T. Rowe Price Appreciation

Frank:

T. ROWE PRICE APPRECIATION

To begin, all four of the mutual funds provided by your employer are good choices, and I do not believe there is a clear-cut “best” selection. With that being said, I have reviewed the questionnaire you filled out and believe I have identified the optimal fund for your needs.

Seeing that you are young and have time on your side, one of our goals for your investments is long-term income. To obtain this, the fund I advise you selecting is the T. Rowe Price Appreciation fund. Below I will highlight the key strengths and reasons why this find is the best match for your current needs.

INCOME

T. Rowe Price Appreciation (PRWCX) is the fund with this highest dividend yield, at 1.21. Stocks with high dividends are historically more stable in a bear market. With those dividends gained, you can collect them and spend them how you like, or set up a dividend reinvestment plan (DRIP.) For the long-term capital growth goal, I recommend a DRIP. Your dividends will be automatically converted into shares of the mutual fund. Long-term, your dividends will be making money for you and increasing the volume of your portfolio. PRWCX’s yield is 1.21, or 1.21% of the NAV of the fund. Currently, the fund is trading at $26.76/share. Thus, you are getting an annual dividend payment of $.3371 per share owned. In year one, with only a 10,500 contribution, you can purchase 392.37 shares of this fund. With that many shares, your total dividend received for that year is going to be $132.27. In one year, you will have enough money to buy 4.94 shares of this fund off the dividend payments alone. Over the 15 plus years you plan to have money invested, you can see how this is going to put you in an advantageous position.

MANAGEMENT

Management expertise has allowed PRWCX to outperform the market over the last fifteen years. Since David Girioux took over managing the fund in 2006, however, the fund has seen a change in strategy. Although the fund...