T. ROWE PRICE STRATEGY FOCUS
ON U.S. IMPACT EQUIT Y

May 2023
STRATEGY SUMMARY■ The US Impact Equity Strategy invests sustainably with the aim of having a
positive impact on the environment and society while seeking to outperform the
S&P 500 Index Net 30% Withholding Tax.
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The strategy invests mainly in the shares of U.S. companies that we believe havethe potential to create positive social or environmental impacts, and that appear
to offer superior growth prospects and investment characteristics, such as strong
earnings and cash flow generation underpinned by a resilient business model.
Our investment approach is aligned to the United Nations Sustainable
Development Goals (UN SDGs). The framework guides how we assess businessactivities and quantify their alignment to our three proprietary impact pillars—
climate and resource impact, social equity and quality of life, and sustainable
innovation and productivity—and eight impact sub‑pillars.

David Rowlett
Portfolio Manager,
US Impact Equity Strategy

Our fundamental research platform, in collaboration with our dedicatedResponsible Investing (RI) team—which is focused on environmental, social, andgovernance (ESG) issues—provide the resources and diverse perspectives tobuild a positive impact portfolio.
We aim to be additional, demonstrated by our commitment to promote andprogress the impact agenda. This includes directing fresh capital toward desired
outcomes, impact‑oriented company engagement, active proxy voting, and theassociated influence feedback loop.

Investment Philosophy
Our investment process is founded on our Impact Charter,
which comprises four guiding principles that serve as aframework for how we develop impact portfolios and invest for
positive long‑term outcomes as outlined in Exhibit 1:

Our approach aligns with the UN SDGs, a globally
recognized framework designed to end poverty, protect theplanet, and ensure prosperity. We believe this is the best way
to align all stakeholders in the impact journey, encompassing
our clients, our investment team, and the businesses our
strategy owns.

Identifying Impact Investments Using Our Impact Charter
Our investment process embeds clear principles of materiality
and measurability and forms the basis for identifying positive
impact for clients. We adopt a forward‑looking perspective onchange, while aiming to ensure that all investment decisions
are based on a clearly defined positive impact thesis. We
also aim to be additional by committing to using our scaleand resources to promote and progress the impact agenda.
Due to the very complex friction points that exist for ourplanet and our global community, delivering impact requires
patience and an understanding of change. This is why being
resilient in applying an impact‑oriented investment approachis imperative.

Durability and Time Horizon Are Key
Stocks have the potential to deliver superior returns when
the durability and persistence of earnings and cash flow areunderappreciated by the market or where economic return
improvement is mispriced. Adopting a long‑term view allows
us to identify inefficiencies embedded in equity markets,
especially in an era of change, disruption, and shortened
time horizons. We also apply a long‑term investment
horizon when measuring impact, given the patience andresilience that our environmental and social transition
journey necessitates.

FOR INVESTMENT PROFESSIONALS ONLY. NOT FOR FURTHER DISTRIBUTION.

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Exhibit 1: Impact Charter
Material

Additional

Every stock is aligned with clearly
defined impact activities, using revenue
inclusion criteria, always accounting for
dimensions of positive future change.

We commit to using our scale andresources to promote and progress theimpact agenda.

Measurable

Our approach is multidimensionaland stock-based, using insights fromour research platform and company
engagements.

Resilient

In an era of disruption and extreme
outcomes, patience, a forward‑looking
approach, and skillful portfolio
construction are key.

Source: T. Rowe Price.

Secular Change Matters
Investing in companies that we believe are on the right side ofsecular change is key to unlocking improving economic returns
in business models, especially in an era of shifting consumer,
business, and regulatory preferences. While impact investing
has traditionally been associated with private investments,
the opportunity to own and engage with companies thatcreate a positive impact is broader than ever before in public
equity markets.
Research Is Crucial
Based on our fundamental and responsible investing
research resources, our approach produces a holistic view ofcompanies and embodies the different perspectives necessary
to invest for future impact and pursue better investment
outcomes. We integrate our stock perspectives to identify, in
our view, underappreciated impact and mispriced economic
return improvement on a stock‑by‑stock basis. We apply aforward‑looking, research‑driven, and high‑conviction approachto our stock choices. This is important with respect to prudent
risk management, as well as alignment with the UN SDGs, as
we seek to engage with the full breadth of impact opportunities
that exist in an evolving and complex world.
Portfolio Management
David Rowlett is the portfolio manager for the US Impact Equity
Strategy. He has 19 years of investment experience and joined
T. Rowe Price in 2008, beginning as an investment analyst in
the U.S. Equity Division focusing on aerospace, defense, andmulti‑industrial companies. Earlier in his career, David held
analyst, portfolio manager, and investment banker roles.
He has always believed investing plays an important rolein society—delivering long‑term financial performanceto help clients meet future needs, such as education
and retirement. David brings a passion for pursuingenvironmental sustainability, zeal for contributing to positivesocial change, and extensive fundamental understanding of
the investment landscape.
While David has ultimate responsibility for investment
decisions, he is closely supported by team analyst Kaoutar
Yaiche, who specializes in incorporating environmental andsocial considerations into the research process. She joined
T. Rowe Price in 2021, having previously been employed byan independent power producer developing wind and solar
farms in emerging markets, a clean‑technology startup, and aclimate‑focused venture capital firm.
The search for high‑quality impact ideas is supported by
T. Rowe Price’s world‑class research platform, comprising ateam of more than 200 fundamental analysts, which gives the
US Impact Equity team access to ideas. The team also works
closely with the analysts on our Responsible Investing (RI) team,particularly on developing impact models for companies andmeasuring the potential and actual impact from an investment.
An Investment Advisory Committee, consisting of senior
T. Rowe Price equity investment professionals, also assists
the portfolio management team by discussing, reviewing, andrecommending potential investment ideas.
Defining the Impact Investment Universe
All US Impact Equity Strategy investments start with astock‑by‑stock assessment of impact materiality. The RI
team defines our impact universe through careful screening,a deep understanding of ESG factors, and industry‑specific,
forward‑looking impact inclusion criteria. The universe also
excludes areas of the U.S. market that, in our view, generatesignificant harm. These include adult entertainment, alcohol,
fossil fuels, gambling, tobacco, for‑profit prisons, weapons, andstocks that screen individually on conduct‑based metrics.

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Exhibit 2: Impact Pillars and Activities
Climate andResource Impact

Social Equity and Qualityof Life

Sustainable Innovation
and Productivity

1. Reducing greenhousegases

4. Enabling social equity

7. Sustainable technology

5. Improving health

8. Building sustainableindustry andinfrastructure

2. Promoting healthy
ecosystems
3. Nurturing circular
economies

6. Enhancing qualityof life

Source: T. Rowe Price.

Our team’s starting point is to screen using our Impact
Template to quantify a company’s alignment to one of ourthree proprietary impact pillars and eight sub‑pillars, as well
as at least one of the UN SDGs. Each company selected
for inclusion in the portfolio has current or future businessactivities that are expected to generate a material andmeasurable positive impact under one of the three impact
pillars shown in Exhibit 2.

place on three levels: first, as our fundamental and responsible
investing research analysts incorporate ESG factors into
their analysis; second, as we use T. Rowe Price’s proprietary
RIIM analysis at regular intervals to help us understandthe ESG characteristics of single stocks and the aggregate
portfolio; and third, as the portfolio manager integrates ESG
considerations within his company interactions and theportfolio construction process.

Portfolio Construction

Measuring Impact

In constructing the portfolio, David leverages the analysis
produced by the fundamental research platform and the
RI team and applies his judgment to create a primarily
U.S. portfolio of typically 30 to 60 of his highest‑conviction
opportunities within the impact universe. These are stocks
with clear impact and financial return markers, based on
product, industry, governance, and growth potential. David
closely collaborates with our team of sector analysts to conduct
thorough, fundamental analysis to identify the most attractive
stock‑based opportunities, integrating our perspectives on
financial returns alongside the positive and negative impact ofbusiness activities. All stock selection decisions begin with aclearly defined positive impact thesis, which proactively andsystematically integrates ESG considerations.

Given our mandate’s dual nature, impact measurement
and management are integral to our investment process.
We believe that measuring and managing impact fulfills
three objectives:

The RI team’s proprietary Responsible Investing Indicator
Model (RIIM), which systematically and proactively evaluates
the RI profile of over 15,000 corporate securities, helps
assess the quality and long‑term sustainability of theinvestee companies.
Our philosophy is that ESG factors cannot be a separate ortangential part of a traditional investment thesis; they have to
be integrated alongside fundamental factors to help create thebest outcome for clients. The process of ESG integration takes

1.

To monitor our investments’ progress toward
clearly defined outcomes through key performanceindicators (KPIs).

2.

To assist in our corporate engagements and to ensurethat we identify any deviation from our impact andinvestment thesis.

3. To report progress and impact delivery to our clients.
We use the “five dimensions of impact framework” to carry
the impact due diligence of a given stock. This framework
was developed by the Impact Management Project, an impact
practitioner community of over 2,000 organizations. This
framework leads to assessing a company’s ability to deliver
impact on a holistic basis, including the risks that may affect its
ability to deliver the targeted impact. The five dimensions are:1.

What is the impact goal?

2.

Who experiences the outcome?

33. How much of the outcome is occurring (scale, depth,and duration)?
4.

Contribution—Would this change likely have
happened anyway?

5.

Risk—What is the risk to people and the planet if the
impact does not occur as expected?

Within this process and depending on data availability, we also
use guidance and metrics from the IRIS+ Catalog of Metrics,
developed by the Global Impact Investing Network (GIIN).
This analysis leads us to formalize an impact thesis, highlightnegative externalities and risks, and define KPIs for each stock.
As part of our approach to impact measurement, we use a“Theory of Change” model, which we believe provides a clear
and comprehensive framework to evaluate how the efforts ofeach holding are delivering impact, through the measurementof achieved outcomes.
Accelerating Impact Through Active Ownership
We truly believe impact is achieved within an investment
portfolio in more ways than simply owning and capturing the
economics and activities of certain types of companies. Our
approach involves directing fresh capital toward desired impact
outcomes alongside impact‑oriented company engagements,
proxy voting, and the associated influence feedback loop.
Engagement Program
The central focus of our engagement program is at thecompany level. We identify specific factors throughour research that could be potential impediments to asecurity’s performance. We may at times suggest to acompany that it make a specific change, or we may seek
to gain more information on an ESG issue, to ensure that
our investment decisions are well informed. We believe thiscompany‑specific approach results in the highest impact
because it is aligned with our firm’s core investment approach:active management rooted in fundamental investment analysis.

Proxy Voting
Proxy voting is a crucial link in the chain of stewardship
responsibilities. Each vote represents both the privileges
and the responsibilities that come with owning a company’s
equity instruments.
We take our responsibility to vote our clients’ shares very
seriously, taking into account high‑level corporate governanceprinciples and company‑specific circumstances. Our
overarching objective is to cast votes to foster long‑term,
sustainable success for the company and its investors. Our
proxy voting program serves as one element of our overall
relationship with corporate issuers. We take a hands‑on
approach to joining voting and engagement activities as part ofour commitment to additionality.
Disciplined Approach to Risk
We do not believe that an investment approach canbe successful if risk is viewed as something distinct
from the rest of portfolio management. Accordingly, we
incorporate risk management throughout every step of ourinvestment processes.
The US Impact Equity Strategy applies a high‑conviction,
impact‑oriented approach but with a mindset that valuation
matters in generating alpha and in managing absolute andrelative risks. We maintain a focus on companies that we
believe offer a positive impact today and an underappreciatedimpact in the future, as well as durable and superior earnings
and cash flow growth; strong, thoughtful management teams;
expert capital allocation; and attractive industry structures. We
inherently believe in our ability to identify such businesses
during challenging times and will always take an active
approach to diversification, challenging ourselves on theindividual and aggregate risks to which we are exposed.

4T. Rowe Price focuses on delivering investment management
excellence that investors can rely on—now and over the long term.

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ID0005953 (05/2023)
202305‑2887194

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