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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

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The Quest for Alternatives to Plastic Packaging

At T. Rowe Price, ESG factors are an important part of our investment process.

As an example, almost everything we buy as consumers comes in some sort of package. Whether its paper, metal, glass, or plastic, the packaging industry takes center stage in the sustainability debate. This is because much of the material used is discarded after just one use.

Within the last few years, single-use plastics have faced increasing scrutiny. Despite being a low-cost, easy to use packaging material, plastic is difficult to dispose of and takes decades or even centuries to break down naturally.

Up until the beginning of 2018, China imported much of the developed world’s plastic waste, which created little incentive for exporting countries to invest in their own recycling infrastructure. Facing growing environmental concerns, the Chinese government elected to forgo this practice, leaving exporting countries unprepared to effectively process accumulating volumes of plastic waste.

Plastics have the lowest recycling rate of any substrate, which unfortunately means much of it ends up in our landfills, oceans, and other fragile ecosystems.

Consumers are becoming increasingly aware of this problem and activism is gradually increasing.

This is not to say that plastic is going away; there is clearly a place for plastic in the global economy, and in several cases, there are no viable alternatives – however, we as investors, seek to identify areas where there is a sustainable alternative to single use plastics - beverage packaging is one such area.

One of our investment holdings at T. Rowe price is a company called Ball Corporation, which is the largest global manufacturer of aluminum beverage cans. This is a consolidated industry where participants generally manage supply and demand rationally and barriers to entry exist from capital intensity and close customer relationships.

Beverage consumption is generally stable through economic cycles, so this business tends to consistently generate strong free cash flow. Ball management has an impressive track record of investing capital to enhance shareholder value through acquisitions, reinvestment in the core business, share buybacks, and dividends.

In our view Ball has the benefits of being a stable compounder through business cycles offering portfolio diversification benefits; but there is also a compelling growth story driven in part by aluminum cans taking share from other beverage packaging substrates, namely plastic. Aluminum is infinitely recyclable, it has the highest recycling rates of any substrate, and there is a well-defined market value for aluminum scrap.

However, social and environmental responsibility goes beyond a company’s core business. Ball takes this responsibility seriously.

I know from working at T. Rowe Price, where culture is such an important piece of the company’s DNA, how important this can be to the long-term success of a business.

As an investment analyst, it’s my job to identify good businesses in which to invest our clients’ capital. Our growing ESG resources provide me with yet another tool to help me accomplish this goal. We believe this effort is vital in a world where demand for transparency and accountability around social and environmental issues is growing.