Important disclosures appear on the last page of this report.

Krause Fund Research Fall 2009

Krause Fund Recommendation: BUY Analysts

Herbert Hicks herbert-hicks@uiowa.edu

Jonathan Frank jonathan-frank@uiowa.edu

Company Overview T. Rowe Price Group, Inc. (TROW) is an asset management firm that specializes in equity, fixed income, blended asset, and money market mutual funds. They have both individual and institutional investors. TROW was founded in 1937 and went public in 1986 on the NASDAQ stock exchange. Their investment approach is centered on low cost funds and low cost portfolio management. Stock Performance Highlights 52 week High $55.48 52 week Low $20.09 Beta Value 1.67 Average Daily Volume 2.40 m Share Highlights Market Capitalization $13.42 b Shares Outstanding 257.5 m Book Value per share $10.65 EPS (2010E) $2.44 P/E Ratio 21.2 Dividend Yield 1.94% Dividend Payout Ratio 59.5% Company Performance Highlights ROA 17.27% ROE 14.96% Sales $1.86 b Financial Ratios Current Ratio 3.742 Debt to Equity 0.00%

T. Rowe Price Group Inc. (NASDAQ: TROW) November 13, 2009

Current Price $51.03 Target Price Range $55-$58

T. Rowe is Positioned to Grow

• Roughly 78 million American’s in the Baby Boomer generation are nearing retirement. The U.S. Census Bureau estimates that the 65 years and older population will almost double by the year 2030 (2008 U.S. Population Estimates – Census). This demographic is likely to save more money to prepare for retirement and replenish shrunken 401(k) and IRA accounts. • T. Rowe Price has very low expense ratios compared to peers which will lead to a gain in market share over their competitors. 80% of their mutual funds have beaten their Lipper leader average for 3-, 5-, and 10-year periods (TRowePrice.com). T. Rowe Price’s mutual funds are a much cheaper, and often better performing, alternative to their larger peers. • With high levels of excess cash, the firm is easily positioned to further diversify globally, which is one of the primary goals of their management. T. Rowe Price recently acquired a 26% stake in UTI Asset Management, an Indian mutual fund manager with a 10% market share in Indian mutual fund assets. • T. Rowe Price has relatively low levels of assets under management compared to peers. While this may seem as a disadvantage, they are poised for growth. One Year Stock Performance

Figure 1

Important disclosures appear on the last page of this report.

We have determined that shares of T. Rowe Price Group

Inc’s equity are undervalued at their current market price and therefore we are assigning a BUY recommendation with a target price range of $55-$58. T. Rowe Price specializes in mutual funds, 401(k)’s and other retirement planning products and services. There are roughly 78 million American’s born between 1946 and 1964 more commonly known as the Baby Boomer generation (2008 Population Estimates – Census). We believe the aging American population will continue to invest more money in retirement savings and specifically in mutual funds.

T. Rowe Price is an asset management and investment

advisory firm for both individual and institutional investors. They specialize in retirement planning and currently have $366.2 Billion in assets under management (AUM); primarily in equity mutual funds, blended asset mutual funds, money market mutual funds, and fixed income mutual funds (Oct 23, 2009 - 10Q).

The majority of their income derives from fees charged on their AUM. In light of the recent recession, asset values have declined significantly which left TROW’s asset managers with lower levels of AUM. A decline in AUM means a smaller pool of assets on which to charge fees, which has hurt T. Rowe’s top line for 2009. However, the considerable stock market rally since March has helped their fund values grow once again and encouraged investors to resume investing. Over 70% of T. Rowe’s mutual funds are in equities so the recent return to higher risk investments has definitely benefited T. Rowe (2008 Annual Report).

In late 2009, we find ourselves in the wake of the most

severe financial crisis since the Great Depression of the 1930’s. The stock market rally that began in March has continued as the economy appears to be recovering. Large financial institutions can be blamed for predatory lending practices, credit rating agencies are at fault for not correctly pricing risk, insurers for not holding large enough reserves for credit default swaps (CDS’s), and regulators for letting these practices continue until the inevitable losses and failures eventually occurred.

UNEMPLOYMENT & NON-FARM PAYROLL (2000-present)

MONTHLY % CHANGE & CHANGE IN THOUSANDS

Figure 2

Stabilization of the financial system was the initial step

that helped bring confidence back to economy and spur a rally in the stock market. However, unemployment has continued to rise. In the first quarter of 2009 roughly 2,074,000 Americans lost their jobs and unemployment has since risen to 10.2% (Figure 2). However, unemployment has been rising at a slower rate, indicating it may be nearing its highs and will soon report job increases. Confidence has returned to the market as job losses slow and stocks continue to rise (Figure 2). We believe unemployment will top out soon, somewhere between 10.5% - 10.75%.

HOUSING STARTS (1999-present)

Figure 3

Housing starts have stopped their freefall and appear to be in a bottoming out process (Figure 3). This indicates that people are beginning to build and buy houses again. The increase in housing starts will help support home values and mortgage-backed security (MBS) values. Home values are also being supported by historically low interest rates, government provided tax incentives, and Federal Reserve purchasing “toxic assets”.

Investment Recommendation

Company Overview

Economic Overview

Important disclosures appear on the last page of this report.

Housing starts are likely to decline in the near future and rise again in the spring, which is typically the time of year that many people purchase or begin building homes. If the new home-buyer tax credit was extended into 2010 there would likely be a large increase in housing starts. An increase in this economic indicator is important because more new housing means more construction, which leads to lower rates of unemployment.

1, 10, 30 YEAR TREASURY YIELDS (1989-present)

Figure 4

Treasury interest rates are at historically low levels

(Figure 4). These low interest rates promote economic activity because people are able to inexpensively finance home and vehicle purchases and businesses are able to borrow at low rates, enabling them to fund their operations. We believe interest rates will remain low and the Federal Reserve Board will not begin to increase them until mid- to late-2010.

CPI MONTHLY % CHANGE (09/2007-09/2009)

Figure 5

The consumer price index (CPI) is generally used as a measure of inflation. We believe Ben Bernanke will keep interest rates low until mid- to late-2010 to help spur

economic growth. He has made it well known that he would much prefer short term inflation by leaving rates low than to cause another depression by raising rates too soon and hindering an economic recovery.

GDP QUARTERLY % GROWTH (2006:Q3-2009:Q3)

Figure 6

Though the low rates are supposed to promote economic

activity, GDP has not had a significant rebound (Figure 6). The sizeable third quarter increase in GDP is largely attributable to automobile sales that were abnormally high in response to the government sponsored “Cash for Clunkers” program. Though we expect GDP to improve, it will likely be at a slow pace.

Relative to America’s recent past, spending it is still very weak in what is primarily a consumer driven economy. However, we believe that the American consumer has a short term memory, and spending will continue to improve with increasing asset values and eventual decreases in the unemployment rate. However, because credit is not as easily available as it once was consumer spending will likely increase at a gradual pace. Relevant Stock Market Prospects

The total net assets in money market mutual funds (in

America) have declined 10.8% from $3,904B during the week of March 11, 2009 to $3,482B during the week of September 16, 2009 (ICI – Money Market Funds). This move coincides with a 48.2% increase in the S&P 500 Index from March to present, implying that investors are seeking more risky investments and moving away from low-risk, low-return funds (Yahoo Finance). T. Rowe Price specializes in equity mutual funds which have directly benefited from the recent increases in stock values.

We believe the S&P 500 index rally is the result of two main things. First, the stock market was exceptionally oversold in February and March due to investors panicking and massive deleveraging of investment portfolios. Second, economic indicators are now continually beating estimates and so are many corporate earning announcements. Investors and asset managers have a renewed sense of confidence about the economy and will continue to invest money into equities. In the next 12 months we see the S&P 500 index

Important disclosures appear on the last page of this report.

returning 8%-10%. This corresponds to a slightly better return than the geometric average of the S&P 500 from 1950-2007. We believe it will be slightly better than average because the Federal Reserve Board is keeping rates low to spur economic growth and many governments around the world have economic stimulus packages in effect.

Industry Analysis and Outlook

T. Rowe Price is in the asset management sub-industry of the investment services industry. Asset management firms typically have less leverage than banks if any at all. They provide advice to individuals and institutions on how and where to allocate funds, and they also provide investment vehicles such as mutual funds.

65 YEARS AND OVER POPULATION GROWTH

Figure 7

The 65 years and over population is projected to almost

double by the year 2030. As the nearly 78 million American’s in the Baby Boomer generation are nearing retirement, they will begin saving a larger portion of their incomes. This trend should be very beneficial to asset managers.

Asset management firms today face two main competitors; large diversified financials and ETF’s (exchange traded funds). ETF’s emerging popularity also creates competition for asset managers. They are highly liquid and require low fees for investors. Mutual funds are being forced to charge lower expense ratios because of ETF’s. Hedge funds are also considered competition for T. Rowe Price but they cater primarily to high-net worth individuals, they cannot advertise their services, and these funds are structurally very different from T. Rowe Price’s mutual funds.

The massive financial holding companies are essentially one-stop shops for clients (banking services, investment advisory services, security brokers, insurance brokers). Their large size and huge clientele base provides these firms with a competitive advantage over smaller, niche firms.

The majority of asset managers’ income is derived from fees. Hedge funds have performance fees and managers have to beat previous years’ asset values to charge investors these fees the following year. Mutual fund managers typically do not have these high water marks and charge expense ratios as a percentage of total assets under management. This incentivizes mutual fund managers to continually increase returns on their funds each year, and to attract new investors. Many mutual funds charge an initial “load” to investors when they first enter a fund. However, these loads are becoming less common as mutual funds compete with each other and ETF’s. T. Rowe Price offers over 90 mutual funds, none of which charge an initial load fee (TRowePrice.com).

ASSETS UNDER MANAGEMENT ($B)

Figure 8

Many financial firms have used acquisitions to grow

their operations and T. Rowe Price is no exception. They recently acquired a 26% stake in UTI Asset Management, an Indian mutual fund firm. However, unlike many financial firms, T. Rowe did not diversify from their core business model or acquire firms in other financial industries outside of asset management.

Company Specific Analysis

T. Rowe Price provides asset management services for

both individuals and institutional clients. These services are primarily aimed towards financial planning for retirement. They offer a large selection of equity, debt, blended asset, and money market mutual funds. T. Rowe also offers 401(k) plans, individual retirement accounts, college savings plans, and online brokerage services.

They experience direct competition with other asset management and investment service firms such as State Street, Legg Mason, Franklin Resources, Apollo Investment Corporation and others. These firms compete between fund returns, low management fees, and offering other investment products, such as ETF’s. T. Rowe Price also has some competition between large financial holding companies such

Review of T. Rowe Price and its Business

Important disclosures appear on the last page of this report.

as JP Morgan, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs. These large financials are diversified and have their own asset management subsidiaries.

Due to the recent popularity of ETF’s, T. Rowe Price’s assortment of mutual funds has competition with these lower cost and more liquid products. The nation’s total net assets in ETF funds was $639.93B in July 2009 (up 8.4% from June) while the total assets in mutual funds was $10.43T (up 3.9% from June) (ICI – Mutual Funds; ICI – ETF’s). This means that the total amount of assets in ETF’s is only 6.1% of the amount of assets invested in mutual funds, or a ratio of 16.3 to 1.

We believe that ETF’s are popular among traders, but they do not greatly threaten T. Rowe’s business. Many people planning their retirement simply do not have the time, or do not feel comfortable actively investing their life savings and prefer to trust an advisor. Older investors that may not be computer savvy are also much less likely to try investing in ETF’s from home over mutual fund investing. Though ETF popularity will probably continue for some time, we see a larger market for mutual funds, specifically for people planning their retirements.

EXPENSE RATIOS: MUTUAL FUND AVE. VS TROW

Figure 9

Aside from mutual funds, T. Rowe Price offers online

brokerage services and therefore faces competition with other online discount brokers (E*Trade, Scottrade, etc). T. Rowe Price is also somewhat globally diversified and plans to acquire more overseas investors in the future. Currently, investors outside America account for roughly 10% of T. Rowe Price’s AUM (2008 Annual Report).

As of October 23, 2009 T. Rowe Price had $366.2B in Assets Under Management. This is up 32.5% from $276.3B at year-end 2008 but still down from $400B at 2007 year-end (June 30, 2009 – 10-Q). As equity values increase and investors continue to allocate more money into mutual funds and withdraw less, AUM will continue to increase, resulting in higher revenues and higher net income.

T. Rowe Price has a debt-free and highly liquid balance sheet with $739.3MM in cash (Oct 23, 2009 – 10-Q). Their largest expense is employee compensation, but their balance sheet allows them to keep employees during poor economic times because they do not have interest payments on debt. We believe their strong balance sheet enabled them to keep many more employees than their competitors.

Strengths (internal) T. Rowe Price has a much lower expense ratio than their

peer average. The recent popularity of ETF’s has forced many mutual fund managers to continually reduce their expense ratios, and effectively their revenues, to remain competitive. TROW charges approximately 30 basis points less than the mutual fund average, and is in a great position to take market share from competitors.

T. Rowe Price has a strong balance sheet with no debt and high levels of excess cash. This gives them the freedom to invest in profitable opportunities without having to raise capital (i.e. the recent $138m investment in UTI Asset Management). They can also afford to continually increase their dividend, as they have done in the past.

Their clients are institutional investors and individuals planning for their retirements. These investors are less cyclical and are less likely to leave T. Rowe’s mutual funds and chase returns in other investments. These clients have very long term goals and the assets they invest with T. Rowe products are stable.

Weaknesses (internal) Firm size is somewhat of a problem for T. Rowe Price,

though they have a roughly $12B market cap (Yahoo Finance). They are not as large as some other asset management firms and have lower AUM levels than some of their competitors (Figure 8).

T. Rowe’s online broker doesn’t offer competitive pricing relative to other discount brokers. However, this does not present a huge problem because we feel the extreme discount brokers are mainly targeting day-traders that trade in large volumes with high frequency. T. Rowe’s target clients are investors concerned about long term equity appreciation and not short term gains.

Opportunities (external)

America has an aging population, which will lead to

increased retirement financial planning. Baby boomers are planning for retirement and will need services provided by T. Rowe Price.

Future Prosects and Opportunities ‐‐ SWOT Analysis

Important disclosures appear on the last page of this report.

Equity, bond and commodity rallies beginning in early 2009 have helped give investors confidence. More specifically, in the months since the largest outflows from mutual funds in recent history ($128 billion of outflows in October 2008), inflows to mutual funds are once again positive (ICI – Mutual Funds).

There is a prevailing trend of employers not wanting the investment risk of pension funds. These employers will continue to offer employees 401(k) plans instead to transfer risk onto the individual and away from the firm. The Pension Protection Act of 2006 let employers automatically enroll their employees in 401(k) plans (which are primarily invested in mutual funds) which is also likely to increase mutual fund investing in the future (NetAdvantage – Industry Trends).

The potential for increased government regulation will likely affect the large financial holding companies that do business over many financial industries and those regulations are unlikely to affect niche firms, like T. Rowe Price, that have one primary area of business and are not diversified among numerous financial fields (e.g. insurance, investment banking, commercial banking, asset management). If anything, T. Rowe Price will benefit from good employees leaving these large institutions in search of better jobs and compensation.

Threats (external)

An emerging popularity in ETF’s could lead to a

decrease in mutual fund investing, though the market for mutual funds is much larger.

With the uncertainty about the job market, American’s are saving more money in case they are laid off or fired (Spors). However, the recent movement of assets out of money market funds and into equity funds demonstrates that investors are beginning to once again desire more risky investments (ICI – Mutual Funds; ICI – Money Market Funds).

Target Price

We used four different methods to arrive at our target price range of $54.00-58.00 for T. Rowe Price. The first two methods used were the discounted free cash flow (FCF) and the economic profit (EP) method. If both are calculated correctly then they will arrive at the same estimated share price. The two key factors that must be calculated are the net operating profit less adjusted taxes (NOPLAT) and the amount of invested capital (IC). Using these two methods, we arrived at a share price of $56.26 suggesting that T. Rowe Price is undervalued at the current market price of $51.03.

T. Rowe Price’s return on invested capital (ROIC) is relatively high compared with other firms. The reason behind their high ROIC is because of the way that invested capital must be calculated. T. Rowe Price’s real invested capital

cannot be found on the balance sheet; it is the people that manage the portfolios. Since T. Rowe Price does not require hard assets to generate returns, their ROIC only appears to be unreasonably high.

The second method used to calculate a share price was a dividend discount model (DDM). In this approach we took the dividends we derived in our income statement projections and discounted them, along with a future share price, to their present value. T. Rowe’s implied intrinsic value using the DDM approach is $70.57, also suggesting the shares are currently undervalued.

The third method used was a combination of a relative price to earnings (P/E) analysis and a price to earnings growth (PEG) analysis. We used analyst estimated earnings per share and projected growth rates to find an industry average P/E and PEG multiples. Using these two approaches we calculated T. Rowe Price’s implied intrinsic value to be approximately $50.02, suggesting that the firm’s equity is slightly overvalued.

After taking into account the different approaches, we arrived at the estimated fair price range of $55.00-$58.00 for TROW. Weighted Average Cost of Capital

T. Rowe Price’s weighted average cost of capital (WACC) was calculated using an estimated beta, cost of debt, market value of equity, market value of debt, and their effective tax rate. The effective tax rate can easily be found in their 10-K statements and T. Rowe’s market value of equity was calculated by taking the current share price multiplied by the number of shares currently outstanding. Their beta was estimated by calculating the covariance of TROW’s weekly returns with those of the S&P 500 index for two years, which equals 1.67. High betas, like this one, tend to drift toward 1.0 over time. The intuition behind this is that firms become less risky over time. We calculated T. Rowe Price’s two year, weekly beta over the last 18 years and it becomes apparent that it drifts towards 1.0 as time progresses. We incorporated this into our model by reducing the beta each year to a continuing value beta of 1.25.

2-YEAR WEEKLY ROLLING BETA

Figure 10

Valuation Analysis

Important disclosures appear on the last page of this report.

T. Rowe has no debt, but they do have operating leases that can be located off their balance sheet. To estimate T. Rowe’s cost of debt, we used the cost of debt from a firm in the same industry with an almost identical capital structure (BEN). The market value of debt was calculated using the present value of their contractual operating lease obligations. Assets Under Management

Asset under management (AUM) inflows were calculated by using the average inflows as a percentage of total AUM for the past five years. This average was then used for the first estimated period, and then declined to a continuing value percentage in the last year of the model. We believe this is a fairly conservative approach because T. Rowe Price’s capital inflows could easily remain high well beyond the forecasting period of this analysis.

Increases in stock fund values were assumed to be equal to the historic geometric average return of the S&P 500 index from 1950-2007. We assumed the return on bonds to be equal to the current risk free rate. This approach is conservative because T. Rowe invests in assets with yields higher than the risk free rate, and because interest rates are currently at historic lows and will almost certainly have to rise in the future. Other portfolios returns were estimated to be an average of equity and fixed income returns. This is also a conservative estimate because T. Rowe Price’s other portfolios are more heavily weighted in equities.

AUM INFLOWS AND INCREASES (DECREASES)

Figure 11

Expense Ratios

We calculated expense ratios by taking the revenue earned from each asset class and dividing it by the average AUM in the respective asset class.

CV Growth and CV Beta

Figure 12

Our continuing value growth may seem fairly high. We

came to this growth rate by first calculating the growth of NOPLAT using continuing value ROIC multiplied by a retention ratio. This gave us a continual growth rate of 6.84%. We also used a weighted average of T. Rowe’s AUM returns and calculated a value of 6.66%. This would imply a continuing value growth rate of 6.66% from asset appreciation and no new net inflows of capital. Realizing that these values were so high, we instead decided to use a continuing value growth rate of 6.00%. Market Risk Premium

Figure 13

The general consensus among Krause Fund analysts is

that the market risk premium should be somewhere between 4.50% and 5.00%. We chose to use 5.00% for our analysis to take a more conservative approach. If we had used a market risk premium of 4.50% it would suggest that TROW is even more undervalued that our previous calculations imply. CV Asset Inflows

Figure 14

We believe T. Rowe Price will benefit from positive

inflows and that this will be a continuing trend because of the aging American population. The 1.00% used in our model may be too small, but if we used a larger number we would

Sensitivity Analysis

CV Beta56.26$ 1.33 1.28 1.25 1.23 1.18 5.50% 48.62$ 50.86$ 52.26$ 53.31$ 56.02$ 5.75% 50.21$ 52.63$ 54.16$ 55.30$ 58.27$

CV Growth 6.00% 51.96$ 54.59$ 56.26$ 57.52$ 60.78$ 6.25% 53.89$ 56.78$ 58.62$ 60.00$ 63.62$ 6.50% 56.05$ 59.23$ 61.26$ 62.80$ 66.84$

CV Beta56.26$ 1.35 1.30 1.25 1.20 1.15 4.80% 54.21$ 57.01$ 60.12$ 63.59$ 67.50$ 4.90% 52.46$ 55.15$ 58.13$ 61.47$ 65.21$

Mkt Risk Prem. 5.00% 50.81$ 53.40$ 56.26$ 59.46$ 63.05$ 5.10% 49.25$ 51.74$ 54.49$ 57.57$ 61.01$ 5.20% 47.77$ 50.16$ 52.82$ 55.77$ 59.08$

CV Beta56.26 1.35 1.30 1.25 1.20 1.15 0.00% 48.82$ 51.29$ 54.03$ 57.08$ 60.50$ 0.50% 49.81$ 52.34$ 55.14$ 58.26$ 61.77$

CV Inflows 1.00% 50.81$ 53.40$ 56.26$ 59.46$ 63.05$ 1.50% 51.83$ 54.48$ 57.41$ 60.68$ 64.36$ 2.00% 52.86$ 55.57$ 58.57$ 61.92$ 65.68$

Important disclosures appear on the last page of this report.

also have to assign a higher corresponding continuing value beta, which would translate to a similar share price. Stock and Bond Yearly Returns

Figure 15

Stock portfolio returns are assumed to the equal to the

average geometric return of the S&P 500 index from 1950-2007. The bond portfolio returns are assumed to be equal to the current market risk free rate of return.

This report was created by students enrolled in the Security Analysis (6F:112) class at the University of Iowa. The report was originally created to offer an internal investment recommendation for the University of Iowa Krause Fund and its advisory board. The report also provides potential employers and other interested parties an example of the students’ skills, knowledge and abilities. Members of the Krause Fund are not registered investment advisors, brokers or officially licensed financial professionals. The investment advice contained in this report does not represent an offer or solicitation to buy or sell any of the securities mentioned. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Krause Fund may hold a financial interest in the companies mentioned in this report.

Stock56.26 6.00% 7.00% 7.78% 8.00% 9.00%3.50% 49.15$ 52.45$ 55.16$ 55.94$ 59.65$ 4.00% 49.76$ 53.07$ 55.80$ 56.58$ 60.31$

Bond 4.36% 50.21$ 53.53$ 56.26$ 57.05$ 60.79$ 4.50% 50.38$ 53.71$ 56.45$ 57.24$ 60.98$ 5.00% 51.02$ 54.37$ 57.11$ 57.91$ 61.66$

Important Disclaimer

Important disclosures appear on the last page of this report.

T. Rowe Price.com. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “Oct 23, 2009. 10-Q”. T. Rowe Price. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “2008 Annual Report”. T. Rowe Price. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.troweprice.com/ “Historical weekly money market data”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/pdf/mm_data_2009.pdf “Exchange-Traded Fund Assets - June 2009”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/etf/etfs_07_09 “Trends in Mutual Fund Investing - July 2009”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/trends/trends_07_09 Yahoo Finance. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.finance.yahoo.com Spors, Kelly K. “Stop Me Before I Spend.” The Wall Street Journal. November 13, 2009. “Industry Trends”. NetAdvantage. Investment Services. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.netadvantage.standardpoor.com/NASApp/NetAdvantage/showIndustrySurvey.do?code=ivs “2008 Population Estimates”. U.S. Census Bureau. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.census.gov/

Figure 1 : Yahoo Finance. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.finance.yahoo.com Figure 2: “Civilian Unemployment Rate.” “Total Non-Farm Payrolls: All Employees.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business

Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 3: “Housing Starts: Total: New Privately Owned Housing Units Started.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 4: “1-Year Treasury Constant Maturity Rate.” “10-Year Treasury Constant Maturity Rate.” “30-Year Treasury Constant Maturity Rate.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 5: “Consumer Price Index: Monthly Change.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 6: “Gross Domestic Product: Quarterly Percentage Change.” Board of Governors of the Federal Reserve System. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.stlouisfed.org Figure 7: Analyst Made Chart: “2008 Population Estimates”. U.S. Census Bureau. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.census.gov/ Figure 8: Analyst Made Chart: “1999-2008 10-K” for TROW, BEN, LM, BLK. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.sec.gov/edgar/ Figure 9: Analyst Made Chart: Trends in the Fees and Expenses of Mutual Funds”. Investment Company Institute. University of Iowa, Pomerantz Business Library, Iowa City, IA. November 13, 2009. http://www.ici.org/research/stats/trends/ Figures 10, 11, 12, 13, 14, and 15 are analyst created charts based on calculations made in the analysis.

Source Citations

Figure Citations

T Rowe Price Group Inc Herbert HicksKey Assumptions of Valuation Model Jonathan Frank

Team Alpha -- CME GroupTicker Symbol TROWCurrent Share Price 51.51

WACCWACC (Current) 12.58% Cost of Debt 4.28%WACC (CV) 10.51% Cost of Equity 12.70%

Risk Free Rate (30Yr T-Bond Yield) 4.36%Beta 1.67 Market Risk Premium 5.00%Target Beta 1.25CV ROIC 42.70%CV Growth 6.00% AUM

CV Growth (calculated) 6.84% Stock and Blended Asset Exp Ratio 0.61%CV Growth (AUM growth) 6.66% Bond and Money Market Exp Ratio 0.44%

Other Portfolio Exp Ratio 0.37%OTHER Admin Fees and Other Income 0.10%Normal Cash 28.55%Compensation Expense as an average % of revenue 36.22% AUM inflows as average % of AUM 7.42%Inflation Estimate 3.00% CV AUM inflows 1.00%Marginal Tax Rate 38.3%Dividend historical average growth rate 18% Stock and Other Portfolio AUM return 7.78%After 5 years Dividends increase at lower rate 12% Bond AUM return 4.36%Investments in sponsored mutual funds as % of AUM 0.1816% Other Portfolio AUM return 6.07%

PP&E increases at historical average rate (decreases over time) 9.64%Depreciation Expense is a % of net PP&E 14.02%Occupancy costs, Oper. Leases, and Other Contractual Obligations increase with PPE (estimated number)

T Rowe Price Group Inc Income StatementFiscal Years Ending 12/31

2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

RevenuesInvestment advisory fees income

Stock and blended asset 1,168,700 1,031,400 835,901 1,072,288 1,239,883 1,421,158 1,615,155 1,820,498 2,035,385 2,257,598 2,484,528 2,713,224 Bond and money market 184,600 207,400 223,706 260,711 289,251 319,166 350,103 381,624 413,207 444,250 474,082 501,971 Other portfolios 525,800 522,200 469,762 578,989 653,416 732,661 816,070 902,793 991,778 1,081,781 1,171,379 1,258,999

Total investment advisory fees 1,879,100 1,761,000 1,529,369 1,911,987 2,182,551 2,472,985 2,781,329 3,104,916 3,440,371 3,783,629 4,129,989 4,474,194 Administrative fees & other income 348,100 353,900 332,515 401,960 457,423 516,840 579,786 645,692 713,839 783,371 853,296 922,512 Total revenues 2,233,100 2,121,300 1,861,884 2,313,946 2,639,974 2,989,826 3,361,115 3,750,607 4,154,210 4,567,000 4,983,285 5,396,706

Investment income of savings bank subsidiary 5,900 6,400 5,749 7,144 8,151 9,231 10,378 11,580 12,826 14,101 15,386 16,663 Interest expense on savings bank deposits 4,800 5,000 4,698 5,838 6,661 7,543 8,480 9,463 10,481 11,523 12,573 13,616 Net revenues 2,228,300 2,116,300 1,862,935 2,315,253 2,641,464 2,991,514 3,363,013 3,752,724 4,156,555 4,569,578 4,986,098 5,399,752

Operating ExpensesCompensation & related costs 797,200 815,600 761,867 838,126 956,215 1,082,934 1,217,417 1,358,494 1,504,681 1,654,197 1,804,978 1,954,721 Advertising & promotion expenses 107,900 104,100 91,369 113,554 129,553 146,722 164,942 184,056 203,862 224,120 244,548 264,836 Depreciation & amortization of property & equipment 53,400 61,700 67,647 73,667 79,681 85,597 91,321 96,755 101,799 106,354 110,329 113,639 Occupancy & facility costs 92,100 101,800 104,854 114,186 123,507 132,678 141,551 149,973 157,791 164,852 171,013 176,144 Other operating expenses 181,300 184,600 162,714 196,696 223,837 252,912 283,714 315,964 349,312 383,337 417,554 451,424 Total operating expenses 1,231,900 1,267,800 1,188,450 1,336,230 1,512,793 1,700,842 1,898,946 2,105,243 2,317,445 2,532,859 2,748,422 2,960,765

Net operating income 996,400 848,500 674,484 979,023 1,128,671 1,290,671 1,464,067 1,647,482 1,839,110 2,036,719 2,237,676 2,438,988

Other investment income (loss) 80,400 (52,300) 35,282 43,848 50,026 56,656 63,691 71,072 78,720 86,542 94,430 102,265 Net non-operating income (loss) 80,400 (52,300) 35,282 43,848 50,026 56,656 63,691 71,072 78,720 86,542 94,430 102,265

Income before income taxes & minority interests 1,076,800 796,200 709,766 1,022,871 1,178,697 1,347,327 1,527,758 1,718,554 1,917,830 2,123,261 2,332,106 2,541,252 Provision for income taxes 406,200 305,400 271,840 391,760 451,441 516,026 585,131 658,206 734,529 813,209 893,197 973,300 Minority interest in consolidated subsidiaries - - - - - - - - - - - - Net income 670,600 490,800 437,926 631,112 727,256 831,301 942,627 1,060,348 1,183,301 1,310,052 1,438,909 1,567,953

Earnings per shareNet earnings per share-basic 2.53 1.89 1.69 2.42 2.77 3.15 3.54 3.96 4.38 4.82 5.26 5.69 Year end shares outstanding ( '000's) 264,605 256,856 258,721 260,586 262,450 264,315 266,180 268,045 269,910 271,775 273,639 275,504

Dividends per share 0.75 0.96 1.00 1.18 1.38 1.62 1.91 2.14 2.39 2.68 3.00 3.36

T Rowe Price Group Inc Balance SheetFiscal Years Ending 12/31

2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

ASSETSCash & cash equivalents 785,100 619,100 552,446 690,669 1,009,367 1,373,109 1,779,273 2,249,466 2,782,280 3,375,883 4,026,358 4,727,393 Accounts receivable & accrued revenue 265,300 177,300 216,542 269,119 307,036 347,725 390,907 436,206 483,146 531,155 579,570 627,652 Investments in sponsored mutual funds 773,000 513,500 664,945 714,295 767,307 824,253 885,426 951,138 1,021,728 1,097,556 1,179,012 1,266,513 Debt securities held by savings bank subsidiary 126,900 166,000 153,113 190,288 217,099 245,869 276,402 308,432 341,623 375,569 409,802 443,800 Other investments 102,300 41,900 64,821 80,559 91,909 104,089 117,016 130,576 144,627 158,998 173,491 187,884 Property & equipment, net 358,300 440,100 482,516 525,461 568,353 610,555 651,387 690,145 726,120 758,614 786,968 810,577 Goodwill 668,800 665,700 665,700 665,700 665,700 665,700 665,700 665,700 665,700 665,700 665,700 665,700 Other assets 97,600 195,800 108,947 122,021 141,112 162,299 185,442 211,338 239,880 270,939 304,300 339,653 Minority Interest Asset (UTI Asset Mangement) - - 138,000 138,000 138,000 138,000 138,000 138,000 138,000 138,000 138,000 138,000 Total assets 3,177,300 2,819,400 2,909,030 3,258,111 3,767,885 4,333,600 4,951,553 5,643,002 6,405,104 7,234,414 8,125,200 9,069,171

LIABILITIES AND STOCKHOLDERS' EQUITYLiabilitiesAccounts payable & accrued expenses 99,500 86,800 80,315 99,815 113,879 128,970 144,986 161,787 179,197 197,004 214,961 232,794 Accrued compensation & related costs 81,100 60,700 73,690 81,066 92,488 104,744 117,752 131,397 145,537 159,999 174,583 189,066 Income taxes payable 41,700 25,300 22,093 31,839 36,689 41,938 47,554 53,493 59,696 66,090 72,591 79,101 Dividends payable 63,600 - 77,844 92,162 109,106 129,160 152,892 172,439 194,475 219,317 247,321 278,887 Customer deposits at savings bank subsidiary 114,300 157,800 135,833 168,813 192,598 218,122 245,209 273,624 303,069 333,184 363,554 393,715 Total liabilities 400,200 330,600 389,775 473,694 544,760 622,934 708,393 792,741 881,974 975,593 1,073,008 1,173,562

Stockholders' EquityCommon Equity 348,700 415,100 419,165 423,430 428,610 435,652 445,820 460,763 482,592 513,968 558,212 619,417 Retained earnings 2,333,400 2,086,800 2,188,160 2,498,650 2,846,339 3,228,315 3,639,063 4,106,752 4,621,667 5,177,963 5,766,884 6,376,372 Accumlated other comprehensive income (loss) 95,000 (13,100) (88,071) (137,663) (51,824) 46,700 158,277 282,747 418,872 566,890 727,097 899,820 Total stockholders' equity 2,777,100 2,488,800 2,519,255 2,784,417 3,223,125 3,710,666 4,243,160 4,850,262 5,523,130 6,258,821 7,052,192 7,895,609 Total liabilities and stockholders' equity 3,177,300 2,819,400 2,909,030 3,258,111 3,767,885 4,333,600 4,951,553 5,643,002 6,405,104 7,234,414 8,125,200 9,069,171

T Rowe Price Group Inc Cash Flow StatementFiscal Years Ending 12/31

2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Cash flows from operating activitiesNet income 670,600 490,800 437,926 631,112 727,256 831,301 942,627 1,060,348 1,183,301 1,310,052 1,438,909 1,567,953 Depreciation & amortization of property & equipment 53,400 61,700 67,647 73,667 79,681 85,597 91,321 96,755 101,799 106,354 110,329 113,639 Stock-based compensation expense 79,800 85,500 79,673 87,829 99,100 109,740 119,748 129,123 137,861 145,961 153,419 160,234 Intangible asset amortization 600 600 600 600 550 500 500 500 500 500 - - Accounts receivable & accrued revenue (42,700) 89,400 (39,242) (52,576) (37,918) (40,689) (43,182) (45,299) (46,940) (48,009) (48,415) (48,082) Accounts payable & accrued liabilities 23,900 (45,600) (6,485) 19,500 14,064 15,091 16,016 16,801 17,410 17,806 17,957 17,833 Other assets & liabilities (27,600) (31,900) 82,383 (127,768) (28,794) (28,782) (28,324) (29,041) (31,271) (33,677) (36,268) (39,055) Net cash flows from operating activities 758,000 741,800 622,501 632,364 853,938 972,758 1,098,707 1,229,187 1,362,659 1,498,988 1,635,932 1,772,521

Cash flows from investing activitiesAcquisition of minority interest in UTI Asset Management - - (138,000) - - - - - - - - - Net investments in sponsored mutual funds (175,500) (2,600) (151,445) (52,576) (37,918) (40,689) (43,182) (45,299) (46,940) (48,009) (48,415) (48,082) Net investments in debt securities by savings bank subsidiary (1,200) (41,300) 12,887 (37,176) (26,811) (28,770) (30,533) (32,030) (33,190) (33,946) (34,233) (33,998) Net other investments made (22,400) 63,000 (22,921) (15,738) (11,350) (12,180) (12,926) (13,560) (14,051) (14,371) (14,493) (14,393) Additions to property & equipment (145,600) (144,100) (110,663) (117,213) (123,123) (128,298) (132,653) (136,014) (138,273) (139,349) (138,683) (137,248) Net cash flows from investing activities (344,700) (125,000) (410,141) (222,703) (199,202) (209,937) (219,295) (226,903) (232,455) (235,674) (235,824) (233,721)

Cash flows from financing activitiesRepurchases of common shares (312,100) (614,200) (307,944) (345,100) (388,380) (434,256) (482,942) (534,655) (589,604) (647,999) (710,038) (775,909) Common share issuances under stock-based compensation plans 91,600 100,400 309,618 346,986 391,180 438,926 490,754 547,261 609,119 677,087 752,020 834,880 Dividends paid to stockholders (180,300) (312,500) (258,721) (306,305) (362,622) (429,272) (508,147) (573,111) (646,350) (728,914) (821,985) (926,898) Change in savings bank subsidiary deposits (400) 43,500 (21,967) 32,980 23,785 25,523 27,087 28,415 29,445 30,115 30,370 30,161 Net cash flows from financing activities (401,200) (782,800) (279,014) (271,438) (336,037) (399,079) (473,248) (532,090) (597,391) (669,711) (749,633) (837,766)

Net increase (decrease) in cash & cash equivalents during year 12,100 (166,000) (66,654) 138,223 318,699 363,742 406,164 470,194 532,814 593,603 650,475 701,035 Cash & cash equivalents at beginning of year 773,000 785,100 619,100 552,446 690,669 1,009,367 1,373,109 1,779,273 2,249,466 2,782,280 3,375,883 4,026,358 Cash & cash equivalents at end of year 785,100 619,100 552,446 690,669 1,009,367 1,373,109 1,779,273 2,249,466 2,782,280 3,375,883 4,026,358 4,727,393

T Rowe Price Group Inc Revenue DecompositionFiscal Years Ending 12/31

2007 2008 averages 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

AUM at beginning of year 334.7 400.0 276.3 366.2 418.3 474.4 534.3 597.3 662.9 730.3 798.6 866.8

Sponsored mutual funds in the U.S. 20.2 3.9Other portfolios 13.6 13.2Net cash inflows 33.8 17.1 15.4 27.18 27.69 27.59 26.79 25.15 22.59 19.03 14.40 8.67

Net cash inflows as % of AUM 10.1% 4.3% 7.4% 5.6% 7.4% 6.6% 5.8% 5.0% 4.2% 3.4% 2.6% 1.8% 1.0%Stock Gains 13.11 15.16 17.38 19.75 22.27 24.89 27.61 30.39 33.18 Bond Gains 2.53 2.81 3.10 3.40 3.71 4.01 4.32 4.61 4.88 Other Portfolio Gains 9.28 10.48 11.75 13.09 14.48 15.90 17.35 18.78 20.19

Net market gains (losses) and income 32.4 (140.3) 74.5 24.93 28.45 32.23 36.24 40.45 44.81 49.27 53.78 58.25 Mutual fund distributions not reinvested (0.9) (0.5) Increase (decrease) during year 65.400986 (123.7) 89.9 52.1 56.1 59.8 63.0 65.6 67.4 68.3 68.2 66.9

AUM at end of year 400.0 276.3 366.2 418.3 474.4 534.3 597.3 662.9 730.3 798.6 866.8 933.7

Stock AUM ($B) 200.6 117.9 162.0 188.2 216.7 247.4 280.1 314.5 350.3 387.1 424.4 461.8

% of total AUM 50.2% 42.7% 48.2% 44.24% 45.00% 45.68% 46.31% 46.89% 47.44% 47.96% 48.47% 48.96% 49.46%

Bond AUM ($B) 45.4 46.5 56.2 62.5 69.2 76.1 83.3 90.5 97.7 104.6 111.3 117.3

% of total AUM 11.4% 16.8% 13.9% 15.35% 14.95% 14.58% 14.25% 13.94% 13.65% 13.37% 13.10% 12.84% 12.57%

Other Port AUM ($B) 154.0 111.9 147.8 167.4 188.3 210.5 233.7 257.7 282.2 306.7 330.9 354.4

% of total AUM 38.5% 40.5% 37.8% 40.36% 40.01% 39.69% 39.40% 39.13% 38.88% 38.64% 38.40% 38.18% 37.96%

Investment advisory fees incomeStock and blended asset 1,168,700 1,031,400 835,901.0 1,072,287.5 1,239,883.0 1,421,158.4 1,615,155.3 1,820,498.0 2,035,385.0 2,257,598.0 2,484,528.3 2,713,223.9

0.63% 0.65% 0.61%Bond and money market 184,600 207,400 223,705.8 260,710.8 289,251.0 319,166.1 350,103.3 381,624.4 413,207.3 444,250.4 474,081.6 501,970.9

0.44% 0.45% 0.44%Other portfolios 525,800 522,200 469,762.0 578,988.7 653,416.5 732,660.9 816,070.3 902,793.3 991,778.4 1,081,780.9 1,171,379.0 1,258,999.1

0.37% 0.39% 0.37%Total investment advisory fees 1,879,100 1,761,000 1,529,368.8 1,911,987.0 2,182,550.5 2,472,985.5 2,781,328.9 3,104,915.7 3,440,370.7 3,783,629.3 4,129,989.0 4,474,193.9 Administrative fees & other income 348,100 353,900 332,515.0 401,959.5 457,423.2 516,840.3 579,786.3 645,691.5 713,839.2 783,370.7 853,296.0 922,512.0

0.09% 0.10% 0.10%

T Rowe Price Group Inc Common Size Income StatementFiscal Years Ending 12/31

2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

RevenuesInvestment advisory fees income

Stock and blended asse 52.34% 48.62% 44.90% 46.34% 46.97% 47.53% 48.05% 48.54% 49.00% 49.43% 49.86% 50.28%Bond and money marke 8.27% 9.78% 12.02% 11.27% 10.96% 10.68% 10.42% 10.18% 9.95% 9.73% 9.51% 9.30%Other portfolios 23.55% 24.62% 25.23% 25.02% 24.75% 24.51% 24.28% 24.07% 23.87% 23.69% 23.51% 23.33%

Total investment advisory fee 84.15% 83.02% 82.14% 82.63% 82.67% 82.71% 82.75% 82.78% 82.82% 82.85% 82.88% 82.91%Administrative fees & other income 15.59% 16.68% 17.86% 17.37% 17.33% 17.29% 17.25% 17.22% 17.18% 17.15% 17.12% 17.09%Total revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Investment income of savings bank subsidiary 0.26% 0.30% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31%Interest expense on savings bank deposits 0.21% 0.24% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%Net revenues 99.79% 99.76% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06% 100.06%

Operating ExpensesCompensation & related costs 35.70% 38.45% 40.92% 36.22% 36.22% 36.22% 36.22% 36.22% 36.22% 36.22% 36.22% 36.22%Advertising & promotion expenses 4.83% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91% 4.91%Depreciation & amortization of property & equipment 2.39% 2.91% 3.63% 3.18% 3.02% 2.86% 2.72% 2.58% 2.45% 2.33% 2.21% 2.11%Occupancy & facility costs 4.12% 4.80% 5.63% 4.93% 4.68% 4.44% 4.21% 4.00% 3.80% 3.61% 3.43% 3.26%Other operating expenses 8.12% 8.70% 8.74% 8.50% 8.48% 8.46% 8.44% 8.42% 8.41% 8.39% 8.38% 8.36%Total operating expenses 55.17% 59.77% 63.83% 57.75% 57.30% 56.89% 56.50% 56.13% 55.79% 55.46% 55.15% 54.86%

Net operating income 44.62% 40.00% 36.23% 42.31% 42.75% 43.17% 43.56% 43.93% 44.27% 44.60% 44.90% 45.19%

Other investment income (loss) 3.60% -2.47% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89%Credit facility expenses - - - - - - - - - - - - Net non-operating income (loss) 3.60% -2.47% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89% 1.89%

Income before income taxes & minority interests 48.22% 37.53% 38.12% 44.20% 44.65% 45.06% 45.45% 45.82% 46.17% 46.49% 46.80% 47.09%Provision for income taxes 18.19% 14.40% 14.60% 16.93% 17.10% 17.26% 17.41% 17.55% 17.68% 17.81% 17.92% 18.04%Net income 30.03% 23.14% 23.52% 27.27% 27.55% 27.80% 28.05% 28.27% 28.48% 28.69% 28.87% 29.05%

T Rowe Price Group Inc Common Size Balance SheetFiscal Years Ending 12/31

2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

ASSETSCash & cash equivalents 35.16% 29.18% 29.67% 29.85% 38.23% 45.93% 52.94% 59.98% 66.97% 73.92% 80.80% 87.60%Accounts receivable & accrued revenue 11.88% 8.36% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63% 11.63%Investments in sponsored mutual funds 34.62% 24.21% 35.71% 30.87% 29.06% 27.57% 26.34% 25.36% 24.59% 24.03% 23.66% 23.47%Debt securities held by savings bank subsidiary 5.68% 7.83% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22% 8.22%Other investments 4.58% 1.98% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48% 3.48%Property & equipment, net 16.04% 20.75% 25.92% 22.71% 21.53% 20.42% 19.38% 18.40% 17.48% 16.61% 15.79% 15.02%Goodwill 29.95% 31.38% 35.75% 28.77% 25.22% 22.27% 19.81% 17.75% 16.02% 14.58% 13.36% 12.34%Other assets 4.37% 9.23% 5.85% 5.27% 5.35% 5.43% 5.52% 5.63% 5.77% 5.93% 6.11% 6.29%Minority Interest Asset (UTI Asset Mangement) 0.00% 0.00% 7.41% 5.96% 5.23% 4.62% 4.11% 3.68% 3.32% 3.02% 2.77% 2.56%Total assets 142.28% 132.91% 156.24% 140.80% 142.72% 144.94% 147.32% 150.46% 154.18% 158.41% 163.05% 168.05%

LIABILITIES AND STOCKHOLDERS' EQUITYLiabilitiesAccounts payable & accrued expenses 4.46% 4.09% 4.31% 4.31% 4.31% 4.31% 4.31% 4.31% 4.31% 4.31% 4.31% 4.31%Accrued compensation & related costs 3.63% 2.86% 3.96% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%Income taxes payable 1.87% 1.19% 1.19% 1.38% 1.39% 1.40% 1.41% 1.43% 1.44% 1.45% 1.46% 1.47%Dividends payable 2.85% 0.00% 4.18% 3.98% 4.13% 4.32% 4.55% 4.60% 4.68% 4.80% 4.96% 5.17%Customer deposits at savings bank subsidiary 5.12% 7.44% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30%Total liabilities 17.92% 15.58% 20.93% 20.47% 20.64% 20.84% 21.08% 21.14% 21.23% 21.36% 21.53% 21.75%

Stockholders' EquityCommon Equity 15.62% 19.57% 22.51% 18.30% 16.24% 14.57% 13.26% 12.29% 11.62% 11.25% 11.20% 11.48%Retained earnings 104.49% 98.37% 117.52% 107.98% 107.82% 107.98% 108.27% 109.50% 111.25% 113.38% 115.72% 118.15%Accumlated other comprehensive income (loss) 4.25% -0.62% -4.73% -5.95% -1.96% 1.56% 4.71% 7.54% 10.08% 12.41% 14.59% 16.67%Total stockholders' equity 124.36% 117.32% 135.31% 120.33% 122.09% 124.11% 126.24% 129.32% 132.95% 137.04% 141.52% 146.30%Total liabilities and stockholders' equity 142.28% 132.91% 156.24% 140.80% 142.72% 144.94% 147.32% 150.46% 154.18% 158.41% 163.05% 168.05%

T Rowe Price Group Inc Value Driver EstimationFiscal Years Ending 12/31

2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018CV

NOPLATIncome before taxes 796,200 709,766 1,022,871 1,178,697 1,347,327 1,527,758 1,718,554 1,917,830 2,123,261 2,332,106 2,541,252 Plus: Interest expense (savings bank 5,000 4,698 5,838 6,661 7,543 8,480 9,463 10,481 11,523 12,573 13,616 Less: Interest Income (savings bank 6,400 5,749 7,144 8,151 9,231 10,378 11,580 12,826 14,101 15,386 16,663 Plus: Goodwill amortization - - - - - - - - - - - Less: Non-operating income (52,300) 35,282 43,848 50,026 56,656 63,691 71,072 78,720 86,542 94,430 102,265 EBITA 847,100 673,433 977,717 1,127,181 1,288,983 1,462,169 1,645,364 1,836,765 2,034,141 2,234,863 2,435,941

Provision for income taxes 305,400 271,840 391,760 451,441 516,026 585,131 658,206 734,529 813,209 893,197 973,300 Marginal tax rate 38.3% 38.3% 38.3% 38.3% 38.3% 38.3% 38.3% 38.3% 38.3% 38.3% 38.3%

Plus: Tax shield on interest expense (savings bank 1,915 1,799 2,236 2,551 2,889 3,248 3,624 4,014 4,413 4,815 5,215 Less: Taxes on interest income (savings bank 2,451 2,202 2,736 3,122 3,536 3,975 4,435 4,912 5,401 5,893 6,382 Plus: Tax shield on amortization - - - - - - - - - - - Less: Taxes on non-operating income (20,031) 13,513 16,794 19,160 21,699 24,394 27,221 30,150 33,146 36,167 39,167 Less: Adjusted Taxes 324,895 257,925 374,466 431,710 493,681 560,011 630,175 703,481 779,076 855,952 932,965

Plus: Change in deferred tax liability - - - - - - - - - - -

NOPLAT 522,205 415,508 603,251 695,471 795,303 902,158 1,015,190 1,133,284 1,255,065 1,378,910 1,502,976

INVESTED CAPITALNormal Cash 605,586 531,528 660,582 753,656 853,532 959,527 1,070,719 1,185,939 1,303,781 1,422,622 1,540,645 Accounts receivable & accrued revenue 177,300 216,542 269,119 307,036 347,725 390,907 436,206 483,146 531,155 579,570 627,652 Investments in sponsored mutual funds 513,500 664,945 714,295 767,307 824,253 885,426 951,138 1,021,728 1,097,556 1,179,012 1,266,513 Operating Current Assets 1,296,386 1,413,016 1,643,996 1,828,000 2,025,510 2,235,860 2,458,063 2,690,813 2,932,492 3,181,204 3,434,810

Accounts payable & accrued expenses 86,800 80,315 99,815 113,879 128,970 144,986 161,787 179,197 197,004 214,961 232,794 Accrued compensation & related costs 60,700 73,690 81,066 92,488 104,744 117,752 131,397 145,537 159,999 174,583 189,066 Income taxes payable 25,300 22,093 31,839 36,689 41,938 47,554 53,493 59,696 66,090 72,591 79,101 Dividends payable - 77,844 92,162 109,106 129,160 152,892 172,439 194,475 219,317 247,321 278,887 Operating Current Liabilities 172,800 253,942 304,881 352,162 404,812 463,184 519,116 578,905 642,409 709,454 779,848

Net Operating Working Capital 1,123,586 1,159,074 1,339,115 1,475,838 1,620,698 1,772,676 1,938,947 2,111,908 2,290,083 2,471,750 2,654,963 Net: PPE 440,100 482,516 525,461 568,353 610,555 651,387 690,145 726,120 758,614 786,968 810,577 Other Operating Assets 195,800 108,947 122,021 141,112 162,299 185,442 211,338 239,880 270,939 304,300 339,653 PV Operating Leases 182,264 163,398 177,940 192,465 206,756 220,583 233,708 245,891 256,895 266,496 274,491 Less: Other Contractual Purchase Commitments 205,000 190,000 206,911 223,800 240,418 256,496 271,758 285,924 298,719 309,884 319,180 Invested Capita 1,736,750 1,723,935 1,957,627 2,153,969 2,359,890 2,573,592 2,802,381 3,037,874 3,277,812 3,519,630 3,760,503

NOPLAT 522,205 415,508 603,251 695,471 795,303 902,158 1,015,190 1,133,284 1,255,065 1,378,910 1,502,976 Beginning Invested Capital 1,817,265 1,736,750 1,723,935 1,957,627 2,153,969 2,359,890 2,573,592 2,802,381 3,037,874 3,277,812 3,519,630 Return On Invested Capita 28.74% 23.92% 34.99% 35.53% 36.92% 38.23% 39.45% 40.44% 41.31% 42.07% 42.70%

NOPLAT 522,205 415,508 603,251 695,471 795,303 902,158 1,015,190 1,133,284 1,255,065 1,378,910 1,502,976 Less: Change In Invested Capital (80,515) (12,815) 233,692 196,342 205,921 213,702 228,788 235,494 239,937 241,818 240,873 Free Cash Flow 602,720 428,323 369,560 499,129 589,381 688,457 786,401 897,790 1,015,128 1,137,092 1,262,102

Beginning Invested Capital 1,817,265 1,736,750 1,723,935 1,957,627 2,153,969 2,359,890 2,573,592 2,802,381 3,037,874 3,277,812 3,519,630 ROIC 28.74% 23.92% 34.99% 35.53% 36.92% 38.23% 39.45% 40.44% 41.31% 42.07% 42.70%WACC 12.58% 12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 10.51% 10.51%Economic Profit 293,556 196,989 390,802 459,285 540,998 629,644 724,652 824,164 927,824 1,034,298 1,132,940

SAVINGS BANK SUBSIDIARYCash from OperationsInterest Income 6,400 5,749 7,144 8,151 9,231 10,378 11,580 12,826 14,101 15,386 16,663 less: Interest Expense 5,000 4,698 5,838 6,661 7,543 8,480 9,463 10,481 11,523 12,573 13,616 less: Tax on Income 2,451 2,202 2,736 3,122 3,536 3,975 4,435 4,912 5,401 5,893 6,382

Marginal tax rate 38.30% 38.30% 38.30% 38.30% 38.30% 38.30% 38.30% 38.30% 38.30% 38.30% 38.30%plus: Tax Shield on Expense 1,915 1,799 2,236 2,551 2,889 3,248 3,624 4,014 4,413 4,815 5,215 Total Cash from Operations 864 648 806 919 1,041 1,171 1,306 1,447 1,591 1,736 1,880

plus: Change in Cash (4,400) 9,080 4,195 3,026 3,247 3,446 3,615 3,746 3,831 3,863 3,837 plus: Change in Deposits 43,500 (21,967) 32,980 23,785 25,523 27,087 28,415 29,445 30,115 30,370 30,161 less: Uses of Deposits 39,100 (12,887) 37,176 26,811 28,770 30,533 32,030 33,190 33,946 34,233 33,998 FCFE 864 648 806 919 1,041 1,171 1,306 1,447 1,591 1,736 1,880

T Rowe Price Group Inc Discounted Cash Flow (DCF) and Economic Profit (EP) Model ValuationFiscal Years Ending 12/31

Assumptions: CV growth 6.00% FCFECV ROIC 42.70% CV NI 1,880 WACC (CV) 10.51% CV NI Growth 6.00%Cost of Equity (CV) 10.61% CV ROE 4.0643%

2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018CV

DCF ModelFCF 428,323 369,560 499,129 589,381 688,457 786,401 897,790 1,015,128 1,137,092 28,620,926 PV(FCF) 380,454 292,243 352,211 371,981 389,529 399,811 411,095 419,622 425,322 10,705,469 PV(FCF) 14,147,737 plus: Excess Cash 20,917$ plus: Other Investments 41,900$ less: PV(ESOP) (912,967)$ less: PV(Op.Leases) (163,398) PV(Equity) 13,134,189,291$ Shares Outstanding 258,720,825 plus: FCFETarget Price 50.77$ 50.76$ Adj. Target Price 56.27$ 56.26$

EP Model ROIC 23.92% 34.99% 35.53% 36.92% 38.23% 39.45% 40.44% 41.31% 42.07% 42.70%EP 196,989 390,802 459,285 540,998 629,644 724,652 824,164 927,824 1,034,298 25,101,296 PV(EP) 174,974 309,042 324,095 341,444 356,253 368,417 377,382 383,533 386,872 9,388,975 PV(EP) 12,410,987$ Invested Capital 1,736,750$ PV(Operations) 14,147,737$ plus: Excess Cash 20,917$ plus: Other Investments 41,900$ less: PV(ESOP) (912,967)$ less:PV(Op.Leases) (163,398)$ PV(Equity) 13,134,189,290.52$ Shares Outstanding 258,720,825 plus: FCFETarget Price 50.77$ 50.76$ Adj. Target Price 56.27$ 56.26$

FCFEFCFE 648 806 919 1,041 1,171 1,306 1,447 1,591 1,736 (19,420) PV(FCFE) 575 636 647 654 659 660 658 652 644 (7,200) PV(FCFE) (1,414,655) Shares Outstanding 258,720,825 Target Price (deduction) (0.01)$ Adj. Target Price (deduction) (0.01)$

Calculations for FCFECV NI

Total Cash From Operations (2018E) 1,880 CV NI Growth 6.00%CV ROE

Total Cash From Operations (2018E) / Total Equity (2018E) 4.06%

WACC 12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 10.51% 10.51%Cost of Equity 12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87% 10.61% 10.61%

Discounting (WACC) 1.125821 1.264561 1.417129284 1.58444 1.767408 1.966934 2.183899 2.41914977 2.67348643 2.673486432Discounting (Equity) 1.12704 1.2672682 1.421627325 1.591067 1.776537 1.978978 2.199307 2.43841039 2.69712573 2.697125731

T Rowe Price Group Inc Weighted Average Cost of Capital (WACC) Estimation

Common Shares Outstanding 258,720,825Current Price 51.51$ Market Value of Equity 13,326,709,714.90$ 98.8%

Preferred Shares Outstanding 0Current Price 0Market Value of Preferred 0 0%

Market Value of Debt 163,397,638.69$ 1.211%

Value of Capital 13,490,107,353.59$

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018CV

Risk Free Rate 4.36%Market Premium 5.00%Beta 1.67 1.62 1.56 1.51 1.46 1.41 1.35 1.30 1.25 1.25

Cost of Equity 12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87% 10.61% 10.61%

Cost of Preferred 0%

Cost of Debt 4.28%After Tax 2.64%

WACC 12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 10.51% 10.51%

T Rowe Price Group Inc Dividend Discount Model (DDM) or Fundamental P/E Valuation ModelFiscal Years Ending 12/31

2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

EPS 1.69$ 2.42$ 2.77$ 3.15$ 3.54$ 3.96$ 4.38$ 4.82$ 5.26$ 5.69$

Key AssumptionsWACC 12.58% 12.32% 12.06% 11.81% 11.55% 11.29% 11.03% 10.77% 10.51% 10.51%ROE 19.86%

CV growth 8.12%Retention Ratio 40.88%

Cost of Equity 12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87% 10.61% 10.61%

Future Cash Flows EPS(next period) 5.69$ Future Stock Price 135.07$ Dividends Per Share 1.00 1.18 1.38 1.62 1.91 2.14 2.39 2.68 3.00 3.36 Future Cash Flows 1.00$ 1.18$ 1.38$ 1.62$ 1.91$ 2.14$ 2.39$ 2.68$ 138.07$

Discounted Cash Flows 0.89 0.93 0.98 1.04 1.11 1.13 1.15 1.18 56.15

Intrinsic Value 63.67$ Adj. Intrinsic Value 70.57$

Relative P/E Analysis

EPS EPS Est.Ticker Company Price 2009E 2010E P/E 09 P/E 10 5yr Gr. PEG 09 PEG 10BLK BlackRock Inc. $231.25 $6.76 $10.22 34.2 22.6 13.0 2.63 1.74 BEN Franklin Resources Inc. $113.92 $3.89 $5.93 29.3 19.2 9.8 2.99 1.96 BAM Brookfield Asset Management Inc. $21.00 $0.68 $0.69 30.9 30.4 13.0 2.38 2.34 LM Legg Mason Inc. $31.61 $1.29 $1.56 24.5 20.3 7.33 3.34 2.76 BX The Blackstone Group $15.23 $0.51 $0.98 29.9 15.5 14.3 2.08 1.08 SEIC SEI Investments Co. $18.00 $0.94 $1.16 19.1 15.5 12.3 1.55 1.26 STT State Street Corp. $40.66 $4.11 $4.44 9.9 9.2 9.20 1.08 1.00 LAZ Lazard Ltd. $40.37 $1.01 $2.26 40.0 17.9 15.50 2.58 1.15

Average 29.7 20.2 2.5 1.8

TROW T.Rowe Price $51.51 $1.69 $2.42 30.4 21.3 11.87 2.6 1.8

Implied Value: Relative P/E (EPS09) $ 50.26 Relative P/E (EPS10) 48.94$ PEG Ratio (EPS09) 50.38$ (average PEG ratio * growth * EPS) PEG Ratio (EPS10) 50.52$

Average Implied Value 50.02$

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding

Number of Options Outstanding (shares): 39,037,741Average Time to Maturity (years): 6.20Expected Annual Number of Options Exercised: 6,296,410

Current Average Strike Price: 36.52$ Cost of Equity: 12.70% 12.44% 12.18% 11.92% 11.66% 11.40% 11.13% 10.87% 10.61% 10.61%Current Stock Price: 51.51$

2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Increase in Shares Outstanding: 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410Average Strike Price: 36.52$ 41.16$ 46.39$ 52.28$ 58.92$ 66.41$ 74.85$ 84.35$ 95.07$ 107.15$ Stock Based Compensation Expense 79,672,963$ 87,829,417$ 99,099,554$ 109,739,700$ 119,748,135$ 129,122,775$ 137,861,261$ 145,961,041$ 153,419,444$ 160,233,746$ Shares for SBCE 1,546,747 1,512,897 1,518,139 1,498,603 1,461,129 1,411,032 1,352,414 1,288,426 1,221,468 1,153,350 Increase in Common Stock Account: 309,617,851 346,986,397 391,179,717 438,925,593 490,753,653 547,260,663 609,119,194 677,087,365 752,019,812 834,880,030

Change in Treasury Stock 307,943,879 345,099,765 388,380,018 434,255,871 482,942,485 534,654,607 589,604,388 647,998,937 710,037,617 775,909,107Expected Price of Repurchased Shares: 51.51$ 58.05$ 65.28$ 73.23$ 81.96$ 91.51$ 101.94$ 113.29$ 125.60$ 138.93$ Number of Shares Repurchased: 5,978,332 5,944,481 5,949,724 5,930,187 5,892,714 5,842,617 5,783,999 5,720,010 5,653,052 5,584,935

Shares Outstanding (beginning of the year) 256,856,000 258,720,825 260,585,651 262,450,476 264,315,301 266,180,127 268,044,952 269,909,778 271,774,603 273,639,428Plus: Shares Issued Through ESOP 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410 6,296,410Plus: Shares Issued Through SBCE 1,546,747 1,512,897 1,518,139 1,498,603 1,461,129 1,411,032 1,352,414 1,288,426 1,221,468 1,153,350Less: Shares Repurchased in Treasury 5,978,332 5,944,481 5,949,724 5,930,187 5,892,714 5,842,617 5,783,999 5,720,010 5,653,052 5,584,935 Shares Outstanding (end of the year) 258,720,825 260,585,651 262,450,476 264,315,301 266,180,127 268,044,952 269,909,778 271,774,603 273,639,428 275,504,254

Average Change in shares 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825 1,864,825

VALUATION OF OPTIONS GRANTED IN ESOP

Ticker Symbol TROWCurrent Stock Price 51.51 Risk Free Rate 4.36%Current Dividend Yield 1.94%Annualized St. Dev. of Stock Returns 36.18%

Average Average B-S ValueRange of Number Exercise Remaining Option of OptionsOutstanding Options of Shares Price Life (yrs) Price GrantedRange 1 39,037,741 36.52 6.20 23.39$ 912,967,146$ Total 39,037,741 36.52$ 6.20 28.30$ 912,967,146$

Operating and Capital Lease Obligations

Capital OperatingYears Ended April 30, Leases Leases2009 26,0002010 24,0002011 24,0002012 21,0002013 21,000Thereafter 81,000Total Minimum Payments 197000Less: Interest 33602PV of Minimum Payments 163398

Capitalization of Operating Leases

Pre-Tax Cost of Debt 4.28%Number Years Implied by Year 6 Payment 3

Lease PV LeaseYear Commitment Payment1 26000 24932.92 24000 22070.33 24000 21164.54 21000 17758.95 21000 17030.06 & beyond 27000 60441.1PV of Minimum Payments 163397.6

CV Beta56.26$ 1.42 1.38 1.33 1.28 1.25 1.23 1.18 1.13 1.08 5.00% 42.43$ 44.07$ 45.85$ 47.78$ 48.99$ 49.88$ 52.18$ 54.71$ 57.49$ 5.25% 43.51$ 45.27$ 47.17$ 49.25$ 50.55$ 51.52$ 54.01$ 56.75$ 59.79$ 5.50% 44.70$ 46.57$ 48.62$ 50.86$ 52.26$ 53.31$ 56.02$ 59.03$ 62.38$ 5.75% 45.98$ 48.00$ 50.21$ 52.63$ 54.16$ 55.30$ 58.27$ 61.57$ 65.28$

CV Growth 6.00% 47.39$ 49.56$ 51.96$ 54.59$ 56.26$ 57.52$ 60.78$ 64.45$ 68.59$ 6.25% 48.93$ 51.29$ 53.89$ 56.78$ 58.62$ 60.00$ 63.62$ 67.71$ 72.37$ 6.50% 50.63$ 53.20$ 56.05$ 59.23$ 61.26$ 62.80$ 66.84$ 71.45$ 76.75$ 6.75% 52.52$ 55.33$ 58.47$ 61.99$ 64.26$ 65.98$ 70.53$ 75.77$ 81.87$

CV Beta56.26$ 1.50 1.45 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 4.40% 54.08$ 56.56$ 59.29$ 62.30$ 65.63$ 69.35$ 73.53$ 78.24$ 83.61$ 89.79$ 96.96$ 4.50% 52.22$ 54.60$ 57.21$ 60.09$ 63.27$ 66.82$ 70.80$ 75.29$ 80.39$ 86.26$ 93.05$ 4.60% 50.47$ 52.75$ 55.25$ 58.01$ 61.06$ 64.45$ 68.24$ 72.53$ 77.39$ 82.96$ 89.41$ 4.70% 48.82$ 51.01$ 53.41$ 56.05$ 58.97$ 62.22$ 65.85$ 69.93$ 74.57$ 79.88$ 86.01$ 4.80% 47.26$ 49.37$ 51.67$ 54.21$ 57.01$ 60.12$ 63.59$ 67.50$ 71.93$ 77.00$ 82.84$ 4.90% 45.79$ 47.81$ 50.03$ 52.46$ 55.15$ 58.13$ 61.47$ 65.21$ 69.45$ 74.29$ 79.86$

Market Risk Premium 5.00% 44.39$ 46.34$ 48.47$ 50.81$ 53.40$ 56.26$ 59.46$ 63.05$ 67.11$ 71.74$ 77.06$ 5.10% 43.06$ 44.94$ 46.99$ 49.25$ 51.74$ 54.49$ 57.57$ 61.01$ 64.91$ 69.34$ 74.43$ 5.20% 41.80$ 43.61$ 45.59$ 47.77$ 50.16$ 52.82$ 55.77$ 59.08$ 62.82$ 67.07$ 71.95$ 5.30% 40.60$ 42.35$ 44.26$ 46.36$ 48.67$ 51.23$ 54.07$ 57.26$ 60.85$ 64.93$ 69.61$ 5.40% 39.46$ 41.15$ 42.99$ 45.02$ 47.25$ 49.71$ 52.46$ 55.52$ 58.98$ 62.91$ 67.40$ 5.50% 38.36$ 40.00$ 41.79$ 43.74$ 45.90$ 48.28$ 50.92$ 53.88$ 57.21$ 60.99$ 65.30$ 5.60% 37.32$ 38.91$ 40.64$ 42.53$ 44.61$ 46.91$ 49.46$ 52.31$ 55.52$ 59.16$ 63.32$

CV Beta56.26 1.50 1.45 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00

-2.00% 39.45$ 41.15$ 43.00$ 45.03$ 47.27$ 49.75$ 52.53$ 55.64$ 59.16$ 63.17$ 67.78$ -1.50% 40.24$ 41.98$ 43.87$ 45.95$ 48.25$ 50.80$ 53.64$ 56.83$ 60.43$ 64.54$ 69.27$ -1.00% 41.05$ 42.82$ 44.76$ 46.90$ 49.25$ 51.86$ 54.77$ 58.03$ 61.72$ 65.93$ 70.78$ -0.50% 41.86$ 43.68$ 45.67$ 47.85$ 50.26$ 52.93$ 55.91$ 59.26$ 63.04$ 67.35$ 72.31$ 0.00% 42.69$ 44.55$ 46.59$ 48.82$ 51.29$ 54.03$ 57.08$ 60.50$ 64.38$ 68.79$ 73.87$ 0.50% 43.53$ 45.44$ 47.52$ 49.81$ 52.34$ 55.14$ 58.26$ 61.77$ 65.73$ 70.25$ 75.45$

Asset Inflows 1.00% 44.39$ 46.34$ 48.47$ 50.81$ 53.40$ 56.26$ 59.46$ 63.05$ 67.11$ 71.74$ 77.06$ 1.50% 45.26$ 47.25$ 49.43$ 51.83$ 54.48$ 57.41$ 60.68$ 64.36$ 68.51$ 73.25$ 78.70$ 2.00% 46.14$ 48.18$ 50.41$ 52.86$ 55.57$ 58.57$ 61.92$ 65.68$ 69.93$ 74.78$ 80.36$ 2.50% 47.04$ 49.12$ 51.41$ 53.92$ 56.68$ 59.76$ 63.18$ 67.03$ 71.38$ 76.34$ 82.05$ 3.00% 47.94$ 50.08$ 52.42$ 54.98$ 57.81$ 60.96$ 64.46$ 68.40$ 72.85$ 77.92$ 83.76$ 3.50% 48.87$ 51.05$ 53.44$ 56.07$ 58.96$ 62.18$ 65.76$ 69.79$ 74.34$ 79.53$ 85.50$ 4.00% 49.81$ 52.04$ 54.48$ 57.17$ 60.13$ 63.41$ 67.08$ 71.20$ 75.85$ 81.16$ 87.27$

Stock Returns56.26 4.00% 5.00% 6.00% 7.00% 7.78% 8.00% 9.00% 10.00% 11.00%0.50% 39.85$ 42.72$ 45.75$ 48.98$ 51.63$ 52.40$ 56.03$ 59.87$ 63.95$ 1.00% 40.36$ 43.24$ 46.29$ 49.52$ 52.19$ 52.96$ 56.60$ 60.46$ 64.55$ 1.50% 40.89$ 43.77$ 46.83$ 50.08$ 52.75$ 53.53$ 57.18$ 61.06$ 65.16$ 2.00% 41.42$ 44.32$ 47.39$ 50.65$ 53.34$ 54.11$ 57.78$ 61.67$ 65.79$ 2.50% 41.97$ 44.88$ 47.96$ 51.24$ 53.93$ 54.71$ 58.39$ 62.29$ 66.43$ 3.00% 42.53$ 45.45$ 48.55$ 51.83$ 54.54$ 55.32$ 59.02$ 62.93$ 67.08$ 3.50% 43.10$ 46.03$ 49.15$ 52.45$ 55.16$ 55.94$ 59.65$ 63.59$ 67.75$ 4.00% 43.69$ 46.63$ 49.76$ 53.07$ 55.80$ 56.58$ 60.31$ 64.26$ 68.44$

Bond Returns 4.36% 44.12$ 47.07$ 50.21$ 53.53$ 56.26$ 57.05$ 60.79$ 64.75$ 68.94$ 4.50% 44.29$ 47.25$ 50.38$ 53.71$ 56.45$ 57.24$ 60.98$ 64.94$ 69.14$ 5.00% 44.90$ 47.87$ 51.02$ 54.37$ 57.11$ 57.91$ 61.66$ 65.64$ 69.85$ 5.50% 45.53$ 48.52$ 51.68$ 55.04$ 57.79$ 58.59$ 62.36$ 66.35$ 70.58$ 6.00% 46.18$ 49.17$ 52.35$ 55.72$ 58.49$ 59.29$ 63.07$ 67.08$ 71.33$ 6.50% 46.83$ 49.85$ 53.04$ 56.42$ 59.20$ 60.01$ 63.81$ 67.83$ 72.09$ 7.00% 47.51$ 50.54$ 53.74$ 57.14$ 59.93$ 60.74$ 64.55$ 68.59$ 72.87$