If Mr. Price miraculously arrived one pleasant summer morning in 2018 at 100 East Pratt Street in downtown Baltimore, the global headquarters of T. Rowe Price Group, what would he find that was familiar? What would be new? How had the company that he, Charlie, Walter, Marie, and Isabella founded in 1937 with so much effort and sacrifice fared over the 35 years since his death? What is the working environment at the company like now? Would he still be proud to have his name on the masthead?

Standing on the southwest corner of East Pratt and Light Streets, he would discover that the exterior of the original building had changed very little. It is the same handsome, modern concrete structure that Pietro Belluschi designed for IBM, the building's first major tenant. T. Rowe Price Associates had moved there in 1975, also as one of the first tenants. Baltimore Inner Harbor to the south would be beginning to bustle with tourists. East Pratt Street traffic would seem the same – heavy. He would notice a twenty‐eight‐floor tower attached to the rear of the original ten‐story building. The tower added 110,000 square feet, bringing the total interior square feet for all tenants to 653,000. Mr. Price would soon discover that the firm had also expanded, far beyond the three floors that it had occupied in the original building in 1983, the year that he died. The T. Rowe Price Group now fills the entire original building, plus an additional three floors of the new tower.

When he opened the familiar glass door on the front of the building, facing the harbor, instead of the old banks of brushed chrome elevator doors, he would find that the lobby is now two stories high. T. Rowe Price associates would be wearing photo security badges, which opened the gates leading up to the steps to the second floor.

Once Mr. Price had entered the offices and taken the elevator to a higher floor, he would have felt very comfortable. There are light gray cubicles in the center of each floor, with functional offices grouped around the periphery. Wall‐to‐wall carpet keeps the noise level down. Each of the first 10 floors was expanded, of course, with the addition of the tower. If he wandered around the eighth floor, he would note with satisfaction that the current executives had given up the big original corner offices of the early 1980s, and now occupied small offices, some with just a glimpse of Baltimore Inner Harbor. The office of the president and CEO, Bill Stromberg, is only slightly larger than any other. He would also have noted that the best space on the floor was occupied by large conference rooms, with great views of the harbor. These rooms were good places to meet with clients or other associates. If he walked back to the elevator lobby and went to the ninth floor, he would have found on the northern side of the lobby a comfortable grouping of modern furniture in which he could rest for a minute from all the walking around. There would be several years of the firm's annual reports on a table comfortably near his chair. He might decide to check out a few of these reports to see how his old firm was doing. Several items in these reports would catch his eye.

Seeing the first paragraph of the 2013 annual report, Mr. Price surely would break into a grin and maybe even a dry chuckle as he read, “Client confidence in T. Rowe Price is based on the expectation of excellence and reliability. We deliver on that expectation by consistently adhering to our core principle – CLIENTS COME FIRST.” He would surely have thought, “By God, those young men did learn what I preached for so many years, and passed it along to the current generation. I couldn't have said it better myself. This is what the firm has always been all about.”

He would notice that the 2014 report was also on the table. “Earning our clients' confidence starts with delivering consistently excellent investment results and outstanding service,” it read. “But it doesn't end there. Confidence also comes from knowing that every associate at T. Rowe Price embraces the view that our firm's success follows from the success of our clients.” Seventy‐four percent of all the company's funds across their classes outperformed their comparable Lipper Average on a total return basis for three years, 80 percent for five years on the same basis, and 88 percent for ten years. Mr. Price had always focused on the long term, or ten years.

In the 2015 report he would see that ten of the funds were closed to new investors because demand had outstripped the ability of management to find suitable investments at reasonable prices for these funds. He would have smiled in approval. This was similar to the firm's action in the late 1960s, when the firm had closed the New Horizons Fund for the same reason. It was all part of putting your clients first.

Convinced that things were going well and that the current management was looking at the right things, he might open the 2016 annual report to the page on performance and be startled to see that 94 percent of the firm's U.S. Equity Funds had outperformed their Lipper Average over the last decade, an amazing 100 percent for five years; these numbers are based on the same criteria as the 2013 results above. “Wow,” he might have thought, “the firm is hitting on all the cylinders! As I always preached, great performance is the key to success in the investment business.”

Reading these reports, Mr. Price would have also learned that his old company had gone public in 1986. In the summer of 1982, the stock market started a historic climb, ending the long doldrums of the 1970s. Business picked up dramatically for T. Rowe Price. The company began to expand its investment offerings and to take in‐house many fund administrative functions. It significantly increased its investment in the technology for fund administration and portfolio management. It began to market its products in new venues. All of these functions increased its need for capital.

Over the years T. Rowe Price had been approached by many firms seeking to acquire it. Under the concept of creating a financial supermarket, there were some banks and investment firms that felt T. Rowe Price would fit nicely into their corporate structure. The problem was that after a few years, the acquiring company would typically begin to change the acquired company's business practices in an effort to improve profits. This usually destroyed the acquired firm. Something needed to happen, however, beginning in the early 1980s, as T. Rowe Price had little permanent capital, with most of its earnings used to buy the stock of retiring executives.

The board of directors decided to find a solution to this problem. George Roche was asked to devise a program to solve what was a complex issue. The firm not only had its own current shareholders, but also a large group of former shareholders (almost a hundred) who had recapture rights under the shareholder agreement.

The management agreed that the firm should remain independent. It had a strong culture, and management feared that a new owner would tamper with it. It had hired a number of very able individuals in recent years, many of whom might leave after an acquisition. The investment results for the clients were very strong. The firm's reputation for always doing the right thing for its clients placed it among the most respected firms in the business. The overall investment environment was good, and the firm's efforts in client service, marketing and technology were proving successful. The firm could continue to sustain itself and grow profitably as an independent entity. But there was little room for an unexpected large cash drain. What was missing was the insurance policy of a strong balance sheet.

George determined that the best course of action was to take the company public. This would solve the capital problem because the firm would have substantial permanent capital after the offering. It would also place a more realistic valuation on the stock than the private company valuation. Finally, it would leave the company as an independent entity managed by its current team, retaining its unique culture and controlling its own destiny. His public offering program provided a fair but workable compromise between the old and new shareholders. Its brilliance was that it gave the former shareholders immediate cash by selling some shares of what had been an illiquid holding. The program, however, also permitted old shareholders to retain part of their stock, so that they could benefit from the company's future growth. The associate shareholders could continue to hold their shares and options with less potential dilution than had existed under the original stockholder agreement. The offering was assisted by the old shareholders selling some of their shares in order to create a reasonably sized public offering. Otherwise, the company would have had to sell corporate shares, causing dilution.

George proved to be a good salesman of this complicated deal. Some important blocks of stock had fallen into the hands of heirs, some of whom did not have as much financial sophistication. He did an excellent job of negotiating with this large, diverse group. In the end, 100 percent of all the shareholders, new and old, agreed with the program. The firm went public on August 11, 1986, and has remained as an independent entity with a very strong balance sheet ever since.

George told the story of inviting one of the older shareholders to lunch at a New York club during these negotiations. He had forgotten to mention the actual reason for the lunch in his invitation. When George began to discuss the financial situation of the firm and the possibility of a public offering, he noticed that this individual's attention began to wander. He really didn't have any interest in George's spiel. He had long since sold all of his shares and was enjoying his new life of retirement in Florida. He obviously didn't remember the recapture agreement. When George explained that by selling some of the shares generated by the recapture agreement in the offering, he would receive a very tidy sum, this elegantly dressed gentleman let out a whoop and poured salad over his mostly bald head – to the astonishment of the waiter and his nearby club mates!

The public offering proved to be a very good idea, in ways that could not have been predicted in 1986. By 1990, the firm's net worth had increased to $100 million ($192 million in 2018 dollars). In that year a real estate company, Mortgage and Realty Trust (MRT), went bankrupt. T. Rowe Price had a significant position in this company in the Prime Reserve Fund, as well as in client accounts. The firm decided to buy in the underlying debt of MRT held by the fund and its clients to protect them from any risk or the need to write down their portfolios. The cost to do this, by the company, according to George Roche, was approximately $67 million, or two‐thirds of the firm's capital. It required several years of difficult negotiations, but eventually the firm did recover almost all of its capital.

Ten years later, on April 11, 2000, the firm's international investment partner, Robert Fleming Holdings, Ltd., agreed to be acquired by Chase Bank. The joint venture had been formed between the two companies to be Rowe Price‐Fleming International, Inc., which managed all of the T. Rowe Price international mutual funds and clients. Under T. Rowe Price's agreement with Robert Fleming, it had right of first refusal should Fleming desire to sell its shares. T. Rowe Price management felt that it was important to acquire Fleming's 50‐percent ownership in the joint venture. Because many of the clients and shareholders had joined because of T. Rowe Price, it was believed that they should be protected. In addition, it was held that the international funds and money management business would fit well with the company's future plans. The firm made a $700 million offer, which was accepted, and T. Rowe Price assumed total ownership of Rowe Price‐Fleming International. Again, this constituted two‐thirds of the firm's then net worth and could not have been accomplished without the cash from the public offering.

In the company's 1986 prospectus, by 1983 assets under management had reached $16.5 billion dollars, with revenues of just under $60 million. The Growth Stock Fund alone had reached more than $16 billion in assets.

In the thirty‐four years between 1983 and 2017, Mr. Price could have calculated on a scrap of yellow paper that revenues at $4.8 billion had grown an amazing 80 times, and assets under management were now over $1 trillion. The Growth Stock Fund had reached $46 billion! Total employment in 2018 approached 8,000 individuals. A large part of this increase in personnel was due to bringing in‐house all of the mutual fund services.

When Mr. Price realized how large the firm had grown, he might have felt a sense of awe, as he recognized that not only had it grown far beyond his wildest dreams, but also well beyond his ability or interest to manage, much less to control. He would have felt the admiration and pride that a parent feels when his small child grows up to be a mature, highly accomplished adult. He had always preferred a small group, but he would have respected those who had the ability to carry his original investment concepts to such great heights – particularly as he realized that management had accomplished this by adhering to his original philosophy of providing the client with outstanding service and superior performance.

If he got up from the chair and wandered further down the hallway, he would have begun to pass the offices of the investment professionals. The analysts and portfolio management offices were along the exterior walls, with their assistants working in adjacent cubicles in the center of the floor. Looking in, he would have seen none of the piles of paper reports that had occupied the floors and visitors' chairs of the analysts and portfolio managers in 1983, or copies of the current Wall Street Journal that were must‐reading by all professionals when he retired in 1971. Instead, the occupants were monitoring large computer screens, where such information would be stored.

If Mr. Price had stepped into an analyst's office, such as that of Kennard (Ken) W. Allen, who manages the Science & Technology Fund and leads its technology research team, he would have met an impressive, outgoing young man. Ken earned his B.A. from Colby College and has been with the firm for eighteen years. Mr. Price would also have learned that all current news and financial information, both published and in‐house, was now instantly accessible not only on those computers, but also on Ken and his colleagues' omnipresent iPhones and iPads. It could be easily reasoned over and communicated anywhere in the world at the touch of a button. In fact, technology's ability to manage information had become much more important throughout the investment process by 2017. With the dominance of the Internet, the problem had become too much information. As Ken would have emphasized, the skillful analyst at T. Rowe Price maintained superior performance in 2018 in part by understanding which information was important to the companies that he followed and which was not, and deriving insights from that which mattered. The firm was greatly aided in this process by continuing to focus on the longer‐term outlook, ignoring much of the noise of short‐term data so emphasized today by the hedge funds and most mutual funds. This unique focus remained a major competitive advantage.

In 1983, there had been 21 equity portfolio managers (counselors), but only 26 equity analysts, all located in the U.S. Mr. Price would have discovered that according to the 2017 annual report, there were 71 equity portfolio managers, more than triple the number in 1983, despite assets under management rising almost 50 times. The use of computers to manage and properly distribute assets had made managing money much more efficient. In addition, much of the increase in assets had gone into existing funds, which were far easier and less time‐consuming than clients. The total number of equity analysts had increased almost six times to 148.

The job of a portfolio manager had been greatly refined by 2018. In 1983, the portfolio manager was called an “investment counselor.” He or she was hired directly for that position from business school or another financial institution. As I observed, no counselors in 1983 other than the fund managers had ever been research analysts. A counselor usually first worked under a senior counselor on a team. As he or she gained experience and a good performance record, he or she would eventually graduate to become a senior counselor and head of a team. Counselors in 1983 had a mix of many different clients, including pension funds and individuals. A high percentage of their time involved counseling individual clients to buy or sell specific industries and companies in order to meet their specific personal objectives. The more senior counselors, with good performance records, would be invited to serve on one of the four equity fund advisory committees, along with selected research analysts. The funds, however, were just another client, an adjunct to the counselor's or analyst's other job commitments. The actual responsibility of managing the funds was shared by all the members of the advisory committee, although the preponderance of the responsibility fell on the chairman.

Had he continued along the corridor, Mr. Price might have met Brian Berghuis. Brian manages the Mid‐Cap Growth Fund with the very able assistance of John Wakeman. He would have learned that they had won the prestigious Morningstar Fund Manager of the Year Award in 2004 for domestic equity funds. Brian graduated from Princeton with an A.B. degree and from Harvard Business School. He would have explained that the committee system, with its advantage of developing ideas from several sources, and its ability to facilitate debate on investment decisions, had been retained for each fund, but in an abbreviated form. It could be called upon as needed by the portfolio manager, but the final decision to buy, sell, or hold a stock was strictly his. The committees were only advisory. On an overall basis, however, Brian would have stressed that both research and portfolio management remained a highly collaborative team effort. Communication had actually improved over 1983, although the number of people now involved was much larger, because of the technology and the emphasis on communication by management. Despite the importance of a team effort, a major effort had been made to prevent “group think.” As Mr. Price would have discovered in these conversations, there were no shrinking violets. Everyone was encouraged to speak their mind and disagree when the facts, in their opinion, called for it.

In this conversation with Brian, Mr. Price would have learned that he was a very well‐informed investor, had an impressive intellect, and was both pleasant and professional. He would also have learned that the path to becoming the manager of a fund in 2018 was long and challenging. A research analyst might come straight out of a business school with a master's degree, or as an associate analyst who would be hired for a limited time, such as during the summer before entering business school. The new MBA would have the goal of becoming an analyst, but not the promise. His or her inexperienced recommendations would be subject to careful oversight and consideration for the first two or three years. He or she would be assigned a mentor who would work closely alongside. Finally, after this probation period, if his or her recommendations were beginning to make money, he or she could become a full‐fledged analyst.

Mr. Price would also discover that analysts are judged today by far stricter standards than they were in 1983. With the assistance of custom software, the analyst at T. Rowe Price in 2018 is measured by how much money his or her recommendations actually make for the firm. The job involves closely following thirty or so stocks, writing reports with specific buy, sell, or hold recommendations, supporting those conclusions in weekly investment committee meetings, and then making the rounds of the portfolio managers to answer any questions and to give them a nudge to act on the recommendations. He or she must not only generate good investment ideas but, to merit a good bonus, sell them to the portfolio managers. All portfolio managers now come out of research positions, but the decision to transition to a portfolio manager is not made by every analyst, as it wasn't in 1983. A successful analyst today can make as much money or more than a portfolio manager, although the average pay for a portfolio manager is more. It is similar to the decision made by many engineers when deciding between management and engineering for their career. Some analysts enjoy delving into the depths of a company and coming up with great new investment ideas, more than running a diversified portfolio, which crosses into economic sectors beyond their specialty.

James A. C. Kennedy, the firm's president and CEO until he retired in 2016, received his undergraduate degree from Princeton and his MBA from Stanford. He recalls that he turned down the first six offers to become the Director of Research, far preferring to remain an analyst. Of course, the seventh offer proved to be the one that was irresistible and he took the job – but still with a touch of regret. Jim took the job because he realized that it is the analysts who come up with the ideas that can make a real difference in performance. For the good of the firm, he had a responsibility to try to maximize the analyst's important role.

Today, most of the portfolio managers at T. Rowe Price are responsible for billions of dollars of assets. A portfolio manager of an equity or bond fund is focused only on that fund. His or her time is not diluted by other accounts. He or she knows intimately all the companies in the portfolio and visits on a regular basis with management. The firm has even developed an app for portfolio managers for use on their iPhones, which contains the most recent financial and portfolio information on each company in the fund, together with its current market price. They can issue buy and sell orders to the trading desk from their mobile phones anywhere in the world. Of course, such orders are well verified and double‐checked.

Mr. Price would have applauded this total focus by the fund managers on their funds. It was the way he ran the New Horizons and the New Era Funds when he phased out of managing most of his individual accounts in the late 1960s. In 1983, as noted in the prospectus issued prior to the company going public, institutional and individual accounts totaled about $8.3 billion of the firm's assets, or about half of the total assets under management. Since that time, there has been an enormous shift in pension funds from defined benefit to defined contribution, as discussed in Chapter 11.

According to Brian Rogers, the nonexecutive chairman of the board, this shift has caused managed pension fund assets to drop under 20 percent of total assets under management today. Mutual funds have simultaneously increased, as they became the investment vehicle favored by most employees for their retirement accounts. Traditional investment counseling to individuals in 1983 was still about 20 percent of the firm's total assets under management. Today, individual accounts with assets of more than $3 million are still managed very capably by Mark Weigman and his team, but they represent only $3.7 billion total, or less than 0.4 percent of total assets under management.

In 1983, there were eighteen portfolio managers and traders in the fixed income department and six credit analysts, managing five funds and a number of institutional accounts. Today, there are seventy‐seven portfolio managers and traders and seventy‐six research and credit analysts. They manage seventeen mutual funds, totaling $105 billion. Mr. Price would have noted with satisfaction that about half the investment professionals today are research or credit analysts. From his days of running the Mackubin, Legg bond department in the 1930s, he well remembered that outside credit analysts cannot be relied upon. He and George Collins, the first head of fixed income at T. Rowe Price, agreed that thorough in‐house credit analyses were at least as critical in managing bonds as excellent equity research was in managing stocks.

The great majority of all public and private debt is still rated by the big three – Standard & Poor's, Moody's, and Fitch. These are the same three firms that totally missed the warning signs of the coming financial collapse in 2007 and 2008. In fact, they were instrumental in creating it by awarding very high credit ratings to the structured financial notes, which were built on dubious mortgages generated by the housing boom in 2006 and 2007. In return, these three rating agencies received large fees from investment banks like the Goldman Sachs Group, Inc., and Morgan Stanley. Banks and other institutions then created and sold the structured products for large commissions to the public and other institutions. The day Lehman Brothers failed and went into bankruptcy, the notes of Lehman, whose assets largely consisted of such highly leveraged paper, were rated triple A by these agencies.

This house of cards imploded during April 2007, when nearly two trillion dollars of structured notes were written off. This ultimately caused the bankruptcy of large brokerage firms like Bear Stearns Companies, Inc., and the collapse of the stock market. Several large banks, as well as AIG, a large insurance company, had to be rescued by the federal government. General Motors, which had to be rescued by DuPont early in Mr. Price's career, fell into default and was also bailed out by taxpayers.

The T. Rowe Price Group went through this credit crash largely unscathed. Walter Kidd first saw to it that, once T. Rowe Price became profitable in 1949, by assuring that not only did it stay profitable, but it also began to build up a strong balance sheet. George Roche continued this tradition during the years that he was chief financial officer. When the company went public in 1986, it reported, before the offering, that cash and liquid securities were $18 million, more than enough to pay off all of its current liabilities and debt. By the end of 2017, according to the firm's annual report for that year, liquid assets had grown remarkably to $4.1 billion in cash and marketable securities. Liabilities in 2017 were only $717 million. As George was fond of saying, “A good balance sheet doesn't matter until it matters, and then that is the only thing that matters.”

Soon after he was elected president of T. Rowe Price at the beginning of 2007, Jim Kennedy moved his desk into the fixed income area. He knew little about it, having focused on equities during his long career at the firm. “One of the most important benefits [of this move],” he said, “was getting to know a young analyst named Susan G. Troll.” She had received her Bachelor of Science degree from Drexel University, and was a Certified Public Accountant. If Mr. Price had met Sue during his tour, he would have found an energetic woman who talked in rapid‐fire phrases, her mind moving quickly through complex issues. She had become skeptical of the forecasts made by so‐called fixed income “experts” at places such as the Goldman Sachs Group, Inc. and Morgan Stanley, when their ideas clearly did not reflect the reality that she found in the marketplace. After thoroughly studying the condition of the mortgage market in 2006, she became convinced that it was going to implode. Credit spreads were tightening, while fundamentals were deteriorating. It made no sense. Thanks to her warnings, which earned her the nickname of the “Duchess of Doom” on Wall Street, the firm's fixed income department eliminated nearly all of its subprime mortgage exposure, which was not assured of being paid off in the near future, as well as the small number of complex structured notes it held, which were then still highly rated. It was a year early but, as Mr. Price often said, in such situations it was far better to be early than late.

The Prime Reserve Fund had always been very conservatively managed, as it continued to be during this entire period. Near the bottom of the credit crisis in May 2008, the fund had only one structured note, equal to 0.2 percent of its portfolio. It was one of the very few such notes that would pay principal and interest owed, on time, two months later. The Prime Reserve Fund had none of the problems of maintaining the one‐dollar share price faced by many of its peers.

Managing a fixed income portfolio in the 2006–2008 environments was extremely difficult. A fixed income fund's performance is based on its total return on capital and income to its shareholders. Typically, higher‐yielding securities are the riskiest. It seemed that in 2007, you could have your cake and eat it too, with the high‐yield structured notes ranked highly by the credit agencies. Many of the firm's competitors took the bait, and for a short time performed much better on paper. By taking the contrary course and staying away from the tempting higher yields, the T. Rowe Price fixed income funds ultimately performed strongly relative to their peers, according to Ted Wiese, the head of Fixed Income, and suffered none of the large write‐downs of other funds during this period.

Mr. Price would probably have ended his visit to his old firm at East Pratt Street and not gone out to its new campus in Owings Mills. His major interests were always the investment process, the firm's investment performance and its attitude toward its clients. The administrative details had never been a strong focus of his, although he had always believed that they should be in capable, knowledgeable hands, beginning with Walter Kidd in the office and Eleanor on the home front.

The administrative function had also changed and grown considerably since his death. There were many new mutual funds, and the number of shareholders had expanded substantially. The State Street Bank and Trust Company had been running the funds' back office in 1983, but there had been growing concern that T. Rowe Price should begin to deal directly with its mutual fund shareholders. Client service was too important to leave in the hands of a third party. The top management members at T. Rowe Price were excellent managers of financial assets, but no one had much administrative experience, other than that learned on the job as the firm expanded.

In 1981, Edward (Ed) J. Mathias, a vice president and director of the firm, suggested that his fraternity brother from the University of Pennsylvania, Jim Riepe, might be the person to fill this requirement. Jim had spent the last twelve years of his business career at Wellington Management and the Vanguard Group, where he was the executive vice president reporting directly to John C. Bogle, the firm's founder and CEO. Vanguard at that time managed the country's first index fund for retail customers. An index fund is run by a computer and mirrors an index. Costs can be quite low because the expense of a research department and portfolio managers can be eliminated. The downside is that the portfolio cannot do better than the index. Vanguard's original computer program mimicked the Standard & Poor's 500 Composite Stock Price Index. Today, Vanguard is a giant in the investment management business, with more than $5 trillion under management in many different index funds. In 1981, shareholder relations, administration, sales and marketing, and finance at Vanguard all reported to Jim. Not only did he have the administrative experience needed at T. Rowe Price, but he was also personable and fit in well with the existing management of the firm. He was also well known in the mutual fund industry. T. Rowe Price was fortunate to be able to hire Jim in 1981.

He immediately became a member of the management committee and the board of directors. He assumed responsibility for a number of important areas in the Mutual Fund Division, including sales, marketing, distribution, client service, and the important technology involved in properly serving millions of shareholders. As Jim said, from a marketing perspective, the firm didn't have a single mascot or logo identity. Each fund had its own favorite. Jim settled on the large bighorn sheep for its wisdom, independence, and strength. It had been the symbol of the Prime Reserve Fund since 1976. He also established the motto “Invest with Confidence.” Both are still used today in T. Rowe Price's promotion and advertising.

In 1984, in this first move to build up the fund's back office, Jim brought in‐house the funds' important calls division from State Street and the firm began to handle all the fund shareholder telephone calls from Baltimore. In those days, this was the primary way of communicating with shareholders. In 1991, the transition from State Street was completed when the last elements – the processing of fund data and fund accounting were largely brought in‐house. Fortunately, the tower at 100 East Pratt Street had been completed, so most of this large increase of administrative staff could easily be housed. Jim also brought many new services to the firm's mutual fund shareholders.

He put in place over the next several years the computer technology that allowed the firm to communicate on a one‐to‐one basis with its shareholders using computers and, later, cell phones. Distribution channels were expanded and new channels were opened for both mutual funds and private clients. Despite the huge growth of fund operations under Jim's leadership, he was also able to greatly improve the quality of these services for the mutual fund shareholders and clients, at a lowered price.

Although T. Rowe Price remains committed to the basic growth stock philosophy, with the Growth Stock Fund still its largest equity fund today, Jim realized shortly after his arrival that it would be important for the firm's future growth to diversify its product. When he arrived in 1981, 90 percent of the firm's equity assets were invested in just the single category of growth stocks. The only nongrowth stocks were in the New Era Fund and a few specialized accounts.

Another reason for diversification was to better serve the large market that was rapidly unfolding in the “defined contribution” plan business, discussed in Chapter 11. In a defined contribution plan, employees took over the responsibility of saving for their retirement from their employers. At that time, this was done primarily through 401(k)s, tax‐deferred vehicles into which employees deposited funds that were deducted from their salary. Most often these were supplemented by additional funds donated by the employer. The human resource departments usually approved a range of mutual funds in which the employees could invest. Selected funds generally provided full services, offered diversification, and had a good reputation. Both equity and fixed income funds were made available so employees could structure their own portfolios depending on their age and income.

This was a very different process than the firm's principal business of managing corporate pension funds. In managing a “defined benefit” pension fund, the customer was usually the chief financial officer; the account was managed by a counselor. Performance in managing pensions was very important, because it directly impacted the company's bottom line.

Riding on the back of this defined contribution trend, it was evident to Jim that mutual funds would rapidly grow and become much more important to the firm in the future. Modernizing the back office was essential, but so was diversifying the product. By 1981 the long decline in the relative performance of growth stocks, as their high valuations in the 1960s unwound, was just coming to an end, but this was not yet apparent to the investing public. A category that had done relatively well in the past decade was value stocks. Jim felt that to be successful in the retirement market, it was important for T. Rowe Price to have funds that offered both capital appreciation and dividend income, which a portfolio of value stocks would do.

A value stock is generally defined as a stock that, after careful analysis, is worth more than its current market price. This is often due to unrecognized assets on its books, but it can also be for a variety of other reasons that push it out of fashion, such as a cyclical downturn in business, the market's concern about the current management, or a temporary slowdown in earnings growth. Such a stock generally sells for a low relative price‐earnings ratio and price to book value. It often has a relatively higher dividend because of its low price. Classical value stock investing grew out of the academic work of Benjamin Graham and David Dodd at the Columbia Business School beginning in 1928. They published the seminal text on this subject in 1934, Security Analysis, which became mandatory reading in college business courses. It remained in print through six different editions, with the last published in 2008. Warren Buffett was undoubtedly their most famous pupil.

As Jim was looking around for a portfolio manager in this area, he met L. Gordon Croft. Gordon was considered a bit of a maverick, an independent thinker, at T. Rowe Price. He had an uncanny ability to see behind a company's current weak financials and poor management to see a much better future. He had an excellent performance record of investing in such value stocks during the volatile 1970s. However, such companies were quite different than the growth stocks that the firm had featured since its inception. With no other immediate candidates, Jim decided to give Gordon a crack at running the company's first value‐oriented fund. After considerable arm twisting, because this fund would clearly be at variance with the firm's traditional growth stock investments and Gordon himself was a bit controversial, the other members of management finally agreed to name Gordon as the new fund's first president.

The Growth and Income Fund was launched in 1982. It performed well and was well received by investors. After several years another value‐oriented fund was launched in 1985, called the Equity Income Fund, run by the team of Thomas (Tommy) H. Broadus and Brian C. Rogers. Brian is currently nonexecutive chairman of the board of T. Rowe Price. The fund was an offshoot of an account that they had run for Duke University, whose guidelines specified that both yield and quality were important. This account emphasized good companies that were undervalued for what appeared, after careful research, to be temporary reasons. After Tommy retired, it continued to have an outstanding performance under Brian during the difficult early years of the twenty‐first century. The fund, chiefly because of its record, was extremely popular, and briefly became the largest fund at T. Rowe Price in the early 2000s.

This was quickly followed by the Small Cap Value Fund in 1988, which employed the same basic concepts used in the Equity Income Fund but with New Horizons–sized companies. Over the following decade, five more value‐type funds were launched by the firm. Overall value stocks gave the firm's earnings much the same needed boost in the early 2000s that bonds did in the decade of the '70s, as growth stocks faded in popularity in both time periods. As Bill Stromberg, president and CEO of T. Rowe Price Group, said, “Value stocks offer a great investment offering to our clients and provide good balance to the firm, as they tend to lead at different parts of the economic cycle than growth stocks. Having strong offerings in both areas reminds all of us that no investment style dominates in all seasons and diversification is important.”

In the late 1990s and the early years of the twenty‐first century, new accounts began to be drawn into T. Rowe Price, attracted by the continued excellent performance of these funds. T. Rowe Price ultimately coined the term “GAARP” for its particular style of investing in the value area, which translated to “Growth at a Reasonable Price.” At the end of 2015, GAARP‐oriented mutual funds accounted for $84 billion. A number of “sector” funds were launched, offering portfolio management opportunities for equity analysts and providing greater diversity of product. A sector can be an industry such as New Era's emphasis on natural resources or a geographic area. New industry funds were opened in areas such as health care and science and technology. After the firm bought out Fleming, its overseas partner, in 2000, Jim and the investment group also expanded the line‐up of international mutual funds.

As existing funds continued to grow in size and new funds were added, mutual funds became the firm's major business, as Jim Riepe had foreseen in 1981. This also created continued strong growth of the investment staff, as well as fund administration. Once more, the firm outgrew its quarters and new space had to be found. After considerable search, the firm decided to build a corporate campus in Owings Mills, Maryland.

Currently, about 3,500 associates work at Owings Mills, and the six buildings encompass over one million square feet on the 72 acres. Portions of finance and accounting, legal, human resources, technology, and other functions are all located there, as is the group that serves the funds' shareholders. This operation is supported by a large, complex computer/communication system, fully backed up offsite.

As the back office gained in sophistication, certified professionals began to help mutual fund shareholders with their overall investment programs, and particularly their retirement funds. An outgrowth of this individual service was “target date funds” These funds “target” a specific year that represents a time when money will be needed for such events as retirement or college entry. The balance in the fund between equity and fixed income reflects the length of time until the target date. The firm handles all the administration and mix of investments, which changes gradually as the target date approaches. T. Rowe Price today is one of several mutual fund groups that can offer clients such in‐house full service, including client service, administrative expertise, and investment management.

In 2003, there was a mutual fund scandal involving a number of well‐known funds. The transgressions involved such things as “late trading” by favored shareholders, who were allowed to buy or sell shares of the fund after hours, at the prior day's price, thereby profiting from any changes in the market after the close. Another transgression involved “front running,” in which some clients were told of planned trades by the fund, so they could trade first, and profit from the change in market price from the sizable transactions by the fund. T. Rowe Price was not involved in any of this, and Jim Riepe became a spokesman for the industry in criticizing and ending such practices.

By 2018, the T. Rowe Price Group had expanded far beyond Baltimore. It now controls 31 acres and 245,000‐square‐feet of office space in Colorado Springs. In Tampa, Florida, the firm rents a 70,000‐square‐foot building, also principally for shareholder services and fund sales. Globally, the company now has offices in Amsterdam, Copenhagen, Dubai, Frankfurt, Hong Kong, London, Luxembourg, Madrid, Melbourne, Milan, Singapore, Stockholm, Sydney, Tokyo, Toronto, and Zurich. In the U.S., in addition to Colorado, Florida, and Maryland, the firm has offices located in New York, Philadelphia, and San Francisco.

Bill Stromberg became the next president and CEO, following Jim Kennedy's retirement in 2016. Bill graduated from Johns Hopkins, majoring in mathematics, and earned his MBA from the Amos Tuck School of Business Administration at Dartmouth. He has served at the firm for nearly thirty years in a variety of positions, beginning as an analyst, covering environmental and industrial companies. He initiated the concept of what became the very successful Dividend Growth Fund, and was its first portfolio manager. This fund identified companies that paid solid, rising dividends, and, after careful analysis, promised to continue to do so. He was most recently head of the Global Equity and Global Research Groups. His performance in this role is mirrored in the outstanding investment results that the firm has enjoyed during his tenure. The T. Rowe Group is well‐positioned for the new century with its excellent record of performance, its great diversity of product, global exposure in both products and research, a strong team of experienced professionals, its in‐depth management group, an outstanding customer service department, its extremely strong balance sheet, and the more than $1 trillion that the firm manages, as of April 2018.

Mr. Price could end his visit with the knowledge that his name is indeed safe in the hands of management. The firm is set to grow and will undoubtedly continue to be respected for the performance, ethics, and high quality of service that it provides to its clients. He can rest easy.