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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 
FORM 10-Q
______________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 000-32191
______________________________________ 
T. ROWE PRICE GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland
 
52-2264646
(State of incorporation)   (I.R.S. Employer Identification No.)
100 East Pratt Street, Baltimore, Maryland 21202
(Address, including Zip Code, of principal executive offices)
(410) 345-2000
(Registrant’s telephone number, including area code)
________________
Common stock, $.20 par value per share
TROW
The NASDAQ Stock Market LLC
(title of security) (ticker symbol) (Name of exchange on which registered)
______________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer 
Non-accelerated filer (do not check if smaller reporting company)
Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No
The number of shares outstanding of the issuer’s common stock ($.20 par value), as of the latest practicable date,
July 26, 2021, is 226,936,886.
The exhibit index is at Item 6 on page 39.



PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 
6/30/2021 12/31/2020
ASSETS
Cash and cash equivalents $ 3,514.9  $ 2,151.7 
Accounts receivable and accrued revenue 918.2  863.1 
Investments 3,473.9  3,250.8 
Assets of consolidated T. Rowe Price investment products ($1,605.0 million at June 30, 2021 and $2,497.4 million at December 31, 2020, related to variable interest entities)
1,667.9  2,695.5 
Operating lease assets 101.7  117.6 
Property and equipment, net 716.7  695.4 
Goodwill 665.7  665.7 
Other assets 220.2  219.2 
Total assets $ 11,279.2  $ 10,659.0 
LIABILITIES
Accounts payable and accrued expenses $ 246.2  $ 187.7 
Liabilities of consolidated T. Rowe Price investment products ($30.5 million at June 30, 2021 and $47.7 million at December 31, 2020, related to variable interest entities)
31.0  57.7 
Operating lease liabilities 138.5  154.1 
Accrued compensation and related costs 480.0  133.6 
Dividends payable 699.8  — 
Income taxes payable 102.4  85.0 
Supplemental savings plan liability 807.9  772.2 
Total liabilities 2,505.8  1,390.3 
Commitments and contingent liabilities
Redeemable non-controlling interests 880.4  1,561.7 
STOCKHOLDERS’ EQUITY
Preferred stock, undesignated, $.20 par value – authorized and unissued 20,000,000 shares
—  — 
Common stock, $.20 par value—authorized 750,000,000; issued 226,925,000 shares at June 30, 2021 and 227,965,000 at December 31, 2020
45.4  45.6 
Additional capital in excess of par value 673.7  654.6 
Retained earnings 7,202.6  7,029.8 
Accumulated other comprehensive loss (28.7) (23.0)
Total permanent stockholders’ equity 7,893.0  7,707.0 
Total liabilities, redeemable non-controlling interests, and permanent stockholders’ equity $ 11,279.2  $ 10,659.0 
The accompanying notes are an integral part of these statements.
Page 2


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per-share amounts)
 
  Three months ended Six months ended
  6/30/2021 6/30/2020 6/30/2021 6/30/2020
Revenues
Investment advisory fees $ 1,787.2  $ 1,293.8  $ 3,475.0  $ 2,621.6 
Administrative, distribution, and servicing fees 142.1  121.6  281.1  256.4 
Net revenues 1,929.3  1,415.4  3,756.1  2,878.0 
Operating expenses
Compensation and related costs 603.8  549.0  1,187.3  989.7 
Distribution and servicing 92.7  62.0  178.3  127.7 
Advertising and promotion 20.4  13.4  39.3  38.3 
Product and recordkeeping related costs 43.3  39.6  84.3  81.2 
Technology, occupancy, and facility costs 119.3  111.3  236.6  216.7 
General, administrative, and other 91.7  86.4  179.0  163.5 
Total operating expenses 971.2  861.7  1,904.8  1,617.1 
Net operating income 958.1  553.7  1,851.3  1,260.9 
Non-operating income (loss)
Net gains on investments 87.7  170.6  156.3  16.0 
Net gains (losses) on consolidated investment products 55.5  242.5  92.7  (87.8)
Other income (loss) .7  2.0  (3.0) (13.4)
Total non-operating income (loss) 143.9  415.1  246.0  (85.2)
Income before income taxes 1,102.0  968.8  2,097.3  1,175.7 
Provision for income taxes 259.3  240.3  489.8  280.6 
Net income 842.7  728.5  1,607.5  895.1 
Less: net income (loss) attributable to redeemable non-controlling interests 27.0  125.5  42.4  (51.0)
Net income attributable to T. Rowe Price $ 815.7  $ 603.0  $ 1,565.1  $ 946.1 
Earnings per share on common stock of T. Rowe Price
Basic $ 3.50  $ 2.58  $ 6.70  $ 3.99 
Diluted $ 3.46  $ 2.55  $ 6.63  $ 3.95 

The accompanying notes are an integral part of these statements.
Page 3


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 
  Three months ended Six months ended
  6/30/2021 6/30/2020 6/30/2021 6/30/2020
Net income $ 842.7  $ 728.5  $ 1,607.5  $ 895.1 
Other comprehensive income (loss)
Currency translation adjustments
Consolidated T. Rowe Price investment products - variable interest entities 6.1  15.9  (12.8) (9.2)
Reclassification gains recognized in non-operating income upon deconsolidation of certain T. Rowe Price investment products —  —  (2.6) (.1)
Total currency translation adjustments of consolidated T. Rowe Price investment products - variable interest entities
6.1  15.9  (15.4) (9.3)
Equity method investments
(.3) (9.4) (1.1) (9.5)
Other comprehensive income (loss) before income taxes 5.8  6.5  (16.5) (18.8)
Net deferred tax (expense) benefits (.2) .7  2.8  2.7 
Total other comprehensive income (loss) 5.6  7.2  (13.7) (16.1)
Total comprehensive income 848.3  735.7  1,593.8  879.0 
Less: comprehensive income (loss) attributable to redeemable non-controlling interests 30.8  135.8  34.4  (57.9)
Total comprehensive income attributable to T. Rowe Price $ 817.5  $ 599.9  $ 1,559.4  $ 936.9 

The accompanying notes are an integral part of these statements.
Page 4


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 
  Six months ended
  6/30/2021 6/30/2020
Cash flows from operating activities
Net income $ 1,607.5  $ 895.1 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment
99.4  94.3 
Stock-based compensation expense
113.9  111.6 
Net (gains) losses recognized on investments (140.9) 3.4 
Net (investments) redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability 21.9  (10.0)
Net change in securities held by consolidated T. Rowe Price investment products
(253.4) 40.8 
Other changes in assets and liabilities
353.6  505.5 
Net cash provided by operating activities 1,802.0  1,640.7 
Cash flows from investing activities
Purchases of T. Rowe Price investment products (30.6) (237.1)
Dispositions of T. Rowe Price investment products 190.7  347.9 
Net cash of T. Rowe Price investment products on deconsolidation (44.2) (9.2)
Additions to property and equipment (121.8) (105.3)
Other investing activity 11.6  6.1 
Net cash provided by investing activities 5.7  2.4 
Cash flows from financing activities
Repurchases of common stock (311.4) (1,027.1)
Common share issuances under stock-based compensation plans 24.7  54.0 
Dividends paid to common stockholders of T. Rowe Price (505.1) (425.7)
Net subscriptions received from redeemable non-controlling interest holders 299.1  87.7 
Net cash used in financing activities (492.7) (1,311.1)
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
(.5) (7.4)
Net change in cash and cash equivalents during period 1,314.5  324.6 
Cash and cash equivalents at beginning of period, including $104.8 million at December 31, 2020, and $76.5 million at December 31, 2019, held by consolidated T. Rowe Price investment products
2,256.5  1,858.3 
Cash and cash equivalents at end of period, including $56.1 million at June 30, 2021, and $124.8 million at June 30, 2020, held by consolidated T. Rowe Price investment products
$ 3,571.0  $ 2,182.9 

The accompanying notes are an integral part of these statements.
Page 5


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(shares in thousands; dollars in millions)
Three months ended 6/30/2021
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at March 31, 2021 226,948  $ 45.4  $ 654.6  $ 7,338.7  $ (30.5) $ 8,008.2  $ 1,012.9 
Net income —  —  —  815.7  —  815.7  27.0 
Other comprehensive income (loss), net of tax —  —  —  —  1.8  1.8  3.8 
Dividends declared ($1.08 per share)
—  —  —  (251.8) —  (251.8) — 
Special cash dividend declared ($3.00 per share)
—  —  —  (699.5) —  (699.5) — 
Shares issued upon option exercises 190  —  4.3  —  —  4.3  — 
Restricted shares issued, net of shares withheld for taxes —  —  —  —  —  — 
Net shares issued upon vesting of restricted stock units —  (.6) —  —  (.6) — 
Stock-based compensation expense —  —  56.6  —  —  56.6  — 
Restricted stock units issued as dividend equivalents —  —  .1  (.5) —  (.4) — 
Common shares repurchased (225) —  (41.3) —  —  (41.3) — 
Net subscriptions into T. Rowe Price investment products —  —  —  —  —  —  111.4 
Net deconsolidations of T. Rowe Price investment products —  —  —  —  —  —  (274.7)
Balances at June 30, 2021 226,925  $ 45.4  $ 673.7  $ 7,202.6  $ (28.7) $ 7,893.0  $ 880.4 
Three months ended 6/30/2020
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at March 31, 2020 227,985  $ 45.6  $ 654.6  $ 5,782.9  $ (49.1) $ 6,434.0  $ 971.0 
Net income —  —  —  603.0  —  603.0  125.5 
Other comprehensive income (loss), net of tax —  —  —  —  (3.1) (3.1) 10.3 
Dividends declared ($0.90 per share)
—  —  —  (210.3) —  (210.3) — 
Shares issued upon option exercises 296  .1  15.8  —  —  15.9  — 
Restricted shares issued, net of shares withheld for taxes —  —  —  —  —  — 
Net shares issued upon vesting of restricted stock units —  (.3) —  —  (.3) — 
Stock-based compensation expense —  —  53.3  —  —  53.3  — 
Restricted stock units issued as dividend equivalents —  —  .1  (.1) —  —  — 
Common shares repurchased (1,305) (.3) (68.9) (72.6) —  (141.8) — 
Net subscriptions into T. Rowe Price investment products —  —  —  —  —  —  26.1 
Net deconsolidations of T. Rowe Price investment products —  —  —  —  —  —  (42.8)
Balances at June 30, 2020 226,990  $ 45.4  $ 654.6  $ 6,102.9  $ (52.2) $ 6,750.7  $ 1,090.1 

(1) Accumulated other comprehensive income.

The accompanying notes are an integral part of these statements.
Page 6


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(shares in thousands; dollars in millions)
Six months ended 6/30/2021
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at December 31, 2020 227,965  $ 45.6  $ 654.6  $ 7,029.8  $ (23.0) $ 7,707.0  $ 1,561.7 
Net income —  —  —  1,565.1  —  1,565.1  42.4 
Other comprehensive income (loss), net of tax —  —  —  —  (5.7) (5.7) (8.0)
Dividends declared ($2.16 per share)
—  —  —  (504.1) —  (504.1) — 
Special cash dividend declared ($3.00 per share)
—  —  —  (699.5) —  (699.5) — 
Shares issued upon option exercises 762  .2  29.6  —  —  29.8  — 
Restricted shares issued, net of shares withheld for taxes —  —  —  —  —  — 
Net shares issued upon vesting of restricted stock units 49  —  (4.3) —  —  (4.3) — 
Stock-based compensation expense —  —  113.9  —  —  113.9  — 
Restricted stock units issued as dividend equivalents —  —  .2  (.5) —  (.3) — 
Common shares repurchased (1,855) (.4) (120.3) (188.2) —  (308.9) — 
Net subscriptions into T. Rowe Price investment products —  —  —  —  —  —  298.9 
Net deconsolidations of T. Rowe Price investment products —  —  —  —  —  —  (1,014.6)
Balances at June 30, 2021 226,925  $ 45.4  $ 673.7  $ 7,202.6  $ (28.7) $ 7,893.0  $ 880.4 
Six months ended 6/30/2020
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at December 31, 2019 235,214  $ 47.0  $ 654.6  $ 6,443.5  $ (43.0) $ 7,102.1  $ 1,121.0 
Net income —  —  —  946.1  —  946.1  (51.0)
Other comprehensive income (loss), net of tax —  —  —  —  (9.2) (9.2) (6.9)
Dividends declared ($1.80 per share)
—  —  —  (425.1) —  (425.1) — 
Shares issued upon option exercises 1,364  .3  56.9  —  —  57.2  — 
Restricted shares issued, net of shares withheld for taxes —  —  —  —  —  — 
Net shares issued upon vesting of restricted stock units 43  —  (3.3) —  —  (3.3) — 
Forfeiture of restricted awards —  —  —  —  —  —  — 
Stock-based compensation expense —  —  111.6  —  —  111.6  — 
Restricted stock units issued as dividend equivalents —  —  .1  (.1) —  —  — 
Common shares repurchased (9,639) (1.9) (165.3) (861.5) —  (1,028.7) — 
Net subscriptions into T. Rowe Price investment products —  —  —  —  —  —  89.9 
Net deconsolidations of T. Rowe Price investment products —  —  —  —  —  —  (62.9)
Balances at June 30, 2020 226,990  $ 45.4  $ 654.6  $ 6,102.9  $ (52.2) $ 6,750.7  $ 1,090.1 
(1) Accumulated other comprehensive income.

The accompanying notes are an integral part of these statements.
Page 7


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY AND BASIS OF PREPARATION.

T. Rowe Price Group Inc. derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors in the T. Rowe Price U.S. mutual funds (“U.S. mutual funds”), subadvised funds, separately managed accounts, collective investment trusts, and other
T. Rowe Price products. The other T. Rowe Price products include open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery and other multi-asset solutions for providers to implement.

Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations.

BASIS OF PRESENTATION.

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. These principles require the use of estimates and reflect all adjustments that are, in the opinion of management, necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature. Actual results may vary from our estimates.

The unaudited interim financial information contained in these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 2020 Annual Report.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE

We have considered all newly issued accounting guidance that is applicable to our operations and the preparation of our unaudited condensed consolidated statements, including those we have not yet adopted. We do not believe that any such guidance has or will have a material effect on our financial position or results of operations.



Page 8


NOTE 2 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Revenues earned under agreements with clients include: 
Three months ended 6/30/2021 Three months ended 6/30/2020
Administrative, distribution, and servicing fees
Administrative, distribution, and servicing fees
(in millions)
Investment advisory fees
Administrative fees
Distribution and servicing fees
Net revenues
Investment advisory fees
Administrative fees
Distribution and servicing fees
Net revenues
U.S. mutual funds $ 1,097.5  $ 81.8  $ 30.0  $ 1,209.3  $ 823.1  $ 69.4  $ 25.7  $ 918.2 
Subadvised funds, separate accounts, collective investment trusts, and other investment products 689.7  —  —  689.7  470.7  —  —  470.7 
Other clients(1)
—  30.3  —  30.3  —  26.5  —  26.5 
$ 1,787.2  $ 112.1  $ 30.0  $ 1,929.3  $ 1,293.8  $ 95.9  $ 25.7  $ 1,415.4 
Six months ended 6/30/2021 Six months ended 6/30/2020
Administrative, distribution, and servicing fees
Administrative, distribution, and servicing fees
(in millions)
Investment advisory fees
Administrative fees
Distribution and servicing fees
Net revenues
Investment advisory fees
Administrative fees
Distribution and servicing fees
Net revenues
U.S. mutual funds $ 2,147.7  $ 160.5  $ 59.1  $ 2,367.3  $ 1,699.3  $ 146.6  $ 53.6  $ 1,899.5 
Subadvised funds, separate accounts, collective investment trusts, and other investment products 1,327.3  —  —  1,327.3  922.3  —  —  922.3 
Other clients(1)
—  61.5  —  61.5  —  56.2  —  56.2 
$ 3,475.0  $ 222.0  $ 59.1  $ 3,756.1  $ 2,621.6  $ 202.8  $ 53.6  $ 2,878.0 
(1) Other clients primarily include individuals, defined contribution plans, college savings plans, and institutions related to our non-discretionary advisory services.    

Total net revenues earned from our related parties, specifically T. Rowe Price investment products, aggregate $1,571.9 million and $1,142.8 million for the three months ended June 30, 2021 and 2020, respectively. Total net revenues earned from these products during the six months ended June 30, 2021 and 2020 aggregate $3,054.2 million and $2,350.5 million, respectively. Accounts receivable from these products aggregate to $563.6 million at June 30, 2021, and $523.4 million at December 31, 2020.

The following table details the investment advisory fees earned from clients by their underlying asset class.
  Three months ended Six months ended
(in millions) 6/30/2021 6/30/2020 6/30/2021 6/30/2020
U.S. mutual funds
Equity $ 768.0  $ 545.9  $ 1,497.8  $ 1,114.3 
Fixed income, including money market 59.9  66.8  118.9  138.5 
Multi-asset 269.6  210.4  531.0  446.5 
1,097.5  823.1  2,147.7  1,699.3 
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity 446.0  305.6  870.2  585.1 
Fixed income, including money market 40.8  33.9  78.3  71.9 
Multi-asset 202.9  131.2  378.8  265.3 
689.7  470.7  1,327.3  922.3 
Total $ 1,787.2  $ 1,293.8  $ 3,475.0  $ 2,621.6 

Page 9



The following table summarizes the assets under management on which we earn investment advisory fees.
Average during Average during
Three months ended Six months ended As of
(in billions) 6/30/2021 6/30/2020 6/30/2021 6/30/2020 6/30/2021 12/31/2020
U.S. mutual funds
Equity $ 532.2  $ 374.5  $ 520.9  $ 381.4  $ 550.3  $ 498.6 
Fixed income, including money market 85.9  74.2  84.1  75.0  86.2  79.4 
Multi-asset 230.1  179.9  226.3  185.1  229.3  216.6 
848.2  628.6  831.3  641.5  865.8  794.6 
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity 427.7  293.2  418.1  285.3  434.8  397.2 
Fixed income, including money market 91.3  77.1  91.0  79.2  92.5  89.3 
Multi-asset 218.1  141.3  206.7  145.4  230.0  189.4 
737.1  511.6  715.8  509.9  757.3  675.9 
Total $ 1,585.3  $ 1,140.2  $ 1,547.1  $ 1,151.4  $ 1,623.1  $ 1,470.5 

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for 9.0%, 8.8% and 9.3% of our assets under management at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

NOTE 3 – INVESTMENTS.

The carrying values of our investments that are not part of the consolidated T. Rowe Price investment products are as follows:
(in millions) 6/30/2021 12/31/2020
Investments held at fair value
T. Rowe Price investment products
Discretionary investments $ 1,642.0  $ 1,647.7 
Seed capital 252.0  169.5 
Supplemental savings plan liability economic hedges 802.8  768.1 
Investment partnerships and other investments 105.4  95.1 
Equity method investments
T. Rowe Price investment products
Discretionary investments 256.4  242.9 
Seed capital 257.6  178.6 
23% investment in UTI Asset Management Company Limited (India)
154.0  145.5 
Investment partnerships and other investments 2.7  2.4 
U.S. Treasury note 1.0  1.0 
Total $ 3,473.9  $ 3,250.8 

The investment partnerships are carried at fair value using net asset value (“NAV”) per share as a practical expedient. Our interests in these partnerships are generally not redeemable and are subject to significant transferability restrictions. The underlying investments of these partnerships have contractual terms through 2029, though we may receive distributions of liquidating assets over a longer term. The investment strategies of these partnerships include growth equity, buyout, venture capital, and real estate.

During the three- and six- months ended June 30, 2021, net gains on investments included $49.5 million and $88.3 million, respectively, of net unrealized gains related to investments held at fair value that were still held at June 30,

Page 10


2021. For the same period of 2020, net gains on investments included $125.5 million and $21.9 million, respectively, of net unrealized gains related to investments held at fair value that were still held at June 30, 2020.

During the six months ended June 30, 2021 and 2020, certain T. Rowe Price investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest. Depending on our ownership interest, we are now reporting our residual interests in these T. Rowe Price investment products as either an equity method investment or an investment held at fair value. Additionally, during the six months ended June 30, 2020, certain T. Rowe Price investment products that were being accounted for as equity method investments were consolidated, as we regained a controlling interest. The net impact of these changes on our unaudited condensed consolidated balance sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.
Three months ended Six months ended
(in millions) 6/30/2021 6/30/2020 6/30/2021 6/30/2020
Net decrease in assets of consolidated T. Rowe Price investment products $ (389.2) $ (100.0) $ (1,317.3) $ (146.2)
Net decrease in liabilities of consolidated T. Rowe Price investment products $ (8.9) $ (1.2) $ (24.2) $ (3.6)
Net decrease in redeemable non-controlling interests $ (274.7) $ (42.8) $ (1,014.6) $ (62.9)
Gains recognized upon deconsolidation $ —  $ —  $ 2.6  $ .1 

The gains or losses recognized upon deconsolidation were the result of reclassifying currency translation adjustments accumulated on certain T. Rowe Price investment products with non-USD functional currencies from accumulated other comprehensive income to non-operating income.

VARIABLE INTEREST ENTITIES.

Our investments at June 30, 2021 and December 31, 2020, include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary. Our maximum risk of loss related to our involvement with these entities is as follows:
(in millions) 6/30/2021 12/31/2020
Investment carrying values $ 217.6  $ 144.7 
Unfunded capital commitments 9.9  12.3 
Accounts receivable 16.2  13.8 
$ 243.7  $ 170.8 

The unfunded capital commitments totaling $9.9 million at June 30, 2021 and $12.3 million at December 31, 2020 relate primarily to the investment partnerships in which we have an existing investment. In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

NOTE 4 – FAIR VALUE MEASUREMENTS.

We determine the fair value of our cash equivalents and investments held at fair value using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.
Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar
     securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data
     obtained from independent sources.
Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. We do not
        value any investments using Level 3 inputs.

These levels are not necessarily an indication of the risk or liquidity associated with our investments. The following table summarizes our investments that are recognized in our unaudited condensed consolidated balance sheets using fair value measurements determined based on the differing levels of inputs. This table excludes investments

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held by the consolidated T. Rowe Price investment products which are presented separately on our unaudited condensed consolidated balance sheets and are detailed in Note 5.

6/30/2021 12/31/2020
(in millions)
Level 1
Level 2
Level 1
Level 2
T. Rowe Price investment products
Cash equivalents held in money market funds 3,115.0  $ —  $ 1,931.1  $ — 
Discretionary investments 1,642.0  —  1,647.7  — 
Seed capital 238.3  13.7  156.6  12.9 
Supplemental savings plan liability economic hedges 802.8  —  768.1  — 
Other investments 1.3  .1  .5  .6 
Total $ 5,799.4  $ 13.8  $ 4,504.0  $ 13.5 

The fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient. The carrying value of these investments as disclosed in Note 3 were $104.0 million at June 30, 2021, and $94.0 million at December 31, 2020.

NOTE 5 – CONSOLIDATED T. ROWE PRICE INVESTMENT PRODUCTS.

The T. Rowe Price investment products that we consolidate in our unaudited condensed consolidated financial statements are generally those products we provided initial seed capital at the time of their formation and have a controlling interest. Our U.S. mutual funds are considered voting interest entities, while those regulated outside the U.S. are considered variable interest entities.

The following table details the net assets of the consolidated T. Rowe Price investment products:
6/30/2021 12/31/2020
(in millions)
Voting
interest entities
Variable interest entities
Total
Voting
interest entities
Variable interest entities
Total
Cash and cash equivalents(1)
$ .9  $ 55.2  $ 56.1  $ 7.1  $ 97.7  $ 104.8 
Investments(2)
61.1  1,529.8  1,590.9  188.2  2,372.7  2,560.9 
Other assets .9  20.0  20.9  2.8  27.0  29.8 
Total assets 62.9  1,605.0  1,667.9  198.1  2,497.4  2,695.5 
Liabilities .5  30.5  31.0  10.0  47.7  57.7 
Net assets $ 62.4  $ 1,574.5  $ 1,636.9  $ 188.1  $ 2,449.7  $ 2,637.8 
Attributable to T. Rowe Price $ 45.0  $ 711.5  $ 756.5  $ 130.7  $ 945.4  $ 1,076.1 
Attributable to redeemable non-controlling interests 17.4  863.0  880.4  57.4  1,504.3  1,561.7 
$ 62.4  $ 1,574.5  $ 1,636.9  $ 188.1  $ 2,449.7  $ 2,637.8 
(1) Cash and cash equivalents includes $.9 million at June 30, 2021, and $7.0 million at December 31, 2020, of T. Rowe Price money market mutual funds.
(2) Investments include $31.3 million at June 30, 2021, and $26.9 million at December 31, 2020 of other T. Rowe Price investment products.

Although we can redeem our net interest in these consolidated T. Rowe Price investment products at any time, we cannot directly access or sell the assets held by these products to obtain cash for general operations. Additionally, the assets of these investment products are not available to our general creditors.

Since third party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated T. Rowe Price investment products is limited to valuation changes associated with our net interest. We, however, are required to recognize the valuation changes associated with all underlying investments held by these products in our unaudited condensed consolidated statements of income and disclose the portion attributable to third party investors as net income attributable to redeemable non-controlling interests.

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The operating results of the consolidated T. Rowe Price investment products for the three- and six- months ended June 30, 2021 and 2020, are reflected in our unaudited condensed consolidated statements of income as follows:
Three months ended
6/30/2021 6/30/2020
(in millions)
Voting interest entities Variable interest entities Total Voting interest entities Variable interest entities Total
Operating expenses reflected in net operating income $ (.1) $ (2.7) $ (2.8) $ (.3) $ (3.3) $ (3.6)
Net investment income (loss) reflected in non-operating income (loss) 7.3  48.2  55.5  16.4  226.0  242.4 
Impact on income before taxes $ 7.2  $ 45.5  $ 52.7  $ 16.1  $ 222.7  $ 238.8 
Net income (loss) attributable to T. Rowe Price $ 4.3  $ 21.4  $ 25.7  $ 12.9  $ 100.4  $ 113.3 
Net income (loss) attributable to redeemable non-controlling interests 2.9  24.1  27.0  3.2  122.3  125.5 
$ 7.2  $ 45.5  $ 52.7  $ 16.1  $ 222.7  $ 238.8 

Six months ended
6/30/2021 6/30/2020
(in millions) Voting
interest entities
Variable interest entities Total Voting
interest entities
Variable interest entities Total
Operating expenses reflected in net operating income $ (.3) $ (6.0) $ (6.3) $ (.5) $ (6.8) $ (7.3)
Net investment income (loss) reflected in non-operating income 13.4  79.3  92.7  (18.8) (69.1) (87.9)
Impact on income before taxes $ 13.1  $ 73.3  $ 86.4  $ (19.3) $ (75.9) $ (95.2)
Net income (loss) attributable to T. Rowe Price $ 8.3  $ 35.7  $ 44.0  $ (9.7) $ (34.5) $ (44.2)
Net income (loss) attributable to redeemable non-controlling interests 4.8  37.6  42.4  (9.6) (41.4) (51.0)
$ 13.1  $ 73.3  $ 86.4  $ (19.3) $ (75.9) $ (95.2)

The operating expenses of the consolidated investment products are reflected in general, administrative and other expenses. In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $1.1 million and $2.1 million for the three months ended June 30, 2021 and 2020, respectively, against the investment advisory and administrative fees earned from these products. Operating expenses eliminated for the six months ended June 30, 2021 and 2020, were $2.4 million and $4.6 million, respectively. The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income as well as realized and unrealized gains and losses on the underlying securities held by the consolidated T. Rowe Price investment products.



Page 13


The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020.
Six months ended
6/30/2021 6/30/2020
(in millions)
Voting
interest entities
Variable interest entities
Total
Voting
interest entities
Variable interest entities
Total
Net cash provided by (used in) operating activities $ (69.0) $ (153.9) $ (222.9) $ .8  $ (49.8) $ (49.0)
Net cash used in investing activities (11.8) (32.4) (44.2) (9.2) —  (9.2)
Net cash provided by financing activities 74.6  144.3  218.9  9.9  104.0  113.9 
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
—  (.5) (.5) —  (7.4) (7.4)
Net change in cash and cash equivalents during period
(6.2) (42.5) (48.7) 1.5  46.8  48.3 
Cash and cash equivalents at beginning of year
7.1  97.7  104.8  9.9  66.6  76.5 
Cash and cash equivalents at end of period
$ .9  $ 55.2  $ 56.1  $ 11.4  $ 113.4  $ 124.8 

The net cash provided by financing activities during the six months ended June 30, 2021 and 2020 includes $80.2 million and $26.2 million, respectively, of net subscriptions we made into the consolidated T. Rowe Price investment products, net of dividends received. These cash flows were eliminated in consolidation.

FAIR VALUE MEASUREMENTS.

We determine the fair value of investments held by consolidated T. Rowe Price investment products using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.
Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data obtained from independent sources.
Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. The value of investments using Level 3 inputs is insignificant.

These levels are not necessarily an indication of the risk or liquidity associated with these investment holdings. The following table summarizes the investment holdings held by our consolidated T. Rowe Price investment products using fair value measurements determined based on the differing levels of inputs.
6/30/2021 12/31/2020
(in millions)
Level 1
Level 2
Level 1
Level 2
Assets
  Cash equivalents $ .9  $ —  $ 7.0  $ — 
Equity securities 160.0  258.4  308.0  708.0 
Fixed income securities —  1,129.5  —  1,411.3 
Other investments 3.9  39.1  2.6  131.0 
$ 164.8  $ 1,427.0  $ 317.6  $ 2,250.3 
Liabilities $ (.8) $ (7.0) $ (.4) $ (18.8)



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NOTE 6 – STOCKHOLDERS’ EQUITY.

Accounts payable and accrued expenses includes liabilities of $2.5 million at December 31, 2020 for common stock repurchases that settled during the first week of January 2021.

On June 14, 2021, the Board of Directors declared a special cash dividend of $3.00 per common share, or $699.8 million, that was paid on July 7, 2021 to stockholders of record as of the close of business on June 25, 2021.

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the six months ended June 30, 2021.
Options
Weighted-
average
exercise
price
Outstanding at December 31, 2020 4,379,663  $ 71.67 
Exercised (997,788) $ 69.84 
Outstanding at June 30, 2021 3,381,875  $ 72.21 
Exercisable at June 30, 2021 3,381,875  $ 72.21 

EFFECT OF SPECIAL CASH DIVIDEND.

As a result of the special cash dividend declared by the Board of Directors in June 2021, the anti-dilution provisions of our employee long-term incentive plans and non-employee director plans (collectively, the LTI plans) require an automatic adjustment to neutralize the effect of the special cash dividend. On the special cash dividend’s ex-dividend date (June 24, 2021), the number of shares authorized and the number of stock options outstanding and their exercise price were adjusted resulting in an increase of 50,607 stock options outstanding on the ex-dividend date, and no incremental compensation expense. In the table above, the number of options outstanding at December 31, 2020 was updated to reflect this adjustment.

RESTRICTED SHARES AND STOCK UNITS.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the six months ended June 30, 2021.
Restricted
shares
Restricted
stock
units
Weighted-average
fair value
Nonvested at December 31, 2020 7,412  6,367,059  $ 116.51 
Time-based grants 4,336  18,356  $ 180.72 
Dividend equivalents granted to non-employee directors —  1,067  $ 184.61 
Vested (7,412) (88,268) $ 100.40 
Forfeited —  (42,792) $ 114.34 
Nonvested at June 30, 2021 4,336  6,255,422  $ 117.01 

Nonvested at June 30, 2021, includes performance-based restricted stock units of 361,609. These nonvested performance-based restricted stock units include 198,205 units for which the performance period has lapsed, and the performance threshold has been met.


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FUTURE STOCK-BASED COMPENSATION EXPENSE.

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at June 30, 2021. Estimated future compensation expense will change to reflect future grants of restricted stock awards and units, future option grants, changes in the probability of performance thresholds being met, and adjustments for actual forfeitures.
 
(in millions)
Third quarter 2021 $ 57.1 
Fourth quarter 2021 50.6 
2022 117.9 
2023 through 2026 97.2 
Total $ 322.8 

NOTE 8 – EARNINGS PER SHARE CALCULATIONS.

The following table presents the reconciliation of net income attributable to T. Rowe Price to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock. Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested. No outstanding stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.
  Three months ended Six months ended
(in millions) 6/30/2021 6/30/2020 6/30/2021 6/30/2020
Net income attributable to T. Rowe Price 815.7  $ 603.0  $ 1,565.1  $ 946.1 
Less: net income allocated to outstanding restricted stock and stock unit holders 22.2  16.8  42.1  26.2 
Net income allocated to common stockholders $ 793.5  $ 586.2  $ 1,523.0  $ 919.9 
Weighted-average common shares
Outstanding 226.9  227.4  227.3  230.7 
Outstanding assuming dilution 229.2  229.5  229.6  233.1 

NOTE 9 – OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS.

The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the three months ended June 30, 2021 and 2020 are presented in the table below.
Three months ended 6/30/2021 Three months ended 6/30/2020
(in millions) Equity method investments Consolidated T. Rowe Price investment products - variable interest entities
Total currency translation adjustments
Equity method investments Consolidated T. Rowe Price investment products - variable interest entities Total currency translation adjustments
Balances at beginning of period $ (43.9) $ 13.4  $ (30.5) $ (47.0) $ (2.1) $ (49.1)
Other comprehensive income (loss) before reclassifications and income taxes
(.3) 2.3  2.0  (7.3) 5.7  (1.6)
Net deferred tax benefits (income taxes)
.4  (.6) (.2) (.1) (1.4) (1.5)
Other comprehensive income (loss)
.1  1.7  1.8  (7.4) 4.3  (3.1)
Balances at end of period $ (43.8) $ 15.1  $ (28.7) $ (54.4) $ 2.2  $ (52.2)

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The other comprehensive income (loss) in the table above excludes $3.8 million and $10.3 million of other comprehensive income related to redeemable non-controlling interests held in our consolidated products for the three months ended June 30, 2021 and 2020, respectively.
The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the six months ended June 30, 2021 and 2020, are presented in the table below.
Six months ended 6/30/2021 Six months ended 6/30/2020
(in millions) Equity method investments Consolidated T. Rowe Price investment products - variable interest entities Total currency translation adjustments
Equity method investments
Consolidated T. Rowe Price investment products - variable interest entities Total currency translation adjustments
Balances at beginning of period $ (43.6) $ 20.6  $ (23.0) $ (46.9) $ 3.9  $ (43.0)
Other comprehensive income (loss) before reclassifications and income taxes (1.1) (4.8) (5.9) (7.4) (2.2) (9.6)
Reclassification adjustments recognized in non-operating income —  (2.6) (2.6) —  (.1) (.1)
(1.1) (7.4) (8.5) (7.4) (2.3) (9.7)
Net deferred tax benefits (income taxes) .9  1.9  2.8  (.1) .6  .5 
Other comprehensive income (loss) (.2) (5.5) (5.7) (7.5) (1.7) (9.2)
Balances at end of period $ (43.8) $ 15.1  $ (28.7) $ (54.4) $ 2.2  $ (52.2)
The other comprehensive income (loss) in the table above excludes $8.0 million for the 2021 period and $(6.9) million for the 2020 period of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

On February 14, 2017, T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., T. Rowe Price Trust Company, current and former members of the management committee, and trustees of the T. Rowe Price U.S. Retirement Program were named as defendants in a lawsuit filed in the United States District Court for the District of Maryland. The lawsuit alleges breaches of ERISA’s fiduciary duty and prohibited transaction provisions on behalf of a class of all participants and beneficiaries of the T. Rowe Price 401(k) Plan from February 14, 2011, to the time of judgment. The matter has been certified as a class action. The parties have reached an agreement in principle, which will be presented to the court for approval. The proposed settlement would not be material to T. Rowe Price Group, Inc.

In addition to the matter discussed above, various claims against us arise in the ordinary course of business, including employment-related claims. In the opinion of management, after consultation with counsel, the likelihood of an adverse determination in one or more of these pending ordinary course of business claims that would have a material adverse effect on our financial position or results of operations is remote.





Page 17


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
T. Rowe Price Group, Inc.:

Results of Review of Interim Financial Information
We have reviewed the condensed consolidated balance sheet of T. Rowe Price Group, Inc. and subsidiaries (the “Company") as of June 30, 2021, the related condensed consolidated statements of income, comprehensive income, and stockholders’ equity for the three-month and six-month periods ended June 30, 2021 and 2020, the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 2021 and 2020, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 11, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP
Baltimore, Maryland
July 29, 2021
 



Page 18


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW.

Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in U.S. mutual funds, subadvised funds, separately managed accounts, collective investment trusts, and other T. Rowe Price products. The other T. Rowe Price products include open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery.

We manage a broad range of U.S., international and global stock, bond, and money market mutual funds and collective investment trusts and other investment products, which meet the varied needs and objectives of individual and institutional investors. Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations. Additionally, approximately 30% of our operating expenses are impacted by fluctuations in our assets under management.

We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new investment advisory clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.

The general trend to passive investing has been persistent and accelerated in recent years, which has negatively impacted our new client inflows. However, over the long term we expect well-executed active management to play an important role for investors. In this regard, we remain debt-free with ample liquidity and resources that allow us to take advantage of attractive growth opportunities. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.

MARKET TRENDS.

Led by large-caps, U.S. stocks produced solid gains in the second quarter of 2021, with many major indexes reaching all-time highs at some point during the last three months. Investors were encouraged by favorable economic data and the broadening distribution of coronavirus vaccines, which enabled state and local governments to roll back more of their pandemic restrictions on business operations and gatherings. The market was also buoyed by strong earnings and revenue growth reported by many companies in recent months. Inflation concerns remained prevalent, but investors largely seemed to accept the Federal Reserve’s determination that rising price pressures were due to “transitory” factors—a viewpoint supported late in the quarter by sharp declines in some commodity prices from recent peaks.

Stocks in many developed non-U.S. equity markets advanced in U.S. dollar terms, though major non-U.S. currencies were mixed versus the dollar. UK stocks rose about 6%, and other European stock markets were mostly positive. Developed Asian and Far East markets were generally positive, although Japanese shares edged lower.

Equities in emerging markets generally rose in U.S. dollar terms. Shares in most major emerging European markets produced strong returns, though Turkish shares fell slightly. Latin American markets were mixed, though Brazil led the region with a 23% gain. Asian emerging markets were also mixed, though several markets rose at least 7%.




Page 19


Returns of several major equity market indexes were as follows:
Three months ended Six months ended
Index 6/30/2021 6/30/2021
S&P 500 Index 8.6% 15.3%
NASDAQ Composite Index(1)
9.5% 12.5%
Russell 2000 Index 4.3% 17.5%
MSCI EAFE (Europe, Australasia, and Far East) Index 5.4% 9.2%
MSCI Emerging Markets Index 5.1% 7.6%
 (1) Returns exclude dividends

Global bond returns were mostly positive in U.S. dollar terms. In the U.S., bond prices rose as long-term Treasury yields decreased from their first-quarter highs—the 10-year Treasury yield dropped from 1.74% to 1.45%—even though inflation remained a concern among some investors. Shorter-term Treasury yields increased amid expectations that the Federal Reserve could reduce its monthly asset purchases and raise the overnight federal funds target rate sooner than anticipated.

In the investment-grade universe, corporate bonds, long-term Treasuries, and commercial mortgage-backed securities performed well. Asset- and mortgage-backed securities advanced modestly. Tax-free municipal securities trailed the taxable investment-grade market, whereas high yield bonds outperformed, helped by investors’ search for attractive yields.

Bonds in developed non-U.S. markets gained in U.S. dollar terms, though major non-U.S. currencies were mixed versus the U.S. dollar. The dollar rose slightly against the yen, fell almost 1% against the euro, and was little changed against the British pound.

Emerging markets bonds easily outperformed bonds in developed countries. Local currency issues modestly lagged bonds denominated in U.S. dollars. Many emerging markets currencies rose versus the dollar, with the Brazilian real posting a particularly notable gain. However, the Turkish lira fell materially.

Returns for several major bond market indexes were as follows:
Three months ended Six months ended
Index 6/30/2021 6/30/2021
Bloomberg Barclays U.S. Aggregate Bond Index 1.8% (1.6)%
JPMorgan Global High Yield Index     2.7% 4.0%
Bloomberg Barclays Municipal Bond Index 1.4% 1.1%
Bloomberg Barclays Global Aggregate Ex-U.S. Dollar Bond Index .9% (4.4)%
JPMorgan Emerging Markets Bond Index Plus 4.4% (3.1)%


Page 20


ASSETS UNDER MANAGEMENT.

Assets under management ended the second quarter of 2021 at $1,623.1 billion, an increase of $105.1 billion from March 31, 2021, and $152.6 billion from the end of 2020. For the three months ended June 30, 2021, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $105.7 billion, partially offset by net cash outflows of $0.6 billion. Clients transferred $9.2 billion in net assets from the U.S. mutual funds primarily to collective investment trusts and other investment products, of which $5.9 billion transferred into the retirement date trusts.

For the six months ended June 30, 2021, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $152.0 billion and net cash inflows of $0.6 billion. Clients transferred $14.8 billion in net assets from the U.S. mutual funds primarily to collective investment trusts and other investment products, of which $10.8 billion transferred into the retirement date trusts.

The following tables detail changes in our assets under management, by vehicle and asset class, during the three- and six-month periods ended June 30, 2021:
Three months ended 6/30/2021 Six months ended 6/30/2021
(in billions) U.S. mutual funds Subadvised funds and separate accounts Collective investment trusts and other investment products Total U.S. mutual funds Subadvised funds and separate accounts Collective investment trusts and other investment products Total
Assets under management at beginning of period $ 816.4  $ 403.8  $ 297.8  $ 1,518.0  $ 794.6  $ 400.1  $ 275.8  $ 1,470.5 
Net cash flows before client transfers 1.1  (7.9) 6.2  (0.6) 3.1  (16.1) 13.6  0.6 
Client transfers (9.2) 1.5  7.7  —  (14.8) 1.5  13.3  — 
Net cash flows after client transfers (8.1) (6.4) 13.9  (0.6) (11.7) (14.6) 26.9  0.6 
Net market appreciation and gains 57.7  29.5  18.7  105.9  83.2  41.4  27.7  152.3 
Net distributions not reinvested (.2) —  —  (.2) (.3) —  —  (.3)
Change during the period 49.4  23.1  32.6  105.1  71.2  26.8  54.6  152.6 
Assets under management at June 30, 2021 $ 865.8  $ 426.9  $ 330.4  $ 1,623.1  $ 865.8  $ 426.9  $ 330.4  $ 1,623.1 
Three months ended 6/30/2021 Six months ended 6/30/2021
(in billions) Equity Fixed income, including money market
Multi-asset(1)
Total Equity Fixed income, including money market
Multi-asset(2)
Total
Assets under management at beginning of period $ 917.2  $ 172.8  $ 428.0  $ 1,518.0  $ 895.8  $ 168.7  $ 406.0  $ 1,470.5 
Net cash flows (11.5) 3.7  7.2  (0.6) (20.4) 9.1  11.9  0.6 
Net market appreciation and gains(2)
79.4  2.2  24.1  105.7  109.7  .9  41.4  152.0 
Change during the period 67.9  5.9  31.3  105.1  89.3  10.0  53.3  152.6 
Assets under management at June 30, 2021 $ 985.1  $ 178.7  $ 459.3  $ 1,623.1  $ 985.1  $ 178.7  $ 459.3  $ 1,623.1 
(1) The underlying assets under management of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
(2) Includes distributions reinvested and not reinvested.

Investment advisory clients outside the United States account for 9.0% of our assets under management at June 30, 2021, 8.8% at March, 31, 2021, and 9.3% at December 31, 2020.


Page 21


Our target date retirement products, which are included in the multi-asset totals shown above, continue to be a significant part of our assets under management. Assets under management in these portfolios, as well as net cash inflows (outflows), by vehicle, were as follows:
Net cash inflows (outflows)
Assets under management Three months ended Six months ended
(in billions) 6/30/2021 3/31/2021 12/31/2020 6/30/2021 6/30/2020 6/30/2021 6/30/2020
U.S. mutual funds $ 185.0  $ 179.9  $ 176.1  $ (4.9) $ (1.7) $ (8.7) $ (6.7)
Collective investment trusts 182.0  160.3  145.4  12.2