(PUB) Investing 2015

August 2015

Morningstar FundInvestor

7

Data through July 31, 2015 T. Rowe Price Real Estate

Ticker

Status Yield Total Assets

Mstar Category

TRREX Open

2.2% $4,878 mil

Real Estate

Morningstar Analyst Rating 07-17-15

Investment Style Equity Stock %

Historical Profile Return Risk Rating Above Avg Average Above Avg

97% 92% 93% 93% 93% 95% 93% 94% 94%

Œ

Manager Change Partial Manager Change

15.0 20.0 27.0

Morningstar Pillars Process Performance

Growth of $10,000

Positive Positive Positive Positive Positive

Investment Values of Fund Investment Values of MSCI Ac Wrld ND

10.0

People Parent Price

6.0

Performance Quartile (within Category) History

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 07-15

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis.

17.90 36.82 21.59

19.49 14.54

25.33

19.18

11.13

13.83 31.65 -2.98

17.50 29.89 17.22

18.36

21.01 17.03 -0.96 2.53 14.50

21.21

26.86 29.75 25.59 -0.51

26.74 0.52 -3.03 1.35 0.97 -0.45

NAV

-39.08 -18.80 36.75

7.32

3.28

Total Return %

3.70 2.37 3.98

-30.46 15.80

3.11 -0.75 3.91

14.67 -1.16

-19.52 0.90

+/-MSCI Ac Wrld ND +/-S&P US REIT TR USD

Analyst Rating Spectrum Œ „ ´ •

5.04 4.46

0.72 3.23

-2.10 2.90

3.05 5.06

1.42 3.07

0.88 2.35 0.93 0.49 0.00 0.79 1.25 14

2.30 5.02 0.40 0.00 0.78 1.10 59

2.86

Income Return % Capital Return %

• ¨

32.36

10.56

-42.99 -21.70 33.52

26.59

26.82

26.89

13

27

20

82

55

26

16

43

45

19

Total Rtn % Rank Cat

Pillar Spectrum Positive

0.60 0.07 0.90 2.74

0.70 0.24 0.85 1.86

0.62 0.60 0.78 1.60

0.72 0.79 0.73 1.49

0.74 0.00 0.75 2.85

0.55 0.00 0.77 2.84

0.42 0.00 0.76 1.26

0.46 0.00 0.78 1.35

0.60 0.00 0.76 1.54

0.26 0.00

Income $

§ Negative

¶ Neutral

Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil

. . .

Performance 07-31-15 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total 7.32

8

18

25

33

15

20

13

5

6

4

3

2011 2012 2013 2014 2015

6.01 4.50 -15.37 14.47

640

944

2,333

1,940

1,585

2,206

2,519

2,670

3,392

3,476

4,826

4,617

12.53 2.40 5.90 -0.85 10.00 6.51 5.55 -9.89

0.15 1.41 17.03

-2.34 0.72

3.28

Portfolio Analysis 06-30-15 Share change since 03-15 Total Stocks:39 Sector

Rating and Risk Time Load-Adj

-3.05 14.23 29.75 . . .

PE Tot Ret% % Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Simon Property Group Inc AvalonBay Communities In T. Rowe Price Reserve In Essex Property Trust Inc

Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est Real Est

40.5 4.40 9.24 30.4 7.01 5.33 92.6 10.26 4.77 38.9 5.67 4.29 27.1 -2.31 4.28 37.6 12.68 4.27 20.4 -3.95 4.08 55.6 3.80 3.84 50.8 -2.25 3.69 65.8 -3.19 3.41 64.9 -7.32 3.34 51.0 1.82 3.12 7.8 -3.54 3.08 19.3 9.74 2.55 19.4 0.20 2.50 51.5 3.59 2.49 103.1 4.68 2.44 4.92

1 Yr 3 Yr 5 Yr

11.50 10.64 13.57

Trailing

Total +/- MSCI

+/- S&P %Rank Growth of

Return%Ac Wrld ND US REIT TR USD

Cat

$10,000

+Avg +Avg +Avg

Avg -Avg +Avg

. . .

3 Mo 6 Mo 1 Yr

1.00 2.63 -4.89 -10.09 11.50 8.67 10.64 -2.19 13.57 3.19 6.94 0.83 11.29 7.39

0.42 2.16 1.71 0.61 0.16 0.19 0.08

36 10,100 17 9,511 18 11,150 12 13,544 13 18,894 32 19,561 21 49,756

10 Yr Incept

6.94

Equity Residential

10.28

General Growth Propertie

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

Public Storage Prologis Inc

Other Measures

Standard Index Best Fit Index MSCI Ac Wrld ND S&P US REIT TR USD

Federal Realty Investmen SL Green Realty Corp Boston Properties Inc Vornado Realty Trust Regency Centers Corp Camden Property Trust Kimco Realty Corp Kilroy Realty Corp Douglas Emmett Inc Hilton Worldwide Holding Weingarten Realty Invest Macerich Co

Alpha

5.5

1.2

Beta

0.44

0.93

R-Squared

9

98

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 9.58 4 0.96 29 12.55 9 0.89 43 5.61 20 1.25 31 Potential Capital Gain Exposure: 36% of assets Morningstar’s Take by David Kathman, CFA 07-17-15 T. Rowe Price Real Estate has long been a top choice for fund investors seeking real estate exposure, earning it a Morningstar Analyst Rating of Gold. It has one of the most consistently solid long-term records in the real estate Morningstar Category; as of July 2015, its returns ranked near the top of the category since its 1997 inception. While it has seldom been among the best performers in any given year, it has mostly avoided big losses and has managed to outpace its peers in a wide variety of market conditions. Investors have a single manager to thank for this impressive record: David Lee, who has been in charge since the fund launched. He employs a strategy that’s grounded in fundamentals and focused on the long term, thus accounting for the portfolio’s low annual turnover (typically around 10%). Lee and his team look for REITs and real estate operating companies with good long-term growth prospects and talented management teams that are trading below the net asset value of their underlying real estate assets. Lee puts a lot of emphasis on the quality of those

Standard Deviation

13.02 10.64

Mean

Sharpe Ratio

0.84

Cnsmr Cyc 40.6 2.91 2.02

underlying assets, with location being a primary consideration. That’s why the fund has long been underweight relative to its peers in health-care REITs, which often feature properties in unattractive locations. The fund also doesn’t own data-center REITs, which have been hot recently for their role in cloud computing, but which tend to have similarly poor locations. The lack of health-care REITs hurt the fund in the brutal 2007-08 downturn, but for the most part, Lee’s long-term, quality-focused strategy is well-suited to down markets. The fund ranked in the category’s top quartile in 2013 and the first half of 2015, two periods when REITs took a beating in anticipation of rising interest rates. But it has also performed well in bull markets for REITs, easily beating its category peers in 2009 and 2010, and edging past them in 2012 and 2014 with gains of 17% and 30%. Recent turnover on the analyst staff bears watching, but overall this is an excellent fund, with low expenses adding to its numerous other pluses.

Real Est

49.3 2.72 2.01

Current Investment Style

Industry Weightings

% of Stocks

Rel Cat 1.5 1.0 1.0 0.2 1.1 0.8 0.5 0.0 0.9

Market Cap % Giant 0.0 Large 42.6 Mid 42.7 Small 13.6 Micro 1.0 Avg $mil: 10,868

Value Blnd Growth

Large Mid Small

Retail

39.0 21.3 11.6

Residential Industrial Healthcare Diversified Hotel/Motel Mgmt & Dev Office

1.9

14.8

5.9 2.7 0.0 2.9

Value Measures Price/Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield % Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Growth Measures

Rel Category

Other

40.56 2.50 7.50 17.61 3.40

1.02 1.12 1.26 1.17 0.97 1.10 1.42 0.49 4.55 7.71

Composition - Net

Cash 4.7 Stocks 94.4 Bonds 0.0 Other 1.0 Foreign 0.0

% Rel Category

7.01 3.64 1.93

(% of Stock)

20.93 46.94

Address:

T. Rowe Price Real Estate Fund, Inc. Baltimore, MD 21202 800-638-2587

Minimum Purchase: Min Auto Inv Plan:

$2500 $2500

Add: $100 IRA: $1000

Add: $100

Profitability

% Rel Category

Sales Fees:

No-load, 1.00%R 0.30%, 0.15%A

Return on Equity Return on Assets Net Margin

12.94 4.39 30.90

1.72 1.64 1.60

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

www.troweprice.com

Management Fee:

10-31-97

Actual Fees:

Mgt:0.59% Dist: .

T. Rowe Price Associates, Inc.

Expense Projections: Income Distribution:

3Yr:$243 Quarterly

5Yr:$422 10Yr:$942

None

N/A

Mutual Funds ß ®

© 2015Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted to be accurate, correct, complete or timely.Past performance isnoguaranteeof future results.Accessupdated reports at To order reprints, call312-696-6100. mfb.morningstar.com.

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