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:



	12/31/2017						9/30/2018
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Cash and cash equivalents⁽¹⁾	$	7.1	$	96.0	$	103.1	$	17.9	$	87.8	$	105.7
Investments⁽²⁾	188.8		1,725.7		1,914.5		277.4		1,504.1		1,781.5
Other assets	12.9		17.9		30.8		8.7		21.9		30.6
Total assets	208.8		1,839.6		2,048.4		304.0		1,613.8		1,917.8
Liabilities	16.4		39.5		55.9		13.7		61.0		74.7
Net assets	$	192.4	$	1,800.1	$	1,992.5	$	290.3	$	1,552.8	$	1,843.1

Attributable to T. Rowe Price Group	$	131.6	$	868.1	$	999.7	$	190.9	$	791.6	$	982.5
Attributable to redeemable non-controlling interests	60.8		932.0		992.8		99.4		761.2		860.6
	$	192.4	$	1,800.1	$	1,992.5	$	290.3	$	1,552.8	$	1,843.1

⁽¹⁾Cash and cash equivalents includes $6.2 million and $17.6 million at December 31, 2017 and September 30, 2018, respectively, of investments in T. Rowe Price money market mutual funds.

⁽²⁾Investments include $15.0 million and $46.8 million at December 31, 2017 and September 30, 2018, respectively, of T. Rowe Price investment products.

Although we can redeem our net interest in these 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.

The operating results of the consolidated T. Rowe Price investment products for the three- and nine-months ended September 30, 2017 and 2018 are reflected in our unaudited condensed consolidated statements of income as follows:



	Three months ended
	9/30/2017									9/30/2018
(in millions)	Voting interest entities			Variable interest entities			Total			Voting interest entities			Variable interest entities			Total
Operating expenses reflected in net operating income	$	(.4	)	$	(2.8	)	$	(3.2	)	$	(.6	)	$	(3.0	)	$	(3.6	)
Net investment income reflected in non-operating income	4.6			32.9			37.5			5.0			3.7			8.7
Impact on income before taxes	$	4.2		$	30.1		$	34.3		$	4.4		$	.7		$	5.1

Net income attributable to T. Rowe Price Group	$	3.1		$	17.9		$	21.0		$	2.8		$	3.7		$	6.5
Net income attributable to redeemable non-controlling interests	1.1			12.2			13.3			1.6			(3.0		)	(1.4		)
	$	4.2		$	30.1		$	34.3		$	4.4		$	.7		$	5.1



	Nine months ended
	9/30/2017									9/30/2018
(in millions)	Voting interest entities			Variable interest entities			Total			Voting interest entities			Variable interest entities			Total
Operating expenses reflected in net operating income	$	(.9	)	$	(7.6	)	$	(8.5	)	$	(1.3	)	$	(7.9	)	$	(9.2	)
Net investment income reflected in non-operating income	14.7			111.1			125.8			4.4			24.2			28.6
Impact on income before taxes	$	13.8		$	103.5		$	117.3		$	3.1		$	16.3		$	19.4

Net income attributable to T. Rowe Price Group	$	10.4		$	63.0		$	73.4		$	1.5		$	6.8		$	8.3
Net income attributable to redeemable non-controlling interests	3.4			40.5			43.9			1.6			9.5			11.1
	$	13.8		$	103.5		$	117.3		$	3.1		$	16.3		$	19.4

The operating expenses of these consolidated investment products are reflected in other operating expenses. In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $1.4 million and $1.5 million for the three months ended September 30, 2017 and 2018, respectively, against the investment advisory and administrative fees earned from these portfolios. Operating expenses eliminated for the nine months ended September 30, 2017 and 2018, were $3.2 million and $4.6 million, respectively. The net investment income reflected in non-operating income includes dividend and interest income and realized and unrealized gains and losses on the underlying securities held by the consolidated T. Rowe Price investment products.

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 nine months ended September 30, 2017 and 2018.



	Nine months ended
	9/30/2017									9/30/2018
(in millions)	Voting interest entities			Variable interest entities			Total			Voting interest entities			Variable interest entities			Total
Net cash provided by (used in) operating activities	$	(28.0	)	$	(1,078.1	)	$	(1,106.1	)	$	(40.7	)	$	(529.7	)	$	(570.4	)
Net cash provided by (used in) investing activities	(6.1		)	(39.9		)	(46.0		)	(.8		)	(21.7		)	(22.5		)
Net cash provided by (used in) financing activities	33.3			1,153.1			1,186.4			52.3			545.6			597.9
Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products	—			6.9			6.9			—			(2.4		)	(2.4		)
Net change in cash and cash equivalents during period	(.8		)	42.0			41.2			10.8			(8.2		)	2.6
Cash and cash equivalents at beginning of year	10.3			55.3			65.6			7.1			96.0			103.1
Cash and cash equivalents at end of period	$	9.5		$	97.3		$	106.8		$	17.9		$	87.8		$	105.7

The net cash provided by financing activities during nine months ended September 30, 2017 and 2018 includes $181.1 million and $111.7 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.



	12/31/17						9/30/18
(in millions)	Level 1			Level 2			Level 1			Level 2
Assets
Cash equivalents	$	6.2		$	.7		$	17.6		$	.1
Equity securities	536.0			667.5			224.3			601.9
Fixed income securities	—			687.4			—			933.2
Other investments	1.3			22.3			1.6			20.5
	$	543.5		$	1,377.9		$	243.5		$	1,555.7

Liabilities	$	(.1	)	$	(13.7	)	$	(.3	)	$	(7.9	)