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US Equities
US GROWTH OPPORTUNITIES
OUTSIDE FANG*
*FACEBOOK, AMAZON, NETFLIX, GOOGLE
Helen Ford, Portfolio Specialist
T. Rowe Price
Trends & Morningstar Roularta event
March 9th 2016
For investment professionals only. Not for further distribution.
2 2
0
0.5
1
1.5
2
2.5
3
Energy Materials Consumer
Discretionary
Industrials Information
Technology
Financials Consumer
Staples
Health Care Telecom. Utilities
Current Relative P/E Ratio
Average P/E Ratio
Past performance is not a reliable indicator of future results.
Sources: FactSet
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of
Russell Investment Group.
0
10
20
30
40
50
60
S&P 500 Russell 1000 Value Russell 1000 Grow th Russell Mid Cap Russell 2000
Current P/E Ratio
Average P/E Ratio
Equity Valuations:
Key Market Indices and Sectors
MARKET INDICES: FORWARD P/E RATIOS
Past 20 years, as of 31 January 2016
SECTORS: FORWARD P/E RATIOS RELATIVE TO THE S&P 500 INDEX
Past 20 years, as of 31 January 2016
P/E Ratio Range over
past 20 years
P/E Ratio Range over
past 15 years
3 3
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
S&
P 5
00 D
iv. Y
ield
Min
us
T
en
Year
Tre
asu
ry Y
ield
S&P 500 DIVIDEND YIELD VS.
10 YEAR TREASURY YIELD
June 1997–January 2016
-5%
-3%
-1%
1%
3%
5%
0
5
10
15
20
25
30
1997 2000 2003 2006 2009 2012 2015
S&P 500: TRAILING PE VS.
RELATIVE EARNINGS YIELD
December 1997– December 2015, quarterly
S&P 500 Trailing PE (LHS)
Average PE
Relative Earnings Yield* (RHS)
Average EY Spread
As of 31 January 2016
Past performance is not a reliable indicator of future results.
* Relative earnings yield is calculated as the S&P 500 Forward Earnings Yield minus the BBB U.S. Corporate Bond Yield
Source: Factset, The Luethold Group
Equity Valuations: Cheap or Expensive?
Average:
-2.29%
Current
0.52%
50%
70%
90%
110%
130%
1983 1987 1991 1995 1999 2003 2007 2011 2015
SMALL-CAP TO LARGE-CAP
HISTORICAL P/E RATIO
Based on Normalized Earnings, January 1983–January 2016
Median:
104%
30
40
50
60
70
80
90
100
110
120
130
700
1,000
1,300
1,600
1,900
2,200
2000 2003 2006 2009 2012 2015
Earn
ing
s P
er
Sh
are
(U
SD
$)
Ind
ex L
evel
S&P 500 INDEX VS EARNINGS PER SHARE
January 2000– January 2016
Price (L) Earnings Per Share (R)
4 4
0%
25%
50%
75%
100%
125%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
VALUATION PREMIUM: GROWTH VS. VALUE
(NTM)
Russell 1000 Growth/Value
Russell 1000 Growth/Value Median
Russell 2000 Growth/Value
Russell 2000 Growth/Value Median
-20%
-10%
0%
10%
20%
30%
40%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FOLLOWING GLOBAL FINANCIAL CRISIS GROWTH STOCKS HAVE MOSTLY OUTPERFORMED
Value - Growth
As of 31 January 2016
Past performance is not a reliable indicator of future results.
Source: Factset, Strategas
Growth Commanding A Smaller-Than-
Average Premium
Value Outperforms
Growth
Outperforms
5 5
0
50
100
150
200
250
300
350
400
Reb
ased
In
de
x L
evel
FACEBOOK AND GOOGLE PRICE vs. S&P 500
December 2010 – January 2016 Facebook
S&P 500
0
100
200
300
400
500
600
Reb
ased
In
de
x L
evel
AMAZON AND NETFLIX PRICE vs. S&P 500
December 2010 – January 2016
Amazon
Netflix
S&P 500
As of 31 January 2016
Past performance is not a reliable indicator of future results.
Source: Factset
FANG - Performance
2014 2015 2016E 2017E
Facebook 58.4% 43.8% 42.0% 32.9%
Amazon 19.5% 20.2% 21.3% 19.4%
Netflix 25.8% 23.2% 29.2% 26.3%
Google 10.2% 13.9% 17.7% 16.4%
S&P 500 3.7% -3.5% 2.0% 6.2%
REVENUE GROWTH ACROSS FANG
6
As of 31 December 2015
Source & Copyright: Citywire. The Fund manager is rated by Citywire based on the manager’s 3 year risk adjusted performance as at 31 December 2015.
Morningstar rating based on A Class performance and Silver Morningstar Analyst Rating of the Fund as at 31 December 2015.
© 2015 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
About The Manager
26 years of investment experience
25 years with T. Rowe Price
1993-Present: PM Blue Chip Growth Strategy
2003-Present: PM US Blue Chip Equity SICAV
Past performance is not a reliable indicator of future performance.
Morningstar rating
T. Rowe Price Funds SICAV- US Blue Chip Equity Fund A Class.
As of 31 December 2015. © Morningstar, Inc. All rights reserved.
*Performance is annualised for periods greater than 1 year.
Period 1 Year 3 Years 5 Years
Performance* 10.87% 19.59% 14.78%
Ranking
Percentile
Ranking
3/64 2/60 2/56
3rd 4th
T. Rowe Price Funds SICAV –
US Blue Chip Equity A Share Class, USD
PERCENTILE RANKING IN MORNINGSTAR
US LARGE-CAP CORE GROWTH EQUITY
LARRY PUGLIA
US Large-Cap Core Growth Equity Portfolio Manager
5th
7 7
Our US Equity Expertise
US Equity AUM: USD490.1B
US Equity Research Analysts: 1021
Combined US Large Cap Growth Assets: USD158.9B2
As of 31 December 2015
1 Includes 12 sector PM’s, 48 research analysts, 30 associate research analysts, 6 quantitative analysts, and 6 specialty analysts. 2 The combined U.S. Large-Cap Growth assets of the T. Rowe Price group of companies. The T. Rowe Price group of companies includes T. Rowe Price Associates, Inc.,
T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd., and T. Rowe Price (Canada), Inc.
Large-Cap Growth investing is a significant
business for T. Rowe Price
8 8
Investing in growth stocks since 1950 – total large-cap growth
equity assets under management exceed USD158 billion1
As of 31 December 2015
1 The combined U.S. Large-Cap Growth assets of the T. Rowe Price group of companies. The T. Rowe Price group of companies includes T. Rowe Price Associates,
Inc., T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd., and T. Rowe Price (Canada), Inc.
The T. Rowe Price Growth
Investing Advantage
The energy and focus of a boutique endowed with the
resources of a global organization
Extensive US small-/mid-cap and non-US research and portfolio
management resources complement our large-cap growth
investing activities
The T. Rowe Price Funds SICAV – US Blue Chip Equity Fund has
had the same portfolio manager since the Fund’s inception
– Larry Puglia
9
As of 31 December 2015
Investment Team
10
As of 31 December 2015
Equity Research Team
11
Objective –
Sustainable Competitive Advantage
Focus on leading business franchises that can successfully
weather economic cycles.
Attractive business model
in growth industry
Seasoned, shareholder-
oriented management
Significant free cash flow
generation
Above-average, durable
revenue and earnings growth
Competitive
Advantage
12 12
Our Blue Chip Growth Philosophy
Companies operating in fertile growth fields can best grow sales and earnings
Durable and sustainable earning and free cash flow growth drive investment
returns over time
Strong management teams who skillfully reinvest cash flow can significantly
enhance company performance
Fundamental research is essential to the identification of long-term growth
opportunities
Valuation matters – investors must be careful to avoid overpaying for growth
Diversified portfolios help to manage portfolio risk profile
13 13
Investment Process
USD
14 14
Portfolio Snapshot
As of 31 December 2015, Figures Shown in US Dollars
T. ROWE PRICE FUNDS SICAV—US BLUE CHIP EQUITY FUND
Past performance is not a reliable indicator of future performance.
15 15
Total Return Performance – Class A
As of 31 December 2015 Figures Shown in US Dollars
T. ROWE PRICE FUNDS SICAV—US BLUE CHIP EQUITY FUND
Past performance is not a reliable indicator of future performance.
Annualized
Three
Months
One
Year
Three
Years
Five
Years
Seven
Years
Ten
Years
Since Inception 5
Feb 2003
US Blue Chip Equity Fund Class A 11.09 10.87 19.59 14.78 18.47 8.23 9.73
S&P 500 Index 7.04 1.38 15.13 12.57 14.81 7.31 9.32
Value Added¹ 4.05 9.49 4.46 2.21 3.66 0.92 0.41
Russell 1000 Growth Index 7.32 5.67 16.83 13.53 17.11 8.53 10.02
Value Added² 3.77 5.2 2.76 1.25 1.36 -0.3 -0.29
16 16
Three Year Rolling Returns –
TRP Funds SICAV – US Blue Chip Equity Fund Class A (Annualized Net of Fees)
vs. S&P 500 Index and Russell 1000 Growth Index
-40
-20
0
20
40
-40 -20 0 20 40
vs. S&P 500 Index
vs. Russell 1000 Growth Index
Fund Underperformance
US
Blu
e C
hip
Eq
uity F
un
d C
lass A
Percent
Past performance is not a reliable indicator of future performance.
Each point represents the performance of the fund and its benchmark for a three-year annualized period. Points above the diagonal represent outperformance
relative to the benchmark. Points below the diagonal represent relative underperformance. Figures shown net of fees.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of
Russell Investment Group.
Calculated Quarterly from 31 December 2005 through 31 December 2015
Fund Outperformance
17 17
Positioning: Structural Themes
UBIQUITOUS & EXPERIENCE RICH INTERNET
(convergence of communications & computing) As of 31 January 2016
Past performance is not a reliable indicator of future performance.
* Sources: Factset, Standard & Poor's, RBC Capital Markets
The specific securities identified and described above do not necessarily represent securities purchased or sold by T. Rowe Price. This information is not intended to
be a recommendation to take any particular investment action and is subject to change. No assumptions should be made that the securities identified and discussed
above were or will be profitable. The views and opinions above are as of 31 January 2016.
LEGACY TECHNOLOGY
COMPANIES
Intel, Cisco, Hewlett-
Packard, Oracle
ENTERPRISE ADOPTION
OF CLOUD COMPUTING
Red Hat , Salesforce.com,
Amazon.com, Workday,
ServiceNow, NetSuite,
Microsoft
BUSINESS MODELS
ENABLED BY ACCESS
TO RICH INTERNET
CONTENT
Google, Amazon, Baidu,
Priceline, LinkedIn, Netflix,
Facebook, Ctrip.com
International
INFRASTRUCTURE
PROVIDERS
Juniper Networks, Akamai,
Crown Castle, VMware
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Cu
mu
lati
ve P
erf
orm
an
ce (
%)
TECHNOLOGY
S&P 500 New Tech*
S&P 500 Transitional Tech*
S&P 500 Old Tech*
18
As of 31 January 2016
Sources: World Bank, Centers for Medicare & Medicaid Services, Factset
The specific securities identified and described above do not represent all of the securities purchased, sold, or recommended for the SICAV sub-fund and no
assumptions should be made that the securities identified and discussed were or will be profitable.
Positioning: Structural Themes
COST EFFECTIVE & INNOVATIVE SOLUTION
DRIVEN HEALTHCARE
Addressing unmet clinical needs – Gilead, Celgene, Biogen, Regeneron, Alexion, Vertex
Cost-effective therapy – McKesson, UnitedHealth, Cardinal Health, Humana
0
4
8
12
16
20
1960 1966 1972 1978 1984 1990 1996 2002 2008 2014
%
INCREASING HEALTHCARE SPEND
DRIVEN BY AGEING POPULATION
December 1960 – December 2014
National health expenditure (% of GDP)
Population ages 65 and above (% of total)
-20
-15
-10
-5
0
5
10
15
20
25
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Cu
mu
lati
ve P
erf
orm
an
ce (
%)
HEALTH CARE S&P 1500 Biotech
S&P 1500 Health Care Technology
APPENDIX
20
1 The combined U.S. Large-Cap Growth assets of the T. Rowe Price group of companies. The T. Rowe Price group of companies includes T. Rowe Price Associates,
Inc., T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd., and T. Rowe Price (Canada), Inc. 2 The total US Large-Cap Core Growth Equity Strategy assets of the T. Rowe Price group of companies. 3 Corporate, Public, Non-Profit, Taft-Hartley, Endowments/Foundations, and Sub-Advisory clients.
US Large-Cap Growth Assets
Under Management
21 21
Portfolio Construction and
Risk Management
Individual position sizes are typically +/-3% relative to S&P 500 Index and +/-4%
versus the Russell 1000 Growth Index weightings
Typical position sizes range from 0.25% to 5.00%
Sector weights typically range from 0.5X to 2.0X for primary S&P 500 Index
sectors1 and 0.5X to 3.0X for primary Russell 1000 Growth Index sectors2
Portfolio turnover typically ranges from 30%-45% annually
Monthly attribution analysis employed to confirm and evaluate source of
investment returns
Management oversight throughout the process, including Equity Steering
Committee and Risk Management Working Group
1 Sectors representing 10%+ of the S&P Index. 2 Sectors representing 10%+ of the Russell 1000 Growth Index.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyright related to the Russell indexes. Russell® is a trademark of Russell
Investment Group.
22
The specific securities identified and described above do not represent all of the securities purchased, sold, or recommended for the SICAV sub-fund and no
assumptions should be made that the securities identified and discussed were or will be profitable.
The information shown does not reflect any exchange-traded funds that may be held in the portfolio. Numbers may not total due to rounding. Listed holdings are a
portion of the fund’s total and may change at any time. They are not recommendations to buy or sell any security. Data is expressed as a percentage of net assets
and excludes cash and cash equivalents.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyright related to the Russell indexes. Russell® is a trademark of Russell
Investment Group.
10 Largest Over/Underweights
T. Rowe Price Funds SICAV – US Blue Chip Equity Fund Relative to the Russell 1000 Growth Index
As of 31 January 2016
T. Rowe Price Funds SICAV – US Blue Chip Equity Fund Relative to the S&P 500 Index
As of 31 January 2016
10 Largest Overweights % of
Fund
% of
Index Difference
Amazon.com 7.3 1.3 6.0
Alphabet 7.7 2.6 5.1
Facebook 4.6 1.5 3.1
Danaher 3.1 0.3 2.8
Priceline 3.0 0.3 2.7
Visa 3.1 0.9 2.2
Mastercard 2.6 0.5 2.1
Alexion Pharmaceuticals 2.2 0.2 2.0
Allergan 2.6 0.7 1.9
McKesson 1.9 0.2 1.6
10 Largest Underweight % of
Fund
% of
Index Difference
Exxon Mobil Corporation 0.0 1.9 -1.9
Apple 1.4 3.2 -1.8
Johnson & Johnson 0.0 1.7 -1.7
GE 0.0 1.6 -1.6
Berkshire Hathaway 0.0 1.4 -1.4
Wells Fargo 0.0 1.4 -1.4
Procter & Gamble 0.0 1.3 -1.3
AT&T 0.0 1.3 -1.3
J.P. Morgan Chase & Co. 0.0 1.3 -1.3
Verizon 0.0 1.2 -1.2
10 Largest Overweights % of
Fund
% of
Index Difference
Amazon.com 7.3 2.2 5.0
Alphabet 7.7 4.4 3.3
Danaher 3.1 0.1 3.0
Priceline 3.0 0.6 2.5
Facebook 4.6 2.4 2.1
Allergan 2.6 0.5 2.1
Alexion Pharmaceuticals 2.2 0.3 1.9
MasterCard 2.6 0.9 1.7
Visa 3.1 1.5 1.6
McKesson 1.9 0.4 1.5
10 Largest Underweights % of
Fund
% of
Index Difference
Apple 1.4 5.6 -4.2
Verizon Communications 0.0 1.9 -1.9
Coca-Cola 0.0 1.7 -1.7
PepsiCo 0.0 1.5 -1.5
Comcast 0.0 1.3 -1.3
McDonald’s 0.0 1.2 -1.2
Altria Group 0.0 1.1 -1.1
Amgen 0.0 1.2 -1.1
3M 0.0 1.0 -1.0
AbbVie 0.1 0.9 -0.9
23 23
Portfolio Turnover
Investors, not traders
Sources: T. Rowe Price, Morningstar as of 31/12/15
2009 2010 2011 2012 2013 2014 2015
T. Rowe Price Funds SICAV –
US Blue Chip Equity Fund 71% 43% 48% 28% 68% 36% 36%
Morningstar US Large Growth
Category Average 109% 91% 88% 78% 79% 75% 69%
Our low-turnover approach can help
allow earnings to compound and reduces
trading costs.
24 24
Market Capitalization
Figures may not add to 100% due to rounding.
As of 31 January 2016 Market Capitalization shown in US Dollars
T. ROWE PRICE FUNDS SICAV—US BLUE CHIP EQUITY FUND
$0-$10 Billion
1%
$10-$25 Billion
10%
$25-$50 Billion
18%
$50+ Billion
70%
Alaska Air Group Ameriprise Financial Northern Trust Aetna Intercontinental Exchange AbbVie Kraft Heinz
Ashland Amerisource Bergen Norwegian Cruise Line Holdings Alexion Pharmaceutical Kroger Allergan Lockheed Martin
Borg-Warner AutoZone Perrigo American Airlines Las Vegas Sands Alphabet Lowes
Carmax Canadian Pacific Railway Pioneer Natural Resources American Tower Marsh & McLennan Amazon.com MasterCard
Cimarex Energy Chipotle Mexican Grill Red Hat Anthem McKesson Amgen McDonalds
Flowserve Concho Resources Rockwell Collins Avago Technologies Monster Beverage Apple Medtronic
Hologic Delphi Automotive Roper Technologies Bank Of New York Mellon Morgan Stanley Biogen Microsoft
Hunt J B Trans Services Electronic Arts Ross Stores Baxalta Netflix Boeing Nike
IHS First Data Royal Caribbean Cruises Becton Dickinson & Company Northrop Grumman Bristol-Myers Squibb Priceline
MGM Resorts International Fiserv Sherwin-Williams Cardinal Health O Reilly Automotive Celgene Starbucks
PVH Hanesbrands State Street Carnival PayPal Holdings Chubb Thermo Fisher Scientific
ServiceNow Henry Schein Synchrony Financial Cigna PPG Industries Citigroup Time Warner
Wabtec Hilton Worldwide Holdings TD Ameritrade Holding Cognizant Technology Solutions Regeneron Pharmaceutical Costco Wholesale Union Pacific
Incyte Tesla Motors Constellation Brands Salesforce CVS Health UnitedHealth Group
Intuitive Surgical Tractor Supply Delta Air Lines Shire Danaher Visa
L Brands United Continental Holdings Elab Stryker Eli Lilly Walgreens Boots Alliance
Linkedin Vertex Pharmaceuticals Estee Lauder T-Mobile Facebook Walt Disney
Marriott Willis Towers Watson FedEx V. F. Gilead Sciences
Molson Coors Brewing Zoetis Humana Valeant Pharmaceuticals Home Depot
25 25
Risk/Return Characteristics
Five Years Ended 31 January 2016
Past performance is not a reliable indicator of future performance.
This information demonstrates, in part, the firm’s Risk/Return analysis. This material is provided for informational purposes only and is not intended to be investment
advice or a recommendation to take any particular investment action. Statistics are based on monthly net returns. Russell Investment Group is the source and owner
of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Five Years
T. Rowe Price Funds
SICAV – US Blue Chip
Equity Fund Class A
S&P 500 Index
Annualised Total Return 12.07 10.91
Annualised Standard Deviation 15.31 11.88
Historical Tracking Error 6.95
Beta 1.16 1
R-Squared 0.81 1
Alpha -0.27
Sharpe Ratio 0.78 0.91
Information Ratio 0.17
Five Years
T. Rowe Price Funds
SICAV – US Blue Chip
Equity Fund Class A
Russell 1000
Growth Index
Annualised Total Return 12.07 11.67
Annualised Standard Deviation 15.31 12.27
Historical Tracking Error 5.79
Beta 1.17 1
R-Squared 0.88 1
Alpha -1.21
Sharpe Ratio 0.78 0.94
Information Ratio 0.07
26
US Blue Chip Equity Fund Class A
S&P 500 Index
Russell 1000 Growth Index
8
12
16
8 12 16
Five Years Ended 31 January 2016
Past performance is not a reliable indicator of future performance.
This information demonstrates, in part, the firm’s Risk/Return analysis. This material is provided for informational purposes only and is not intended to be investment
advice or a recommendation to take any particular investment action. Statistics are based on monthly net returns.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell
Investment Group.
Risk/Return Characteristics
Avera
ge
An
nu
al
Retu
rn (
%)
Average Annual Standard Deviation (%)
27
0
200
400
600
800
1,000
1,200
00 02 04 06 08 10 12 14 16
0
50
100
150
200
250
300
Nu
mb
er
of
Deals
$ B
illi
on
s (
US
D)
US M&A DEAL VALUE
January 2000 - January 2016
Value of Deals (L) Number of Deals (R)
$0 $100000 $200000 $300000 $400000 $500000
Discretionary
Industrials
Technology
Staples
Materials
Utilities
Healthcare
Financials
Energy
Telecom
Total Transaction Value ($MM USD)
COMPLETED GLOBAL M&A BY INDUSTRY
January 2015 – December 2015
Sources: T. Rowe Price, Factset, Standard & Poor‘s
Continuation of Deals Following Period
of Increased Capital Return
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013
NEW ISSUES, US CORPORATE BONDS
(TRAILING TWELVE MONTHS, $B USD) As of 31 October 2015
50
100
150
200
250
1995 1999 2003 2007 2011 2015
TOTAL DEBT AS % OF TOTAL EQUITY
December 1994 - January 2016
S&P 500 Large Cap
28 28
All currency in US Dollars
Sources: Deutsche Bank, World Federation of Exchanges, Strategas, Factset
The Impact of Share Buybacks
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Co
ntr
ibu
tio
n o
f tt
m e
ps
gro
wth
SHARE BUYBACKS HAVE HAD A LIMITED
IMPACT ON EPS GROWTH
As of 31 December 2014 Buybacks Net Margin Sales
2,000
4,000
6,000
8,000
10,000
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
MEANINGFUL SHRINKAGE IN THE
NUMBER OF US LISTED COMPANIES
As of 31 December 2015
8,823
5,250
0
100
200
300
400
500
600
700
800
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
$b
ns U
SD
Quarterly
ANNOUNCED BUYBACK CURRENTLY
AHEAD OF ACTUAL BUYBACKS
As of 30 June 2015
Buyback Announcements
Gross Buybacks
-9.7 -50
0
50
100
150
200
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
5-y
r ch
g in
S&
P 5
00 S
ha
res
O
uts
tan
din
g $
bn
s U
SD
SHARES OUTSTANDING IN THE S&P HAS
DECREASED FROM 2011-2014
As of 31 December 2014
29 29
-22.4
-1.5
32.2
26.1
18.7
12.4 7.5
-20.5
-39.7
78.1
17.7
5.0 4.1 6.9
-1.5
7.8
12.5 10.1
-60.00
-40.00
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
%
S&P 500 INDEX EARNINGS
PER SHARE GROWTH
2001 – 2018E*
9.8
-1.2
4.4
10.6
13.0
11.2
7.1
8.9
-12.9
7.8
9.9
3.1 2.1
3.7
-3.6
1.8
6.3 5.7
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
%
S&P 500 INDEX REVENUE
GROWTH
2001 – 2018E*
As of 30 September 2015
Past performance is not a reliable indicator of future results.
Chart is shown for illustrative purposes only and does not represent the performance of any specific security.
* Institutional Brokers’ Estimate System (IBES) estimate.
Sources: FactSet, Standard & Poor’s.
Earnings And Revenues Under Pressure –
Reversal Forecast In 2016
30 30
Headwinds from Energy and Currency
Expected to Subside
As of 31 December 2015
Past performance is not a reliable indicator of future results. 1 Source: Standard & Poor’s, RBC Capital Markets 2 Note: Bottom-up consensus expectations; YoY growth of current
constituents
Source: S&P, Thomson Financial, Compustat, FactSet and RBC
Capital Markets
ENERGY AND THE DOLLAR ARE
WEIGHING ON 2015 EARNINGS
EXPECTATIONS2
THESE IMPACTS ARE EXPECTED
TO REVERSE IN 20162
-20
-10
0
10
20
30
40
50
60
70
80
2008Q1
2008Q4
2009Q3
2010Q2
2011Q1
2011Q4
2012Q3
2013Q2
2014Q1
2014Q4
2015Q3
2016Q2(E)
Earn
ing
s P
er
Sh
are
($)
S&P 500 OPERATING EARNINGS
PER SHARE BY SECTOR1
January 2008 – December 2016 (E)
S&P 500 Health Care, Information Technology
S&P 500 Financials and Utilities
S&P 500 Energy, Industrials, Materials
S&P 500 Consumer Discretionary, ConsumerStaples
31
As of 31 January 2016
Past performance is not a reliable indicator of future results. 1 EBIT Margins = Earnings Before Interest and Taxes. Where data is not yet reported, IBES estimates are used.
Sources: FactSet, Standard & Poor’s.
Corporate Profit Margins Have Plateaued
S&P 500 INDEX RETURN ON EQUITY
2000 – 2015
S&P 500 INDEX: CUMULATIVE
GROWTH OF EARNINGS COMPONENTS
MARCH 2009 – JAN 2016
SIGNS OF REVENUE GROWTH
IMPROVEMENT
JUNE 2001 – JAN 2016
0
2
4
6
8
10
12
14
16
18
20
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
%
6
7
8
9
10
11
12
13
14
15
16
-40
-30
-20
-10
0
10
20
30
40
50
2001 2003 2005 2007 2009 2011 2013 2015
%
Revenues (Y/Y% Change) (L)
EBIT Margin (Y/Y% Change) (L)
EBIT Margin (%) (R)
0
2
4
6
8
10
12
14
16
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
%
S&P 500 INDEX EBIT MARGINS1
2000 – 2015
72%
68%
12%
-40
-20
0
20
40
60
80
100
2009 2010 2011 2012 2013 2014 2015
Ind
ex L
evel
Earnings Per Share
Net Margin
Revenue Per Share
32 32
-10
-8
-6
-4
-2
0
2
4
6
8
10
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Perc
en
t C
ha
ng
e, A
nn
ua
l R
ate
REAL GDP
MARCH 2001–DECEMBER 2015
As of 31 January 2016
Notes: A = Actual; E = U.S Fed; AR = Annual Rate; YA = Year Ago.
* Real GDP and CPI are Q4/Q4; unemployment rate is Q4 average, corporate profits are year./year.
Forecast includes data released through 5 March 2013.
Source: Factset, Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve
US Economy: Modest Growth, Tame
Inflation, and Improved Labour Market
US ECONOMIC PROJECTIONS
ANNUAL PROFILE*
2015(A) 2016(E) 2017(E) 2018(E)
Real GDP (% chg., ar) 2.1 2.3 2.2 2.0
Unemployment Rate (%) 5 4.8 4.8 4.8
Consumer Price Index (% chg., ar) 0.4 1.7 1.9 2.0
-1,000
-800
-600
-400
-200
0
200
400
600
3
4
5
6
7
8
9
10
11
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Ch
an
ge in
No
n-f
arm
Payro
lls
Un
em
plo
ym
en
t (%
)
UNEMPLOYMENT AND
NON-FARM PAYROLLS
MAY 2001–JANUARY 2016
Non-farm Payrolls (R)
Unemployment (L)
33 33
-2
-1
0
1
2
3
4
5
Perc
en
t ch
an
ge,
year
ag
o
INFLATION: PCE PRICE INDEX
JANUARY 2006 – DECEMBER 2015
All Items
Excl. Food & Energy
FED Target
0
2
4
6
8
10
12
1
2
3
4
5
99 01 03 05 07 09 11 13 15
% y
/y
Avg hourly earnings: total pvt industries (L)
Fed funds target rate (R)
As of 31 January 2016
Source: Haver Analytics, Bureau of Economic Analysis, Bureau of Labor Statistics
A Closer Look at Inflation
HISTORICALLY THE FED HAS HIKED
WHEN WAGES STARTED RISING
Fed long-term
objective 2%
34 34
0
2
4
6
8
10
12
14
16
18
0
2
4
6
8
10
12
14
16
18
04 05 06 07 08 09 10 11 12 13 14 15
%
%
STRONG JOB CREATION
Full time (LHS)Part time (RHS)
0
5
10
15
04 05 06 07 08 09 10 11 12 13 14
%
UNEMPLOYMENT RATE BY
QUALIFICATION
College graduates: 25+ yrs
Less than HS diploma: 25+ yrs
As of 31 January 2016
Source: Haver Analytics, Bureau of Labor Statistics
A Closer Look at Employment Trends
0
1
2
3
4
5
6
7
8
9
10
93 95 97 99 01 03 05 07 09 11 13
% o
f L
ab
ou
r F
orc
e
UNEMPLOYMENT RATE BY DURATION
Less than 5 weeks 5 to 14 weeks
15-26 weeks 27 weeks and above
0
1
2
3
4
5
6
7
8
9
10
-1200
-1000
-800
-600
-400
-200
0
200
400
600
800
85 90 95 00 05 10 15
m/m
ch
g
THE FED HAS HISTORICALLY
HIKED RATES 2-3 YEARS AFTER
THE TROUGH IN EMPLOYMENT
GROWTH
Change in payroll employment
Fed funds target rate
Pre-crisis Average
UPDATED UPDATED
0
2
4
6
8
10
12
14
16
18
UNEMPLOYMENT RATE VS. PART TIME
January 2000 - January 2016
Official (U3) Unemployment Rate
U6 Unemployment (Marginally attachedand Part Time)
35 35
0
20
40
60
80
100
120
140
160
180
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
93 95 97 99 01 03 05 07 09 11 13 15
Th
ou
san
d B
arr
els
Per
Day
US PRODUCING MORE AND IMPORTING LESS
US Crude Oil Field Production (LHS)
US Petroleum Products Net Imports From All Countries (LHS)
WTI Crude Oil ($/bbl USD) (RHS)
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
05 06 07 08 09 10 11 12 13 14 15
Th
ou
san
d B
arr
els
Per
Day
US CRUDE OIL PRODUCTION VS. RIG COUNT
US Crude Oil Field Production (LHS)
Oil Rigs (RHS)
As of 31 December 2015
Sources: Factset, Energy Information Agency, Baker Hughes, Deutsche Bank, Bureau of Economic Analysis, St. Louis Fed
The US Shale Oil Revolution
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
63 67 71 75 79 83 87 91 95 99 03 07 11 15
OIL CONSUMPTION AS A % OF GDP
0
20
40
60
80
100
120
140
160
45
50
55
60
65
70
92 93 95 97 99 01 03 04 06 08 10 12 14 15
$U
SD
OECD INVENTORY DAYS OF DEMAND VS.
OIL PRICE (BRENT CRUDE)
Total OECD Inventory Days of Demand (L)
Oil Price (R)
36 36
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
2010 2011 2012 2013 2014 2015E 2016E
Upstream
Midstream
Downstream
As of 30 November 2015
Sources: Jeffries Capex Survey, FactSet Capex Data, TRP Estimates,
Haver Analytics, Bureau of Economic Analysis, Bureau of Labor Statistics, Census Bureau, Deutsche Bank Research, T. Rowe Price
Economic Impact of Lower Energy Prices
OIL & GAS CAPEX FORECAST
-500
0
500
1000
1500
2000
2500
3000
3500
4000
Jul-14 Nov-14 Mar-15 Jul-15 Nov-15
Th
ou
san
ds
JOB CREATION SINCE THE SUMMER OF 2014
Manufacturing Sector
Mining and Logging Sector
Service Sector
37 37
9
10
11
12
13
70
80
90
100
110
120
130
97 99 01 03 05 07 09 11 13 15
Perc
en
t of D
isp
os
ab
le In
co
me
Perc
en
t o
f D
isp
os
ab
le In
co
me
HOUSEHOLD DEBT AND DEBT SERVICE AS
% OF DISPOSABLE INCOME
DECEMBER 1997–SEPTEMBER 2015
Mortgage Debt & Consumer Credit (L)
Household Debt Service Ratio (R)
As of 31 January 2016
Sources: Haver Analytics, Bureau of Economic Analysis, T. Rowe Price
US Consumer: Lower Debt and Improved
Labour Market to Drive Income and Spending
-8
-6
-4
-2
0
2
4
6
8
08 09 10 11 12 13 14 15
Perc
en
t C
ha
ng
e, Y
ear
Ag
o
PAYROLL VS. PERSONAL
CONSUMPTION EXPENDITURES
JANUARY 2008-JANUARY 2016
Payroll Index, Private Industries
Personal Consumption Expenditures
38 38
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
95
115
135
155
175
195
215
04 05 06 07 08 09 10 11 12 13 14 15
Med
ian
In
co
me a
s o
f %
of
Qu
ali
fyin
g I
nc
om
e*
MORTGAGE RATES AND HOUSING
AFFORDABILITY
JULY 2004 – JANUARY 2016
Affordability (LHS)
30 yr rate (RHS)
200
700
1200
1700
2200
04 05 06 07 08 09 11 12 13 14 15
12-q
tr. C
hg
., A
R,
tho
us
an
ds
HOUSING STARTS VS.
HOUSEHOLD FORMATIONS
JULY 2004 – JANUARY 2016
Household Formation
Housing Starts
As of 31 January 2016
*Housing Affordability compares the hypothetical mortgage payment on a median priced house to median household income. An index of 100 means this “median”
payment is equal to the amount of income necessary to meet traditional loan quality standards
Source: Haver Analytics, U.S. Census Bureau, National Association of Realtors, Standard & Poor's
How Robust is the Housing Recovery?
Average
affordability
154.8
39 39
90
100
110
120
130
140
150
160
170
1 5 9 13 17 21 25 29 33 37
Number of Months after Bull Market Inception
CUMULATIVE GDP GROWTH IN
BULL MARKETS
March 2009 - Sep 2015
Sept 2002 - Oct 2007
Oct 1990 - Jan 2000
Nov 1987 - July 1990
Aug 1982 - Aug 1987
0
50
100
150
200
250
300
350
400
450
500
1 5 9 13 17 21 25 29 33 37
Number of Quarters after Bull Market Inception
S&P 500 EARNINGS IN BULL
MARKETS
March 2009 - Sep 2015Sept 2002 - Oct 2007Oct 1990 - Jan 2000Nov 1987 - July 1990Aug 1982 - Aug 1987
As of 31 December 2015
Past performance is not a reliable indicator of future results.
Chart is shown for illustrative purposes only and does not represent the performance of any specific security.
Source: FactSet, Haver Analytics
Muted Growth but Strong Returns
Recent US Bull Market Periods Duration (months) S&P Cumulative Return S&P Annualised Return
Aug 1982 - Aug 1987 61 280% 30%
Nov 1987 - July 1990 33 56% 18%
Oct 1990 - Jan 2000 112 469% 20%
Sept 2002 - Oct 2007 62 86% 13%
March 2009 - December 2015 83 221% 19%
Average 70.2 222% 20%
40 40
How Long Can the US Equity Bull Market
Last?
Bull Market
Start
Bull Market
End
Cumulative
S&P 500 Total
Return
Length in
Months
Recession
Start
Recession
End
Oct-1966 Nov-1968 48% 26 Dec-1969 Dec-1970
May-1970 Jan-1973 74% 32 Nov-1973 Apr-1975
Oct-1974 Feb-1980 90% 65 Jan-1980 Aug-1980
Mar-1980 Nov-1980 43% 8 Jul-1981 Dec-1982
Aug-1982 Aug-1987 229% 61 N/A N/A
Dec-1987 Jul-1990 65% 32 Jul-1990 Apr-1991
Oct-1990 Mar-2000 417% 115 Mar-2001 Dec-2001
Oct-2002 Oct-2007 101% 61 Dec-2007 Jul-2009
As of 30 September 2015
Past performance is not a reliable indicator of future results.
Chart is shown for illustrative purposes only and does not represent the performance of any specific security.
Sources: RBC Capital Markets, Standard & Poor’s, Haver Analytics
The passage of time does not typically bring the end to a bull market. Rather they end when an economic
recession sets in. In the last 50 years, the only exception was the bull market of 1982-87, which was followed
by a bear market that lasted only 3 months.
41 41
How Long Can the US Equity Bull Market
Last? Part II
Bear Market Timing S&P 500 Cumulative Price Return
Recession
Period
Start
Date
# of Months
Before Recession
Bear Market
Peak to Trough
1 Year Prior to
Start of Bear
Market
2 Years Prior to
Start of Bear
Market
Dec 69 – Dec 70 Nov-68 11 -36.06% 15.29% 34.70%
Nov 73 – Apr 75 Jan-73 10 -48.20% 16.07% 29.68%
Jan 80 – Aug 80 Feb-80 -1 -17.07% 19.72% 31.81%
Jul 81 – Dec 82 Nov-80 8 -27.11% 31.61% 47.68%
Jul 90 – Apr 91 Jul-90 0 -19.92% 11.18% 35.62%
Mar 01 – Dec 01 Mar-00 12 -49.15% 18.41% 38.15%
Dec 07 – Jul 09 Oct-07 2 -56.78% 15.88% 30.88%
Median n/a 8 -36.06% 16.07% 34.70%
Average n/a 6 -36.33% 18.31% 35.50%
As of 30 September 2015
Past performance is not a reliable indicator of future results.
Chart is shown for illustrative purposes only and does not represent the performance of any specific security.
Sources: RBC Capital Markets, Factset, Standard & Poor’s
While a recession does not appear imminent we do appear to be in the mid to late stages of the current
economic expansion. Bear markets typically begin before the recession occurs, but performance typically
remains strong in the latter stages of a bear market.
42
Helen Ford
Portfolio Specialist, US equities
Biographies
Helen Ford is a portfolio specialist in the Equity Division at T. Rowe Price, representing the firm's US equity portfolio
managers to institutional clients, consultants and prospects.
Mrs. Ford has 28 years of investment experience. She joined the firm in 2007 from the Kuwait Investment Office (KIO)
where she was head of US equities for nearly three years. Prior to joining the KIO, she was the financials and health
care manager within Cazenove's global equity team, and before that, she was head of US equities at SLC Asset
Management.
Mrs. Ford holds a B.Sc. (Hons.) degree (1st) from the Open University and is a member of the CFA Institute, having
completed the Institute of Investment Management and Research examinations.
Philippe Goettmann
Head of Distribution Belgium, Luxembourg and France
Tel. +352 274 725 28
Philippe J. Goettmann leads the development of relationships with financial intermediaries and distribution networks
Belgium, France, Luxembourg and Monaco for T. Rowe Price.
He joined T. Rowe Price in 2014 and has 19 years of industry experience. Mr. Goettmann was previously head of
distribution and sales in France and Monaco for Deutsche Asset & Wealth Management (formerly DWS).
Prior to this he spent 10 years responsible for distribution in Belgium and Luxembourg for DWS and ING Investment
Management. Philippe started his career as Legal Officer for Société Générale Bank & Trust in Luxembourg.
43 43
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