EX-99.B1 NOTIC/SHLDR 3 finalproxy06.htm

T. Rowe Price Family of Funds

T. Rowe Price Funds
100 East Pratt Street
Baltimore, MD 21202

Patricia B. Lippert
Secretary

February 28, 2006

An annual meeting of shareholders of the funds will be held on Wednesday, April 19, 2006, at 8:00 a.m., eastern time, in the offices of the funds, 100 East Pratt Street, Baltimore, MD 21202. The following matters will be considered and acted upon at that time:

Electing directors/trustees to serve on the Boards of the funds until the next annual meeting, if any, or until their successors shall have been duly elected and qualified;

Changing the investment objective for the GNMA Fund;

Simplifying the industry concentration fundamental policy for the High Yield, International Bond, New Income, and Short-Term Bond Funds and their Advisor and/or R classes;

Adopting a new industry concentration fundamental policy for Equity Index 500, Extended Equity Market Index, and Total Equity Market Index Funds; and Equity Index Portfolio; and

Transacting such other business as may properly come before the meeting and any adjournments thereof.

Only shareholders of record at the close of business on February 21, 2006, are entitled to notice of, and to vote at, this meeting or any adjournment thereof. The Boards of the funds recommend that you vote in favor of all the proposals.

PATRICIA B. LIPPERT

Notice of Annual Meeting of Shareholders

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YOUR VOTE IS IMPORTANT

All funds (other than the Equity, Fixed Income, and International Series)
Shareholders are urged to designate their choice on the matters to be acted upon by using one of the following three methods:
1. Vote by Internet.*
Read the proxy statement.
Go to the proxy voting link found on your proxy card.
Enter the control number found on your proxy card.
Follow the instructions using your proxy card as a guide.
2. Vote by telephone.*
Read the proxy statement.
Call the toll-free number found on your proxy card.
Enter the control number found on your proxy card.
Follow the recorded instructions using your proxy card as a guide.
3. Vote by mail.
Date, sign, and return the enclosed proxy card in the envelope
provided, which requires no postage if mailed in the United States.
Equity, Fixed Income, and International Series
Contractholders are urged to designate their choice on the matters to be acted upon by using the following method:
1. Vote by mail.
Date, sign, and return the enclosed proxy card in the envelope
provided, which requires no postage if mailed in the United States.
*If you vote by telephone or access the Internet voting site, your vote must be received no later than 12:00 a.m. eastern time on April 19, 2006.
Your prompt response will help assure a quorum at the meeting and avoid the additional expense of further solicitation.

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Annual Meeting of Shareholders — April 19, 2006

T. ROWE PRICE FAMILY OF FUNDS
(each a "fund" and collectively, the "funds")

T. Rowe Price Balanced Fund, Inc.
T. Rowe Price Blue Chip Growth Fund, Inc. and
its Advisor/R Classes
T. Rowe Price California Tax-Free Income Trust
consisting of its series:
California Tax-Free Bond Fund
California Tax-Free Money Fund
T. Rowe Price Capital Appreciation Fund and its
Advisor Class
T. Rowe Price Capital Opportunity Fund, Inc.
and its Advisor/R Classes
T. Rowe Price Corporate Income Fund, Inc.
T. Rowe Price Developing Technologies
Fund, Inc.
T. Rowe Price Diversified Mid-Cap Growth
Fund, Inc.
T. Rowe Price Diversified Small-Cap Growth
Fund, Inc.
T. Rowe Price Dividend Growth Fund, Inc. and
its Advisor Class
T. Rowe Price Equity Income Fund and
its Advisor/R Classes
T. Rowe Price Equity Series, Inc.
consisting of its series:
T. Rowe Price Blue Chip Growth Portfolio and
 its II Class
T. Rowe Price Equity Income Portfolio and its
 II Class
T. Rowe Price Equity Index 500 Portfolio
T. Rowe Price Health Sciences Portfolio and
 its II Class
T. Rowe Price Mid-Cap Growth Portfolio and
 its II Class
T. Rowe Price New America Growth Portfolio
T. Rowe Price Personal Strategy Balanced
 Portfolio
T. Rowe Price Financial Services Fund, Inc.
T. Rowe Price Fixed Income Series, Inc.
consisting of its series:
T. Rowe Price Limited-Term Bond Portfolio
 and its II Class
T. Rowe Price Prime Reserve Portfolio
T. Rowe Price Global Technology Fund, Inc.
T. Rowe Price GNMA Fund
T. Rowe Price Growth & Income Fund, Inc.
T. Rowe Price Growth Stock Fund, Inc. and its
Advisor/R Classes
T. Rowe Price Health Sciences Fund, Inc.
T. Rowe Price High Yield Fund, Inc. and
its Advisor Class
T. Rowe Price Index Trust, Inc.
consisting of its series:
T. Rowe Price Equity Index 500 Fund
T. Rowe Price Extended Equity Market Index
 Fund
T. Rowe Price Total Equity Market Index Fund
T. Rowe Price Inflation Protected Bond
Fund, Inc.
T. Rowe Price Institutional Equity Funds, Inc.
consisting of its series:
T. Rowe Price Institutional Large-Cap Core
 Growth Fund
T. Rowe Price Institutional Large-Cap Growth
 Fund
T. Rowe Price Institutional Large-Cap Value
 Fund
T. Rowe Price Institutional Mid-Cap Equity
 Growth Fund
T. Rowe Price Institutional Small-Cap Stock
 Fund
T. Rowe Price Institutional Income Funds, Inc.
consisting of its series:
T. Rowe Price Institutional Core Plus Fund
T. Rowe Price Institutional High Yield Fund
T. Rowe Price Institutional International
Funds, Inc.
consisting of its series:
T. Rowe Price Institutional Emerging Markets
 Equity Fund
T. Rowe Price Institutional Foreign Equity Fund



(continued on next page)

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T. Rowe Price International Funds, Inc.
consisting of its series:
T. Rowe Price Emerging Europe &
 Mediterranean Fund
T. Rowe Price Emerging Markets Bond Fund
T. Rowe Price Emerging Markets Stock Fund
T. Rowe Price European Stock Fund
T. Rowe Price Global Stock Fund
T. Rowe Price International Bond Fund and
 its Advisor Class
T. Rowe Price International Discovery Fund
T. Rowe Price International Growth & Income
 Fund and its Advisor/R Classes
T. Rowe Price International Stock Fund and
 its Advisor/R Classes
T. Rowe Price Japan Fund
T. Rowe Price Latin America Fund
T. Rowe Price New Asia Fund
T. Rowe Price International Index Fund, Inc.
consisting of its series:
T. Rowe Price International Equity Index Fund
T. Rowe Price International Series, Inc.
consisting of its series:
T. Rowe Price International Stock Portfolio
T. Rowe Price Media & Telecommunications
Fund, Inc.
T. Rowe Price Mid-Cap Growth Fund, Inc. and
its Advisor/R Classes
T. Rowe Price Mid-Cap Value Fund, Inc. and its
Advisor/R Classes
T. Rowe Price New America Growth Fund and
its Advisor Class
T. Rowe Price New Era Fund, Inc.
T. Rowe Price New Horizons Fund, Inc.
T. Rowe Price New Income Fund, Inc. and its
Advisor/R Classes
T. Rowe Price Personal Strategy Funds, Inc.
consisting of its series:
T. Rowe Price Personal Strategy Balanced
 Fund
T. Rowe Price Personal Strategy Growth Fund
T. Rowe Price Personal Strategy Income Fund
T. Rowe Price Prime Reserve Fund, Inc.
T. Rowe Price Real Estate Fund, Inc. and its
Advisor Class
T. Rowe Price Reserve Investment Funds, Inc.
consisting of its series:
T. Rowe Price Government Reserve
 Investment Fund
T. Rowe Price Reserve Investment Fund
T. Rowe Price Retirement Funds, Inc.
consisting of its series:
T. Rowe Price Retirement 2005 Fund
T. Rowe Price Retirement 2010 Fund and its
 Advisor/R Classes
T. Rowe Price Retirement 2015 Fund
T. Rowe Price Retirement 2020 Fund and its
 Advisor/R Classes
T. Rowe Price Retirement 2025 Fund
T. Rowe Price Retirement 2030 Fund and its
 Advisor/R Classes
T. Rowe Price Retirement 2035 Fund
T. Rowe Price Retirement 2040 Fund and its
 Advisor/R Classes
T. Rowe Price Retirement 2045 Fund
T. Rowe Price Retirement Income Fund and
 its Advisor/R Classes
T. Rowe Price Science & Technology Fund, Inc.
and its Advisor Class
T. Rowe Price Short-Term Bond Fund, Inc. and
its Advisor Class
T. Rowe Price Small-Cap Stock Fund, Inc. and its
Advisor Class
T. Rowe Price Small-Cap Value Fund, Inc. and its
Advisor Class
T. Rowe Price Spectrum Fund, Inc.
consisting of its series:
Spectrum Growth Fund
Spectrum Income Fund
Spectrum International Fund
T. Rowe Price State Tax-Free Income Trust
consisting of its series:
Florida Intermediate Tax-Free Fund
Georgia Tax-Free Bond Fund
Maryland Short-Term Tax-Free Bond Fund
Maryland Tax-Free Bond Fund
Maryland Tax-Free Money Fund
New Jersey Tax-Free Bond Fund
New York Tax-Free Bond Fund
New York Tax-Free Money Fund
Virginia Tax-Free Bond Fund
T. Rowe Price Summit Funds, Inc.
consisting of its series:
T. Rowe Price Summit Cash Reserves Fund
T. Rowe Price Summit GNMA Fund




(continued on next page)

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T. Rowe Price Summit Municipal Funds, Inc.
consisting of its series:
T. Rowe Price Summit Municipal Income
 Fund
T. Rowe Price Summit Municipal
 Intermediate Fund
T. Rowe Price Summit Municipal Money
 Market Fund
T. Rowe Price Tax-Efficient Funds, Inc.
consisting of its series:
T. Rowe Price Tax-Efficient Balanced Fund
T. Rowe Price Tax-Efficient Growth Fund
T. Rowe Price Tax-Efficient Multi-Cap Growth
 Fund
T. Rowe Price Tax-Exempt Money Fund, Inc.
T. Rowe Price Tax-Free High Yield Fund, Inc.
T. Rowe Price Tax-Free Income Fund, Inc. and its
Advisor Class
T. Rowe Price Tax-Free Intermediate Bond
Fund, Inc.
T. Rowe Price Tax-Free Short-Intermediate
Fund, Inc.
T. Rowe Price U.S. Bond Index Fund, Inc.
T. Rowe Price U.S. Treasury Funds, Inc.
consisting of its series:
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
T. Rowe Price Value Fund, Inc. and its Advisor
Class

PROXY STATEMENT

This document gives you information you need in order to vote on the matters coming before the annual meeting and is furnished in connection with the solicitation of proxies by the funds. If you have any questions, please feel free to call us toll-free, 1800541-5910.

Who is asking for my vote?

The Boards of the funds have asked that you vote on the matters listed in the notice of annual meeting of shareholders. The votes will be formally counted at the annual meeting on Wednesday, April 19, 2006, and if the annual meeting is adjourned, at any later meeting. You may vote in person at the annual meeting, by Internet, by telephone, or by returning your completed proxy card in the prepaid envelope provided. Do not mail the proxy card if you are voting by Internet or telephone.

Equity, Fixed Income, and International Series contractholders may only vote by returning their completed proxy card in the postage-paid envelope provided or in person at the annual meeting.

Who is eligible to vote?

Shareholders of record at the close of business on February 21, 2006, (the "record date") are notified of the meeting and are entitled to one vote for each full share and a proportionate vote for each fractional share of the fund(s) they held as of February 21, 2006. The notice of annual meeting, the proxy card, and the proxy statement were mailed to shareholders of record on or about February 28, 2006. Only one copy of this Proxy Statement may be mailed to households, even if more than one person in a household is a fund shareholder of record. If you need additional copies of this Proxy Statement, please contact us at 1-800-541-5910. If you do not want the mailing of this Proxy Statement to be combined with those for other members of your household, call us at 1-800-541-5910.

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Under Maryland and Massachusetts law, shares owned by two or more persons (whether as joint tenants, co-fiduciaries, or otherwise) will be voted as follows, unless a written instrument or court order providing to the contrary has been filed with the fund(s): (1) if only one votes, that vote will bind all; (2) if more than one votes, the vote of the majority will bind all; and (3) if more than one votes and the vote is evenly divided, the vote will be cast proportionately.

What are shareholders being asked to vote on?

At a meeting held on February 7, 2006, the Boards of the funds, including a majority of the independent directors/trustees, unanimously approved submitting the following proposals to be considered and acted upon:


Proposal


Funds Affected

Electing directors/trustees to serve on the Boards of the funds until the next annual meeting, if any, or until their successors shall have been duly elected and qualified.
All funds
Changing the investment objective.
GNMA Fund
Simplifying the industry concentration fundamental policy.
High Yield, International Bond, New Income, and Short-Term Bond Funds and their Advisors and/or R classes
Adopting a new industry concentration fundamental policy.
Equity Index 500, Extended Equity Market Index, and Total Equity Market Index Funds; and Equity Index 500 Portfolio
Transacting such other business as may properly come before the meeting and any adjournments thereof.
All funds

Who provides services to the funds?

T. Rowe Price Associates, Inc. ("T. Rowe Price"), provides investment advisory services to the funds other than the international funds. T. Rowe Price is a wholly owned subsidiary of T. Rowe Price Group, Inc., a holding company listed on the Nasdaq® National Market.

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T. Rowe Price International, Inc. ("Price International"), a wholly owned subsidiary of T. Rowe Price, provides investment advisory services to the international funds.

Each fund also has an accounting services agreement with T. Rowe Price, an underwriting agreement with T. Rowe Price Investment Services, Inc. ("Investment Services"), and a transfer agency agreement with T. Rowe Price Services, Inc. ("Price Services"). The taxable funds also have a transfer agency agreement with T. Rowe Price Retirement Plan Services, Inc. ("Retirement Services"). Each of these service providers is a wholly owned subsidiary of T. Rowe Price.

The T. Rowe Price Trust Company (the "Trust Company") is a wholly owned subsidiary of T. Rowe Price and serves as trustee and/or custodian for certain IRA, Keogh, and other prototype plans that utilize the funds as investment options.

The address of T. Rowe Price, Investment Services, and the Trust Company is 100 East Pratt Street, Baltimore, MD 21202, and the address of Price Services and Retirement Services is 4515 Painters Mill Road, Owings Mills, MD 21117. The address for T. Rowe Price International, Inc. is 60 Queen Victoria Street, London, EC4N 4TZ, England.

How can I get more information about the funds?

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A copy of each fund`s most recent shareholder report was mailed to all shareholders of record at the close of business for the funds` fiscal period-ends. If you would like to receive additional copies of any report, please contact T. Rowe Price by calling 1800541-5910; writing to 10090 Red Run Boulevard, Owings Mills, MD 21117; or visiting our Web site at www.troweprice.com. Shareholder reports for the Equity, Fixed Income, and International Series are not available on the Web site. All copies are provided free of charge.
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PROPOSAL NO. 1 — Election of Directors/Trustees

ALL FUNDS

Why are directors/trustees being elected?

Under the Investment Company Act of 1940 (the "1940 Act"), a certain percentage of each Board must be elected by shareholders. Due to the retirement of several directors/trustees over the past years, it has become necessary for the funds to hold a shareholder meeting in order to replace these retired directors/trustees. All of the present Boards are composed of at least 75% independent directors and that will continue to be the case if the proposed nominees are elected.

Importantly, all of the independent directors/trustees standing for election currently serve on the Boards of multiple funds. If the entire slate is approved, there will be seven independent directors/trustees and two interested directors/trustees on each fund Board.

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Another important benefit of these elections is that the same independent directors/trustees will serve on the Boards of all of the Price funds. This will expose the directors/trustees to a wider range of business issues and economic trends, allow the directors`/trustees` to better share their knowledge, background, and experience, and permit the Boards to operate more efficiently.

Who are the nominees for directors/trustees?

The Boards have proposed the slate of persons listed in Table 1 for election as director or trustee, each to hold office until the next annual meeting (if any), retirement, or resignation, or until his or her successor is duly elected and qualified.

A shareholder using the enclosed proxy card can vote for all or any of the nominees or withhold his or her vote from all or any of such nominees. If the proxy card is properly executed but unmarked, it will be voted for all of the nominees. Each of the nominees has agreed to serve as a director or trustee if elected; however, should any nominee become unable or unwilling to accept nomination or election, the persons named in the proxy will exercise their voting power in favor of such other person or persons as the Boards of the funds may recommend. There are no family relationships among these nominees.

Independent Directors/Trustees. Ms. Horn and Messrs. Deering, Dick, Fagin, and Schreiber currently serve as independent directors/trustees to all of the Price funds, as indicated in Table 3. Messrs. Casey and Theo Rodgers currently serve as independent directors/trustees to a subset of funds, as set forth in Table 3. Shareholders are being asked to elect all of the independent directors/trustees to the Boards of all the Price funds.

Dr. F. Pierce Linaweaver, an independent director of the Price funds since 1979, has retired from the Boards and will not be standing for reelection.

Interested Directors/Trustees. Interested directors/trustees are considered as such because of relationships with T. Rowe Price and/or Price International as described in Table 2. They are also shareholders of T. Rowe Price Group, Inc. Ms. Miller and Messrs. Kennedy, Laporte, and Riepe currently serve as interested directors/trustees to the Price funds/trusts as indicated in Table 3. Shareholders are being asked to elect Ms. Miller and Mr. Laporte to each of the Boards of the Price funds on which they currently serve.

Mr. James A.C. Kennedy, an interested director of the equity Price funds since 1992, will not be standing for reelection.

As part of a long-planned management transition, Mr. Riepe retired from T. Rowe Price at the end of 2005 and is not standing for reelection to the mutual fund boards when his current term expires in April 2006. Mr. Bernard has worked closely with Mr. Riepe since joining T. Rowe Price in 1988 and has assumed substantially all of Mr. Riepe`s responsibilities.

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Messrs. Bernard and Brian Rogers do not currently serve as interested directors/trustees to any of the Price funds. Shareholders are being asked to elect Mr. Bernard to the Boards of all the Price funds.

Shareholders are being asked to elect Mr. Brian Rogers to the Boards of the Balanced, Blue Chip Growth, Capital Appreciation, Developing Technologies, Diversified Mid-Cap Growth, Dividend Growth, Equity Income, Financial Services, Global Technology, Growth & Income, Growth Stock, Institutional Equity, Institutional International, International, International Index, Media & Telecommunications, Mid-Cap Growth, Mid-Cap Value, New Era, Personal Strategy, Real Estate, Retirement, Spectrum, Tax-Efficient, and Value Funds, the Index Trust, and the International Series.

Shareholders are being asked to elect the directors/trustees of their respective fund(s) only.

Tables 1 and 2 provide biographical information on each nominated director/trustee, their ownership, if any, in the funds on which they currently serve (or to which they are being nominated) as directors/trustees, and their total ownership in all the Price funds.

1  Nominees for Election as Independent Directors/Trustees (continued)

Name, Year of Birth, Address,
Position on Fund Board, and
Principal Occupations and Other
Directorships of Public Companies


Dollar Range of
Fund Shares Beneficially
Owned, Directly or Indirectly,
as of 12/31/05





Total Dollar
Range of Shares
Owned, Directly
or Indirectly, in
All Funds
Overseen or to
be Overseen, as
of 12/31/05

Jeremiah E. Casey, 1940

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
equity funds/trusts (See Table 3)

Director, Allfirst Financial Inc.
(previously First Maryland Bankcorp)
(1983 to 2002); Director, National Life
Insurance (2001 to 2005); Director, The
Rouse Company, real estate developers
(1990 to 2004)
Balanced
Equity Income
Equity Index 500
Growth Stock
Media &
Telecommunications
New Horizons
Real Estate
Small-Cap Value




over $100,000
over $100,000
over $100,000
over $100,000

$10,001-$50,000
over $100,000
$10,001-$50,000
over $100,000




over $100,000












Anthony W. Deering, 1945

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
funds/trusts

Chairman, Exeter Capital, LLC, private
investment firm (2004 to present);
Director, Vornado Real Estate
Investment Trust (3/04 to present);
Director, Mercantile Bankshares (4/03
to present); Member, Advisory Board,
Deutsche Bank North America (2004 to
present); Director, Chairman of the
Board, and Chief Executive Officer, The
Rouse Company, real estate developers
(1997 to 2004)
Emerging Markets Stock
Equity Income
European Stock
Growth Stock
International Bond
International
Discovery
International Stock
Japan
Media &
Telecommunications
Mid-Cap Growth
New Horizons
Tax-Free Short-
Intermediate



over $100,000
over $100,000
over $100,000
over $100,000
$50,001-$100,000

$50,001-$100,000
over $100,000
over $100,000

over $100,000
over $100,000
over $100,000

over $100,000



over $100,000

















Donald W. Dick, Jr., 1943

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
funds/trusts

Principal, EuroCapital Advisors, LLC, an
acquisition and management advisory
firm; Chairman, President, and Chief
Executive Officer, The Haven Group, a
custom manufacturer of modular homes
(1/04 to present)









Blue Chip Growth
Capital Appreciation
Equity Income
European Stock
Financial Services
Global Stock
Growth & Income
Growth Stock
Health Sciences
High Yield
International Bond
International Discovery
Mid-Cap Growth
New Horizons
New Income
Prime Reserve
Small-Cap Stock
Small-Cap Value
Summit Cash Reserves
U.S. Treasury
Intermediate
Value
$10,001-$50,000
over $100,000
$50,001-$100,000
$10,001-$50,000
$10,001-$50,000
$50,001-$100,000
$1-$10,000
$10,001-$50,000
$10,001-$50,000
$50,001-$100,000
over $100,000
$10,001-$50,000
$10,001-$50,000
$10,001-$50,000
$50,001-$100,000
over $100,000
$10,001-$50,000
$10,001-$50,000
over $100,000

$50,001-$100,000
$10,001-$50,000
over $100,000





















David K. Fagin, 1938

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
funds/trusts

Chairman and President, Nye
Corporation (6/88 to present); Director,
Canyon Resources Corp. and Golden
Star Resources Ltd. (5/92 to present),
and Pacific Rim Mining Corp. (2/02 to
present)









Blue Chip Growth
Diversified Mid-Cap
Growth
Dividend Growth
Equity Income
European Stock
Global Stock
Health Sciences
International Stock
Mid-Cap Growth
Mid-Cap Value
New Asia
New Horizons
Short-Term Bond
Small-Cap Stock
Summit Cash Reserves
Summit Municipal
Intermediate
Tax-Free High Yield
Tax-Free Short-
Intermediate
Value
over $100,000

$50,001-$100,000
$50,001-$100,000
over $100,000
$10,001-$50,000
$10,001-$50,000
$50,001-$100,000
over $100,000
over $100,000
over $100,000
$10,001-$50,000
$1-$10,000
$50,001-$100,000
over $100,000
over $100,000

over $100,000
$10,001-$50,000

over $100,000
over $100, 000
over $100,000





















Karen N. Horn, 1943

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
funds/trusts

Managing Director and President, Global
Private Client Services, Marsh Inc. (1999
to 2003); Managing Director and Head
of International Private Banking,
Bankers Trust (1996 to 1999); Director,
Georgia Pacific (5/04 to 12/05);
Director, Eli Lilly and Company and
Simon Property Group
Blue Chip Growth
Dividend Growth
High Yield
Retirement 2020
Summit Cash Reserves










$50,001-$100,000
$50,001-$100,000
$1-$10,000
$10,001-$50,000
over $100,000










over $100,000














Theo C. Rodgers, 1941

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
equity and income funds/trusts
(See Table 3)

President, A&R Development
Corporation
Capital Appreciation
Emerging Markets Stock
International Discovery
New America Growth
New Asia
New Horizons
Prime Reserve
Spectrum Growth


$10,001-$50,000
$50,001-$100,000a
$50,001-$100,000
$50,001-$100,000
$50,001-$100,000a
over $100,000a
$10,001-$50,000
over $100,000


over $100,000









John G. Schreiber, 1946

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
funds/trusts

Owner/President, Centaur Capital
Partners, Inc., a real estate investment
company; Partner, Blackstone Real
Estate Advisors, L.P.; Director, AMLI
Residential Properties Trust









GNMA
Growth & Income
High Yield
New Income
Prime Reserve
Short-Term Bond
Summit Cash Reserves
Summit Municipal:
Income
Intermediate
Money Market
Tax-Exempt Money
Tax-Free High Yield
Tax-Free Income
Tax-Free Short-
Intermediate
U.S. Treasury:
Intermediate
Long-Term
Money
Value
over $100,000
over $100,000
over $100,000
over $100,000
$10,001-$50,000
over $100,000
$0-$10,000

over $100,000
over $100,000
$50,001-$100,000
$0-$10,000
over $100,000
over $100,000

over $100,000

over $100,000
over $100,000
$0-$10,000
over $100,000
over $100,000




















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aHoldings are current as of January 3, 2006.

2  Nominees for Election as Interested Directors/Trustees (continued)

Name, Year of Birth, Address,
Position on Fund Board, and
Principal Occupationsa


Dollar Range of
Fund Shares Beneficially
Owned, Directly or Indirectly,
as of 12/31/05





Total Dollar
Range of Shares
Owned Directly
or Indirectly in
All Funds
Overseen or to
be Overseen, as
of 12/31/05

Edward C. Bernard, 1956

100 E. Pratt Street, Baltimore, MD 21202

Director and Vice President, T. Rowe
Price and T. Rowe Price Group, Inc.;
Director and President, T. Rowe Price
Investment Services, Inc.; Chairman of
the Board and Director, T. Rowe Price
Retirement Plan Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Savings Bank; Director, T. Rowe Price
Global Asset Management Limited and
T. Rowe Price Global Investment
Services Limited; Chief Executive
Officer, Chairman of the Board, Director,
and President, T. Rowe Price Trust
Company
Developing Technologies
Emerging Markets Stock
Equity Income
Global Stock
Growth Stock
High Yield
International Discovery
International Stock
Mid-Cap Growth
New Asia
New Horizons
Prime Reserve
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Spectrum IncomeSummit Cash Reserves
$10,001-$50,000
$50,001-$100,000
over $100,000
over $100,000
over $100,000
$1-$10,000
$10,001-$50,000
$50,001-$100,000
over $100,000
$50,001-$100,000
over $100,000
over $100,000
$10,001-$50,000
$10,001-$50,000
over $100,000
over $100,000
$10,001-$50,000
over $100,000
over $100,000

















John H. Laporte, CFA 1945

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of the Capital
Opportunity, Diversified Small-Cap
Growth, Health Sciences, New America
Growth, New Horizons, Science &
Technology, Small-Cap Stock, and
Small-Cap Value Funds and the Equity
Series

Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., and T. Rowe Price
Trust Company; Officer of Diversified
Small-Cap Growth, Health Sciences, and
New Horizons Funds and 3 other
T. Rowe Price funds/trusts
Capital Opportunity
New America Growth
New Horizons
Science & Technology














over $100,000
over $100,000
over $100,000
over $100,000














over $100,000

















Mary J. Miller, CFA 1955

100 E. Pratt Street, Baltimore, MD 21202

Director/Trustee of all T. Rowe Price
income funds (See Table 3)

Director and Vice President, T. Rowe
Price; Vice President, T. Rowe Price
Group, Inc.; Officer of 15 of the T. Rowe
Price income funds and 4 other Price
funds
High Yield
Maryland Tax-Free Bond
Maryland Tax-Free Money
Short-Term Bond
Tax-Exempt Money
Tax-Free Income
U.S. Treasury Long-Term





over $100,000
over $100,000
over $100,000
over $100,000
over $100,000
over $100,000
$50,001-$100,000





over $100,000











Brian C. Rogers, CFA, CIC 1955

100 E. Pratt Street, Baltimore, MD 21202

Chief Investment Officer, Director, and
Vice President, T. Rowe Price and
T. Rowe Group, Inc.; Director and Vice
President, T. Rowe Price Trust Company;
Officer of 8 T. Rowe Price funds/trusts



Developing Technologies
Equity Income
Global Stock
Growth Stock
Media &
Telecommunications
New America Growth
New Income
Prime Reserve
Spectrum Income
Summit Cash Reserves
Value
$10,001-$50,000
over $100,000
over $100,000
over $100,000

$50,001-$100,000
over $100,000
$50,001-$100,000
$50,001-$100,000
over $100,000
over $100,000
over $100,000
over $100,000











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aUnless otherwise indicated, each individual has held the office indicated, or other offices in the same company, for the last five years. Messrs. Bernard, Laporte, and Rogers have held their positions with T. Rowe Price Group since 2000 and Ms. Miller has held her position with T. Rowe Price Group since 2002.

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Table 3 sets forth the year from which each director/trustee first served.

3  Year from which each Director/Trustee first served (continued)

T. Rowe Price Fund


Casey(a)


Deering


Dick


Fagin


Horn(b)


Rodgers(c)


Schreiber


Laporte


Miller

Balanced
2005
2001
1991
1991
2003
2005
2001
—
—
Blue Chip Growth
2005
2001
1993
1993
2003
2005
2001
—
—
California Tax-Free Income Trust
—
1986
2001
2001
2003
2005
1992
—
2004
Capital Appreciation
2005
2001
1986
1988
2003
2005
2001
—
—
Capital Opportunity
2005
2001
1994
1994
2003
2005
2001
1994
—
Corporate Income
—
1995
2001
2001
2003
2005
1995
—
2004
Developing Technologies
2005
2001
2000
2000
2003
2005
2001
—
—
Diversified Mid-Cap Growth
2005
2003
2003
2003
2003
2005
2003
—
—
Diversified Small-Cap Growth
2005
2001
1997
1997
2003
2005
2001
1997
—
Dividend Growth
2005
2001
1992
1992
2003
2005
2001
—
—
Equity Income
2005
2001
1994
1988
2003
2005
2001
—
—
Equity Series
2005
2001
1994
1994
2003
2005
2001
1994
—
Financial Services
2005
2001
1996
1996
2003
2005
2001
—
—
Fixed Income Series
—
1994
2001
2001
2003
2005
1994
—
2004
Global Technology
2005
2001
2000
2000
2003
2005
2001
—
—
GNMA
—
1985
2001
2001
2003
2005
1992
—
2004
Growth & Income
2005
2001
1982
1994
2003
2005
2001
—
—
Growth Stock
2005
2001
1980
1994
2003
2005
2001
—
—
Health Sciences
2005
2001
1995
1995
2003
2005
2001
1995
—
High Yield
—
1984
2001
2001
2003
2005
1992
—
2004
Index Trust
2005
2001
1994
1994
2003
2005
2001
—
—
Inflation Protected Bond
—
2002
2002
2002
2003
2005
2002
—
2004
Institutional Equity
2005
2001
1996
1996
2003
2005
2001
—
—
Institutional Income
—
2002
2002
2002
2003
2005
2002
—
2004
Institutional International
—
1991
1989
2001
2003
—
2001
—
—
International
—
1991
1988
2001
2003
—
2001
—
—
International Equity Index
—
2000
2000
2001
2003
—
2001
—
—
International Series
—
1994
1994
2001
2003
—
2001
—
—
Media & Telecommunications
2005
2001
1997
1997
2003
2005
2001
—
—
Mid-Cap Growth
2005
2001
1992
1992
2003
2005
2001
—
—
Mid-Cap Value
2005
2001
1996
1996
2003
2005
2001
—
—
New America Growth
2005
2001
1985
1994
2003
2005
2001
1985
—
New Era
2005
2001
1994
1988
2003
2005
2001
—
—
New Horizons
2005
2001
1994
1988
2003
2005
2001
1988
—
New Income
—
1980
2001
2001
2003
2005
1992
—
2004
Personal Strategy
2005
2001
1994
1994
2003
2005
2001
—
—
Prime Reserve
—
1979
2001
2001
2003
2005
1992
—
2004
Real Estate
2005
2001
1997
1997
2003
2005
2001
—
—
TRP Reserve Investment
—
1997
2001
2001
2003
2005
1997
—
2004
Retirement
2005
2002
2002
2002
2003
2005
2002
—
—
Science & Technology
2005
2001
1994
1994
2003
2005
2001
1988
—
Short-Term Bond
—
1983
2001
2001
2003
2005
1992
—
2004
Small-Cap Stock
2005
2001
1992
1992
2003
2005
2001
1994
—
Small-Cap Value
2005
2001
1994
1994
2003
2005
2001
1994
—
Spectrum
2005
2001
1999
1999
2003
2005
2001
—
—
State Tax-Free Income Trust
—
1986
2001
2001
2003
2005
1992
—
2004
Summit
—
1993
2001
2001
2003
2005
1993
—
2004
Summit Municipal
—
1993
2001
2001
2003
2005
1993
—
2004
Tax-Efficient
2005
2001
1997
1997
2003
2005
2001
—
—
Tax-Exempt Money
—
1983
2001
2001
2003
2005
1992
—
2004
Tax-Free High Yield
—
1984
2001
2001
2003
2005
1992
—
2004
Tax-Free Income
—
1983
2001
2001
2003
2005
1992
—
2004
Tax-Free Intermediate Bond
—
1992
2001
2001
2003
2005
1992
—
2004
Tax-Free Short-Intermediate
—
1983
2001
2001
2003
2005
1992
—
2004
U.S. Bond Index
—
2000
2001
2001
2003
2005
2000
—
2004
U.S. Treasury
—
1989
2001
2001
2003
2005
1992
—
2004
Value
2005
2001
1994
1994
2003
2005
2001
—
—

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(a)On October 19, 2005, Mr. Casey was appointed by the Board to serve as director/trustee effective on that date.

(b)On October 22, 2003, Ms. Horn was appointed by the Board to serve as director/trustee effective on that date.

(c)On March 2, 2005, Mr. Rodgers was appointed by the Board to serve as director/trustee effective on that date.

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Do the nominees have a stake in the funds?

The directors/trustees of the funds believe it is important to have an investment in the Price funds. The nominees allocate their investments among the Price funds based on their own investment objectives. Tables 1 and 2 list each nominee`s investment in the individual funds, if any, as well as his/her total investment in all of the Price funds.

What are the primary responsibilities of each fund`s Board members?

They are responsible for the general oversight of each fund`s business and for assuring that each fund is managed in the best interests of its shareholders. The directors/trustees periodically review the performance, investment program, compliance matters, advisory fees and expenses, service providers, and business and regulatory matters affecting the funds based on reports provided by their respective investment advisers, transfer agents, custodians, auditors, and legal counsel.

How often does each fund`s Board meet?

The Boards of Directors /Trustees of the Price funds held five meetings during calendar year 2005. Each director/trustee attended 75% or more of the meetings of the Price funds held in 2005. The Price funds do not normally hold annual meetings. If they do, the policy is that all directors/trustees should attend, subject to availability. Each Board currently has three committees, described in the following paragraphs.

The Committee of Independent Directors/Trustees, which consists of all of the independent directors/trustees of the funds, is responsible for, among other things, selecting candidates for election as independent directors or trustees to fill vacancies on each fund`s Board. Effective January 1, 2006, Anthony W. Deering became chairman of the committee and receives a fee of $1,000 for each committee meeting attended. The committee will consider written recommendations from shareholders for possible nominees. Shareholders should submit their recommendations to the secretary of the funds. The committee held four formal meetings in 2005. All members of the committee participated in the meetings.

The Joint Audit Committee consists of only independent directors/trustees. The members of the committee are Donald W. Dick, Jr., Karen N. Horn, and Theo C. Rodgers. Mr. Dick as chairman of the committee receives an annual retainer of $15,000 per year and Ms. Horn and Mr. Theo Rodgers receive an annual retainer of $7,500 per year. These directors/trustees also receive a fee of $1,000 for each committee meeting attended. The Audit Committee holds two regular meetings each year, at which time it meets with the independent registered public accounting firm of the Price funds to review: (1) the services provided; (2) the findings of the most recent audits; (3) management`s response to the findings of the most recent audits; (4) the scope of the audits to be performed; (5) the accountants` fees; and (6) any accounting, tax, compliance, or other questions relating to

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particular areas of the Price funds` operations or the operations of parties dealing with the Price funds, as circumstances indicate. Each fund`s Board has designated Donald W. Dick, an independent director/trustee, as the Audit Committee financial expert. The Audit Committee for the funds met twice in 2005. All members of the committee participated in the meetings.

The Executive Committee, which consists of all of the interested directors/trustees, is authorized by its respective Board to exercise all powers of the Boards of the funds to manage the funds in the intervals between meetings of the Boards, except the powers prohibited by statute from being delegated.The Executive Committees of the Short-Term Bond Fund and Spectrum Fund, on behalf of the Spectrum Income Fund, met once in 2005. All members of each committee participated in the meeting.

If a shareholder wishes to send a communication to the Board, or to a specified director/trustee, the communication should be submitted in writing to Patricia B. Lippert, Secretary of the Funds, T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, Maryland 21202, who will forward such communication to the directors/trustees.

What are the directors/trustees paid for their services to the funds?

Ms. Miller and Messrs. Bernard, Laporte, and Brian Rogers are employed by, and thus considered "interested persons" of, T. Rowe Price or International. Therefore, they are not entitled to compensation or benefits for their service as directors of the funds.

Table 4 provides the independent directors`/trustees` accrued compensation for the most recently completed fiscal year of each fund and their total compensation for the calendar year 2005. The fees are allocated to each fund under a formula which includes a base fee and a fee based on the net assets of each fund relative to the other funds. Effective July 1, 2005, the annual compensation for the directors/trustees was increased for 2005 to $150,000 and for 2006 to $190,000 per year. At the same time, the annual compensation for the lead independent director/trustee was increased for 2005 to $215,000 and for 2006 to $290,000 per year. The Price fund group included 113 funds at December 31, 2005. The independent directors of the funds do not receive any pension or retirement benefits from the funds or T. Rowe Price.

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4  Compensation to Fund Directors/Trustees (continued)


T. Rowe Price Fund


Director/Trustee Compensation From T. Rowe Price Funds























Casey


Deering


Dick


Fagin


Horn


Rodgers


Schreiber

Balanced
938
1,774
1,898
1,871
1,844
1,797
1,793
Blue Chip Growth
938
3,223
3,454
3,401
3,348
3,203
3,257
Blue Chip Growth Portfolio
330
729
784
788
764
607
741
California Tax-Free Bond
—
812
865
874
821
—
886
California Tax-Free Money
—
785
836
844
794
—
855
Capital Appreciation
938
2,875
3,082
3,017
2,989
2,923
2,899
Capital Opportunity
364
737
791
798
770
619
750
Corporate Income
—
769
827
845
786
134
839
Developing Technologies
182
688
739
743
713
540
701
Diversified Mid-Cap Growth
211
695
744
751
725
552
708
Diversified Small-Cap Growth
267
716
769
773
748
584
728
Dividend Growth
740
1,178
1,262
1,254
1,228
1,192
1,193
Emerging Europe & Mediterranean
—
1,072
1,142
1,157
1,120
—
1,085
Emerging Markets Bond
—
1,014
1,086
1,088
1,057
—
1,028
Emerging Markets Stock
—
1,350
1,441
1,452
1,410
—
1,364
Equity Income
938
4,484
4,820
4,828
4,676
4,275
4,566
Equity Income Portfolio
938
1,537
1,644
1,624
1,600
1,525
1,555
Equity Index 500
941
2,667
2,862
2,805
2,776
2,815
2,698
Equity Index 500 Portfolio
118
664
711
719
691
505
676
European Stock
—
1,233
1,316
1,334
1,290
—
1,249
Extended Equity Market Index
599
819
879
883
854
744
832
Financial Services
632
918
982
982
958
882
932
Florida Intermediate Tax-Free
—
788
838
846
796
—
857
Georgia Tax-Free Bond
—
784
834
844
793
—
855
Global Stock
—
818
874
904
857
—
831
Global Technology
326
734
788
791
767
615
750
GNMA
—
975
1,054
1,077
995
186
1,075
TRP Government Reserve Investment
—
913
990
1,010
936
175
1,005
Growth & Income
938
1,569
1,680
1,664
1,633
1,550
1,589
Growth Stock
938
3,359
3,608
3,562
3,500
3,383
3,406
Health Sciences
932
1,438
1,538
1,523
1,496
1,404
1,455
Health Sciences Portfolio
124
666
713
721
694
508
678
High Yield
—
1,459
1,588
1,620
1,491
307
1,623
Inflation Protected Bond
—
746
804
820
763
128
814
Institutional Core Plus
—
363
393
405
377
120
381
Institutional Emerging Markets Equity
—
821
876
901
859
—
836
Institutional Foreign Equity
—
967
1,037
1,061
1,061
—
982
Institutional High Yield
—
851
920
938
871
147
936
Institutional Large-Cap Core Growth
169
679
732
737
712
535
691
Institutional Large-Cap Growth
443
740
793
798
771
618
752
Institutional Large-Cap Value
350
741
795
798
774
625
753
Institutional Mid-Cap Equity Growth
649
947
1,016
1,014
988
931
960
Institutional Small-Cap Stock
650
950
1,019
1,019
991
936
964
International Bond
—
1,797
1,921
1,898
1,873
—
1,815
International Discovery
—
1,431
1,526
1,540
1,492
—
1,447
International Equity Index
—
829
885
910
861
—
841
International Growth & Income
—
1,287
1,371
1,388
1,342
—
1,302
International Stock
—
2,307
2,472
2,496
2,414
—
2,339
International Stock Portfolio
—
1,106
1,184
1,178
1,153
—
1,120
Japan
—
881
941
967
922
—
894
Latin America
—
1,093
1,166
1,183
1,142
—
1,106
Limited-Term Bond Portfolio
—
742
794
799
774
585
755
Maryland Short-Term Tax-Free Bond
—
807
860
870
817
—
881
Maryland Tax-Free Bond
—
977
1,045
1,057
988
—
1,076
Maryland Tax-Free Money
—
789
839
849
797
—
858
Media & Telecommunications
804
1,285
1,374
1,362
1,337
1,251
1,300
Mid-Cap Growth
938
3,785
4,070
4,045
3,945
3,757
3,848
Mid-Cap Growth Portfolio
718
1,108
1,186
1,179
1,153
1,155
1,123
Mid-Cap Value
938
2,774
2,977
2,918
2,888
2,873
2,805
New America Growth
768
1,254
1,342
1,333
1,305
1,226
1,270
New America Growth Portfolio
282
715
767
771
746
583
727
New Asia
—
1,458
1,552
1,567
1,520
—
1,472
New Era
938
1,991
2,133
2,094
2,073
2,096
2,011
New Horizons
938
2,832
3,043
2,983
2,949
2,891
2,867
New Income
—
1,227
1,332
1,361
1,254
260
1,359
New Jersey Tax-Free Bond
—
795
846
854
804
—
867
New York Tax-Free Bond
—
809
861
869
818
—
882
New York Tax-Free Money
—
788
838
846
796
—
858
Personal Strategy Balanced
—
911
986
1,005
932
169
1,003
Personal Strategy Balanced Portfolio
377
751
802
810
780
636
763
Personal Strategy Growth
—
852
919
938
870
155
935
Personal Strategy Income
—
801
863
884
819
141
879
Prime Reserve
—
1,613
1,758
1,794
1,649
339
1,801
Prime Reserve Portfolio
—
700
754
758
734
531
712
Real Estate
785
1,219
1,302
1,294
1,269
1,221
1,233
TRP Reserve Investment
—
1,800
1,963
2,004
1,842
431
2,004
Retirement 2005
—
761
820
839
780
134
831
Retirement 2010
—
850
917
938
871
164
931
Retirement 2015
—
779
839
856
797
143
850
Retirement 2020
—
871
940
959
891
172
952
Retirement 2025
—
771
831
848
789
139
841
Retirement 2030
—
812
875
894
830
152
887
Retirement 2035
—
748
805
822
765
130
816
Retirement 2040
—
767
826
843
785
136
838
Retirement 2045(a)
—
—
—
—
—
—
—
Retirement Income
—
783
845
862
801
139
856
Science & Technology
938
2,248
2,416
2,376
2,342
2,581
2,278
Short-Term Bond
—
1,004
1,088
1,111
1,027
186
1,110
Small-Cap Stock
938
3,005
3,232
3,170
3,132
3,007
3,043
Small-Cap Value
938
2,634
2,827
2,772
2,740
2,806
2,665
Spectrum Growth
938
1,849
1,982
1,955
1,924
1,890
1,871
Spectrum Income
938
2,419
2,598
2,555
2,521
2,708
2,448
Spectrum International
388
751
802
808
780
634
763
Summit Cash Reserves
—
1,790
1,917
1,937
1,874
1,697
1,815
Summit GNMA
—
746
800
822
784
460
760
Summit Municipal Income
—
774
829
850
809
504
787
Summit Municipal Intermediate
—
819
872
895
854
565
831
Summit Municipal Money Market
—
1,014
1,084
1,103
1,061
835
1,029
Tax-Efficient Balanced
—
777
826
834
786
—
846
Tax-Efficient Growth
—
782
832
841
791
—
851
Tax-Efficient Multi-Cap Growth
—
774
823
831
783
—
842
Tax-Exempt Money
—
886
945
955
895
—
971
Tax-Free High Yield
—
962
1,030
1,039
973
—
1,058
Tax-Free Income
—
1,049
1,125
1,137
1,061
—
1,158
Tax-Free Intermediate Bond
—
798
848
857
806
—
870
Tax-Free Short-Intermediate
—
865
922
931
875
—
946
Total Equity Market Index
629
908
972
973
947
872
921
U.S. Bond Index
—
792
849
870
831
529
801
U.S. Treasury Intermediate
—
788
850
869
806
136
863
U.S. Treasury Long-Term
—
780
839
857
796
134
853
U.S. Treasury Money
—
903
975
995
922
164
994
Value
938
1,964
2,105
2,070
2,044
2,044
1,986
Virginia Tax-Free Bond
—
838
893
902
847
—
916
Total Compensation From Funds and Fund Complex(b)
38,306
150,000
160,750
159,500
156,250
125,000
152,000

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PAGE 19
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PAGE 20
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PAGE 21
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<R>
PAGE 22
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(a)The fund began operations on May 31, 2005, the last day of its fiscal year.

(b)Represents compensation paid for calendar year 2005. It may not equal the sum of the amounts shown in the table, which represents compensation for each fund`s recently completed fiscal year.

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</R>

What vote is required to elect the directors/trustees?

<R>
Each Board will consist of nine directors/trustees. Director/Trustees are elected by a plurality.
</R>

<R>
For all funds other than the California Tax-Free Income, Index, and State Tax-Free Trusts, Equity and Fixed Income Series, and Institutional Equity, Institutional Income, Institutional International, International, Personal Strategy, TRP Reserve Investment, Retirement, Spectrum, Summit, Summit Municipal, Tax-Efficient, and U.S. Treasury Funds, each fund votes separately and the nine nominees receiving the highest number of votes cast at the meeting shall be elected directors/trustees of that fund (provided a quorum is present).
</R>

<R>
For the California Tax-Free Income, Index, and State Tax-Free Trusts, Equity and Fixed Income Series, and Institutional Equity, Institutional Income, Institutional International, International, Personal Strategy, TRP Reserve Investment, Retirement, Spectrum, Summit, Summit Municipal, Tax-Efficient, and U.S. Treasury Funds, each corporation/trust votes separately but all series of each corporation vote together. The votes of the Blue Chip Growth, Capital Appreciation, Capital Opportunity, Dividend Growth, Equity Income, Growth Stock, High Yield, International Bond, International Growth & Income, International Stock, Mid-Cap Growth, Mid-Cap Value, New America Growth, New Income, Real Estate, Retirement 2010, Retirement 2020, Retirement 2030, Retirement 2040, Retirement Income, Science & Technology, Short-Term Bond, Small-Cap Stock, Small-Cap Value, Tax-Free Income, and Value Funds will include the votes of their Advisor and/or R Classes. The votes of the Blue Chip Growth, Equity Income, Health Sciences, Limited-Term Bond, and Mid-Cap Growth Portfolios will include the votes of their II Classes. The nine nominees receiving the highest number of the combined votes cast at the meeting by the shareholders of all series and classes of each corporation/trust shall be elected directors/trustees of that corporation/trust (provided a quorum is present). The Board of Directors/Trustees recommends that shareholders vote FOR all of the proposed nominees.
</R>

PROPOSAL NO. 2 — Amend Investment Objective

GNMA FUND

<R>
The fund`s current objective is to seek "high current income consistent with maximum credit protection and moderate price fluctuation by investing exclusively in securities backed by the full faith and credit of the U.S. government and instruments linked to these securities."
</R>

<R>
The Board proposes that the objective be changed as follows: "the fund`s objective is to seek high current income consistent with high overall credit quality and moderate price fluctuation by investing at least 80% of its total assets in GNMA securities backed by the full faith and credit of the U.S. government."
</R>

<R>
The new objective would differ from the current objective in two significant respects. First, the new objective would require that 80% of fund total assets be invested in GNMA securities backed by the full
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faith and credit of the U.S. government. The current objective requires that 100% of the fund`s assets be invested in securities backed by the full faith and credit of the U.S. government, but not necessarily GNMA securities.
</R>

<R>
Secondly, under the proposed new objective up to 20% of the fund`s total assets could be invested in securities not backed by the full faith and credit of the U.S. government. The other 20% of the fund`s securities could be invested in a wide variety of government and nongovernment securities and investments including derivatives. The fund`s Board of Trustees has indicated that it will require the fund`s non-GNMA fixed-income securities to have a credit rating of at least AA or the equivalent as determined by a national rating organization or, if unrated, deemed to be of comparable quality by T. Rowe Price. While it has no current intention to do so, the Board could authorize the fund to invest in lower quality securities at some time in the future. Under the current objective, the fund may not invest in any securities not backed by the full faith and credit of the U.S. government.
</R>

<R>
Securities backed by the full faith and credit of the U.S. government are considered to have no credit risk. While the non-GNMA fixed-income securities that the fund would be eligible to invest in must be rated at least AA (or the equivalent), they will have some credit risk. Credit risk is the risk that an issuer will have its credit ratings downgraded or will default (fail to make scheduled interest or principal payments), potentially reducing the fund`s income level and share price. By conducting thorough credit research of its non-GNMA securities, T. Rowe Price will seek to reduce this risk.
</R>

<R>
The fund can currently invest in derivatives such as futures and certain types of stripped-mortgage securities. If the proposal is adopted, the fund`s derivative investment could expand to include other types of derivatives including, but not limited to, swaps and structured notes.
</R>

<R>
Derivatives will be used if the expected risks and rewards are consistent with fund objectives, policies, and overall risk profile. Generally, the fund would use these additional derivatives where they would help accomplish the following: hedge against a decline in principal value, increase yield, invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment, or adjust portfolio duration.
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<R>
The use of derivatives involves risks including that they may not always be successful hedges; using them could lower fund total return, their prices can be highly volatile, the potential loss from the use of derivatives can exceed a fund`s initial investment in such instruments, and the other party to the derivative instrument could default on its obligations.
</R>

<R>
The Board believes the proposed change to the fund`s objective, including the increase in the fund`s credit risk, is in the interests of the fund`s shareholders. The additional flexibility will provide the fund with more options in terms of incremental yield, diversification, and the ability to manage the fund in response to interest rate changes. With these tools the Board believes the fund will be able to execute its investment strategies more precisely. To conform the fund`s proposed
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<R>
new objective to this greater investment flexibility, the new objective would require the fund to seek "high overall credit quality" rather than "maximum credit protection."
</R>

If the proposed amendment is approved by shareholders, it will become effective on or about June 1, 2006. Shareholders will receive notification of the changes to the fund`s objectives and programs.

What vote is required to approve this amendment to the fund`s investment objective?

Proposal No. 2 requires the affirmative vote of the lesser of (1) 67% of the shares present at the meeting of the fund in person or by proxy or (2) a majority of the fund`s outstanding shares. The Board of Trustees of the fund recommends that shareholders vote FOR the proposal.

PROPOSAL NO. 3 — Amend Industry Concentration Fundamental Policy

HIGH YIELD, INTERNATIONAL BOND, NEW INCOME, AND SHORT-TERM BOND FUNDS AND THEIR ADVISOR AND/OR R CLASSES

Each fund`s Board is recommending that its fundamental policy on industry concentration (set forth below) be simplified and changed.

Industry Concentration (High Yield Fund and its Advisor Class) Purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that the fund will normally concentrate 25% or more of its assets in securities of the banking industry when the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets.

Industry Concentration (International Bond Fund and its Advisor Class) Purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that the fund will normally concentrate 25% or more of its assets in securities of the banking industry when the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets.

Industry Concentration (New Income Fund and its Advisor and R Class) Purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that the fund will invest more than 25% of its total assets, but not more than 50%, in any one of the gas utility, gas transmission utility, electric utility, telephone utility, and petroleum industries under certain circumstances, and further provided that this

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limitation does not apply to securities of the banking industry including, but not limited to, certificates of deposit and banker`s acceptances.

Industry Concentration (Short-Term Bond Fund and its Advisor Class) Purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, provided, however, that the fund will normally invest more than 25% of its total assets in the securities of the banking industry including, but not limited to, bank certificates of deposit and banker`s acceptances when the fund`s position in issues maturing in one year or less equals 35% or more of the fund`s total assets; provided, further, that the fund will invest more than 25% of its total assets, but not more than 50%, in any one of the gas utility, gas transmission utility, electric utility, telephone utility, and petroleum industries under certain circumstances.

Since these policies were adopted, none of the funds has concentrated their investments in any industry and the circumstances which would have required such concentration have not occurred. As a result, the Boards have concluded that the existing policies are not necessary for the funds to fully implement their investment programs.

The Boards recommend that each fund`s new policy read as follows:

"The fund may not purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry."

If the new policy is approved, each fund will not invest more than 25% of its total assets in securities of companies in the same industry. The funds have not concentrated their investments in single industries in the past and the new policy will not change that practice.

If the proposed amendment is approved by shareholders, it will become effective on or about May 1, 2006, or at such other time as the directors/trustees of the funds deem appropriate.

What vote is required to approve this amendment to each fund`s fundamental policy?

<R>
Proposal No. 3 requires the affirmative vote of the lesser of (1) 67% of the shares (including all classes) present at the meeting of each fund in person or by proxy or (2) a majority of each fund`s outstanding shares (including all classes). The Board of Directors of each fund recommends that shareholders vote FOR the proposal.
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PROPOSAL NO. 4 — Adopt a New Industry Concentration Fundamental Policy

EQUITY INDEX 500 FUND, EXTENDED EQUITY MARKET INDEX FUND, TOTAL EQUITY MARKET INDEX FUND, AND EQUITY INDEX 500 PORTFOLIO

Each fund`s Board is recommending that its fundamental policy on industry concentration be changed to accommodate their operation as index funds. Currently the policies state that as a matter of fundamental policy, the funds may not:

"Purchase the securities of any issuer if, as a result, more than 25% of the value of the funds` total assets would be invested in the securities of issuers having their principal business activities in the same industry."

The Boards are recommending that the funds adopt the following policy relating to concentration:

"The fund may not purchase the securities of any issuer if, as a result, more than 25% of the value of the fund`s total assets would be invested in the securities of issuers having their principal business activities in the same industry, except that the fund will invest more than 25% of the value of its total assets in issuers having their principal business activities in the same industry to the extent necessary to replicate the index that the fund uses as its benchmark as set forth in its prospectus."

This policy will simply allow each of the index funds to concentrate in an industry if the index the fund seeks to replicate also concentrates in that industry. Although such a scenario is unlikely, the proposal will provide the funds with the necessary flexibility should an index become concentrated. In the absence of this change, if one of the indices these funds follow were to become concentrated, the funds would not be able to replicate the index.

<R>
If the proposed amendment is approved by shareholders, it will become effective on or about May 1, 2006, or at such other time as the directors/trustees of the funds deem appropriate.
</R>

<R>
What vote is required for each fund to adopt a new fundamental policy?
</R>

<R>
Proposal No. 4 requires the affirmative vote of the lesser of (1) 67% of the shares present at the meeting of each fund in person or by proxy or (2) a majority of each fund`s outstanding shares. The Board of Directors of each fund recommends that shareholders vote FOR the proposal.
</R>

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</R>

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FURTHER INFORMATION ABOUT VOTING AND
THE SHAREHOLDER MEETING

What is the required quorum?

To hold a meeting for a corporation or trust, a majority of the corporation or trust`s shares entitled to be voted must have been received by proxy or be present at the meeting. In the event that a quorum is present but sufficient votes in favor of a proposal are not received by the meeting date, the persons named as proxies may propose one or more adjournments to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of the shares present in person or by proxy at the meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment if they determine that additional solicitation is reasonable and in the interests of the corporation/trust`s shareholders.

How are the votes counted?

The individuals named as proxies (or their substitutes) on the enclosed proxy card (or cards, if you have multiple funds or accounts) will vote according to your directions if your proxy is received properly executed, or in accordance with your instructions given when voting by telephone or Internet. With respect to directors/trustees, you may direct the proxy holders to vote your shares on the proposal by checking the appropriate box "FOR ALL NOMINEES" or "FOR ALL EXCEPT," or instruct them not to vote those shares on the proposal by checking the "WITHHOLD AUTHORITY" box. With respect to proposals 2, 3, and 4, you may direct the proxy holders to vote FOR or AGAINST. Alternatively, you may simply sign, date, and return your proxy card(s) with no specific instructions as to the proposals. If you properly execute your proxy card and give no voting instructions with respect to the election of directors/trustees or any of the other proposals, your shares will be voted FOR ALL NOMINEES and for all of the other proposals.

<R>
Abstentions and "broker non-votes" (as defined below) are counted for purposes of determining whether a quorum is present for purposes of convening the meeting. "Broker non-votes" are shares held by a broker or nominee for which an executed proxy is received by the fund but are not voted as to one or more proposals because instructions have not been received from the beneficial owners or persons entitled to vote, and the broker or nominee does not have discretionary voting power. If a proposal must be approved by a plurality vote, abstentions and broker non-votes will have no effect on the result of the vote. If the proposal must be approved by a percentage of voting securities present at the meeting or a majority of the fund`s outstanding shares, abstentions and broker non-votes will be considered to be voting securities that are present and will have the effect of being counted as votes against the proposal.
</R>

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<R>
For shares held in IRA accounts, the Custodian shall, without written direction from the investor, vote shares for which no voting instructions are timely received in the same proportion as shares for which voting instructions from other shareholders are timely received.
</R>

Shares of the Equity, Fixed Income, and International Series held by insurance company separate accounts for which the insurance company has not received timely voting instructions, as well as shares the insurance company owns, shall be voted in the same proportion as shares for which voting instructions from contractholders are timely received.

Shares of the Price funds held by the Spectrum and Retirement Funds will be voted in the same proportion as shares for which voting instructions from other shareholders are timely received.

Can additional matters be acted upon at the annual meeting?

The management of the funds knows of no other business that may come before the meeting. However, if any additional matters are properly presented at the meeting, it is intended that the persons named in the enclosed proxy, or their substitutes, will vote on such matters in accordance with their judgment.

How can proxies be recorded?

You may record your votes on the proxy card enclosed with this statement and mail it in the prepaid envelope provided to Management Information Services Corp., who the funds have retained to tabulate the votes. In addition, the funds (except the Equity, Fixed Income, and International Series) have arranged to have votes recorded through the Internet or by telephone. The telephone and Internet voting procedures are designed to authenticate shareholders` identities, to allow shareholders to authorize the voting of their shares in accordance with their instructions, and to confirm that their instructions have been properly recorded.

How can proxies be solicited, and who pays for the costs involved?

Directors/trustees, officers, or employees of the funds, T. Rowe Price or Price International may solicit proxies by mail, in person, or by telephone. In the event that votes are solicited by telephone, shareholders would be called at the telephone number T. Rowe Price has in its records for their accounts, and would be asked for their Social Security number or other identifying information. The shareholders would then be given an opportunity to authorize proxies to vote their shares at the meeting in accordance with their instructions. To ensure that shareholders` instructions have been recorded correctly, confirmation of the instructions is also mailed. A special toll-free number will be available in case the information contained in the confirmation is incorrect.

To ensure that sufficient shares of common stock are represented at the meeting to permit approval of the proposals outlined in the proxy statement, the funds may retain the services of a proxy solicitor to assist

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them in soliciting proxies for a fee plus reimbursement of out-of-pocket expenses. Securities brokers, custodians, fiduciaries, and other persons holding shares as nominees will be reimbursed, upon request, for their reasonable expenses in sending solicitation materials to the principals of the accounts.

<R>
All costs of the shareholder meetings and the proxy solicitation will be paid for by the funds, except for the Equity, Fixed Income, and International Series, and the Extended Equity Market Index, Institutional Emerging Markets Equity, Institutional Income, International Index, Summit, Summit Municipal, Total Equity Market Index, and U.S. Bond Index Funds. These funds pay a single fee to T. Rowe Price and, as a result, T. Rowe Price will bear these costs for these funds.
</R>

Can I change my vote after I mail my proxy?

Any proxy, including those given via the Internet or by telephone, may be revoked at any time before it is voted by filing a written notice of revocation with the funds, by delivering a properly executed proxy bearing a later date, or by attending the meeting and voting in person.

Are the funds required to hold annual meetings?

Under Maryland and Massachusetts law, the funds are not required to hold annual meetings. The Board of Directors/Trustees of each fund has determined that the funds will take advantage of these Maryland and Massachusetts law provisions to avoid the significant expense associated with holding annual meetings, including legal, accounting, printing, and mailing fees incurred in preparing proxy materials. Accordingly, no annual meetings shall be held in any year in which a meeting is not otherwise required to be held by the 1940 Act unless the Boards determine otherwise. However, special meetings will be held in accordance with applicable law or when otherwise determined by each fund`s Board.

If a shareholder wishes to present a proposal to be included in a proxy statement for a subsequent shareholder meeting, the proposal must be submitted in writing and received by Patricia B. Lippert, Secretary of the Funds, T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD 21202, within a reasonable time before the funds begin to print and mail their proxy materials.

GENERAL INFORMATION ABOUT THE FUNDS

Who are the funds` executive officers?

Table 5 lists the executive officers of the funds and their positions with T. Rowe Price, Price International, and T. Rowe Price Group. Each executive officer has been an officer of T. Rowe Price, Price International, or T. Rowe Price Group and the funds for at least the last five years unless otherwise indicated.

For all funds other than those referred to in the next sentence, the executive officers and directors/trustees of each fund, as a group, beneficially owned, directly or indirectly, less than 1% of any of the

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fund`s outstanding shares as of December 31, 2005. For the following funds, the executive officers and directors/trustees of each fund, as a group, beneficially owned, directly or indirectly, the following percentages of each such fund`s outstanding shares as of December 31, 2005: Summit Municipal Income Fund (1.17%); Tax-Efficient Balanced Fund (1.28%); Tax-Efficient Growth Fund (2.04%); and Tax-Efficient Multi-Cap Growth Fund (1.90%).

5   Executive Officers of the Funds (continued)

Officer, Year of Birth


Position With
Fund


Position With
T. Rowe Price


Position With T. Rowe
Price Group

Balanced



Richard T. Whitney, 1958a
President
Vice President
Vice President
Blue Chip Growth



Larry J. Puglia, 1960a
President
Vice President
Vice President
California Tax-Free Income Trust



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Joseph K. Lynagh, 1958

Executive Vice
President
Vice President
Vice President
Konstantine B. Mallas, 1963

Executive Vice
President
Vice President
Vice President
Capital Appreciation



Stephen W. Boesel, 1944a
President
Vice President
Vice President
Capital Opportunity



William J. Stromberg, 1960a
President
Vice President
Vice President
Corporate Income



David A. Tiberii, 1965a
President
Vice President
Vice President
Mark J. Vaselkiv, 1958a

Executive Vice
President
Vice President
Vice President
Developing Technologies



Michael F. Sola, 1969
President
Vice President
Vice President
Jeffrey Rottinghaus, 1970a

Executive Vice
President
Vice President
Vice President
Diversified Mid-Cap Growth



Donald J. Peters, 1959
President
Vice President
Vice President
Diversified Small-Cap Growth



Paul W. Wojcik, 1970
President
Vice President
Vice President
Richard T. Whitney, 1958a

Executive Vice
President
Vice President
Vice President
Dividend Growth



Thomas J. Huber, 1966
President
Vice President
Vice President
Equity Income



Brian C. Rogers, 1955a


President
Chief Investment
Officer, Director, and
Vice President
Chief Investment
Officer, Director, and
Vice President
Equity Series



Brian C. Rogers, 1955a


President
Chief Investment
Officer, Director, and
Vice President
Chief Investment
Officer, Director, and
Vice President
E. Frederick Bair, 1969

Executive Vice
President
Vice President
None
Brian W. H. Berghuis, 1958a

Executive Vice
President
Vice President
Vice President
Kris H. Jenner, 1962

Executive Vice
President
Vice President
Vice President
Joseph M. Milano, 1972

Executive Vice
President
Vice President
Vice President
Edmund M. Notzon III, 1945a

Executive Vice
President
Vice President
Vice President
Larry J. Puglia, 1960a

Executive Vice
President
Vice President
Vice President
Financial Services



Michael W. Holton, 1968
President
Vice President
Vice President
Fixed Income Series



Edward A. Wiese, 1959
President
Vice President
Vice President
James M. McDonald, 1949

Executive Vice
President
Vice President
Vice President
Global Technology



Robert N. Gensler, 1957b
President
Vice President
Vice President
GNMA



Connice A. Bavely, 1951
President
Vice President
Vice President
Growth & Income



Anna M. Dopkin, 1967
President
Vice President
Vice President
Growth Stock



Robert W. Smith, 1961a
President
Vice President
Vice President
Robert W. Sharps, 1971

Executive Vice
President
President
President
Health Sciences



Kris H. Jenner, 1962
President
Vice President
Vice President
High Yield



Mark J. Vaselkiv, 1958a
President
Vice President
Vice President
Index Trust



E. Frederick Bair, 1969
President
Vice President
None
Inflation Protected Bond



Daniel O. Shackelford, 1958
President
Vice President
Vice President
Institutional Equity



Brian C. Rogers, 1955a


President
Chief Investment
Officer, Director, and
Vice President
Chief Investment
Officer, Director, and
Vice President
Brian W. H. Berghuis, 1958a

Executive Vice
President
Vice President
Vice President
John D. Linehan, 1965b

Executive Vice
President
Vice President
Vice President
Gregory A. McCrickard, 1958a

Executive Vice
President
Vice President
Vice President
Larry J. Puglia, 1960a

Executive Vice
President
Vice President
Vice President
Robert W. Sharps, 1971

Executive Vice
President
Vice President
Vice President
Robert W. Smith, 1961a

Executive Vice
President
Vice President
Vice President
Institutional Income



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Brian J.Brennan, 1964a

Executive Vice
President
Vice President
Vice President
Mark J. Vaselkiv, 1958a

Executive Vice
President
Vice President
Vice President
Institutional International



David J. L. Warren, 1957ab

President
Director and Vice
President
Vice President
International



David J. L. Warren, 1957ab

President
Director and Vice
President
Vice President
Robert N. Gensler, 1957b

Executive Vice
President
Vice President
Vice President
Raymond A. Mills, 1960b

Executive Vice
President
Vice President
Vice President
International Equity Index



E. Frederick Bair, 1969
President
Vice President
None
International Series



David J. L. Warren, 1957ab

President
Director and Vice
President
Vice President
Media & Telecommunications



Robert N. Gensler, 1957b
President
Vice President
Vice President
P. Robert Bartolo, 1972a

Executive Vice
President
Vice President
Vice President
Henry M. Ellenbogen, 1971a

Executive Vice
President
Vice President
Vice President
Mid-Cap Growth



Brian W. H. Berghuis, 1958a
President
Vice President
Vice President
John F. Wakeman, 1962

Executive Vice
President
Vice President
Vice President
Mid-Cap Value



David J. Wallack, 1960
President
Vice President
Vice President
New America Growth



Joseph M. Milano, 1972
President
Vice President
Vice President
New Era



Charles M. Ober, 1950
President
Vice President
Vice President
New Horizons



John H. Laporte, 1945a
President
Vice President
Vice President
New Income



Daniel O. Shackelford, 1958
President
Vice President
Vice President
Personal Strategy



Edmund M. Notzon III, 1945a
President
Vice President
Vice President
Stephen W. Boesel, 1944a

Executive Vice
President
Vice President
Vice President
Larry J. Puglia, 1960a

Executive Vice
President
Vice President
Vice President
Prime Reserve



James M. McDonald, 1949
President
Vice President
Vice President
Real Estate



David M. Lee, 1962
President
Vice President
Vice President
TRP Reserve Investment



James M. McDonald, 1949
President
Vice President
Vice President
Retirement



Edmund M. Notzon III, 1945a
President
Vice President
Vice President
Stephen W. Boesel, 1944a

Executive Vice
President
Vice President
Vice President
Science & Technology



Michael F. Sola, 1969
President
Vice President
Vice President
Short-Term Bond



Edward A. Wiese, 1959
President
Vice President
Vice President
Small-Cap Stock



Gregory A. McCrickard, 1958a
President
Vice President
Vice President
Small-Cap Value



Preston G. Athey, 1949a
President
Vice President
Vice President
Spectrum



Edmund M. Notzon III, 1945a
President
Vice President
Vice President
Stephen W. Boesel, 1944a

Executive Vice
President
Vice President
Vice President
Mary J. Miller, 1955a

Executive Vice
President
Director and Vice
President
Vice President
David J. L. Warren, 1957ab

Executive Vice
President
Director and Vice
President
Vice President
State Tax-Free Income Trust



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Charles B. Hill, 1961

Executive Vice
President
Vice President
Vice President
Joseph K. Lynagh, 1958

Executive Vice
President
Vice President
Vice President
Konstantine B. Mallas, 1963

Executive Vice
President
Vice President
Vice President
Hugh D. McGuirk, 1960

Executive Vice
President
Vice President
Vice President
Summit



Edward A. Wiese, 1959
President
Vice President
Vice President
Connice A. Bavely, 1951

Executive Vice
President
Vice President
Vice President
James M. McDonald, 1949

Executive Vice
President
Vice President
Vice President
Summit Municipal



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Charles B. Hill, 1961

Executive Vice
President
Vice President
Vice President
Joseph K. Lynagh, 1958

Executive Vice
President
Vice President
Vice President
Konstantine B. Mallas, 1963

Executive Vice
President
Vice President
Vice President
Tax-Efficient



Donald J. Peters, 1959
President
Vice President
Vice President
Hugh D. McGuirk, 1960

Executive Vice
President
Vice President
Vice President
Tax-Exempt Money



Joseph K. Lynagh, 1958
President
Vice President
Vice President
Tax-Free High Yield



James M. Murphy, 1967
President
Vice President
Vice President
Tax-Free Income



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Tax-Free Intermediate Bond



Charles B. Hill, 1961
President
Vice President
Vice President
Tax-Free Short-Intermediate



Charles B. Hill, 1961
President
Vice President
Vice President
U.S. Bond Index



Edmund M. Notzon III, 1945a
President
Vice President
Vice President
Charles M. Shriver, 1967

Executive Vice
President
Vice President
None
U.S. Treasury



Mary J. Miller, 1955a

President
Director and Vice
President
Vice President
Brian J. Brennan, 1964

Executive Vice
President
Vice President
Vice President
James M. McDonald, 1949

Executive Vice
President
Vice President
Vice President
Cheryl A. Mickel, 1967

Executive Vice
President
Vice President
Vice President
Value



John D. Linehan, 1965b
President
Vice President
Vice President

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aPreston G. Athey, Brian W.H. Berghuis, Stephen W. Boesel, John H. Laporte, Gregory A. McCrickard, Mary J. Miller, Edmund M. Notzon III, Larry J. Puglia, Brian C. Rogers, Robert W. Smith, William J. Stromberg, Mark J. Vaselkiv, David J.L. Warren, and Richard T. Whitney have held their positions with T. Rowe Price Group since 2002. David A. Tiberii has held his position with T. Rowe Price Group since 2003. Henry M. Ellenbogen and Jeffrey Rottinghaus have held their positions with T. Rowe Price Group since 2004.

bRobert N. Gensler, John D. Linehan, and Raymond A. Mills are Vice Presidents of Price International David J.L. Warren is Chief Executive Officer, Director, and President of Price International.

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What are the shares outstanding for each fund?

Table 6 presents the shares of the capital stock of each fund outstanding as of December 31, 2005.

6  Outstanding Shares of Capital Stock (continued)

T. Rowe Price Fund


Outstanding Shares of
Capital Stock

Balanced
127,755,568
Blue Chip Growth
268,260,427
Blue Chip Growth Portfolio
13,717,202
California Tax-Free Bond
26,230,831
California Tax-Free Money
107,760,923
Capital Appreciation
369,035,827
Capital Opportunity
12,823,736
Corporate Income
21,682,060
Developing Technologies
9,556,249
Diversified Mid-Cap Growth
5,295,364
Diversified Small-Cap Growth
6,221,058
Dividend Growth
33,971,463
Emerging Europe & Mediterranean
41,862,756
Emerging Markets Bond
34,755,623
Emerging Markets Stock
60,488,791
Equity Income
786,872,106
Equity Income Portfolio
81,958,856
Equity Index 500
173,519,179
Equity Index 500 Portfolio
1,531,440
European Stock
47,351,972
Extended Equity Market Index
18,760,616
Financial Services
18,643,826
Florida Intermediate Tax-Free
11,160,750
Georgia Tax-Free Bond
9,555,028
Global Stock
9,100,698
Global Technology
19,983,663
GNMA
133,124,558
TRP Government Reserve Investment
807,481,099
Growth & Income
84,430,452
Growth Stock
450,746,577
Health Sciences
59,379,159
Health Sciences Portfolio
942,697
High Yield
585,081,577
Inflation Protected Bond
9,947,536
Institutional Core Plus
3,279,341
Institutional Emerging Markets Equity
5,938,873
Institutional Foreign Equity
14,903,139
Institutional High Yield
33,438,482
Institutional Large-Cap Core Growth
2,775,772
Institutional Large-Cap Growth
14,769,762
Institutional Large-Cap Value
12,493,818
Institutional Mid-Cap Equity Growth
17,798,479
Institutional Small-Cap Stock
31,596,865
International Bond
178,695,061
International Discovery
36,311,315
International Equity Index
13,376,828
International Growth & Income
92,148,819
International Stock
393,113,541
International Stock Portfolio
30,538,563
Japan
40,916,401
Latin America
42,872,836
Limited-Term Bond Portfolio
17,633,631
Maryland Short-Term Tax-Free Bond
33,590,351
Maryland Tax-Free Bond
126,796,749
Maryland Tax-Free Money
153,942,468
Media & Telecommunications
30,828,783
Mid-Cap Growth
293,845,605
Mid-Cap Growth Portfolio
27,749,920
Mid-Cap Value
261,654,587
New America Growth
27,159,331
New America Growth Portfolio
4,641,314
New Asia
121,908,379
New Era
91,558,133
New Horizons
206,415,993
New Income
393,247,974
New Jersey Tax-Free Bond
15,139,774
New York Tax-Free Bond
21,818,222
New York Tax-Free Money
118,550,998
Personal Strategy Balanced
65,865,977
Personal Strategy Balanced Portfolio
7,944,029
Personal Strategy Growth
40,129,948
Personal Strategy Income
32,070,213
Prime Reserve
4,901,646,310
Prime Reserve Portfolio
23,999,771
Real Estate
49,335,891
TRP Reserve Investment
7,808,072,396
Retirement 2005
35,556,198
Retirement 2010
105,710,264
Retirement 2015
82,023,217
Retirement 2020
125,204,227
Retirement 2025
70,808,177
Retirement 2030
75,098,767
Retirement 2035
30,876,283
Retirement 2040
33,004,147
Retirement 2045
2,451,864
Retirement Income
41,733,665
Science & Technology
191,334,059
Short-Term Bond
271,834,489
Small-Cap Stock
226,995,215
Small-Cap Value
144,473,555
Spectrum Growth
156,678,200
Spectrum Income
330,319,915
Spectrum International
13,804,927
Summit Cash Reserves
3,958,990,601
Summit GNMA
8,047,820
Summit Municipal Income
14,494,828
Summit Municipal Intermediate
20,814,452
Summit Municipal Money Market
393,435,719
Tax-Efficient Balanced
2,963,970
Tax-Efficient Growth
7,082,081
Tax-Efficient Multi-Cap Growth
3,033,912
Tax-Exempt Money
1,064,446,263
Tax-Free High Yield
115,712,483
Tax-Free Income
176,134,064
Tax-Free Intermediate Bond
17,163,857
Tax-Free Short-Intermediate
96,121,979
Total Equity Market Index
28,489,829
U.S. Bond Index
16,624,370
U.S. Treasury Intermediate
49,244,825
U.S. Treasury Long-Term
18,901,246
U.S. Treasury Money
885,109,299
Value
152,844,632
Virginia Tax-Free Bond
40,964,320

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Who are the principal holders of each fund`s shares?

Table 7 sets forth the persons or entities owning more than 5% of each fund`s outstanding common stock as of December 31, 2005.

7  Record/Beneficial Ownership of Fund Shares (continued)

Fund


Shareholder


# of Shares


%

Balanced

T. Rowe Price Trust Company
Baltimore, Maryland 21297
64,133,159
50.19
Blue Chip Growth








Fidelity Investments
Covington, Kentucky 41015

Pirateline & Co.
Baltimore, Maryland 21202

T. Rowe Price Retirement Plan
Services, Inc.
Baltimore, Maryland 21297
13,389,532


14,788,303


78,836,569
5.47


6.05


32.24
Blue Chip Growth Fund—Advisor
Class






John Hancock Life Insurance Company USA
Toronto Ontario Canada M4W1E5

Mercer Trust Co.
Norwood, Massachusetts 02062

National Financial Services
New York, New York 10281
9,621,406


1,587,130


2,405,381
44.44


7.33


11.11
Blue Chip Growth Fund—R Class











American United Life
Indianapolis, Indiana 46206

Massachusetts Mutual Life
Insurance Co.
Springfield, Massachusetts 01111

Nationwide Trust Company
Columbus, Ohio 43218

T. Rowe Price Retirement Plan
Services, Inc.
406,452


144,877



318,078


473,020
22.08


7.87



17.28


25.70
Blue Chip Growth Portfolio


















C.M. Life Insurance Company
Springfield, Massachusetts 01111

Mass Mutual Life Insurance Company
Springfield, Massachusetts 01111

NYLIAC
Parsippany, New Jersey 07054

Security Benefit Life Insurance
Company
Topeka, Kansas 66636

Transamerica Life Insurance Company
Cedar Rapids, Iowa 52499

Western Reserve Life Assurance
Company of Ohio
Cedar Rapids, Iowa 52499
1,334,278


4,131,465


862,407


649,599



1,200,418


788,776
14.02


43.41


9.06


6.83



12.61


8.29
Blue Chip Growth Portfolio—II







Lincoln Benefit Life Company
Vernon Hills, Illinois 60061

National Life Insurance Co.
Montpelier, Vermont 05604

Nationwide Insurance Company
Columbus, Ohio 43218
1,851,807


316,811


697,483
44.09


32.67


16.61
California Tax-Free Money

Georgette O`Connor Day
Los Angeles, California 90049
8,948,515
8.31
Capital Appreciation





Charles Schwab & Co., Inc.
San Francisco, California 94104

National Financial Services

T. Rowe Price Trust Company
35,286,627


32,591,714

31,746,888
9.59


8.86

8.63
Capital Appreciation Fund—Advisor
Class
National Financial Services

373,940
37.38
Capital Opportunity




Swebak & Co.
Rockford, Illinois 61110

McWood & Co.
Raleigh, North Carolina 27626
2,546,013


3,308,100
19.92


25.89
Capital Opportunity Fund—Advisor
Class
T. Rowe Price Associates, Inc.
Baltimore, Maryland 21202
18,849
100.00
Capital Opportunity Fund—R Class
T. Rowe Price Associates, Inc.
18,809
100.00
Corporate Income

Yachtcrew & Co.
Baltimore, Maryland 21202
9,610,728
44.34
Developing Technologies

Trustees of T. Rowe Price
Baltimore, Maryland 21202
815,072
8.54
Dividend Growth
T. Rowe Price Trust Company
5,516,304
16.25
Emerging Europe & Mediterranean

National Financial Services

9,750,764
23.30
Emerging Markets Bond




Charles Schwab & Co., Inc.

National Financial Services

Yachtcrew & Co.
2,394,815

2,312,668

7,778,600
6.90

6.66

22.40
Emerging Markets Stock






Charles Schwab & Co., Inc.

National Financial Services

Pirateline & Co.

T. Rowe Price Trust Company
6,539,454

4,833,608

3,648,375

3,873,243
10.81

7.99

6.03

6.41
Equity Income
T. Rowe Price Trust Company
139,830,993
20.28
Equity Income Fund—Advisor Class









Citigroup Global Markets Inc.
New York, New York 10001

John Hancock Life Insurance Company USA

National Financial Services

Prudential Retirement Insurance &
Annuity Company
Hartford, Connecticut 06103
6,041,497


9,351,101

45,796,374

4,683,969
6.72


10.40

50.94

5.21
Equity Income Fund—R Class








American United Life

Nationwide Trust Company

Unified Trust Company
Lexington, Kentucky 40504

Wachovia Bank
Charlotte, North Carolina 28288
865,018

741,838

621,627


1,099,607
11.94

10.24

8.58


15.17
Equity Income Portfolio












American United Life

American United Life

Mass Mutual Life Insurance Company

NYLIAC

Pruco Life
Newark, New Jersey 07102

Security Benefit Life Insurance
Company
4,156,146

10,150,167


6,970,882

14,809,860

6,910,550


3,555,732
6.32

15.43


10.60

22.51

10.51


5.41
Equity Income Portfolio—II




Lincoln Benefit Life Company

NYLIAC

Nationwide Insurance Company
1,826,974

7,580,468

4,691,410
11.29

46.85

28.99
Equity Index 500






Retirement Portfolio 2010
Baltimore, Maryland 21202

Retirement Portfolio 2020
Baltimore, Maryland 21202

T. Rowe Price Trust Company
11,786,858


10,622,597


34,518,779
6.80


6.12


19.90
Equity Index 500 Portfolio



Security Benefit Life Insurance
Company

Transamerica Life Insurance Company
675,989


780,606
44.14


50.97
European Stock



Bobstay & Co.
Baltimore, Maryland 21202

Charles Schwab & Co., Inc.
2,629,119


4,083,540
5.56


8.63
Extended Equity Market Index
T. Rowe Price Trust Company
4,303,194
22.95
Financial Services
Charles Schwab & Co., Inc.
1,036,158
5.56
Georgia Tax-Free Bond
Charles Schwab & Co., Inc.
590,365
6.18
Global Stock



Charles Schwab & Co., Inc.

T. Rowe Price Retirement Plan
Services, Inc.
681,971

831,898
7.48

9.12
GNMA
Yachtcrew & Co.
51,764,757
38.92
TRP Government Reserve Investment










Barnaclesail
Baltimore, Maryland 21202

Bridgesail & Co.
Baltimore, Maryland 21202

Mainbody & Co.
Baltimore, Maryland 21202

T. Rowe Price Retirement Plan
Services, Inc.
447,556,607


44,655,705


126,304,914


95,392,935
55.20


5.51


15.58


11.76
Growth & Income
T. Rowe Price Trust Company
22,853,899
27.08
Growth Stock





Charles Schwab & Co., Inc.

Saxon and Co.
Philadelphia, Pennsylvania 19182

T. Rowe Price Trust Company
20,586,655

21,213,960


61,002,068
5.25

5.41


15.55
Growth Stock Fund—Advisor Class






National Financial Services

PFPC Brokerage Inc.
King of Prussia, Pennsylvania 19406

U.S. Bank
Milwaukee, Wisconsin 53201
14,279,628

3,076,167


3,037,475
32.17

6.93


6.84
Growth Stock Fund—R Class





American United Life

Nationwide Trust Company

Suntrust Bank
Englewood, Colorado 80111
1,864,664

1,120,652

1,134,458
13.49

8.11

8.21
Health Sciences
John Hancock Life Insurance Company USA
5,175,062
8.72
Health Sciences Portfolio




First Security Benefit Life and Annuity
Company of New York

Security Benefit Life Insurance
Company
43,815


642,790
6.38


93.62
Health Sciences Portfolio—II



National Life Insurance Co.

Principal Life Insurance Co.
Des Moines, Iowa 50392
192,855

46,837
75.31

18.29
High Yield
Yachtcrew & Co.
93,033,493
20.36
High Yield Fund—Advisor Class
National Financial Services
118,994,581
93.05
Inflation Protected Bond

T. Rowe Price Retirement Plan
Services, Inc.
1,537,017
15.46
Institutional Core Plus



Dewey Ballantine LLP
New York, New York 10019

TRP Finance, Inc.
1,712,270


1,567,071
52.21


47.79
Institutional Emerging Markets
Equity






SEI Private Trust Co.
Oaks, Pennsylvania 19456

State Street Bank & Trust Co.
Boston, Massachusetts 02111

The Nemours Foundation
Jacksonville, Florida 32246
3,909,028


407,843


516,072
65.82


6.87


8.69
Institutional Foreign Equity













Carey & Co.
Columbus, Ohio 43219

Mac & Co.
Pittsburgh, Pennsylvania 15230

State Street Bank & Trust Co.
Kansas City, Missouri 64105

Strafe & Co.
Westerville, Ohio 43086

Vanguard Fiduciary Trust Company
Valley Forge, Pennsylvania 19482
1,126,173


1,052,418


2,206,214


1,577,255


2,117,873
7.58


7.08


14.85


10.61


14.25
Institutional High Yield















Bread & Co.
Baltimore, Maryland 21202

Ladybug & Co.
Baltimore, Maryland 21202

Ladybird & Co.
Baltimore, Maryland 21202

National City
Cleveland, Ohio 44101

National Financial Services

State Street Bank & Trust Co.
North Quincy, Massachusetts 02171
7,311,765


3,351,942


2,142,539


2,278,713


6,148,560


1,692,254
21.89


10.03


6.41


6.82


18.41


5.07
Institutional Large-Cap Core Growth










Post & Co.
New York, New York 10268

TRP Finance, Inc.
Wilmington, Delaware 19801

TRUCOJO
St. Joseph, Missouri 64502

The Jewish Foundation of Cincinnati
Cincinnati, Ohio 45236
1,577,395


203,198


204,682


790,495
56.83


7.32


7.37


28.48
Institutional Large-Cap Growth



















Charles Schwab & Co., Inc.

Dewey Ballantine LLP

National Merit Scholarship
Corporation
Evanston, Illinois 60201

Stichting Pensioenfonds
Van De Koninklijke Nedlloyd
Netherlands

SEI Private Trust Co.
Oaks, Pennsylvania 19456

The Bank of New York
New York, New York 10286

Wave Board & Co.
Quincy, Massachusetts 02171
3,395,836

1,699,779

1,118,734



840,128



1,289,771


1,078,743


778,558
22.99

11.51

7.57



5.69



8.73


7.30


5.27
Institutional Large-Cap Value

















Carey & Co.
Columbus, Ohio 43219

Charles Schwab & Co., Inc.

Dewey Ballantine LLP

Fidelity Management
Boston, Massachusetts 02109

Investors Bank & Trust
Purchase, New York 10577

Patterson & Co.
Charlotte, North Carolina 28288

Wells Fargo Bank NA
Minneapolis, Minnesota 55480
1,919,589


1,833,163

1,351,777

900,908


1,758,836


914,397


1,211,371
15.36


14.67

10.82

7.21


14.08


7.32


9.70
Institutional Mid-Cap Equity Growth









Balsa & Company
Dallas, Texas 75254

Bank of New York
New York, New York 10286

SEI Private Trust Co.
Oaks, Pennsylvania 19456

U.S. Bank
1,094,207


971,169


918,511


892,002
6.15


5.46


5.16


5.01
Institutional Small-Cap Stock






National Financial Services

Sigler & Co.
Brooklyn, New York 11245

State Street Trust & Banking Company
Tokyo, Japan 105-6014
4,618,587

5,783,241


3,193,975
14.62

18.30


10.11
International Bond




Charles Schwab & Co., Inc.

National Financial Services

Yachtcrew & Co.
20,146,057

9,050,486

45,883,487
11.89

5.34

27.05
International Bond Fund—Advisor
Class




Citigroup Global Markets Inc.

National Financial Services

Smith Barney Corp Trust Company
East Brunswick, New Jersey 08816
3,734,861

2,790,995

1,198,893
41.50

31.01

13.32
International Discovery





Fidelity Investments

T. Rowe Price Retirement Plan
Services, Inc.

Vanguard Fiduciary Trust Company
2,488,526

2,480,675


3,188,973
6.85

6.83


8.78
International Equity Index

T. Rowe Price Retirement Plan
Services, Inc.
1,274,361
9.53
International Growth & Income













Pirateline & Co.

Retirement Portfolio 2010

Retirement Portfolio 2015
Baltimore, Maryland 21202

Retirement Portfolio 2020

Retirement Portfolio 2025
Baltimore, Maryland 21202

Retirement Portfolio 2030
Baltimore, Maryland 21202
14,651,573

5,902,097

3,883,996


8,939,338

3,978,313


6,932,433
20.01

8.06

5.31


12.21

5.43


9.47
International Growth & Income
Fund—Advisor Class
U.S. Bank

17,449,180
96.77
International Growth & Income
Fund—R Class

American United Life

Saxon and Co.
628,988

53,118
73.49

6.21
International Stock
T. Rowe Price Trust Company
62,449,890
16.07
International Stock Fund—Advisor
Class
Citigroup Global Markets Inc.

832,142
25.51
International Stock Fund—R Class



American United Life

T. Rowe Price Retirement Plan
Services, Inc.
54,024

178,656
17.68

58.48
International Stock Portfolio












CUNA Mutual Life Insurance Company
Waverly, Iowa 50677

Pruco Life

SMA Life
Worcester, Massachusetts 01653

Security Benefit Life Insurance
Company

United of Omaha—Series V
Omaha, Nebraska 68175
1,906,452


4,872,143

9,037,735


1,670,973


1,978,749
6.24


15.96

29.60


5.47


6.48
Japan


Charles Schwab & Co., Inc.

National Financial Services
4,936,801

3,553,192
12.02

8.65
Latin America
Charles Schwab & Co., Inc.
4,713,347
11.00
Limited-Term Bond Portfolio

















American National Group
Galveston, Texas 77550

American United Life

AUL Individual Variable
Indianapolis, Indiana 46206

Paragon Life Insurance Company
St. Louis, Missouri 63105-3443

Security Benefit Life Insurance
Company

Sentry Life Insurance Company
Stevens Point, Wisconsin 54481

United of Omaha—Series V
1,232,442


887,947

1,198,184


1,128,990


2,707,246


879,413


4,519,688
7.27


5.24

7.07


6.66


15.97


5.19


26.67
Limited-Term Bond Portfolio—II
Nationwide Trust Company
643,291
93.70
Maryland Short-Term Tax-Free Bond
Charles Schwab & Co., Inc.
2,143,922
6.40
Maryland Tax-Free Money
T. Rowe Price Associates, Inc.
20,000,000
12.79
Media & Telecommunications


Charles Schwab & Co., Inc.

T. Rowe Price Trust Company
1,603,834

2,574,190
5.21

8.36
Mid-Cap Growth


Charles Schwab & Co., Inc.

T. Rowe Price Trust Company
21,452,354

49,639,874
7.65

17.70
Mid-Cap Growth Fund—Advisor Class









MITRA & Company
Milwaukee, Wisconsin 53202

National Financial Services

Vanguard Fiduciary Trust Company

U.S. Bank

Wells Fargo Bank NA
559,387


1,405,869

1,237,727

571,828

525,585
5.83


14.66

12.91

5.96

5.48
Mid-Cap Growth Fund—R Class










ING Life Insurance and Annuity
Company
Hartford, Connecticut 06156

Nationwide Trust Company

ReliaStar Life Insurance Company
Hartford, Connecticut 06156

T. Rowe Price Retirement Plan
Services, Inc.
608,694



542,906

541,291


195,771
16.20



14.45

14.40


5.21
Mid-Cap Growth Portfolio









C.M. Life Insurance Company

MML Baystate Life Insurance
Company
Springfield, Massachusetts 01111

Mass Mutual Life Insurance Company

Security Benefit Life Insurance
Company
10,001,494

1,392,891



5,328,757

2,009,014
39.25

5.47



20.91

7.88
Mid-Cap Growth Portfolio—II



JPF Separate Account
Concord, New Hampshire 03301

Nationwide Insurance Company
395,075


1,801,424
17.42


79.42
Mid-Cap Value





Charles Schwab & Co., Inc.

National Financial Services

T. Rowe Price Retirement Plan
Services, Inc.
15,366,109

15,726,194

14,686,160
6.66

6.81

6.36
Mid-Cap Value Fund—Advisor Class





National Financial Services

U.S. Bank

Union Central Life Insurance Company
Cincinnati, Ohio 45240
2,685,934

1,395,548

1,090,120
15.27

7.93

6.20
Mid-Cap Value Fund—R Class










American United Life

ING Life Insurance and Annuity
Company

J.P. Morgan Chase
Brooklyn, New York 11245

Nationwide Trust Company

State Street Bank & Trust Co.
896,564

960,962


904,148


1,850,086

3,314,160
6.91

7.40


6.96


14.25

25.52
New America Growth



T. Rowe Price Trust Company

Wilmington Trust Co.
Wilmington, Delaware 19899
6,483,988

2,057,991
23.90

7.59
New America Growth Portfolio















Farm Bureau Life Insurance Company
West Des Moines, Iowa 50266

Lincoln Benefit Life Company

Mony America Variable
New York, New York 10104

Nationwide Insurance Company

Paragon Life Insurance Company

Security Benefit Life Insurance
Company

United of Omaha—Series V
435,757


252,875

350,996


705,085

258,564

1,400,133


510,396
9.39


5.57

7.56


15.19

5.57

30.17


11.00
New Asia
Charles Schwab & Co., Inc.
11,732,444
9.63
New Era


Charles Schwab & Co., Inc.

National Financial Services
9,141,510

5,191,888
9.99

5.67
New Horizons


Pirateline & Co.

T. Rowe Price Trust Company
13,248,337

63,224,131
6.42

30.66
New Income






Retirement Portfolio 2010

Retirement Portfolio 2020

T. Rowe Price Trust Company

Yachtcrew & Co.
30,830,830

27,908,288

39,275,018

103,922,936
7.86

7.11

10.01

26.49
New Income Fund—Advisor Class



Harvey R. Gross
Teaneck, New Jersey 07666

National Financial Services
21,742


92,563
5.22


22.22
New Income Fund—R Class




AMVESCAP National Trust Company
Atlanta, Georgia 30348

T. Rowe Price Retirement Plan
Services, Inc.
23,778


254,155
5.73


61.22
New York Tax-Free Money


Coleman M. Brandt
Grace L. Brandt
New York, New York
10,665,228
8.98
Personal Strategy Balanced
T. Rowe Price Trust Company
31,032,853
47.13
Personal Strategy Balanced Portfolio















Farm Bureau Life Insurance Company

NYLIAC

Paragon Life Insurance Company

Security Benefit Life Insurance
Company

Sentry Life Insurance Company

Southern Farm Bureau Life Insurance
Company
West Des Moines, Iowa 50266

United of Omaha—Series V
1,300,050

423,114

757,126

1,678,992


806,007

487,038



980,812
16.37

5.33

9.53

21.14


10.15

6.13



12.35
Personal Strategy Growth
T. Rowe Price Trust Company
16,198,688
40.36
Personal Strategy Income
T. Rowe Price Trust Company
12,197,154
38.01
Prime Reserve
T. Rowe Price Trust Company
671,801,748
13.70
Prime Reserve Portfolio












First Security Benefit Life and Annuity
Company of New York

Mony America Variable
New York, New York 10019

Security Benefit Life Insurance
Company

Sentry Life Insurance Company

Southern Farm Bureau Life Insurance
Company
1,279,494


5,928,784


11,919,856


2,816,777

1,961,571
5.33


24.70


49.67


11.74

8.17
Real Estate

T. Rowe Price Retirement Plan
Services, Inc.
4,456,264
9.21
Real Estate Fund—Advisor Class



National Financial Services

Union Bank Trust
San Diego, California 92186
777,463


53,577
85.33


5.88
TRP Reserve Investment
















Covewater & Co.
Baltimore, Maryland 21202

Eye & Co.
Baltimore, Maryland 21202

Overlap & Co.
Baltimore, Maryland 21202

Seamile & Co.
Baltimore, Maryland 21202

Taskforce & Co.
Baltimore, Maryland 21202

T. Rowe Price Managed GIC
Baltimore, Maryland 21202
546,481,695


450,829,175


637,217,524


1,318,481,826


801,223,236


424,167,741
6.99


5.77


8.15


16.86


10.25


5.43
Retirement 2005

T. Rowe Price Retirement Plan
Services, Inc.
23,166,358
65.18
Retirement 2010

T. Rowe Price Retirement Plan
Services, Inc.
60,331,473
61.50
Retirement 2010 Fund—Advisor Class















Nationwide Trust Company

Saxon and Co.

Scudder Trust Company
Salem, New Hampshire 03079

TRUSTlynx & Company
Denver, Colorado 80217

Union Bank Trust

Union Central Life Insurance Co.
Cincinnati, Ohio 45240

Wells Fargo Bank
288,573

378,109

362,305


192,156


573,665

506,503


251,995
8.15

10.67

10.23


5.42


16.19

14.30


7.11
Retirement 2010 Fund—R Class



State Street Bank & Trust Co.
Westwood, Massachusetts 02090

Saxon and Co.
2,515,671


520,172
61.07


12.63
Retirement 2015

T. Rowe Price Retirement Plan
Services, Inc.
54,749,136
66.67
Retirement 2020

T. Rowe Price Retirement Plan
Services, Inc.
76,864,398
64.94
Retirement 2020 Fund—Advisor Class






Saxon and Co.

Union Bank Trust

Union Central Life Insurance Co.

Wells Fargo Bank
882,395

366,748

946,624

204,201
23.62

9.82

25.34

5.47
Retirement 2020 Fund—R Class





State Street Bank & Trust Co.

Saxon and Co.

T. Rowe Price Retirement Plan
Services, Inc.
754,036

746,961

171,309
23.57

23.35

5.36
Retirement 2025

T. Rowe Price Retirement Plan
Services, Inc.
50,474,350
71.26
Retirement 2030

T. Rowe Price Retirement Plan
Services, Inc.
47,903,199
67.85
Retirement 2030 Fund—Advisor Class









Saxon and Co.

Scudder Trust Company

Union Bank Trust

Union Central Life Insurance Co.

Wilmington Trust Company Cust.
Wilmington, Delaware 19899
545,551

256,738

229,986

527,844

114,628
24.98

11.76

10.53

24.17

5.25
Retirement 2030 Fund—R Class




State Street Bank & Trust Co.

Saxon and Co.

Suntrust Bank
632,691

497,171

322,391
26.95

21.18

13.73
Retirement 2035

T. Rowe Price Retirement Plan
Services, Inc.
22,498,928
72.80
Retirement 2040

T. Rowe Price Retirement Plan
Services, Inc.
22,210,367
71.38
Retirement 2040 Fund—Advisor Class






Saxon and Co.

Union Bank Trust

Union Central Life Insurance Co.

Wilmington Trust Company Cust.
221,725

60,968

232,533

383,129
19.79

5.44

20.75

34.19
Retirement 2040 Fund—R Class







Saxon and Co.

State Street Bank & Trust

Suntrust Bank

T. Rowe Price Retirement Plan
Services, Inc.
144,042

49,401

302,232

40,551
18.42

6.32

38.66

5.19
Retirement 2045 Fund



T. Rowe Price Retirement Plan
Services, Inc.

Trustees of T. Rowe Price
1,640,826


143,541
66.95


5.86
Retirement Income

T. Rowe Price Retirement Plan
Services, Inc.
14,164,279
34.07
Retirement Income Fund—Advisor
Class









AIG Federal Savings Bank Custodian
Houston, Texas 77019

Belbank & Co.
Belvidere, Illinois 61008

Scudder Trust Company

Saxon and Co.

Union Bank Trust
67,777


47,991


81,323

93,704

230,405
10.40


7.36


12.48

14.38

35.36
Retirement Income Fund—R Class












Fulton Financial Adv.
Lancaster, Pennsylvania17604

NFS LLC FEBO
Reliance Trust Company
Hialeah, Florida 33016

Saxon and Co.

State Street Bank & Trust

T. Rowe Price Retirement Plan
Services, Inc.
20,917


13,487



22,619

15,862

90,917
8.03


5.18



8.69

6.09

34.91
Science & Technology
T. Rowe Price Trust Company
38,387,911
23.29
Science & Technology Fund— Advisor
Class
John Hancock Life Insurance Company USA

23,538,276
89.38
Short-Term Bond
Yachtcrew & Co.
41,094,935
15.15
Short-Term Bond Fund—Advisor
Class
PFPC Brokerage Inc.

2,133,760
99.65
Small-Cap Stock



Norwest Bank Company
Englewood, Colorado 80111

T. Rowe Price Trust Company
11,457,809


34,012,770
5.44


16.14
Small-Cap Stock Fund—Advisor Class








ICMA Retirement Trust
Washington, DC 20002

Minnesota Life
Saint Paul, Minnesota 55101

Northern Trust Company

Vanguard Fiduciary Trust Company
2,144,229


3,163,533


2,262,811

2,151,830
13.46


19.86


14.20

13.51
Small-Cap Value
T. Rowe Price Trust Company
36,112,756
28.26
Small-Cap Value Fund—Advisor Class








ICMA Retirement Trust

John Hancock Life Insurance Company USA

Merrill Lynch Pierce Fenner & Smith
Inc.
Jacksonville, Florida 32246

U.S. Bank
3,941,201

5,602,806

1,977,685



1,105,337
23.69

33.68

11.89



6.64
Spectrum Growth
T. Rowe Price Trust Company
27,969,458
17.85
Spectrum Income
T. Rowe Price Trust Company
88,618,447
26.82
Spectrum International

T. Rowe Price Retirement Plan
Services, Inc.
1,116,945
8.08
Summit Cash Reserves


T. Rowe Price Trust Company

Yachtcrew & Co.
531,242,898

237,134,377
13.39

5.98
Summit Municipal Income
National Financial Services
2,798,509
19.32
Summit Municipal Intermediate




Charles Schwab & Co., Inc.

Prudential Investment Management
Services
Iselin, New Jersey 08830
1,809,605

7,561,330
8.69

36.32
Summit Municipal Money Market








TRP Finance, Inc.

T. Rowe Price Associates, Inc.

T. Rowe Price Group, Inc.
Baltimore, Maryland 21289

T. Rowe Price International, Inc.
Baltimore, Maryland 21202
25,302,335

26,714,209

45,182,392


49,773,645
6.45

6.81

11.52


12.69
Tax-Exempt Money


T. Rowe Price Associates, Inc.

T. Rowe Price International, Inc.
201,721,673

94,226,248
18.93

8.84
Tax-Free High Yield
Charles Schwab & Co., Inc.
6,042,249
5.23
Tax-Free Income Fund—Advisor Class
National Financial Services
29,081,298
99.45
Tax-Free Short-Intermediate
Charles Schwab & Co., Inc.
8,267,035
8.61
U.S. Bond Index




Alaska College Savings Trust
Baltimore, Maryland 21202

T. Rowe Price Retirement Plan
Services, Inc.
1,061,269


5,912,946
6.39


35.58
U.S. Treasury Intermediate
T. Rowe Price Trust Company
9,439,034
19.19
U.S. Treasury Long-Term


T. Rowe Price Trust Company

Yachtcrew & Co.
2,374,004

6,239,013
12.55

32.99
U.S. Treasury Money
T. Rowe Price Trust Company
153,374,118
17.33
Value








Northern Trust Company

Pirateline & Co.

Retirement Portfolio 2020

Retirement Portfolio 2030

T. Rowe Price Trust Company
8,058,120

11,113,617

13,462,457

12,276,510

19,280,932
5.75

7.94

9.61

8.77

13.77
Value Fund—Advisor Class










Bost & Company
Pittsburgh, Pennsylvania 15230

Citigroup Global Markets Inc.

ING Life Insurance and Annuity
Company

Minnesota Life

National Financial Services
843,336


800,438

1,341,339


1,916,378

6,635,695
6.69


6.35

10.64


15.20

52.64

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INFORMATION ABOUT INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee has selected PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Price funds for their current fiscal years. Representatives of PricewaterhouseCoopers are expected to be present at the meeting and will be available to make a statement, if they desire to do so, and to respond to appropriate questions which shareholders may wish to address to them.

Table 8 sets forth the audit, audit-related, tax, and all other fees billed to the Price funds by PricewaterhouseCoopers in each of the last two fiscal years. Audit fees are billed for professional services rendered by PricewaterhouseCoopers for the audit of each Price fund`s annual

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financial statements and for services normally provided in connection with statutory and regulatory filings. Audit-related fees are billed to the Price funds for assurance and related services by PricewaterhouseCoopers that are reasonably related to the performance of the audit of each Price fund`s financial statements. The nature of service comprising these fees is the issuance of a report on internal controls. Tax fees are billed to the Price funds for services rendered by PricewaterhouseCoopers for tax compliance, tax advice, and tax planning. The nature of services comprising these fees includes the review of distribution calculations and the preparation of federal, state, and excise tax returns. All other fees are billed for all other services rendered to the Price funds by PricewaterhouseCoopers. The nature of the service comprising these fees is agreed-upon procedures in conjunction with service contract approvals by the Price funds` Board of Directors/Trustees.

The Audit Committee has considered whether the provisions of the services covered under "Other Fees" is compatible with maintaining the independence of PricewaterhouseCoopers.

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8  (continued)


Fund


Audit Fees


Audit Related Fees


Tax Fees


All Other Fees

















Previous Fiscal Year


Current Fiscal Year


Previous Fiscal Year


Current Fiscal Year


Previous Fiscal Year


Current Fiscal Year


Previous Fiscal Year


Current Fiscal Year

Balanced
9,523
10,364
1,316
666
2,583
2,944
—
393
Blue Chip Growth
23,270
24,316
3,018
1,563
6,311
6,907
—
393
Blue Chip Growth Portfolio
8,930
8,740
1,227
562
2,422
2,482
—
394
California Tax-Free Bond
8,359
7,120
715
811
2,330
2,073
124
—
California Tax-Free Money
8,009
6,869
683
784
2,233
2,000
124
—
Capital Appreciation
10,718
16,636
1,544
993
2,906
4,385
—
393
Capital Opportunity
6,897
10,298
968
508
1,871
2,243
—
393
Corporate Income
7,523
6,403
685
797
2,079
1,957
124
306
Developing Technologies
6,500
6,867
909
442
1,763
1,950
—
393
Diversified Mid-Cap Growth
11,778
7,589
725
488
3,194
2,156
—
252
Diversified Small-Cap Growth
6,129
6,605
848
425
1,662
1,876
—
394
Dividend Growth
7,530
8,016
1,050
515
2,042
2,277
—
394
Emerging Europe & Mediterranean
11,228
11,928
1,064
1,016
2,997
3,382
124
369
Emerging Markets Bond
11,457
12,262
1,600
788
3,107
3,483
—
393
Emerging Markets Stock
12,481
14,017
1,211
1,194
5,686
3,974
124
368
Equity Income
28,978
29,989
3,951
1,928
7,858
8,518
—
394
Equity Income Portfolio
11,007
11,356
1,529
730
2,985
3,226
—
394
Equity Index 500
12,316
15,668
1,736
927
3,340
4,096
—
393
Equity Index 500 Portfolio
5,500
6,078
751
391
1,492
1,726
—
394
European Stock
13,785
14,394
1,345
1,221
3,794
4,081
124
368
Extended Equity Market Index
7,127
8,633
1,005
475
1,933
2,097
—
394
Financial Services
7,104
7,519
994
484
1,927
2,136
—
394
Florida Intermediate Tax-Free
8,047
6,882
686
785
2,243
2,004
124
—
Georgia Tax-Free Bond
7,993
6,860
682
781
2,228
1,997
124
—
Global Stock
11,682
11,096
1,094
1,009
5,467
3,146
124
368
Global Technology
6,543
6,937
913
446
2,808
1,970
—
394
GNMA
10,069
7,170
916
939
2,783
2,191
124
307
TRP Government Reserve Investment
9,384
7,641
853
955
2,594
2,335
124
306
Growth & Income
9,700
9,816
1,336
631
2,631
2,789
—
394
Growth Stock
21,264
24,352
2,898
1,566
5,767
6,917
—
394
Health Sciences
8,150
8,846
1,152
569
2,210
2,513
—
393
Health Sciences Portfolio
9,059
8,756
1,245
563
2,457
2,487
—
394
High Yield
12,903
13,755
1,428
1,774
3,630
4,203
124
306
Inflation Protected Bond
7,356
3,739
670
640
2,033
1,143
124
306
Institutional Core Plus
N/A
7,486
N/A
64
N/A
2,288
N/A
165
Institutional Emerging Markets Equity
9,490
9,590
912
732
4,863
2,719
124
368
Institutional Foreign Equity
15,070
13,100
1,410
1,129
6,399
3,714
124
368
Institutional High Yield
8,395
3,861
763
687
2,320
1,180
124
306
Institutional Large-Cap Core Growth
8,254
6,463
860
416
2,238
1,836
—
394
Institutional Large-Cap Growth
6,960
7,260
980
467
1,887
2,062
—
393
Institutional Large-Cap Value
6,252
6,750
871
434
1,695
1,917
—
394
Institutional Mid-Cap Equity Growth
7,433
7,776
1,045
500
2,016
2,209
—
394
Institutional Small-Cap Stock
6,927
7,328
961
471
1,878
2,082
—
394
International Bond
17,744
21,265
2,481
1,367
4,812
6,041
—
394
International Discovery
13,502
15,119
1,317
1,278
5,967
4,287
124
368
International Equity Index
10,003
10,939
965
799
2,753
2,747
124
369
International Growth & Income
16,199
17,354
1,563
1,503
4,458
4,921
124
368
International Stock
28,804
29,735
2,707
2,409
13,781
8,431
124
369
International Stock Portfolio
12,054
13,207
1,703
849
5,521
3,752
—
393
Japan
10,724
10,797
1,049
910
2,951
3,061
124
369
Latin America
11,020
11,537
1,070
966
3,032
3,271
124
369
Limited-Term Bond Portfolio
7,047
8,994
992
501
1,911
2,214
—
394
Maryland Short-Term Tax-Free Bond
8,270
7,082
709
808
2,305
2,062
124
—
Maryland Tax-Free Bond
10,480
8,080
907
919
2,921
2,353
124
—
Maryland Tax-Free Money
7,951
7,048
679
807
2,216
2,052
124
—
Media & Telecommunications
7,812
8,405
1,103
540
2,118
2,388
—
394
Mid-Cap Growth
26,406
29,371
3,602
1,889
7,161
8,343
—
393
Mid-Cap Growth Portfolio
10,164
10,040
1,414
646
2,757
2,852
—
393
Mid-Cap Value
15,810
19,279
2,181
1,240
4,287
5,476
—
393
New America Growth
7,952
8,260
1,103
531
2,156
2,346
—
394
New America Growth Portfolio
6,765
7,089
948
456
1,835
2,013
—
393
New Asia
13,149
15,107
1,319
1,248
5,871
4,283
124
368
New Era
8,564
10,573
1,207
680
2,322
3,003
—
393
New Horizons
12,790
14,913
1,801
959
3,468
4,236
—
393
New Income
16,881
16,580
1,536
1,916
4,665
5,067
124
307
New Jersey Tax-Free Bond
8,115
6,948
692
793
2,262
2,023
124
—
New York Tax-Free Bond
8,288
7,067
707
807
2,311
2,058
124
—
New York Tax-Free Money
8,028
6,887
685
785
2,238
2,005
124
—
Personal Strategy Balanced
7,945
8,421
796
954
2,214
2,332
124
307
Personal Strategy Balanced Portfolio
6,824
7,163
956
461
1,851
2,035
—
393
Personal Strategy Growth
7,349
7,859
742
891
2,049
2,176
124
306
Personal Strategy Income
7,120
7,513
721
853
1,986
2,076
124
307
Prime Reserve
18,092
11,607
1,647
1,590
5,000
3,547
124
306
Prime Reserve Portfolio
6,948
7,330
977
471
1,884
2,082
—
394
Real Estate
6,382
8,931
890
497
1,731
2,196
—
394
TRP Reserve Investment
14,037
13,696
1,278
1,742
3,879
4,185
124
307
Retirement 2005
5,186
4,003
—
134
1,314
1,223
—
165
Retirement 2010
10,774
4,849
434
720
2,730
1,482
124
307
Retirement 2015
5,186
4,011
—
134
1,314
1,226
—
165
Retirement 2020
10,774
4,897
434
726
2,730
1,496
124
307
Retirement 2025
5,186
4,008
—
134
1,314
1,225
—
165
Retirement 2030
10,774
4,614
434
690
2,730
1,410
124
307
Retirement 2035
5,186
3,620
—
131
1,314
1,106
—
165
Retirement 2040
10,774
4,418
434
664
2,730
1,350
124
307
Retirement 2045(a)
—
—
—
—
—
—
—
—
Retirement Income
10,774
4,571
434
683
2,730
1,397
124
307
Science & Technology
15,929
15,233
2,190
979
6,440
4,327
—
393
Short-Term Bond
9,296
8,460
847
1,065
2,569
2,585
124
307
Small-Cap Stock
16,969
18,399
2,322
1,183
4,602
5,226
—
394
Small-Cap Value
13,744
15,666
1,914
1,007
3,727
4,450
—
393
Spectrum Growth
6,323
6,458
996
415
1,715
1,834
—
394
Spectrum Income
6,953
7,934
1,147
510
1,885
2,254
—
394
Spectrum International
4,406
2,928
672
188
1,195
832
—
393
Summit Cash Reserves
12,169
12,489
1,191
1,025
3,349
3,541
124
369
Summit GNMA
7,157
7,123
690
614
1,970
2,020
124
368
Summit Municipal Income
7,331
7,471
711
656
2,018
2,118
124
368
Summit Municipal Intermediate
7,382
7,596
718
665
2,032
2,154
124
369
Summit Municipal Money Market
7,738
8,248
760
713
2,129
2,339
124
369
Tax-Efficient Balanced
7,517
6,343
674
721
2,096
1,847
124
—
Tax-Efficient Growth
7,674
6,552
679
743
2,139
1,907
124
—
Tax-Efficient Multi-Cap Growth
7,781
6,968
670
795
2,169
2,029
124
—
Tax-Exempt Money
8,348
6,306
788
718
2,327
1,836
124
—
Tax-Free High Yield
10,062
7,760
865
889
2,805
2,259
124
—
Tax-Free Income
13,110
12,155
1,174
1,386
3,655
3,539
124
—
Tax-Free Intermediate Bond
8,145
6,978
697
796
2,271
2,031
124
—
Tax-Free Short-Intermediate
8,934
7,404
769
847
2,490
2,155
124
—
Total Equity Market Index
7,336
7,790
1,033
501
1,990
2,213
—
393
U.S. Bond Index
7,741
9,058
730
695
2,067
2,214
124
368
U.S. Treasury Intermediate
8,138
7,088
740
880
2,249
2,166
124
306
U.S. Treasury Long-Term
7,892
6,884
718
854
2,181
2,104
124
307
U.S. Treasury Money
9,419
7,339
859
940
2,603
2,243
124
306
Value
11,123
12,486
1,537
803
3,016
3,547
—
394
Virginia Tax-Free Bond
8,624
7,266
739
830
2,404
2,116
124
—

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(a)The fund began operations on May 31, 2005, the last day of its fiscal year.

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