497 1 PAGE 1 o Hypothetical example: Assume you invest $1,000, the fund returns 5% annually, expense ratios remain as previously listed, and you close your account at the end of the time periods shown. Your expenses would be: _________________________ The table at right is just an example; actual expenses can be higher or lower than those shown. __________________________________________ 1 3 5 10 Year Years Years Years __________________________________________ $11 $35 $61 $135 ________________________________________ Table 2 Financial Highlights The following table provides information about the fund's financial history. It is based on a single share outstanding throughout each fiscal year. The table is part of the fund's financial statements which are included in the fund's annual report and incorporated by reference into the Statement of Additional Information. This document is available to shareholders upon request. The financial highlights for the years ended December 31, 1992 and 1993, presented below, is included in financial statements audited by the Fund's independent accountants, Coopers & Lybrand L.L.P., whose reports thereon were unqualified. The information presented below for the years 1985-1991 has been examined by Sanville & Company, independent accountants, whose respective reports thereon were unqualified. PAGE 2 Investment Activities Distributions Net Real- ized and Net Unreal- Total Asset ized Gain from Value, Net (Loss) Invest- Net Net Begin- Invest- on ment Invest-Real- Total Year Ended, ning of ment Invest- Activi- ment ized Distri- December 31 Period Income ments ties Income Gain butions _________________________________________________________________ 1985 $14.93 $0.14 $4.895 $5.035$(0.15)$(1.135)$(1.285) 1986 18.68 0.20 0.79 0.99 (0.06) (2.57) (2.63) 1987 17.04 0.15 (2.17) (2.02) (0.32) (1.51) (1.83) 1988 13.19 0.11 3.47 3.58 (0.13) (2.50)a (2.63) 1989 14.14 0.09 2.61 2.70 (0.13) (0.48) (0.61) 1990 16.23 0.11 (3.43) (3.32) (0.09) (0.10) (0.19) 1991 12.72 0.07 4.84 4.91 (0.09) (0.68) (0.77) 1992 16.86 0.02 2.20 2.22 (0.07) (4.64) (4.71) 1993 14.37 -- 2.60 2.60 -- (1.58) (1.58) 1994 15.39 0.04 (0.04) -- (0.03) (1.56) (1.59) End of Period Ratio of Total Ratio Net Return of Invest- Net (Includes Expenses ment Port- Asset Rein- to Income folio Value, vested Net Average to Aver- Turn- Year Ended, End of Divi- Assets ($ Net age Net over December 31 Period dends) Thousands) Assets Assets Rate _________________________________________________________________ 1985 $18.68 35.4% 147,535 1.25% 0.75% 31.2% 1986 17.04 4.7% 247,676 0.85% 0.95% 30.7% 1987 13.19 (12.5)% 212,319 1.00% 0.80% 49.0% 1988 14.14 (27.2)% 292,104 1.55% 0.69% 27.2% 1989 16.23 19.1% 315,939 1.45% 0.63% 33.1% 1990 12.72 (20.5)% 215,299 1.47% 0.73% 34.8% 1991 16.86 38.6% 266,584 1.34% 0.48% 31.2% 1992b 14.37 13.9% 186,838 1.32% 0.03% 30.7% 1993 15.39 18.4% 204,609 1.20% (0.01)% 40.8% 1994 13.80 0.1% 196,726 1.11% 0.24% 41.9% _________________________________________________________________ a Return of capital distribution. b T. Rowe Price became the Fund's investment manager on August 31, 1992. _________________________________________________________________ Table 3