T. ROWE PRICE U.S. EQUITY RESEARCH FUND
September 30, 2019 (Unaudited)
Portfolio of Investments‡ | Shares/Par | $ Value |
(Cost and value in $000s) | ||
COMMON STOCKS 99.6% | ||
COMMUNICATION SERVICES 11.3% | ||
Diversified Telecommunication Services 1.5% | ||
AT&T | 384,635 | 14,555 |
Verizon Communications | 179,671 | 10,845 |
25,400 | ||
Entertainment 1.8% | ||
Activision Blizzard | 69,593 | 3,683 |
Electronic Arts (1) | 53,405 | 5,224 |
Netflix (1) | 39,353 | 10,532 |
Walt Disney | 80,325 | 10,468 |
29,907 | ||
Interactive Media & Services 5.7% | ||
Alphabet, Class A (1) | 16,710 | 20,405 |
Alphabet, Class C (1) | 29,620 | 36,107 |
Facebook, Class A (1) | 204,394 | 36,398 |
92,910 | ||
Media 2.2% | ||
Altice USA, Class A (1) | 46,850 | 1,344 |
Charter Communications, Class A (1) | 11,896 | 4,902 |
Comcast, Class A | 496,451 | 22,380 |
DISH Network, Class A (1) | 13,145 | 448 |
Liberty Broadband, Class C (1) | 60,812 | 6,365 |
35,439 | ||
Wireless Telecommunication Services 0.1% | ||
T-Mobile US (1) | 17,227 | 1,357 |
1,357 | ||
Total Communication Services | 185,013 | |
CONSUMER DISCRETIONARY 11.3% | ||
Auto Components 0.6% | ||
Aptiv | 50,450 | 4,411 |
Garrett Motion (1) | 7,330 | 73 |
First Page Footer
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Magna International | 90,855 | 4,845 |
9,329 | ||
Automobiles 0.3% | ||
Ferrari | 30,514 | 4,702 |
4,702 | ||
Hotels, Restaurants & Leisure 2.5% | ||
Darden Restaurants | 14,249 | 1,684 |
Hilton Worldwide Holdings | 35,259 | 3,283 |
Marriott International, Class A | 30,044 | 3,737 |
McDonald's | 68,661 | 14,742 |
MGM Resorts International | 96,819 | 2,684 |
Restaurant Brands International | 51,265 | 3,647 |
Royal Caribbean Cruises | 17,378 | 1,882 |
Starbucks | 41,503 | 3,670 |
Wynn Resorts | 15,616 | 1,698 |
Yum! Brands | 32,168 | 3,649 |
40,676 | ||
Household Durables 0.2% | ||
NVR (1) | 684 | 2,543 |
2,543 | ||
Internet & Direct Marketing Retail 3.9% | ||
Amazon. com (1) | 31,175 | 54,117 |
Booking Holdings (1) | 4,888 | 9,593 |
63,710 | ||
Multiline Retail 0.4% | ||
Dollar General | 28,744 | 4,569 |
Dollar Tree (1) | 19,362 | 2,210 |
6,779 | ||
Specialty Retail 2.4% | ||
AutoZone (1) | 2,463 | 2,671 |
Burlington Stores (1) | 8,662 | 1,731 |
Home Depot | 63,773 | 14,797 |
Lowe's | 40,111 | 4,410 |
O'Reilly Automotive (1) | 12,612 | 5,026 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Ross Stores | 57,869 | 6,357 |
TJX | 66,822 | 3,725 |
Ulta Beauty (1) | 5,630 | 1,411 |
40,128 | ||
Textiles, Apparel & Luxury Goods 1.0% | ||
Kontoor Brands | 4,147 | 146 |
NIKE, Class B | 119,334 | 11,208 |
Tapestry | 68,000 | 1,771 |
VF | 36,043 | 3,207 |
16,332 | ||
Total Consumer Discretionary | 184,199 | |
CONSUMER STAPLES 7.0% | ||
Beverages 1.9% | ||
Coca-Cola | 154,912 | 8,433 |
Keurig Dr Pepper | 85,140 | 2,326 |
Monster Beverage (1) | 61,934 | 3,596 |
PepsiCo | 122,579 | 16,806 |
31,161 | ||
Food & Staples Retailing 1.0% | ||
Costco Wholesale | 31,165 | 8,979 |
Walmart | 60,841 | 7,221 |
16,200 | ||
Food Products 1.5% | ||
Bunge | 18,358 | 1,039 |
Campbell Soup | 52,911 | 2,483 |
Conagra Brands | 224,459 | 6,886 |
Corteva | 15,814 | 443 |
Mondelez International, Class A | 160,297 | 8,868 |
Tyson Foods, Class A | 47,462 | 4,088 |
23,807 | ||
Household Products 1.5% | ||
Kimberly-Clark | 39,718 | 5,642 |
Procter & Gamble | 158,953 | 19,770 |
25,412 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Tobacco 1.1% | ||
Altria Group | 136,031 | 5,563 |
Philip Morris International | 162,093 | 12,308 |
17,871 | ||
Total Consumer Staples | 114,451 | |
ENERGY 3.9% | ||
Energy Equipment & Services 0.3% | ||
Halliburton | 197,519 | 3,723 |
Schlumberger | 55,733 | 1,905 |
5,628 | ||
Oil, Gas & Consumable Fuels 3.6% | ||
BP, ADR | 41,714 | 1,585 |
Cabot Oil & Gas | 46,943 | 825 |
Chevron | 47,092 | 5,585 |
Concho Resources | 48,465 | 3,291 |
ConocoPhillips | 59,036 | 3,364 |
EOG Resources | 32,395 | 2,404 |
Exxon Mobil | 245,219 | 17,315 |
Hess | 29,161 | 1,764 |
Marathon Petroleum | 69,604 | 4,228 |
Occidental Petroleum | 116,447 | 5,178 |
Pioneer Natural Resources | 15,978 | 2,010 |
Targa Resources | 35,305 | 1,418 |
TC Energy | 82,278 | 4,261 |
TOTAL, ADR | 92,908 | 4,831 |
58,059 | ||
Total Energy | 63,687 | |
FINANCIALS 13.0% | ||
Banks 5.5% | ||
Bank of America | 264,219 | 7,707 |
Citigroup | 250,745 | 17,322 |
Fifth Third Bancorp | 310,852 | 8,511 |
First Republic Bank | 41,645 | 4,027 |
JPMorgan Chase | 235,714 | 27,741 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
KeyCorp | 29,370 | 524 |
PNC Financial Services Group | 23,238 | 3,257 |
U. S. Bancorp | 15,776 | 873 |
Wells Fargo | 413,554 | 20,860 |
90,822 | ||
Capital Markets 2.6% | ||
Ameriprise Financial | 11,329 | 1,666 |
Cboe Global Markets | 37,045 | 4,257 |
Charles Schwab | 155,548 | 6,507 |
CME Group | 14,593 | 3,084 |
E*TRADE Financial | 29,600 | 1,293 |
Intercontinental Exchange | 84,128 | 7,762 |
KKR, Class A | 58,652 | 1,575 |
Morgan Stanley | 115,843 | 4,943 |
Raymond James Financial | 26,433 | 2,180 |
S&P Global | 8,998 | 2,204 |
State Street | 35,555 | 2,105 |
TD Ameritrade Holding | 92,699 | 4,329 |
41,905 | ||
Consumer Finance 0.5% | ||
Ally Financial | 79,979 | 2,652 |
Capital One Financial | 33,240 | 3,024 |
Synchrony Financial | 80,917 | 2,759 |
8,435 | ||
Diversified Financial Services 1.7% | ||
AXA Equitable Holdings | 194,793 | 4,317 |
Berkshire Hathaway, Class B (1) | 96,131 | 19,997 |
Voya Financial | 60,638 | 3,301 |
27,615 | ||
Insurance 2.7% | ||
American International Group | 187,299 | 10,433 |
Chubb | 68,789 | 11,105 |
Fidelity National Financial | 22,042 | 979 |
Marsh & McLennan | 51,893 | 5,192 |
MetLife | 122,530 | 5,778 |
The accompanying notes are an integral part of this Portfolio of Investments. |
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Progressive | 40,882 | 3,158 |
Willis Towers Watson | 36,461 | 7,036 |
43,681 | ||
Total Financials | 212,458 | |
HEALTH CARE 12.9% | ||
Biotechnology 2.4% | ||
AbbVie | 189,325 | 14,336 |
Alexion Pharmaceuticals (1) | 24,952 | 2,444 |
Amgen | 43,231 | 8,365 |
Biogen (1) | 11,606 | 2,702 |
BioMarin Pharmaceutical (1) | 10,360 | 698 |
Gilead Sciences | 56,342 | 3,571 |
Incyte (1) | 10,187 | 756 |
Regeneron Pharmaceuticals (1) | 1,933 | 536 |
Vertex Pharmaceuticals (1) | 34,221 | 5,798 |
39,206 | ||
Health Care Equipment & Supplies 2.9% | ||
Abbott Laboratories | 53,891 | 4,509 |
Becton Dickinson & Company | 48,178 | 12,187 |
Cooper | 3,177 | 943 |
Danaher | 24,497 | 3,538 |
Hologic (1) | 54,843 | 2,769 |
Intuitive Surgical (1) | 20,906 | 11,288 |
Medtronic | 44,344 | 4,817 |
Stryker | 37,114 | 8,028 |
48,079 | ||
Health Care Providers & Services 2.6% | ||
AmerisourceBergen | 6,191 | 510 |
Anthem | 20,761 | 4,985 |
Centene (1) | 71,311 | 3,085 |
Cigna | 58,611 | 8,896 |
CVS Health | 104,031 | 6,561 |
HCA Healthcare | 34,211 | 4,120 |
McKesson | 18,597 | 2,541 |
UnitedHealth Group | 49,658 | 10,792 |
The accompanying notes are an integral part of this Portfolio of Investments. |
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
WellCare Health Plans (1) | 6,276 | 1,626 |
43,116 | ||
Life Sciences Tools & Services 0.9% | ||
Agilent Technologies | 55,014 | 4,216 |
Thermo Fisher Scientific | 33,282 | 9,694 |
13,910 | ||
Pharmaceuticals 4.1% | ||
Allergan | 15,118 | 2,544 |
Bristol-Myers Squibb | 66,700 | 3,383 |
Elanco Animal Health (1) | 191,719 | 5,098 |
Eli Lilly | 26,656 | 2,981 |
Johnson & Johnson | 156,291 | 20,221 |
Merck | 130,293 | 10,968 |
Pfizer | 450,740 | 16,195 |
Zoetis | 45,600 | 5,681 |
67,071 | ||
Total Health Care | 211,382 | |
INDUSTRIALS & BUSINESS SERVICES 9.1% | ||
Aerospace & Defense 2.8% | ||
Boeing | 62,042 | 23,605 |
L3Harris Technologies | 33,270 | 6,942 |
Northrop Grumman | 23,880 | 8,950 |
Textron | 84,770 | 4,150 |
United Technologies | 14,042 | 1,917 |
45,564 | ||
Air Freight & Logistics 0.6% | ||
United Parcel Service, Class B | 83,144 | 9,962 |
9,962 | ||
Airlines 0.6% | ||
Alaska Air Group | 35,003 | 2,272 |
Delta Air Lines | 66,835 | 3,850 |
United Airlines Holdings (1) | 49,734 | 4,397 |
10,519 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Building Products 0.1% | ||
Fortune Brands Home & Security | 34,953 | 1,912 |
1,912 | ||
Commercial Services & Supplies 0.3% | ||
Waste Connections | 44,309 | 4,076 |
4,076 | ||
Industrial Conglomerates 1.9% | ||
General Electric | 1,254,322 | 11,214 |
Honeywell International | 61,209 | 10,356 |
Roper Technologies | 24,425 | 8,710 |
30,280 | ||
Machinery 1.8% | ||
Cummins | 9,395 | 1,528 |
Flowserve | 85,785 | 4,007 |
Fortive | 115,000 | 7,884 |
Illinois Tool Works | 10,128 | 1,585 |
PACCAR | 113,925 | 7,976 |
Snap-on | 10,211 | 1,599 |
Wabtec | 57,257 | 4,115 |
28,694 | ||
Professional Services 0.3% | ||
CoStar Group (1) | 1,576 | 935 |
Equifax | 11,600 | 1,632 |
TransUnion | 38,073 | 3,088 |
5,655 | ||
Road & Rail 0.7% | ||
JB Hunt Transport Services | 47,907 | 5,301 |
Kansas City Southern | 17,331 | 2,305 |
Union Pacific | 24,781 | 4,014 |
11,620 | ||
Total Industrials & Business Services | 148,282 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
INFORMATION TECHNOLOGY 22.6% | ||
Communications Equipment 1.5% | ||
Cisco Systems | 346,435 | 17,117 |
Juniper Networks | 80,288 | 1,987 |
Motorola Solutions | 34,135 | 5,817 |
24,921 | ||
Electronic Equipment, Instruments & Components 0.8% | ||
Amphenol, Class A | 87,163 | 8,411 |
CDW | 15,000 | 1,849 |
FLIR Systems | 16,947 | 891 |
Keysight Technologies (1) | 8,591 | 836 |
11,987 | ||
IT Services 5.5% | ||
Accenture, Class A | 55,732 | 10,720 |
Cognizant Technology Solutions, Class A | 76,422 | 4,606 |
Fidelity National Information Services | 74,644 | 9,910 |
Fiserv (1) | 23,366 | 2,420 |
FleetCor Technologies (1) | 20,053 | 5,751 |
Global Payments | 41,008 | 6,520 |
Mastercard, Class A | 71,087 | 19,305 |
PayPal Holdings (1) | 45,653 | 4,729 |
VeriSign (1) | 10,277 | 1,939 |
Visa, Class A | 141,719 | 24,377 |
90,277 | ||
Semiconductors & Semiconductor Equipment 4.1% | ||
Analog Devices | 20,251 | 2,263 |
Applied Materials | 200,656 | 10,013 |
Broadcom | 25,735 | 7,105 |
Lam Research | 14,531 | 3,358 |
Marvell Technology Group | 57,015 | 1,424 |
Microchip Technology | 58,460 | 5,431 |
Micron Technology (1) | 251,521 | 10,778 |
NVIDIA | 75,402 | 13,125 |
NXP Semiconductors | 21,279 | 2,322 |
QUALCOMM | 134,591 | 10,266 |
The accompanying notes are an integral part of this Portfolio of Investments. |
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Xilinx | 13,727 | 1,316 |
67,401 | ||
Software 7.1% | ||
Intuit | 20,449 | 5,438 |
Microsoft | 517,009 | 71,880 |
Oracle | 84,130 | 4,630 |
Paycom Software (1) | 3,900 | 817 |
salesforce. com (1) | 101,458 | 15,060 |
Symantec | 419,794 | 9,920 |
Synopsys (1) | 29,041 | 3,986 |
VMware, Class A | 25,367 | 3,806 |
115,537 | ||
Technology Hardware, Storage & Peripherals 3.6% | ||
Apple | 261,246 | 58,511 |
58,511 | ||
Total Information Technology | 368,634 | |
MATERIALS 2.5% | ||
Chemicals 2.2% | ||
Air Products & Chemicals | 19,242 | 4,269 |
Dow | 73,310 | 3,493 |
DuPont de Nemours | 90,720 | 6,469 |
International Flavors & Fragrances | 9,616 | 1,180 |
Linde | 57,394 | 11,118 |
PPG Industries | 27,374 | 3,244 |
RPM International | 20,903 | 1,438 |
Sherwin-Williams | 6,095 | 3,352 |
Westlake Chemical | 20,412 | 1,338 |
35,901 | ||
Containers & Packaging 0.3% | ||
Avery Dennison | 22,638 | 2,571 |
International Paper | 32,344 | 1,353 |
Packaging Corp. of America | 5,083 | 539 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |
(Cost and value in $000s) | ||
Sealed Air | 27,897 | 1,158 |
5,621 | ||
Total Materials | 41,522 | |
REAL ESTATE 2.3% | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS 2.3% | ||
American Tower, REIT | 19,993 | 4,421 |
AvalonBay Communities, REIT | 20,694 | 4,456 |
Crown Castle International, REIT | 8,528 | 1,186 |
Equinix, REIT | 3,428 | 1,977 |
Equity Residential, REIT | 40,754 | 3,515 |
JBG SMITH Properties, REIT | 18,016 | 706 |
Prologis, REIT | 92,177 | 7,855 |
Public Storage, REIT | 14,093 | 3,457 |
Regency Centers, REIT | 26,241 | 1,824 |
Simon Property Group, REIT | 13,304 | 2,071 |
SL Green Realty, REIT | 18,250 | 1,492 |
Vornado Realty Trust, REIT | 19,597 | 1,248 |
Weyerhaeuser, REIT | 127,448 | 3,530 |
Total Real Estate | 37,738 | |
UTILITIES 3.7% | ||
Electric Utilities 2.2% | ||
Edison International | 68,927 | 5,199 |
Entergy | 41,402 | 4,859 |
Eversource Energy | 55,167 | 4,715 |
NextEra Energy | 69,532 | 16,200 |
Southern | 93,198 | 5,757 |
36,730 | ||
Gas Utilities 0.2% | ||
Atmos Energy | 21,278 | 2,423 |
2,423 | ||
Multi-Utilities 1.1% | ||
CenterPoint Energy | 60,500 | 1,826 |
NiSource | 144,966 | 4,337 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Shares/Par | $ Value | |||
(Cost and value in $000s) | ||||
Sempra Energy | 80,587 | 11,896 | ||
18,059 | ||||
Water Utilities 0.2% | ||||
American Water Works | 13,024 | 1,618 | ||
Aqua America | 39,065 | 1,751 | ||
3,369 | ||||
Total Utilities | 60,581 | |||
Total Common Stocks (Cost $1,292,682) | 1,627,947 | |||
SHORT-TERM INVESTMENTS 0.7% | ||||
Money Market Funds 0.6% | ||||
T. Rowe Price Treasury Reserve Fund, 2.04% (2)(3) | 10,331,791 | 10,332 | ||
10,332 | ||||
U. S. Treasury Obligations 0.1% | ||||
U. S. Treasury Bills, 2.031%, 11/7/19 (4) | 660,000 | 659 | ||
659 | ||||
Total Short-Term Investments (Cost $10,990) | 10,991 | |||
Total Investments in Securities 100.3% | ||||
(Cost $1,303,672) | $ | 1,638,938 | ||
Other Assets Less Liabilities (0.3)% | (4,657) | |||
Net Assets 100.0% | $ | 1,634,281 |
‡ | Shares/Par and Notional Amount are denominated in U. S. dollars unless | |
otherwise noted. | ||
(1 | ) | Non-income producing |
(2 | ) | Seven-day yield |
(3 | ) | Affiliated Companies |
(4 | ) | At September 30, 2019, all or a portion of this security is pledged as collateral |
and/or margin deposit to cover future funding obligations. | ||
ADR | American Depositary Receipts | |
REIT | A domestic Real Estate Investment Trust whose distributions pass-through | |
with original tax character to the shareholder |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
FUTURESCONTRACTS | ||||||||
($000s) | ||||||||
Value and | ||||||||
Expiration | Notional | Unrealized Gain | ||||||
Date | Amount | (Loss) | ||||||
Long, 32 S&P 500 E-Mini Index contracts | 12/19 | 4,766 | $ | (24) | ||||
Net payments (receipts) of variation margin to date | 42 | |||||||
Variation margin receivable (payable) on open futures contracts | $ | 18 |
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Affiliated Companies
($000s)
The fund may invest in certain securities that are considered affiliated companies. As defined
by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the
outstanding voting securities, or a company that is under common ownership or control. The
following securities were considered affiliated companies for all or some portion of the nine
months ended September 30, 2019. Net realized gain (loss), investment income, change in net
unrealized gain/loss, and purchase and sales cost reflect all activity for the period then ended.
Change in Net | ||||||||
Net Realized Gain | Unrealized | Investment | ||||||
Affiliate | (Loss) | Gain/Loss | Income | |||||
T. Rowe Price Short-Term Fund | $ | — | $ | — | $ | —++ | ||
T. Rowe Price Treasury Reserve | ||||||||
Fund | — | — | 114 | |||||
Totals | $ | —# | $ | — | $ | 114+ | ||
Supplementary Investment Schedule | ||||||||
Value | Purchase | Sales | Value | |||||
Affiliate | 12/31/18 | Cost | Cost | 9/30/19 | ||||
T. Rowe Price Short-Term | ||||||||
Fund | $ | — | ¤ | ¤ | $ | — | ||
T. Rowe Price Treasury | ||||||||
Reserve Fund | 2,187 | ¤ | ¤ | 10,332 | ||||
$ | 10,332^ |
# Capital gain distributions from mutual funds represented $0 of the net realized gain (loss).
++ Excludes earnings on securities lending collateral, which are subject to rebates and fees.
+ Investment income comprised $114 of dividend income and $0 of interest income.
¤ Purchase and sale information not shown for cash management funds.
^ The cost basis of investments in affiliated companies was $10,332.
The accompanying notes are an integral part of this Portfolio of Investments.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Unaudited
NOTES TO PORTFOLIO OF
INVESTMENTS
T. Rowe Price U.S. Equity Research Fund, Inc. (the fund), formerly the Capital Opportunity Fund, Inc., is registered
under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and follows
accounting and reporting guidance of the Financial Accounting Standards BoardAccounting Standards CodificationTopic
946. The accompanying Portfolio of Investments was prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP). For additional information on the fund’s significant accounting policies
and investment related disclosures, please refer to the fund’s most recent semiannual or annual shareholder report and its
prospectus.
VALUATION
The fund’s financial instruments are valued at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET,
each day the NYSE is open for business.
Fair Value
The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been
delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are
appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the
Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value
determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing
techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and
performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on
internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation
from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.
Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP
establishes the following fair value hierarchy that categorizes the inputs used to measure fair value:
Level 1 - quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at
the reporting date
Level 2 - inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not
limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or
similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and
credit spreads)
Level 3 - unobservable inputs
Observable inputs are developed using market data, such as publicly available information about actual events or
transactions, and reflect the assumptions that market participants would use to price the financial instrument.
Unobservable inputs are those for which market data are not available and are developed using the best information
available about the assumptions that market participants would use to price the financial instrument. GAAP requires
valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value
hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are
not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the
degree of judgment used in determining those values.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Valuation Techniques
Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued
at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC
Bulletin Board securities are valued at the mean of the closing bid and asked prices. A security that is listed or traded on
more than one exchange is valued at the quotation on the exchange determined to be the primary market for such
security. Listed securities not traded on a particular day are valued at the mean of the closing bid and asked prices.
Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value
hierarchy. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets
generally are categorized in Level 2 of the fair value hierarchy.
Debt securities generally are traded in the OTC market and are valued at prices furnished by dealers who make markets
in such securities or by an independent pricing service, which considers the yield or price of bonds of comparable
quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Generally,
debt securities are categorized in Level 2 of the fair value hierarchy; however, to the extent the valuations include
significant unobservable inputs, the securities would be categorized in Level 3.
Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation and are
categorized in Level 1 of the fair value hierarchy. Financial futures contracts are valued at closing settlement prices and
are categorized in Level 1 of the fair value hierarchy.
Thinly traded financial instruments and those for which the above valuation procedures are inappropriate or are
deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee. The
objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current
sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted
securities, warrants, rights, and other securities that are not publicly traded.
Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and
adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining
the fair value of an equity investment with limited market activity, such as a private placement or a thinly traded public
company stock, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the
issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, new
rounds of financing, negotiated transactions of significant size between other investors in the company, relevant market
valuations of peer companies, strategic events affecting the company, market liquidity for the issuer, and general
economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will
determine an appropriate valuation technique based on available information, which may include both observable and
unobservable inputs. The Valuation Committee typically will afford greatest weight to actual prices in arm’s length
transactions, to the extent they represent orderly transactions between market participants, transaction information can
be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also
consider other valuation methods such as market-based valuation multiples; a discount or premium from market value
of a similar, freely traded security of the same issuer; or some combination. Fair value determinations are reviewed on a
regular basis and updated as information becomes available, including actual purchase and sale transactions of the
issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity
inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from
those of other market participants. Depending on the relative significance of unobservable inputs, including the
valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy.
T. ROWE PRICE U.S. EQUITY RESEARCH FUND
Valuation Inputs
The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values
on September 30, 2019 (for further detail by category, please refer to the accompanying Portfolio of Investments):
($000s) | Level 1 | Level 2 | Level 3 | Total Value | |||
Assets | |||||||
Common Stocks | $ | 1,627,947 | $ — | $ — | $ 1,627,947 | ||
Short-Term Investments | 10,332 | 659 | — | 10,991 | |||
Total Securities | 1,638,279 | 659 | — | 1,638,938 | |||
Futures Contracts | 18 | — | — | 18 | |||
Total | $ | 1,638,297 | $ 659 | $ — | $ 1,638,956 |