedinconnectionwiththeMeetingbutalsotheknowledgegainedovertimethroughinteractionwiththeAdvisoraboutvarioustopics.Theboardmeetsregularlyand,ateachofitsmeetings,coversanextensiveagendaoftopicsandmaterialsandconsidersfactorsthatarerelevanttoitsannualconsiderationoftherenewaloftheT.RowePricefunds’advisorycontracts,includingperformanceandtheservicesandsupportprovidedtothefundsandtheirshareholders.

Services Provided by the AdvisorTheboardconsideredthenature,quality,andextentoftheservicesprovidedtothefundbytheAdvisor.Theseservicesincluded,butwerenotlimitedto,directingthefund’sinvestmentsinaccordancewithitsinvestmentprogramandtheoverallmanagementofthefund’sportfolio,aswellasavarietyofrelatedactivitiessuchasfinancial,investmentoperations,andadministrativeservices;compliance;maintainingthefund’srecordsandregistrations;andshareholdercommunications.TheboardalsoreviewedthebackgroundandexperienceoftheAdvisor’sseniormanagementteamandinvestmentpersonnelinvolvedinthemanagementofthefund,aswellastheAdvisor’scompliancerecord.Theboardconcludedthatitwassatisfiedwiththenature,quality,andextentoftheservicesprovidedbytheAdvisor.

Investment Performance of the FundTheboardtookintoaccountdiscussionswiththeAdvisorandreportsthatitreceivesthroughouttheyearrelatingtofundperformance.InconnectionwiththeMeeting,theboardreviewedthefund’snetannualizedtotalreturnsfortheone-,two-,three-,four-,andfive-yearperiodsasofSeptember30,2016,andcomparedthesereturnswiththeperformanceofapeergroupoffundswithsimilarinvestmentprogramsandawidevarietyofotherpreviouslyagreed-uponcomparableperformancemeasuresandmarketdata,includingthosesuppliedbybroadridge,whichisanindependentproviderofmutualfunddata.

Proof #3

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Approval of Investment Management Agreement (continued)

Onthebasisofthisevaluationandtheboard’songoingreviewofinvestmentresults,andfactoringintherelativemarketconditionsduringcertainoftheperformanceperiods,theboardconcludedthatthefund’sperformancewassatisfactory.

Costs, Benefits, Profits, and Economies of ScaleTheboardrevieweddetailedinformationregardingtherevenuesreceivedbytheAdvisorundertheAdvisoryContractandotherbenefitsthattheAdvisor(anditsaffiliates)mayhaverealizedfromitsrelationshipwiththefund,includinganyresearchreceivedunder“softdollar”agreementsandcommission-sharingarrangementswithbroker-dealers.TheboardconsideredthattheAdvisormayreceivesomebenefitfromsoft-dollararrangementspursuanttowhichresearchisreceivedfrombroker-dealersthatexecutethefund’sportfoliotransactions.TheboardreceivedinformationontheestimatedcostsincurredandprofitsrealizedbytheAdvisorfrommanagingtheT.RowePricefunds.Theboardalsoreviewedestimatesoftheprofitsrealizedfrommanagingthefundinparticular,andtheboardconcludedthattheAdvisor’sprofitswerereasonableinlightoftheservicesprovidedtothefund.

TheboardalsoconsideredwhetherthefundbenefitsunderthefeelevelssetforthintheAdvisoryContractfromanyeconomiesofscalerealizedbytheAdvisor.undertheAdvisoryContract,thefundpaysafeetotheAdvisorforinvestmentmanagementservicescomposedoftwocomponents—agroupfeeratebasedonthecombinedaveragenetassetsofmostoftheT.RowePricefunds(includingthefund)thatdeclinesatcertainassetlevelsandanindividualfundfeeratebasedonthefund’saveragedailynetassets—andthefundpaysitsownexpensesofoperations(subjecttoanexpenselimitationagreedtobytheAdvisorwithrespecttothefund’sIClass).AttheMeeting,theboardapprovedanadditional0.005%breakpointtothegroupfeeschedule,effectiveMay1,2017.Withthenewbreakpoint,thegroupfeeratewilldeclineto0.265%whenthecombinedaveragenetassetsoftheapplicableT.RowePricefundsexceed$650billion.Theboardconcludedthattheadvisoryfeestructureforthefundcontinuedtoprovideforareasonablesharingofbenefitsfromanyeconomiesofscalewiththefund’sinvestors.

Fees and ExpensesTheboardwasprovidedwithinformationregardingindustrytrendsinmanagementfeesandexpenses.Amongotherthings,theboardrevieweddataforpeergroupsthatwerecompiledbybroadridge,whichcompared:(i)contractualmanagementfees,totalexpenses,actualmanagementfees,andnon-managementexpensesoftheInvestorClassofthefundwithagroupofcompetitorfundsselectedbybroadridge(Expensegroup)and(ii)totalexpenses,actualmanagementfees,andnon-managementexpensesoftheInvestorClassofthefundwithabroadersetoffundswithinthelipperinvestmentclassification(Expenseuniverse).Theboardconsideredthefund’scontractualmanagementfeerate,actualmanagementfeerate(whichreflectsthemanagementfeesactuallyreceivedfromthefundbytheAdvisorafteranyapplicablewaivers,reductions,orreimbursements),operatingexpenses,andtotalexpenses(whichreflectthenettotalexpenseratioofthefundafter

Proof #3

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Approval of Investment Management Agreement (continued)

anywaivers,reductions,orreimbursements)incomparisonwiththeinformationforthebroadridgepeergroups.broadridgegenerallyconstructedthepeergroupsbyseekingthemostcomparablefundsbasedonsimilarinvestmentclassificationsandobjectives,expensestructure,assetsize,andoperatingcomponentsandattributesandrankedfundsintoquintiles,withthefirstquintilerepresentingthefundswiththelowestrelativeexpensesandthefifthquintilerepresentingthefundswiththehighestrelativeexpenses.Theinformationprovidedtotheboardindicatedthatthefund’scontractualmanagementfeerankedinthethirdquintile(Expensegroup),thefund’sactualmanagementfeeraterankedinthefirstquintile(Expensegroup)andsecondquintile(Expenseuniverse),andthefund’stotalexpensesrankedinthefirstquintile(ExpensegroupandExpenseuniverse).

TheboardalsoreviewedthefeeschedulesforinstitutionalaccountsandprivateaccountswithsimilarmandatesthatareadvisedorsubadvisedbytheAdvisoranditsaffiliates.ManagementprovidedtheboardwithinformationabouttheAdvisor’sresponsibilitiesandservicesprovidedtosubadvisoryandotherinstitutionalaccountclients,includinginformationabouthowtherequirementsandeconomicsoftheinstitutionalbusinessarefundamentallydifferentfromthoseofthemutualfundbusiness.TheboardconsideredinformationshowingthattheAdvisor’smutualfundbusinessisgenerallymorecomplexfromabusinessandcomplianceperspectivethanitsinstitutionalaccountbusinessandconsideredvariousrelevantfactors,suchasthebroaderscopeofoperationsandoversight,moreextensiveshareholdercommunicationinfrastructure,greaterassetflows,heightenedbusinessrisks,anddifferencesinapplicablelawsandregulationsassociatedwiththeAdvisor’sproprietarymutualfundbusiness.Inassessingthereasonablenessofthefund’smanagementfeerate,theboardconsideredthedifferencesinthenatureoftheservicesrequiredfortheAdvisortomanageitsmutualfundbusinessversusmanagingadiscretepoolofassetsasasubadvisortoanotherinstitution’smutualfundorforaninstitutionalaccountandthattheAdvisorgenerallyperformssignificantadditionalservicesandassumesgreaterriskinmanagingthefundandotherT.RowePricefundsthanitdoesforinstitutionalaccountclients.

Onthebasisoftheinformationprovidedandthefactorsconsidered,theboardconcludedthatthefeespaidbythefundundertheAdvisoryContractarereasonable.

Approval of the Advisory ContractAsnoted,theboardapprovedthecontinuationoftheAdvisoryContract.nosinglefactorwasconsideredinisolationortobedeterminativetothedecision.Rather,theboardconcluded,inlightofaweightingandbalancingofallfactorsconsidered,thatitwasinthebestinterestsofthefundanditsshareholdersfortheboardtoapprovethecontinuationoftheAdvisoryContract(includingthefeestobechargedforservicesthereunder).

Proof #3

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Proof #3

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Proof #3

F176-051 8/17

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

201708-229579

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.‡‡EffectiveatthecloseofbusinessonFriday,September29,2017,thefundwillbeclosedtonewinvestorsandnewaccounts,subjecttocertainexceptions.

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 Class · PDF fileReal Assets Fund Real Assets Fund– ... • We aim to diversify the portfolio across a range of underlying asset