INVESTMENT MANAGER SUMMARY MANAGEMENT...Apr 11, 2018 · Corporate, Public, Non-Profit, Taft-Hartley, Endowments/Foundations, and Sub-Advisory clients. Strategy assets under management

12

Item No. 12: Annual Presentation by T. Rowe Price Associates, Inc. – Large-Cap Value Manager (April 11, 2018, Regular Retirement Board Meeting)

INVESTMENT MANAGER SUMMARY

MANAGEMENT Firm Name T. Rowe Price Associates, Inc. Manager Tenure with Fund 13.5 Years Investment Strategy/Vehicle Large Cap Value Equity Contract Expiration 06/30/2019

ASSETS Total Firm AUM (12/31/2017) $991.1 Billion Total Firm Assets in Strategy (12/31/2017) $21.5 Billion Total Assets Managed for WPERP (01/31/2018)

RP - $634.9 Million HP - $106.4 Million

PERFORMANCE As of 01/31/2018 1 Year 3 Year 5 Year Inception

T. Rowe Price LCV (gross) 22.38% 13.82% 15.44% 9.98% T. Rowe Price LCV (est. net) 22.02% 13.49% 15.10% 9.62% Russell 1000 Value Index 17.22% 11.54% 13.47% 8.52% Difference (net of fees) 4.80% 1.95% 1.63% 1.10%

Fees Schedule 50 basis points on the first $20 million

40 basis points on the next $30 million When assets exceed $50 million, the fee is 40 bps on all assets When assets exceed $200 million, the fee is 35 bps on all assets When assets exceed $250 million, the fee on the portion of assets above $250 million is 30 bps.

Current Blended Fee 32 basis points

WATCH STATUS N/A

Caleb Fritz, CFAPortfolio Specialist

John Plowright, CFAVice President - Institutional Client Service, North America

Heather McPhersonPortfolio Manager

US LARGE-CAP VALUE EQUITY STRATEGYPRESENTATION TO LOS ANGELES DEPARTMENT OF WATER AND POWERFOURTH QUARTER 2017

For Los Angeles Department of Water and Power only. Not for further distribution.

T. ROWE PRICE

AustraliaLevel 27101 Collins StreetMelbourne VIC 3000Australia+61.3.9653.7402

Australia Level 50, Governor Phillip Tower 1 Farrer Place, Suite 50BSydney NSW 2000Australia+61.2.8667.5700

Canada Suite 4240, 77 King Street WestTD North TowerP.O. Box 87Toronto, ON M5K 1G8Canada+1.416.360.5777

Denmark Axeltorv 2F, 7th. Floor,1609 København VDenmark+45.33.36.05.00

GermanyNeue Rothofstrasse 19 60313 FrankfurtGermany+49.69.24437.1900

Hong Kong 21/F Jardine House1 Connaught Place Central, Hong Kong+852.2536.7800

Italy5th floorVia San Prospero 120121 MilanItaly+39.023.0300.200

JapanGranTokyo South Tower 7F9-2, Marunouchi 1-chome,Chiyoda-ku, Tokyo100-6607, Japan+81.3.6758.3800

Luxembourg 35 Boulevard Prince Henri3rd FloorL-1724 LuxembourgGrand Duchy of Luxembourg+352.27.47.251

Netherlands Strawinskylaan 1433WTC Tower B Level 141077 XX AmsterdamNetherlands+310.20.333.6200

Singapore 501 Orchard Road10-02 Wheelock PlaceSingapore 238880+65.6836.0098

SpainTorre EuropaPaseo de la Castellana 95–1528046 MadridSpain+34.91.418.69.50

Sweden Ôstermalmstorg 1114 42 StockholmSweden+46-85-025-65-93

Switzerland Talstrasse 65, 6th Floor8001 ZurichSwitzerland+41.44.227.1550

United Arab Emirates Dubai International Financial CentreThe Gate, Level 15, Office 24PO Box 482023DubaiUnited Arab Emirates+971.4.4019266

United Kingdom60 Queen Victoria StreetLondon, EC4N 4TZUnited Kingdom+44.20.7651.8200

United States 100 East Pratt StreetBaltimore, MD 21202United States+1.410.345.2000

T. ROWE PRICE

T. ROWE PRICE—PRESENTERS

Portfolio ManagerHeather McPhersonVice President—Portfolio Manager

17 years of investment experience;

15 years with T. Rowe Price

Vice President - Institutional Client Service, North America John Plowright, CFAVice President—Institutional Client Service, North America



Portfolio Specialist

Caleb N. Fritz, CFAPortfolio Specialist



T. ROWE PRICE

TABLE OF CONTENTS

1 Section A: Company Overview

2 Section B: Investment Discipline and Process

3 Section C: Market Overview

4 Section D: Performance Review

5 Section E: Portfolio Review and Characteristics

6 Section F: Fee Schedule

7 Section G: Additional Information and Disclosures

8 Section H: Glossary of Investment Terms

9 Section I: Biographical Backgrounds

2017-US-30551

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COMPANY OVERVIEW

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1 The combined assets under management of the T. Rowe Price group of companies in USD as of 31 December 2017. The T. Rowe Price group of companies includes T. Rowe Price Associates, Inc., T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd., and T. Rowe Price (Canada), Inc.

2 82 portfolio managers, 24 associate portfolio managers, 10 regional portfolio managers, 12 sector portfolio managers, 148 investment analysts/credit analysts, 54 quantitative analysts, 10 solutions associates, 54 associate analysts, 31 portfolio specialists/generalists, 2 strategists, 3 specialty analysts, 58 traders, 15 trading analysts, 2 economists, 40 portfolio modeling associates, and 24 management associates.

3 As of 31 December 2017.

A GLOBAL ASSET MANAGEMENT FIRM—FOCUSED ON CLIENT SUCCESS

INDEPENDENT INVESTMENT ORGANIZATION

We are focused solely on investment management and related services

ALIGNMENT OF INTERESTS

We are a publicly owned company with substantial employee ownership

FINANCIAL STRENGTH

We carry no outstanding long-term debt and maintain substantial cash reserves

GLOBAL INVESTMENT PLATFORM

We offer a full range of Equity, Fixed Income, and Multi-Asset solutions

STABLE LEADERSHIP TEAM

Our Management Committee averages 15 years with T. Rowe Price3

Founded in

1937

991.1billion USD in assets under management1

569Investment professionals worldwide2,3

16Local presence in

countries3

6,800Over

associates worldwide3

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AUSTRALIA

JAPAN

SINGAPORE

UNITED KINGDOM

82 portfolio managers, 24 associate portfolio managers, 10 regional portfolio managers, 12 sector portfolio managers, 148 investment analysts/credit analysts, 54 quantitative analysts, 10 solutions associates, 54 associate analysts, 31 portfolio specialists/generalists, 2 strategists, 3 specialty analysts, 58 traders, 15 trading analysts, 2 economists, 40 portfolio modeling associates, and 24 management associates.

WE INVEST IN OUR GLOBAL INVESTMENT RESOURCES As of 31 December 2017

16 21

YEARS Portfolio Manager Average Tenure

YEARS Portfolio Manager Average Investment Experience

UNITED STATES

50|204|148

PROFESSIONALS PROFESSIONALS

398 110

PROFESSIONALS 7

PROFESSIONALS 33

PROFESSIONALS 7

PROFESSIONALS 9

3|73|34

1|25|7

7

9

190 325

FIXED INCOMEProfessionals

EQUITYProfessionals

54 MULTI-ASSETProfessionals

FIXED INCOME PROFESSIONALS EQUITY PROFESSIONALS MULTI-ASSET PROFESSIONALS

PROFESSIONALS 4 6|1

SWITZERLAND

PROFESSIONAL 1

1

HONG KONG

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MARKET TRENDS

PERSPECTIVES AND RESEARCH As of 31 December 2017

Video Forces Propelling Retail Disruption

Aren’t Slowing Down Cloud Computing: Still In Its Early

Stages And Spreading GloballyManager Blogs Trump, Trade, And Inflation—Should

We Worry? P&I—Where are the alpha

opportunities in EM debt? What Will Disrupt the Equity Cycle in

2018? Value Pain—Is It Peaking (Or Do I Just

Want It To Stop)? A World of Secular Change—What

Does it Mean For Investors?Press David Giroux Named Morningstar's

2017 U.S. Allocation/Alternatives Fund Manager Press Release, 24 January 2018

Barron's Cover—Bright Outlook for the Economy and Stocks, 13 January 2018

Morningstar 2017 U.S. Fund Manager of the Year Press Release, 12 January 2018

Morningstar—Nominees for 2017 Domestic-Stock Fund Manager of the Year, 11 January 2018

Bloomberg—Emerging-Market Bulls Hold Firm After Best Rally Since 2009, 28 November 2017

MEDIADefined Contribution Preparing for Retirement: The Lost

Generation Comes of Age Focus on Generation X—Key Finding Participants and the Advice They

Want—Key Finding # 1 Financial Priorities—Key Finding # 2Defined Benefit LDI Solutions: Pension Curve Insider Using an LDI Completion Manager

PLAN SPONSORS

2018 Global Market Outlook: The Right Side of Change

The Benefits of the TRP Approach to Active Management

Global Capital Market Updates

Global Equity CIO Roundtable—Modern Titans of the

Information Age Q&A with Scott Berg—What Has Defined

This Bull Market, And How Will It Play Out?

Japanese Equities—Japan's Stars Appear to be Aligning

Global Equities—Innovation is Disrupting a Growing Number of Sectors

Global Fixed Income Policy Insights: Will Political Risk

Dominate Fixed Income Markets in 2018?

Global Fixed Income—Fixed Income Enters a New Era

Policy Insights: Revisiting the China Dream

Central and Eastern Europe Growth Creates Relative Value Opportunities

STRATEGY

Quarterly In Focus Defined Contribution Investment Only Quarterly Investment Updates

NEWSLETTERS

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Institutional Client Service:John D. Plowright, CFA

Phone: 415-772-1117

E-mail :[email protected]

Coordinates overall relationship management activities

Primary point of contact providing access to broad firm resources

Ultimate accountability for client satisfaction

Institutional Client Operations:Anne M. Fader

Phone: 410-345-2268 E-mail :[email protected]

Key contact during initial onboarding and for future cash flows

Operational liaison with legal, investments, and custodian

Coordinates review of legal agreements and contracts

Institutional Sales:Ken Brooks

Phone: 415-772-1104

E-mail :[email protected]

Partners with client service team to share intellectual capital, industry insights, etc.

Leads investment solutions dialogue in areas beyond current mandate(s)

LOS ANGELES DEPARTMENT OF WATER AND POWER—RELATIONSHIP MANAGEMENT TEAM

A dedicated team helping you meet your overall objectives.

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Objective The objective seeks to provide long-term capital appreciation by investing in common

stocks believed to be undervalued.

Mandate U.S. Large-Cap Value: Separately Managed Portfolio Strategy Assets as of

31 December 2017: 21.5 Billion USD

Benchmark Russell 1000 Value Index

Investment Guidelines

▪ Cash will not exceed 5% of portfolio.

▪ No more than 5% of the portfolio or 125% of a security’s index weighting shall be invested in asingle issuer.

▪ No single issue shall represent more than 10% of the portfolio.

▪ Shares may not be purchased in the portfolio if T. Rowe Price holds on aggregatemore than 10% of that issuers outstanding shares.

Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

CLIENTOBJECTIVELos Angeles Department of Water and Power Retirement Plan:

Los Angeles Department of Water and Power–Health Benefits Plan:

Inception value as of 1 October 2004 248,180,297 USDContributions 53,430,839 USDWithdrawals 242,472,751 USDChange in market value 544,673,727 USDMarket Value as of 31 December 2017 603,812,112 USD

Inception value as of 15 September 2009 41,982,244 USDContributions 52,826,644 USDWithdrawals 35,078,357 USDChange in market value 41,453,708 USDMarket Value as of 31 December 2017 101,184,239 USD

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US Large-Cap Value Equity

Strategy21.5B USD2

US Large-Cap Equity Income

Strategy36.0B USD

US Value Equity

Strategy42.1B USD

US LARGE-CAP VALUE ASSETS UNDER MANAGEMENT

TOTAL U.S. LARGE-CAP VALUE ASSETS: 99.9 BILLION USD1

US LARGE-CAP VALUE EQUITY STRATEGY ASSETS: 21.5 BILLION USD3

As of 31 December 2017 As of 31 December 2017

1 The combined U.S. Large-Cap Value assets of the T. Rowe Price group of companies. The T. Rowe Price group of companies includes T. Rowe Price Associates, Inc., T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd., and T. Rowe Price (Canada), Inc.

2 Includes US Large-Cap Value Taxable Strategy assets.3 The total US Large-Cap Value Equity Strategy assets of the T. Rowe Price Group of companies.4 Corporate, Public, Non-Profit, Taft-Hartley, Endowments/Foundations, and Sub-Advisory clients.

Strategy assets under management for the T. Rowe Price U.S.-registered mutual funds and common trust funds are calculated based on the closing price of the security in its respectivemarket and may differ from the net asset value of the fund. Numbers may not total due to rounding.

Non-U.S. Separate Accounts

513.8M USD

Non-U.S. Commingled

Fund1,031.3M USD

Institutional-Sourced U.S.

Registered Mutual Fund

3,878.1M USD

U.S. Separate Accounts

16,033.0M USD4

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INVESTMENT DISCIPLINE AND PROCESS

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US Large-Cap Value Equity StrategyPortfolio Management Team

Stability | Depth | Collaboration

Heather McPherson,(CPA Inactive)

Portfolio Manager(US Large-Cap Value Equity Strategy, US Equity Income

Strategy)

Mark S. Finn, CFA, CPAPortfolio Manager

(US Large-Cap Value Equity Strategy, US Value Equity

Strategy)

John Linehan, CFAPortfolio Manager

(US Large-Cap ValueEquity Strategy, US Equity

Income Strategy)

William D. Nolan Portfolio Specialist

Caleb N. Fritz, CFA Portfolio Specialist

17 years of investment experience; 15 years with T. Rowe

Price. B.S., University of

California-Davis M.B.A., Duke University,

The Fuqua School of Business


Price. B.S., University of

Delaware


Price. B.A., Amherst College M.B.A., Stanford

Graduate School of Business

26 years of investment experience; 8 years with T. Rowe Price. B.S., Johns Hopkins

University


Price. B.A., University of South

Florida M.A., University of

South Florida

US LARGE-CAP VALUE INVESTMENT TEAMAs of 31 December 2017

Extensive collaboration among investment professionals enhances idea generation.112 portfolio managers, 94 research analysts, 47 associate research analysts, 6 quantitative analysts, and 3 specialty analysts as of 31 December 2017.

Equity Research Team162 Research Analysts | Industry Specialists¹

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As of 31 December 2017

ADVISORY COMMITTEE

Name RoleYears with

T. Rowe PriceYears of

Investment Experience

Heather McPherson,(CPA Inactive)

US Large-Cap Value Equity Portfolio ManagerUS Large-Cap Equity Income Associate Portfolio Manager

15 17

Mark S. Finn, CFA, CPA US Value Equity Portfolio ManagerUS Large-Cap Value Equity Portfolio Manager 27 20

John Linehan, CFA US Large-Cap Equity Income Portfolio ManagerUS Large-Cap Value Equity Portfolio Manager 19 28

Ken W. Allen Lead Portfolio Manager Science & Technology Equity 17 17

Ziad Bakri, CFA, MD Health Sciences Equity Strategy Co-Portfolio Manager US Biotechnology Analyst 6 12

Richard de los Reyes Asset Allocation Portfolio Manager 11 18

David R. Giroux, CFA US Capital Appreciation Portfolio Manager 19 19

Ryan S. Hedrick, CFA Coal and Utilities Analyst 4 13

Nina P. Jones, CPA Global Real Estate Portfolio Manager 9 9

Gregory W. Locraft Jr. US P&C Insurance Analyst 3 20

Daniel Martino, CFA Consulting Portfolio Manager 11 20

Gabriel Solomon US Financial Services Equity Portfolio Manager 13 15

Eric L. Veiel, CFA Head of US Equity 12 18

John M. Williams, CFA Consumer Staples Analyst 7 11

US Large-Cap Value Equity

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EQUITY RESEARCH TEAM

1 Also has portfolio management responsibilities.2 12 sector portfolio managers, 94 research analysts, 47 associate research analysts, 6 quantitative analysts, and 3 specialty analysts as of 31 December 2017. Highlighted names reflect analysts with coverage responsibilities for portfolio holdings.

162 Equity Research Professionals worldwide2

HEADS OF EQUITY DIRECTORS OF EQUITY RESEARCH ASSOCIATE DIRECTORS OF EQUITY RESEARCH

Chris AldersonGlobal Co-Head

LON Eric Veiel, CFAU.S.

BAL Kamran BaigEMEA and Latin America

LON Stephon Jackson, CFA U.S.

BAL Mitchell Todd, CADeveloped Europe

LON Tom Watson, CFAU.S.

BAL Jai Kapadia Asia

HKG Viral PatelAustralia

SYD

Rob Sharps, CFAGlobal Co-Head

BAL Maria DrewResponsible Investing

LON Jason Polun, CFAU.S.

BAL Kes Visuvalingam, CFAAsia

SGP Tobias Mueller, CFADeveloped Europe

LON

HEALTH CAREZiad Bakri, CFA, MD1 BALU.S. Bio Tech Melissa Gallagher, Ph.D. LONOUS Pharma/BiotechJohn Hall, Ph.D. BALU.S. SMID BiotechRachel Jonas BALU.S. SMID HealthcareAdam Poussard, CFA BALU.S. Services & EquipmentI-hung Shih, Ph.D. BALU.S. BiotechDai Wang HKGChinese HealthcareJon Wood, CFA BALU.S. Medical Devices/ToolsRouven Wool-Lewis, Ph.D. BALU.S. Services & Hospitals

INDUSTRIALSJason Adams BALU.S. Aerospace and DefensePeter Bates, CFA1 BALU.S. ConglomeratesAndrew Chang SGPJapan and Asia Ex-Japan Auto/SteelAndrew Davis BALU.S. TransportsRyan Ferro, CFA BALU.S. SMID IndustrialsJoel Grant, CFA BALU.S. AutosGianluca Guicciardi, CFA LONCapital GoodsDaniel Hirsch, CFA BALU.S. IndustrialsHiromasa Ikeda HKGJapan Small-Cap IndustrialsCurt Organt, CFA1 BALU.S. Small-Cap GeneralistMelanie Rizzo, CFA BALU.S. Trucking/MachineryEunbin Song, CFA HKGAsia Ex -Japan Auto/C&ERupinder Vig LONCapital Goods

BUSINESS SERVICESShaun Currie, CFA BALU.S. Business ServicesJon Friar1 BALU.S. Business ServicesIan McDonald, CFA BALU.S. Business ServicesMaria Muller LONEurope Bus. Serv.Jared Murphy BALU.S. Bus. Serv./IndustrialsDante Pearson BALU.S. Business Services

TECHNOLOGYKen Allen1 BALU.S. Hardware/SoftwareGreg Dunham, CFA BALU.S. SoftwareTobias Mueller, CFA LONEurope Semi./SoftwareEmily Scudder, CFA, CPABALU.S. HardwareJoshua Spencer, CFA1 BALU.S. Semi./EquipmentAlan Tu, CFA SFOU.S. SoftwareAnthony Wang BALU.S. Semi.Alison Yip HKGAsia Ex-Japan Hardware

MEDIA/TELECOMPaul Cho BALU.S. Cable/SatellitePaul Greene1 BALU.S. Advertising/InternetAden Lau SGPAsia Ex-Japan Telecom/Fin.Jacqueline Liu HKGAsia Ex-Japan InternetCorey Shull, CFA BALU.S. Media/InternetJim Stillwagon BALU.S. Advertising/MediaChristopher Whitehouse LONEurope Media/Telecom

CONSUMER/RETAILPaulina Amieva BALLatin America GeneralistTim Bei, CFA SFOU.S. Consumer DiscretionaryEric DeVilbiss, CFA BALU.S. RestaurantsAmanda Hall, CFA LONEurope ConsumerMichael Jacobs TOKJapan Retail/LeisureJacob Kann, CFA BALDiscretionaryRekha Marda BALU.S. Food Retail/DurablesSridhar Nishtala SGPAsia Ex-Japan StaplesRobert Quinn, Jr. BALU.S. Consumer StaplesSebastian Schrott LONEuropean Luxury/RetailVivian Si BALU.S. Mass Merch./ApparelBrian Solomon, CFA BALU.S. Cruise/LodgingKonstantin Stoev, CFA LONEuropean Staples and AutoJohn Williams, CFA BALLarge-Cap Consumer StaplesEric Yuan HKGRegional Gaming

FINANCIAL SERVICESMalik Asif LONEMEA BanksJon Casper BALU.S. FinancialsVincent DeAugustino, CFA BALU.S. SMID FinancialsChristopher Fortune, CFABALU.S. Small-Cap BanksTakanori Kobayashi TOKJapan FinancialsGregory Locraft BALU.S. P&C InsuranceJihong Min SGPAsia Banks/InsuranceJoe Mlinac, CFA BALU.S. BanksThibault Nardin LONEurope BanksJeff Nathan BALU.S. HomebuildersMatt Snowling, CFA BALU.S. Asset Managers/BrokersGabriel Solomon1 BALU.S. Money Center/Insur.Zenon Voyiatzis LONEurope Insur./Financials

REAL ESTATEDaniel McCulley, CFA BALU.S. Real EstatePreeta Ragavan, CFA BALU.S. Real Estate

NATURAL RESOURCESHaider Ali HKGAsia Ex-Japan Oil & GasSheena Barbosa, CFA HKGAsia Ex-Japan Utilities/Infra.Shawn Driscoll1 BALSector Team Leader Ryan Hedrick, CFA BALU.S. Coal/UtilitiesJon Hussey BALU.S. AgricultureShinwoo Kim BALMajors/U.S. E&PMatt Mahon BALU.S. ChemicalsRyan Martyn SYDAustralia Energy/IndustrialsChris O'Neill BALU.S. E&PJohn Qian BALMetals & MiningVivek Rajeswaran, CFA BALU.S. Equip. & ServicesThomas Shelmerdine SYDAustralian Metals & MiningJohn Sherman LONEuropean Chemicals/Indus.

REGIONAL GENERALISTSUlle Adamson, CFA1 LONEMEAMartin Baylac LONLatin AmericaSimon Cheng, CFA, CPA HKGGreater China Small-CapArchibald Ciganer, CFA1 TOKJapan Transports/ConsumerAnouk Dey, CFA BALU.S. SMID-CapVishnu Gopal HKGIndia & ASEAN Small-CapBen Griffiths, CFA1 LONEurope Small-CapNabil Hanano, CFA BALEuropeTetsuji Inoue, CPA TOKJapan Small-Cap/Real Estate, Japan TechnologyRandal Jenneke1 SYDAustralia Media/ConsumerJai Kapadia HKGAsia Real Estate/Conglom.Mark Lawrence, CFA LONEMEAJohannes Loefstrand LONEMEAOxana Lyalina, CFA LONEMEAAaron Mazur SYDAustralia Media/Consumer DiscretionaryMichael Niedzielski LONEurope Small-CapPaul O'Sullivan, ACA SYDAustralia Financials/H.C.Seun Oyegunle, CFA LONEMEAViral Patel SYDAustralia REITS/RetailAlexander Roik, CFA BALSMID ValueSin Dee Tan, CFA LONEurope Small-CapChris Vost, CFA LONLatin AmericaVerena Wachnitz, CFA1 LONLatin AmericaHiroshi Watanabe, CFA1 TOKJapan SMID-CapMarta Yago LONLatin America

BAL Baltimore HKG Hong Kong LON London SFO San Francisco SGP Singapore SYD Sydney TOK TokyoAs of 1 January 2018

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Research is the lifeblood of our organization

Investment idea generation

Professional development: focused mentoring effort nurtures investment talent―career analyst or portfolio management track

Fundamental approach to research—analysts are industry specialists across capitalization and style

Understanding impact of all competitors within an industry group is key to assessing the outlook for any individual company

Ideas leveraged across styles as valuation opportunities arise

Formal and informal communication channels foster a collaborative research approach

Multiple signaling tools communicate analysts’ conviction and urgency—company rankings, Research Management System (RMS), analyst portfolios, and weekly meetings

Ongoing informal interaction between the portfolio managers and analysts is also central to the process

Rigorous performance and contribution review drives compensation

Key retention tools include performance-based bonus and equity participation

EQUITY RESEARCH

Extensive analyst interaction across industry groups, sectors, and asset classes promotes a broad perspective and timely decision making.

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VALUE DISTORTIONS AND INVESTOR PSYCHOLOGY

Large-Cap companies are at times inefficiently priced

Stoc

k Pr

ice

Intrinsic value

Controversy causes investor anxiety

Corrective strategies implemented

Mispriced

Resolution restoresinvestor confidence

Mispriced

Time

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Focus on relative value relationships to opportunistically identify attractively valued companies

Fundamental research is key to uncovering companies with potential for stock price mean reversion

A long-term orientation allows for the full exploitation of valuation anomalies

Diversified portfolios help to manage portfolio risk profile

INVESTMENT PHILOSOPHY AND APPROACH

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INVESTMENT PROCESS

Investment CandidatesCompelling valuation relative to historic norms

Balance Valuation Appeal and Quality of Company

Portfolio Construction (70-80 stocks)

Initial Screening Relative Valuation Filter Analyst Research

UniverseMarket Caps Generally Greater than 5 billion USD

Fundamental Analysis

Evaluate company projections and financial outlook

Are current issues facing the company correctable?

Quantitative Analysis

In-depth financial statement and relative valuation analysis

Use absolute valuation metrics to confirm investment appeal

Qualitative Dynamics

Access the potential for change in investment sentiment

Assess competitive positioning, quality of assets and management

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Buy Criteria Identify candidate companies whose earnings and dividend streams appear mispriced Integrate fundamental research assessment

– Focus on improving financial outlook Apply qualitative overlay

– Potential for improved investor perception Verify relative valuation anomalies through quantitative analysis

– Focus on relevant valuation metrics Balance valuation analysis versus qualitative overlay

Sell Criteria Upside achieved—valuation gap narrows Significant change in fundamental assessment Deterioration in financial strength

INVESTMENT PROCESS

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PORTFOLIO CONSTRUCTIONAs of 31 December 2017

Concentrated positions are avoided to control portfolio risk profile.

Los Angeles Department of Water and Power Retirement Plan

0

5

10

15

20

25

30

35

0.00-0.50% 0.51-1.00% 1.01-1.50% 1.51-2.00% >2.01%

Number of Holdings

Weighting Range


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Diversified Portfolio StructurePORTFOLIO CONSTRUCTION

70-80 stock portfolio

Individual position sizes typically are below 3%, but higher conviction ideas can range to 5%

Sector weights will typically vary from 0.5X to 2.0X, of the primary sectors of the Russell 1000 Value Index

Reserves will typically range from 0% to 2%

Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

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MARKET REVIEW

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BULL MARKET CONTINUESFigures are Calculated in U.S. Dollars

31 December 2017P/E (forward) = 18.2x

S&P 500 Index

% Gain +/-

S&P 500 Valuation Measures 12/31/17 9/30/16 3-Yr Avg. 5-Yr Avg. 10-Yr Avg.Price to Earnings (P/E Forward) 18.2x 16.8x 16.7x 15.9x 14.2xPrice to Book (P/B) 3.1x 2.7x 2.7x 2.5x 2.2xDividend Yield 2.0% 2.2% 2.2% 2.2% 2.3%

2,10724 March 2000P/E (forward) = 27.2x

-47% | 1,1099 October 2002

P/E (forward) = 14.9x

+121% | 2,4479 October 2007


-55% | 1,0959 March 2009


+376% | 5,213S&P 500 TOTAL RETURN INDEX1 January 2000 to 31 December 2017

Past performance cannot guarantee future results.The S&P 500 is made up of primarily large-capitalization companies that represent a broad spectrum of the U.S. economy and a substantial part of the U.S. stock market’s total capitalization.Sources: Standard & Poors, T. Rowe Price, FactSet.

0

1,000

2,000

3,000

4,000

5,000

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THE WINDS OF U.S. GROWTH HAVE SHIFTED

TailwindsHeadwinds

Monetary Policy

Fiscal Policy

Regulation

TaxPolicy

TradePolicy

GFC=Global Financial Crisis.

Stalled Recovery (2012 to 2016)

Initial Post-GFC Rebound(2008 to 2011)

Acceleration(Today)

Acceleration(One Year Ago)

???

????

???

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MULTIPLE EXPANSION DROVE MARKET STRENGTH

24%

37%35%

27% 26%24%

20%

10% 10% 10%

7% 7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

S&P 500 Financials Technology Materials Industrials Discretionary Heath Care Staples Utilities Telecom Real Estate Energy

Annu

aliz

ed R

etur

n

S&P 500 SECTOR RETURNS SINCE 2016 ELECTION8 November 2016–31 December 2017

Nine sectors have produced double-digit returns since the 2016 election.

Past performance is not a reliable indicator of future performance.Sources: Standard & Poor’s, FactSet, and T. Rowe Price.

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MARKET STRENGTH DRIVEN BY MULTIPLE EXPANSION

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

Inde

x Le

vel

S&P 500 Index LevelS&P 500 Index Level (Holding P/E Constant)S&P 500 Index Level (12/31/2011) 64%

Difference

2,674

1,767

36% Difference

1,258

ACTUAL AND THEORETICAL S&P 500 INDEX LEVEL, HOLDING P/E MULTIPLE CONSTANT AGAINST FORWARD EARNINGS2012–2017

Return

S&P 500 Price Return (Annualized) 12.8%

S&P 500 Constant P/E Price Return (Annualized) 4.7%

Difference 8.0%

Positive expectations have been a key driving force of market returns.

5

10

15

20

25

1997 2000 2003 2006 2009 2012 2015

Pric

e/Ea

rnin

gs M

ultip

le

S&P 500 PRICE TO 12 MONTHS FORWARD EARNINGSJanuary 1997–December 2017

Average 16.0X

Median15.4x

Current 18.2X

Past performance is not a reliable indicator of future performance.Sources: FactSet and T. Rowe Price.

T. ROWE PRICE27

U.S. TAX REFORM IMPLICATIONS

0%

5%

10%

15%

20%

25%

30%

35%

40%

CORPORATE INCOME TAX RATESAs of 30 April 2016

New U.S. Rate

Old U.S. Rate

Potential Winners Mixed Potential Losers

Small-CapsMid-CapsLarge-Caps With High Tax RatesFinancialsRetail CompaniesCompanies With High Cash Positions OverseasU.S. Companies With High Foreign Sales

Information TechnologyREITsMLPsInsurance CompaniesUtilities

Companies With Low Tax RatesCompanies With High Levels of DebtNon-U.S. MultinationalsInverted CompaniesCompanies With High Amounts of Intangible Income Overseas

Corporate Taxes

Tax rate cut from 35% to 21%

100% Expensing (five years at 100%; phases out over five years)

U.S. moves to a territorial tax system

Repatriated earnings subject to one-time tax (15.5% liquid, 8% illiquid)

Limits interest deductibility

Individual Taxes (Sunset at End of 2025)

Lowers taxes for most individuals through lower income tax rate and higher standard deduction

Lower tax rate for small businesses (pass through)

KEY FEATURES

Sources: FactSet, Russell, OECD, Strategas Research Partners, and T. Rowe Price. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

T. ROWE PRICE28

OPTIMISM AMONG INVESTORS AND BUSINESS LEADERS HAS GROWN

-10

10

30

50

70

90

110

85

90

95

100

105

110

115

120

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inde

x Le

vel

Inde

x Le

vel

NFIB: Small Business Optimism Index (L) CEO Economic Outlook Survey (R)

BUSINESS LEADERS ARE MORE OPTIMISTIC POST 2016 ELECTION THAN ANY TIME SINCE GFCAs of 31 December 2017

As of: 11/30/2017 03/02/2018 Change2018 Estimates 146.13 USD 158.06 USD 8.2%

2019 Estimates 160.68 USD 174.31 USD 8.5%

Sources: FactSet, Business Roundtable and the National Federation of Independent Business/Haver Analytics, and T. Rowe Price.

S&P 500 EARNINGS PER SHARE ESTIMATES BEFORE AND AFTER PASSAGE OF TAX REFORMAs of 2 March 2018

T. ROWE PRICE29

Value vs. growth returns have been heavily influenced by economic growth expectations during the current cycle, as evidenced by the comparison of returns and the steepness of the yield curve. This is partially due to the much higher representation of banks in value indices (bank profit margins are generally driven by yield spreads), but is also due to the relationship between the yield curve and economic growth expectations. When the curve is flat (indicating weaker growth expectations), growth stocks outperform—as growth stocks typically are driven more by their own product cycles than by the broad economic cycle. Meanwhile, value stocks are typically very sensitive to the economic cycle.

GROWTH VS. VALUE: HEAVILY INFLUENCED BY ECONOMIC GROWTH EXPECTATIONS DURING THIS CYCLE

Past performance cannot guarantee future results.Sources: FactSet, Russell, MSCI. Returns in USD.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

0.5%

1.0%

0%2.0%

-5%

1.5%-10%

2.5%

3.0%

-20%

-15%

5%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Yiel

d Sp

read

, 10

Year

UST

min

us 2

Year

UST

Cum

ulat

ive

Tota

lRet

urn

YIELD CURVE AND GROWTH VS. VALUE RETURNSJune 2009 to December 2017

Russell 3000 Value minus Russell 3000 Growth Yield Curve (UST 2 year vs. 10 year spread)

T. ROWE PRICE30

INTEREST RATES REMAIN HISTORICALLY LOW

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1944 1955 1966 1976 1987 1997 2008

Yiel

d

U.S. TREASURY 10-YEAR YIELD1945–2017

Median 4.7%

Sources: Empirical Research Partners, FactSet, and T. Rowe Price.

2.36%

T. ROWE PRICE31

FINANCIALS SECTOR IS RELATIVELY INEXPENSIVE

0.3

0.4

0.4

0.5

0.5

0.6

0.6

0.7

0.7

0.8

0.8

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Rel

ativ

e P/

B (N

TM)

S&P 500 Financials Sector Relative to S&P 500 Index

While financials have outperformed since the election, they have lagged on a multiyear

basis

Relative to the S&P, the Financials sector is trading below both the median forward relative

P/E and the median relative P/B over the last 15 years

Yet, with tax reform and higher interest rates, financials should have among the highest

levels of earnings growth and ROE expansion

THE FINANCIAL SECTOR’S FORWARD P/E RELATIVE TO THE S&P IS TOWARD THE LOWER END OF THE HISTORICAL RANGE

THE FINANCIAL SECTOR’S P/B RELATIVE TO THE S&P IS MODESTLY BELOW THE MIDPOINT OF THE HISTORICAL RANGE

0.7

0.8

0.9

1.0

1.1

1.2

1.3

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Rel

ativ

e P/

E (N

TM)

S&P 500 Financials Sector Relative to S&P 500 Index

Median 0.53

Median 0.83


Sources: FactSet, T. Rowe Price.

T. ROWE PRICE32

OUTLOOK

Expect synchronized global economic expansion to continue into 2018, with balanced risks to the upside and downside.

Corporate earnings growth will remain supportive. Recent underperformance of defensive sectors suggest the market has

become more complacent and is starting to play more offense. Monetary policy will continue to become less accommodative. Energy prices will be pressured as higher North American supply offsets

OPEC production cuts. Equity valuations appear stretched and opportunities are more idiosyncratic. Key risks include geopolitics, monetary policy missteps, unexpected inflation,

and protectionist trade policies.

T. ROWE PRICE33

ENERGY PRICES

Increased supply and lower cost curve will pressure oil prices

Prefer strong balance sheets, optionality, free-cash-flow inflection (Total, Hess)

INTEREST RATES & INFLATION

Expect three rate hikes as fiscal stimulus could drive inflation higher

Higher rates good for financials, companies with pension obligations (J.P. Morgan Chase & Co., Boeing)

OFFENSIVE ROTATION

Bond proxies have traded off amid expectations for higher interest rates

Valuations in defensive areas are beginning to look more attractive (CVS Health, Kimberly-Clark)

P&C INSURANCE CYCLE

Insurance providers saw a significant increase in claims following several natural disasters that impacted North America

Insurance demand and premiums are likely to rise, which should benefit brokers and providers (Marsh & McLennan, American International Group)

KEY CONTROVERSIES AND OPPORTUNITIES

T. ROWE PRICE34

PERFORMANCE REVIEW

T. ROWE PRICE35

COMPLIANCE CERTIFICATE

T. ROWE PRICE36

COMPLIANCE CERTIFICATE

T. ROWE PRICE37

Periods Ended 31 December 2017 Figures are Calculated in U.S. Dollars

Los Angeles Department of Water and Power Retirement Plan TOTAL RETURN PERFORMANCE

Annualized

ThreeMonths

One Year

TwoYears

Three Years

Five Years

Seven Years

TenYears

Since ClientInception1 Oct 2004

Los Angeles Department of Water and Power Plan Retirement (Gross of Fees)1 5.43% 16.76% 16.65% 10.08% 15.41% 13.53% 8.71% 9.58%

Los Angeles Department of Water and Power Plan Retirement (Net of Fees)2 5.35 16.39 16.27 9.72 15.04 13.17 8.36 9.22

Russell 1000 Value Index 5.33 13.66 15.49 8.65 14.04 12.46 7.10 8.27

Value Added (Net of Fees) 0.02 2.73 0.78 1.07 1.00 0.71 1.26 0.95

Past performance cannot guarantee future results.1 Performance figures are shown gross of advisory fees. Total returns would be lower as a result of the deduction of such fees.2 Net returns reflect the deduction of advisory fees.

Source: T. Rowe Price Modified Dietz Rate of Return.Total returns include all realized and unrealized gains and losses plus income.All investments are subject to risk, including the possible loss of the money you invest.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Calendar Years 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Los Angeles Department of Water andPower Retirement Plan (Gross of Fees)1 2.87% -35.53% 27.96% 14.98% 0.54% 18.13% 35.32% 13.42% -1.98% 16.54% 16.76%

Los Angeles Department of Water andPower Retirement Plan (Net of Fees)2 2.53 -35.77 27.55 14.61 0.21 17.75 34.90 13.06 -2.29 16.16 16.39

Russell 1000 Value Index -0.17 -36.85 19.69 15.51 0.39 17.51 32.53 13.45 -3.83 17.34 13.66

Value Added (Net of Fees) 2.70 1.08 7.86 -0.90 -0.18 0.24 2.37 -0.39 1.54 -1.18 2.73

T. ROWE PRICE38

Periods Ended 28 February 2018 Figures are Calculated in U.S. Dollars

Los Angeles Department of Water and Power Retirement Plan TOTAL RETURN PERFORMANCE



Annualized

Quarter-to-Date

One Year

TwoYears

Three Years

Five Years

Seven Years

TenYears

Since ClientInception1 Oct 2004

Los Angeles Department of Water and Power Plan Retirement (Gross of Fees)1 0.01% 11.80% 19.86% 9.78% 13.77% 12.42% 9.63% 9.46%

Los Angeles Department of Water and Power Plan Retirement (Net of Fees)2 -0.04 11.45 19.49 9.43 13.41 12.06 9.28 9.10

Russell 1000 Value Index -1.09 7.75 17.96 8.02 12.04 11.35 7.89 8.07

Value Added (Net of Fees) 1.05 3.70 1.53 1.41 1.37 0.71 1.39 1.03

T. ROWE PRICE39

Periods Ended 31 December 2017 Figures are Calculated in U.S. Dollars

Los Angeles Department of Water and Power–Health Benefits PlanTOTAL RETURN PERFORMANCE

Past performance cannot guarantee future results.1 Performance figures are shown gross of advisory fees. Total returns would be lower as a result of the deduction of such fees.2 Net returns reflect the deduction of advisory fees. 3 15 September -31 December 2009.


Calendar Years 20093 2010 2011 2012 2013 2014 2015 2016 2017Los Angeles Department of Water andPower– Health Benefits Plan (Gross of Fees)1 5.52% 14.76% 0.61% 18.20% 35.45% 13.51% -1.83% 16.57% 16.75%

Los Angeles Department of Water andPower–Health Benefits Plan (Net of Fees)2 5.42 14.39 0.28 17.82 35.03 13.15 -2.15 16.19 16.38

Russell 1000 Value Index 4.23 15.51 0.39 17.51 32.53 13.45 -3.83 17.34 13.66

Value Added (Net of Fees) 1.19 -1.12 -0.11 0.31 2.50 -0.30 1.68 -1.15 2.72

Annualized

ThreeMonths

One Year

TwoYears

Three Years

Five Years

Seven Years

Since ClientInception

15 Sep 2009Los Angeles Department of Water and Power–HealthBenefits Plan (Gross of Fees)1 5.42% 16.75% 16.66% 10.14% 15.48% 13.61% 13.99%

Los Angeles Department of Water and Power–HealthBenefits Plan (Net of Fees)2 5.34 16.38 16.28 9.78 15.12 13.24 13.62

Russell 1000 Value Index 5.33 13.66 15.49 8.65 14.04 12.46 13.00

Value Added (Net of Fees) 0.01 2.72 0.79 1.13 1.08 0.78 0.62

T. ROWE PRICE40

Periods Ended 28 February 2018 Figures are Calculated in U.S. Dollars

Los Angeles Department of Water and Power–Health Benefits PlanTOTAL RETURN PERFORMANCE



Annualized

Quarter-to-Date

One Year

TwoYears

Three Years

Five Year

Seven Years

Since ClientInception

15 Sep 2009Los Angeles Department of Water and Power–HealthBenefits Plan (Gross of Fees)1 0.02% 11.80% 19.86% 9.83% 13.84% 12.47% 13.71%

Los Angeles Department of Water and Power– HealthBenefits Plan (Net of Fees)2 -0.03 11.45 19.48 9.48 13.48 12.11 13.34

Russell 1000 Value Index -1.09 7.75 17.96 8.02 12.04 11.35 12.59

Value Added (Net of Fees) 1.06 3.70 1.52 1.46 1.44 0.76 0.75

T. ROWE PRICE41

ATTRIBUTION ANALYSIS (USD)Three Months Ended 31 December 2017

Past performance cannot guarantee future results. Numbers may not add to 100% due to rounding; all numbers are percentages. Analysis represents the equity-only performance of the portfolio as calculated by the Wilshire Atlas attribution model and is exclusive of cash, trusts, mutual funds, delisted securities, and other non-equity holdings. Returns will not match official T. Rowe Price performance because Wilshire uses different pricing and exchange rate sources and does not capture intraday trading or fair-value pricing. Performance for each security is obtained in the local currency and, if necessary, is converted using an exchange rate determined by an independent third party.Source: Wilshire Atlas, MSCI/S&P Global Industry Classification Standard (GICS) sectors; analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses the MSCI/S&P GICS for sector and industry reporting. Each year, MSCI and S&P review the GICS structure. The last change occurred on 31 August 2016. T. Rowe Price will adhere to all future updates to GICS for prospective reporting.Figures are shown gross of fees.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Los Angeles Department of Water and Power Retirement Plan vs. Russell 1000 Value Index

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

Val

ue A

dded

-P

erce

ntag

e

TotalConsumer

DiscInformation Technology

Industrials & Bus Svcs

Consumer Staples

Telecom Svcs

Real Estate

Health Care Materials Energy Utilities Financials

Over (Under) Weight -- 0.37 2.22 2.64 2.20 -1.13 -3.69 -0.28 0.86 -2.26 -0.02 -0.91

Portfolio Weight (Ending) 100.00 7.21 10.68 11.02 10.80 1.87 0.92 13.20 3.84 8.78 5.89 25.78

Index Weight (Ending) 100.00 6.84 8.46 8.38 8.60 3.00 4.61 13.48 2.99 11.03 5.91 26.69

Portfolio Performance 5.57 13.87 14.93 6.87 5.81 8.24 0.50 2.11 5.83 3.31 -8.73 5.58

Index Performance 5.33 5.60 10.29 1.36 4.03 1.98 1.99 2.14 8.81 6.42 0.53 8.46

BY SECTOR

Total Value Added

Value Added From Sector Weight

Value Added FromStock Selection

T. ROWE PRICE42

PERFORMANCE ATTRIBUTIONThree Months Ended 31 December 2017Figures are Calculated in U.S. Dollars

Past performance cannot guarantee future results.1 Source: Wilshire.

Business Description sourced from Thomson Reuters Worldscope Fundamentals, Copyright©, Thomson Reuters, 1999–2018. All Rights Reserved. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for the portfolio, and no assumptions should be made that the securities identified and discussed were or will be profitable. The information shown does not reflect any exchange-traded funds that may be held in the portfolio.


Stock

% ofPortfolio(Average Weights)1

Contribution Amount1 Industry Business Description

J.P. Morgan Chase & Co.

4.5% 55 bps Banks J.P. Morgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services.

Twenty-First Century Fox

1.6 48 Media Twenty-First Century Fox is a media and entertainment company. The Company's segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations.

Microsoft 3.4 48 Software Microsoft is a technology company. The Company develops, licenses, and supports a range of software products, services and devices.

Wal-Mart 1.6 37 Food & Staples Retailing Wal-Mart Stores is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam's Club.

Qualcomm 1.7 36 Semiconductors & Semiconductor Equipment

Qualcomm is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA).

SIGNIFICANT ABSOLUTE CONTRIBUTORS

SIGNIFICANT ABSOLUTE DETRACTORS

Stock


Contribution Amount1 Industry Business Description

PG&E 1.7% -77 bps Electric Utilities PG&E is a holding company. The Company's primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California.

Merck 1.9 -24 Pharmaceuticals Merck is a global healthcare company. The Company offers health solutions through its prescription medicines, vaccines, biologic therapies and animal health products.

GE 0.6 -18 Industrial Conglomerates GE is a global digital industrial company. The Company's products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products.

Gilead Sciences 1.1 -13 Biotechnology Gilead Sciences is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in areas of unmet medical need.

EQT 0.7 -10 Oil, Gas & Consumable Fuels EQT is a natural gas company. The Company operates through three segments: EQT Production, EQT Gathering and EQT Transmission.

2017-US-29548

T. ROWE PRICE43

ATTRIBUTION ANALYSIS (USD)One Year Ended 31 December 2017

Past performance cannot guarantee future results. Numbers may not add to 100% due to rounding; all numbers are percentages. Analysis represents the equity-only performance of the portfolio as calculated by the Wilshire Atlas attribution model and is exclusive of cash, trusts, mutual funds, delisted securities, and other non-equity holdings. Returns will not match official T. Rowe Price performance because Wilshire uses different pricing and exchange rate sources and does not capture intraday trading or fair-value pricing. Performance for each security is obtained in the local currency and, if necessary, is converted using an exchange rate determined by an independent third party.Source: Wilshire Atlas, MSCI/S&P Global Industry Classification Standard (GICS) sectors; analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses the MSCI/S&P GICS for sector and industry reporting. Each year, MSCI and S&P review the GICS structure. The last change occurred on 31 August 2016. T. Rowe Price will adhere to all future updates to GICS for prospective reporting.Figures are shown gross of fees.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Los Angeles Department of Water and Power Retirement Plan vs. Russell 1000 Value Index

-1.50-1.00-0.500.000.501.001.502.002.503.003.504.00

Val

ue A

dded

-P

erce

ntag

e

TotalIndustrials &

Bus SvcsInformation Technology

Health Care

Telecom Svcs

Consumer Disc

Consumer Staples

Real Estate Materials Energy Financials Utilities

Over (Under) Weight -- 2.64 2.22 -0.28 -1.13 0.37 2.20 -3.69 0.86 -2.26 -0.91 -0.02

Portfolio Weight (Ending) 100.00 11.02 10.68 13.20 1.87 7.21 10.80 0.92 3.84 8.78 25.78 5.89

Index Weight (Ending) 100.00 8.38 8.46 13.48 3.00 6.84 8.60 4.61 2.99 11.03 26.69 5.91

Portfolio Performance 17.12 23.95 35.84 21.86 7.93 20.75 18.71 9.71 18.36 -6.63 19.64 -0.36

Index Performance 13.67 9.62 28.23 18.83 -3.01 14.02 13.33 5.39 25.19 -1.17 20.49 12.25

BY SECTOR

Total Value Added

Value Added From Sector Weight

Value Added FromStock Selection

T. ROWE PRICE44

PERFORMANCE ATTRIBUTIONOne Year Ended 31 December 2017 Figures are Calculated in U.S. Dollars

Past Performance can not guarantee future results.1 Source: Wilshire.

Business Description sourced from Thomson Reuters Worldscope Fundamentals, Copyright©, Thomson Reuters, 1999–2018. All Rights Reserved. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for the portfolio, and no assumptions should be made that the securities identified and discussed were or will be profitable. The information shown does not reflect any exchange-traded funds that may be held in the portfolio.


Stock


Contribution Amount Industry Business Description

J.P. Morgan Chase & Co.

4.2% 115 bps Banks J.P. Morgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services.

Boeing 1.6 114 Aerospace & Defense Boeing is an aerospace company. The Company's segments include Commercial Airplanes; Defense, Space & Security (BDS), such as Boeing Military Aircraft (BMA), Network & Space Systems (N&SS) and Global Services & Support (GS&S), and Boeing Capital (BCC).

Microsoft 2.9 112 Software Microsoft is a technology company. The Company develops, licenses, and supports a range of software products, services and devices.

Aetna 1.7 73 Health Care Providers & Services Aetna is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions.

Morgan Stanley 2.5 62 Capital Markets Morgan Stanley is a financial holding company. The Company's segments include Institutional Securities, Wealth Management and Investment Management.

SIGNIFICANT ABSOLUTE CONTRIBUTORS

SIGNIFICANT ABSOLUTE DETRACTORS

Stock


Contribution Amount Industry Business Description

GE 1.4% -61 bps Industrial Conglomerates GE is a global digital industrial company. The Company's products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products.

Apache 1.2 -49 Oil, Gas & Consumable Fuels Apache is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil and natural gas liquids.

PG&E 2.6 -44 Electric Utilities PG&E is a holding company. The Company's primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California.

Mattel 0.5 -31 Leisure Products Mattel manufactures and markets a range of toy products around the world. The Company's segments are North America; International, and American Girl.

Hess 0.9 -23 Oil, Gas & Consumable Fuels Hess is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas.

2017-US-29548

T. ROWE PRICE45

TOTAL RETURN PERFORMANCE

Calculated Quarterly from 31 December 2007 Through 31 December 2017 Figures are Calculated in U.S. Dollars

Past performance cannot guarantee future results. Each point represents the performance of the portfolio and its benchmark for a three-year annualized period. Points above the diagonal represent outperformance relative to the benchmark. Points below the diagonal represent relative underperformance. Total return includes all realized and unrealized gains and losses plus income. Figures shown gross of fees. Returns would have been lower as the result of the deduction of applicable fees.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Three-Year Rolling Returns (Annualized Gross of Fees)―Los Angeles Department of Water and Power Retirement Plan vs. Russell 1000 Value Index

Annualized

31 Dec 07–31 Dec 10

31 Dec 08–31 Dec 11

31 Dec 09–31 Dec 12

31 Dec 10–31 Dec 13

31 Dec 11–31 Dec 14

31 Dec 12–31 Dec 15

31 Dec 13–31 Dec 16

31 Dec 14–31 Dec 17

Los Angeles Department of Water and Power Retirement Plan (Gross of Fees) -1.75% 13.94% 10.95% 17.14% 21.94% 14.59% 9.02% 10.08%

Russell 1000 Value Index -4.42 11.55 10.86 16.06 20.89 13.08 8.59 8.65

-30

-20

-10

0

10

20

30

-30 -20 -10 0 10 20 30

Percent

Portfolio Outperformance

Portfolio Underperformance

Russell 1000 Value Index

Los

Ange

les

Dep

artm

ent o

fW

ater

and

Pow

er R

etire

men

t Pla

n

T. ROWE PRICE46

TOTAL RETURN PERFORMANCEThree Years Ended 31 December 2017 Figures are Calculated in U.S. Dollars

Past performance cannot guarantee future results. This information demonstrates, in part, the firm’s Risk/Return analysis. This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.Total return includes all realized and unrealized gains and losses plus income. Statistics based on monthly gross returns. Returns would have been lower as the result of the deduction of applicable fees.Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Risk/Return Characteristics

Three YearsLos Angeles Department

of Water and Power Retirement Plan


Annualized Total Return 10.08% 8.65%

Annualized Standard Deviation 11.00% 10.20%

Historical Tracking Error 1.89% 0.00%

Beta 1.06 1.00

R-Squared 0.97 1.00

Alpha 0.85% 0.00%

Sharpe Ratio 0.87 0.80

Information Ratio 0.75 0.00

2

8

14

20

2 8 14 20Average Annual Standard Deviation (%)

Aver

age

Annu

al R

etur

n (%

)



T. ROWE PRICE47

TOTAL RETURN PERFORMANCEFive Years Ended 31 December 2017Figures are Calculated in U.S. Dollars



Five YearsLos Angeles Department






Beta 1.01 1.00

R-Squared 0.97 1.00

Alpha 1.14% 0.00%


Information Ratio 0.75 0.00

4

8

12

16

20

2 8 14 20Average Annual Standard Deviation (%)

Aver

age

Annu

al R

etur

n (%

)



T. ROWE PRICE48

4

8

12

10 15 20Average Annual Standard Deviation (%)

Aver

age

Annu

al R

etur

n (%

)

TOTAL RETURN PERFORMANCE10 Years Ended 31 December 2017Figures are Calculated in U.S. Dollars



10 YearsLos Angeles Department






Beta 0.99 1.00

R-Squared 0.98 1.00

Alpha 1.58% 0.00%


Information Ratio 0.74 0.00Russell 1000 Value

Index


T. ROWE PRICE49

PORTFOLIO REVIEW ANDCHARACTERISTICS

T. ROWE PRICE50

STYLE CONSISTENCY

Zephyr StyleADVISOR performs a constrained quadratic optimization to determine the portfolio’s (style, size) coordinate relative to the indices shown. This rolling window analysis displays the smaller data points to represent the oldest time period and larger data points to represent the most recent time period. T. Rowe Price Associates, Inc., and Zephyr Associates, Inc., are not affiliated companies. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.

Zephyr StyleADVISOR: T. Rowe Price Associates, Inc.

Zephyr StyleADVISOR: T. Rowe Price Associates, Inc.36-Month Moving Windows, Computed MonthlyOctober 2004 - December 2017

Zeph

yrS

ize

Coo

rdin

ate

Small

-1

0

1

Large

Zephyr Style Coordinate-1 0 1

LA DEPT OF WATER AND POWEREMPLOYEES RETIREMENT PLAN - LCV

Russell 1000 Value

Russell 1000 Value Russell 1000 Growth

Russell 2000 Value Russell 2000 Growth

Russell Generic Corners

Small Growth

Small Value

Large Growth

Large Value

T. ROWE PRICE51

PORTFOLIO CHARACTERISTICSAs of 31 December 2017

1 Source: IBES.2 These statistics are based on the portfolio’s underlying holdings and are not a projection of future portfolio performance. Actual results may vary.

Statistics are investment-weighted median unless otherwise noted. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.


Los Angeles Department of Water and Power

Retirement Plan Russell 1000 Value Index

Projected Earnings Growth Rate (3 to 5 Years)1,2 8.7% 8.5%

Price to Earnings (12 Months Forward)1,2 16.1X 17.1X

Price to Book 2.9X 2.2X

Return on Equity (Last 12 Months) 15.1% 10.9%

Return on Invested Capital (Last 12 Months) 8.1% 7.2%

Investment-Weighted Median Market Capitalization (Millions USD) 88,916 67,837

Investment-Weighted Average Market Capitalization (Millions USD) 148,500 128,459

Unweighted Median Market Capitalization (Millions USD) 55,761 9,791

Portfolio Turnover (12 Months) 27.4% –

Number of Holdings 83 701

% of Portfolio in Top 20 Holdings 44.6% 35.0%

201712-321156

T. ROWE PRICE52


T. Rowe Price uses the MSCI/S&P Global Industry Classification Standard (GICS) for sector and industry reporting. Each year, MSCI and S&P review the GICS structure. The last change occurred on 31 August 2016. T. Rowe Price will adhere to all future updates to GICS for prospective reporting. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group


-5 0 5 10 15 20 25 30

Real Estate

Energy

Telecommunication Services

Financials

Health Care

Consumer Discretionary

Utilities

Materials

Consumer Staples

Information Technology

Industrials & Business Services

L.A. Department of Water and Power Retirement PlanOver/UnderweightingRussell 1000 Value Index

SECTOR DIVERSIFICATION

Percent

T. ROWE PRICE53

RECENT PORTFOLIO CHANGESThree Months Ended 31 December 2017

1 New Holding.2 Eliminated.

Business Description sourced from Thomson Reuters Worldscope Fundamentals, Copyright©, Thomson Reuters, 1999–2018. All Rights Reserved. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for the portfolio, and no assumptions should be made that the securities identified and discussed were or will be profitable.The information shown does not reflect any exchange-traded funds that may be held in the portfolio.Numbers may not total due to rounding.


Major Purchases% of

Portfolio Business DescriptionCVS Health 1.7% CVS Health, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company

provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare's long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings.

Sempra Energy1 0.6 Sempra Energy is a holding company. The Company's principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments.

UPS 1.8 UPS is a package delivery company. The Company is a provider of global supply chain management solutions.

Kimberly-Clark 1.0 Kimberly-Clark is engaged in the manufacturing and marketing of a range of products made from natural or synthetic fibers. The Company's segments include Personal Care, Consumer Tissue, K-C Professional and Corporate & Other.

Verizon Communications 1.8 Verizon Communications is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies.

Major Sales% of

Portfolio Business DescriptionProcter & Gamble 0.3% Procter & Gamble is focused on providing branded consumer packaged goods to the consumers across

the world. The Company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care.

PG&E 1.2 PG&E is a holding company. The Company's primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California.

Exelon 1.0 Exelon is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business.

VEREIT2 0.0 VEREIT is a full-service real estate operating company. The Company owns and manages a diversified portfolio of retail, restaurant, office and industrial real estate assets.

GE 0.4 GE is a global digital industrial company. The Company's products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products.

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As of 31 December 2017 Los Angeles Department of Water and Power Retirement Plan 10 LARGEST ABSOLUTE PORTFOLIO HOLDINGS

1 Source: IBES.2 These statistics are based on the portfolio’s underlying holdings and are not a projection of future portfolio performance. Actual results may vary.

Statistics are investment-weighted median unless otherwise noted.Business Description sourced from Thomson Reuters Worldscope Fundamentals, Copyright©, Thomson Reuters, 1999–2018. All Rights Reserved.The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for the portfolio, and no assumptions should be made that the securities identified and discussed were or will be profitable. The information shown does not reflect any exchange-traded funds that may be held in the portfolio. Numbers may not total due to rounding.

Company % of

Portfolio

Price to Earnings

(12 Months Forward)1,2

Market Capitalization (Millions USD) Business Description

J.P. Morgan Chase & Co. 4.5% 14.1X 371,052 J.P. Morgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services. It operates in four segments, as well as a Corporate segment.

ExxonMobil 3.4 19.8 354,392 ExxonMobil is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products.

Microsoft 3.3 25.0 659,906 Microsoft is a technology company. The Company develops, licenses, and supports a range of software products, services and devices.

Wells Fargo 3.2 14.3 298,755 Wells Fargo is a bank holding company. The Company is a diversified financial services company.

Morgan Stanley 2.2 13.2 94,860 Morgan Stanley is a financial holding company. The Company's segments include Institutional Securities, Wealth Management and Investment Management.

Citigroup 2.2 12.9 196,740 Citigroup is a financial services holding company. The Company's whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management.

Fifth Third Bancorp 2.0 15.3 21,407 Fifth Third Bancorp is a bank holding company and a financial holding company. The Company conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern regions of the United States.

Cisco Systems 2.0 15.4 189,341 Cisco Systems designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC).

Johnson & Johnson 1.9 18.2 375,361 Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices.

Pfizer 1.9 13.6 215,897 Pfizer is a research-based global biopharmaceutical company. The Company is engaged in the discovery, development and manufacture of healthcare products.

Total 26.8%

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FULL PORTFOLIO HOLDINGSLos Angeles Department of Water and Power Retirement PlanAs of 31 December 2017

Rounding may cause figures to vary from 100.00%.

Security Name %Assets+Accrd Security Name %Assets

+Accrd

CONSUMER DISCRETIONARY 7.01 %

Automobiles 0.20 %

GM General Motors 0.20

Hotels Restaurants & Leisure 1.23 %

CCL Carnival 0.62

LVS Las Vegas Sands 0.61

Leisure Products 0.48 %

MAT Mattel 0.48

Media 4.08 %

CMCSA Comcast 1.65

FOX Twenty-First Century Fox 1.75

NWSA News Corp 0.68

Multiline Retail 0.57 %

KSS Kohl's 0.57

Specialty Retail 0.44 %

LOW Lowe's 0.44

CONSUMER STAPLES 10.50 %

Beverages 1.20 %

PEP PepsiCo 1.20

Food Products 3.09 %

BG Bunge Limited 1.03

MDLZ Mondelez International 0.58

TSN Tyson Foods 1.48

Food & Staples Retailing 3.27 %

CVS CVS Health 1.66

WMT Walmart 1.61

Household Products 1.28 %

KMB Kimberly-Clark 1.02

PG Procter & Gamble 0.25

Tobacco 1.67 %

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+Accrd

PM Philip Morris International 1.67

ENERGY 8.53 %

Oil, Gas & Consumable Fuels 8.53 %

APA Apache 0.87

CVX Chevron 0.80

EQT EQT 0.62

HES Hess 0.97

OXY Occidental Petroleum 1.90

XOM ExxonMobil 3.37

FINANCIALS 25.06 %

Banks 13.47 %

C Citigroup 2.24

FITB Fifth Third Bancorp 2.03

JPM JPMorgan Chase 4.51

USB U.S. Bancorp 1.52

WFC Wells Fargo 3.18

Capital Markets 4.99 %

AMP Ameriprise Financial 0.83

BK Bank of New York Mellon 1.55

IVZ Invesco 0.37

MS Morgan Stanley 2.24

Consumer Finance 0.56 %

AXP American Express 0.56

Insurance 6.04 %

AIG American International Group 1.09

BHF Brighthouse Financial 0.58

L Loews 1.16

MET MetLife 1.33

MMC Marsh & McLennan 1.13

XL XL Group 0.74

HEALTH CARE 12.84 %

Biotechnology 1.10 %

GILD Gilead Sciences 1.10

Health Care Equipment & Supplies 2.42 %

ABT Abbott Laboratories 0.85

BAX Baxter International 0.86


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+Accrd

DHR Danaher 0.24

HOLX Hologic 0.47

Health Care Providers & Services 2.28 %

AET Aetna 1.93

CAH Cardinal Health 0.34

Life Sciences Tools & Services 1.32 %

A Agilent Technologies 0.87

TMO Thermo Fisher Scientific 0.46

Pharmaceuticals 5.72 %

JNJ Johnson & Johnson 1.94

MRK Merck 1.83

PFE Pfizer 1.94

INDUSTRIALS & BUSINESS SERVICES 10.71 %

Aerospace & Defense 3.66 %

BA Boeing 1.46

HRS Harris 0.26

RTN Raytheon 0.86

UTX United Technologies 1.08

Air Freight & Logistics 1.75 %

UPS UPS 1.75

Airlines 1.79 %

LUV Southwest Airlines 1.79

Building Products 0.30 %

FBHS Fortune Brands Home & Security 0.30

Commercial Services & Supplies 0.59 %

SRCL Stericycle 0.59

Electrical Equipment 0.93 %

EMR Emerson Electric 0.93

Industrial Conglomerates 0.45 %

GE GE 0.45

Machinery 1.24 %


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+Accrd

ITW Illinois Tool Works 1.24

INFORMATION TECHNOLOGY 10.39 %

Communications Equipment 1.99 %

CSCO Cisco Systems 1.99

Semiconductors & Semiconductor Equipment 4.43 %

ADI Analog Devices 0.50

AMAT Applied Materials 0.68

INTC Intel 0.62

QCOM Qualcomm 1.69

TXN Texas Instruments 0.94

Software 3.32 %

MSFT Microsoft 3.32

Technology Hardware, Storage & Peripherals 0.65 %

AAPL Apple 0.65

MATERIALS 3.74 %

Chemicals 1.83 %

CF CF Industries 0.39

DWDP DowDuPont 1.44

Construction Materials 0.74 %

VMC Vulcan Materials 0.74

Containers & Packaging 1.17 %

IP International Paper 1.17

OTHER RESERVES 2.00 %

Cash 0.15 %

U S Dollars 0.15

Short Term Obligations 1.84 %

TC1E44MI Collective STIF 1.84

REAL ESTATE 0.90 %

Equity Real Estate Investment Trusts (reits) 0.90 %

WY Weyerhaeuser 0.90

TELECOMMUNICATION SERVICES 1.82 %

Diversified Telecommunication Services 1.82 %

VZ Verizon Communications 1.82

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Security Name %Assets+Accrd

UTILITIES 6.51 %

Electric Utilities 5.95 %

EXC Exelon 1.01

NEE NextEra Energy 0.54

NEE/P/R/PFD NEXTERA ENERGY INC CVT 6.123000 0.78

PCG PG&E 1.15

SO Southern Company 1.61

WR Westar Energy 0.86

Multi-utilities 0.56 %

SRE Sempra Energy 0.56

Total Mkt Val+Accrd (USD): 603,812,112.01

T. ROWE PRICE60

FULL PORTFOLIOHOLDINGSLos Angeles Department of Water and Power Health Benefits PlanAs of 31 December 2017


+Accrd


CONSUMER DISCRETIONARY 7.00 %

Automobiles 0.20 %

GM General Motors 0.20

Hotels Restaurants & Leisure 1.23 %

CCL Carnival 0.62

LVS Las Vegas Sands 0.61

Leisure Products 0.48 %

MAT Mattel 0.48

Media 4.07 %

CMCSA Comcast 1.64

FOX Twenty-First Century Fox 1.75

NWSA News Corp 0.68

Multiline Retail 0.57 %

KSS Kohl's 0.57

Specialty Retail 0.44 %

LOW Lowe's 0.44

CONSUMER STAPLES 10.46 %

Beverages 1.19 %

PEP PepsiCo 1.19

Food Products 3.10 %

BG Bunge Limited 1.04

MDLZ Mondelez International 0.59

TSN Tyson Foods 1.48

Food & Staples Retailing 3.22 %

CVS CVS Health 1.61

WMT Walmart 1.61

Household Products 1.27 %

KMB Kimberly-Clark 1.02

PG Procter & Gamble 0.25

Tobacco 1.67 %

T. ROWE PRICE61



+Accrd


PM Philip Morris International 1.67

ENERGY 8.53 %

Oil, Gas & Consumable Fuels 8.53 %

APA Apache 0.86

CVX Chevron 0.82

EQT EQT 0.61

HES Hess 0.98

OXY Occidental Petroleum 1.90

XOM ExxonMobil 3.37

FINANCIALS 25.09 %

Banks 13.46 %

C Citigroup 2.24

FITB Fifth Third Bancorp 2.03

JPM JPMorgan Chase 4.50

USB U.S. Bancorp 1.51

WFC Wells Fargo 3.18

Capital Markets 4.99 %

AMP Ameriprise Financial 0.83

BK Bank of New York Mellon 1.55

IVZ Invesco 0.37

MS Morgan Stanley 2.24

Consumer Finance 0.55 %

AXP American Express 0.55

Insurance 6.08 %

AIG American International Group 1.13

BHF Brighthouse Financial 0.58

L Loews 1.16

MET MetLife 1.33

MMC Marsh & McLennan 1.13

XL XL Group 0.74

HEALTH CARE 12.86 %

Biotechnology 1.10 %

GILD Gilead Sciences 1.10

Health Care Equipment & Supplies 2.44 %

ABT Abbott Laboratories 0.86

BAX Baxter International 0.87

T. ROWE PRICE62



+Accrd


DHR Danaher 0.25

HOLX Hologic 0.47

Health Care Providers & Services 2.29 %

AET Aetna 1.93

CAH Cardinal Health 0.36

Life Sciences Tools & Services 1.31 %

A Agilent Technologies 0.85

TMO Thermo Fisher Scientific 0.46

Pharmaceuticals 5.71 %

JNJ Johnson & Johnson 1.94

MRK Merck 1.83

PFE Pfizer 1.94

INDUSTRIALS & BUSINESS SERVICES 10.71 %

Aerospace & Defense 3.67 %

BA Boeing 1.46

HRS Harris 0.27

RTN Raytheon 0.86

UTX United Technologies 1.08

Air Freight & Logistics 1.75 %

UPS UPS 1.75

Airlines 1.79 %

LUV Southwest Airlines 1.79

Building Products 0.30 %

FBHS Fortune Brands Home & Security 0.30

Commercial Services & Supplies 0.59 %

SRCL Stericycle 0.59

Electrical Equipment 0.94 %

EMR Emerson Electric 0.94

Industrial Conglomerates 0.45 %

GE GE 0.45

Machinery 1.23 %

T. ROWE PRICE63



+Accrd


ITW Illinois Tool Works 1.23

INFORMATION TECHNOLOGY 10.37 %

Communications Equipment 1.99 %

CSCO Cisco Systems 1.99

Semiconductors & Semiconductor Equipment 4.41 %

ADI Analog Devices 0.48

AMAT Applied Materials 0.68

INTC Intel 0.62

QCOM Qualcomm 1.68

TXN Texas Instruments 0.93

Software 3.32 %

MSFT Microsoft 3.32

Technology Hardware, Storage & Peripherals 0.65 %

AAPL Apple 0.65

MATERIALS 3.73 %

Chemicals 1.83 %

CF CF Industries 0.39

DWDP DowDuPont 1.44

Construction Materials 0.73 %

VMC Vulcan Materials 0.73

Containers & Packaging 1.17 %

IP International Paper 1.17

OTHER RESERVES 2.06 %

Cash 0.16 %

U S Dollars 0.16

Short Term Obligations 1.90 %

TC1E44MI Collective STIF 1.90

REAL ESTATE 0.90 %

Equity Real Estate Investment Trusts (reits) 0.90 %

WY Weyerhaeuser 0.90

TELECOMMUNICATION SERVICES 1.82 %

Diversified Telecommunication Services 1.82 %

VZ Verizon Communications 1.82

T. ROWE PRICE64


Security Name %Assets+Accrd


UTILITIES 6.47 %

Electric Utilities 5.91 %

EXC Exelon 1.00

NEE NextEra Energy 0.51

NEE/P/R/PFD NEXTERA ENERGY INC CVT 6.123000 0.78

PCG PG&E 1.15

SO Southern Company 1.61

WR Westar Energy 0.86

Multi-utilities 0.56 %

SRE Sempra Energy 0.56

Total Mkt Val+Accrd (USD): 101,184,238.70

T. ROWE PRICE65

Investing in large-cap value stocks since 1985

Dedicated, experienced, and stable team

Global research resources provide multiple perspectives and insights

Relative value focus—consistent investment approach since inception

Long-term investment horizon

High-quality company orientation

Stable, independent organization

THE T. ROWE PRICE LARGE-CAP VALUE ADVANTAGE

The energy and focus of a boutique endowed with the resources of a global organization.

US Large-Cap Value Equity Strategy

T. ROWE PRICE66

FEE SCHEDULE

T. ROWE PRICE67

Los Angeles Department of Water and Power Retirement Plan FEE SCHEDULE

First 20 million (USD) 50 basis points

Next 30 million (USD) 40 basis points

When assets exceed 50 million (USD), the fee is 40 basis points on all assets1

When assets exceed 200 million (USD), the fee is 35 basis points on all assets1

When assets exceed 250 million (USD), the fee on the portion of the assets above 250 million (USD) is 30 basis points

1 A transitional credit is applied to the fee schedule as assets approach or fall below the breakpoint.

T. ROWE PRICE68

ADDITIONAL INFORMATION ANDDISCLOSURES

T. ROWE PRICE69

Equity Steering Committee Oversight

Periodic review by senior investment professionals promotes consistency of the strategy’s investment process and portfolio construction.

Quantitative Risk Management Tools

Wilshire Variance Analysis enables portfolio managers to review performance attribution versus benchmarks from a holdings-based perspective.

Barra risk analysis provides managers with a common risk factor tool to analyze their strategy versus a benchmark.

Zephyr returns-based style analysis allows portfolio managers to analyze the style and size consistency of their strategy versus a benchmark.

MONITORING AND RISK MANAGEMENT ELEMENTS

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GLOSSARY OF INVESTMENT TERMS

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Active Share – Active Share is a holdings based measure of active management representing the percentage of a portfolio’s holdings that differ from those in its benchmark. Compared to tracking error, which measures the standard deviation of the difference in a manager’s returns versus the index returns, Active Share allows investors to get a clearer understanding of what a manager is doing to drive performance, rather than drawing conclusions from observed returns. The greater the difference between the asset composition of a product and its benchmark, the greater the active share is. Alpha – A measure of a strategy’s risk-adjusted performance. Alpha represents the difference between a strategy’s actual returns and its expected performance, given its level of risk as measured by beta. The difference is expressed as an annualized percentage. Batting Average – A statistical measure used to determine the percentage of months where the portfolio’s performance exceeded or matched the return of the index.Beta – A measure of the market risk of a strategy showing how responsive the strategy is to a given market index, such as the S&P 500 Index (an index for equity strategies) or the Bloomberg Barclays Government/Corporate Bond Index (an index for fixed income strategies). By definition, the beta of the benchmark index is 1.00. A strategy with a 1.10 beta is expected to perform 10% better than the index in up markets and 10% worse in down markets. Usually, higher betas represent riskier investments. Earnings Growth Rate (Current Fiscal Year) – Measures the annualized percent change in earnings per share from the prior fiscal year to the current fiscal year. Earnings Growth Rate (Next Fiscal Year) – Measures the annualized percent change in earnings per share from the current fiscal year and the forecast for the next fiscal year. Enterprise Value to EBITDA – A financial ratio that measures a company’s return on investment. The EBITDA/EV ratio may be preferred over other measures of return because it is normalized for differences between companies. Using EBITDA normalizes for differences in capital structure, taxation and fixed asset accounting. Meanwhile, using enterprise value also normalizes for differences in a company’s capital structure.Five-Year EPS Growth (Least Squares) – Uses the least squares regression approach to adjust for sharp fluctuations and reflect the average growth rate over the past five years.Historical Tracking Error – Standard deviation of the strategy’s excess return over the market benchmark. Information Ratio – A measure of the significance or quality of alpha. It is defined as the ratio of alpha to the standard deviation of alpha. A larger number is better—either a very strong alpha score or a consistent alpha with low standard deviation. Long-Term Growth – Average expected 3-5 year earnings growth rate based on IBES analyst estimates.Market Capitalization – A measure of a company’s total value and is equal to the total dollar value of all outstanding shares.

Median – Represents the midpoint of market capitalization of stocks in a portfolio where 50% of holdings are above the value. Investment-Weighted Median – Represents the breakpoint where 50% of the weights are above the value. Investment-Weighted Average – Sum of each holding’s market capitalization multiplied by its weight in the portfolio.

Net Debt to EBITDA – A measurement of leverage, calculated as a company’s interest-bearing liabilities minus cash or cash equivalents, divided by its EBITDA. The net debt to EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant. If a company has more cash than debt, the ratio can be negative.Price to Book Ratio – Used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value (book value is simply total assets minus intangible assets and liabilities). Price-to-Earnings Ratio (12 Months Forward) – P/E is a valuation measure calculated by dividing the price of a stock by the analysts’ forecast of the next 12 months expected earnings. The ratio is a measure of how much investors are willing to pay for the company’s future earnings. The higher the P/E, the more investors are paying for a company’s earnings growth in the next 12 months.Price-to-Earnings Ratio (Current Fiscal Year) – P/E is a valuation measure calculated by dividing the price of a stock by its reported earnings per share from the latest fiscal year. The ratio is a measure of how much investors are willing to pay for the company’s earnings. The higher the P/E, the more investors are paying for a company’s current earnings.Price-to-Earnings Ratio (Next Fiscal Year) – P/E is a valuation measure calculated by dividing the price of a stock by its estimated earnings for the next fiscal year. The ratio is a measure of how much investors are willing to pay for the company’s future earnings. The higher the P/E, the more investors are paying for the company’s expected earnings growth in the next fiscal year. Price to FFO – A figure used by real estate investment trusts (REITs) to define the cash flow from their operations. It is calculated by adding depreciation and amortization expenses to earnings, and sometimes quoted on a per share basis.Projected Earnings Growth Rate (IBES) – A company’s expected earnings per share growth rate for a given time period based on the forecast from the Institutional Broker’s Estimate System, which is commonly referred to as IBES.Return on Equity – ROE is a valuation measure calculated by dividing the company’s current fiscal year net income by shareholders’ equity (i.e., the company’s book value). Return on equity measures how much a company earns on each dollar that common stock investors have put into the company. It indicates how effectively and efficiently a company and its management are using stockholder investments. Return on Invested Capital – Measures how well a company generates cash flow relative to the amount invested. The return on invested capital measures how efficiently a company is using its money to generate returns. It is calculated by dividing net income minus dividends by the sum of long-term debt and common equity.R-Squared – Measures the percentage of a strategy’s movement that is explained by movements in the benchmark index. R-Squared helps indicate the accuracy of a strategy’s alpha and beta. Sharpe Ratio – A risk-adjusted measure, which is calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the strategy’s historical risk-adjusted performance. Standard Deviation – Indicates the volatility of a strategy’s total returns as measured against its mean performance. Unlike alpha, beta, and R-Squared, which are compared with a benchmark index, standard deviation is strategy-specific. In general, the higher the standard deviation, the greater the volatility or risk. Turnover – A measurement of how frequently assets within a fund are bought and sold by the managers. Up and Down Capture – A statistical measure used to quantify the percentage of market gains captured by the portfolio in either up or down markets. It is expressed as a percentage.

PERFORMANCE STATISTICS GLOSSARY

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BIOGRAPHICAL BACKGROUNDS

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Heather K. McPherson, (CPA Inactive)

Heather McPherson is the co-portfolio manager for the US Large-Cap Value Equity Strategy and an associate portfolio manager of the Equity Income Strategy in the U.S. Equity Division of T. Rowe Price. Ms. McPherson is also a vice president and Investment Advisory Committee member of the Equity Income , Growth & Income, Global Technology, Large-Cap Core, New Era, Mid-Cap Value and Value Strategies. She is a vice president of T. Rowe Price Group, Inc.

Ms. McPherson has 17 years of investment experience, 15 of which have been with T. Rowe Price. Prior to joining the firm in 2002, she worked as a summer intern in 2001 at Salomon Smith Barney, covering the storage area networking industry. Prior to this, she was a vice president of finance and administration for Putnam Lovell Securities, Inc.

Ms. McPherson earned a B.S. in managerial economics from the University of California-Davis and an M.B.A. from Duke University, The Fuqua School of Business.


Mark S. Finn, CFA, CPA

Mark Finn is the portfolio manager of the US Value Equity Strategy and is also co-portfolio manager of the US Large-Cap Value Equity Strategy. Mr. Finn is a vice president of T. Rowe Price Group, Inc.

Mr. Finn has 20 years of investment experience, all of which have been with T. Rowe Price. From 2005 to 2009, Mr. Finn was an equity research analyst specializing in electric power generation, utilities, and coal. Prior to this, he was an analyst in T. Rowe Price's Fixed Income Division, where he also covered utilities and power generation. From 1998 to 2001, Mr. Finn worked with the T. Rowe Price Recovery Strategy team, where he evaluated financially distressed companies. Mr. Finn began his career with T. Rowe Price in 1990 in the Finance Division, where he served as controller of T. Rowe Price Investment Services, Inc., and as the principal accounting officer for the T. Rowe Price realty income strategies. Prior to joining the firm, he had five years of auditing experience with Price Waterhouse LLP, where he worked on engagements for both public and private companies.

Mr. Finn earned a B.S. from the University of Delaware and has earned the Chartered Financial Analyst designation. He is also a certified public accountant.

T. ROWE PRICE74

John D. Linehan, CFA

John Linehan is the portfolio manager for the Equity Income Strategy and co-portfolio manager of the U.S. Large-Cap Value Strategy for T. Rowe Price. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering, Equity Brokerage and Trading Control, and Counterparty Risk Committees. From February 2009 to June 2014, Mr. Linehan was head of U.S. Equity and chairman of the U.S. Equity Steering Committee. From April 2003 to December 2009, he was the portfolio manager of the U.S. Value Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Mr. Linehan has 28 years of investment experience, 19 of which have been at T. Rowe Price. He started at the firm in 1998 as an equity analyst covering the paper and forest products and airline industries. Between 1990 and 1996, he was an executive in the oil trading and consulting industry, first as vice president and managing director for Delaney Petroleum, then as vice president and managing director for E.T. Petroleum. Mr. Linehan began his investment career in 1987 while at Bankers Trust NY Corporation, where he served as an associate in mortgage-backed securities trading.

Mr. Linehan earned a B.A. in economics from Amherst College and an M.B.A. from Stanford Graduate School of Business, where he was the Henry Ford II Scholar, an Arjay Miller Scholar, and the winner of the Alexander A. Robichek Award in finance. Mr. Linehan has also earned the Chartered Financial Analyst designation.


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Caleb N. Fritz, CFA

Caleb Fritz is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He acts as a proxy for equity portfolio managers with institutional clients, consultants, and prospects. Mr. Fritz supports T. Rowe Price's large-cap value strategies, as well as its US Dividend Growth, US Large-Cap Core Equity, Global Real Estate Equity, and US Real Estate Equity Strategies. He is a vice president of T. Rowe Price Associates, Inc. Previously, he was a lead portfolio analyst providing analytical support to investment, client service, and marketing staff for the firm's large-cap value and health sciences portfolios.

Mr. Fritz has 17 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2007, Mr. Fritz served as an associate analyst for Legg Mason Capital Management, covering the health care sector.

Mr. Fritz earned a B.A. and an M.A. from the University of South Florida, and he also has earned the Chartered Financial Analyst designation.


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John D. Plowright, CFA

John Plowright is a North America client service executive for Global Investment Services, the organization responsible for the firm's institutional business worldwide. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. Mr. Plowright has 25 years of investment experience, 12 of which have been at T. Rowe Price. Before joining T. Rowe Price in 2004, he was a director of client services with RCM Capital Management, and prior to that, he was a director and fixed income specialist with RCM Capital Management. Mr. Plowright earned a B.A. in religion from Earlham College, cum laude, and a master's degree in international management from American Graduate School of International Management. Mr. Plowright has earned the Chartered Financial Analyst designation and is a Series 7 and 63 registered representative.


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2015-GL-2678

Documents

INVESTMENT MANAGER SUMMARY MANAGEMENT...Apr 11, 2018 · Corporate, Public, Non-Profit, Taft-Hartley, Endowments/Foundations, and Sub-Advisory clients. Strategy assets under management