Registration Nos. 002-48848/811-2396
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 66 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 41 /X/
T. ROWE PRICE NEW INCOME FUND, INC.
Exact Name of Registrant as Specified in Charter
100 East Pratt Street, Baltimore, Maryland 21202
Address of Principal Executive
Offices
410-345-2000
Registrant’s
Telephone Number, Including Area Code
David Oestreicher
100 East Pratt Street, Baltimore, Maryland
21202
Name and Address of Agent for Service
Approximate Date of Proposed Public Offering October 1, 2012
It is proposed that this filing will become effective (check appropriate box):
// Immediately upon filing pursuant to paragraph (b)
/X/ On October 1, 2012 pursuant to paragraph (b)
// 60 days after filing pursuant to paragraph (a)(1)
// On (date) pursuant to paragraph (a)(1)
// 75 days after filing pursuant to paragraph (a)(2)
// On (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
// This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
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PROSPECTUS | |
PRCIX | |
October 1, 2012 | |
T. Rowe Price New Income Fund | |
A bond fund seeking the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities. | |
The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. | |
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Table of Contents
SUMMARY
The fund seeks the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities.
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
Fees and Expenses of the Fund
Shareholder fees (fees paid directly from your investment) | |
Maximum sales charge (load) imposed on | NONE |
Maximum deferred sales charge (load) | NONE |
Redemption fee | NONE |
Maximum account fee | $20a |
Annual fund operating expenses | |
Management fees | 0.45% |
Distribution and service (12b-1) fees | 0.00% |
Other expenses | 0.16% |
Acquired fund fees and expenses | 0.02% |
Total annual fund operating expenses | 0.63% |
Fee waiver/expense reimbursement | 0.02%b |
Total annual fund operating expenses after fee waiver/expense reimbursement | 0.61%c |
a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee.
b T. Rowe Price Associates, Inc. is required to permanently waive a portion of its management fee charged to the fund in an amount sufficient to fully offset any acquired fund fees and expenses related to investments in other T. Rowe Price mutual funds. The amount of the waiver will vary each fiscal year in proportion to the amount invested in other T. Rowe Price mutual funds. The T. Rowe Price funds would be required to seek regulatory approval in order to terminate this arrangement.
c The figure shown under “Total annual fund operating expenses after fee waiver/expense reimbursement” does not match the “Ratio of expenses to average net assets” shown in the Financial Highlights table, as that figure does not include acquired fund fees and expenses.
Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same.
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Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 year | 3 years | 5 years | 10 years |
$62 | $195 | $340 | $762 |
Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 157.1% of the average value of its portfolio.
Investments, Risks, and Performance
Principal Investment Strategies In seeking income and capital preservation, the fund pursues a total return strategy. Active management of the portfolio can result in bonds being sold at gains or losses. However, over the long term, the fund seeks to achieve its objective by investing primarily in income-producing securities that possess what the fund believes are favorable total return (income plus increases in principal value) characteristics.
The fund will invest at least 80% of its total assets in income-producing securities, which may include, but are not limited to, U.S. government and agency obligations, mortgage- and asset-backed securities, corporate bonds, foreign securities, collateralized mortgage obligations, Treasury inflation protected securities, and others, including, on occasion, equities.
Eighty percent (80%) of the debt securities purchased by the fund will be rated investment grade (AAA, AA, A, BBB, or an equivalent rating) by each of the major credit rating agencies (Standard & Poor’s, Moody’s, and Fitch) that have assigned a rating to the security or, if unrated, deemed to be of investment-grade quality by T. Rowe Price. Up to 15% of the fund’s total assets may be invested in “split-rated securities,” which are securities that have been rated investment-grade by at least one rating agency but below investment-grade by another rating agency. In addition, the fund may invest up to 5% of its total assets in securities that have received below investment-grade ratings from each of the rating agencies that have assigned ratings to the securities or, if unrated, deemed to be below investment-grade quality by T. Rowe Price.
The fund has considerable flexibility in seeking high yields. There are no maturity restrictions, so the fund can purchase longer-term bonds, which tend to have higher yields than shorter-term bonds. However, the portfolio’s weighted average maturity is expected to be between four and 15 years. In addition, when there is a large yield difference between the various quality levels, the fund may move down the credit scale and purchase lower-rated bonds with higher yields. When the difference is
Summary | 3 |
small or the outlook warrants, the fund may concentrate investments in higher-rated issues.
While most assets will typically be invested in bonds, the fund also uses interest rate futures and forward currency exchange contracts in keeping with the fund’s objectives. Interest rate futures would typically be used to manage the fund’s exposure to interest rate changes or to adjust portfolio duration. Forward currency exchange contracts would be used to gain exposure to certain currencies expected to increase or decrease in value relative to other currencies or to protect the fund’s foreign bond holdings from adverse currency movements relative to the U.S. dollar.
The fund may sell holdings for a variety of reasons, such as to adjust the portfolio’s average maturity, duration, or credit quality or to shift assets into and out of higher-yielding or lower-yielding securities or different sectors.
Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:
Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.
Interest rate risk This is the risk that a rise in interest rates will cause the price of a fixed rate debt security to fall. Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk.
Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation.
Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price.
Foreign investing risk This is the risk that the fund’s investments in foreign securities may be adversely affected by political and economic conditions overseas, reduced liquidity, or decreases in foreign currency values relative to the U.S. dollar.
Prepayment risk and extension risk Prepayment risk is the risk that the principal on mortgage-backed securities, other asset-backed securities or any debt security with an embedded call option may be prepaid at any time, which could reduce yield and market value. The rate of prepayments tends to increase as interest rates fall, which could cause the average maturity of the portfolio to shorten. Extension risk may result from a rise in interest rates, which tends to make mortgage-backed securities, asset-backed securities, and other callable debt securities more volatile.
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Derivatives risk To the extent the fund uses interest rate futures and forward currency exchange contracts, it is exposed to additional volatility in comparison to investing directly in bonds and other debt securities. These instruments can be illiquid and difficult to value, may involve leverage so that small changes produce disproportionate losses for the fund, and instruments not traded on an exchange are subject to the risk that a counterparty to the transaction will fail to meet its obligations under the derivatives contract. The fund’s principal use of derivatives involves the risk that anticipated interest rate movements and changes in currency values and currency exchange rates will not be accurately predicted, which could significantly harm the fund’s performance.
Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance.
The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted.
The fund’s return for the six months ended 6/30/12 was 2.86%.
In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as a 401(k) account or individual retirement account.
Summary | 5 |
Average Annual Total Returns | ||||||||||||
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| Periods ended |
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| December 31, 2011 |
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| 1 Year | 5 Years | 10 Years |
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| New Income Fund |
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| Returns before taxes | 6.25 | % | 6.64 | % | 5.78 | % |
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| Returns after taxes on distributions | 4.83 |
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| 4.91 |
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| 4.29 |
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| Returns after taxes on distributions |
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| and sale of fund shares | 4.12 |
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| 4.67 |
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| 4.14 |
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| Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes) | 7.84 |
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| 6.50 |
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| 5.78 |
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| Lipper Corporate Debt Funds A-Rated Average | 6.87 |
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| 5.88 |
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| 5.40 |
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Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132.
Management
Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price)
Portfolio Manager | Title | Managed Fund Since | Joined Investment |
Daniel O. Shackelford | Chairman of Investment Advisory Committee | 2002 | 1999 |
Purchase and Sale of Fund Shares
The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums):
Type of Account | Minimum | Minimum subsequent |
Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts | $1,000 | $100 |
All other accounts | 2,500 | 100 |
You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary.
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Tax Information
The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments.
Information About Accounts in T. Rowe Price Funds | 2 | |
As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to the T. Rowe Price family of funds.
How and When Shares Are Priced
The share price, also called the “net asset value,” for the funds is calculated at the close of the New York Stock Exchange (normally 4 p.m. ET) each day that the exchange is open for business. To calculate the net asset value, the fund’s assets are valued and totaled; liabilities are subtracted; and the balance, called net assets, is divided by the number of shares outstanding. Market values are used to price portfolio holdings for which market quotations are readily available. Market values represent the prices at which securities actually trade or evaluations based on the judgment of the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation.
Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange will, in its judgment, materially affect the value of some or all of the fund’s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income securities. The fund cannot predict how often it will use closing prices and how often it will adjust those prices.
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As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values than the fair value that the fund assigns to the same security.
The various ways you can buy, sell, and exchange shares are explained at the end of this prospectus and on the New Account form. These procedures may differ for institutional and employer-sponsored retirement accounts or if you hold your account through an intermediary.
How Your Purchase, Sale, or Exchange Price Is Determined
If your request is received by T. Rowe Price in correct form by the close of the New York Stock Exchange (normally 4 p.m. ET), your transaction will be priced at that business day’s net asset value. If your request is received by T. Rowe Price after the close of the New York Stock Exchange, your transaction will be priced at the next business day’s net asset value.
The funds generally do not accept orders that request a particular day or price for a transaction or any other special conditions.
Fund shares may be purchased through various third-party intermediaries, including banks, brokers, and investment advisers. Where authorized by a fund, orders will be priced at the net asset value next computed after receipt by the intermediary. Contact your intermediary for trade deadlines and the applicable policies for purchasing, selling, or exchanging your shares, as well as initial and subsequent investment minimums. The intermediary may charge a fee for its services.
When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received.
Note: The time at which transactions and shares are priced and the time until which orders are accepted may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price website, or other circumstances. Should this occur, your order must still be placed
Information About Accounts in T. Rowe Price Funds | 9 |
and accepted by T. Rowe Price prior to the time the New York Stock Exchange closes to be priced at that business day’s net asset value. Under certain conditions, a money fund may accept and process purchase and redemption orders beyond the close of the New York Stock Exchange on days that the New York Stock Exchange closes early and does not reopen, and may accept orders on a business day that the New York Stock Exchange is unexpectedly closed.
How You Can Receive the Proceeds From a Sale
When filling out the New Account form, you may wish to give yourself the widest range of options for receiving proceeds from a sale.
If your request is received in correct form by T. Rowe Price on a business day prior to the close of the New York Stock Exchange, proceeds are usually sent on the next business day. Proceeds can be mailed to you by check or sent electronically to your bank account by Automated Clearing House transfer or bank wire. Automated Clearing House is an automated method of initiating payments from, and receiving payments in, your financial institution account. Proceeds sent by Automated Clearing House transfer are usually credited to your account the second business day after the sale and there are typically no fees associated with such payments. Proceeds sent by bank wire are usually credited to your account the next business day after the sale, although your financial institution may charge an incoming wire fee.
Exception Under certain circumstances, and when deemed to be in a fund’s best interest, your proceeds may not be sent for up to seven calendar days after we receive your redemption request. Under certain limited circumstances, the Board of Directors/Trustees of a money fund may elect to suspend redemptions and postpone payment of redemption proceeds in order to facilitate an orderly liquidation of the money fund.
If for some reason we cannot accept your request to sell shares, we will contact you.
Contingent Redemption Fee
Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated:
T. Rowe Price Funds With Redemption Fees | ||
Fund | Redemption fee | Holding period |
Africa & Middle East | 2% | 90 days or less |
Diversified Small-Cap Growth | 1% | 90 days or less |
Emerging Europe | 2% | 90 days or less |
Emerging Markets Bond | 2% | 90 days or less |
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T. Rowe Price Funds With Redemption Fees | ||
Fund | Redemption fee | Holding period |
Emerging Markets Corporate Bond | 2% | 90 days or less |
Emerging Markets Local Currency Bond | 2% | 90 days or less |
Emerging Markets Stock | 2% | 90 days or less |
Equity Index 500 | 0.5% | 90 days or less |
European Stock | 2% | 90 days or less |
Extended Equity Market Index | 0.5% | 90 days or less |
Floating Rate | 2% | 90 days or less |
Global Infrastructure | 2% | 90 days or less |
Global Large-Cap Stock | 2% | 90 days or less |
Global Real Estate | 2% | 90 days or less |
Global Stock | 2% | 90 days or less |
High Yield | 2% | 90 days or less |
International Bond | 2% | 90 days or less |
International Discovery | 2% | 90 days or less |
International Equity Index | 2% | 90 days or less |
International Growth & Income | 2% | 90 days or less |
International Stock | 2% | 90 days or less |
Japan | 2% | 90 days or less |
Latin America | 2% | 90 days or less |
New Asia | 2% | 90 days or less |
Overseas Stock | 2% | 90 days or less |
Real Assets | 2% | 90 days or less |
Real Estate | 1% | 90 days or less |
Small-Cap Value | 1% | 90 days or less |
Spectrum International | 2% | 90 days or less |
Tax-Efficient Equity | 1% | less than 365 days |
Tax-Free High Yield | 2% | 90 days or less |
Total Equity Market Index | 0.5% | 90 days or less |
U.S. Bond Enhanced Index | 0.5% | 90 days or less |
Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or
Information About Accounts in T. Rowe Price Funds | 11 |
investment adviser), recordkeeper for retirement plan participants, or other third party.
Computation of Holding Period
When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. For a fund with a 365-day holding period, a redemption fee will be charged on shares sold before the end of the required holding period. For funds with a 90-day holding period, a redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day from the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied.
Transactions Not Subject to Redemption Fees
The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees:
· Shares redeemed through an automated, systematic withdrawal plan;
· Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price;
· Shares purchased through the reinvestment of dividends or capital gain distributions;*
· Shares converted from one share class to another share class of the same fund;*
· Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums);
· Shares purchased by rollover or changes of account registration within the same fund;*
· Shares redeemed to return an excess contribution from a retirement account;
· Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy);
· Shares that are redeemed in-kind;
· Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically;* and
· Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price.
* Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee.
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Redemption Fees on Shares Held in Retirement Plans
If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan’s recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper.
Omnibus Accounts
If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees.
Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees.
Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders.
To the extent possible, all net investment income and realized capital gains are distributed to shareholders.
Dividends and Other Distributions
Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares.
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Distributions not reinvested are paid by check or transmitted to your bank account via Automated Clearing House. If the U.S. Postal Service cannot deliver your check, or if your check remains uncashed for six months, the fund reserves the right to reinvest your distribution check in your account at the net asset value on the day of the reinvestment and to reinvest all subsequent distributions in shares of the fund. Interest will not accrue on amounts represented by uncashed distributions or redemption checks.
The following table provides details on dividend payments:
Dividend Payment Schedule | |
Fund | Dividends |
Money funds | · Purchases received by T. Rowe Price by noon ET via wire begin to earn dividends on that day. Other shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
Bond funds | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
These stock funds only: · Balanced · Dividend Growth · Equity Income · Equity Index 500 · Global Real Estate · Growth & Income · Personal Strategy Balanced · Personal Strategy Income · Real Estate | · Declared and paid quarterly, if any, in March, June, September, and December. · Must be a shareholder on the dividend record date. |
Other stock funds | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
Retirement and Spectrum Funds: | |
· Retirement Income and | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
· All others | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
Bond and money fund shares earn dividends through the date of redemption (except for wire redemptions from money funds prior to noon ET, which earn dividends through the calendar day prior to the date of redemption). Shares redeemed on a Friday or prior to a holiday will continue to earn dividends until the next business
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day. Generally, if you redeem all of your bond or money fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond or money fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day.
If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information previously described may vary.
Capital Gain Payments
A capital gain or loss is the difference between the purchase and sale price of a security. If a fund has net capital gains for the year (after subtracting any capital losses), they are usually declared and paid in December to shareholders of record on a specified date that month. If a second distribution is necessary, it is paid the following year.
Capital gain payments are not expected from money funds, which are managed to maintain a constant share price.
Tax Information
In most cases, you will be provided information for your tax filing needs no later than mid-February.
If you invest in the fund through a tax-deferred account, such as an individual retirement account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you.
If you invest in the fund through a taxable account, you generally will be subject to tax when:
· You sell fund shares, including an exchange from one fund to another.
· The fund makes dividend or capital gain distributions.
Additional information about the taxation of dividends for certain T. Rowe Price funds is listed below:
Tax-Free and Municipal Funds |
· Regular monthly dividends (including those from the state-specific tax-free funds) are expected to be exempt from federal income taxes. |
Information About Accounts in T. Rowe Price Funds | 15 |
Tax-Free and Municipal Funds |
· Exemption is not guaranteed, since the fund has the right under certain conditions to invest in nonexempt securities. |
· A fund may hold Build America Bonds, which were created by the American Recovery and Reinvestment Act of 2009, as well as other qualified tax credit bonds. Investments in these bonds will result in taxable interest income, although the federal income tax on such interest income may be fully or partially offset by the specified tax credits that are available to the bondholders. A fund may elect to pass through to the shareholders taxable interest income and any corresponding tax credits. Any available tax credits—which are also included in federal taxable income—generally can be used to offset federal regular income tax and alternative minimum tax, but those tax credits generally are not refundable. |
· Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that is subject to tax. |
· For state-specific funds, the monthly dividends you receive are expected to be exempt from state and local income tax of that particular state. For other funds, a small portion of your income dividend may be exempt from state and local income taxes. |
· If a fund invests in certain “private activity” bonds that are not exempt from the alternative minimum tax, shareholders who are subject to the alternative minimum tax must include income generated by those bonds in their alternative minimum tax calculation. Private activity bonds issued in 2009 and 2010, and refunding bonds issued in 2009 and 2010 to refund private activity bonds that were issued from the beginning of 2004 to the end of 2008, are exempt from the alternative minimum tax. The portion of a fund’s income dividend that should be included in your alternative minimum tax calculation, if any, will be reported to you in January on Form 1099-DIV. |
For individual shareholders, a portion of ordinary dividends representing “qualified dividend income” received by the fund may be subject to tax at the lower rate applicable to long-term capital gains rather than ordinary income for taxable years beginning before 2013. You may report it as “qualified dividend income” in computing your taxes, provided you have held the fund shares on which the dividend was paid for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Ordinary dividends that do not qualify for this lower rate are generally taxable at the investor’s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term capital gains, distributions from nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Little, if any, of the ordinary dividends paid by the Global Real Estate Fund, Real Estate Fund, or the bond and money funds is expected to qualify for this lower rate.
For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the international stock funds or the bond and money funds is expected to qualify for this deduction.
Beginning in 2013, a 3.8% Medicare contribution tax will be imposed on net investment income, including interest, dividends, and capital gains, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts.
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Taxes on Fund Redemptions
When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is also a sale for tax purposes.
T. Rowe Price will make available to you Form 1099-B, if applicable, no later than mid-February, indicating the date and amount of each sale you made in the fund during the prior year. This information will also be reported to the Internal Revenue Service. For most new accounts or those opened by exchange in 1984 or later, we will provide you with the gain or loss on the shares you sold during the year based on the average cost single category method. You may calculate the cost basis using other methods acceptable to the Internal Revenue Service, such as specific identification.
If you hold your fund through an intermediary, the intermediary is responsible for providing you with any necessary tax forms. You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service.
For
mutual fund shares acquired after 2011, new tax regulations require us to
report the cost basis information
to you and the Internal Revenue Service on
Form 1099-B using a cost basis method selected by
you or, in the absence of such selected method, our default method if you acquire your shares directly
from us. Our default method is average cost. If you acquire your fund shares through an intermediary
after 2011, you should check with your intermediary regarding the applicable cost basis method. You should,
however, note that the cost basis information reported to you may not always be the same as what you
should report on your tax return because the rules applicable to the determination of cost basis on Form 1099-B
may be different from the rules applicable to the determination of cost basis for reporting on your tax
return. Therefore, you should save your transaction records to make sure the information reported on
your tax return is accurate. To help you maintain accurate records, T. Rowe Price will make available
to you a confirmation promptly following each transaction you make (except for systematic purchases and
systematic redemptions) and a year-end statement detailing all of your transactions in each fund account
during the year. If you hold your fund through an intermediary, the intermediary is responsible for providing
you with transaction confirmations and statements.
Taxes on Fund Distributions
T. Rowe Price (or your intermediary) will make available to you, as applicable, no later than mid-February, a Form 1099-DIV, or other Internal Revenue Service forms, as required, indicating the tax status of any income dividends, dividends exempt from federal income taxes, and capital gain distributions made to you. This information will be reported to the Internal Revenue Service. Taxable distributions are generally taxable to you in the year in which they are paid. Your bond or money fund dividends for each calendar year will include dividends accrued up to the first
Information About Accounts in T. Rowe Price Funds | 17 |
business day of the next calendar year. You will be sent any additional information you need to determine your taxes on fund distributions, such as the portion of your dividends, if any, that may be exempt from state and local income taxes. Dividends from tax-free funds are generally expected to be tax-exempt.
The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held the shares in the fund. Short-term (one year or less) capital gain distributions are taxable at the same rate as ordinary income, and gains on securities held for more than one year are taxed at the lower rates applicable to long-term capital gains. If you realized a loss on the sale or exchange of fund shares that you held for six months or less, your short-term capital loss must be reclassified as a long-term capital loss to the extent of any long-term capital gain distributions received during the period you held the shares. For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, currency contracts, and the foreign currency portion of gains on debt securities are taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly dividends to be reclassified as a return of capital.
If the fund qualifies and elects to pass through nonrefundable foreign income taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will meet the requirements to pass through foreign income taxes paid.
Taxable distributions are subject to tax whether reinvested in additional shares or received in cash.
If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits.
The following table provides additional details on distributions for certain funds:
Taxes on Fund Distributions |
Tax-Free and Municipal Funds |
· Gains realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. · Payments received or gains realized on certain derivative transactions may result in taxable ordinary income or capital gains. · To the extent the fund makes such investments, the likelihood of a taxable distribution will be increased. |
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Taxes on Fund Distributions |
Inflation Protected Bond Fund |
· Inflation adjustments on Treasury inflation protected securities that exceed deflation adjustments for the year will be distributed as a short-term capital gain resulting in ordinary income. · In computing the distribution amount, the fund cannot reduce inflation adjustments by short- or long-term capital losses from the sales of securities. · Net deflation adjustments for a year may result in all or a portion of dividends paid earlier in the year being treated as a return of capital. |
Retirement and Spectrum Funds |
· Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains. |
Tax Consequences of Hedging
Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions.
Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution
If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund’s record date before investing. In addition, a fund’s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return.
Following these procedures helps assure timely and accurate transactions.
Purchase Conditions
Nonpayment If you pay with a check or Automated Clearing House transfer that does not clear or if your payment is not received in a timely manner, your purchase may be canceled. You will be responsible for any losses or expenses incurred by the fund or transfer agent, and the fund can redeem shares you own in this or another identically registered T. Rowe Price account as reimbursement. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment.
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U.S. Dollars All purchases must be paid for in U.S. dollars; checks must be drawn on U.S. banks.
Sale (Redemption) Conditions
Holds on Immediate Redemptions: 10-Day Hold If you sell shares that you just purchased and paid for by check or Automated Clearing House transfer, the fund will process your redemption but generally will delay sending you the proceeds for up to 10 calendar days to allow the check or transfer to clear. If, during the clearing period, we receive a check drawn against your newly purchased shares, it will be returned marked “uncollected.” (The 10-day hold does not apply to purchases paid for by bank wire or automatic purchases through your paycheck.)
Telephone and Online Account Transactions You may access your account and conduct transactions using the telephone or the T. Rowe Price website. The T. Rowe Price funds and their agents use reasonable procedures to verify the identity of the shareholder. If these procedures are followed, the funds and their agents are not liable for any losses that may occur from acting on unauthorized instructions. A confirmation is sent promptly after a transaction. Please review it carefully and contact T. Rowe Price immediately about any transaction you believe to be unauthorized. Telephone conversations are recorded.
Large Redemptions Large redemptions can adversely affect a portfolio manager’s ability to implement a fund’s investment strategy by causing the premature sale of securities. Therefore, the fund reserves the right (without prior notice) to pay all or part of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs.
Excessive and Short-Term Trading Policy
Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions.
Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of
T. Rowe Price | 20 |
30 calendar days after the shareholder has redeemed or exchanged out of that same fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made.
General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block:
· Shares purchased or redeemed in money funds;
· Shares purchased or redeemed through a systematic purchase or withdrawal plan;
· Checkwriting redemptions from bond and money funds;
· Shares purchased through the reinvestment of dividends or capital gain distributions;
· Shares redeemed by the fund to pay fund fees or shareholder account fees;
· Transfers and changes of account registration within the same fund;
· Shares purchased by asset transfer or direct rollover;
· Shares purchased or redeemed through IRA conversions and recharacterizations;
· Shares redeemed to return an excess contribution from a retirement account;
· Transactions in Section 529 college savings plans;
· Shares converted from one share class to another share class in the same fund; and
· Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy).
Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price.
In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently.
Intermediary Accounts Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity
Information About Accounts in T. Rowe Price Funds | 21 |
at the intermediary (omnibus account) level in an attempt to identify activity that indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities.
T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees.
If you invest in T. Rowe Price funds through an intermediary, you should review that firm’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds and any other rules or conditions on transactions that may apply. If T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply.
Retirement Plan
Accounts If shares are held in a retirement plan, generally the
30-Day Purchase Block applies
only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day Purchase
Block may apply to transactions other than exchanges depending on how shares of the plan are held at
T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper. An alternative
excessive trading policy may apply to the T. Rowe Price funds where a retirement plan has its own
policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price or your plan recordkeeper
to determine which of your transactions are subject to the funds’ 30-Day Purchase Block or an alternative
policy.
There is no guarantee that T. Rowe Price will be able to identify or prevent all excessive or short-term trades or trading practices.
Keeping Your Account Open
Due to the relatively high cost to a fund of maintaining small accounts, we ask you to maintain an account balance of at least $1,000 ($10,000 for Summit Funds). If, for any reason, your balance is below this amount for three months or longer, we have
T. Rowe Price | 22 |
the right to redeem your account at the then-current net asset value after giving you 60 days to increase your balance. This could result in a taxable gain.
Signature Guarantees
A Medallion signature guarantee is designed to protect you and the T. Rowe Price funds from fraud by verifying your signature.
You may need to have your signature guaranteed in certain situations, such as:
· Written requests: (1) to redeem over $100,000 or (2) to wire redemption proceeds when prior bank account authorization is not on file.
· Remitting redemption proceeds to any person, address, or bank account not on record.
· Transferring redemption proceeds to a T. Rowe Price fund account with a different registration (name or ownership) from yours.
· Establishing certain services after the account is opened.
The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.
In an effort to help offset the disproportionately high costs incurred by the funds in connection with servicing lower-balance accounts, an annual $20 account service fee (paid to T. Rowe Price Services, Inc., or one of its affiliates) is charged to certain fund accounts with a balance below $10,000. The determination of whether a fund account is subject to the account service fee is based on account balances and services selected for accounts as of the last business day of August. The fee will be charged to an account with a balance below $10,000 for any reason, including market fluctuation and recent redemptions. The fee, which is automatically deducted from an account by redeeming fund shares, is typically charged to accounts in early September each calendar year.
The account service fee generally does not apply to fund accounts that are held through an intermediary, participant accounts in employer-sponsored retirement plans for which T. Rowe Price Retirement Plan Services provides recordkeeping services, or money funds that are used as a T. Rowe Price Brokerage sweep account.
Information About Accounts in T. Rowe Price Funds | 23 |
Regardless of a particular fund account’s balance on the last business day of August, the account service fee is automatically waived for accounts that satisfy any of the following conditions:
· Any accounts for which the shareholder has elected to receive electronic delivery of all of the following: account statements, transaction confirmations, and prospectuses and shareholder reports;
· Any accounts of a shareholder with at least $50,000 in total assets with T. Rowe Price (for this purpose, total assets includes investments in T. Rowe Price mutual funds, except for those held through a retirement plan for which T. Rowe Price Retirement Plan Services provides recordkeeping services; T. Rowe Price Brokerage; and T. Rowe Price variable annuities); or
· Any accounts of a shareholder who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000—visit troweprice.com or call 1-800-537-1098 for more information).
T. Rowe Price reserves the right to authorize additional waivers for other types of accounts or to modify the conditions for assessment of the account service fee. Fund shares held in a T. Rowe Price individual retirement account, Education Savings Account, or small business retirement plan account (including certain 403(b) plan accounts) are subject to the account service fee and may be subject to additional administrative fees when distributing all fund shares from such accounts.
More About the Fund | 3 | |
How is the fund organized?
The fund was incorporated in Maryland in 1973 and is an “open-end management investment company” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives.
Shareholders have benefitted from T. Rowe Price’s investment management experience since 1937.
What is meant by “shares”?
As with all mutual funds, investors purchase shares when they put money in a fund. These shares are part of a fund’s authorized capital stock, but share certificates are not issued.
Each share and fractional share entitles the shareholder to:
· Receive a proportional interest in income and capital gain distributions.
· Cast one vote per share on certain fund matters, including the election of fund directors/trustees, changes in fundamental policies, or approval of changes in the fund’s management contract.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting for the purpose of voting on the removal of any fund director or trustee. If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send or make available to you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone or on the Internet.
Who runs the fund?
General Oversight
The fund is governed by a Board of Directors that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the fund’s officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”).
All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price–specifically by the fund’s portfolio manager.
More About the Fund | 25 |
Investment Adviser
T. Rowe Price is the fund’s investment adviser and oversees the selection of the fund’s investments and management of the fund’s portfolio. T. Rowe Price is a SEC-registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub-adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of June 30, 2012, the Firm managed approximately $542 billion for more than 11 million individual and institutional investor accounts.
Portfolio Management
T. Rowe Price has established an Investment Advisory Committee with respect to the fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing the fund’s investment program. The members of the committee are as follows: Daniel O. Shackelford, Chairman, Brian J. Brennan, Geoffrey M. Hardin, Steven C. Huber, Alan D. Levenson, Andrew C. McCormick, Vernon A. Reid, Jr., David A. Tiberii, and Edward A. Wiese. The following information provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). Mr. Shackelford became chairman of the committee in 2002. He joined the Firm in 1999 and his investment experience dates from 1981. He has served as a portfolio manager with the Firm throughout the past five years. The Statement of Additional Information provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager, and the portfolio manager’s ownership of fund shares.
The Management Fee
This fee has two parts–an “individual fund fee,” which reflects a fund’s particular characteristics, and a “group fee.” The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets.
T. Rowe Price | 26 |
Group Fee Schedule
0.334%* | First $50 billion |
0.305% | Next $30 billion |
0.300% | Next $40 billion |
0.295% | Next $40 billion |
0.290% | Next $60 billion |
0.285% | Next $80 billion |
0.280% | Thereafter |
* Represents a blended group fee rate containing various breakpoints.
The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On May 31, 2012, the annual group fee rate was 0.30%. The individual fund fee, also applied to the fund’s average daily net assets, is 0.15%.
The expenses shown in the fee table in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee table.
A discussion about the factors considered by the Board and its conclusions in approving the fund’s investment management contract with T. Rowe Price appears in the fund’s annual report to shareholders for the period ended May 31.
Fund Operations and Shareholder Services
T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc., acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc., provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. These companies receive compensation from the funds for their services. The funds may also pay third-party intermediaries for performing shareholder and administrative services for underlying shareholders in omnibus accounts. The fund also serves as an underlying fund in which certain fund-of-funds products, the T. Rowe Price Spectrum and/or Retirement Funds, invest. Subject to approval by the fund’s Board, the fund bears a proportional share of the operating expenses of the fund-of-funds products. All of the fees discussed above are included in the fees and expenses table under “Other expenses” and in the fund’s financial statements.
Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. The fund may be appropriate for you if you seek an attractive level of income and are willing to accept the risk of a declining share price when interest rates rise. Steadily reinvesting the fund’s income is a conservative strategy for
More About the Fund | 27 |
building capital over time. If you are investing primarily for safety and liquidity, you should consider a money fund.
The fund should offer higher yields than money and short-term bond funds and generally less volatility than longer-term bond funds. In addition, the portfolio is widely diversified among a broad range of fixed income securities, thus reducing the effect of a single bond’s price fluctuations on the fund’s share price or total return.
The fund’s yield will vary. A fund’s yield is the annualized dividends earned for a given period (typically 30 days for bond funds), divided by the share price at the end of the period. A fund’s total return includes distributions from income and capital gains and the change in share price for a given period.
Credit quality refers to a bond issuer’s expected ability to make all required interest and principal payments on time. Because highly-rated issuers represent less risk, they can borrow at lower interest rates than less-creditworthy issuers. Therefore, a fund investing in high-quality securities should have a lower yield than an otherwise comparable fund investing in lower-quality securities.
Every bond has a stated maturity date when the issuer must repay the bond’s entire principal value to the investor. However, many bonds are “callable,” meaning their principal can be repaid before the stated maturity date. Bonds are most likely to be called when interest rates are falling because the issuer can refinance at a lower rate, just as a homeowner refinances a mortgage when interest rates fall. In that environment, a bond’s “effective maturity” is usually its nearest call date. For example, the rate at which homeowners pay down their mortgage principal determines the effective maturity of mortgage-backed bonds.
Mortgage-backed securities differ from other high-quality bonds in one major respect. Non-mortgage bonds generally repay principal (face value of the bond) when their maturity date is reached, but most mortgage-backed securities repay principal continually as homeowners make mortgage payments. Homeowners have the option of paying either part or all of the loan balance before maturity, perhaps to refinance or buy a new home. As a result, the effective maturity of a mortgage-backed security is virtually always shorter than its stated maturity. For example, a newly issued pass-through certificate backed by 30-year, fixed rate mortgages will generally have a far shorter life than 30 years - probably 12 years or less. Therefore, it will usually be about as volatile as a 10-year Treasury bond. It is possible to estimate the average life of an entire mortgage pool backing a particular security with some accuracy, but not with certainty.
A bond fund has no real maturity, but it does have a weighted average maturity and a weighted average effective maturity. Each of these numbers is an average of the stated or effective maturities of the underlying bonds, with each bond’s maturity “weighted” by the percentage of fund assets it represents. (The fund’s average effective maturity is calculated by reference to the nearest mortgage prepayment dates, call dates, or coupon reset dates of the underlying holdings.) Some funds utilize effective
T. Rowe Price | 28 |
maturities rather than stated maturities when managing a fund to a certain average maturity, which provides additional flexibility in portfolio management.
Duration is a calculation that seeks to measure the price sensitivity of a bond or a bond fund to changes in interest rates. It is expressed in years, like maturity, but it is a better indicator of price sensitivity than maturity because it takes into account the time value of cash flows generated over the bond’s life. Future interest and principal payments are discounted to reflect their present value and then multiplied by the number of years they will be received to produce a value expressed in years–the duration. “Effective” duration takes into account call features and sinking fund payments that may shorten a bond’s life.
Since duration can be computed for bond funds, you can estimate the effect of interest rate fluctuations on share prices by multiplying fund duration by an expected change in interest rates. For example, the price of a bond fund with a duration of five years would be expected to fall approximately 5% if rates rose by one percentage point. (A bond fund’s duration is shown in its shareholder report.)
As with any mutual fund, there is no guarantee the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money when you sell your shares of the fund. The income level of the fund will change with market conditions and interest rate levels.
Some particular risks affecting the fund include the following:
Interest rate risk This is the risk that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Prices fall because the bonds and notes in the fund’s portfolio become less attractive to other investors when securities with higher yields become available. Because the fund may invest in debt securities of any maturity, it carries more interest rate risk than a fund that invests in shorter-term securities.
Credit risk This is the risk that an issuer of a debt security or counterparties to over-the-counter derivatives held by the fund will default (fail to make scheduled payments), potentially reducing the fund’s income and share price. This risk is increased when a portfolio security is downgraded or the perceived creditworthiness of an issuer or counterparty deteriorates.
Liquidity risk This is the risk that a fund may not be able to sell a holding in a timely manner at a desired price. Sectors of the bond market can experience sudden downturns in trading activity. During periods of reduced market liquidity, the spread between the price at which a security can be bought and the price at which it can be sold can widen, and the fund may not be able to sell a holding readily at a price that reflects what the fund believes it should be worth. Less liquid securities can also become more difficult to value.
Foreign investing risk To the extent a fund holds foreign securities, it will be subject to special risks, whether the securities are denominated in U.S. dollars or foreign
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currencies. These risks include potentially adverse political and economic conditions overseas, greater volatility, lower liquidity, and the possibility that foreign currencies will decline against the dollar, lowering the value of securities denominated in those currencies and possibly a fund’s share price.
Prepayment risk This is the risk that a fund investing in mortgage-backed securities, certain asset-backed securities, and other debt securities that have embedded call options can be hurt when interest rates fall because borrowers tend to refinance and prepay principal. Receiving increasing prepayments in a falling interest rate environment causes the average maturity of the portfolio to shorten, reducing its potential for price gains. It also requires the fund to reinvest proceeds at lower interest rates, which reduces the fund’s total return and yield, and could result in a loss if bond prices fall below the level that the fund paid for them.
Extension risk This is the risk that a rise in interest rates or lack of refinancing opportunities can cause a fund’s average maturity to lengthen unexpectedly due to a drop in expected prepayments of mortgage-backed securities, asset-backed securities, and callable debt securities. This would increase a fund’s sensitivity to rising rates and its potential for price declines.
Efforts to reduce risk Consistent with the fund’s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including:
· Attempting to reduce the impact of a single holding or sector on the fund’s net asset value.
· Thorough credit research by our own analysts.
· Adjusting fund duration to try to reduce the drop in the fund’s price when interest rates rise or to benefit from the rise in price when rates fall.
In addition to the fund’s normal investments, the fund may employ other strategies that are not considered part of its principal investment strategies. Such investments may include other securities and, to a limited extent, other types of derivatives than those described in the fund’s principal strategies.
A derivative involves risks different from, and possibly greater than, the risks associated with investing directly in the assets on which the derivative is based. Derivatives can be highly volatile, illiquid, and difficult to value, and changes in the value of a derivative may not properly correlate with changes in the value of the underlying asset, reference rate, or index. A fund could be exposed to significant losses if it is unable to close a derivatives position due to the lack of a liquid secondary trading market. Derivatives involve the risk that a counterparty to the derivatives agreement will fail to make required payments or comply with the terms of the agreement. There is also the possibility that limitations or trading restrictions may be imposed by an exchange or government regulation, which could adversely impact the value and liquidity of a derivatives contract subject to such regulation.
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Recent legislation calls for a new regulatory framework for the derivatives markets. The extent and impact of new regulations are not certain at this time. New regulations may make the use of derivatives by funds more costly, may limit the availability of certain types of derivatives, and may otherwise adversely affect the value or performance of derivatives used by funds.
The Statement of Additional Information contains more detailed information about the fund and its investments, operations, and expenses.
This section takes a detailed look at some of the types of fund securities and the various kinds of investment practices that may be used in day-to-day portfolio management. Fund investments are subject to further restrictions and risks described in the Statement of Additional Information.
Shareholder approval is required to substantively change fund objectives. Shareholder approval is also required to change certain investment restrictions noted in the following section as “fundamental policies.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval.
Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund’s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments.
Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time it was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions.
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Changes in fund holdings, fund performance, and the contribution of various investments are discussed in the shareholder reports.
Portfolio managers have considerable discretion in choosing investment strategies and selecting securities they believe will help achieve fund objectives.
Types of Portfolio Securities
In seeking to meet its investment objective, fund investments may be made in any type of security or instrument (including certain potentially high-risk derivatives described in this section) whose investment characteristics are consistent with its investment program. The following pages describe various types of fund holdings and investment management practices.
Diversification As a fundamental policy, the fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund’s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund. These limitations do not apply to fund purchases of securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities.
Bonds
A bond is an interest-bearing security. The issuer has a contractual obligation to pay interest at a stated rate on specific dates and to repay principal (the bond’s face value) on a specified date. An issuer may have the right to redeem or “call” a bond before maturity, and the investor may have to reinvest the proceeds at lower market rates. Bonds can be issued by U.S. and foreign governments, states, and municipalities, as well as a wide variety of companies.
A bond’s annual interest income, set by its coupon rate, is usually fixed for the life of the bond. Its yield (income as a percent of current price) will fluctuate to reflect changes in interest rate levels. A bond’s price usually rises when interest rates fall and vice versa, so its yield stays consistent with current market conditions.
Conventional fixed rate bonds offer a coupon rate for a fixed maturity with no adjustment for inflation. Real rate of return bonds also offer a fixed coupon but include ongoing inflation adjustments for the life of the bond.
Bonds may be unsecured (backed by the issuer’s general creditworthiness only) or secured (also backed by specified collateral). Bonds include asset- and mortgage-backed securities.
Certain bonds have interest rates that are adjusted periodically. These interest rate adjustments tend to minimize fluctuations in the bonds’ principal values. The maturity of those securities may be shortened under certain specified conditions.
Bond investments may include Build America Bonds issued by state and local governments to finance capital expenditures for which they otherwise could issue tax-exempt governmental bonds. Unlike most other municipal obligations, interest
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received on Build America Bonds is taxable to the bondholder. These include bonds on which the issuer may receive an interest payment subsidy directly from the U.S. Treasury, known as direct pay Build America Bonds, and bonds on which the investor may receive a tax credit, known as tax credit Build America Bonds.
Common and Preferred Stocks
Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company’s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has omitted, or is in danger of omitting, payment of its dividend.
Convertible Securities and Warrants
Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants can be highly volatile, have no voting rights, and pay no dividends.
Operating policy The fund may invest up to 20% of total assets in preferred stocks and securities that are convertible into, or which carry warrants for, common stocks or other equity securities. Under normal conditions, the fund does not expect to directly purchase common stocks. However, the fund may occasionally hold shares of common stock that were received through a reorganization, restructuring, exercise, exchange, conversion, or similar action.
Foreign Securities
Investments may be made in foreign securities. These include nondollar-denominated securities traded outside of the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. (such as Yankee bonds) Investing in foreign securities involves special risks that can increase the potential for losses. These
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include: exposure to potentially adverse local, political, and economic developments such as war, political instability, hyperinflation, currency devaluations, and overdependence on particular industries; government interference in markets such as nationalization and exchange controls, expropriation of assets, or imposition of punitive taxes; potentially lower liquidity and higher volatility; possible problems arising from accounting, disclosure, settlement, and regulatory practices and legal rights that differ from U.S. standards; and the chance that fluctuations in foreign exchange rates will decrease the investment’s value (favorable changes can increase its value). These risks are heightened for a fund’s investments in emerging markets.
Operating policy There is no limit on fund investments in U.S. dollar-denominated debt securities issued by foreign issuers, foreign branches of U.S. banks, and U.S. branches of foreign banks. The fund may also invest up to 20% of total assets (excluding reserves) in non-U.S. dollar-denominated foreign debt securities. Subject to the overall limit on fund investments in foreign debt securities, there is no limit on the amount of foreign investments that may be made in emerging markets.
Mortgage-Backed Securities
A fund may invest in a variety of mortgage-backed securities. Mortgage lenders pool individual home mortgages with similar characteristics to back a certificate or bond, which is sold to investors such as the fund. Interest and principal payments generated by the underlying mortgages are passed through to the investors. The “big three” issuers are the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. Government National Mortgage Association certificates are backed by the full faith and credit of the U.S. government, while others, such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation certificates, are only supported by the ability to borrow from the U.S. Treasury or by the credit of the agency. (Since September 2008, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have operated under conservatorship of the Federal Housing Finance Agency, an independent federal agency.) Private mortgage bankers and other institutions also issue mortgage-backed securities.
Mortgage-backed securities are subject to scheduled and unscheduled principal payments as homeowners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be higher or lower than on the original mortgage security. Therefore, these securities are not an effective means of locking in long-term interest rates. In addition, when interest rates fall, the rate of mortgage prepayments tends to increase. These refinanced mortgages are paid off at face value or “par,” causing a loss for any investor who may have purchased the security at a price above par. In such an environment, this risk limits the potential price appreciation of these securities and can negatively affect a fund’s net asset value. When interest rates rise, the prices of mortgage-backed securities can be expected to decline. In addition, when interest rates rise and prepayments slow, the effective duration of mortgage-backed securities extends, resulting in increased price volatility.
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Operating policy There is no limit on fund investments in mortgage-backed securities.
Other types of mortgage-backed securities in which the fund may invest include:
Collateralized Mortgage Obligations Collateralized mortgage obligations are debt securities that are fully collateralized by a portfolio of mortgages or mortgage-backed securities including Government National Mortgage Association, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and non-agency-backed mortgages. All interest and principal payments from the underlying mortgages are passed through to the collateralized mortgage obligations in such a way as to create different classes with varying risk characteristics, payment structures, and maturity dates. Collateralized mortgage obligation classes may pay fixed or variable rates of interest, and certain classes have priority over others with respect to the receipt of prepayments and allocation of defaults.
Stripped Mortgage Securities Stripped mortgage securities (a type of potentially high-risk derivative) are created by separating the interest and principal payments generated by a pool of mortgage-backed securities or a collateralized mortgage obligation to create additional classes of securities. Generally, one class receives interest-only payments and another receives principal-only payments. Unlike other mortgage-backed securities and principal-only strips, the value of interest-only strips tends to move in the same direction as interest rates. A fund can use interest-only strips as a hedge against falling prepayment rates (when interest rates are rising) and/or in an unfavorable market environment. Principal-only strips can be used as a hedge against rising prepayment rates (when interest rates are falling) and/or in a favorable market environment. Interest-only strips and principal-only strips are acutely sensitive to interest rate changes and to the rate of principal prepayments.
A rapid or unexpected increase in prepayments can severely depress the price of interest-only strips, while a rapid or unexpected decrease in prepayments could have the same effect on principal-only strips. Of course, under the opposite conditions these securities may appreciate in value. These securities can be very volatile in price and may have less liquidity than most other mortgage-backed securities. Certain non-stripped collateralized mortgage obligation classes may also exhibit these qualities, especially those that pay variable rates of interest that adjust inversely with, and more rapidly than, short-term interest rates. In addition, if interest rates rise rapidly and prepayment rates slow more than expected, certain collateralized mortgage obligation classes, in addition to losing value, can exhibit characteristics of long-term securities and become more volatile. There is no guarantee that a fund’s investments in collateralized mortgage obligations, interest-only strips, or principal-only strips will be successful, and a fund’s total return could be adversely affected as a result.
Operating policy Fund investments in stripped mortgage securities are limited to 10% of total assets.
Commercial Mortgage-Backed Securities Commercial mortgage-backed securities are securities created from a pool of commercial mortgage loans, such as loans for
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hotels, shopping centers, office buildings, and apartment buildings. Interest and principal payments from the loans are passed on to the investor according to a schedule of payments. Credit quality depends primarily on the quality of the loans themselves and on the structure of the particular deal. Generally, deals are structured with senior and subordinate classes. The degree of subordination is determined by the rating agencies who rate the individual classes of the structure. Commercial mortgages are generally structured with prepayment penalties, which greatly reduce prepayment risk to the investor. However, the value of these securities may change because of actual or perceived changes in the creditworthiness of the individual borrowers, their tenants, the servicing agents, or the general state of commercial real estate. There is no limit on fund investments in these securities.
Asset-Backed Securities
An underlying pool of assets, such as credit card or automobile trade receivables or corporate loans or bonds, backs these bonds and provides the interest and principal payments to investors. On occasion, the pool of assets may also include a swap obligation, which is used to change the cash flows on the underlying assets. As an example, a swap may be used to allow floating rate assets to back a fixed rate obligation. Credit quality depends primarily on the quality of the underlying assets, the level of any credit support provided by the structure or by a third-party insurance wrap, and the credit quality of the swap counterparty. The underlying assets (i.e., loans) are sometimes subject to prepayments, which can shorten the security’s effective maturity and may lower its return. The value of these securities also may change because of actual or perceived changes in the creditworthiness of the individual borrowers, the originator, the servicing agent, the financial institution providing the credit support, or the swap counterparty. There is no limit on fund investments in asset-backed securities.
Inflation-Linked Securities
Inflation-linked securities are income-generating instruments whose interest and principal payments are adjusted for inflation—a sustained increase in prices of goods and services that erodes the purchasing power of money. Treasury inflation-protected securities are inflation-linked securities issued by the U.S. government. Inflation-linked bonds are also issued by corporations, U.S. government agencies, and foreign countries. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, such as the consumer price index. A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, both the principal value and the interest payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of your investment. Because of this inflation-adjustment feature, inflation-protected bonds typically have lower yields than conventional fixed rate bonds.
Inflation-protected bonds normally will decline in price when real interest rates rise. (A real interest rate is calculated by subtracting the inflation rate from a nominal
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interest rate. For example, if a 10-year Treasury note is yielding 5% and inflation expectations for the next 10 years are 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected bond could decline and result in losses for the fund.
Noninvestment-Grade Debt Instruments
The fund’s investments in noninvestment-grade companies can include loan participations and assignments, as well as “junk” bonds. Investment in loans involve special types of risk, including those of being a direct lender and reduced liquidity. The price and yield of junk bonds can be expected to fluctuate more than the price and yield of higher-quality bonds.
Investments involving below investment-grade issuers or borrowers are regarded as more volatile than investment-grade bonds and have greater risk with respect to the issuer’s continuing ability to meet principal and interest payments. Normally, the fund will invest in loans and junk bonds through investments in other T. Rowe Price funds that concentrate their investments in these areas.
Derivatives and Leverage
A derivative is a financial instrument whose value is derived from an underlying security such as a stock or bond or from a market benchmark, such as an interest rate index. Many types of investments representing a wide range of risks and potential rewards are derivatives, including conventional instruments such as futures and options, as well as other potentially more complex investments such as swaps and structured notes. The use of derivatives can involve leverage. Leverage has the effect of magnifying returns, positively or negatively. The effect on returns will depend on the extent to which an investment is leveraged. For example, an investment of $1, leveraged at 2 to 1, would have the effect of an investment of $2. Leverage ratios can be higher or lower with a corresponding effect on returns. The fund may use derivatives in certain situations to help accomplish any or all of the following: to hedge against a decline in principal value, to increase yield, to manage exposure to changes in interest or currency exchange rates, to invest in eligible asset classes with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration or credit risk exposure.
While individual fund investments may involve leverage, the fund will not invest in any high-risk, highly leveraged derivative instrument that, at the time of entering into the derivative transaction, is expected to cause the overall price volatility of the portfolio to be meaningfully greater than that of a long-term (over 10-year maturity) investment-grade bond.
Derivatives that may be used include the following as well as others that combine the risk characteristics and features of futures, options, and swaps:
Futures and Options Futures, a type of potentially high-risk derivative, are often used to manage or hedge risk because they enable the investor to buy or sell an asset in the
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future at an agreed-upon price. Options, another type of potentially high-risk derivative, give the investor the right (when the investor purchases the option), or the obligation (when the investor “writes” or sells the option), to buy or sell an asset at a predetermined price in the future. Futures and options contracts may be bought or sold for any number of reasons, including to manage exposure to changes in interest rates, bond prices, foreign currencies, and credit quality; as an efficient means of increasing or decreasing a fund’s exposure to a specific part or broad segment of the U.S. market or a foreign market; in an effort to enhance income; to protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure. Call or put options may be purchased or sold on securities, futures, and financial indexes.
Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower a fund’s total return; and the potential loss from the use of futures can exceed a fund’s initial investment in such contracts.
Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put options.
Swaps Fund investments may be made in interest rate, index, total return, credit default, and other types of swap agreements, as well as options on swaps, commonly referred to as “swaptions.” All of these agreements are considered derivatives and, in certain cases, high-risk derivatives. Interest rate, index, and total return swaps are two-party contracts under which a fund and a counterparty, such as a broker or dealer, agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or indexes. Credit default swaps are agreements where one party (the protection buyer) will make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as defaults and bankruptcies related to an issuer or underlying credit instrument. Swaps and swaptions can be used for a variety of purposes, including to manage a fund’s overall exposure to changes in interest or foreign currency exchange rates and credit quality; as an efficient means of adjusting a fund’s exposure to certain markets; in an effort to enhance income or total return or protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure.
There are risks in the use of swaps and swaptions. Swaps could result in losses if interest or foreign currency exchange rates or credit quality changes are not correctly anticipated by a fund. Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated. Credit default swaps can increase a fund’s exposure to credit risk and could result in losses if evaluation of the creditworthiness of the counterparty, or of the company or government on which the credit default swap is based, is incorrect. The use of swaps and swaptions may not
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always be successful. Using them could lower a fund’s total return, their prices can be highly volatile, and the potential loss from the use of swaps can exceed a fund’s initial investment in such instruments. Also, the other party to a swap agreement could default on its obligations or refuse to cash out a fund’s investment at a reasonable price, which could turn an expected gain into a loss.
Operating policies A swap agreement with any single counterparty will not be entered into if the net amount owed or to be received under existing contracts with that party would exceed 5% of total assets or if the net amount owed or to be received by the fund under all outstanding swap agreements will exceed 10% of total assets. For swaptions, the total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put swaptions.
Hybrid Instruments These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, security, or securities index or another interest rate (each a “benchmark”). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may or may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the fund to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset value of the fund.
Hybrids can have volatile prices and limited liquidity, and their use may not be successful.
Operating policy Fund investments in hybrid instruments are limited to 10% of total assets.
Currency Derivatives The fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency exchange contracts, which are contracts between two counterparties to exchange one currency for another on a future date at a specified exchange rate. In addition to foreign currency forwards, futures, swaps, and options on foreign currencies may also be used to protect a fund’s foreign securities from adverse currency movements relative to the U.S. dollar, as well as to gain exposure to
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currencies and markets expected to increase or decrease in value relative to other currencies or securities.
The fund may attempt to hedge its exposure to potentially unfavorable currency changes. Forward currency contracts will be used primarily to adjust the foreign exchange exposure of the fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price’s outlook. However, forward currency contracts can also be used in an effort to benefit from a currency believed to be appreciating in value versus other currencies. The fund may invest in non-U.S. currencies directly without holding any non-U.S. securities denominated in those currencies.
Forward currency contracts involve special risks, including, but not limited to, the potential for significant volatility in currency markets, and the risk that in certain markets, particularly emerging markets, it is not possible to engage in effective foreign currency hedging. In addition, such transactions involve the risk that currency movements will not occur as anticipated by T. Rowe Price, which could reduce a fund’s total return. The fund might enter into foreign currency transactions under the following circumstances:
Lock In When the fund desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency.
Cross Hedge If a particular currency is expected to decrease in value relative to another currency, the fund may sell the currency expected to decrease and purchase a currency that is expected to increase against the currency sold. The fund’s cross hedging transactions may involve currencies in which the fund’s holdings are denominated. However, the fund is not required to own securities in the particular currency being purchased or sold.
Direct Hedge If the fund seeks to eliminate substantially all of the risk of owning a particular currency or believes the portfolio could benefit from price appreciation in a given country’s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the fund would hope to benefit from an increase (if any) in the value of the bond.
Proxy Hedge In certain circumstances, a different currency may be substituted for the currency in which the investment is denominated, as part of a strategy known as proxy hedging. In this case, the fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and that relationship may not always be maintained. The fund may also use
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these instruments to create a synthetic bond, which is issued in one currency with the currency component transformed into another currency.
Costs of Hedging When the fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. A proxy hedge, which is less costly than a direct hedge, may attempt to reduce this cost through an indirect hedge back to the U.S. dollar.
It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a fund’s dividend distribution and are not reflected in its yield. Instead, such costs will, over time, be reflected in a fund’s net asset value per share and total return. Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid by the funds are classified as capital gains or ordinary income.
Operating policy The fund will not commit more than 20% of total assets to any combination of currency derivatives.
Investments in Other Investment Companies
A fund may invest in other investment companies, including open-end funds, closed-end funds, and exchange-traded funds.
A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program.
The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity.
As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the
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limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order.
A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments include high yield bonds, floating rate loans, international bonds, emerging market bonds, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment.
Illiquid Securities
Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold, for example under Rule 144A of the Securities Act of 1933, others may have resale restrictions and can be illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth.
Operating policy Fund investments in illiquid securities are limited to 15% of net assets.
Types of Investment Management Practices
Reserve Position
A certain portion of fund assets will be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk.
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When-Issued Securities and Forwards
A fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. There is no limit on fund investments in these securities. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment take place after the customary settlement period for that type of security (often a month or more later). During the interim period, the price and yield of the securities can fluctuate, and typically no interest accrues to the purchaser. At the time of delivery, the market value of the securities may be more or less than the purchase or sale price. To the extent the fund remains fully or almost fully invested (in securities with a remaining maturity of more than one year) at the same time it purchases these securities, there will be greater fluctuations in the fund’s net asset value than if the fund did not purchase them.
Borrowing Money and Transferring Assets
A fund may borrow from banks, other persons, and other T. Rowe Price funds for temporary emergency purposes to facilitate redemption requests, or for other purposes consistent with fund policies as set forth in this prospectus. Such borrowings may be collateralized with fund assets, subject to restrictions.
Fundamental policy Borrowings may not exceed 331/3% of total assets.
Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets.
Lending of Portfolio Securities
A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering securities and capital losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform as well as expected.
Fundamental policy The value of loaned securities may not exceed 331/3% of total assets.
Credit Quality Considerations
The credit quality of many fund holdings is evaluated by rating agencies such as Moody’s, Standard & Poor’s, and Fitch. Credit quality refers to the issuer’s ability to meet all required interest and principal payments. The highest ratings are assigned to companies perceived to have the lowest credit risks. T. Rowe Price research analysts also evaluate fund holdings, including those rated by outside agencies. Other things being equal, lower-rated bonds and other debt obligations have higher yields due to greater credit risk.
More About the Fund | 43 |
Credit quality ratings are not guarantees. They are estimates of a company’s financial strength and ability to make interest and principal payments as they come due. Ratings can change at any time due to real or perceived changes in a company’s credit or financial fundamentals.
The following table shows the rating scale used by the major rating agencies.
Ratings of Corporate Debt Securities
Moody’s Investors Service, Inc. | Standard & Poor’s Corporation | Fitch | Definition | ||
Long Term | Aaa | AAA | AAA | Highest quality | |
Aa | AA | AA | High quality | ||
A | A | A | Upper-medium grade | ||
Baa | BBB | BBB | Medium grade | ||
Ba | BB | BB | Speculative | ||
B | B | B | Highly speculative | ||
Caa | CCC | CCC | Vulnerable to default | ||
Ca | CC | CC | Default is imminent | ||
C | C | C | Probably in default | ||
Portfolio Turnover
Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on a fund’s total return. Higher turnover can also increase the possibility of taxable capital gain distributions.
Funds investing in bonds may have higher turnover than funds investing in stocks. Unlike stocks, fixed-maturity bonds require reinvestment. For funds investing in mortgages and callable debt, frequent reinvestment of principal is often required. Common trading strategies, such as mortgage dollar rolls, can increase turnover. Active investment strategies, such as sector rotation and duration management, also necessitate more frequent trading. The fund’s portfolio turnover rates are shown in the Financial Highlights table.
Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with
T. Rowe Price | 44 |
the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after each quarter. Under certain conditions, up to 5% of a fund’s holdings may be included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is in the Statement of Additional Information.
The Financial Highlights table, which provides information about the fund’s financial history, is based on a single share outstanding throughout the periods shown. The table is part of the fund’s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual report were audited by the fund’s independent registered public accounting firm, PricewaterhouseCoopers LLP.
More About the Fund | 45 |
Financial Highlights
Year ended May 31 | ||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||
Net asset
value, | $8.85 | $9.00 | $8.89 | $9.46 | $9.62 | |||||
Income From Investment Operations | ||||||||||
Net investment income* | 0.43 | a | 0.41 | a | 0.37 | a,b | o.32 | a,b | o.28 | a |
Net gains or losses on | 0.15 | — | 0.58 | 0.26 | 0.28 | |||||
Total from investment | 0.58 | 0.41 | 0.95 | 0.58 | 0.56 | |||||
Less Distributions | ||||||||||
Dividends
(from net | (0.43 | ) | (0.41 | ) | (0.38 | ) | (0.34 | ) | (0.32 | ) |
Distributions (from | — | (0.11 | ) | — | (0.08 | ) | (0.06 | ) | ||
Returns of capital | — | — | — | — | — | |||||
Total distributions | (0.43 | ) | (0.52 | ) | (0.38 | ) | (0.42 | ) | (0.38 | ) |
Net asset
value, | $9.00 | $8.89 | $9.46 | $9.62 | $9.80 | |||||
Total return | 6.63 | %a | 4.94 | %a | 10.90 | %a,b | 6.29 | %a,b | 5.98 | %a |
Ratios/Supplemental Data | ||||||||||
Net assets, end of period | $8,071 | $7,110 | $11,215 | $14,807 | $17,430 | |||||
Ratio of
expenses to | 0.64 | %a | 0.67 | %a | 0.68 | %a,b | 0.61 | %a,b | 0.59 | %a |
Ratio of net income to | 4.74 | %a | 4.72 | %a | 4.04 | %a,b | 3.39 | %a,b | 2.95 | %a |
Portfolio turnover rate | 128.3 | %c | 81.5 | %c | 69.0 | % | 110.7 | %c | 157.1 | %c |
Portfolio turnover rate, excluding mortgage dollar roll transactions | 119.7 | % | 76.0 | % | 69.0 | % | 91.9 | % | 116.2 | % |
* Per share amounts calculated using average shares outstanding method.
a Excludes expenses permanently waived 0.02%, 0.02%, 0.02%, 0.02%, and 0.00% of average net assets for the years ended May 31, 2012, May 31, 2011, May 31, 2010, May 31, 2009, and May 31, 2008, respectively, related to investments in T. Rowe Price mutual funds.
b Includes interest expense on TALF loans of 0.02% and 0.06% of average net assets for the years ended May 31, 2011 and May 31, 2010, respectively.
c The portfolio turnover rate calculation includes purchases and sales from the mortgage dollar roll transactions.
Investing With T. Rowe Price | 4 | |
If you are purchasing fund shares through a third-party intermediary, contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums. |
Tax Identification | We must have your correct Social Security number or employer identification number on a signed New Account form or W-9 Form. Otherwise, federal law requires the funds to withhold a percentage of your dividends, capital gain distributions, and redemptions and may subject you to an Internal Revenue Service fine. If this information is not received within 60 days after your account is established, your account may be redeemed at the then-current net asset value for the fund. | |
Transaction Confirmations | We send immediate confirmations for most of your fund transactions, but some, such as
systematic purchases, dividend reinvestments, checkwriting redemptions for money funds, and transactions
in money funds used as a T. Rowe Price Brokerage sweep account, may be reported on your account
statement. Please review confirmations and statements as soon as you receive them and promptly report
any discrepancies to Shareholder Services by calling |
Employer-Sponsored T.
Rowe Price 1-800-492-7670 | Transaction procedures in the following sections may not apply to employer-sponsored retirement plans and institutional accounts. For procedures regarding employer-sponsored retirement plans, please call T. Rowe Price Trust Company or consult your plan administrator. For institutional account procedures, please call your designated account manager or service representative. |
Investing With T. Rowe Price | 47 |
We do not accept third-party checks for initial purchases; however, we do accept third-party checks for subsequent purchases. In addition, T. Rowe Price does not accept purchases by cash, traveler’s checks, or credit card checks. | ||
$2,500 minimum initial investment; $1,000 for retirement plans or Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts ($25,000 minimum initial investment for Summit Funds only) |
Important Information | Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. This information is needed not only for the account owner and any other person who opens the account, but also for any person who has authority to act on behalf of the account. | |
When
you open an account, you will be asked for the name, residential street address, date of birth, and Social
Security number or employer identification number for each account owner and person(s) opening an account
on behalf of others, such as custodians, agents, trustees, or other authorized signers. Corporate and
other institutional accounts require documents showing the existence of the entity (such as articles
of incorporation or partnership agreements) to open an account. Certain other fiduciary accounts (such
as trusts or power of attorney arrangements) require documentation, which may include an original or
certified copy of the trust agreement or power of attorney to open an account. For more information,
call Investor Services at |
We will use this information to verify the identity of the person(s)/entity opening the account. We will not be able to open your account until we receive all of this information. If we are unable to verify your identity, we are authorized to take any action permitted by law. (See Rights Reserved by the Funds.) |
T. Rowe Price | 48 |
The funds are generally available only to investors residing in the United States. In addition, purchases in state tax-free funds are limited to investors living in states where the fund is available. The address of record on your account must be located in one of these states, or you will be restricted from purchasing fund shares. Contact Investor Services for more information. | ||
Account Registration | If you own other T. Rowe Price funds, be sure to register any new account just like your existing accounts so you can exchange shares among them easily. (The name(s) of the account owner(s) and the account type must be identical.) |
For joint accounts or other types of accounts owned or controlled by more than one party, either owner/party has complete authority to act on behalf of all and give instructions concerning the account without notice to the other party. T. Rowe Price may, in its sole discretion, require written authorization from all owners/parties to act on the account for certain transactions (for example, to transfer ownership). |
By Mail | Please make your check payable to T. Rowe Price Funds (otherwise it will be returned), and send your check, together with the New Account form, to the appropriate address below: via U.S. Postal Service via private carriers/overnight services Note: Please use the correct address to avoid a delay in opening your new account. |
By Wire | Visit us online at troweprice.com or call Investor Services for an account number and wire transfer instructions. | |
Investing With T. Rowe Price | 49 |
In order to obtain an account number, you must supply the name, date of birth, Social Security or employer identification number, and residential or business street address for each owner on the account. |
Complete a New Account form and mail it to one of the appropriate T. Rowe Price addresses listed under By Mail. |
Note: Although the purchase will be made, services may not be established and Internal Revenue Service penalty withholding may occur until we receive a signed New Account form. |
Online | You can open a new mutual fund account online. Go to troweprice.com/newaccount to choose the type of account you wish to open. | |
To open an account electronically, you must be a U.S. citizen residing in the U.S. or a resident alien and not subject to Internal Revenue Service backup withholding. Additionally, you must provide consent to receive certain documents electronically. |
You will have the option of providing your bank account information that will enable you to make electronic funds transfers to and from your bank account. To set up this banking service online, additional steps will be taken to verify your identity. |
By Exchange
| Visit us online at troweprice.com (see Automated Services under Information About Your Services) or call Shareholder Services. The new account will have the same registration as the account from which you are exchanging. Services for the new account may be carried over by telephone request if they are preauthorized on the existing account. For limitations on exchanging, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading. |
In Person | Drop off your New Account form at any Investor Center location listed on the back cover and obtain a receipt. | |
T. Rowe Price | 50 |
$100 minimum per fund account for all additional purchases, including those made through Automatic Asset Builder (all funds except Summit Funds); $100 minimum per fund account for additional purchases through Automatic Asset Builder and $1,000 for all other additional purchases (Summit Funds) |
By Automated | Visit us online at troweprice.com or call Shareholder Services if you have established electronic transfers using the Automated Clearing House system. |
By Wire | Go to troweprice.com or call Shareholder Services for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that you will receive the share price for the same day you initiated the wire from your financial institution. |
By Mail | 1. Make your check payable to T. Rowe Price Funds (otherwise it may be returned). 2. Mail the check to us at the following address with either a fund reinvestment slip or a note indicating the fund you want to purchase and your fund account number. Please use the correct address to avoid a delay in processing your transaction. 3. Remember to provide your account number and the fund name on the memo line of your check. | |
via U.S. Postal Service (To send mail directly to T. Rowe Price via private carriers and overnight services, see previous section.) |
Your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). |
By Automatic | Fill out the Automatic Asset Builder section on the New Account form or Shareholder Services form. | |
Investing With T. Rowe Price | 51 |
Exchange Service | You can move money from one account to an existing, identically registered account or open a new identically registered account. Remember, exchanges are purchases and sales for tax purposes. (Exchanges into a state tax-free fund are limited to investors living in states where the fund is available.) For exchange policies, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading Policy. | |
Redemptions | Redemption proceeds can be mailed to your account address, sent by Automated Clearing House transfer to your bank, or wired to your bank (provided your bank information is already on file). Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund. Please note that large purchase and redemption requests initiated through automated services, including the National Securities Clearing Corporation, may be rejected and, in such instances, the transaction must be placed by contacting a service representative. |
If you request to redeem a specific dollar amount, and the market value of your account is less than the amount of your request, your redemption will not be processed, and you will need to submit a new redemption request in proper form. If you change your address on an account, proceeds will not be mailed to the new address for 15 calendar days after the address change, unless we receive a signature guaranteed letter of instruction. | ||
Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund. |
For redemptions by check or electronic transfer, please see Information About Your Services. |
T. Rowe Price | 52 |
Online | Visit us online at troweprice.com. Customers with Account Access (our secure self-service Web platform for individual investors) can electronically exchange shares between identically registered T. Rowe Price accounts and electronically redeem shares from their mutual fund accounts. | |
By Phone | Call Shareholder Services If you find our phones busy during unusually volatile markets, please consider placing your order at troweprice.com (if you have previously authorized these services) or express mail. |
By Mail | For each account involved, provide the account name and number, fund name, and exchange or redemption amount. For exchanges, be sure to specify any fund you are exchanging out of and the fund or funds you are exchanging into. T. Rowe Price may require a signature guarantee of all registered owners (see Transaction Procedures and Special Requirements—Signature Guarantees). Please use one of the following addresses: |
For nonretirement and individual retirement
accounts: via private carriers/overnight
services For
employer-sponsored retirement accounts: via private carriers/overnight services | ||
Investing With T. Rowe Price | 53 |
For requests that are not sent via private carriers or overnight services, your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). |
Requests for redemptions from employer-sponsored retirement accounts may be required to be in writing; please call T. Rowe Price Trust Company or your plan administrator for instructions. Individual retirement account distributions may be requested in writing or by telephone; please call Shareholder Services to obtain an Individual Retirement Account Distribution form or an Individual Retirement Account Shareholder Services form to authorize the telephone redemption service. | ||
| T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary, no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (5) to cease offering fund shares at any time to all or certain groups of investors; (6) to freeze any account and suspend account services when notice has been received of a dispute regarding the ownership of the account or a legal claim against an account or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day |
T. Rowe Price | 54 |
|
| the account is redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund. |
Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660 | Many services are available to you as a shareholder; some you receive automatically, and others you must authorize or request on the New Account form. By signing up for services on the New Account form, you avoid having to complete a separate form at a later time and obtain a signature guarantee. This section discusses some of the services currently offered. |
Retirement Plans | We offer a wide range of plans for individuals, institutions, and large and small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, 401(k)s, and 403(b)(7)s. For information on individual retirement accounts or our no-load variable annuity (for existing variable annuity contract holders), call Investor Services. For information on all other retirement plans, please call 1-800-492-7670. | |
Investing for College | We can help you save for future college expenses on a tax-advantaged basis. |
529
Plans |
Investing With T. Rowe Price | 55 |
Automated Services | Online Account Access |
Tele*AccessSM 1-800-638-2587 |
Plan Account Line 1-800-401-3279 |
By Telephone and | Purchase, redeem, or exchange shares by calling one of our service representatives or by visiting one of our Investor Center locations listed on the back cover. | |
Electronic Transfers | By
Automated Clearing House |
By Wire |
Checkwriting | (Not available for equity funds or the Emerging Markets Bond, Emerging Markets Corporate Bond, Emerging Markets Local Currency Bond, Floating Rate, High Yield, International Bond, or U.S. Bond Enhanced Index Funds.) You may write an unlimited number of free checks on any money fund and most bond funds, with a minimum of $500 per check. Keep in mind, however, that a check results in a redemption; a check written on a bond fund will create a taxable event that you and we must report to the Internal Revenue Service. | |
T. Rowe Price | 56 |
Automatic Investing | Automatic Asset Builder | |
Automatic Exchange |
To Open an Account 1-800-638-5660 For Existing 1-800-225-7720 | Investments available through our Brokerage service include stocks, options, bonds, and other securities at commission savings over full-service brokers.* We also provide a wide range of services, including: Automated Telephone and Computer Services | |
Investor Information |
Dividend Reinvestment
Service *Services vary by firm. T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services, Inc., Member FINRA/SIPC. |
Investing With T. Rowe Price | 57 |
To help you monitor your investments and make decisions that accurately reflect your financial goals, T. Rowe Price offers a wide variety of information in addition to account statements. Most of this information is also available on our website at troweprice.com. |
If your account has no activity in it for a certain period of time, T. Rowe Price may be required to transfer your account to the appropriate state under its abandoned property laws. |
A note on mailing procedures: If two or more members of a household own the same fund, we economize on fund expenses by sending only one fund report and prospectus. If you need additional copies or do not want your mailings to be “householded,” please call Shareholder Services at 1-800-225-5132 or write to us at P.O. Box 17630, Baltimore, MD 21297-1630. |
Shareholder Reports |
The T. Rowe Price Report |
Insights |
Investment Guides |
T. Rowe Price | 58 |
In the course of doing business with T. Rowe Price, you share personal and financial information with us. We treat this information as confidential and recognize the importance of protecting access to it.
You may provide information when communicating or transacting business with us in writing, electronically, or by phone. For instance, information may come from applications, requests for forms or literature, and your transactions and account positions with us. On occasion, such information may come from consumer reporting agencies and those providing services to us.
We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and services to best meet your investing needs. We may also share that information with companies that perform administrative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies’ use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired.
We maintain physical, electronic, and procedural safeguards to protect your personal information. Within T. Rowe Price, access to such information is limited to those who need it to perform their jobs, such as servicing your accounts, resolving problems, or informing you of new products or services. Finally, our Code of Ethics, which applies to all employees, restricts the use of customer information and requires that it be held in strict confidence.
This Privacy Policy applies to the following T. Rowe Price family of companies: T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds.
To help you achieve your financial goals, T. Rowe Price offers a wide range of stock, bond, and money market investments, as well as convenient services and informative reports.
For mutual fund or T. Rowe Price Brokerage information
Investor Services
1-800-638-5660
For existing accounts
Shareholder Services
1-800-225-5132
For the hearing impaired
1-800-367-0763
For performance, prices, or account information
Tele*AccessSM
24 hours, 7 days
1-800-638-2587
Internet address
troweprice.com
Plan Account Line
For retirement plan investors: The appropriate 800 number appears on your retirement account statement.
Investor Centers For directions,
call Baltimore Area Downtown 105 East
Lombard Owings Mills Three Financial Center Boston Area 386 Washington Street Chicago Area Northbrook 40 Skokie Boulevard Oak Brook 1900 Spring
Road Colorado Springs 2260 Briargate Parkway Florida Area Boca Raton Wachovia Plaza Tampa 4211 W.
Boy Scout | Los Angeles Area 10100 Santa
Monica New Jersey Area Short Hills 51 JFK
Parkway Paramus 35 Plaza Office Center New York Area 1100 Franklin Avenue San Francisco Area 1990 N.
California Boulevard Washington, D.C. Area Downtown 1000 Connecticut Tysons Corner 1600 Tysons Boulevard | A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, or for shareholder inquiries, call 1-800-638-5660. These documents and updated performance information are available through troweprice.com. Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington, D.C. 20549-1520. |
T. Rowe Price Associates, Inc. |
|
1940 Act File No. 811-2396 | F43-040 10/1/12 |
| |
PROSPECTUS | |
PANIX | |
October 1, 2012 | |
T. Rowe Price New Income Fund–Advisor Class | |
A bond fund seeking the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities. This class of shares is sold only through financial intermediaries. | |
The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. | |
| |
Table of Contents
SUMMARY
The fund seeks the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities.
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
Fees and Expenses of the Fund’s Advisor Class
Annual
fund operating expenses | |
Management fees | 0.45% |
Distribution and service (12b-1) fees | 0.25% |
Other expenses | 0.11% |
Acquired fund fees and expenses | 0.02% |
Total annual fund operating expenses | 0.83% |
Fee waiver/expense reimbursement | 0.02%a |
Total annual fund operating expenses after fee waiver/expense reimbursement | 0.81%b |
a T. Rowe Price Associates, Inc. is required to permanently waive a portion of its management fee charged to the fund in an amount sufficient to fully offset any acquired fund fees and expenses related to investments in other T. Rowe Price mutual funds. The amount of the waiver will vary each fiscal year in proportion to the amount invested in other T. Rowe Price mutual funds. The T. Rowe Price funds would be required to seek regulatory approval in order to terminate this arrangement.
b The figure shown under “Total annual fund operating expenses after fee waiver/expense reimbursement” does not match the “Ratio of expenses to average net assets” shown in the Financial Highlights table, as that figure does not include acquired fund fees and expenses.
Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 year | 3 years | 5 years | 10 years |
$83 | $259 | $450 | $1,002 |
Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual
T. Rowe Price | 2 |
fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 157.1% of the average value of its portfolio.
Investments, Risks, and Performance
Principal Investment Strategies In seeking income and capital preservation, the fund pursues a total return strategy. Active management of the portfolio can result in bonds being sold at gains or losses. However, over the long term, the fund seeks to achieve its objective by investing primarily in income-producing securities that possess what the fund believes are favorable total return (income plus increases in principal value) characteristics.
The fund will invest at least 80% of its total assets in income-producing securities, which may include, but are not limited to, U.S. government and agency obligations, mortgage- and asset-backed securities, corporate bonds, foreign securities, collateralized mortgage obligations, Treasury inflation protected securities, and others, including, on occasion, equities.
Eighty percent (80%) of the debt securities purchased by the fund will be rated investment grade (AAA, AA, A, BBB, or an equivalent rating) by each of the major credit rating agencies (Standard & Poor’s, Moody’s, and Fitch) that have assigned a rating to the security or, if unrated, deemed to be of investment-grade quality by T. Rowe Price. Up to 15% of the fund’s total assets may be invested in “split-rated securities,” which are securities that have been rated investment-grade by at least one rating agency but below investment-grade by another rating agency. In addition, the fund may invest up to 5% of its total assets in securities that have received below investment-grade ratings from each of the rating agencies that have assigned ratings to the securities or, if unrated, deemed to be below investment-grade quality by T. Rowe Price.
The fund has considerable flexibility in seeking high yields. There are no maturity restrictions, so the fund can purchase longer-term bonds, which tend to have higher yields than shorter-term bonds. However, the portfolio’s weighted average maturity is expected to be between four and 15 years. In addition, when there is a large yield difference between the various quality levels, the fund may move down the credit scale and purchase lower-rated bonds with higher yields. When the difference is small or the outlook warrants, the fund may concentrate investments in higher-rated issues.
While most assets will typically be invested in bonds, the fund also uses interest rate futures and forward currency exchange contracts in keeping with the fund’s objectives. Interest rate futures would typically be used to manage the fund’s exposure to interest rate changes or to adjust portfolio duration. Forward currency exchange contracts would be used to gain exposure to certain currencies expected to increase or decrease in value relative to other currencies or to protect the fund’s foreign bond holdings from adverse currency movements relative to the U.S. dollar.
Summary | 3 |
The fund may sell holdings for a variety of reasons, such as to adjust the portfolio’s average maturity, duration, or credit quality or to shift assets into and out of higher-yielding or lower-yielding securities or different sectors.
Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:
Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.
Interest rate risk This is the risk that a rise in interest rates will cause the price of a fixed rate debt security to fall. Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk.
Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation.
Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price.
Foreign investing risk This is the risk that the fund’s investments in foreign securities may be adversely affected by political and economic conditions overseas, reduced liquidity, or decreases in foreign currency values relative to the U.S. dollar.
Prepayment risk and extension risk Prepayment risk is the risk that the principal on mortgage-backed securities, other asset-backed securities or any debt security with an embedded call option may be prepaid at any time, which could reduce yield and market value. The rate of prepayments tends to increase as interest rates fall, which could cause the average maturity of the portfolio to shorten. Extension risk may result from a rise in interest rates, which tends to make mortgage-backed securities, asset-backed securities, and other callable debt securities more volatile.
Derivatives risk To the extent the fund uses interest rate futures and forward currency exchange contracts, it is exposed to additional volatility in comparison to investing directly in bonds and other debt securities. These instruments can be illiquid and difficult to value, may involve leverage so that small changes produce disproportionate losses for the fund, and instruments not traded on an exchange are subject to the risk that a counterparty to the transaction will fail to meet its obligations under the derivatives contract. The fund’s principal use of derivatives involves the risk that anticipated interest rate movements and changes in currency values and currency exchange rates will not be accurately predicted, which could significantly harm the fund’s performance.
T. Rowe Price |
Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance.
The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted.
The fund’s return for the six months ended 6/30/12 was 2.74%.
In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as a 401(k) account or individual retirement account.
Summary | 5 |
Average Annual Total Returns | |||||||||||
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| Periods ended |
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| December 31, 2011 |
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| Since inception |
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| 1 Year | 5 Years | (9/30/02) |
| |||||||
| New Income Fund-Advisor Class |
| |||||||||
| Returns before taxes | 5.85 | % | 6.37 | % | 5.37 | % | ||||
| Returns after taxes on distributions | 4.54 |
|
| 4.73 |
|
| 4.00 |
|
| |
| Returns after taxes on distributions |
|
|
|
|
|
|
|
|
| |
| and sale of fund shares | 3.87 |
|
| 4.49 |
|
| 3.86 |
|
| |
| Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes) | 7.84 |
|
| 6.50 |
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| 5.32 |
|
| |
| Lipper Corporate Debt Funds A-Rated Average | 6.87 |
|
| 5.88 |
|
| 5.07 |
|
| |
Updated performance information is available through troweprice.com or may be obtained by calling 1-800-638-8790.
Management
Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price)
Portfolio Manager | Title | Managed Fund Since | Joined Investment |
Daniel O. Shackelford | Chairman of Investment Advisory Committee | 2002 | 1999 |
Purchase and Sale of Fund Shares
For retirement plan accounts and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts, generally the fund’s minimum initial investment requirement is $1,000 and, for all other accounts, generally the fund’s minimum initial investment requirement is $2,500. The fund’s minimum subsequent investment requirement is $100. Your financial intermediary may impose different investment minimums.
You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business. You must purchase, redeem, and exchange shares through your financial intermediary.
Tax Information
The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable.
T. Rowe Price | 6 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Information About Accounts in T. Rowe Price Funds | 2 | |
As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to Advisor Class accounts in the T. Rowe Price family of funds.
How and When Shares Are Priced
The share price, also called the “net asset value,” for each class of shares is calculated at the close of the New York Stock Exchange (normally 4 p.m. ET) each day that the exchange is open for business. To calculate the net asset value, the fund’s assets are valued and totaled; liabilities are subtracted; and each class’s proportionate share of the balance, called net assets, is divided by the number of shares outstanding of that class. Market values are used to price portfolio holdings for which market quotations are readily available. Market values represent the prices at which securities actually trade or evaluations based on the judgment of the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation.
Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange will, in its judgment, materially affect the value of some or all of the fund’s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income
T. Rowe Price | 8 |
securities. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values than the fair value that the fund assigns to the same security.
How Your Purchase, Sale, or Exchange Price Is Determined
Advisor Class shares are intended for purchase through various third-party intermediaries, including brokers, banks, insurance companies, retirement plan recordkeepers, and others. Contact your intermediary to find out how to purchase, sell, or exchange your shares; trade deadlines; and other applicable procedures for these transactions. The intermediary may charge a fee for its services.
The fund may have an agreement with your intermediary that permits the intermediary to accept orders on behalf of the fund until the close of the New York Stock Exchange (normally 4 p.m. ET). In such cases, if your order is received by the intermediary in correct form by the close of the New York Stock Exchange and is transmitted to T. Rowe Price and paid for in accordance with the agreement, the transaction will be priced at the next net asset value computed after the intermediary received your order. If the fund does not have an agreement with your intermediary, T. Rowe Price must receive the request in correct form from your intermediary by the close of the New York Stock Exchange in order for your transaction to be priced at that business day’s net asset value.
When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received.
Note: The time at which transactions and shares are priced and the time until which orders are accepted by the fund or an intermediary may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price website, or other circumstances. Should this occur, your order must still be placed and accepted by T. Rowe Price prior to the
Information About Accounts in T. Rowe Price Funds | 9 |
time the New York Stock Exchange closes to be priced at that business day’s net asset value.
How Proceeds Are Received
Normally, the fund transmits proceeds to intermediaries for redemption orders received in correct form on either the next or third business day after receipt, depending on the arrangement with the intermediary. Under certain circumstances, and when deemed to be in a fund’s best interests, proceeds may not be sent to intermediaries for up to seven calendar days after receipt of the redemption order. You must contact your intermediary about procedures for receiving your redemption proceeds.
Contingent Redemption Fee
Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated:
T. Rowe Price Advisor Class Funds With Redemption Fees | ||
Fund | Redemption fee | Holding period |
Emerging Markets Corporate Bond—Advisor Class | 2% | 90 days or less |
Emerging Markets Local Currency Bond—Advisor Class | 2% | 90 days or less |
Floating Rate—Advisor Class | 2% | 90 days or less |
Global Infrastructure—Advisor Class | 2% | 90 days or less |
Global Large-Cap Stock—Advisor Class | 2% | 90 days or less |
Global Real Estate—Advisor Class | 2% | 90 days or less |
Global Stock—Advisor Class | 2% | 90 days or less |
High Yield—Advisor Class | 2% | 90 days or less |
International Bond—Advisor Class | 2% | 90 days or less |
International Growth & Income—Advisor Class | 2% | 90 days or less |
International Stock—Advisor Class | 2% | 90 days or less |
Real Estate—Advisor Class | 1% | 90 days or less |
Small-Cap Value—Advisor Class | 1% | 90 days or less |
Tax-Free High Yield—Advisor Class | 2% | 90 days or less |
Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves
T. Rowe Price | 10 |
as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or investment adviser), recordkeeper for retirement plan participants, or other third party.
Computation of Holding Period
When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. A redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day after the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied.
Transactions Not Subject to Redemption Fees
The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees:
· Shares redeemed through an automated, systematic withdrawal plan;
· Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price;
· Shares purchased through the reinvestment of dividends or capital gain distributions; *
· Shares converted from one share class to another share class of the same fund;*
· Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums);
· Shares purchased by rollover or changes of account registration within the same fund; *
· Shares redeemed to return an excess contribution from a retirement account;
· Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy);
· Shares that are redeemed in-kind;
· Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically; * and
· Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price.
* Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee.
Information About Accounts in T. Rowe Price Funds | 11 |
Redemption Fees on Shares Held in Retirement Plans
If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan’s recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper.
Omnibus Accounts
If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees.
Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees.
Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company, and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders.
To the extent possible, all net investment income and realized capital gains are distributed to shareholders.
Dividends and Other Distributions
Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares.
T. Rowe Price | 12 |
Interest will not accrue on amounts represented by uncashed distributions or redemption checks.
The following table provides details on dividend payments:
Dividend Payment Schedule | |
Fund | Dividends |
Bond funds | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
These stock funds only: · Dividend Growth—Advisor Class · Equity Income—Advisor Class · Global Real Estate—Advisor Class · Real Estate—Advisor Class | · Declared and paid quarterly, if any, in March, June, September, and December. · Must be a shareholder on the dividend record date. |
Other stock funds | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
Retirement Funds: | |
· Retirement Income—Advisor Class | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
· All others | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
Bond fund shares will earn dividends through the date of redemption. Shares redeemed on a Friday or prior to a holiday will continue to earn dividends until the next business day. Generally, if you redeem all of your bond fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that, if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day.
If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information previously described may vary.
Information About Accounts in T. Rowe Price Funds | 13 |
Capital Gain Payments
A capital gain or loss is the difference between the purchase and sale price of a security. If a fund has net capital gains for the year (after subtracting any capital losses), they are usually declared and paid in December to shareholders of record on a specified date that month. If a second distribution is necessary, it is paid the following year.
Tax Information
You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service.
If you invest in the fund through a tax-deferred account, such as an individual retirement account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you.
If you invest in the fund through a taxable account, you generally will be subject to tax when:
· You sell fund shares, including an exchange from one fund to another.
· The fund makes dividend or capital gain distributions.
For individual shareholders, a portion of ordinary dividends representing “qualified dividend income” received by the fund may be subject to tax at the lower rate applicable to long-term capital gains rather than ordinary income for taxable years beginning before 2013. You may report it as “qualified dividend income” in computing your taxes, provided you have held the fund shares on which the dividend was paid for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Ordinary dividends that do not qualify for this lower rate are generally taxable at the investor’s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term capital gains, distributions from nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Little, if any, of the ordinary dividends paid by the Global Real Estate Fund–Advisor Class, Real Estate Fund–Advisor Class, or the bond fund Advisor Classes is expected to qualify for this lower rate.
For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the international stock or bond fund Advisor Classes is expected to qualify for this deduction.
Regular monthly dividends from the Summit Municipal Income Fund–Advisor Class, Summit Municipal Intermediate Fund–Advisor Class, Tax-Free High Yield Fund–Advisor Class, Tax-Free Income Fund–Advisor Class, and the Tax-Free Short-Intermediate Fund–Advisor Class are expected to be exempt from federal income
T. Rowe Price | 14 |
taxes. Exemption is not guaranteed since the fund has the right under certain conditions to invest in nonexempt securities. You must report your total tax-free income on Internal Revenue Service Form 1040. The Internal Revenue Service uses this information to help determine the tax status of any Social Security payments you may have received during the year. Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that is subject to tax.
Beginning in 2013, a 3.8% Medicare contribution tax will be imposed on net investment income, including interest, dividends, and capital gains, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts.
Taxes on Fund Redemptions
When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is also a sale for tax purposes.
Taxes on Fund Distributions
The tax treatment of a capital
gain distribution is determined by how long the fund held the portfolio securities, not how long you
held the shares in the fund.
Short-term (one year or less) capital gain distributions are taxable
at the same rate as ordinary income, and gains on securities held more than one year are taxed at the
lower rates applicable to long-term capital gains. If you realized a loss on the sale or exchange of
fund shares that you held six months or less, your short-term capital loss must be reclassified as a
long-term capital loss to the extent of any long-term capital gain distributions received during the
period you held the shares. For funds investing in foreign securities, distributions resulting from the
sale of certain foreign currencies, currency contracts, and the foreign currency portion of gains on
debt securities are taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly
dividends to be reclassified as a return of capital.
If the fund qualifies and elects to pass through nonrefundable foreign income taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will meet the requirements to pass through foreign income taxes paid.
If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits.
For the tax-free bond fund Advisor Classes, gains realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income
Information About Accounts in T. Rowe Price Funds | 15 |
and cannot be offset by other capital losses, and payments received or gains realized on certain derivative transactions may result in taxable ordinary income or capital gain. To the extent the fund invests in these securities, the likelihood of a taxable gain distribution will be increased.
For the Retirement Funds, distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains.
Taxable distributions are subject to tax whether reinvested in additional shares or received in cash.
Tax Consequences of Hedging
Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions.
Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution
If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund’s record date before investing. In addition, a fund’s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return.
The Advisor Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The fund’s Advisor Class shares are intended for purchase through various third-party intermediaries, including brokers, banks, insurance companies, retirement plan recordkeepers, and other financial intermediaries that provide various distribution and administrative services.
The Advisor Class is designed for use by investors investing through intermediaries and requires an agreement between the intermediary and T. Rowe Price to be executed prior to investment. Purchases of Advisor Class shares for which the required agreement with T. Rowe Price has not been executed, or that are not made through an eligible intermediary, are subject to rejection or cancellation without prior notice to the intermediary or investor. Existing investments in the Advisor Class shares that are not through an eligible intermediary may be transferred by T. Rowe
T. Rowe Price | 16 |
Price to another class (with lower expenses) in the same fund following notice to the intermediary or shareholder.
Purchase Conditions for Intermediaries
Nonpayment If the fund does not receive payment for an order in a timely manner, your purchase may be canceled. The intermediary will be responsible for any losses or expenses incurred by the fund or transfer agent. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment.
U.S. Dollars All purchases must be paid for in U.S. dollars; checks must be drawn on U.S. banks.
Sale (Redemption) Conditions
Holds on Immediate Redemptions: 10-Day Hold If an intermediary sells shares that it just purchased and paid for by check or Automated Clearing House transfer, the fund will process the redemption but generally will delay sending the proceeds for up to 10 calendar days to allow the check or transfer to clear. (The 10-day hold does not apply to purchases paid for by bank wire.)
Large Redemptions Large redemptions can adversely affect a portfolio manager’s ability to implement a fund’s investment strategy by causing the premature sale of securities. Therefore, the fund reserves the right (without prior notice) to pay all or part of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs.
Excessive and Short-Term Trading Policy
Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions.
Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of 30 calendar days after the shareholder has redeemed or exchanged out of that same
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fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made.
General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block:
· Shares purchased or redeemed in money funds;
· Shares purchased or redeemed through a systematic purchase or withdrawal plan;
· Checkwriting redemptions from bond and money funds;
· Shares purchased through the reinvestment of dividends or capital gain distributions;
· Shares redeemed by the fund to pay fund fees or shareholder account fees;
· Transfers and changes of account registration within the same fund;
· Shares purchased by asset transfer or direct rollover;
· Shares purchased or redeemed through IRA conversions and recharacterizations;
· Shares redeemed to return an excess contribution from a retirement account;
· Transactions in Section 529 college savings plans;
· Shares converted from one share class to another share class in the same fund; and
· Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy).
Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price.
In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently.
Intermediary Accounts Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity at the intermediary (omnibus account) level in an attempt to identify activity that
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indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities.
T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees.
If you invest in T. Rowe Price funds through an intermediary, you should review that firm’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds and any other rules or conditions on transactions that may apply. If T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply.
Retirement Plan
Accounts If shares are held in a retirement plan, generally the
30-Day Purchase Block applies
only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day Purchase
Block may apply to transactions other than exchanges depending on how shares of the plan are held at
T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper. An alternative
excessive trading policy may apply to the T. Rowe Price funds where a retirement plan has its own
policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price or your plan recordkeeper
to determine which of your transactions are subject to the funds’ 30-Day Purchase Block or an alternative
policy.
There is no guarantee that T. Rowe Price will be able to identify or prevent all excessive or short-term trades or trading practices.
Signature Guarantees
An intermediary may need to obtain a signature
guarantee in certain situations,
such as:
· Written requests to redeem over $5 million and wire the redemption proceeds to a bank account not on file;
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· Remitting redemption proceeds to any person, address, or bank account not on record; or
· Changing the account registration or broker-dealer of record for an account.
Intermediaries should consult their T. Rowe Price Financial Institution Services representative for specific requirements.
The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.
The Advisor Class has adopted a 12b-1 plan under which it pays a fee at a rate of up to 0.25% of its average daily net assets per year to various unaffiliated intermediaries, such as brokers, banks, insurance companies, and retirement plan recordkeepers for distribution and/or shareholder servicing of the Advisor Class shares. Distribution payments may include payments to intermediaries for making the Advisor Class shares available to their customers (e.g., providing the fund with “shelf space” or inclusion on a “preferred list” or “supermarket” platform). Shareholder servicing payments may include payments to intermediaries for providing shareholder support services to existing shareholders of the Advisor Class. These payments may be more or less than the costs incurred by the intermediaries. Because the fees are paid from the Advisor Class net assets on an ongoing basis, they will increase the cost of your investment and, over time, could result in your paying more than with other types of sales charges. The Advisor Class may also separately compensate intermediaries at a rate of up to 0.15% of average daily net assets per year for various recordkeeping and transfer agent services they perform. These services include maintaining separate records for each customer, transmitting net purchase and redemption orders, mailing shareholder confirmations and periodic statements, and providing telephone and Internet support to respond to questions regarding the customer’s account.
Payment of these fees may influence your financial advisor’s recommendation of the fund or of any particular share class of the fund.
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How is the fund organized?
The fund was incorporated in Maryland in 1973 and is an “open-end management investment company” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives. In 2002, the fund issued two separate share classes known as the Advisor Class and R Class.
Shareholders have benefitted from T. Rowe Price’s investment management experience since 1937.
What is meant by “shares”?
As with all mutual funds, investors purchase shares when they put money in a fund. These shares are part of a fund’s authorized capital stock, but share certificates are not issued.
Each share and fractional share entitles the shareholder to:
· Receive a proportional interest in income and capital gain distributions of the class. The income dividends for Advisor Class shares will generally differ from those of other classes to the extent that the expense ratios of the classes differ.
· Cast one vote per share on certain fund matters, including the election of fund directors/trustees, changes in fundamental policies, or approval of changes in the fund’s management contract. Shareholders of each class have exclusive voting rights on matters affecting only that class.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting for the purpose of voting on the removal of any fund director or trustee. If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send or make available to you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone or on the Internet.
Who runs the fund?
General Oversight
The fund is governed by a Board of Directors that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the
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fund’s officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”).
All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price–specifically by the fund’s portfolio manager.
Investment Adviser
T. Rowe Price is the fund’s investment adviser and oversees the selection of the fund’s investments and management of the fund’s portfolio. T. Rowe Price is a SEC-registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub-adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of June 30, 2012, the Firm managed approximately $542 billion for more than 11 million individual and institutional investor accounts.
Portfolio Management
T. Rowe Price has established an Investment Advisory Committee with respect to the fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing the fund’s investment program. The members of the committee are as follows: Daniel O. Shackelford, Chairman, Brian J. Brennan, Geoffrey M. Hardin, Steven C. Huber, Alan D. Levenson, Andrew C. McCormick, Vernon A. Reid, Jr., David A. Tiberii, and Edward A. Wiese. The following information provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). Mr. Shackelford has been chairman of the committee since 2002. He joined the Firm in 1999 and his investment experience dates from 1981. He has served as a portfolio manager with the Firm throughout the past five years. The Statement of Additional Information provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager, and the portfolio manager’s ownership of fund shares.
The Management Fee
This fee has two parts–an “individual fund fee,” which reflects a fund’s particular characteristics, and a “group fee.” The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets.
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Group Fee Schedule
0.334%* | First $50 billion |
0.305% | Next $30 billion |
0.300% | Next $40 billion |
0.295% | Next $40 billion |
0.290% | Next $60 billion |
0.285% | Next $80 billion |
0.280% | Thereafter |
* Represents a blended group fee rate containing various breakpoints.
The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On May 31, 2012, the annual group fee rate was 0.30%. The individual fund fee, also applied to the fund’s average daily net assets, is 0.15%.
The expenses shown in the fee table in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee table.
A discussion about the factors considered by the Board and its conclusions in approving the fund’s investment management contract with T. Rowe Price appears in the fund’s annual report to shareholders for the period ended May 31.
Fund Operations and Shareholder Services
T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc., acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. These companies receive compensation from the funds for their services. All such fees are included in the fees and expenses table under “Other expenses” and in the fund’s financial statements.
Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. The fund may be appropriate for you if you are investing through an intermediary and seek an attractive level of income and are willing to accept the risk of a declining share price when interest rates rise. Steadily reinvesting the fund’s income is a conservative strategy for building capital over time. If you are investing primarily for safety and liquidity, you should consider a money fund.
The fund should offer higher yields than money and short-term bond funds and generally less volatility than longer-term bond funds. In addition, the portfolio is widely diversified among a broad range of fixed income securities, thus reducing the effect of a single bond’s price fluctuations on the fund’s share price or total return.
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The fund’s yield will vary. A fund’s yield is the annualized dividends earned for a given period (typically 30 days for bond funds), divided by the share price at the end of the period. A fund’s total return includes distributions from income and capital gains and the change in share price for a given period.
Credit quality refers to a bond issuer’s expected ability to make all required interest and principal payments on time. Because highly-rated issuers represent less risk, they can borrow at lower interest rates than less-creditworthy issuers. Therefore, a fund investing in high-quality securities should have a lower yield than an otherwise comparable fund investing in lower-quality securities.
Every bond has a stated maturity date when the issuer must repay the bond’s entire principal value to the investor. However, many bonds are “callable,” meaning their principal can be repaid before the stated maturity date. Bonds are most likely to be called when interest rates are falling because the issuer can refinance at a lower rate, just as a homeowner refinances a mortgage when interest rates fall. In that environment, a bond’s “effective maturity” is usually its nearest call date. For example, the rate at which homeowners pay down their mortgage principal determines the effective maturity of mortgage-backed bonds.
Mortgage-backed securities differ from other high-quality bonds in one major respect. Non-mortgage bonds generally repay principal (face value of the bond) when their maturity date is reached, but most mortgage-backed securities repay principal continually as homeowners make mortgage payments. Homeowners have the option of paying either part or all of the loan balance before maturity, perhaps to refinance or buy a new home. As a result, the effective maturity of a mortgage-backed security is virtually always shorter than its stated maturity. For example, a newly issued pass-through certificate backed by 30-year, fixed rate mortgages will generally have a far shorter life than 30 years - probably 12 years or less. Therefore, it will usually be about as volatile as a 10-year Treasury bond. It is possible to estimate the average life of an entire mortgage pool backing a particular security with some accuracy, but not with certainty.
A bond fund has no real maturity, but it does have a weighted average maturity and a weighted average effective maturity. Each of these numbers is an average of the stated or effective maturities of the underlying bonds, with each bond’s maturity “weighted” by the percentage of fund assets it represents. (The fund’s average effective maturity is calculated by reference to the nearest mortgage prepayment dates, call dates, or coupon reset dates of the underlying holdings.) Some funds utilize effective maturities rather than stated maturities when managing a fund to a certain average maturity, which provides additional flexibility in portfolio management.
Duration is a calculation that seeks to measure the price sensitivity of a bond or a bond fund to changes in interest rates. It is expressed in years, like maturity, but it is a better indicator of price sensitivity than maturity because it takes into account the time value of cash flows generated over the bond’s life. Future interest and principal
T. Rowe Price | 24 |
payments are discounted to reflect their present value and then multiplied by the number of years they will be received to produce a value expressed in years–the duration. “Effective” duration takes into account call features and sinking fund payments that may shorten a bond’s life.
Since duration can be computed for bond funds, you can estimate the effect of interest rate fluctuations on share prices by multiplying fund duration by an expected change in interest rates. For example, the price of a bond fund with a duration of five years would be expected to fall approximately 5% if rates rose by one percentage point. (A bond fund’s duration is shown in its shareholder report.)
As with any mutual fund, there is no guarantee the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money when you sell your shares of the fund. The income level of the fund will change with market conditions and interest rate levels.
Some particular risks affecting the fund include the following:
Interest rate risk This is the risk that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Prices fall because the bonds and notes in the fund’s portfolio become less attractive to other investors when securities with higher yields become available. Because the fund may invest in debt securities of any maturity, it carries more interest rate risk than a fund that invests in shorter-term securities.
Credit risk This is the risk that an issuer of a debt security or counterparties to over-the-counter derivatives held by the fund will default (fail to make scheduled payments), potentially reducing the fund’s income and share price. This risk is increased when a portfolio security is downgraded or the perceived creditworthiness of an issuer or counterparty deteriorates.
Liquidity risk This is the risk that a fund may not be able to sell a holding in a timely manner at a desired price. Sectors of the bond market can experience sudden downturns in trading activity. During periods of reduced market liquidity, the spread between the price at which a security can be bought and the price at which it can be sold can widen, and the fund may not be able to sell a holding readily at a price that reflects what the fund believes it should be worth. Less liquid securities can also become more difficult to value.
Foreign investing risk To the extent a fund holds foreign securities, it will be subject to special risks, whether the securities are denominated in U.S. dollars or foreign currencies. These risks include potentially adverse political and economic conditions overseas, greater volatility, lower liquidity, and the possibility that foreign currencies will decline against the dollar, lowering the value of securities denominated in those currencies and possibly a fund’s share price.
Prepayment risk This is the risk that a fund investing in mortgage-backed securities, certain asset-backed securities, and other debt securities that have embedded call
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options can be hurt when interest rates fall because borrowers tend to refinance and prepay principal. Receiving increasing prepayments in a falling interest rate environment causes the average maturity of the portfolio to shorten, reducing its potential for price gains. It also requires the fund to reinvest proceeds at lower interest rates, which reduces the fund’s total return and yield, and could result in a loss if bond prices fall below the level that the fund paid for them.
Extension risk This is the risk that a rise in interest rates or lack of refinancing opportunities can cause a fund’s average maturity to lengthen unexpectedly due to a drop in expected prepayments of mortgage-backed securities, asset-backed securities, and callable debt securities. This would increase a fund’s sensitivity to rising rates and its potential for price declines.
Efforts to reduce risk Consistent with the fund’s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including:
· Attempting to reduce the impact of a single holding or sector on the fund’s net asset value.
· Thorough credit research by our own analysts.
· Adjusting fund duration to try to reduce the drop in the fund’s price when interest rates rise or to benefit from the rise in price when rates fall.
In addition to the fund’s normal investments, the fund may employ other strategies that are not considered part of its principal investment strategies. Such investments may include other securities and, to a limited extent, other types of derivatives than those described in the fund’s principal strategies.
A derivative involves risks different from, and possibly greater than, the risks associated with investing directly in the assets on which the derivative is based. Derivatives can be highly volatile, illiquid, and difficult to value, and changes in the value of a derivative may not properly correlate with changes in the value of the underlying asset, reference rate, or index. A fund could be exposed to significant losses if it is unable to close a derivatives position due to the lack of a liquid secondary trading market. Derivatives involve the risk that a counterparty to the derivatives agreement will fail to make required payments or comply with the terms of the agreement. There is also the possibility that limitations or trading restrictions may be imposed by an exchange or government regulation, which could adversely impact the value and liquidity of a derivatives contract subject to such regulation.
Recent legislation calls for a new regulatory framework for the derivatives markets. The extent and impact of new regulations are not certain at this time. New regulations may make the use of derivatives by funds more costly, may limit the availability of certain types of derivatives, and may otherwise adversely affect the value or performance of derivatives used by funds.
The Statement of Additional Information contains more detailed information about the fund and its investments, operations, and expenses.
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This section takes a detailed look at some of the types of fund securities and the various kinds of investment practices that may be used in day-to-day portfolio management. Fund investments are subject to further restrictions and risks described in the Statement of Additional Information.
Shareholder approval is required to substantively change fund objectives. Shareholder approval is also required to change certain investment restrictions noted in the following section as “fundamental policies.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval.
Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund’s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments.
Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time it was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions.
Changes in fund holdings, fund performance, and the contribution of various investments are discussed in the shareholder reports.
Portfolio managers have considerable discretion in choosing investment strategies and selecting securities they believe will help achieve fund objectives.
Types of Portfolio Securities
In seeking to meet its investment objective, fund investments may be made in any type of security or instrument (including certain potentially high-risk derivatives described in this section) whose investment characteristics are consistent with its investment program. The following pages describe various types of fund holdings and investment management practices.
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Diversification As a fundamental policy, the fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund’s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund. These limitations do not apply to fund purchases of securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities.
Bonds
A bond is an interest-bearing security. The issuer has a contractual obligation to pay interest at a stated rate on specific dates and to repay principal (the bond’s face value) on a specified date. An issuer may have the right to redeem or “call” a bond before maturity, and the investor may have to reinvest the proceeds at lower market rates. Bonds can be issued by U.S. and foreign governments, states, and municipalities, as well as a wide variety of companies.
A bond’s annual interest income, set by its coupon rate, is usually fixed for the life of the bond. Its yield (income as a percent of current price) will fluctuate to reflect changes in interest rate levels. A bond’s price usually rises when interest rates fall and vice versa, so its yield stays consistent with current market conditions.
Conventional fixed rate bonds offer a coupon rate for a fixed maturity with no adjustment for inflation. Real rate of return bonds also offer a fixed coupon but include ongoing inflation adjustments for the life of the bond.
Bonds may be unsecured (backed by the issuer’s general creditworthiness only) or secured (also backed by specified collateral). Bonds include asset- and mortgage-backed securities.
Certain bonds have interest rates that are adjusted periodically. These interest rate adjustments tend to minimize fluctuations in the bonds’ principal values. The maturity of those securities may be shortened under certain specified conditions.
Bond investments may include Build America Bonds issued by state and local governments to finance capital expenditures for which they otherwise could issue tax-exempt governmental bonds. Unlike most other municipal obligations, interest received on Build America Bonds is taxable to the bondholder. These include bonds on which the issuer may receive an interest payment subsidy directly from the U.S. Treasury, known as direct pay Build America Bonds, and bonds on which the investor may receive a tax credit, known as tax credit Build America Bonds.
Common and Preferred Stocks
Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company’s
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stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has omitted, or is in danger of omitting, payment of its dividend.
Convertible Securities and Warrants
Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants can be highly volatile, have no voting rights, and pay no dividends.
Operating policy The fund may invest up to 20% of total assets in preferred stocks and securities that are convertible into, or which carry warrants for, common stocks or other equity securities. Under normal conditions, the fund does not expect to directly purchase common stocks. However, the fund may occasionally hold shares of common stock that were received through a reorganization, restructuring, exercise, exchange, conversion, or similar action.
Foreign Securities
Investments may be made in foreign securities. These include nondollar-denominated securities traded outside of the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. (such as Yankee bonds) Investing in foreign securities involves special risks that can increase the potential for losses. These include: exposure to potentially adverse local, political, and economic developments such as war, political instability, hyperinflation, currency devaluations, and overdependence on particular industries; government interference in markets such as nationalization and exchange controls, expropriation of assets, or imposition of punitive taxes; potentially lower liquidity and higher volatility; possible problems arising from accounting, disclosure, settlement, and regulatory practices and legal rights that differ from U.S. standards; and the chance that fluctuations in foreign exchange rates will decrease the investment’s value (favorable changes can increase its value). These risks are heightened for a fund’s investments in emerging markets.
Operating policy There is no limit on fund investments in U.S. dollar-denominated debt securities issued by foreign issuers, foreign branches of U.S. banks, and U.S.
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branches of foreign banks. The fund may also invest up to 20% of total assets (excluding reserves) in non-U.S. dollar-denominated foreign debt securities. Subject to the overall limit on fund investments in foreign debt securities, there is no limit on the amount of foreign investments that may be made in emerging markets.
Mortgage-Backed Securities
A fund may invest in a variety of mortgage-backed securities. Mortgage lenders pool individual home mortgages with similar characteristics to back a certificate or bond, which is sold to investors such as the fund. Interest and principal payments generated by the underlying mortgages are passed through to the investors. The “big three” issuers are the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. Government National Mortgage Association certificates are backed by the full faith and credit of the U.S. government, while others, such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation certificates, are only supported by the ability to borrow from the U.S. Treasury or by the credit of the agency. (Since September 2008, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have operated under conservatorship of the Federal Housing Finance Agency, an independent federal agency.) Private mortgage bankers and other institutions also issue mortgage-backed securities.
Mortgage-backed securities are subject to scheduled and unscheduled principal payments as homeowners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be higher or lower than on the original mortgage security. Therefore, these securities are not an effective means of locking in long-term interest rates. In addition, when interest rates fall, the rate of mortgage prepayments tends to increase. These refinanced mortgages are paid off at face value or “par,” causing a loss for any investor who may have purchased the security at a price above par. In such an environment, this risk limits the potential price appreciation of these securities and can negatively affect a fund’s net asset value. When interest rates rise, the prices of mortgage-backed securities can be expected to decline. In addition, when interest rates rise and prepayments slow, the effective duration of mortgage-backed securities extends, resulting in increased price volatility.
Operating policy There is no limit on fund investments in mortgage-backed securities.
Other types of mortgage-backed securities in which the fund may invest include:
Collateralized Mortgage Obligations Collateralized mortgage obligations are debt securities that are fully collateralized by a portfolio of mortgages or mortgage-backed securities including Government National Mortgage Association, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and non-agency-backed mortgages. All interest and principal payments from the underlying mortgages are passed through to the collateralized mortgage obligations in such a way as to create different classes with varying risk characteristics, payment structures, and maturity dates. Collateralized mortgage obligation classes may pay fixed or
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variable rates of interest, and certain classes have priority over others with respect to the receipt of prepayments and allocation of defaults.
Stripped Mortgage Securities Stripped mortgage securities (a type of potentially high-risk derivative) are created by separating the interest and principal payments generated by a pool of mortgage-backed securities or a collateralized mortgage obligation to create additional classes of securities. Generally, one class receives interest-only payments and another receives principal-only payments. Unlike other mortgage-backed securities and principal-only strips, the value of interest-only strips tends to move in the same direction as interest rates. A fund can use interest-only strips as a hedge against falling prepayment rates (when interest rates are rising) and/or in an unfavorable market environment. Principal-only strips can be used as a hedge against rising prepayment rates (when interest rates are falling) and/or in a favorable market environment. Interest-only strips and principal-only strips are acutely sensitive to interest rate changes and to the rate of principal prepayments.
A rapid or unexpected increase in prepayments can severely depress the price of interest-only strips, while a rapid or unexpected decrease in prepayments could have the same effect on principal-only strips. Of course, under the opposite conditions these securities may appreciate in value. These securities can be very volatile in price and may have less liquidity than most other mortgage-backed securities. Certain non-stripped collateralized mortgage obligation classes may also exhibit these qualities, especially those that pay variable rates of interest that adjust inversely with, and more rapidly than, short-term interest rates. In addition, if interest rates rise rapidly and prepayment rates slow more than expected, certain collateralized mortgage obligation classes, in addition to losing value, can exhibit characteristics of long-term securities and become more volatile. There is no guarantee that a fund’s investments in collateralized mortgage obligations, interest-only strips, or principal-only strips will be successful, and a fund’s total return could be adversely affected as a result.
Operating policy Fund investments in stripped mortgage securities are limited to 10% of total assets.
Commercial Mortgage-Backed Securities Commercial mortgage-backed securities are securities created from a pool of commercial mortgage loans, such as loans for hotels, shopping centers, office buildings, and apartment buildings. Interest and principal payments from the loans are passed on to the investor according to a schedule of payments. Credit quality depends primarily on the quality of the loans themselves and on the structure of the particular deal. Generally, deals are structured with senior and subordinate classes. The degree of subordination is determined by the rating agencies who rate the individual classes of the structure. Commercial mortgages are generally structured with prepayment penalties, which greatly reduce prepayment risk to the investor. However, the value of these securities may change because of actual or perceived changes in the creditworthiness of the individual borrowers, their tenants, the servicing agents, or the general state of commercial real estate. There is no limit on fund investments in these securities.
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Asset-Backed Securities
An underlying pool of assets, such as credit card or automobile trade receivables or corporate loans or bonds, backs these bonds and provides the interest and principal payments to investors. On occasion, the pool of assets may also include a swap obligation, which is used to change the cash flows on the underlying assets. As an example, a swap may be used to allow floating rate assets to back a fixed rate obligation. Credit quality depends primarily on the quality of the underlying assets, the level of any credit support provided by the structure or by a third-party insurance wrap, and the credit quality of the swap counterparty. The underlying assets (i.e., loans) are sometimes subject to prepayments, which can shorten the security’s effective maturity and may lower its return. The value of these securities also may change because of actual or perceived changes in the creditworthiness of the individual borrowers, the originator, the servicing agent, the financial institution providing the credit support, or the swap counterparty. There is no limit on fund investments in asset-backed securities.
Inflation-Linked Securities
Inflation-linked securities are income-generating instruments whose interest and principal payments are adjusted for inflation—a sustained increase in prices of goods and services that erodes the purchasing power of money. Treasury inflation-protected securities are inflation-linked securities issued by the U.S. government. Inflation-linked bonds are also issued by corporations, U.S. government agencies, and foreign countries. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, such as the consumer price index. A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, both the principal value and the interest payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of your investment. Because of this inflation-adjustment feature, inflation-protected bonds typically have lower yields than conventional fixed rate bonds.
Inflation-protected bonds normally will decline in price when real interest rates rise. (A real interest rate is calculated by subtracting the inflation rate from a nominal interest rate. For example, if a 10-year Treasury note is yielding 5% and inflation expectations for the next 10 years are 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected bond could decline and result in losses for the fund.
Noninvestment-Grade Debt Instruments
The fund’s investments in noninvestment-grade companies can include loan participations and assignments, as well as “junk” bonds. Investment in loans involve special types of risk, including those of being a direct lender and reduced liquidity. The price and yield of junk bonds can be expected to fluctuate more than the price and yield of higher-quality bonds.
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Investments involving below investment-grade issuers or borrowers are regarded as more volatile than investment-grade bonds and have greater risk with respect to the issuer’s continuing ability to meet principal and interest payments. Normally, the fund will invest in loans and junk bonds through investments in other T. Rowe Price funds that concentrate their investments in these areas.
Derivatives and Leverage
A derivative is a financial instrument whose value is derived from an underlying security such as a stock or bond or from a market benchmark, such as an interest rate index. Many types of investments representing a wide range of risks and potential rewards are derivatives, including conventional instruments such as futures and options, as well as other potentially more complex investments such as swaps and structured notes. The use of derivatives can involve leverage. Leverage has the effect of magnifying returns, positively or negatively. The effect on returns will depend on the extent to which an investment is leveraged. For example, an investment of $1, leveraged at 2 to 1, would have the effect of an investment of $2. Leverage ratios can be higher or lower with a corresponding effect on returns. The fund may use derivatives in certain situations to help accomplish any or all of the following: to hedge against a decline in principal value, to increase yield, to manage exposure to changes in interest or currency exchange rates, to invest in eligible asset classes with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration or credit risk exposure.
While individual fund investments may involve leverage, the fund will not invest in any high-risk, highly leveraged derivative instrument that, at the time of entering into the derivative transaction, is expected to cause the overall price volatility of the portfolio to be meaningfully greater than that of a long-term (over 10-year maturity) investment-grade bond.
Derivatives that may be used include the following as well as others that combine the risk characteristics and features of futures, options, and swaps:
Futures and Options Futures, a type of potentially high-risk derivative, are often used to manage or hedge risk because they enable the investor to buy or sell an asset in the future at an agreed-upon price. Options, another type of potentially high-risk derivative, give the investor the right (when the investor purchases the option), or the obligation (when the investor “writes” or sells the option), to buy or sell an asset at a predetermined price in the future. Futures and options contracts may be bought or sold for any number of reasons, including to manage exposure to changes in interest rates, bond prices, foreign currencies, and credit quality; as an efficient means of increasing or decreasing a fund’s exposure to a specific part or broad segment of the U.S. market or a foreign market; in an effort to enhance income; to protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure. Call or put options may be purchased or sold on securities, futures, and financial indexes.
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Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower a fund’s total return; and the potential loss from the use of futures can exceed a fund’s initial investment in such contracts.
Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put options.
Swaps Fund investments may be made in interest rate, index, total return, credit default, and other types of swap agreements, as well as options on swaps, commonly referred to as “swaptions.” All of these agreements are considered derivatives and, in certain cases, high-risk derivatives. Interest rate, index, and total return swaps are two-party contracts under which a fund and a counterparty, such as a broker or dealer, agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or indexes. Credit default swaps are agreements where one party (the protection buyer) will make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as defaults and bankruptcies related to an issuer or underlying credit instrument. Swaps and swaptions can be used for a variety of purposes, including to manage a fund’s overall exposure to changes in interest or foreign currency exchange rates and credit quality; as an efficient means of adjusting a fund’s exposure to certain markets; in an effort to enhance income or total return or protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure.
There are risks in the use of swaps and swaptions. Swaps could result in losses if interest or foreign currency exchange rates or credit quality changes are not correctly anticipated by a fund. Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated. Credit default swaps can increase a fund’s exposure to credit risk and could result in losses if evaluation of the creditworthiness of the counterparty, or of the company or government on which the credit default swap is based, is incorrect. The use of swaps and swaptions may not always be successful. Using them could lower a fund’s total return, their prices can be highly volatile, and the potential loss from the use of swaps can exceed a fund’s initial investment in such instruments. Also, the other party to a swap agreement could default on its obligations or refuse to cash out a fund’s investment at a reasonable price, which could turn an expected gain into a loss.
Operating policies A swap agreement with any single counterparty will not be entered into if the net amount owed or to be received under existing contracts with that party would exceed 5% of total assets or if the net amount owed or to be received by the fund under all outstanding swap agreements will exceed 10% of total assets. For swaptions, the total market value of securities covering call or put options may not
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exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put swaptions.
Hybrid Instruments These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, security, or securities index or another interest rate (each a “benchmark”). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may or may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the fund to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset value of the fund.
Hybrids can have volatile prices and limited liquidity, and their use may not be successful.
Operating policy Fund investments in hybrid instruments are limited to 10% of total assets.
Currency Derivatives The fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency exchange contracts, which are contracts between two counterparties to exchange one currency for another on a future date at a specified exchange rate. In addition to foreign currency forwards, futures, swaps, and options on foreign currencies may also be used to protect a fund’s foreign securities from adverse currency movements relative to the U.S. dollar, as well as to gain exposure to currencies and markets expected to increase or decrease in value relative to other currencies or securities.
The fund may attempt to hedge its exposure to potentially unfavorable currency changes. Forward currency contracts will be used primarily to adjust the foreign exchange exposure of the fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price’s outlook. However, forward currency contracts can also be used in an effort to benefit from a currency believed to be appreciating in value versus other currencies. The fund may invest in non-U.S. currencies directly without holding any non-U.S. securities denominated in those currencies.
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Forward currency contracts involve special risks, including, but not limited to, the potential for significant volatility in currency markets, and the risk that in certain markets, particularly emerging markets, it is not possible to engage in effective foreign currency hedging. In addition, such transactions involve the risk that currency movements will not occur as anticipated by T. Rowe Price, which could reduce a fund’s total return. The fund might enter into foreign currency transactions under the following circumstances:
Lock In When the fund desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency.
Cross Hedge If a particular currency is expected to decrease in value relative to another currency, the fund may sell the currency expected to decrease and purchase a currency that is expected to increase against the currency sold. The fund’s cross hedging transactions may involve currencies in which the fund’s holdings are denominated. However, the fund is not required to own securities in the particular currency being purchased or sold.
Direct Hedge If the fund seeks to eliminate substantially all of the risk of owning a particular currency or believes the portfolio could benefit from price appreciation in a given country’s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the fund would hope to benefit from an increase (if any) in the value of the bond.
Proxy Hedge In certain circumstances, a different currency may be substituted for the currency in which the investment is denominated, as part of a strategy known as proxy hedging. In this case, the fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and that relationship may not always be maintained. The fund may also use these instruments to create a synthetic bond, which is issued in one currency with the currency component transformed into another currency.
Costs of Hedging When the fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. A proxy hedge, which is less costly than a direct hedge, may attempt to reduce this cost through an indirect hedge back to the U.S. dollar.
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It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a fund’s dividend distribution and are not reflected in its yield. Instead, such costs will, over time, be reflected in a fund’s net asset value per share and total return. Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid by the funds are classified as capital gains or ordinary income.
Operating policy The fund will not commit more than 20% of total assets to any combination of currency derivatives.
Investments in Other Investment Companies
A fund may invest in other investment companies, including open-end funds, closed-end funds, and exchange-traded funds.
A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program.
The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity.
As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order.
A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments
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include high yield bonds, floating rate loans, international bonds, emerging market bonds, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment.
Illiquid Securities
Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold, for example under Rule 144A of the Securities Act of 1933, others may have resale restrictions and can be illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth.
Operating policy Fund investments in illiquid securities are limited to 15% of net assets.
Types of Investment Management Practices
Reserve Position
A certain portion of fund assets will be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk.
When-Issued Securities and Forwards
A fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. There is no limit on fund investments in these securities. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment take place after the customary settlement period for that type of security (often a month or more later). During the interim period, the price and yield of the securities can fluctuate, and typically no interest accrues to the purchaser. At the time of delivery, the market value of the securities may be more or less than the purchase or sale price. To the extent the fund remains fully or almost fully invested (in securities with a remaining maturity of more
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than one year) at the same time it purchases these securities, there will be greater fluctuations in the fund’s net asset value than if the fund did not purchase them.
Borrowing Money and Transferring Assets
A fund may borrow from banks, other persons, and other T. Rowe Price funds for temporary emergency purposes to facilitate redemption requests, or for other purposes consistent with fund policies as set forth in this prospectus. Such borrowings may be collateralized with fund assets, subject to restrictions.
Fundamental policy Borrowings may not exceed 331/3% of total assets.
Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets.
Lending of Portfolio Securities
A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering securities and capital losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform as well as expected.
Fundamental policy The value of loaned securities may not exceed 331/3% of total assets.
Credit Quality Considerations
The credit quality of many fund holdings is evaluated by rating agencies such as Moody’s, Standard & Poor’s, and Fitch. Credit quality refers to the issuer’s ability to meet all required interest and principal payments. The highest ratings are assigned to companies perceived to have the lowest credit risks. T. Rowe Price research analysts also evaluate fund holdings, including those rated by outside agencies. Other things being equal, lower-rated bonds and other debt obligations have higher yields due to greater credit risk.
Credit quality ratings are not guarantees. They are estimates of a company’s financial strength and ability to make interest and principal payments as they come due. Ratings can change at any time due to real or perceived changes in a company’s credit or financial fundamentals.
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The following table shows the rating scale used by the major rating agencies.
Ratings of Corporate Debt Securities
Moody’s Investors Service, Inc. | Standard & Poor’s Corporation | Fitch | Definition | ||
Long Term | Aaa | AAA | AAA | Highest quality | |
Aa | AA | AA | High quality | ||
A | A | A | Upper-medium grade | ||
Baa | BBB | BBB | Medium grade | ||
Ba | BB | BB | Speculative | ||
B | B | B | Highly speculative | ||
Caa | CCC | CCC | Vulnerable to default | ||
Ca | CC | CC | Default is imminent | ||
C | C | C | Probably in default | ||
Portfolio Turnover
Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on a fund’s total return. Higher turnover can also increase the possibility of taxable capital gain distributions.
Funds investing in bonds may have higher turnover than funds investing in stocks. Unlike stocks, fixed-maturity bonds require reinvestment. For funds investing in mortgages and callable debt, frequent reinvestment of principal is often required. Common trading strategies, such as mortgage dollar rolls, can increase turnover. Active investment strategies, such as sector rotation and duration management, also necessitate more frequent trading. The fund’s portfolio turnover rates are shown in the Financial Highlights table.
Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after
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each quarter. Under certain conditions, up to 5% of a fund’s holdings may be included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is in the Statement of Additional Information.
The Financial Highlights table, which provides information about the fund’s Advisor Class financial history, is based on a single share outstanding throughout the periods shown. The class’s section of the table is part of the fund’s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual report were audited by the fund’s independent registered public accounting firm, PricewaterhouseCoopers LLP.
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Financial Highlights
Year ended May 31 | ||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||
Net asset
value, | $8.85 | $9.00 | $8.89 | $9.45 | $9.60 | |||||
Income From Investment Operations | ||||||||||
Net investment income* | 0.41 | a | 0.39 | a | 0.34 | a,b | 0.32 | a,b | 0.26 | a |
Net gains or losses on | 0.14 | 0.01 | 0.59 | 0.23 | 0.28 | |||||
Total from investment | 0.55 | 0.40 | 0.93 | 0.55 | 0.54 | |||||
Less Distributions | ||||||||||
Dividends
(from net | (0.40 | ) | (0.40 | ) | (0.37 | ) | (0.32 | ) | (0.30 | ) |
Distributions (from | — | (0.11 | ) | — | (0.08 | ) | (0.06 | ) | ||
Returns of capital | — | — | — | — | — | |||||
Total distributions | (0.40 | ) | (0.51 | ) | (0.37 | ) | (0.40 | ) | (0.36 | ) |
Net asset
value, | $9.00 | $8.89 | $9.45 | $9.60 | $9.78 | |||||
Total return | 6.36 | %a | 4.71 | %a | 10.58 | %a,b | 5.86 | %a,b | 5.79 | %a |
Ratios/Supplemental Data | ||||||||||
Net assets, end of period | $7,157 | $9,503 | $191,280 | $29,040 | $61,811 | |||||
Ratio of
expenses to | 0.90 | %a | 0.88 | %a | 0.87 | %a,b | 0.85 | %a,b | 0.79 | %a |
Ratio of net income to | 4.49 | %a | 4.48 | %a | 3.65 | %a,b | 3.38 | %a,b | 2.66 | %a |
Portfolio turnover rate | 128.3 | %c | 81.5 | %c | 69.0 | % | 110.7 | %c | 157.1 | %c |
Portfolio turnover rate, excluding mortgage dollar roll transactions | 119.7 | % | 76.0 | % | 69.0 | % | 91.9 | % | 116.2 | % |
* Per share amounts calculated using average shares outstanding method.
a Excludes expenses in excess of a 0.90% contractual expense limitation in effect through September 30, 2010, and expenses permanently waived 0.02%, 0.02%, 0.02%, 0.02%, and 0.00% of average net assets for the years ended May 31, 2012, May 31, 2011, May 31, 2010, May 31, 2009, and May 31, 2008, respectively, related to investments in T Rowe Price mutual funds.
b Includes interest expense on TALF loans of 0.02% and 0.06% of average net assets for the years ended May 31, 2011 and May 31, 2010, respectively.
c The portfolio turnover rate calculation includes purchases and sales from the mortgage dollar roll transactions.
Investing With T. Rowe Price | 4 | |
Your fund shares must be purchased through a third-party intermediary, therefore please contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums. |
Tax Identification | The intermediary must provide T. Rowe Price with its certified taxpayer identification number. Otherwise, federal law requires the funds to withhold a percentage of dividends, capital gain distributions, and redemptions and may subject the intermediary or account holder to an Internal Revenue Service fine. If this information is not received within 60 days after the account is established, the account may be redeemed at the then-current net asset value for the fund. | |
All initial and subsequent
investments by intermediaries should be made by bank wire or electronic payment. For more information,
contact Financial Institution Services by calling |
Important Information About Opening an Account | Opening a New Account |
Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. | ||
| When an account is opened, the name, residential street address, date of birth, and Social Security or employer identification number for each account owner and person(s) opening an account on behalf of others (such as custodians, agents, trustees, or other authorized signers) must be provided. Corporate and other institutional accounts require documents showing the existence of the entity (such |
Investing With T. Rowe Price | 43 |
|
| as articles of incorporation or partnership agreements) to open an account. Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documentation, which may include an original or certified copy of the trust agreement or power of attorney to open an account. For more information, call Financial Institution Services. |
T. Rowe Price will use this information to verify the identity of the person(s)/entity opening the account. An account cannot be opened until all of this information is received. If the identity of the account holder cannot be verified, T. Rowe Price is authorized to take any action permitted by law. (See Rights Reserved by the Funds.) |
Intermediaries should call Financial Institution Services for an account number, assignment to a dedicated service representative, and wire transfer instructions. |
In order to obtain an account number, the intermediary must supply the name, Social Security or employer identification number, and business street address for the account. |
Intermediaries should complete a New Account form and mail it, with proper documentation identifying your firm, to one of the appropriate addresses listed below. Intermediaries must also enter into a separate agreement with the fund or its agent. The funds are generally available only to investors residing in the United States. | ||
via U.S. Postal Service |
via private carriers/overnight
services |
Note: Please use the correct address to avoid a delay in opening your new account. |
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$100 minimum per fund for all additional purchases and $1,000 minimum required for Summit Funds (your intermediary may impose different minimums) |
By Wire | Intermediaries should call Financial Institution Services or access troweprice.com for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that the share price for the purchase will be the same day the wire was initiated. | |
Exchange Service | Money can be moved from one account to an existing, identically registered account or a new identically registered account can be opened. Intermediaries should call their Financial Institution Services representative for more information or to place a trade. For exchange policies, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading Policy. | |
Redemptions | Unless otherwise indicated, redemption proceeds will be wired to the intermediary’s designated bank. Intermediaries should contact their Financial Institution Services representative. |
Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund. |
If your account has no activity in it for a certain period of time, your intermediary may be required to transfer your account to the appropriate state under its abandoned property laws. |
Investing With T. Rowe Price | 45 |
T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary, no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (5) to cease offering fund shares at any time to all or certain groups of investors; (6) to freeze any account and suspend account services when notice has been received of a dispute regarding the ownership of the account or a legal claim against an account, or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day the account is redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund. | ||
T. Rowe Price | 46 |
In the course of doing business with T. Rowe Price, you share personal and financial information with us. We treat this information as confidential and recognize the importance of protecting access to it.
You may provide information when communicating or transacting business with us in writing, electronically, or by phone. For instance, information may come from applications, requests for forms or literature, and your transactions and account positions with us. On occasion, such information may come from consumer reporting agencies and those providing services to us.
We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and services to best meet your investing needs. We may also share that information with companies that perform administrative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies’ use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired.
We maintain physical, electronic, and procedural safeguards to protect your personal information. Within T. Rowe Price, access to such information is limited to those who need it to perform their jobs, such as servicing your accounts, resolving problems, or informing you of new products or services. Finally, our Code of Ethics, which applies to all employees, restricts the use of customer information and requires that it be held in strict confidence.
This Privacy Policy applies to the following T. Rowe Price family of companies: T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds.
A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, call your intermediary. These documents are available through troweprice.com.
Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington, D.C. 20549-1520.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
1940 Act File No. 811-2396 E243-040 10/1/12
| |
PROSPECTUS | |
RRNIX | |
October 1, 2012 | |
T. Rowe Price New Income Fund–R Class | |
A bond fund seeking the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities. This class of shares is sold only through financial intermediaries. | |
The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. | |
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Table of Contents
SUMMARY
The fund seeks the highest level of income consistent with the preservation of capital over time by investing primarily in marketable debt securities.
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
Fees and Expenses of the Fund’s R Class
Annual
fund operating expenses | |
Management fees | 0.45% |
Distribution and service (12b-1) fees | 0.50% |
Other expenses | 0.27% |
Acquired fund fees and expenses | 0.02% |
Total annual fund operating expenses | 1.24% |
Fee waiver/expense reimbursement | 0.09%a,b |
Total annual fund operating expenses after fee waiver/expense reimbursement | 1.15%b,c |
a T. Rowe Price Associates, Inc. is required to permanently waive a portion of its management fee charged to the fund in an amount sufficient to fully offset any acquired fund fees and expenses related to investments in other T. Rowe Price mutual funds. The amount of the waiver will vary each fiscal year in proportion to the amount invested in other T. Rowe Price mutual funds. The T. Rowe Price funds would be required to seek regulatory approval in order to terminate this arrangement.
b T. Rowe Price Associates, Inc. has agreed (through September 30, 2014) to waive its fees and/or bear any expenses (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees) that would cause the class’s ratio of expenses to average net assets to exceed 1.15%. Termination of the agreement would require approval by the fund’s Board of Directors. Fees waived and expenses paid under this agreement (and a previous limitation of 1.15%) are subject to reimbursement to T. Rowe Price Associates, Inc. by the fund whenever the class’s expense ratio is below 1.15%. However, no reimbursement will be mademore than three years after the waiver or if it would result in the expense ratio exceeding 1.15% (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees).
c The figure shown under “Total annual fund operating expenses after fee waiver/expense reimbursement” does not match the “Ratio of expenses to average net assets” shown in the Financial Highlights table, as that figure does not include acquired fund fees and expenses.
Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, the fund’s operating expenses remain the same, and the expense limitation currently in place is not renewed. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
T. Rowe Price | 2 |
1 year | 3 years | 5 years | 10 years |
$117 | $375 | $663 | $1,484 |
Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 157.1% of the average value of its portfolio.
Investments, Risks, and Performance
Principal Investment Strategies In seeking income and capital preservation, the fund pursues a total return strategy. Active management of the portfolio can result in bonds being sold at gains or losses. However, over the long term, the fund seeks to achieve its objective by investing primarily in income-producing securities that possess what the fund believes are favorable total return (income plus increases in principal value) characteristics.
The fund will invest at least 80% of its total assets in income-producing securities, which may include, but are not limited to, U.S. government and agency obligations, mortgage- and asset-backed securities, corporate bonds, foreign securities, collateralized mortgage obligations, Treasury inflation protected securities, and others, including, on occasion, equities.
Eighty percent (80%) of the debt securities purchased by the fund will be rated investment grade (AAA, AA, A, BBB, or an equivalent rating) by each of the major credit rating agencies (Standard & Poor’s, Moody’s, and Fitch) that have assigned a rating to the security or, if unrated, deemed to be of investment-grade quality by T. Rowe Price. Up to 15% of the fund’s total assets may be invested in “split-rated securities,” which are securities that have been rated investment-grade by at least one rating agency but below investment-grade by another rating agency. In addition, the fund may invest up to 5% of its total assets in securities that have received below investment-grade ratings from each of the rating agencies that have assigned ratings to the securities or, if unrated, deemed to be below investment-grade quality by T. Rowe Price.
The fund has considerable flexibility in seeking high yields. There are no maturity restrictions, so the fund can purchase longer-term bonds, which tend to have higher yields than shorter-term bonds. However, the portfolio’s weighted average maturity is expected to be between four and 15 years. In addition, when there is a large yield difference between the various quality levels, the fund may move down the credit scale and purchase lower-rated bonds with higher yields. When the difference is small or the outlook warrants, the fund may concentrate investments in higher-rated issues.
Summary | 3 |
While most assets will typically be invested in bonds, the fund also uses interest rate futures and forward currency exchange contracts in keeping with the fund’s objectives. Interest rate futures would typically be used to manage the fund’s exposure to interest rate changes or to adjust portfolio duration. Forward currency exchange contracts would be used to gain exposure to certain currencies expected to increase or decrease in value relative to other currencies or to protect the fund’s foreign bond holdings from adverse currency movements relative to the U.S. dollar.
The fund may sell holdings for a variety of reasons, such as to adjust the portfolio’s average maturity, duration, or credit quality or to shift assets into and out of higher-yielding or lower-yielding securities or different sectors.
Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows:
Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies.
Interest rate risk This is the risk that a rise in interest rates will cause the price of a fixed rate debt security to fall. Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk.
Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation.
Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price.
Foreign investing risk This is the risk that the fund’s investments in foreign securities may be adversely affected by political and economic conditions overseas, reduced liquidity, or decreases in foreign currency values relative to the U.S. dollar.
Prepayment risk and extension risk Prepayment risk is the risk that the principal on mortgage-backed securities, other asset-backed securities or any debt security with an embedded call option may be prepaid at any time, which could reduce yield and market value. The rate of prepayments tends to increase as interest rates fall, which could cause the average maturity of the portfolio to shorten. Extension risk may result from a rise in interest rates, which tends to make mortgage-backed securities, asset-backed securities, and other callable debt securities more volatile.
Derivatives risk To the extent the fund uses interest rate futures and forward currency exchange contracts, it is exposed to additional volatility in comparison to
T. Rowe Price | 4 |
investing directly in bonds and other debt securities. These instruments can be illiquid and difficult to value, may involve leverage so that small changes produce disproportionate losses for the fund, and instruments not traded on an exchange are subject to the risk that a counterparty to the transaction will fail to meet its obligations under the derivatives contract. The fund’s principal use of derivatives involves the risk that anticipated interest rate movements and changes in currency values and currency exchange rates will not be accurately predicted, which could significantly harm the fund’s performance.
Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance.
The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted.
The fund’s return for the six months ended 6/30/12 was 2.69%.
In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as a 401(k) account or individual retirement account.
Summary | 5 |
Average Annual Total Returns | |||||||||||
|
|
| Periods ended |
| |||||||
| December 31, 2011 |
| |||||||||
| Since inception |
| |||||||||
| 1 Year | 5 Years | (9/30/02) |
| |||||||
| New Income Fund-R Class |
| |||||||||
| Returns before taxes | 5.57 | % | 6.08 | % | 5.11 | % | ||||
| Returns after taxes on distributions | 4.36 |
|
| 4.54 |
|
| 3.82 |
|
| |
| Returns after taxes on distributions |
|
|
|
|
|
|
|
|
| |
| and sale of fund shares | 3.69 |
|
| 4.30 |
|
| 3.69 |
|
| |
| Barclays U.S. Aggregate Bond
Index (reflects no deduction | 7.84 |
|
| 6.50 |
|
| 5.32 |
|
| |
| Lipper Corporate Debt Funds A-Rated Average | 6.87 |
|
| 5.88 |
|
| 5.07 |
|
| |
Updated performance information is available through troweprice.com or may be obtained by calling 1-800-638-8790.
Management
Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price)
Portfolio Manager | Title | Managed Fund Since | Joined Investment |
Daniel O. Shackelford | Chairman of Investment Advisory Committee | 2002 | 1999 |
Purchase and Sale of Fund Shares
For retirement plan accounts and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts, generally the fund’s minimum initial investment requirement is $1,000 and, for all other accounts, generally the fund’s minimum initial investment requirement is $2,500. The fund’s minimum subsequent investment requirement is $100. Your financial intermediary may impose different investment minimums.
You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business. You must purchase, redeem, and exchange shares through your financial intermediary.
Tax Information
The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable.
T. Rowe Price | 6 |
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Information About Accounts in T. Rowe Price Funds | 2 | |
As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to R Class accounts in the T. Rowe Price family of funds.
How and When Shares Are Priced
The share price, also called the “net asset value,” for each class of shares is calculated at the close of the New York Stock Exchange (normally 4 p.m. ET) each day that the exchange is open for business. To calculate the net asset value, the fund’s assets are valued and totaled; liabilities are subtracted; and each class’s proportionate share of the balance, called net assets, is divided by the number of shares outstanding of that class. Market values are used to price portfolio holdings for which market quotations are readily available. Market values represent the prices at which securities actually trade or evaluations based on the judgment of the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation.
Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange will, in its judgment, materially affect the value of some or all of the fund’s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income securities. The fund cannot predict how often it will use closing prices and how often it will adjust those prices.
T. Rowe Price | 8 |
As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values to the same security.
How Your Purchase, Sale, or Exchange Price Is Determined
R Class shares are intended for purchase through various third-party intermediaries, including brokers, banks, insurance companies, retirement plan recordkeepers, and others. Contact your intermediary to find out how to purchase, sell, or exchange your shares; trade deadlines; and other applicable procedures for these transactions. The intermediary may charge a fee for its services.
The fund may have an agreement with your intermediary that permits the intermediary to accept orders on behalf of the fund until the close of the New York Stock Exchange (normally 4 p.m. ET). In such cases, if your order is received by the intermediary in correct form by the close of the New York Stock Exchange and is transmitted to T. Rowe Price and paid for in accordance with the agreement, the transaction will be priced at the next net asset value computed after the intermediary received your order. If the fund does not have an agreement with your intermediary, T. Rowe Price must receive the request in correct form from your intermediary by the close of the New York Stock Exchange in order for your transaction to be priced at that business day’s net asset value.
When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received.
Note: The time at which transactions and shares are priced and the time until which orders are accepted by the fund or an intermediary may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price website, or other circumstances. Should this occur, your order must still be placed and accepted by T. Rowe Price prior to the time the New York Stock Exchange closes to be priced at that business day’s net asset value.
Information About Accounts in T. Rowe Price Funds | 9 |
How Proceeds Are Received
Normally, the fund transmits proceeds to intermediaries for redemption orders received in correct form on either the next or third business day after receipt, depending on the arrangement with the intermediary. Under certain circumstances, and when deemed to be in a fund’s best interests, proceeds may not be sent to intermediaries for up to seven calendar days after receipt of the redemption order. You must contact your intermediary about procedures for receiving your redemption proceeds.
Contingent Redemption Fee
Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated:
T. Rowe Price R Class Funds With Redemption Fees | ||
Fund | Redemption fee | Holding period |
International Growth & Income–R Class | 2% | 90 days or less |
International Stock–R Class | 2% | 90 days or less |
Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or investment adviser), recordkeeper for retirement plan participants, or other third party.
Computation of Holding Period
When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. A redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day after the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied.
T. Rowe Price | 10 |
Transactions Not Subject to Redemption Fees
The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees:
· Shares redeemed through an automated, systematic withdrawal plan;
· Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price;
· Shares purchased through the reinvestment of dividends or capital gain distributions;*
· Shares converted from one share class to another share class of the same fund;*
· Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums);
· Shares purchased by rollover or changes of account registration within the same fund;*
· Shares redeemed to return an excess contribution from a retirement account;
· Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy);
· Shares that are redeemed in-kind;
· Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically;* and
· Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price.
* Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee.
Redemption Fees on Shares Held in Retirement Plans
If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan’s recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper.
Omnibus Accounts
If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees.
Information About Accounts in T. Rowe Price Funds | 11 |
Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees.
Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company, and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders.
To the extent possible, all net investment income and realized capital gains are distributed to shareholders.
Dividends and Other Distributions
Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option on your New Account form. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares.
Interest will not accrue on amounts represented by uncashed distributions or redemption checks.
The following table provides details on dividend payments:
Dividend Payment Schedule | |
Fund | Dividends |
Bond funds | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
Equity Income–R Class | · Declared and paid quarterly, if any, in March, June, September, and December. · Must be a shareholder on the dividend record date. |
Other stock funds | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
T. Rowe Price | 12 |
Dividend Payment Schedule | |
Fund | Dividends |
Retirement Funds: | |
· Retirement Income–R Class | · Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. · Declared daily and paid on the first business day of each month. |
· All others | · Declared and paid annually, if any, generally in December. · Must be a shareholder on the dividend record date. |
Bond fund shares will earn dividends through the date of redemption. Shares redeemed on a Friday or prior to a holiday will continue to earn dividends until the next business day. Generally, if you redeem all of your bond fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that, if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day.
If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information previously described may vary.
Capital Gain Payments
A capital gain or loss is the difference between the purchase and sale price of a security. If a fund has net capital gains for the year (after subtracting any capital losses), they are usually declared and paid in December to shareholders of record on a specified date that month. If a second distribution is necessary, it is paid the following year.
Tax Information
You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service.
If you invest in the fund through a tax-deferred account, such as a 401(k) account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you.
Information About Accounts in T. Rowe Price Funds | 13 |
If you invest in the fund through a taxable account, you generally will be subject to tax when:
· You sell fund shares, including an exchange from one fund to another.
· The fund makes dividend or capital gain distributions.
For individual shareholders, a portion of ordinary dividends representing
“qualified dividend income” received by the fund may be subject to tax at the lower rate applicable
to long-term capital gains rather than ordinary income for taxable years beginning before 2013. You may
report it as “qualified dividend income” in computing your taxes, provided you have held the
fund shares on which the dividend was paid for more than 60 days during the
121-day period beginning
60 days before the ex-dividend date. Ordinary dividends that do not qualify for this lower rate are generally
taxable at the investor’s marginal income tax rate. This includes the portion of ordinary dividends
derived from interest, short-term capital gains, distributions from nonqualified foreign corporations,
and dividends received by the fund from stocks that were on loan. Little, if any, of the ordinary dividends
paid by the bond fund R Classes is expected to qualify for this lower rate.
For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the international stock or bond fund R Classes is expected to qualify for this deduction.
Beginning in 2013, a 3.8% Medicare contribution tax will be imposed on net investment income, including interest, dividends, and capital gains, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts.
Taxes on Fund Redemptions
When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is also a sale for tax purposes.
Taxes on Fund Distributions
The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held the shares in the fund. Short-term (one year or less) capital gain distributions are taxable at the same rate as ordinary income, and gains on securities held more than one year are taxed at the lower rates applicable to long-term capital gains. If you realized a loss on the sale or exchange of fund shares that you held six months or less, your short-term capital loss must be reclassified as a long-term capital loss to the extent of any long-term capital gain distributions received during the period you held the shares. For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, currency contracts, and the foreign currency portion of gains on debt securities are
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taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly dividends to be reclassified as a return of capital.
If the fund qualifies and elects to pass through nonrefundable foreign income taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will meet the requirements to pass through foreign income taxes paid.
If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits.
For the Retirement Funds, distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains.
Taxable distributions are subject to tax whether reinvested in additional shares or received in cash.
Tax Consequences of Hedging
Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions, even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions.
Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution
If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund’s record date before investing. In addition, a fund’s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return.
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The R Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The fund’s R Class shares are intended for purchase through various third-party intermediaries that offer or service employer-sponsored defined contribution retirement plans and certain other accounts, including brokers, banks, insurance companies, retirement plan recordkeepers, and others.
The R Class is designed for employer-sponsored defined contribution retirement plans and certain other accounts, and requires an agreement between the intermediary and T. Rowe Price to be executed prior to investment. Purchases of R Class shares for which the required agreement with T. Rowe Price has not been executed, or that are not made through an eligible intermediary on behalf of an eligible account are subject to rejection or cancellation without prior notice to the intermediary or investor. Existing investments in the R Class shares that are not on behalf of an employer-sponsored defined contribution retirement plan may be transferred by T. Rowe Price to another class (with lower expenses) in the same fund following notice to the intermediary or shareholder.
Purchase Conditions for Intermediaries
Nonpayment If the fund does not receive payment for an order in a timely manner, your purchase may be canceled. The intermediary will be responsible for any losses or expenses incurred by the fund or transfer agent. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment.
U.S. Dollars All purchases must be paid for in U.S. dollars; checks must be drawn on U.S. banks.
Sale (Redemption) Conditions
Holds on Immediate Redemptions: 10-Day Hold If an intermediary sells shares that it just purchased and paid for by check or Automated Clearing House transfer, the fund will process the redemption but generally will delay sending the proceeds for up to 10 calendar days to allow the check or transfer to clear. (The 10-day hold does not apply to purchases paid for by bank wire.)
Large Redemptions Large redemptions can adversely affect a portfolio manager’s ability to implement a fund’s investment strategy by causing the premature sale of securities that would otherwise be held longer. Therefore, the fund reserves the right (without prior notice) to pay all or part of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs.
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Excessive and Short-Term Trading Policy
Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions.
Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of 30 calendar days after the shareholder has redeemed or exchanged out of that same fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made.
General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block:
· Shares purchased or redeemed in money funds;
· Shares purchased or redeemed through a systematic purchase or withdrawal plan;
· Checkwriting redemptions from bond and money funds;
· Shares purchased through the reinvestment of dividends or capital gain distributions;
· Shares redeemed by the fund to pay fund fees or shareholder account fees;
· Transfers and changes of account registration within the same fund;
· Shares purchased by asset transfer or direct rollover;
· Shares purchased or redeemed through IRA conversions and recharacterizations;
· Shares redeemed to return an excess contribution from a retirement account;
· Transactions in Section 529 college savings plans;
· Shares converted from one share class to another share class in the same fund; and
· Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy).
Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be
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exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price.
In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently.
Intermediary Accounts Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity at the intermediary (omnibus account) level in an attempt to identify activity that indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities.
T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees.
If you invest in T. Rowe Price funds through an intermediary, you should review that firm’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds and any other rules or conditions on transactions that may apply. If T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply.
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Retirement
Plan Accounts If shares are held in a retirement plan, generally the
30-Day Purchase Block
applies only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day
Purchase Block may apply to transactions other than exchanges depending on how shares of the plan are
held at T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper.
An alternative excessive trading policy may apply to the T. Rowe Price funds where a retirement
plan has its own policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price
or your plan recordkeeper to determine which of your transactions are subject to the funds’ 30-Day
Purchase Block or an alternative policy.
There is no guarantee that T. Rowe Price will be able to identify or prevent all excessive or short-term trades or trading practices.
Signature Guarantees
An intermediary may need to
obtain a signature guarantee in certain situations,
such as:
· Written requests to redeem over $5 million and wire the redemption proceeds to a bank account not on file;
· Remitting redemption proceeds to any person, address, or bank account not on record; or
· Changing the account registration or broker-dealer of record for an account.
Intermediaries should consult their T. Rowe Price Financial Institution Services representative for specific requirements.
The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud.
The R Class has adopted a 12b-1 plan under which it pays a fee at a rate of up to 0.50% of its average daily net assets per year to various unaffiliated intermediaries, such as brokers, banks, insurance companies, retirement plan recordkeepers, and retirement plan consultants for distribution and/or shareholder servicing of the R Class shares. Distribution payments may include payments to intermediaries for making the R Class shares available as investment options to retirement plans and
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retirement plan participants, assisting plan sponsors in conducting searches for investment options, and providing ongoing monitoring of investment options. Shareholder servicing payments may include payments to intermediaries for providing shareholder support services to existing plans or shareholders of the R Class. These payments may be more or less than the costs incurred by the intermediaries. Because the fees are paid from the R Class net assets on an ongoing basis, they will increase the cost of your investment and, over time, could result in your paying more than with other types of sales charges. The R Class may also separately compensate intermediaries at a rate of up to 0.15% of average daily net assets per year for various recordkeeping and transfer agent services they perform. These services include maintaining separate records for each customer, transmitting net purchase and redemption orders, mailing shareholder confirmations and periodic statements, and providing telephone and Internet support to respond to questions regarding the customer’s account.
Payment of these fees may influence your financial advisor’s recommendation of the fund or of any particular share class of the fund.
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How is the fund organized?
The fund was incorporated in Maryland in 1973 and is an “open-end management investment company” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives. In 2002, the fund issued two separate share classes known as the Advisor Class and R Class.
Shareholders have benefitted from T. Rowe Price’s investment management experience since 1937.
What is meant by “shares”?
As with all mutual funds, investors purchase shares when they put money in a fund. These shares are part of a fund’s authorized capital stock, but share certificates are not issued.
Each share and fractional share entitles the shareholder to:
· Receive a proportional interest in income and capital gain distributions of the class. The income dividends for the R Class shares will generally differ from those of other classes to the extent that the expense ratios of the classes differ.
· Cast one vote per share on certain fund matters, including the election of fund directors/trustees, changes in fundamental policies, or approval of changes in the fund’s management contract. Shareholders of each class have exclusive voting rights on matters affecting only that class.
Do T. Rowe Price funds have annual shareholder meetings?
The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting for the purpose of voting on the removal of any fund director or trustee. If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send or make available to you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone or on the Internet.
Who runs the fund?
General Oversight
The fund is governed by a Board of Directors that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the
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fund’s officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”).
All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price–specifically by the fund’s portfolio manager.
Investment Adviser
T. Rowe Price is the fund’s investment adviser and oversees the selection of the fund’s investments and management of the fund’s portfolio. T. Rowe Price is a SEC-registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub-adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of June 30, 2012, the Firm managed approximately $542 billion for more than 11 million individual and institutional investor accounts.
Portfolio Management
T. Rowe Price has established an Investment Advisory Committee with respect to the fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing the fund’s investment program. The members of the committee are as follows: Daniel O. Shackelford, Chairman, Brian J. Brennan, Geoffrey M. Hardin, Steven C. Huber, Alan D. Levenson, Andrew C. McCormick, Vernon A. Reid, Jr., David A. Tiberii, and Edward A. Wiese. The following information provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). Mr. Shackelford has been chairman of the committee since 2002. He joined the Firm in 1999 and his investment experience dates from 1981. He has served as a portfolio manager with the Firm throughout the past five years. The Statement of Additional Information provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager, and the portfolio manager’s ownership of fund shares.
The Management Fee
This fee has two parts–an “individual fund fee,” which reflects a fund’s particular characteristics, and a “group fee.” The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets.
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Group Fee Schedule
0.334%* | First $50 billion |
0.305% | Next $30 billion |
0.300% | Next $40 billion |
0.295% | Next $40 billion |
0.290% | Next $60 billion |
0.285% | Next $80 billion |
0.280% | Thereafter |
* Represents a blended group fee rate containing various breakpoints.
The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On May 31, 2012, the annual group fee rate was 0.30%. The individual fund fee, also applied to the fund’s average daily net assets, is 0.15%.
The expenses shown in the fee table in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee table.
A discussion about the factors considered by the Board and its conclusions in approving the fund’s investment management contract with T. Rowe Price appears in the fund’s annual report to shareholders for the period ended May 31.
Fund Operations and Shareholder Services
T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc., acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc., provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. These companies receive compensation from the funds for their services. All such fees are included in the fees and expenses table under “Other expenses” and in the fund’s financial statements.
Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. The fund may be appropriate for you if you are investing through an intermediary and seek an attractive level of income and are willing to accept the risk of a declining share price when interest rates rise. Steadily reinvesting the fund’s income is a conservative strategy for building capital over time. If you are investing primarily for safety and liquidity, you should consider a money fund.
The fund should offer higher yields than money and short-term bond funds and generally less volatility than longer-term bond funds. In addition, the portfolio is
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widely diversified among a broad range of fixed income securities, thus reducing the effect of a single bond’s price fluctuations on the fund’s share price or total return.
The fund’s yield will vary. A fund’s yield is the annualized dividends earned for a given period (typically 30 days for bond funds), divided by the share price at the end of the period. A fund’s total return includes distributions from income and capital gains and the change in share price for a given period.
Credit quality refers to a bond issuer’s expected ability to make all required interest and principal payments on time. Because highly-rated issuers represent less risk, they can borrow at lower interest rates than less-creditworthy issuers. Therefore, a fund investing in high-quality securities should have a lower yield than an otherwise comparable fund investing in lower-quality securities.
Every bond has a stated maturity date when the issuer must repay the bond’s entire principal value to the investor. However, many bonds are “callable,” meaning their principal can be repaid before the stated maturity date. Bonds are most likely to be called when interest rates are falling because the issuer can refinance at a lower rate, just as a homeowner refinances a mortgage when interest rates fall. In that environment, a bond’s “effective maturity” is usually its nearest call date. For example, the rate at which homeowners pay down their mortgage principal determines the effective maturity of mortgage-backed bonds.
Mortgage-backed securities differ from other high-quality bonds in one major respect. Non-mortgage bonds generally repay principal (face value of the bond) when their maturity date is reached, but most mortgage-backed securities repay principal continually as homeowners make mortgage payments. Homeowners have the option of paying either part or all of the loan balance before maturity, perhaps to refinance or buy a new home. As a result, the effective maturity of a mortgage-backed security is virtually always shorter than its stated maturity. For example, a newly issued pass-through certificate backed by 30-year, fixed rate mortgages will generally have a far shorter life than 30 years - probably 12 years or less. Therefore, it will usually be about as volatile as a 10-year Treasury bond. It is possible to estimate the average life of an entire mortgage pool backing a particular security with some accuracy, but not with certainty.
A bond fund has no real maturity, but it does have a weighted average maturity and a weighted average effective maturity. Each of these numbers is an average of the stated or effective maturities of the underlying bonds, with each bond’s maturity “weighted” by the percentage of fund assets it represents. (The fund’s average effective maturity is calculated by reference to the nearest mortgage prepayment dates, call dates, or coupon reset dates of the underlying holdings.) Some funds utilize effective maturities rather than stated maturities when managing a fund to a certain average maturity, which provides additional flexibility in portfolio management.
Duration is a calculation that seeks to measure the price sensitivity of a bond or a bond fund to changes in interest rates. It is expressed in years, like maturity, but it is
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a better indicator of price sensitivity than maturity because it takes into account the time value of cash flows generated over the bond’s life. Future interest and principal payments are discounted to reflect their present value and then multiplied by the number of years they will be received to produce a value expressed in years–the duration. “Effective” duration takes into account call features and sinking fund payments that may shorten a bond’s life.
Since duration can be computed for bond funds, you can estimate the effect of interest rate fluctuations on share prices by multiplying fund duration by an expected change in interest rates. For example, the price of a bond fund with a duration of five years would be expected to fall approximately 5% if rates rose by one percentage point. (A bond fund’s duration is shown in its shareholder report.)
As with any mutual fund, there is no guarantee the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money when you sell your shares of the fund. The income level of the fund will change with market conditions and interest rate levels.
Some particular risks affecting the fund include the following:
Interest rate risk This is the risk that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Prices fall because the bonds and notes in the fund’s portfolio become less attractive to other investors when securities with higher yields become available. Because the fund may invest in debt securities of any maturity, it carries more interest rate risk than a fund that invests in shorter-term securities.
Credit risk This is the risk that an issuer of a debt security or counterparties to over-the-counter derivatives held by the fund will default (fail to make scheduled payments), potentially reducing the fund’s income and share price. This risk is increased when a portfolio security is downgraded or the perceived creditworthiness of an issuer or counterparty deteriorates.
Liquidity risk This is the risk that a fund may not be able to sell a holding in a timely manner at a desired price. Sectors of the bond market can experience sudden downturns in trading activity. During periods of reduced market liquidity, the spread between the price at which a security can be bought and the price at which it can be sold can widen, and the fund may not be able to sell a holding readily at a price that reflects what the fund believes it should be worth. Less liquid securities can also become more difficult to value.
Foreign investing risk To the extent a fund holds foreign securities, it will be subject to special risks, whether the securities are denominated in U.S. dollars or foreign currencies. These risks include potentially adverse political and economic conditions overseas, greater volatility, lower liquidity, and the possibility that foreign currencies will decline against the dollar, lowering the value of securities denominated in those currencies and possibly a fund’s share price.
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Prepayment risk This is the risk that a fund investing in mortgage-backed securities, certain asset-backed securities, and other debt securities that have embedded call options can be hurt when interest rates fall because borrowers tend to refinance and prepay principal. Receiving increasing prepayments in a falling interest rate environment causes the average maturity of the portfolio to shorten, reducing its potential for price gains. It also requires the fund to reinvest proceeds at lower interest rates, which reduces the fund’s total return and yield, and could result in a loss if bond prices fall below the level that the fund paid for them.
Extension risk This is the risk that a rise in interest rates or lack of refinancing opportunities can cause a fund’s average maturity to lengthen unexpectedly due to a drop in expected prepayments of mortgage-backed securities, asset-backed securities, and callable debt securities. This would increase a fund’s sensitivity to rising rates and its potential for price declines.
Efforts to reduce risk Consistent with the fund’s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including:
· Attempting to reduce the impact of a single holding or sector on the fund’s net asset value.
· Thorough credit research by our own analysts.
· Adjusting fund duration to try to reduce the drop in the fund’s price when interest rates rise or to benefit from the rise in price when rates fall.
In addition to the fund’s normal investments, the fund may employ other strategies that are not considered part of its principal investment strategies. Such investments may include other securities and, to a limited extent, other types of derivatives than those described in the fund’s principal strategies.
A derivative involves risks different from, and possibly greater than, the risks associated with investing directly in the assets on which the derivative is based. Derivatives can be highly volatile, illiquid, and difficult to value, and changes in the value of a derivative may not properly correlate with changes in the value of the underlying asset, reference rate, or index. A fund could be exposed to significant losses if it is unable to close a derivatives position due to the lack of a liquid secondary trading market. Derivatives involve the risk that a counterparty to the derivatives agreement will fail to make required payments or comply with the terms of the agreement. There is also the possibility that limitations or trading restrictions may be imposed by an exchange or government regulation, which could adversely impact the value and liquidity of a derivatives contract subject to such regulation.
Recent legislation calls for a new regulatory framework for the derivatives markets. The extent and impact of new regulations are not certain at this time. New regulations may make the use of derivatives by funds more costly, may limit the availability of certain types of derivatives, and may otherwise adversely affect the value or performance of derivatives used by funds.
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The Statement of Additional Information contains more detailed information about the fund and its investments, operations, and expenses.
This section takes a detailed look at some of the types of fund securities and the various kinds of investment practices that may be used in day-to-day portfolio management. Fund investments are subject to further restrictions and risks described in the Statement of Additional Information.
Shareholder approval is required to substantively change fund objectives. Shareholder approval is also required to change certain investment restrictions noted in the following section as “fundamental policies.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval.
Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund’s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments.
Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time it was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions.
Changes in fund holdings, fund performance, and the contribution of various investments are discussed in the shareholder reports.
Portfolio managers have considerable discretion in choosing investment strategies and selecting securities they believe will help achieve fund objectives.
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Types of Portfolio Securities
In seeking to meet its investment objective, fund investments may be made in any type of security or instrument (including certain potentially high-risk derivatives described in this section) whose investment characteristics are consistent with its investment program. The following pages describe various types of fund holdings and investment management practices.
Diversification As a fundamental policy, the fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund’s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund. These limitations do not apply to fund purchases of securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities.
Bonds
A bond is an interest-bearing security. The issuer has a contractual obligation to pay interest at a stated rate on specific dates and to repay principal (the bond’s face value) on a specified date. An issuer may have the right to redeem or “call” a bond before maturity, and the investor may have to reinvest the proceeds at lower market rates. Bonds can be issued by U.S. and foreign governments, states, and municipalities, as well as a wide variety of companies.
A bond’s annual interest income, set by its coupon rate, is usually fixed for the life of the bond. Its yield (income as a percent of current price) will fluctuate to reflect changes in interest rate levels. A bond’s price usually rises when interest rates fall and vice versa, so its yield stays consistent with current market conditions.
Conventional fixed rate bonds offer a coupon rate for a fixed maturity with no adjustment for inflation. Real rate of return bonds also offer a fixed coupon but include ongoing inflation adjustments for the life of the bond.
Bonds may be unsecured (backed by the issuer’s general creditworthiness only) or secured (also backed by specified collateral). Bonds include asset- and mortgage-backed securities.
Certain bonds have interest rates that are adjusted periodically. These interest rate adjustments tend to minimize fluctuations in the bonds’ principal values. The maturity of those securities may be shortened under certain specified conditions.
Bond investments may include Build America Bonds issued by state and local governments to finance capital expenditures for which they otherwise could issue tax-exempt governmental bonds. Unlike most other municipal obligations, interest received on Build America Bonds is taxable to the bondholder. These include bonds on which the issuer may receive an interest payment subsidy directly from the U.S. Treasury, known as direct pay Build America Bonds, and bonds on which the investor may receive a tax credit, known as tax credit Build America Bonds.
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Common and Preferred Stocks
Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company’s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has omitted, or is in danger of omitting, payment of its dividend.
Convertible Securities and Warrants
Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants can be highly volatile, have no voting rights, and pay no dividends.
Operating policy The fund may invest up to 20% of total assets in preferred stocks and securities that are convertible into, or which carry warrants for, common stocks or other equity securities. Under normal conditions, the fund does not expect to directly purchase common stocks. However, the fund may occasionally hold shares of common stock that were received through a reorganization, restructuring, exercise, exchange, conversion, or similar action.
Foreign Securities
Investments may be made in foreign securities. These include nondollar-denominated securities traded outside of the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. (such as Yankee bonds) Investing in foreign securities involves special risks that can increase the potential for losses. These include: exposure to potentially adverse local, political, and economic developments such as war, political instability, hyperinflation, currency devaluations, and overdependence on particular industries; government interference in markets such as nationalization and exchange controls, expropriation of assets, or imposition of punitive taxes; potentially lower liquidity and higher volatility; possible problems
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arising from accounting, disclosure, settlement, and regulatory practices and legal rights that differ from U.S. standards; and the chance that fluctuations in foreign exchange rates will decrease the investment’s value (favorable changes can increase its value). These risks are heightened for a fund’s investments in emerging markets.
Operating policy There is no limit on fund investments in U.S. dollar-denominated debt securities issued by foreign issuers, foreign branches of U.S. banks, and U.S. branches of foreign banks. The fund may also invest up to 20% of total assets (excluding reserves) in non-U.S. dollar-denominated foreign debt securities. Subject to the overall limit on fund investments in foreign debt securities, there is no limit on the amount of foreign investments that may be made in emerging markets.
Mortgage-Backed Securities
A fund may invest in a variety of mortgage-backed securities. Mortgage lenders pool individual home mortgages with similar characteristics to back a certificate or bond, which is sold to investors such as the fund. Interest and principal payments generated by the underlying mortgages are passed through to the investors. The “big three” issuers are the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. Government National Mortgage Association certificates are backed by the full faith and credit of the U.S. government, while others, such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation certificates, are only supported by the ability to borrow from the U.S. Treasury or by the credit of the agency. (Since September 2008, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have operated under conservatorship of the Federal Housing Finance Agency, an independent federal agency.) Private mortgage bankers and other institutions also issue mortgage-backed securities.
Mortgage-backed securities are subject to scheduled and unscheduled principal payments as homeowners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be higher or lower than on the original mortgage security. Therefore, these securities are not an effective means of locking in long-term interest rates. In addition, when interest rates fall, the rate of mortgage prepayments tends to increase. These refinanced mortgages are paid off at face value or “par,” causing a loss for any investor who may have purchased the security at a price above par. In such an environment, this risk limits the potential price appreciation of these securities and can negatively affect a fund’s net asset value. When interest rates rise, the prices of mortgage-backed securities can be expected to decline. In addition, when interest rates rise and prepayments slow, the effective duration of mortgage-backed securities extends, resulting in increased price volatility.
Operating policy There is no limit on fund investments in mortgage-backed securities.
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Other types of mortgage-backed securities in which the fund may invest include:
Collateralized Mortgage Obligations Collateralized mortgage obligations are debt securities that are fully collateralized by a portfolio of mortgages or mortgage-backed securities including Government National Mortgage Association, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and non-agency-backed mortgages. All interest and principal payments from the underlying mortgages are passed through to the collateralized mortgage obligations in such a way as to create different classes with varying risk characteristics, payment structures, and maturity dates. Collateralized mortgage obligation classes may pay fixed or variable rates of interest, and certain classes have priority over others with respect to the receipt of prepayments and allocation of defaults.
Stripped Mortgage Securities Stripped mortgage securities (a type of potentially high-risk derivative) are created by separating the interest and principal payments generated by a pool of mortgage-backed securities or a collateralized mortgage obligation to create additional classes of securities. Generally, one class receives interest-only payments and another receives principal-only payments. Unlike other mortgage-backed securities and principal-only strips, the value of interest-only strips tends to move in the same direction as interest rates. A fund can use interest-only strips as a hedge against falling prepayment rates (when interest rates are rising) and/or in an unfavorable market environment. Principal-only strips can be used as a hedge against rising prepayment rates (when interest rates are falling) and/or in a favorable market environment. Interest-only strips and principal-only strips are acutely sensitive to interest rate changes and to the rate of principal prepayments.
A rapid or unexpected increase in prepayments can severely depress the price of interest-only strips, while a rapid or unexpected decrease in prepayments could have the same effect on principal-only strips. Of course, under the opposite conditions these securities may appreciate in value. These securities can be very volatile in price and may have less liquidity than most other mortgage-backed securities. Certain non-stripped collateralized mortgage obligation classes may also exhibit these qualities, especially those that pay variable rates of interest that adjust inversely with, and more rapidly than, short-term interest rates. In addition, if interest rates rise rapidly and prepayment rates slow more than expected, certain collateralized mortgage obligation classes, in addition to losing value, can exhibit characteristics of long-term securities and become more volatile. There is no guarantee that a fund’s investments in collateralized mortgage obligations, interest-only strips, or principal-only strips will be successful, and a fund’s total return could be adversely affected as a result.
Operating policy Fund investments in stripped mortgage securities are limited to 10% of total assets.
Commercial Mortgage-Backed Securities Commercial mortgage-backed securities are securities created from a pool of commercial mortgage loans, such as loans for hotels, shopping centers, office buildings, and apartment buildings. Interest and
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principal payments from the loans are passed on to the investor according to a schedule of payments. Credit quality depends primarily on the quality of the loans themselves and on the structure of the particular deal. Generally, deals are structured with senior and subordinate classes. The degree of subordination is determined by the rating agencies who rate the individual classes of the structure. Commercial mortgages are generally structured with prepayment penalties, which greatly reduce prepayment risk to the investor. However, the value of these securities may change because of actual or perceived changes in the creditworthiness of the individual borrowers, their tenants, the servicing agents, or the general state of commercial real estate. There is no limit on fund investments in these securities.
Asset-Backed Securities
An underlying pool of assets, such as credit card or automobile trade receivables or corporate loans or bonds, backs these bonds and provides the interest and principal payments to investors. On occasion, the pool of assets may also include a swap obligation, which is used to change the cash flows on the underlying assets. As an example, a swap may be used to allow floating rate assets to back a fixed rate obligation. Credit quality depends primarily on the quality of the underlying assets, the level of any credit support provided by the structure or by a third-party insurance wrap, and the credit quality of the swap counterparty. The underlying assets (i.e., loans) are sometimes subject to prepayments, which can shorten the security’s effective maturity and may lower its return. The value of these securities also may change because of actual or perceived changes in the creditworthiness of the individual borrowers, the originator, the servicing agent, the financial institution providing the credit support, or the swap counterparty. There is no limit on fund investments in asset-backed securities.
Inflation-Linked Securities
Inflation-linked securities are income-generating instruments whose interest and principal payments are adjusted for inflation—a sustained increase in prices of goods and services that erodes the purchasing power of money. Treasury inflation-protected securities are inflation-linked securities issued by the U.S. government. Inflation-linked bonds are also issued by corporations, U.S. government agencies, and foreign countries. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, such as the consumer price index. A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, both the principal value and the interest payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of your investment. Because of this inflation-adjustment feature, inflation-protected bonds typically have lower yields than conventional fixed rate bonds.
Inflation-protected bonds normally will decline in price when real interest rates rise. (A real interest rate is calculated by subtracting the inflation rate from a nominal interest rate. For example, if a 10-year Treasury note is yielding 5% and inflation
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expectations for the next 10 years are 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected bond could decline and result in losses for the fund.
Noninvestment-Grade Debt Instruments
The fund’s investments in noninvestment-grade companies can include loan participations and assignments, as well as “junk” bonds. Investment in loans involve special types of risk, including those of being a direct lender and reduced liquidity. The price and yield of junk bonds can be expected to fluctuate more than the price and yield of higher-quality bonds.
Investments involving below investment-grade issuers or borrowers are regarded as more volatile than investment-grade bonds and have greater risk with respect to the issuer’s continuing ability to meet principal and interest payments. Normally, the fund will invest in loans and junk bonds through investments in other T. Rowe Price funds that concentrate their investments in these areas.
Derivatives and Leverage
A derivative is a financial instrument whose value is derived from an underlying security such as a stock or bond or from a market benchmark, such as an interest rate index. Many types of investments representing a wide range of risks and potential rewards are derivatives, including conventional instruments such as futures and options, as well as other potentially more complex investments such as swaps and structured notes. The use of derivatives can involve leverage. Leverage has the effect of magnifying returns, positively or negatively. The effect on returns will depend on the extent to which an investment is leveraged. For example, an investment of $1, leveraged at 2 to 1, would have the effect of an investment of $2. Leverage ratios can be higher or lower with a corresponding effect on returns. The fund may use derivatives in certain situations to help accomplish any or all of the following: to hedge against a decline in principal value, to increase yield, to manage exposure to changes in interest or currency exchange rates, to invest in eligible asset classes with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration or credit risk exposure.
While individual fund investments may involve leverage, the fund will not invest in any high-risk, highly leveraged derivative instrument that, at the time of entering into the derivative transaction, is expected to cause the overall price volatility of the portfolio to be meaningfully greater than that of a long-term (over 10-year maturity) investment-grade bond.
Derivatives that may be used include the following as well as others that combine the risk characteristics and features of futures, options, and swaps:
Futures and Options Futures, a type of potentially high-risk derivative, are often used to manage or hedge risk because they enable the investor to buy or sell an asset in the future at an agreed-upon price. Options, another type of potentially high-risk
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derivative, give the investor the right (when the investor purchases the option), or the obligation (when the investor “writes” or sells the option), to buy or sell an asset at a predetermined price in the future. Futures and options contracts may be bought or sold for any number of reasons, including to manage exposure to changes in interest rates, bond prices, foreign currencies, and credit quality; as an efficient means of increasing or decreasing a fund’s exposure to a specific part or broad segment of the U.S. market or a foreign market; in an effort to enhance income; to protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure. Call or put options may be purchased or sold on securities, futures, and financial indexes.
Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower a fund’s total return; and the potential loss from the use of futures can exceed a fund’s initial investment in such contracts.
Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put options.
Swaps Fund investments may be made in interest rate, index, total return, credit default, and other types of swap agreements, as well as options on swaps, commonly referred to as “swaptions.” All of these agreements are considered derivatives and, in certain cases, high-risk derivatives. Interest rate, index, and total return swaps are two-party contracts under which a fund and a counterparty, such as a broker or dealer, agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or indexes. Credit default swaps are agreements where one party (the protection buyer) will make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as defaults and bankruptcies related to an issuer or underlying credit instrument. Swaps and swaptions can be used for a variety of purposes, including to manage a fund’s overall exposure to changes in interest or foreign currency exchange rates and credit quality; as an efficient means of adjusting a fund’s exposure to certain markets; in an effort to enhance income or total return or protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure.
There are risks in the use of swaps and swaptions. Swaps could result in losses if interest or foreign currency exchange rates or credit quality changes are not correctly anticipated by a fund. Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated. Credit default swaps can increase a fund’s exposure to credit risk and could result in losses if evaluation of the creditworthiness of the counterparty, or of the company or government on which the credit default swap is based, is incorrect. The use of swaps and swaptions may not always be successful. Using them could lower a fund’s total return, their prices can be
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highly volatile, and the potential loss from the use of swaps can exceed a fund’s initial investment in such instruments. Also, the other party to a swap agreement could default on its obligations or refuse to cash out a fund’s investment at a reasonable price, which could turn an expected gain into a loss.
Operating policies A swap agreement with any single counterparty will not be entered into if the net amount owed or to be received under existing contracts with that party would exceed 5% of total assets or if the net amount owed or to be received by the fund under all outstanding swap agreements will exceed 10% of total assets. For swaptions, the total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put swaptions.
Hybrid Instruments These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, security, or securities index or another interest rate (each a “benchmark”). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may or may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the fund to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset value of the fund.
Hybrids can have volatile prices and limited liquidity, and their use may not be successful.
Operating policy Fund investments in hybrid instruments are limited to 10% of total assets.
Currency Derivatives The fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency exchange contracts, which are contracts between two counterparties to exchange one currency for another on a future date at a specified exchange rate. In addition to foreign currency forwards, futures, swaps, and options on foreign currencies may also be used to protect a fund’s foreign securities from adverse currency movements relative to the U.S. dollar, as well as to gain exposure to
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currencies and markets expected to increase or decrease in value relative to other currencies or securities.
The fund may attempt to hedge its exposure to potentially unfavorable currency changes. Forward currency contracts will be used primarily to adjust the foreign exchange exposure of the fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price’s outlook. However, forward currency contracts can also be used in an effort to benefit from a currency believed to be appreciating in value versus other currencies. The fund may invest in non-U.S. currencies directly without holding any non-U.S. securities denominated in those currencies.
Forward currency contracts involve special risks, including, but not limited to, the potential for significant volatility in currency markets, and the risk that in certain markets, particularly emerging markets, it is not possible to engage in effective foreign currency hedging. In addition, such transactions involve the risk that currency movements will not occur as anticipated by T. Rowe Price, which could reduce a fund’s total return. The fund might enter into foreign currency transactions under the following circumstances:
Lock In When the fund desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency.
Cross Hedge If a particular currency is expected to decrease in value relative to another currency, the fund may sell the currency expected to decrease and purchase a currency that is expected to increase against the currency sold. The fund’s cross hedging transactions may involve currencies in which the fund’s holdings are denominated. However, the fund is not required to own securities in the particular currency being purchased or sold.
Direct Hedge If the fund seeks to eliminate substantially all of the risk of owning a particular currency or believes the portfolio could benefit from price appreciation in a given country’s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the fund would hope to benefit from an increase (if any) in the value of the bond.
Proxy Hedge In certain circumstances, a different currency may be substituted for the currency in which the investment is denominated, as part of a strategy known as proxy hedging. In this case, the fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and that relationship may not always be maintained. The fund may also use
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these instruments to create a synthetic bond, which is issued in one currency with the currency component transformed into another currency.
Costs of Hedging When the fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. A proxy hedge, which is less costly than a direct hedge, may attempt to reduce this cost through an indirect hedge back to the U.S. dollar.
It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a fund’s dividend distribution and are not reflected in its yield. Instead, such costs will, over time, be reflected in a fund’s net asset value per share and total return. Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid by the funds are classified as capital gains or ordinary income.
Operating policy The fund will not commit more than 20% of total assets to any combination of currency derivatives.
Investments in Other Investment Companies
A fund may invest in other investment companies, including open-end funds, closed-end funds, and exchange-traded funds.
A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program.
The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity.
As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the
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limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order.
A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments include high yield bonds, floating rate loans, international bonds, emerging market bonds, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment.
Illiquid Securities
Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold, for example under Rule 144A of the Securities Act of 1933, others may have resale restrictions and can be illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth.
Operating policy Fund investments in illiquid securities are limited to 15% of net assets.
Types of Investment Management Practices
Reserve Position
A certain portion of fund assets will be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk.
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When-Issued Securities and Forwards
A fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. There is no limit on fund investments in these securities. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment take place after the customary settlement period for that type of security (often a month or more later). During the interim period, the price and yield of the securities can fluctuate, and typically no interest accrues to the purchaser. At the time of delivery, the market value of the securities may be more or less than the purchase or sale price. To the extent the fund remains fully or almost fully invested (in securities with a remaining maturity of more than one year) at the same time it purchases these securities, there will be greater fluctuations in the fund’s net asset value than if the fund did not purchase them.
Borrowing Money and Transferring Assets
A fund may borrow from banks, other persons, and other T. Rowe Price funds for temporary emergency purposes to facilitate redemption requests, or for other purposes consistent with fund policies as set forth in this prospectus. Such borrowings may be collateralized with fund assets, subject to restrictions.
Fundamental policy Borrowings may not exceed 331/3% of total assets.
Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets.
Lending of Portfolio Securities
A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering securities and capital losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform as well as expected.
Fundamental policy The value of loaned securities may not exceed 331/3% of total assets.
Credit Quality Considerations
The credit quality of many fund holdings is evaluated by rating agencies such as Moody’s, Standard & Poor’s, and Fitch. Credit quality refers to the issuer’s ability to meet all required interest and principal payments. The highest ratings are assigned to companies perceived to have the lowest credit risks. T. Rowe Price research analysts also evaluate fund holdings, including those rated by outside agencies. Other things being equal, lower-rated bonds and other debt obligations have higher yields due to greater credit risk.
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Credit quality ratings are not guarantees. They are estimates of a company’s financial strength and ability to make interest and principal payments as they come due. Ratings can change at any time due to real or perceived changes in a company’s credit or financial fundamentals.
The following table shows the rating scale used by the major rating agencies.
Ratings of Corporate Debt Securities
Moody’s Investors Service, Inc. | Standard & Poor’s Corporation | Fitch | Definition | ||
Long Term | Aaa | AAA | AAA | Highest quality | |
Aa | AA | AA | High quality | ||
A | A | A | Upper-medium grade | ||
Baa | BBB | BBB | Medium grade | ||
Ba | BB | BB | Speculative | ||
B | B | B | Highly speculative | ||
Caa | CCC | CCC | Vulnerable to default | ||
Ca | CC | CC | Default is imminent | ||
C | C | C | Probably in default | ||
Portfolio Turnover
Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on a fund’s total return. Higher turnover can also increase the possibility of taxable capital gain distributions.
Funds investing in bonds may have higher turnover than funds investing in stocks. Unlike stocks, fixed-maturity bonds require reinvestment. For funds investing in mortgages and callable debt, frequent reinvestment of principal is often required. Common trading strategies, such as mortgage dollar rolls, can increase turnover. Active investment strategies, such as sector rotation and duration management, also necessitate more frequent trading. The fund’s portfolio turnover rates are shown in the Financial Highlights table.
Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with
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the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after each quarter. Under certain conditions, up to 5% of a fund’s holdings may be included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is in the Statement of Additional Information.
The Financial Highlights table, which provides information about the fund’s R Class financial history, is based on a single share outstanding throughout the periods shown. The class’s section of the table is part of the fund’s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual report were audited by the fund’s independent registered public accounting firm, PricewaterhouseCoopers LLP.
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Financial Highlights
Year ended May 31 | ||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||
Net asset
value, | $8.85 | $9.00 | $8.89 | $9.45 | $9.62 | |||||
Income From Investment Operations | ||||||||||
Net investment income* | 0.39 | a | 0.36 | a | 0.32 | a,b | 0.28 | a,b | 0.24 | a |
Net gains or losses on | 0.14 | 0.01 | 0.58 | 0.26 | 0.26 | |||||
Total from investment | 0.53 | 0.37 | 0.90 | 0.54 | 0.50 | |||||
Less Distributions | ||||||||||
Dividends
(from net | (0.38 | ) | (0.37 | ) | (0.34 | ) | (0.29 | ) | (0.27 | ) |
Distributions (from | — | (0.11 | ) | — | (0.08 | ) | (0.06 | ) | ||
Returns of capital | — | — | — | — | — | |||||
Total distributions | (0.38 | ) | (0.48 | ) | (0.34 | ) | (0.37 | ) | (0.33 | ) |
Net asset
value, | $9.00 | $8.89 | $9.45 | $9.62 | $9.79 | |||||
Total return | 6.09 | %a | 4.45 | %a | 10.22 | %a,b | 5.83 | %a,b | 5.30 | %a |
Ratios/Supplemental Data | ||||||||||
Net assets, end of period | $2,973 | $6,983 | $11,366 | $11,985 | $9,794 | |||||
Ratio of
expenses to | 1.15 | %a | 1.13 | %a | 1.19 | %a,b | 1.15 | %a,b | 1.13 | %a |
Ratio of net income to | 4.25 | %a | 4.25 | %a | 3.52 | %a,b | 2.89 | %a,b | 2.50 | %a |
Portfolio turnover rate | 128.3 | %c | 81.5 | %c | 69.0 | % | 110.7 | %c | 157.1 | %c |
Portfolio turnover rate, excluding mortgage dollar roll transactions | 119.7 | % | 76.0 | % | 69.0 | % | 91.9 | % | 116.2 | % |
* Per share amounts calculated using average shares outstanding method.
a Excludes expenses in excess of a 1.15% contractual expense limitation in effect through September 30, 2012, and expenses permanently waived 0.02%, 0.02%, 0.02%, 0.02%, and 0.00% of average net assets for the years ended May 31, 2012, May 31, 2011, May 31, 2010, May 31, 2009, and May 31, 2008, respectively, related to investments in T. Rowe Price mutual funds.
b Includes interest expense on TALF loans of 0.02% and 0.06% of average net assets for the years ended May 31, 2011 and May 31, 2010, respectively.
c The portfolio turnover rate calculation includes purchases and sales from the mortgage dollar roll transactions.
Investing With T. Rowe Price | 4 | |
Your fund shares must be purchased through a third-party intermediary, therefore please contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums. |
Tax Identification | The intermediary must provide T. Rowe Price with its certified taxpayer identification number. Otherwise, federal law requires the funds to withhold a percentage of dividends, capital gain distributions, and redemptions and may subject the intermediary or account holder to an Internal Revenue Service fine. If this information is not received within 60 days after the account is established, the account may be redeemed at the then-current net asset value for the fund. | |
All initial and subsequent
investments by intermediaries should be made by bank wire or electronic payment. For more information,
contact Financial Institution Services by calling |
Important Information About Opening an Account | Opening a New Account |
Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. | ||
| When an account is opened, the name, residential street address, date of birth, and Social Security or employer identification number for each account owner and person(s) opening an account on behalf of others (such as custodians, agents, trustees, or other authorized signers) must be provided. Corporate and other institutional accounts require documents showing the existence of the entity (such |
Investing With T. Rowe Price | 43 |
|
| as articles of incorporation or partnership agreements) to open an account. Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documentation, which may include an original or certified copy of the trust agreement or power of attorney to open an account. For more information, call Financial Institution Services. |
T. Rowe Price will use this information to verify the identity of the person(s)/entity opening the account. An account cannot be opened until all of this information is received. If the identity of the account holder cannot be verified, T. Rowe Price is authorized to take any action permitted by law. (See Rights Reserved by the Funds.) |
Intermediaries should call Financial Institution Services for an account number, assignment to a dedicated service representative, and wire transfer instructions. |
In order to obtain an account number, the intermediary must supply the name, Social Security or employer identification number, and business street address for the account. |
Intermediaries should complete a New Account form and mail it, with proper documentation identifying your firm, to one of the appropriate addresses listed below. Intermediaries must also enter into a separate agreement with the fund or its agent. The funds are generally available only to investors residing in the United States. | ||
via U.S. Postal Service |
via private carriers/overnight
services |
Note: Please use the correct address to avoid a delay in opening your new account. |
T. Rowe Price | 44 |
$100 minimum per fund for all additional purchases and $1,000 minimum required for Summit Funds (your intermediary may impose different minimums) |
By Wire | Intermediaries should call Financial Institution Services or access troweprice.com for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that the share price for the purchase will be the same day the wire was initiated. | |
Exchange Service | Money can be moved from one account to an existing, identically registered account or a new identically registered account can be opened. Intermediaries should call their Financial Institution Services representative for more information or to place a trade. For exchange policies, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading Policy. | |
Redemptions | Unless otherwise indicated, redemption proceeds will be wired to the intermediary’s designated bank. Intermediaries should contact their Financial Institution Services representative. |
Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund. |
If your account has no activity in it for a certain period of time, your intermediary may be required to transfer your account to the appropriate state under its abandoned property laws. |
Investing With T. Rowe Price | 45 |
T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary, no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (5) to cease offering fund shares at any time to all or certain groups of investors; (6) to freeze any account and suspend account services when notice has been received of a dispute regarding the ownership of the account or a legal claim against an account, or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day the account is redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund. | ||
T. Rowe Price | 46 |
In the course of doing business with T. Rowe Price, you share personal and financial information with us. We treat this information as confidential and recognize the importance of protecting access to it.
You may provide information when communicating or transacting business with us in writing, electronically, or by phone. For instance, information may come from applications, requests for forms or literature, and your transactions and account positions with us. On occasion, such information may come from consumer reporting agencies and those providing services to us.
We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and services to best meet your investing needs. We may also share that information with companies that perform administrative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies’ use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired.
We maintain physical, electronic, and procedural safeguards to protect your personal information. Within T. Rowe Price, access to such information is limited to those who need it to perform their jobs, such as servicing your accounts, resolving problems, or informing you of new products or services. Finally, our Code of Ethics, which applies to all employees, restricts the use of customer information and requires that it be held in strict confidence.
This Privacy Policy applies to the following T. Rowe Price family of companies: T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds.
A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, call your intermediary. These documents are available through troweprice.com.
Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington, D.C. 20549-1520.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
1940 Act File No. 811-2396 E443-040 10/1/12
STATEMENT OF ADDITIONAL INFORMATION |
This is the Statement of Additional Information for all of the funds listed below. It is divided into two parts (Part I and Part II). Part I generally contains information that is particular to each fund, while Part II contains information that generally applies to all of the funds in the T. Rowe Price family of funds (“Price Funds”).
The date of this Statement of Additional Information (“SAI”) is October 1, 2012.
T. ROWE PRICE BALANCED FUND, INC. (RPBAX)
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC. (TRBCX)
T. Rowe Price Blue Chip Growth Fund–Advisor Class (PABGX)
T. Rowe Price Blue Chip Growth Fund–R Class (RRBGX)
T. ROWE PRICE CALIFORNIA TAX-FREE INCOME TRUST
California Tax-Free Bond Fund (PRXCX)
California Tax-Free Money Fund (PCTXX)
T. ROWE PRICE CAPITAL APPRECIATION FUND (PRWCX)
T. Rowe Price Capital Appreciation Fund–Advisor Class (PACLX)
T. ROWE PRICE CAPITAL OPPORTUNITY FUND, INC. (PRCOX)
T. Rowe Price Capital Opportunity Fund–Advisor Class (PACOX)
T. Rowe Price Capital Opportunity Fund–R Class (RRCOX)
T. ROWE PRICE CORPORATE INCOME FUND, INC. (PRPIX)
T. ROWE PRICE DIVERSIFIED MID-CAP GROWTH FUND, INC. (PRDMX)
T. ROWE PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC. (PRDSX)
T. ROWE PRICE DIVIDEND GROWTH FUND, INC. (PRDGX)
T. Rowe Price Dividend Growth Fund–Advisor Class (TADGX)
T. ROWE PRICE EQUITY INCOME FUND (PRFDX)
T. Rowe Price Equity Income Fund–Advisor Class (PAFDX)
T. Rowe Price Equity Income Fund–R Class (RRFDX)
T. ROWE PRICE FINANCIAL SERVICES FUND, INC. (PRISX)
T. ROWE PRICE FLOATING RATE FUND, INC. (PRFRX)
T. Rowe Price Floating Rate Fund–Advisor Class (PAFRX)
T. ROWE PRICE GLOBAL REAL ESTATE FUND, INC. (TRGRX)
T. Rowe Price Global Real Estate Fund–Advisor Class (PAGEX)
T. ROWE PRICE GLOBAL TECHNOLOGY FUND, INC. (PRGTX)
T. ROWE PRICE GNMA FUND (PRGMX)
T. ROWE PRICE GROWTH & INCOME FUND, INC. (PRGIX)
T. ROWE PRICE GROWTH STOCK FUND, INC. (PRGFX)
T. Rowe Price Growth Stock Fund–Advisor Class (TRSAX)
T. Rowe Price Growth Stock Fund–R Class (RRGSX)
T. ROWE PRICE HEALTH SCIENCES FUND, INC. (PRHSX)
T. ROWE PRICE HIGH YIELD FUND, INC. (PRHYX)
T. Rowe Price High Yield Fund–Advisor Class (PAHIX)
T. ROWE PRICE INDEX TRUST, INC.
T. Rowe Price Equity Index 500 Fund (PREIX)
T. Rowe Price Extended Equity Market Index Fund (PEXMX)
T. Rowe Price Total Equity Market Index Fund (POMIX)
T. ROWE PRICE INFLATION FOCUSED BOND FUND, INC.
T. ROWE PRICE INFLATION PROTECTED BOND FUND, INC. (PRIPX)
T. ROWE PRICE INSTITUTIONAL EQUITY FUNDS, INC. (“Institutional Equity Funds”)
T. Rowe Price Institutional Large-Cap Core Growth Fund (TPLGX)
T. Rowe Price Institutional Large-Cap Growth Fund (TRLGX)
T. Rowe Price Institutional Large-Cap Value Fund (TILCX)
T. Rowe Price Institutional Mid-Cap Equity Growth Fund (PMEGX)
T. Rowe Price Institutional Small-Cap Stock Fund (TRSSX)
T. Rowe Price Institutional U.S. Structured Research Fund (TRISX)
C00-044 10/1/12
T. ROWE PRICE INSTITUTIONAL INCOME FUNDS, INC.
T. Rowe Price Institutional Core Plus Fund (TICPX)
T. Rowe Price Institutional Core Plus Fund–F Class (PFCPX)
T. Rowe Price Institutional Floating Rate Fund (RPIFX)
T. Rowe Price Institutional Floating Rate Fund–F Class (PFFRX)
T. Rowe Price Institutional High Yield Fund (TRHYX)
T. ROWE PRICE INSTITUTIONAL INTERNATIONAL FUNDS, INC.
T. Rowe Price Institutional Africa & Middle East Fund (TRIAX)
T. Rowe Price Institutional Concentrated International Equity Fund (RPICX)
T. Rowe Price Institutional Emerging Markets Bond Fund (TREBX)
T. Rowe Price Institutional Emerging Markets Equity Fund (IEMFX)
T. Rowe Price Institutional International Core Equity Fund (TRCEX)
T. Rowe Price Institutional International Growth Equity Fund (PRFEX)
T. Rowe Price Institutional Global Equity Fund TRGSX)
T. Rowe Price Institutional Global Large-Cap Equity Fund (RPIGX)
T. Rowe Price Institutional Global Value Equity Fund (PRIGX)
T. Rowe Price Institutional International Bond Fund (RPIIX)
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
T. Rowe Price Africa & Middle East Fund (TRAMX)
T. Rowe Price Emerging Europe Fund (formerly T. Rowe Price Emerging Europe & Mediterranean
Fund) (TREMX)
T. Rowe Price Emerging Markets Bond Fund (PREMX)
T. Rowe Price Emerging Markets Corporate Bond Fund (TRECX)
T. Rowe Price Emerging Markets Corporate Bond Fund–Advisor Class (PACEX)
T. Rowe Price Emerging Markets Local Currency Bond Fund (PRELX)
T. Rowe Price Emerging Markets Local Currency Bond Fund–Advisor Class (PAELX)
T. Rowe Price Emerging Markets Stock Fund (PRMSX)
T. Rowe Price European Stock Fund (PRESX)
T. Rowe Price Global Infrastructure Fund (TRGFX)
T. Rowe Price Global Infrastructure Fund–Advisor Class (PAGFX)
T. Rowe Price Global Large-Cap Stock Fund (RPGEX)
T. Rowe Price Global Large-Cap Stock Fund–Advisor Class (PAGLX)
T. Rowe Price Global Stock Fund (PRGSX)
T. Rowe Price Global Stock Fund–Advisor Class (PAGSX)
T. Rowe Price International Bond Fund® (RPIBX)
T. Rowe Price International Bond Fund–Advisor Class (PAIBX)
T. Rowe Price International Discovery Fund (PRIDX)
T. Rowe Price International Growth & Income Fund (TRIGX)
T. Rowe Price International Growth & Income Fund–Advisor Class (PAIGX)
T. Rowe Price International Growth & Income Fund–R Class (RRIGX)
T. Rowe Price International Stock Fund (PRITX)
T. Rowe Price International Stock Fund–Advisor Class (PAITX)
T. Rowe Price International Stock Fund–R Class (RRITX)
T. Rowe Price Japan Fund (PRJPX)
T. Rowe Price Latin America Fund (PRLAX)
T. Rowe Price New Asia Fund (PRASX)
T. Rowe Price Overseas Stock Fund (TROSX)
T. ROWE PRICE INTERNATIONAL INDEX FUND, INC.
T. Rowe Price International Equity Index Fund (PIEQX)
T. ROWE PRICE MEDIA & TELECOMMUNICATIONS FUND, INC. (PRMTX)
T. ROWE PRICE MID-CAP GROWTH FUND, INC. (RPMGX)
T. Rowe Price Mid-Cap Growth Fund–Advisor Class (PAMCX)
T. Rowe Price Mid-Cap Growth Fund–R Class (RRMGX)
T. ROWE PRICE MID-CAP VALUE FUND, INC. (TRMCX)
T. Rowe Price Mid-Cap Value Fund–Advisor Class (TAMVX)
T. Rowe Price Mid-Cap Value Fund–R Class (RRMVX)
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T. ROWE PRICE MULTI-SECTOR ACCOUNT PORTFOLIOS, INC. (“Multi-Sector Account Portfolios”)
T. Rowe Price Emerging Markets Bond Multi-Sector Account Portfolio
T. Rowe Price Emerging Markets Local Multi-Sector Account Portfolio
T. Rowe Price Floating Rate Multi-Sector Account Portfolio
T. Rowe Price High Yield Multi-Sector Account Portfolio
T. Rowe Price Investment-Grade Corporate Multi-Sector Account Portfolio
T. Rowe Price Mortgage-Backed Securities Multi-Sector Account Portfolio
T. ROWE PRICE NEW AMERICA GROWTH FUND (PRWAX)
T. Rowe Price New America Growth Fund–Advisor Class (PAWAX)
T. ROWE PRICE NEW ERA FUND, INC. (PRNEX)
T. ROWE PRICE NEW HORIZONS FUND, INC. (PRNHX)
T. ROWE PRICE NEW INCOME FUND, INC. (PRCIX)
T. Rowe Price New Income Fund–Advisor Class (PANIX)
T. Rowe Price New Income Fund–R Class (RRNIX)
T. ROWE PRICE PERSONAL STRATEGY FUNDS, INC. (“Personal Strategy Funds”)
T. Rowe Price Personal Strategy Balanced Fund (TRPBX)
T. Rowe Price Personal Strategy Growth Fund (TRSGX)
T. Rowe Price Personal Strategy Income Fund (PRSIX)
T. ROWE PRICE PRIME RESERVE FUND, INC. (PRRXX)
T. ROWE PRICE REAL ASSETS FUND, INC. (PRAFX)
T. ROWE PRICE REAL ESTATE FUND, INC. (TRREX)
T. Rowe Price Real Estate Fund–Advisor Class (PAREX)
T. ROWE PRICE RESERVE INVESTMENT FUNDS, INC. (“TRP Reserve Funds”)
T. Rowe Price Government Reserve Investment Fund
(“TRP Government Reserve
Investment Fund”)
T. Rowe Price Reserve Investment Fund (“TRP Reserve Investment Fund”)
T. ROWE PRICE RETIREMENT FUNDS, INC. (“Retirement Funds”)
T. Rowe Price Retirement 2005 Fund (TRRFX)
T. Rowe Price Retirement 2005 Fund–Advisor Class (PARGX)
T. Rowe Price Retirement 2005 Fund–R Class (RRTLX)
T. Rowe Price Retirement 2010 Fund (TRRAX)
T. Rowe Price Retirement 2010 Fund–Advisor Class (PARAX)
T. Rowe Price Retirement 2010 Fund–R Class (RRTAX)
T. Rowe Price Retirement 2015 Fund (TRRGX)
T. Rowe Price Retirement 2015 Fund–Advisor Class (PARHX)
T. Rowe Price Retirement 2015 Fund–R Class (RRTMX)
T. Rowe Price Retirement 2020 Fund (TRRBX)
T. Rowe Price Retirement 2020 Fund–Advisor Class (PARBX)
T. Rowe Price Retirement 2020 Fund–R Class (RRTBX)
T. Rowe Price Retirement 2025 Fund (TRRHX)
T. Rowe Price Retirement 2025 Fund–Advisor Class (PARJX)
T. Rowe Price Retirement 2025 Fund–R Class (RRTNX)
T. Rowe Price Retirement 2030 Fund (TRRCX)
T. Rowe Price Retirement 2030 Fund–Advisor Class (PARCX)
T. Rowe Price Retirement 2030 Fund–R Class (RRTCX)
T. Rowe Price Retirement 2035 Fund (TRRJX)
T. Rowe Price Retirement 2035 Fund–Advisor Class (PARKX)
T. Rowe Price Retirement 2035 Fund–R Class (RRTPX)
T. Rowe Price Retirement 2040 Fund (TRRDX)
T. Rowe Price Retirement 2040 Fund–Advisor Class (PARDX)
T. Rowe Price Retirement 2040 Fund–R Class (RRTDX)
T. Rowe Price Retirement 2045 Fund (TRRKX)
T. Rowe Price Retirement 2045 Fund–Advisor Class (PARLX)
T. Rowe Price Retirement 2045 Fund–R Class (RRTRX)
T. Rowe Price Retirement 2050 Fund (TRRMX)
T. Rowe Price Retirement 2050 Fund–Advisor Class (PARFX)
T. Rowe Price Retirement 2050 Fund–R Class (RRTFX)
3
T. Rowe Price Retirement 2055 Fund (TRRNX)
T. Rowe Price Retirement 2055 Fund–Advisor Class (PAROX)
T. Rowe Price Retirement 2055 Fund–R Class RRTVX)
T. Rowe Price Retirement Income Fund (TRRIX)
T. Rowe Price Retirement Income Fund–Advisor Class (PARIX)
T. Rowe Price Retirement Income Fund–R Class (RRTIX)
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND, INC. (PRSCX)
T. Rowe Price Science & Technology Fund–Advisor Class (PASTX)
T. ROWE PRICE SHORT-TERM BOND FUND, INC. (PRWBX)
T. Rowe Price Short-Term Bond Fund–Advisor Class (PASHX)
T. ROWE PRICE SMALL-CAP STOCK FUND, INC. (OTCFX)
T. Rowe Price Small-Cap Stock Fund–Advisor Class (PASSX)
T. ROWE PRICE SMALL-CAP VALUE FUND, INC. (PRSVX)
T. Rowe Price Small-Cap Value Fund–Advisor Class (PASVX)
T. ROWE PRICE SPECTRUM FUND, INC. (“Spectrum Funds”)
Spectrum Growth Fund (PRSGX)
Spectrum Income Fund (RPSIX)
Spectrum International Fund (PSILX)
T. ROWE PRICE STATE TAX-FREE INCOME TRUST
Georgia Tax-Free Bond Fund (GTFBX)
Maryland Short-Term Tax-Free Bond Fund (PRMDX)
Maryland Tax-Free Bond Fund (MDXBX)
Maryland Tax-Free Money Fund (TMDXX)
New Jersey Tax-Free Bond Fund (NJTFX)
New York Tax-Free Bond Fund (PRNYX)
New York Tax-Free Money Fund (NYTXX)
Virginia Tax-Free Bond Fund (PRVAX)
T. ROWE PRICE STRATEGIC INCOME FUND, INC. (PRSNX)
T. Rowe Price Strategic Income Fund–Advisor Class (PRSAX)
T. ROWE PRICE SUMMIT FUNDS, INC. (“Summit Income Funds”)
T. Rowe Price Summit Cash Reserves Fund (TSCXX)
T. Rowe Price Summit GNMA Fund (PRSUX)
T. ROWE PRICE SUMMIT MUNICIPAL FUNDS, INC. (“Summit Municipal Funds”)
T. Rowe Price Summit Municipal Money Market Fund (TRSXX)
T. Rowe Price Summit Municipal Intermediate Fund (PRSMX)
T. Rowe Price Summit Municipal Intermediate Fund–Advisor Class (PAIFX)
T. Rowe Price Summit Municipal Income Fund (PRINX)
T. Rowe Price Summit Municipal Income Fund–Advisor Class (PAIMX)
T. ROWE PRICE TAX-EFFICIENT FUNDS, INC. (“Tax-Efficient Funds”)
T. Rowe Price Tax-Efficient Equity Fund (PREFX)
T. ROWE PRICE TAX-EXEMPT MONEY FUND, INC. (PTEXX)
T. ROWE PRICE TAX-FREE HIGH YIELD FUND, INC. (PRFHX)
T. Rowe Price Tax-Free High Yield Fund–Advisor Class (PATFX)
T. ROWE PRICE TAX-FREE INCOME FUND, INC. (PRTAX)
T. Rowe Price Tax-Free Income Fund–Advisor Class (PATAX)
T. ROWE PRICE TAX-FREE SHORT-INTERMEDIATE FUND, INC. (PRFSX)
T. Rowe Price Tax-Free Short-Intermediate Fund–Advisor Class (PATIX)
T. ROWE PRICE U.S. BOND ENHANCED INDEX FUND, INC. (formerly T. Rowe Price
U.S. Bond Index Fund, Inc.) (PBDIX)
T. ROWE PRICE U.S. LARGE-CAP CORE FUND, INC. (TRULX)
T. Rowe Price U.S. Large-Cap Core Fund–Advisor Class (PAULX)
T. ROWE PRICE U.S. TREASURY FUNDS, INC. (“U.S. Treasury Funds”)
U.S. Treasury Intermediate Fund (PRTIX)
U.S. Treasury Long-Term Fund (PRULX)
U.S. Treasury Money Fund (PRTXX)
T. ROWE PRICE VALUE FUND, INC. (TRVLX)
T. Rowe Price Value Fund–Advisor Class (PAVLX)
4
Mailing Address:
T. Rowe Price Investment Services, Inc.
100
East Pratt Street
Baltimore, Maryland 21202
1-800-638-5660
This SAI is not a prospectus but should be read in conjunction with the appropriate current fund prospectus, which may be obtained from T. Rowe Price Investment Services, Inc. (“Investment Services”).
Each fund’s financial statements for its most recent fiscal period and the Report of Independent Registered Public Accounting Firm are included in each fund’s annual or semiannual report and incorporated by reference into this SAI. The Emerging Markets Bond Multi-Sector Account Portfolio, Emerging Markets Corporate Bond Fund, Emerging Markets Corporate Bond Fund–Advisor Class, Emerging Markets Local Multi-Sector Account Portfolio, Floating Rate Multi-Sector Account Portfolio, High Yield Multi-Sector Account Portfolio, Institutional Global Value Equity Fund, Investment-Grade Corporate Multi-Sector Account Portfolio, Mortgage-Backed Securities Multi-Sector Account Portfolio, Summit Municipal Income Fund–Advisor Class, Summit Municipal Intermediate Fund–Advisor Class, Tax-Free High Yield Fund–Advisor Class, and Tax-Free Short-Intermediate Fund–Advisor Class have not been in existence long enough to have complete financial statements.
If you would like a prospectus or an annual or semiannual shareholder report for a fund of which you are not a shareholder, please call 1-800-638-5660 and it will be sent to you at no charge. Please read this material carefully.
5
PART I – TABLE OF CONTENTS
Page
Management of the Funds | |
Principal Holders of Securities | |
Investment Management Agreements | |
Other Shareholder Services |
Page
Distributor for the Funds | |
Portfolio Transactions | |
Independent Registered Public | |
Accounting Firm | |
Part II |
References to the following are as indicated:
Internal Revenue Code of 1986, as amended (“Code”)
Investment Company Act of 1940, as amended (“1940 Act”)
Moody’s Investors Service, Inc. (“Moody’s”)
Securities Act of 1933, as amended (“1933 Act”)
Securities and Exchange Commission (“SEC”)
Securities Exchange Act of 1934, as amended (“1934 Act”)
Standard & Poor’s Corporation (“S&P”)
T. Rowe Price Associates, Inc. (“T. Rowe Price”)
T. Rowe Price Hong Kong Limited (“Price Hong Kong”)
T. Rowe Price International Ltd (“T. Rowe Price International”)
T. Rowe Price Singapore Private Ltd. (“Price Singapore”)
Advisor Class
The Advisor Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The Advisor Class shares are designed to be sold only through brokers, dealers, banks, insurance companies, and other financial intermediaries that provide various distribution and administrative services.
F Class
The F Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The F Class shares are designed to be sold only through financial advisors and certain third-party intermediaries, including brokers, banks, insurance companies, retirement plan recordkeepers, and other financial intermediaries that provide various distribution and administrative services. F Class shares are not intended to be offered by intermediaries through a mutual fund “supermarket” platform.
R Class
The R Class is a share class of its respective T. Rowe Price fund and is not a separate mutual fund. The R Class shares are designed to be sold only through various third-party intermediaries that offer employer-sponsored defined contribution retirement plans and certain other accounts, including brokers, dealers, banks, insurance companies, retirement plan recordkeepers, and others.
Inflation Focused Bond Fund, Multi-Sector Account Portfolios, and TRP Reserve Funds
These funds are not available for direct purchase by members of the public. Shares of these funds may only be purchased by or on behalf of mutual funds, section 529 college savings plans, or certain institutional client accounts for which T. Rowe Price or one of its affiliates has discretionary investment authority.
Institutional Funds
The Institutional Funds have a $1,000,000 initial investment minimum (except for their F Class shares) and are designed for institutional investors. Institutional investors typically include banks, pension plans, and trust and investment companies.
6
Below is a table showing the prospectus and shareholder report dates for each fund. The table also lists each fund’s category, which should be used to identify groups of funds that are referenced throughout this SAI.
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
Africa & Middle East | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Balanced | Blended | Dec 31 | Dec 31 | June 30 | May 1 |
Blue Chip Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Blue Chip Growth Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Blue Chip Growth Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
California Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
California Tax-Free Money | State Tax-Free Money | Feb 28 | Feb 28 | Aug 30 | July 1 |
Capital Appreciation | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Capital Appreciation Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Capital Opportunity | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Capital Opportunity Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Capital Opportunity Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Corporate Income | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Diversified Mid-Cap Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Diversified Small-Cap Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Dividend Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Dividend Growth Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Europe | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Emerging Markets Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Corporate Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Corporate Bond–Advisor Class | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Bond Multi-Sector Account Portfolio | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Local Currency Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Local Currency Bond Fund–Advisor Class | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Local Multi-Sector Account Portfolio | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Emerging Markets Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Equity Income | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Equity Income Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Equity Income Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Equity Index 500 | Index Equity | Dec 31 | Dec 31 | June 30 | May 1 |
7
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
European Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Extended Equity Market Index | Index Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Financial Services | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Floating Rate | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Floating Rate Fund–Advisor Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Floating Rate Multi-Sector Account Portfolio | Taxable Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Georgia Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Global Infrastructure | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Infrastructure Fund–Advisor Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Large-Cap Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Large-Cap Stock Fund–Advisor Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Real Estate | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Global Real Estate Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Global Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Stock Fund–Advisor Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Global Technology | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
GNMA | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
TRP Government Reserve Investment | Taxable Money | May 31 | May 31 | Nov 30 | Oct 1 |
Growth & Income | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Growth Stock | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Growth Stock Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Growth Stock Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Health Sciences | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
High Yield | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
High Yield Fund–Advisor Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
High Yield Multi-Sector Account Portfolio | Taxable Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Inflation Focused Bond | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Inflation Protected Bond | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional Africa & Middle East | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional Concentrated International Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional Core Plus | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional Core Plus-F Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional Emerging Markets Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional Emerging Markets Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional Floating Rate | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional Floating Rate-F Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional Global Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
8
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
Institutional Global Large-Cap Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional Global Value Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional High Yield | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Institutional International Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional International Core Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional International Growth Equity | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Institutional Large-Cap Core Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional Large-Cap Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional Large-Cap Value | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional Mid-Cap Equity Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional Small-Cap Stock | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Institutional U.S. Structured Research | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
International Bond | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
International Bond Fund–Advisor Class | International Bond | Dec 31 | Dec 31 | June 30 | May 1 |
International Discovery | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Equity Index | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Growth & Income | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Growth & Income Fund–Advisor Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Growth & Income Fund–R Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Stock Fund–Advisor Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
International Stock Fund–R Class | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Investment-Grade Corporate Multi-Sector Account Portfolio | Taxable Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Japan | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Latin America | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Maryland Short-Term Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Maryland Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Maryland Tax-Free Money | State Tax-Free Money | Feb 28 | Feb 28 | Aug 30 | July 1 |
Media & Telecommunications | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mid-Cap Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mid-Cap Growth Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mid-Cap Growth Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
9
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
Mid-Cap Value | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mid-Cap Value Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mid-Cap Value Fund–R Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Mortgage-Backed Securities Multi-Sector Account Portfolio | Taxable Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
New America Growth | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
New America Growth Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
New Asia | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
New Era | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
New Horizons | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
New Income | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
New Income Fund–Advisor Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
New Income Fund–R Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
New Jersey Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
New York Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
New York Tax-Free Money | State Tax-Free Money | Feb 28 | Feb 28 | Aug 30 | July 1 |
Overseas Stock | International Equity | Oct 31 | Oct 31 | Apr 30 | March 1 |
Personal Strategy Balanced | Blended | May 31 | May 31 | Nov 30 | Oct 1 |
Personal Strategy Growth | Blended | May 31 | May 31 | Nov 30 | Oct 1 |
Personal Strategy Income | Blended | May 31 | May 31 | Nov 30 | Oct 1 |
Prime Reserve | Taxable Money | May 31 | May 31 | Nov 30 | Oct 1 |
Real Assets Fund | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Real Estate | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Real Estate Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
TRP Reserve Investment | Taxable Money | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2005 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2005 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2005 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2010 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2010 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2010 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2015 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2015 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2015 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2020 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2020 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2020 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2025 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
10
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
Retirement 2025 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2025 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2030 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2030 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2030 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2035 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2035 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2035 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2040 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2040 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2040 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2045 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2045 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2045 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2050 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2050 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2050 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2055 | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2055 Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement 2055 Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement Income | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement Income Fund–Advisor Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Retirement Income Fund–R Class | Fund-of-Funds | May 31 | May 31 | Nov 30 | Oct 1 |
Science & Technology | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Science & Technology Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Short-Term Bond | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Short-Term Bond Fund–Advisor Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Small-Cap Stock | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Small-Cap Stock Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Small-Cap Value | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Small-Cap Value Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Spectrum Growth | Fund-of-Funds | Dec 31 | Dec 31 | June 30 | May 1 |
Spectrum Income | Fund-of-Funds | Dec 31 | Dec 31 | June 30 | May 1 |
Spectrum International | Fund-of-Funds | Dec 31 | Dec 31 | June 30 | May 1 |
11
Fund | Fund Category | Fiscal Year End | Annual Report Date | Semiannual Report Date | Prospectus Date |
Strategic Income | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Strategic Income Fund–Advisor Class | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
Summit Cash Reserves | Taxable Money | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit GNMA | Taxable Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit Municipal Income | Tax-Free Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit Municipal Income–Advisor Class | Tax-Free Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit Municipal Intermediate | Tax-Free Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit Municipal Intermediate–Advisor Class | Tax-Free Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
Summit Municipal Money Market | Tax-Free Money | Oct 31 | Oct 31 | Apr 30 | March 1 |
Tax-Efficient Equity | Equity | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Exempt Money | Tax-Free Money | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free High Yield | Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free High Yield–Advisor Class | Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free Income | Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free Income Fund–Advisor Class | Tax Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free Short-Intermediate | Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Tax-Free Short-Intermediate–Advisor Class | Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
Total Equity Market Index | Index Equity | Dec 31 | Dec 31 | June 30 | May 1 |
U.S. Bond Enhanced Index | Index Bond | Oct 31 | Oct 31 | Apr 30 | March 1 |
U.S. Large-Cap Core | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
U.S. Large-Cap Core Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
U.S. Treasury Intermediate | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
U.S. Treasury Long-Term | Taxable Bond | May 31 | May 31 | Nov 30 | Oct 1 |
U.S. Treasury Money | Taxable Money | May 31 | May 31 | Nov 30 | Oct 1 |
Value | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Value Fund–Advisor Class | Equity | Dec 31 | Dec 31 | June 30 | May 1 |
Virginia Tax-Free Bond | State Tax-Free Bond | Feb 28 | Feb 28 | Aug 30 | July 1 |
The officers and directors (the term “director” is used to refer to directors or trustees, as applicable) of the Price Funds are listed below. Unless otherwise noted, the address of each is 100 East Pratt Street, Baltimore, Maryland 21202.
Each fund is overseen by a Board of Directors/Trustees (“Board”) that meets regularly to review a wide variety of matters affecting the funds, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and other business affairs. The Boards elect the funds’ officers and are responsible for performing various duties imposed on them by the 1940 Act, the laws of Maryland or Massachusetts, and other laws. At least 75% of the Board’s members are independent of T. Rowe Price and its affiliates. Each of the independent directors currently serves on the Board of each Price Fund. The directors who are also employees or officers of T. Rowe Price are referred to as inside or interested directors. Except as indicated, each inside director or officer has been an employee of T. Rowe Price or its affiliates for five or more
12
years. Each Board currently has three standing committees, a Committee of Independent Directors, a Joint Audit Committee, and an Executive Committee, each as described in the following paragraphs.
Edward C. Bernard, an inside director, is the Chairman of the Board of each fund. The independent directors of each fund have designated a Lead Independent Director, who functions as a liaison between the Chairman of the Board and the other independent directors. The Lead Independent Director presides at all executive sessions of the independent directors, reviews and provides input on Board meeting agendas and materials, and typically represents the independent directors in discussions with T. Rowe Price management. Anthony W. Deering currently serves as Lead Independent Director. Each fund’s Board has determined that its leadership and committee structure is appropriate because the Board believes that it sets the proper tone for the relationship between the fund, on the one hand, and T. Rowe Price or its affiliates and the fund’s other principal service providers, on the other, and facilitates the exercise of the Board’s independent judgment in evaluating and managing the relationships. In addition, the structure efficiently allocates responsibility among committees and the full Board.
Like other mutual funds, the funds are subject to risks, including investment, compliance, operational and valuation risks, among others. The Board oversees risk as part of its oversight of the funds. Risk oversight is addressed as part of various Board and committee activities. The Board, directly or through its committees, interacts with and reviews reports from, among others, the investment adviser or its affiliates, the funds’ Chief Compliance Officer, the funds’ independent registered public accounting firm, legal counsel, and internal auditors for T. Rowe Price or its affiliates, as appropriate, regarding risks faced by the funds and the risk management programs of the investment adviser and certain other service providers. Also, the Joint Audit Committee receives periodic reports from members of the advisers’ Risk Management Oversight Committee on the significant risks inherent to the advisers’ business, including aggregate investment risks, reputational risk, business continuity risk, and operational risk. The actual day-to-day risk management functions with respect to the funds are subsumed within the responsibilities of the investment advisers and other service providers (depending on the nature of the risk), who carry out the funds’ investment management and business affairs. Although the risk management policies of T. Rowe Price, and its affiliates and the funds’ other service providers are reasonably designed to be effective, those policies and their implementation vary among service providers over time, and there is no guarantee that they will be effective. Not all risks that may affect the funds can be identified. Processes and controls developed may not eliminate or mitigate the occurrence or effects of all risks, and some risks may be simply beyond any control of the funds, T. Rowe Price or its affiliates or other service providers.
The Committee of Independent Directors, which consists of all of the independent directors of the funds, is responsible for selecting candidates for election as independent directors to fill vacancies on each fund’s Board. 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 2011. The committee is chaired by the Lead Independent Director.
The Joint Audit Committee is composed of Jeremiah E. Casey, Anthony W. Deering, John G. Schreiber, and Mark R. Tercek, all independent directors. Jeremiah E. Casey currently serves as chairman of the Joint Audit Committee. The Joint Audit Committee holds two regular meetings during each fiscal 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 questions relating to particular areas of the Price Funds’ operations or the operations of parties dealing with the Price Funds, as circumstances indicate. The Joint Audit Committee met three times in 2011.
The funds’ Executive Committee, consisting of the funds’ interested director(s), has been authorized by its respective Board to exercise all powers of the Boards to manage the funds in the intervals between meetings of the Boards, except the powers prohibited by statute from being delegated. All actions of the Executive Committee must be approved in advance by one independent director and reviewed after the fact by the full Board. The Executive Committee for each fund does not hold regularly scheduled meetings. The Executive Committee did not need to take any action on behalf of any funds during 2011.
13
In addition to the Boards and the three standing committees, the directors have established an Advisory Board with respect to the domestic fixed income Price Funds. The Advisory Board is composed of Robert J. Gerrard, Jr. and Cecilia E. Rouse. Advisory Board members serve in a consultative capacity to the Board of each of the domestic fixed income Price Funds and, in doing so, participate in Board discussions and review Board materials relating to the domestic fixed income Price Funds. However, Advisory Board members are not be eligible to vote on any matter presented to the Boards of the domestic fixed income Price Funds and have no power to act on behalf of or bind the Board or any committee of the Board.
Each Board has concluded that, based on each director’s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other directors, each director should serve on the Board. Attributes common to all directors include their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively with the various service providers to the funds, and to exercise reasonable business judgment in the performance of their duties as directors. In addition, the Board has taken into account the actual service and commitment of the directors during their tenure in concluding that each should continue to serve. A director’s ability to perform his or her duties effectively may have been attained through his or her educational background or professional training; business, consulting, public service or academic positions; experience from service as a director of the Price Funds, public companies, or non-profit entities or other organizations; or other experiences. Set forth below is a brief discussion of the specific experience, qualifications, attributes, or skills of each director that led the Board to conclude that he or she should serve as a director.
Messrs. Deering, Dick and Schreiber have each served as a director of the Price Funds for more than 19 years, and Messrs. Casey and Rodgers and Ms. Horn have each served as a director of the Price Funds for more than 6 years, including in each case as members and/or Chairs of Board committees. Mr. Tercek has been a director of the Price Funds since 2009. He has approximately 24 years of experience in the financial services industry and has been the chief executive officer of a non-profit entity since 2008. Dr. Brody has been a director of the Price Funds since 2009. He has substantial experience in the public health and research fields, as well as academia, and brings a diverse perspective to the Boards. Mr. Gerrard and Dr. Rouse became directors of the Price Funds (other than the domestic fixed income Price Funds) on May 2, 2012, and each brings additional diverse perspectives to the Boards. Mr. Gerrard has substantial experience in the industries relating to communications and interactive data services, and Dr. Rouse has extensive experience in the fields of education and economic research and has served as a director of certain non-profit entities. In addition, specific experience and qualifications of the independent directors with respect to their occupations and directorships of public companies and other investment companies are set forth in the following table.
Independent Directors(a)
Name, Year of Birth, and Number | Principal
Occupation(s) | Directorships |
William R. Brody 1944 138 portfolios | President and Trustee, Salk Institute for Biological Studies (2009 to present); President and Trustee, Johns Hopkins University (1996 to 2009); Chairman of Executive Committee and Trustee, John Hopkins Health System (1996 to 2009) | Novartis, Inc. (2009 to present); IBM (2007 to present) |
Jeremiah E. Casey 1940 138 portfolios | Retired | None |
14
Name, Year of Birth, and Number | Principal
Occupation(s) | Directorships |
Anthony W. Deering 1945 138 portfolios | Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director and Member of the Advisory Board, Deutsche Bank North America (2004 to present) | Under Armour (2008 to present); Vornado Real Estate Investment Trust (2004 to present); Mercantile Bankshares (2002 to 2007); Deutsche Bank North America (2004 to present) |
Donald W. Dick, Jr. 1943 138 portfolios | Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present) | None |
Robert J. Gerrard, Jr. 1952 90 portfolios | Chairman of Compensation Committee, Syniverse Holdings, Inc. (2008-2011); Executive Vice President and General Counsel, Scripps Networks, LLC (1997-2009); and Advisory Board member, Pipeline Crisis/Winning Strategies (1997 to present) | Syniverse Holdings, Inc. (2008-2011) |
Karen N. Horn 1943 138 portfolios | Senior Managing Director, Brock Capital Group, an advisory and investment banking firm (2004 to present) | Eli Lilly and Company (1987 to present); Simon Property Group (2004 to present); Norfolk Southern (2008 to present); Fannie Mae (2006 to 2008) |
Theo C. Rodgers 1941 138 portfolios | President, A&R Development Corporation (1977 to present) | None |
Cecilia E. Rouse 1963 90 portfolios | Professor and Researcher, Princeton University (1992 to present); Director, MDRC (2011 to present); Member of National Academy of Education (2010 to present); Research Associate, National Bureau of Economic Research’s Labor Studies Program (1998-2009 and 2011 to present); Member of President’s Council of Economic Advisors (2009-2011); Member of The MacArthur Foundation Network on the Transition to Adulthood and Public Policy (2000-2008); Member of National Advisory Committee for the Robert Wood Johnson Foundation’s Scholars in Health Policy Research Program (2008); Member of and Director, National Economic Association (2006-2008); Member of Association of Public Policy Analysis and Management Policy Council (2006-2008); Member of Hamilton Project’s Advisory Board at The Brookings Institute (2006-2008); and Chair of Committee on the Status of Minority Groups in the Economic Profession, American Economic Association (2006-2008) | None |
15
Name, Year of Birth, and Number | Principal
Occupation(s) | Directorships |
John G. Schreiber 1946 138 portfolios | Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present) | General Growth Properties, Inc. (2010 to present) |
Mark R. Tercek 1957 138 portfolios | President and Chief Executive Officer, The Nature Conservancy (2008 to present); Managing Director, The Goldman Sachs Group, Inc. (1984 to 2008) | None |
(a) All information about the directors was current as of December 31, 2011, except for the number of portfolios, which is current as of the date of this SAI.
Inside Directors(a)
The following persons are considered interested persons of the funds because they also serve as officers of the funds and T. Rowe Price or its affiliates. No more than two inside directors serve as directors of any fund.
The Board invites nominations from each fund’s investment adviser for persons to serve as interested directors, and the Board reviews and approves these nominations. Each of the current interested directors is a senior executive officer of T. Rowe Price and T. Rowe Price Group, Inc., as well as certain of their affiliates. Mr. Bernard has served as a director of all Price Funds and has been Chairman of the Board for all Price Funds since 2006. Mr. Gitlin became a director of certain Price Funds in 2010, and Messrs. Laporte and Rogers have served as directors of certain Price Funds since 1985 and 2006, respectively, in each case serving as members of the Executive Committee. In addition, specific experience and qualifications of the interested directors with respect to their occupations and directorships of public companies and other investment companies are set forth in the following table.
Name, Year of Birth, and Number | Principal
Occupation(s) | Directorships |
Edward C. Bernard 1956 138 portfolios | Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board, 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 Savings Bank, and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, and Director, T. Rowe Price International; Chief Executive Officer, Chairman of the Board, Director, and President, T. Rowe Price Trust Company Chairman of the Board, all funds | None |
16
Name, Year of Birth, and Number | Principal
Occupation(s) | Directorships |
Michael C. Gitlin 1970 46 portfolios | Director of Fixed Income, T. Rowe Price (2009 to present); Global Head of Trading, T. Rowe Price (2007 to 2009) Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International; President, Multi-Sector Account Portfolios | None |
John H. Laporte; CFA 1945 16 portfolios | Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Vice President, Diversified Small-Cap Growth Fund, Health Sciences Fund, New Horizons Fund, Personal Strategy Funds, Retirement Funds, and Spectrum Funds | None |
Brian C. Rogers; CFA, CIC 1955 75 portfolios | Chief Investment Officer, Director, and Vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company President, Equity Income Fund and Institutional Equity Funds; Vice President, Personal Strategy Funds, Retirement Funds, Spectrum Funds, and Value Fund | None |
(a) All information about the directors was current as of December 31, 2011, except for the number of portfolios, which is current as of the date of this SAI.
Retirement and Spectrum Funds (individually, a “Fund-of-Funds” and collectively, “Funds-of-Funds”)
The management of the business and affairs of the Funds-of-Funds is the responsibility of the Board. In exercising their responsibilities, the Board, among other things, will refer to the Special Servicing Agreement and policies and guidelines included in an Application for an Exemptive Order (and accompanying Notice and Order) issued by the SEC in connection with the Spectrum Funds (and which also applies to Retirement Funds). A majority of directors of the Funds-of-Funds are independent. However, the directors and officers of the Funds-of-Funds and certain directors and officers of T. Rowe Price and its affiliates also serve in similar positions with most of the various Price Funds in which the Retirement and Spectrum Funds invest (collectively, “underlying Price funds”). Thus, if the interests of the Funds-of-Funds and the underlying Price funds were ever to become divergent, it is possible that a conflict of interest could arise and affect how this latter group of persons fulfill their fiduciary duties to the Funds-of-Funds and the underlying Price funds. The directors of Funds-of-Funds believe they have structured the Funds-of-Funds to avoid these concerns. However, a situation could conceivably occur where proper action for the Funds-of-Funds could be adverse to the interests of an underlying Price fund, or the reverse could occur. If such a possibility arises, the directors and officers of the affected funds and the directors and officers of T. Rowe Price will carefully analyze the situation and take all steps they believe reasonable to minimize and, where possible, eliminate the potential conflict.
Term of Office and Length of Time Served
The directors serve until retirement, resignation, or election of a successor. The following table shows the year from which each director has served on each fund’s Board (or that of the corporation or trust of which the fund is a part).
17
Independent Directors | |||||||||||
Fund/Corporation/Trust | Number of portfolios | Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek |
Balanced | 1 | 2009 | 2005 | 2001 | 1991 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Blue Chip Growth | 1 | 2009 | 2005 | 2001 | 1993 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
California Tax-Free Income Trust | 2 | 2009 | 2006 | 1986 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Capital Appreciation | 1 | 2009 | 2005 | 2001 | 1986 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Capital Opportunity | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Corporate Income | 1 | 2009 | 2006 | 1995 | 2001 | — | 2003 | 2005 | — | 1995 | 2009 |
Diversified Mid-Cap Growth | 1 | 2009 | 2005 | 2003 | 2003 | 2012 | 2003 | 2005 | 2012 | 2003 | 2009 |
Diversified Small-Cap Growth | 1 | 2009 | 2005 | 2001 | 1997 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Dividend Growth | 1 | 2009 | 2005 | 2001 | 1992 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Equity Income | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Financial Services | 1 | 2009 | 2005 | 2001 | 1996 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Floating Rate | 1 | 2011 | 2011 | 2011 | 2011 | — | 2011 | 2011 | — | 2011 | 2011 |
Global Real Estate | 1 | 2009 | 2008 | 2008 | 2008 | 2012 | 2008 | 2008 | 2012 | 2008 | 2009 |
Global Technology | 1 | 2009 | 2005 | 2001 | 2000 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
GNMA | 1 | 2009 | 2006 | 1985 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Growth & Income | 1 | 2009 | 2005 | 2001 | 1982 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Growth Stock | 1 | 2009 | 2005 | 2001 | 1980 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Health Sciences | 1 | 2009 | 2005 | 2001 | 1995 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
High Yield | 1 | 2009 | 2006 | 1984 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Index Trust | 3 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Inflation Focused Bond | 1 | 2009 | 2006 | 2006 | 2006 | — | 2006 | 2006 | — | 2006 | 2009 |
Inflation Protected Bond | 1 | 2009 | 2006 | 2002 | 2002 | — | 2003 | 2005 | — | 2002 | 2009 |
Institutional Equity | 6 | 2009 | 2005 | 2001 | 1996 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Institutional Income | 3 | 2009 | 2006 | 2002 | 2002 | — | 2003 | 2005 | — | 2002 | 2009 |
Institutional International | 10 | 2009 | 2006 | 1991 | 1989 | 2012 | 2003 | 2006 | 2012 | 2001 | 2009 |
International | 17 | 2009 | 2006 | 1991 | 1988 | 2012 | 2003 | 2006 | 2012 | 2001 | 2009 |
International Index | 1 | 2009 | 2006 | 2000 | 2000 | 2012 | 2003 | 2006 | 2012 | 2001 | 2009 |
Media & Telecommunications | 1 | 2009 | 2005 | 2001 | 1997 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Mid-Cap Growth | 1 | 2009 | 2005 | 2001 | 1992 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Mid-Cap Value | 1 | 2009 | 2005 | 2001 | 1996 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Multi-Sector Account Portfolios | 6 | 2012 | 2012 | 2012 | 2012 | — | 2012 | 2012 | — | 2012 | 2012 |
New America Growth | 1 | 2009 | 2005 | 2001 | 1985 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
New Era | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
New Horizons | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
New Income | 1 | 2009 | 2006 | 1980 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Personal Strategy | 3 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Prime Reserve | 1 | 2009 | 2006 | 1979 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
18
Independent Directors | |||||||||||
Fund/Corporation/Trust | Number of portfolios | Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek |
Real Assets | 1 | 2010 | 2010 | 2010 | 2010 | 2012 | 2010 | 2010 | 2012 | 2010 | 2010 |
Real Estate | 1 | 2009 | 2005 | 2001 | 1997 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
TRP Reserve Investment | 2 | 2009 | 2006 | 1997 | 2001 | — | 2003 | 2005 | — | 1997 | 2009 |
Retirement | 12 | 2009 | 2005 | 2002 | 2002 | 2012 | 2003 | 2005 | 2012 | 2002 | 2009 |
Science & Technology | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Short-Term Bond | 1 | 2009 | 2006 | 1983 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Small-Cap Stock | 1 | 2009 | 2005 | 2001 | 1992 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Small-Cap Value | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Spectrum | 3 | 2009 | 2005 | 2001 | 1999 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
State Tax-Free Income Trust | 8 | 2009 | 2006 | 1986 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Strategic Income | 1 | 2009 | 2008 | 2008 | 2008 | — | 2008 | 2008 | — | 2008 | 2009 |
Summit | 2 | 2009 | 2006 | 1993 | 2001 | — | 2003 | 2005 | — | 1993 | 2009 |
Summit Municipal | 3 | 2009 | 2006 | 1993 | 2001 | — | 2003 | 2005 | 2012 | 1993 | 2009 |
Tax-Efficient | 1 | 2009 | 2005 | 2001 | 1997 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Tax-Exempt Money | 1 | 2009 | 2006 | 1983 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Tax-Free High Yield | 1 | 2009 | 2006 | 1984 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Tax-Free Income | 1 | 2009 | 2006 | 1983 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Tax-Free Short-Intermediate | 1 | 2009 | 2006 | 1983 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
U.S. Bond Enhanced Index | 1 | 2009 | 2006 | 2000 | 2001 | — | 2003 | 2005 | — | 2000 | 2009 |
U.S. Large-Cap Core | 1 | 2009 | 2009 | 2009 | 2009 | 2012 | 2009 | 2009 | 2012 | 2009 | 2009 |
U.S. Treasury | 3 | 2009 | 2006 | 1989 | 2001 | — | 2003 | 2005 | — | 1992 | 2009 |
Value | 1 | 2009 | 2005 | 2001 | 1994 | 2012 | 2003 | 2005 | 2012 | 2001 | 2009 |
Inside Directors | |||||
Fund/Corporation/Trust | Number of portfolios | Bernard | Gitlin | Laporte | Rogers |
Balanced | 1 | 2006 | — | — | 2006 |
Blue Chip Growth | 1 | 2006 | — | — | 2006 |
California Tax-Free Income Trust | 2 | 2006 | 2010 | — | — |
Capital Appreciation | 1 | 2006 | — | — | 2006 |
Capital Opportunity | 1 | 2006 | — | 1994 | — |
Corporate Income | 1 | 2006 | 2010 | — | — |
Diversified Mid-Cap Growth | 1 | 2006 | — | 2006 | — |
Diversified Small-Cap Growth | 1 | 2006 | — | 1997 | — |
Dividend Growth | 1 | 2006 | — | — | 2006 |
Equity Income | 1 | 2006 | — | — | 2006 |
Financial Services | 1 | 2006 | — | — | 2006 |
Floating Rate | 1 | 2011 | 2011 | — | — |
19
Inside Directors | |||||
Fund/Corporation/Trust | Number of portfolios | Bernard | Gitlin | Laporte | Rogers |
Global Real Estate | 1 | 2008 | — | — | 2008 |
Global Technology | 1 | 2006 | — | — | 2006 |
GNMA | 1 | 2006 | 2010 | — | — |
Growth & Income | 1 | 2006 | — | — | 2006 |
Growth Stock | 1 | 2006 | — | — | 2006 |
Health Sciences | 1 | 2006 | — | 1995 | — |
High Yield | 1 | 2006 | 2010 | — | — |
Index Trust | 3 | 2006 | — | — | 2006 |
Inflation Focused Bond | 1 | 2006 | 2010 | — | — |
Inflation Protected Bond | 1 | 2006 | 2010 | — | — |
Institutional Equity | 6 | 2006 | — | — | 2006 |
Institutional Income | 3 | 2006 | 2010 | — | — |
Institutional International | 10 | 2006 | — | — | 2006 |
International | 18 | 2006 | — | — | 2006 |
International Index | 1 | 2006 | — | — | 2006 |
Media & Telecommunications | 1 | 2006 | — | — | 2006 |
Mid-Cap Growth | 1 | 2006 | — | — | 2006 |
Mid-Cap Value | 1 | 2006 | — | — | 2006 |
Multi-Sector Account Portfolios | 6 | 2012 | 2012 | — | — |
New America Growth | 1 | 2006 | — | 1985 | — |
New Era | 1 | 2006 | — | — | 2006 |
New Horizons | 1 | 2006 | — | 1988 | — |
New Income | 1 | 2006 | 2010 | — | — |
Personal Strategy | 3 | 2006 | — | — | 2006 |
Prime Reserve | 1 | 2006 | 2010 | — | — |
Real Assets | 1 | 2010 | — | — | 2010 |
Real Estate | 1 | 2006 | — | — | 2006 |
TRP Reserve Investment | 2 | 2006 | 2010 | — | — |
Retirement | 12 | 2006 | — | — | 2006 |
Science & Technology | 1 | 2006 | — | 1988 | — |
Short-Term Bond | 1 | 2006 | 2010 | — | — |
Small-Cap Stock | 1 | 2006 | — | 1994 | — |
Small-Cap Value | 1 | 2006 | — | 1994 | — |
Spectrum | 3 | 2006 | — | — | 2006 |
State Tax-Free Income Trust | 8 | 2006 | 2010 | — | — |
Strategic Income | 1 | 2008 | 2010 | — | — |
Summit | 2 | 2006 | 2010 | — | — |
Summit Municipal | 3 | 2006 | 2010 | — | — |
Tax-Efficient | 1 | 2006 | — | — | 2006 |
Tax-Exempt Money | 1 | 2006 | 2010 | — | — |
20
Inside Directors | |||||
Fund/Corporation/Trust | Number of portfolios | Bernard | Gitlin | Laporte | Rogers |
Tax-Free High Yield | 1 | 2006 | 2010 | — | — |
Tax-Free Income | 1 | 2006 | 2010 | — | — |
Tax-Free Short-Intermediate | 1 | 2006 | 2010 | — | — |
U.S. Bond Enhanced Index | 1 | 2006 | 2010 | — | — |
U.S. Large-Cap Core | 1 | 2009 | — | — | 2009 |
U.S. Treasury | 3 | 2006 | 2010 | — | — |
Value | 1 | 2006 | — | — | 2006 |
Officers
Fund | Name | Position
Held |
All funds | Roger L. Fiery III Gregory S. Golczewski David Oestreicher Deborah D. Seidel Julie L. Waples Gregory K. Hinkle Patricia B. Lippert John R. Gilner | Vice President Vice President Vice President Vice President Vice President Treasurer Secretary Chief Compliance Officer |
Fund | Name | Position
Held |
Balanced | Charles M. Shriver E. Frederick Bair Kimberly E. DeDominicis Anna M. Dopkin Mark S. Finn Paul A. Karpers Robert M. Larkins Wyatt A. Lee Raymond A. Mills Larry J. Puglia Guido F. Stubenrauch Richard T. Whitney (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
21
Fund | Name | Position Held |
Blue Chip Growth | Larry J. Puglia P. Robert Bartolo Peter J. Bates Ryan N. Burgess G. Mark Bussard Jonathan Chou Shawn T. Driscoll David J. Eiswert Paul D. Greene II Thomas J. Huber Michael M. Lasota George A. Marzano Timothy E. Parker Robert W. Sharps Taymour R. Tamaddon Ashley R. Woodruff (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
California Tax-Free Income Trust California Tax-Free Bond California Tax-Free Money | Hugh D. McGuirk Joseph K. Lynagh Konstantine B. Mallas Steven G. Brooks M. Helena Condez G. Richard Dent Charles E. Emrich Jared S. Franz Alan D. Levenson Samy B. Muaddi Linda A. Murphy Douglas D. Spratley Timothy G. Taylor Edward A. Wiese Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Capital Appreciation | David R. Giroux Ryan N. Burgess Mark S. Finn Paul D. Greene II Steven D. Krichbaum John D. Linehan Paul M. Massaro Heather K. McPherson Joseph M. Milano Sudhir Nanda Robert T. Quinn, Jr. Gabriel Solomon William J. Stromberg Taymour R. Tamaddon Susan G. Troll Eric L. Veiel Tamara P. Wiggs (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
22
Fund | Name | Position Held |
Capital Opportunity | Anna M. Dopkin Kennard W. Allen Peter J. Bates Christopher W. Carlson Ann M. Holcomb Jennifer Martin Timothy E. Parker Charles G. Pepin Jason B. Polun Robert T. Quinn, Jr. Gabriel Solomon Joshua K. Spencer Taymour R. Tamaddon Eric L. Veiel (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Corporate Income | David A. Tiberii Steve Boothe Steven G. Brooks Michael J. Grogan Paul A. Karpers Michael Lambe Alan D. Levenson Michael J. McGonigle Samy B. Muaddi Alexander S. Obaza Miso Park Vernon A. Reid, Jr. Theodore E. Robson Brian M. Ropp Kimberly A Stokes Robert D. Thomas Lauren T. Wagandt Edward A. Wiese Thea N. Williams J. Howard Woodward Zhen Xia (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President |
Diversified Mid-Cap Growth | Donald J. Peters Donald J. Easley Kennard W. Allen Peter J. Bates Brian W.H. Berghuis Sudhir Nanda Timothy E. Parker Amit Seth John F. Wakeman Rouven J. Wool-Lewis (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Diversified Small-Cap Growth | Sudhir Nanda Anna M. Dopkin Donald J. Easley Prashant G. Jeyaganesh John H. Laporte Curt J. Organt J. David Wagner (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President |
23
Fund | Name | Position Held |
Dividend Growth | Thomas J. Huber Peter J. Bates G. Mark Bussard David M. Lee Daniel Martino Timothy E. Parker Robert T. Quinn, Jr. Jeffrey Rottinghaus Gabriel Solomon William J. Stromberg Eric L. Veiel (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Equity Income | Brian C. Rogers Andrew M. Brooks Mark S. Finn Jon M. Friar David R. Giroux Paul D. Greene II Thomas J. Huber John D. Linehan Robert T. Quinn, Jr. Eric L. Veiel (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Financial Services | Eric L. Veiel Stephen M. Finamore Christopher T. Fortune Jon M. Friar Nina P. Jones Yoichiro Kai Ian C. McDonald Michael J. McGonigle Kathryn M. Mongelli Jason B. Polun Frederick A. Rizzo Francisco Sersale Matthew J. Snowling Gabriel Solomon Mitchell J.K. Todd Tamara P. Wiggs (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Floating Rate | Mark J. Vaselkiv Justin T. Gerbereux Paul M. Massaro Brian E. Burns Michael F. Connelly Stephen M. Finamore David R. Giroux Steven C. Huber Paul A. Karpers Michael J. McGonigle Brian A. Rubin Walter P. Stuart III Thomas E. Tewksbury Thea N. Williams (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
24
Fund | Name | Position Held |
Global Real Estate | David M. Lee Richard N. Clattenburg Nina P. Jones Yoichiro Kai Michael M. Lasota Robert J. Marcotte Raymond A. Mills Eric C. Moffett Philip A. Nestico Viral Patel Marta Yago (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Global Technology | Joshua K. Spencer Kennard W. Allen P. Robert Bartolo Christopher W. Carlson David J. Eiswert Henry M. Ellenbogen Robert N. Gensler Paul D. Greene II Rhett K. Hunter Daniel Martino Heather K. McPherson Tobias F. Mueller Hiroaki Owaki Michael F. Sola Thomas H. Watson Alison Mei Ling Yip Nalin K. Yogasundram (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
GNMA | Andrew C. McCormick Stephen L. Bartolini Brian J. Brennan Christopher P. Brown Keir R. Joyce Martin G. Lee Alan D. Levenson John D. Wells (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Growth & Income | Thomas J. Huber G. Mark Bussard Shawn T. Driscoll David M. Lee Robert T. Quinn, Jr. Jeffrey Rottinghaus David L. Rowlett Gabriel Solomon Joshua K. Spencer Eric L. Veiel (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
25
Fund | Name | Position Held |
Growth Stock | P. Robert Bartolo Kennard W. Allen G. Mark Bussard Joseph B. Fath Paul D. Greene II Barry Henderson Kris H. Jenner Daniel Martino Joseph M. Milano Larry J. Puglia Robert W. Sharps Robert W. Smith Taymour R. Tamaddon Eric L. Veiel Justin P. White (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Health Sciences | Kris H. Jenner Ziad Bakri G. Mark Bussard Melissa C. Gallagher John H. Laporte Graham M. McPhail Jason Nogueira Charles G. Pepin John C.A. Sherman Taymour R. Tamaddon Rouven J. Wool-Lewis (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
High Yield | Mark J. Vaselkiv Jason A. Bauer Andrew M. Brooks Michael F. Connelly Michael Della Vedova Carson R. Dickson Stephen M. Finamore Justin T. Gerbereux Andrew P. Jamison Paul A. Karpers Paul M. Massaro Michael J. McGonigle Brian A. Rubin Walter P. Stuart III Thomas E. Tewksbury Thea N. Williams (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Index Trust Equity Index 500 Extended Equity Market Index Total Equity Market Index | E. Frederick Bair Ken D. Uematsu Neil Smith J. Zachary Wood (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President |
26
Fund | Name | Position Held |
Inflation Focused Bond | Daniel O. Shackelford Brian J. Brennan Steven G. Brooks Jerome A. Clark Bridget A. Ebner Michael J. Grogan Geoffrey M. Hardin Charles B. Hill Keir R. Joyce Wyatt A. Lee Andrew C. McCormick Cheryl A. Mickel Vernon A. Reid, Jr. Michael F. Reinartz John D. Wells Edward A. Wiese (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Inflation Protected Bond | Daniel O. Shackelford Brian J. Brennan Geoffrey M. Hardin Alan D. Levenson Andrew C. McCormick Rebecca L. Setcavage (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Assistant Vice President |
Institutional Equity Funds Institutional Large-Cap Core Growth Institutional Large-Cap Growth Institutional Large-Cap Value Institutional Mid-Cap Equity Growth Institutional Small-Cap Stock Institutional U.S. Structured Research | Brian C. Rogers Brian W.H. Berghuis Anna M. Dopkin Mark S. Finn John D. Linehan Gregory A. McCrickard Larry J. Puglia Robert W. Sharps Ann M. Holcomb Joseph M. Milano J. David Wagner John F. Wakeman (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President |
27
Fund | Name | Position Held |
Institutional Income Funds Institutional Core Plus Institutional Floating Rate Institutional High Yield | Mark J. Vaselkiv Brian J. Brennan Justin T. Gerbereux Paul A. Karpers Paul M. Massaro Jeffrey M. Anapolsky Andrew M. Brooks Brian E. Burns Michael J. Conelius Michael F. Connelly Stephen M. Finamore David R. Giroux Steven C. Huber Andrew J. Keirle Ian D. Kelson Andrew C. McCormick Michael J. McGonigle Brian A. Rubin Daniel O. Shackelford Walter P. Stuart III Thomas E. Tewksbury David A. Tiberii Edward A. Wiese Thea N. Williams (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Fund | Name | Position Held |
28
Institutional International Funds Institutional Africa & Middle East Institutional Concentrated International Equity Institutional Emerging Markets Bond Institutional Emerging Markets Equity Institutional Global Equity Institutional Global Large-Cap Equity Institutional Global Value Equity Institutional International Bond Institutional International Core Equity Institutional International Growth Equity | Christopher D. Alderson Oliver D.M. Bell R. Scott Berg Richard N. Clattenburg Michael J. Conelius Mark J.T. Edwards David J. Eiswert Robert N. Gensler Andrew J. Keirle Ian D. Kelson Sebastien Mallet Raymond A. Mills Joshua Nelson Jason Nogueira Gonzalo Pangaro Christopher J. Rothery Federico Santilli Robert W. Smith Ulle Adamson Roy H. Adkins Paulina Amieva Archibald Ciganer Albeniz Jose Costa Buck Carolyn Hoi Che Chu Michael Della Vedova Richard de los Reyes Bridget A. Ebner Mark S. Finn M. Campbell Gunn Leigh Innes Randal S. Jenneke Kris H. Jenner Yoichiro Kai Christopher J. Kushlis Mark J. Lawrence David M. Lee Christopher C. Loop Anh Lu Daniel Martino Jonathan H.W. Matthews Susanta Mazumdar Sudhir Nanda Michael D. Oh Kenneth A. Orchard Timothy E. Parker Craig J. Pennington Frederick A. Rizzo Sebastian Schrott Robert W. Sharps Joshua K. Spencer David A. Stanley Jonty Starbuck Ju Yen Tan Dean Tenerelli Eric L. Veiel Christopher S. Whitehouse J. Howard Woodward Ernest C. Yeung (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Fund | Name | Position Held |
29
International Funds Africa & Middle East Emerging Europe Emerging Markets Bond Emerging Markets Corporate Bond Emerging Markets Local Currency Bond Emerging Markets Stock European Stock Global Infrastructure Global Large-Cap Stock Global Stock International Bond International Discovery International Growth & Income International Stock Japan Latin America New Asia Overseas Stock | Christopher D. Alderson Oliver D.M. Bell R. Scott Berg Jose Costa Buck Richard N. Clattenburg Michael J. Conelius Mark J.T. Edwards David J. Eiswert Robert N. Gensler M. Campbell Gunn Leigh Innes Andrew J. Keirle Ian D. Kelson Anh Lu Jonathan H.W. Matthews Susanta Mazumdar Raymond A. Mills Joshua Nelson Jason Nogueira Gonzalo Pangaro Christopher J. Rothery Federico Santilli Robert W. Smith Dean Tenerelli Justin Thomson Ulle Adamson Roy H. Adkins Syed H. Ali Paulina Amieva Sheena L. Barbosa Peter J. Bates Brian J. Brennan Ryan N. Burgess Sheldon Chan Tak Yiu Cheng Carolyn Hoi Che Chu Archibald Ciganer Albeniz Michael Della Vedova Richard de los Reyes Jessie Q. Ding Shawn T. Driscoll Bridget A. Ebner Henry M. Ellenbogen Mark S. Finn Melissa C. Gallagher Vishnu Vardhan Gopal Benjamin Griffiths Randal S. Jenneke Kris H. Jenner Yoichiro Kai Jai Kapadia Christopher J. Kushlis Mark J. Lawrence David M. Lee Christopher C. Loop Sebastien Mallet Daniel Martino Eric C. Moffett Samy B. Muaddi | President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Fund | Name | Position Held |
30
International Funds (continued) Africa & Middle East Emerging Europe Emerging Markets Bond Emerging Markets Corporate Bond Emerging Markets Local Currency Bond Emerging Markets Stock European Stock Global Infrastructure Global Large-Cap Stock Global Stock International Bond International Discovery International Growth & Income International Stock Japan Latin America New Asia Overseas Stock | Philip A. Nestico Sridhar Nishtala Michael D. Oh Kenneth A. Orchard Paul T. O’Sullivan Hiroaki Owaki Timothy E. Parker Craig J. Pennington Austin M. Powell Frederick A. Rizzo Naoto Saito Sebastian Schrott Francisco Sersale Amitabh Shah Jeneiv Shah Robert W. Sharps John C.A. Sherman Eunbin Song David A. Stanley Jonty Starbuck Miki Takeyama Ju Yen Tan Sin Dee Tan Jean Pierre Thibaud Siby Thomas Mitchell J.K. Todd Eric L. Veiel Verena E. Wachnitz David J. Wallack Hiroshi Watanabe Christopher S. Whitehouse Clive M. Williams J. Howard Woodward Marta Yago Ernest C. Yeung Alison Mei Ling Yip Christopher Yip Wenli Zheng (For remaining officers, refer to the “All funds” table) | Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
International Index Fund International Equity Index | E. Frederick Bair Neil Smith Ken D. Uematsu J. Zachary Wood (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President |
31
Fund | Name | Position Held |
Media & Telecommunications | Daniel Martino Ulle Adamson P. Robert Bartolo David J. Eiswert Henry M. Ellenbogen Joseph B. Fath Paul D. Greene II Philip A. Nestico Curt J. Organt Corey D. Shull Robert W. Smith Justin P. White Christopher S. Whitehouse Ernest C. Yeung Wenli Zheng (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Mid-Cap Growth | Brian W.H. Berghuis John F. Wakeman Kennard W. Allen P. Robert Bartolo Shawn T. Driscoll Donald J. Easley Henry M. Ellenbogen Kris H. Jenner Robert J. Marcotte Daniel Martino Joseph M. Milano Clark R. Shields Taymour R. Tamaddon (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Mid-Cap Value | David J. Wallack Heather K. McPherson Peter J. Bates Christopher W. Carlson Jonathan Chou Andrew S. Davis Henry M. Ellenbogen Mark S. Finn Gregory A. McCrickard Ian C. McDonald Joseph M. Milano J. David Wagner John M. Williams (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
32
Fund | Name | Position Held |
Multi-Sector Account Portfolios Emerging Markets Bond Multi-Sector Account Portfolio Emerging Markets Local Multi-Sector Account Portfolio Floating Rate Multi-Sector Account Portfolio High Yield Multi-Sector Account Portfolio Investment-Grade Corporate Multi-Sector Account Portfolio Mortgage-Backed Securities Multi-Sector Account Portfolio | Michael C. Gitlin Michael J. Conelius Justin T. Gerbereux Andrew J. Keirle Paul M. Massaro Andrew C. McCormick Christopher J. Rothery David A. Tiberii Mark J. Vaselkiv Roy H. Adkins Anil K. Andhavarapu Stephen L. Bartolini Steve Boothe Brian J. Brennan Steven G. Brooks Christopher P. Brown Brian E. Burns Sheldon Chan Carolyn Hoi Che Chu Michael F. Connelly Bridget A. Ebner Stephen M. Finamore Michael J. Grogan Steven C. Huber Keir R. Joyce Paul A. Karpers Ian D. Kelson Christopher J. Kushlis Michael Lambe Martin G. Lee Alan D. Levenson Christopher C. Loop Michael J. McGonigle Samy B. Muaddi Christina Ni Alexander S. Obaza Michael D. Oh Miso Park Vernon A. Reid, Jr. Theodore E. Robson Brian M. Ropp Brian A. Rubin Daniel O. Shackelford David A. Stanley Kimberly A. Stokes Walter P. Stuart III Ju Yen Tan Thomas E. Tewksbury Robert. D. Thomas Siby Thomas Lauren T. Wagandt John D. Wells Edward A. Wiese Thea N. Williams J. Howard Woodward (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Fund | Name | Position Held |
33
New America Growth | Joseph M. Milano Francisco M. Alonso P. Robert Bartolo Brian W.H. Berghuis Shawn T. Driscoll Benjamin D. Landy Ian C. McDonald Jason Nogueira Curt J. Organt Robert W. Sharps Clark R. Shields Taymour R. Tamaddon Craig A. Thiese Eric L. Veiel (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
New Era | Timothy E. Parker Syed H. Ali Ryan N. Burgess Richard de los Reyes Shawn T. Driscoll Mark S. Finn Shinwoo Kim Jeremy D. Kokemor Steven D. Krichbaum Benjamin D. Landy Ryan Martyn Susanta Mazumdar Heather K. McPherson Craig J. Pennington Craig A. Thiese David J. Wallack John M. Williams Nalin K. Yogasundram (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
New Horizons | Henry M. Ellenbogen Francisco M. Alonso Brian W.H. Berghuis Michael F. Blandino G. Mark Bussard Christopher W. Carlson Rhett K. Hunter Kris H. Jenner John H. Laporte Graham M. McPhail Timothy E. Parker Clark R. Shields Michael F. Sola Taymour R. Tamaddon Justin Thomson J. David Wagner Thomas H. Watson Ashley R. Woodruff Nalin K. Yogasundram (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
34
Fund | Name | Position Held |
New Income | Daniel O. Shackelford Brian J. Brennan Michael J. Grogan Geoffrey M. Hardin Steven C. Huber Alan D. Levenson Andrew C. McCormick Vernon A. Reid, Jr. David A. Tiberii Edward A. Wiese (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Personal Strategy Funds Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income | Charles M. Shriver Christopher D. Alderson E. Frederick Bair Jerome A. Clark Kimberly E. DeDominicis Mark S. Finn Ian D. Kelson John H. Laporte Wyatt A. Lee Raymond A. Mills Larry J. Puglia Brian C. Rogers Robert W. Smith Guido F. Stubenrauch Mark J. Vaselkiv Richard T. Whitney (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Prime Reserve | Joseph K. Lynagh Steven G. Brooks M. Helena Condez G. Richard Dent Jared S. Franz Alan D. Levenson Samy B. Muaddi Douglas D. Spratley Edward A. Wiese Chen Shao (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President |
Real Assets | Wyatt A. Lee E. Frederick Bair Richard de los Reyes Jared S. Franz Stefan Hubrich David M. Lee Susanta Mazumdar Timothy E. Parker Daniel O. Shackelford Richard T. Whitney (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
35
Fund | Name | Position Held |
Real Estate | David M. Lee Anna M. Dopkin Joseph B. Fath Thomas J. Huber Nina P. Jones Michael M. Lasota Philip A. Nestico Theodore E. Robson (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
TRP Reserve Investment Funds TRP Government Reserve Investment TRP Reserve Investment | Joseph K. Lynagh Steven G. Brooks M. Helena Condez G. Richard Dent Jared S. Franz Alan D. Levenson Samy B. Muaddi Douglas D. Spratley Edward A. Wiese Chen Shao (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President |
Retirement Funds Retirement 2005 Retirement 2010 Retirement 2015 Retirement 2020 Retirement 2025 Retirement 2030 Retirement 2035 Retirement 2040 Retirement 2045 Retirement 2050 Retirement 2055 Retirement Income | Jerome A. Clark Wyatt A. Lee Christopher D. Alderson Kimberly E. DeDominicis Ian D. Kelson John H. Laporte Brian C. Rogers Daniel O. Shackelford Charles M. Shriver Robert W. Smith Guido F. Stubenrauch Mark J. Vaselkiv Richard T. Whitney (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Science & Technology | Kennard W. Allen Brian W.H. Berghuis David J. Eiswert Rhett K. Hunter Daniel Martino Shalin Mody Tobias F. Mueller Hiroaki Owaki Michael F. Sola Joshua K. Spencer Thomas H. Watson Alison Mei Ling Yip Nalin K. Yogasundram (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
36
Fund | Name | Position Held |
Short-Term Bond | Edward A. Wiese Brian J. Brennan Steven G. Brooks Bridget A. Ebner Michael J. Grogan Geoffrey M. Hardin Charles B. Hill Keir R. Joyce Andrew C. McCormick Cheryl A. Mickel Vernon A. Reid, Jr. Michael F. Reinartz Daniel O. Shackelford John D. Wells (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Small-Cap Stock | Gregory A. McCrickard Francisco M. Alonso Preston G. Athey Ira W. Carnahan Andrew S. Davis Hugh M. Evans III Christopher T. Fortune Steven D. Krichbaum Robert J. Marcotte Joseph M. Milano Curt J. Organt Michael F. Sola J. David Wagner (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Small-Cap Value | Preston G. Athey Francisco M. Alonso Hugh M. Evans III Christopher T. Fortune Nina P. Jones Steven D. Krichbaum Gregory A. McCrickard Curt J. Organt J. David Wagner (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Spectrum Funds Spectrum Growth Spectrum Income Spectrum International | Charles M. Shriver Christopher D. Alderson Kimberly E. DeDominicis Ian D. Kelson John H. Laporte Brian C. Rogers Daniel O. Shackelford Robert W. Smith Guido F. Stubenrauch Mark J. Vaselkiv Richard T. Whitney (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
37
Fund | Name | Position Held |
State Tax-Free Income Trust Georgia Tax-Free Bond Maryland Short-Term Tax-Free Bond Maryland Tax-Free Bond Maryland Tax-Free Money New Jersey Tax-Free Bond New York Tax-Free Bond New York Tax-Free Money Virginia Tax-Free Bond | Hugh D. McGuirk Charles B. Hill Joseph K. Lynagh Konstantine B. Mallas Austin Applegate R. Lee Arnold, Jr. M. Helena Condez Patricia S. Deford G. Richard Dent Charles E. Emrich Jared S. Franz Dylan Jones Marcy M. Lash Alan D. Levenson Samy B. Muaddi James M. Murphy Linda A. Murphy Douglas D. Spratley Timothy G. Taylor Edward A. Wiese Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Strategic Income | Steven C. Huber Michael J. Conelius Justin T. Gerbereux Andrew J. Keirle Ian D. Kelson Martin G. Lee Andrew C. McCormick Michael J. McGonigle David A. Stanley Ju Yen Tan David A. Tiberii Mark J. Vaselkiv (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Summit Funds Summit Cash Reserves Summit GNMA | Andrew C. McCormick Joseph K. Lynagh Stephen L. Bartolini Brian J. Brennan Christopher P. Brown M. Helena Condez G. Richard Dent Jared S. Franz Keir R. Joyce Martin G. Lee Alan D. Levenson Samy B. Muaddi Douglas D. Spratley Susan G. Troll John D. Wells Edward A. Wiese Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President |
38
Fund | Name | Position Held |
Summit Municipal Funds Summit Municipal Income Summit Municipal Intermediate Summit Municipal Money Market | Hugh D. McGuirk Charles B. Hill Joseph K. Lynagh Konstantine B. Mallas R. Lee Arnold, Jr. M. Helena Condez Patricia S. Deford G. Richard Dent Charles E. Emrich Jared S. Franz Dylan Jones Marcy M. Lash Alan D. Levenson Samy B. Muaddi James M. Murphy Linda A. Murphy Douglas D. Spratley Timothy G. Taylor Edward A. Wiese Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Executive Vice President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Tax-Efficient Funds Tax-Efficient Equity | Donald J. Peters Kennard W. Allen Preston G. Athey Ziad Bakri Andrew S. Davis Donald J. Easley Timothy E. Parker Robert T. Quinn, Jr. William J. Stromberg Taymour R. Tamaddon Mark R. Weigman (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Tax-Exempt Money | Joseph K. Lynagh Steven G. Brooks M. Helena Condez G. Richard Dent Jared S. Franz Marcy M. Lash Alan D. Levenson Samy B. Muaddi Douglas D. Spratley Edward A. Wiese Chen Shao (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President |
39
Fund | Name | Position Held |
Tax-Free High Yield | James M. Murphy R. Lee Arnold, Jr. M. Helena Condez Patricia S. Deford G. Richard Dent Charles B. Hill Dylan Jones Marcy M. Lash Konstantine B. Mallas Hugh D. McGuirk Linda A. Murphy Timothy G. Taylor Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Tax-Free Income | Konstantine B. Mallas R. Lee Arnold, Jr. M. Helena Condez Patricia S. Deford G. Richard Dent Charles B. Hill Marcy M. Lash Hugh D. McGuirk James M. Murphy Timothy G. Taylor Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Tax-Free Short-Intermediate | Charles B. Hill M. Helena Condez G. Richard Dent Charles E. Emrich Dylan Jones Marcy M. Lash Joseph K. Lynagh Konstantine B. Mallas Hugh D. McGuirk Timothy G. Taylor Edward A. Wiese Michael K. Sewell Chen Shao (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
U.S. Bond Enhanced Index | Robert M. Larkins Steven C. Huber Martin G. Lee Peter D. Leiser, Jr. Andrew C. McCormick Brian M. Ropp Daniel O. Shackelford David A. Tiberii Zhen Xia (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
40
Fund | Name | Position Held |
U.S. Large-Cap Core | Jeffrey Rottinghaus Peter J. Bates G. Mark Bussard Shawn T. Driscoll Joseph B. Fath Mark S. Finn John D. Linehan George A. Marzano Timothy E. Parker Robert T. Quinn, Jr. Robert W. Sharps (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
U.S. Treasury Funds U.S. Treasury Intermediate U.S. Treasury Long-Term U.S. Treasury Money | Brian J. Brennan Joseph K. Lynagh Steven G. Brooks M. Helena Condez G. Richard Dent Jared S. Franz Geoffrey M. Hardin Alan D. Levenson Andrew C. McCormick Samy B. Muaddi Vernon A. Reid, Jr. Daniel O. Shackelford Douglas D. Spratley Edward A. Wiese Rebecca L. Setcavage Chen Shao (For remaining officers, refer to the “All funds” table) | President Executive Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Assistant Vice President Assistant Vice President |
Value | Mark S. Finn Peter J. Bates Ryan N. Burgess Ira W. Carnahan Andrew S. Davis David R. Giroux John D. Linehan Heather K. McPherson Robert T. Quinn, Jr. Brian C. Rogers Joshua K. Spencer Walter P. Stuart III Eric L. Veiel Tamara P. Wiggs (For remaining officers, refer to the “All funds” table) | President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President |
Officers
Name, Year of Birth, and Principal Occupation(s) | Position(s) Held With Fund(s) |
Ulle Adamson, 1979 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, Institutional International Funds, International Funds, and Media & Telecommunications Fund |
Roy H. Adkins, 1970 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Employee, African Development Bank (to 2008) | Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
41
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Christopher D. Alderson, 1962 Director and President-International Equity, T. Rowe Price International; Company’s Representative, Director and Vice President, Price Hong Kong; Director and Vice President, Price Singapore; Vice President, T. Rowe Price Group, Inc. | President, Institutional International Funds and International Funds; Vice President, Personal Strategy Funds, Retirement Funds, and Spectrum Funds |
Syed H. Ali, 1970 Vice President, Price Singapore and T. Rowe Price Group, Inc.; formerly Research Analyst, Credit Suisse Securities (to 2010) | Vice President, International Funds and New Era Fund |
Kennard W. Allen, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | President, Science & Technology Fund; Vice President, Capital Opportunity Fund, Diversified Mid-Cap Growth Fund, Global Technology Fund, Growth Stock Fund, Mid-Cap Growth Fund, and Tax-Efficient Funds |
Francisco M. Alonso, 1978 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, New America Growth Fund, New Horizons Fund, Small-Cap Stock Fund, and Small-Cap Value Fund |
Paulina Amieva, 1981 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly student Harvard Business School (to 2008) | Vice President, Institutional International Funds and International Funds |
Jeffrey M. Anapolsky, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Vice President, American Capital, Ltd. (to 2010) | Vice President, Institutional Income Funds |
Anil Kumar Andhavarapu, 1980 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Employee, Nomura Holdings America, Inc. (to 2009) | Vice President, Multi-Sector Account Portfolios |
Austin Applegate, 1974 Vice President, T. Rowe Price; formerly Senior Municipal Credit Research Analyst, Barclays Capital (to 2011); Research Analyst, Lehman Brothers, Inc. (to 2008) | Vice President, State Tax-Free Income Trust |
R. Lee Arnold, Jr., 1970 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA, CPA | Executive Vice President, Tax-Free High Yield Fund; Vice President, State Tax-Free Income Trust, Summit Municipal Funds, and Tax-Free Income Fund |
Preston G. Athey, 1949 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CIC | President, Small-Cap Value Fund; Vice President, Small-Cap Stock Fund and Tax-Efficient Funds |
E. Frederick Bair, 1969 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CPA | President, Index Trust and International Index Fund; Vice President, Balanced Fund, Personal Strategy Funds, and Real Assets Fund |
Ziad Bakri, 1980 Vice President, T. Rowe Price; formerly Vice President, Cowen and Company; M.D., CFA | Vice President, Health Sciences Fund and Tax-Efficient Funds |
Sheena L. Barbosa, 1983 Employee, T. Rowe Price; formerly at Citigroup in Singapore (to 2007) | Vice President, International Funds |
Stephen L. Bartolini, 1977 Vice President, T. Rowe Price; formerly Senior Portfolio Manager, Senior Trader, and Analyst, Fannie Mae (to 2010); CFA | Vice President, GNMA Fund, Multi-Sector Account Portfolios, and Summit Funds |
P. Robert Bartolo, 1972 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CPA | President, Growth Stock Fund; Vice President, Blue Chip Growth Fund, Global Technology Fund, Media & Telecommunications Fund, Mid-Cap Growth Fund, and New America Growth Fund |
42
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Peter J. Bates, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Blue Chip Growth Fund, Capital Opportunity Fund, Diversified Mid-Cap Growth Fund, Dividend Growth Fund, International Funds, Mid-Cap Value Fund, U.S. Large-Cap Core Fund, and Value Fund |
Jason A. Bauer, 1979 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, High Yield Fund |
Oliver D.M. Bell, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Head of Global Emerging Markets Research, Pictet Asset Management Ltd. (to 2011) and Portfolio Manager of Africa and Middle East portfolios and other emerging markets strategies, Pictet Asset Management Ltd. (to 2009) | Executive Vice President, Institutional International Funds and International Funds |
R. Scott Berg, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Executive Vice President, Institutional International Funds and International Funds |
Brian W.H. Berghuis, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Mid-Cap Growth Fund; Executive Vice President, Institutional Equity Funds; Vice President, Diversified Mid-Cap Growth Fund, New America Growth Fund, New Horizons Fund, and Science & Technology Fund |
Michael F. Blandino, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Executive Director, Convertible Sales, JPMorgan (to 2009) | Vice President, New Horizons Fund |
Steve Boothe, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Executive Vice President, Corporate Income Fund; Vice President, Multi-Sector Account Portfolios |
Brian J. Brennan, 1964 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | President, U.S. Treasury Funds; Executive Vice President, Institutional Income Funds; Vice President, GNMA Fund, Inflation Focused Bond Fund, Inflation Protected Bond Fund, International Funds, Multi-Sector Account Portfolios, New Income Fund, Short-Term Bond Fund, and Summit Funds |
Andrew M. Brooks, 1956 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Equity Income Fund, High Yield Fund, and Institutional Income Funds |
Steven G. Brooks, 1954 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, California Tax-Free Income Trust, Corporate Income Fund, Inflation Focused Bond Fund, Multi-Sector Account Portfolios, Prime Reserve Fund, TRP Reserve Investment Funds, Short-Term Bond Fund, Tax-Exempt Money Fund, and U.S. Treasury Funds |
Christopher P. Brown, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, GNMA Fund, Multi-Sector Account Portfolios, and Summit Funds |
Ryan N. Burgess, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Blue Chip Growth Fund, Capital Appreciation Fund, International Funds, New Era Fund, and Value Fund |
Brian E. Burns, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | Vice President, Floating Rate Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
43
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
G. Mark Bussard, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Blue Chip Growth Fund, Dividend Growth Fund, Growth & Income Fund, Growth Stock Fund, Health Sciences Fund, New Horizons Fund, and U.S. Large-Cap Core Fund |
Christopher W. Carlson, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Capital Opportunity Fund, Global Technology Fund, Mid-Cap Value Fund, and New Horizons Fund |
Ira W. Carnahan, 1963 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Small-Cap Stock Fund and Value Fund |
Sheldon Chan, 1981 Vice President, Price Hong Kong; formerly Associate Director, HSBC (Hong Kong) (to 2011) | Vice President, International Funds and Multi-Sector Account Portfolios |
Tak Yiu Cheng, 1974 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; formerly Analyst, CLS, BNP Paribos, and Deutsche Bank (to 2008); CFA, CPA | Vice President, International Funds |
Jonathan Chou, 1980 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Darden Graduate School of Business Administration, University of Virginia (to 2008) | Vice President, Blue Chip Growth Fund and Mid-Cap Value Fund |
Carolyn Hoi Che Chu, 1974 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; formerly Director, Bank of America Merrill Lynch and co-head of credit and convertibles research team in Hong Kong (to 2010) | Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Archibald Ciganer Albeniz, 1976 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Vice President in Mergers and Acquisitions, BNP Paribas, Japan (to 2007); CFA | Vice President, Institutional International Funds, International Funds |
Jerome A. Clark, 1961 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company; CFA | President, Retirement Funds; Vice President, Inflation Focused Bond Fund and Personal Strategy Funds |
Richard N. Clattenburg, 1979 Vice President, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International; CFA | Executive Vice President, Institutional International Funds and International Funds; Vice President, Global Real Estate Fund |
M. Helena Condez, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, California Tax-Free Income Trust, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Short-Intermediate Fund, and U.S. Treasury Funds |
Michael J. Conelius, 1964 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | Executive Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios; Vice President, Institutional Income Funds and Strategic Income Fund |
Michael F. Connelly, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Floating Rate Fund, High Yield Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
Jose Costa Buck, 1972 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, International Funds; Vice President, Institutional International Funds |
44
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Andrew S. Davis, 1978 Vice President, T. Rowe Price; Intern, Franklin Templeton Investments (to 2009); Manager, Deloitte Financial Advisory Services (to 2008) | Vice President, Mid-Cap Value Fund, Small-Cap Stock Fund, Tax-Efficient Funds, and Value Fund |
Kimberly E. DeDominicis, 1976 Vice President, T. Rowe Price and T. Rowe Price Trust Company | Vice President, Balanced Fund, Personal Strategy Funds, Retirement Funds, and Spectrum Funds |
Patricia S. Deford, 1957 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Free High Yield Fund, and Tax-Free Income Fund |
Richard de los Reyes, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Institutional International Funds, International Funds, New Era Fund, and Real Assets Fund |
Michael Della Vedova, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Co-founder and Partner, Four Quarter Capital (to 2009) | Vice President, High Yield Fund, Institutional International Funds, and International Funds |
G. Richard Dent, 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, California Tax-Free Income Trust, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Short-Intermediate Fund, and U.S. Treasury Funds |
Carson R. Dickson, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Equity Research Analyst, MTB Investment Advisors (to 2008); CFA, CPA | Vice President, High Yield Fund |
Jessie Q. Ding, 1981 Vice President, Price Hong Kong; formerly Associate, TPG Capital (to 2008) | Vice President, International Funds |
Anna M. Dopkin, 1967 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | President, Capital Opportunity Fund; Executive Vice President, Institutional Equity Funds; Vice President, Balanced Fund, Diversified Small-Cap Growth Fund, and Real Estate Fund |
Shawn T. Driscoll, 1975 Vice President, T. Rowe Price Group, Inc. | Vice President, Blue Chip Growth Fund, Growth & Income Fund, International Funds, Mid-Cap Growth Fund, New America Growth Fund, New Era Fund, and U.S. Large-Cap Core Fund |
Donald J. Easley, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Executive Vice President, Diversified Mid-Cap Growth Fund; Vice President, Diversified Small-Cap Growth Fund, Mid-Cap Growth Fund, and Tax-Efficient Funds |
Bridget A. Ebner, 1970 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Inflation Focused Bond Fund, Institutional International Funds, International Funds, Multi-Sector Account Portfolios, and Short-Term Bond Fund |
Mark J.T. Edwards, 1957 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, Institutional International Funds and International Funds |
45
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
David J. Eiswert, 1972 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International; CFA | Executive Vice President, Institutional International Funds and International Funds; Vice President, Blue Chip Growth Fund, Global Technology Fund, Media & Telecommunications Fund, and Science & Technology Fund |
Henry M. Ellenbogen, 1973 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | President, New Horizons Fund; Vice President, Global Technology Fund, International Funds, Media & Telecommunications Fund, Mid-Cap Growth Fund, and Mid-Cap Value Fund |
Charles E. Emrich, 1961 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, and Tax-Free Short-Intermediate Fund |
Hugh M. Evans III, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Small-Cap Stock Fund and Small-Cap Value Fund |
Joseph B. Fath, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | Vice President, Growth Stock Fund, Media & Telecommunications Fund, Real Estate Fund, and U.S. Large-Cap Core Fund |
Roger L. Fiery III, 1959 Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CPA | Vice President, all funds |
Stephen M. Finamore, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | Vice President, Financial Services Fund, Floating Rate Fund, High Yield Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
Mark S. Finn, 1963 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CPA | President, Value Fund; Executive Vice President, Institutional Equity Funds; Vice President, Balanced Fund, Capital Appreciation Fund, Equity Income Fund, Institutional International Funds, International Funds, Mid-Cap Value Fund, New Era Fund, Personal Strategy Funds, and U.S. Large-Cap Core Fund |
Christopher T. Fortune, 1973 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Financial Services Fund, Small-Cap Stock Fund, and Small-Cap Value Fund |
Jared S. Franz, 1977 Vice President, T. Rowe Price; formerly student, University of Illinois at Chicago (to 2008) | Vice President, California Tax-Free Income Trust, Real Assets Fund, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and U.S. Treasury Funds |
Jon M. Friar, 1982 Employee, T. Rowe Price; formerly Summer Intern, T. Rowe Price (to 2011); Associate – Structured Product Sales, Barclays Capital (to 2008) | Vice President, Equity Income Fund and Financial Services Fund |
Melissa C. Gallagher, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly European Pharmaceuticals and Biotech Analyst, Bear Stearns International Ltd. (to 2008) | Vice President, Health Sciences Fund and International Funds |
Robert N. Gensler, 1957 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International | Executive Vice President, Institutional International Funds and International Funds; Vice President, Global Technology Fund |
46
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Justin T. Gerbereux, 1975 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Executive Vice President, Floating Rate Fund, Institutional Income Funds, and Multi-Sector Account Portfolios; Vice President, High Yield Fund and Strategic Income Fund |
John R. Gilner, 1961 Chief Compliance Officer and Vice President, T. Rowe Price; Vice President, T. Rowe Price Group, Inc. and T. Rowe Price Investment Services, Inc. | Chief Compliance Officer, all funds |
David R. Giroux, 1975 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Capital Appreciation Fund; Vice President, Equity Income Fund, Floating Rate Fund, Institutional Income Funds, and Value Fund |
Gregory S. Golczewski, 1966 Vice President, T. Rowe Price and T. Rowe Price Trust Company | Vice President, all funds |
Vishnu Vardhan Gopal, 1979 Vice President, Price Hong Kong | Vice President, International Funds |
Paul D. Greene II, 1978 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Blue Chip Growth Fund, Capital Appreciation Fund, Equity Income Fund, Global Technology Fund, Growth Stock Fund, and Media & Telecommunications Fund |
Benjamin Griffiths, 1977 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, International Funds |
Michael J. Grogan, 1971 Vice President, T. Rowe Price and T. Rowe Price Group Inc.; CFA | Vice President, Corporate Income Fund, Inflation Focused Bond Fund, Multi-Sector Account Portfolios, New Income Fund, and Short-Term Bond Fund |
M. Campbell Gunn, 1956 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, International Funds; Vice President, Institutional International Funds |
Geoffrey M. Hardin, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Inflation Focused Bond Fund, Inflation Protected Bond Fund, New Income Fund, Short-Term Bond Fund, and U.S. Treasury Funds |
Barry Henderson, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Growth Stock Fund |
Charles B. Hill, 1961 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Tax-Free Short-Intermediate Fund; Executive Vice President, State Tax-Free Income Trust and Summit Municipal Funds; Vice President, Inflation Focused Bond Fund, Short-Term Bond Fund, Tax-Free High Yield Fund, and Tax-Free Income Fund |
Gregory K. Hinkle, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CPA | Treasurer, all funds |
Ann M. Holcomb, 1972 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Vice President, Capital Opportunity Fund and Institutional Equity Funds |
Steven C. Huber, 1958 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA, FSA | President, Strategic Income Fund; Vice President, Floating Rate Fund, Institutional Income Funds, Multi-Sector Account Portfolios, New Income Fund, and U.S. Bond Enhanced Index Fund |
Thomas J. Huber, 1966 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Dividend Growth Fund and Growth & Income Fund; Vice President, Blue Chip Growth Fund, Equity Income Fund, and Real Estate Fund |
47
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Stefan Hubrich, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Ph.D., CFA | Vice President, Real Assets Fund |
Rhett K. Hunter, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, MIT Sloan School of Management (to 2007) | Vice President, Global Technology Fund, New Horizons Fund, and Science & Technology Fund |
Leigh Innes, 1976 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Executive Vice President, International Funds; Vice President, Institutional International Funds |
Andrew P. Jamison, 1981 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Darden Graduate School of Business Administration, University of Virginia (to 2009), Analyst, Carlson Capital, LP (to 2008) | Vice President, High Yield Fund |
Randal S. Jenneke, 1971 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Senior Portfolio Manager Australian Equities (to 2010) | Vice President, Institutional International Funds and International Funds |
Kris H. Jenner, 1962 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International; M.D., D. Phil. | President, Health Sciences Fund; Vice President, Growth Stock Fund, Institutional International Funds, International Funds, Mid-Cap Growth Fund, and New Horizons Fund |
Prashant G. Jeyaganesh, 1983 Vice President, T. Rowe Price | Vice President, Diversified Small-Cap Growth Fund |
Dylan Jones, 1971 Vice President, T. Rowe Price; CFA | Vice President, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Free High Yield Fund, and Tax-Free Short-Intermediate Fund |
Nina P. Jones, 1980 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student Columbia Business School (to 2008); intern, T. Rowe Price (summer 2007); CPA | Vice President, Financial Services Fund, Global Real Estate Fund, Real Estate Fund, and Small-Cap Value Fund |
Keir R. Joyce, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, GNMA Fund, Inflation Focused Bond Fund, Multi-Sector Account Portfolios, Short-Term Bond Fund, and Summit Funds |
Yoichiro Kai, 1973 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Japanese Financial/Real Estate Sector Analyst/Portfolio Manager, Citadel Investment Group, Asia Limited (to 2009); Research Analyst, Japanese Equities & Sector Fund Portfolio Manager, Fidelity Investments Japan Limited (to 2007) | Vice President, Financial Services Fund, Global Real Estate Fund, Institutional International Funds, and International Funds |
Jai Kapadia, 1982 Employee, T. Rowe Price; formerly student, MIT Sloan School of Management (to 2011); Associate Analyst, Sirios Capital Management (to 2009) | Vice President, International Funds |
Paul A. Karpers, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Executive Vice President, Institutional Income Funds; Vice President, Balanced Fund, Corporate Income Fund, Floating Rate Fund, High Yield Fund, and Multi-Sector Account Portfolios |
Andrew J. Keirle, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios; Vice President, Institutional Income Funds and Strategic Income Fund |
48
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Ian D. Kelson, 1956 President-International Fixed Income, T. Rowe Price International; Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Executive Vice President, Institutional International Funds and International Funds; Vice President, Institutional Income Funds, Multi-Sector Account Portfolios, Personal Strategy Funds, Retirement Funds, Spectrum Funds, and Strategic Income Fund |
Shinwoo Kim, 1977 Vice President, T. Rowe Price; formerly Summer Equity Research Analyst, MFS Investment Management (to 2008), Senior Consultant/Engineer, AT&T, Inc. (to 2007) | Vice President, New Era Fund |
Jeremy D. Kokemor, 1982 Vice President, T. Rowe Price; formerly Summer Intern at T. Rowe Price; (to 2009); CFA | Vice President, New Era Fund |
Steven D. Krichbaum, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, University of Michigan, Stephen M. Ross School of Business (to 2007) | Vice President, Capital Appreciation Fund, New Era Fund, Small-Cap Stock Fund, and Small-Cap Value Fund |
Christopher J. Kushlis, 1976 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Michael Lambe, 1977 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
Benjamin D. Landy, 1980 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, University of Chicago, Booth School of Business (to 2009); Research and Strategy Director, Atlantic Media Company (to 2007) | Vice President, New America Growth Fund and New Era Fund |
Robert M. Larkins, 1973 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, U.S. Bond Enhanced Index Fund; Vice President, Balanced Fund |
Marcy M. Lash, 1963 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short-Intermediate Fund |
Michael M. Lasota, 1982 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, University of Chicago, Graduate School of Business (to 2008) | Vice President, Blue Chip Growth Fund, Global Real Estate Fund, and Real Estate Fund |
Mark J. Lawrence, 1970 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly equity fund manager, Citi, London (to 2008) | Vice President, Institutional International Funds and International Funds |
David M. Lee, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Global Real Estate Fund and Real Estate Fund; Vice President, Dividend Growth Fund, Growth & Income Fund, Institutional International Funds, International Funds, and Real Assets Fund |
Martin G. Lee, 1963 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, GNMA Fund, Multi-Sector Account Portfolios, Strategic Income Fund, Summit Funds, and U.S. Bond Enhanced Index Fund |
Wyatt A. Lee, 1971 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Real Assets Fund; Executive Vice President, Retirement Funds; Vice President, Balanced Fund, Inflation Focused Bond Fund, and Personal Strategy Funds |
49
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Peter D. Leiser, Jr., 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, U.S. Bond Enhanced Index Fund |
Alan D. Levenson, 1958 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Ph.D. | Vice President, California Tax-Free Income Trust, Corporate Income Fund, GNMA Fund, Inflation Protected Bond Fund, Multi-Sector Account Portfolios, New Income Fund, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and U.S. Treasury Funds |
John D. Linehan, 1965 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Executive Vice President, Institutional Equity Funds; Vice President, Capital Appreciation Fund, Equity Income Fund, U.S. Large-Cap Core Fund, and Value Fund |
Patricia B. Lippert, 1953 Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. | Secretary, all funds |
Christopher C. Loop, 1966 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International; CFA | Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Anh Lu, 1968 Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | Executive Vice President, International Funds; Vice President, Institutional International Funds |
Joseph K. Lynagh, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Prime Reserve Fund, TRP Reserve Investment Funds, and Tax-Exempt Money Fund; Executive Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, and U.S. Treasury Funds; Vice President, Tax-Free Short-Intermediate Fund |
Konstantine B. Mallas, 1963 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | President, Tax-Free Income Fund; Executive Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, and Summit Municipal Funds; Vice President, Tax-Free High Yield Fund and Tax-Free Short-Intermediate Fund |
Sebastien Mallet, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, Institutional International Funds; Vice President, International Funds |
Robert J. Marcotte, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Global Real Estate Fund, Mid-Cap Growth Fund, and Small-Cap Stock Fund |
Jennifer Martin, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Capital Opportunity Fund |
Daniel Martino, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Media & Telecommunications Fund; Vice President, Dividend Growth Fund, Global Technology Fund, Growth Stock Fund, Institutional International Funds, International Funds, Mid-Cap Growth Fund, and Science & Technology Fund |
Ryan Martyn, 1979 Vice President, T. Rowe Price International; formerly an Investment Analyst, VGI Partners (to 2009); Corporate & Structured Finance Group Analyst, Babcork & Born (to 2007) | Vice President, New Era Fund |
George A. Marzano, 1980 Vice President, T. Rowe Price | Vice President, Blue Chip Growth Fund and U.S. Large-Cap Core Fund |
50
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Paul M. Massaro, 1975 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Executive Vice President, Floating Rate Fund, Institutional Income Funds, and Multi-Sector Account Portfolios; Vice President, Capital Appreciation Fund and High Yield Fund |
Jonathan H.W. Matthews, 1975 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Analyst, Pioneer Investments (to 2008); CFA | Executive Vice President, International Funds; Vice President, Institutional International Funds |
Susanta Mazumdar, 1968 Vice President, Price Singapore and T. Rowe Price Group, Inc. | Executive Vice President, International Funds; Vice President, Institutional International Funds, New Era Fund, and Real Assets Fund |
Andrew C. McCormick, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; formerly Chief Investment Officer, IMPAC Mortgage Holdings (to 2008) | President, GNMA Fund and Summit Funds; Executive Vice President, Multi-Sector Account Portfolios; Vice President, Inflation Focused Bond Fund, Inflation Protected Bond Fund, Institutional Income Funds, New Income Fund, Short-Term Bond Fund, Strategic Income Fund, U.S. Bond Enhanced Index Fund, and U.S. Treasury Funds |
Gregory A. McCrickard, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Small-Cap Stock Fund; Executive Vice President, Institutional Equity Funds; Vice President, Mid-Cap Value Fund and Small-Cap Value Fund |
Ian C. McDonald, 1971 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Insurance Correspondent, The Wall Street Journal (to 2007) | Vice President, Financial Services Fund, Mid-Cap Value Fund, and New America Growth Fund |
Michael J. McGonigle, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Corporate Income Fund, Financial Services Fund, Floating Rate Fund, High Yield Fund, Institutional Income Funds, Multi-Sector Account Portfolios, and Strategic Income Fund |
Hugh D. McGuirk, 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, California Tax-Free Income Trust, State Tax-Free Income Trust, and Summit Municipal Funds; Vice President, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short-Intermediate Fund |
Graham M. McPhail, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Analyst, The Boston Company Asset Management (to 2008) | Vice President, Health Sciences Fund and New Horizons Fund |
Heather K. McPherson, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | Executive Vice President, Mid-Cap Value Fund; Vice President, Capital Appreciation Fund, Global Technology Fund, New Era Fund, and Value Fund |
Cheryl A. Mickel, 1967 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Vice President, Inflation Focused Bond Fund and Short-Term Bond Fund |
Joseph M. Milano, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, New America Growth Fund; Vice President, Capital Appreciation Fund, Growth Stock Fund, Institutional Equity Funds, Mid-Cap Growth Fund, Mid-Cap Value Fund, and Small-Cap Stock Fund |
Raymond A. Mills, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; Ph.D., CFA | Executive Vice President, Institutional International Funds and International Funds; Vice President, Balanced Fund, Global Real Estate Fund, and Personal Strategy Funds |
51
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Shalin Mody, 1980 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, University of Chicago, Booth School of Business (to 2009), Associate, FLAG Capital (to 2007) | Vice President, Science & Technology Fund |
Eric C. Moffet, 1974 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; formerly Analyst, Fayez Sarofim & Company (to 2007) | Vice President, Global Real Estate Fund and International Funds |
Kathryn M. Mongelli, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Financial Services Fund |
Samy B. Muaddi, 1984 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, California Tax-Free Income Trust, Corporate Income Fund, International Funds, Multi-Sector Account Portfolios, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and U.S. Treasury Funds |
Tobias F. Mueller, 1980 Employee T. Rowe Price; formerly Intern, T. Rowe Price (to 2011); Investment Analyst, Noric Mexxanine UK Limited and Consultant, Victoria Capital Advisors LLC (to 2009); Principal Finance Group Associate, Lehman Brothers International (to 2008) | Vice President, Global Technology Fund and Science & Technology Fund |
James M. Murphy, 1967 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Tax-Free High Yield Fund; Vice President, State Tax-Free Income Trust, Summit Municipal Funds and Tax-Free Income Fund |
Linda A. Murphy, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, and Tax-Free High Yield Fund |
Sudhir Nanda, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Ph.D., CFA | President, Diversified Small-Cap Growth Fund; Vice President, Capital Appreciation Fund, Diversified Mid-Cap Growth Fund, and Institutional International Funds |
Joshua Nelson, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, The Wharton School, University of Pennsylvania (to 2007) | Executive Vice President, Institutional International Funds and International Funds |
Philip A. Nestico, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Global Real Estate Fund, International Funds, Media & Telecommunications Fund, and Real Estate Fund |
Christina Ni, 1977 Vice President, T. Rowe Price; formerly Quantitative Analyst, HSBC Securities (USA) (to 2008); CFA, FRM | Vice President, Multi-Sector Account Portfolios |
Sridhar Nishtala, 1975 Vice President, Price Singapore and T. Rowe Price Group, Inc. | Vice President, International Funds |
Jason Nogueira, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Executive Vice President Institutional International Funds and International Funds; Vice President, Health Sciences Fund and New America Growth Fund |
Alexander S. Obaza, 1981 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
52
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
David Oestreicher, 1967 Director and Vice President, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International | Vice President, all funds |
Michael D. Oh, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Kenneth A. Orchard, 1975 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly, Vice President, Moody’s Investors Service (to 2010) | Vice President, Institutional International Funds and International Funds |
Curt J. Organt, 1968 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Diversified Small-Cap Growth Fund, Media & Telecommunications Fund, New America Growth Fund, Small-Cap Stock Fund, and Small-Cap Value Fund |
Paul T. O’Sullivan, 1973 Vice President, T. Rowe Price International | Vice President, International Funds |
Hiroaki Owaki, 1962 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, Global Technology Fund, International Funds, and Science & Technology Fund |
Gonzalo Pangaro, 1968 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Executive Vice President, Institutional International Funds and International Funds |
Miso Park, 1982 Vice President, T. Rowe Price International; formerly Credit Analyst, M&G Investments (to 2010); CFA | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
Timothy E. Parker, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, New Era Fund; Vice President, Blue Chip Growth Fund, Capital Opportunity Fund, Diversified Mid-Cap Growth Fund, Dividend Growth Fund, Institutional International Funds, International Funds, New Horizons Fund, Real Assets Fund, Tax-Efficient Funds, and U.S. Large-Cap Core Fund |
Viral Patel, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Vice President, Berstein Value Equities (to 2011) | Vice President, Global Real Estate Fund |
Craig J. Pennington, 1971 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly, Global Energy Analyst, Insight Investment (to 2010); Senior Trader, Brevan Howard (to 2008); CFA | Vice President, Institutional International Funds, International Funds and New Era Fund |
Charles G. Pepin, 1966 Director, T. Rowe Price Trust Company; Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Capital Opportunity Fund and Health Sciences Fund |
Donald J. Peters, 1959 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | President, Diversified Mid-Cap Growth Fund and Tax-Efficient Funds |
Jason B. Polun, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Capital Opportunity Fund and Financial Services Fund |
53
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Austin M. Powell, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, International Funds |
Larry J. Puglia, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CPA | President, Blue Chip Growth Fund; Executive Vice President, Institutional Equity Funds; Vice President, Balanced Fund, Growth Stock Fund, and Personal Strategy Funds |
Robert T. Quinn, Jr., 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Dividend Growth Fund, Equity Income Fund, Growth & Income Fund, Tax-Efficient Funds, U.S. Large-Cap Core Fund, and Value Fund |
Vernon A. Reid, Jr., 1954 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Corporate Income Fund, Inflation Focused Bond Fund, Multi-Sector Account Portfolios, New Income Fund, Short-Term Bond Fund, and U.S. Treasury Funds |
Michael F. Reinartz, 1973 Vice President, T. Rowe Price | Vice President, Inflation Focused Bond Fund and Short-Term Bond Fund |
Frederick A. Rizzo, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Financial Services Fund, Institutional International Funds, and International Funds |
Theodore E. Robson, 1965 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | Vice President, Corporate Income Fund, Multi-Sector Account Portfolios, and Real Estate Fund |
Brian M. Ropp, 1969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | Vice President, Corporate Income Fund, Multi-Sector Account Portfolios, and U.S. Bond Enhanced Index Fund |
Christopher J. Rothery, 1963 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Jeffrey Rottinghaus, 1970 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | President, U.S. Large-Cap Core Fund; Vice President, Dividend Growth Fund and Growth & Income Fund |
David L. Rowlett, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Analyst and Portfolio Manager, Neuberger Berman (to 2008); CFA | Vice President, Growth & Income Fund |
Brian A. Rubin, 1974 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CPA | Vice President, Floating Rate Fund, High Yield Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
Naoto Saito, 1980 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly Analyst, HBK Capital Management (to 2008), student, Stanford Graduate School of Business (to 2007) | Vice President, International Funds |
Federico Santilli, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Executive Vice President, Institutional International Funds and International Funds |
Sebastian Schrott, 1977 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly student, Stanford Graduate School of Business (to 2007) | Vice President, Institutional International Funds and International Funds |
54
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Deborah D. Seidel, 1962 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc. | Vice President, all funds |
Francisco Sersale, 1980 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Financial Services Fund and International Funds |
Rebecca L. Setcavage, 1982 Assistant Vice President, T. Rowe Price | Assistant Vice President, Inflation Protected Bond Fund and U.S. Treasury Funds |
Amit Seth, 1979 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Harvard Business School (to 2009); Senior Associate, Centennial Ventures (to 2007) | Vice President, Diversified Mid-Cap Growth Fund |
Michael K. Sewell, 1970 Assistant Vice President, T. Rowe Price | Assistant Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short Intermediate Fund |
Daniel O. Shackelford, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA | President, Inflation Focused Bond Fund, Inflation Protected Bond Fund, and New Income Fund; Vice President, Institutional Income Funds, Multi-Sector Account Portfolios, Real Assets Fund, Retirement Funds, Short-Term Bond Fund, Spectrum Funds, U.S. Bond Enhanced Index Fund, and U.S. Treasury Funds |
Amitabh Shah, 1980 Vice President, T. Rowe Price International | Vice President, International Funds |
Jeneiv Shah, 1980 Employee, T. Rowe Price; formerly Analyst, Mirae Asset Global Investments (to 2010); CFA | Vice President, International Funds |
Chen Shao, 1980 Assistant Vice President, T. Rowe Price | Assistant Vice President, California Tax-Free Income Trust, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, Tax-Free High Yield Fund, Tax-Free Income Fund, Tax-Free Short-Intermediate Fund, and U.S. Treasury Funds |
Robert W. Sharps, 1971 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CPA | Executive Vice President, Institutional Equity Funds; Vice President, Blue Chip Growth Fund, Growth Stock Fund, Institutional International Funds, International Funds, New America Growth Fund, and U.S. Large-Cap Core Fund |
John C.A. Sherman, 1969 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Health Sciences Fund and International Funds |
Clark R. Shields, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Mid-Cap Growth Fund, New America Growth Fund, and New Horizons Fund |
Charles M. Shriver, 1967 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | President, Balanced Fund, Personal Strategy Funds, and Spectrum Funds; Vice President, Retirement Funds |
Corey D. Shull, 1983 Employee, T. Rowe Price; CFA | Vice President, Media & Telecommunications Fund |
55
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Neil Smith, 1972 Vice President, Price Hong Kong, Price Singapore, T. Rowe Price Group, Inc., and T. Rowe Price International | Executive Vice President, International Index Fund; Vice President, Index Trust |
Robert W. Smith, 1961 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | Executive Vice President, Institutional International Funds and International Funds; Vice President, Growth Stock Fund, Media & Telecommunications Fund, Personal Strategy Funds, Retirement Funds, and Spectrum Funds |
Matthew J. Snowling, 1971 Vice President, T. Rowe Price; formerly Managing Director – Specialty Finance, Citadel Securities (to 2011); Managing Director of Investment Services and Senior Vice President, Senior Analyst, Education Services Research Group (to 2011); CFA | Vice President, Financial Services Fund |
Michael F. Sola, 1969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, New Horizons Fund, Global Technology Fund, Science & Technology Fund, and Small-Cap Stock Fund |
Gabriel Solomon, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Dividend Growth Fund, Financial Services Fund, and Growth & Income Fund |
Eunbin Song, 1980 Vice President, Price Singapore; formerly Equity Research Analyst, Samsung Securities (to 2008); student, Columbia Business School; CFA | Vice President, International Funds |
Joshua K. Spencer, 1973 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Global Technology Fund; Vice President, Capital Opportunity Fund, Growth & Income Fund, Institutional International Funds, Science & Technology Fund, and Value Fund |
Douglas D. Spratley, 1969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, California Tax-Free Income Trust, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Funds, Summit Municipal Funds, Tax-Exempt Money Fund, and U.S. Treasury Funds |
David A. Stanley, 1963 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Institutional International Funds, International Funds, Multi-Sector Account Portfolios, and Strategic Income Fund |
Jonty Starbuck, 1975 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; Ph.D. | Vice President, Institutional International Funds and International Funds |
Kimberly A. Stokes, 1969 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
William J. Stromberg, 1960 Director and Vice President, T. Rowe Price; Vice President, Price Hong Kong, Price Singapore, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | Vice President, Capital Appreciation Fund, Dividend Growth Fund, and Tax-Efficient Funds |
Walter P. Stuart III, 1960 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Floating Rate Fund, High Yield Fund, Institutional Income Funds, Multi-Sector Account Portfolios, and Value Fund |
Guido F. Stubenrauch, 1970 Vice President, T. Rowe Price | Vice President, Balanced Fund, Personal Strategy Funds, Retirement Funds, and Spectrum Funds |
56
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Miki Takeyama, 1970 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, International Funds |
Taymour R. Tamaddon, 1976 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Blue Chip Growth Fund, Capital Appreciation Fund, Capital Opportunity Fund, Growth Stock Fund, Health Sciences Fund, Mid- Cap Growth Fund, New America Growth Fund, New Horizons Fund, and Tax-Efficient Funds |
Ju Yen Tan, 1972 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Institutional International Funds, International Funds, Multi-Sector Account Portfolios, and Strategic Income Fund |
Sin Dee Tan, 1979 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly student, London Business School (to 2008); CFA | Vice President, International Funds |
Timothy G. Taylor, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, California Tax-Free Income Trust, State Tax-Free Income Trust, Summit Municipal Funds, Tax-Free High Yield Fund, Tax-Free Income Fund, and Tax-Free Short-Intermediate Fund |
Dean Tenerelli, 1964 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, International Funds; Vice President, Institutional International Funds |
Thomas E. Tewksbury, 1961 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | Vice President, Floating Rate Fund, High Yield Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
Jean Pierre Thibaud, 1982 Employee, T. Rowe Price; formerly student, Harvard Business School (to 2011); Senior Associate, MBA Lazard (to 2009) | Vice President, International Funds |
Craig A. Thiese, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, New America Growth Fund and New Era Fund |
Robert D. Thomas, 1971 Vice President, T. Rowe Price International; formerly Senior Vice President, Moody’s Investors Service, London (to 2011) | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
Siby Thomas, 1979 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, The University of Chicago Graduate School of Business (to 2009); Mechanical Associate, Sargent & Lundy Engineers (to 2007) | Vice President, International Funds and Multi-Sector Account Portfolios |
Justin Thomson, 1968 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Executive Vice President, International Funds; Vice President, New Horizons Fund |
David A. Tiberii, 1965 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | President, Corporate Income Fund; Executive Vice President, Multi-Sector Account Portfolios; Vice President, Institutional Income Funds, New Income Fund, Strategic Income Fund, and U.S. Bond Enhanced Index Fund |
Mitchell J.K. Todd, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly analyst, F&C Asset Management (to 2007) | Vice President, Financial Services Fund and International Funds |
Susan G. Troll, 1966 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CPA | Vice President, Capital Appreciation Fund and Summit Funds |
57
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Ken D. Uematsu, 1969 Vice President, T. Rowe Price and T. Rowe Price Trust Company; CFA | Executive Vice President, Index Trust; Vice President, International Index Fund |
Mark J. Vaselkiv, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | President, Floating Rate Fund, High Yield Fund and Institutional Income Funds; Executive Vice President, Multi-Sector Account Portfolios; Vice President, Personal Strategy Funds, Retirement Funds, Spectrum Funds, and Strategic Income Fund |
Eric L. Veiel, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | President, Financial Services Fund; Vice President, Capital Appreciation Fund, Capital Opportunity Fund, Dividend Growth Fund, Equity Income Fund, Growth & Income Fund, Growth Stock Fund, Institutional International Funds, International Funds, New America Growth Fund, and Value Fund |
Verena E. Wachnitz, 1978 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, International Funds |
Lauren T. Wagandt, 1984 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Product Specialist, BlueCrest Capital Management (to 2009) | Vice President, Corporate Income Fund and Multi-Sector Account Portfolios |
J. David Wagner, 1974 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Diversified Small-Cap Growth Fund, Institutional Equity Funds, Mid-Cap Value Fund, New Horizons Fund, Small-Cap Stock Fund, and Small-Cap Value Fund |
John F. Wakeman, 1962 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Executive Vice President, Mid-Cap Growth Fund; Vice President, Diversified Mid-Cap Growth Fund and Institutional Equity Funds |
David J. Wallack, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | President, Mid-Cap Value Fund; Vice President, International Funds and New Era Fund |
Julie L. Waples, 1970 Vice President, T. Rowe Price | Vice President, all funds |
Hiroshi Watanabe, 1975 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, International Funds |
Thomas H. Watson, 1977 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Tuck School of Business at Dartmouth (to 2007) | Vice President, Global Technology Fund, New Horizons Fund, and Science & Technology Fund |
Mark R. Weigman, 1962 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; CFA, CIC | Vice President, Tax-Efficient Funds |
John D. Wells, 1960 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Savings Bank | Vice President, GNMA Fund, Inflation Focused Bond Fund, Multi-Sector Account Portfolios, Short-Term Bond Fund, and Summit Funds |
Justin P. White, 1981 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, Tuck School of Business at Dartmouth (to 2008) | Vice President, Growth Stock Fund and Media & Telecommunications Fund |
58
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Christopher S. Whitehouse, 1972 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International | Vice President, Institutional International Funds, International Funds, and Media & Telecommunications Fund |
Richard T. Whitney, 1958 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company; CFA | Vice President, Balanced Fund, Personal Strategy Funds, Real Assets Fund, Retirement Funds, and Spectrum Funds |
Edward A. Wiese, 1959 Director and Vice President, T. Rowe Price Trust Company; Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Chief Investment Officer, Director, and Vice President, T. Rowe Price Savings Bank; CFA | President, Short-Term Bond Fund; Vice President, California Tax-Free Income Trust, Corporate Income Fund, Inflation Focused Bond Fund, Institutional Income Funds, Multi-Sector Account Portfolios, New Income Fund, Prime Reserve Fund, TRP Reserve Investment Funds, State Tax-Free Income Trust, Summit Municipal Funds, Summit Funds, Tax-Exempt Money Fund, Tax-Free Short-Intermediate Fund, and U.S. Treasury Funds |
Tamara P. Wiggs, 1979 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Vice President, Institutional Equity Trading, Merrill Lynch & Co., Inc. (to 2007) | Vice President, Capital Appreciation Fund, Financial Services Fund, and Value Fund |
Clive M. Williams, 1966 Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International | Vice President, International Funds |
John M. Williams, 1982 Vice President, T. Rowe Price; formerly Summer Analyst, The Capital Group Companies, Inc. (to 2009) | Vice President, Mid-Cap Value Fund and New Era Fund |
Thea N. Williams, 1961 Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company | Vice President, Corporate Income Fund, Floating Rate Fund, High Yield Fund, Institutional Income Funds, and Multi-Sector Account Portfolios |
J. Zachary Wood, 1972 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; CFA | Vice President, Index Trust and International Index Fund |
Ashley R. Woodruff, 1979 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly Senior Vice President and Senior Restaurants Analyst, Friedman, Billings, Ramsey & Co. (to 2007); CFA | Vice President, Blue Chip Growth Fund and New Horizons Fund |
J. Howard Woodward, 1974 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; CFA | Vice President, Corporate Income Fund, Institutional International Funds, International Funds, and Multi-Sector Account Portfolios |
Rouven J. Wool-Lewis, 1973 Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Ph.D. formerly Vice President of Corporate Strategy, UnitedHealth Group (to 2011); Associate Analyst, Oppenheimer & Company (to 2009); Senior Associate, Friedman, Billings, Ramsey & Co. (to 2008) | Vice President, Diversified Mid-Cap Growth Fund and Health Sciences Fund |
Zhen Xia, 1987 Assistant Vice President, T. Rowe Price; formerly student at Princeton University (to 2008) | Vice President, U.S. Bond Enhanced Index Fund; Assistant Vice President, Corporate Income Fund |
Marta Yago, 1977 Vice President, T. Rowe Price Group, Inc. and T. Rowe Price International; formerly a student, Columbia Business School (to 2007) | Vice President, Global Real Estate Fund and International Funds |
59
Name, Year of Birth, and Principal
Occupation(s) | Position(s) Held With Fund(s) |
Ernest C. Yeung, 1979 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; CFA | Vice President, Institutional International Funds, International Funds and Media & Telecommunications Fund |
Alison Mei Ling Yip, 1966 Vice President, Price Hong Kong and T. Rowe Price Group, Inc. | Vice President, Global Technology Fund, International Funds, and Science & Technology Fund |
Christopher Yip, 1975 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; CFA | Vice President, International Funds |
Nalin K. Yogasundram, 1975 Vice President, T. Rowe Price and T. Rowe Price Group, Inc. | Vice President, Global Technology Fund, New Era Fund, New Horizons Fund, and Science & Technology Fund |
Wenli Zheng, 1979 Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; formerly student, University of Chicago Graduate School of Business (to 2008) | Vice President, International Funds and Media & Telecommunications Fund |
Directors’ Compensation
The following tables show remuneration paid by the Price Funds to the independent directors. For 2011, each independent director was paid $210,000 for his/her service on the Boards. (Effective January 1, 2012, an independent director is paid $250,000 annually for his/her service on the Boards.) The Lead Independent Director receives an additional $100,000 annually for serving in this capacity. For 2011, an independent director serving on the Joint Audit Committee received an additional $7,500 for his/her service and the chairman of the Joint Audit Committee received an additional $15,000 for his/her service. (Effective January 1, 2012, an independent director is paid $9,000 annually for serving on the Joint Audit Committee and an independent director is paid $18,000 annually for serving as the chairman of the Joint Audit Committee.) Members of the Advisory Board that has been established with respect to the domestic fixed income Price Funds are paid the same compensation as the domestic fixed income Price Funds’ independent directors.
Officers of the funds and directors of the funds who are employees of T. Rowe Price or its affiliates (inside directors) do not receive any remuneration from the funds. In addition, the funds do not pay pension or retirement benefits to any of their directors or officers. The following table shows the total compensation from all of the Price Funds that was paid to the directors for the calendar year 2011:
Directors | Total Compensation |
Brody | $210,000 |
Casey | 225,000 |
Deering (Lead) | 317,500 |
Dick | 210,000 |
Horn | 210,000 |
Gerrard | (a) |
Rodgers | 210,000 |
Rouse | (a) |
Schreiber | 217,500 |
Tercek | 217,500 |
(a) Elected May 2, 2012
60
The following table shows the amounts paid by each fund to the directors based on accrued compensation for the calendar year 2011:
Fund | Aggregate Compensation From Fund | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek | |
Africa & Middle East | $654 | $685 | $989 | $654 | (e) | $654 | $686 | (e) | $662 | $678 |
Balanced | 1,823 | 1,910 | 2,757 | 1,823 | (e) | 1,823 | 1,911 | (e) | 1,845 | 1,888 |
Blue Chip Growth | 5,159 | 5,404 | 7,799 | 5,159 | (e) | 5,159 | 5,404 | (e) | 5,220 | 5,343 |
California Tax-Free Bond | 713 | 747 | 1,077 | 713 | — | 713 | 746 | — | 721 | 738 |
California Tax-Free Money | 612 | 641 | 925 | 612 | — | 612 | 641 | — | 619 | 634 |
Capital Appreciation | 5,035 | 5,274 | 7,613 | 5,035 | (e) | 5,035 | 5,277 | (e) | 5,094 | 5,215 |
Capital Opportunity | 693 | 726 | 1,047 | 693 | (e) | 693 | 726 | (e) | 701 | 717 |
Corporate Income | 859 | 900 | 1,299 | 859 | — | 859 | 900 | — | 869 | 890 |
Diversified Mid-Cap Growth | 651 | 682 | 984 | 651 | (e) | 651 | 682 | (e) | 659 | 674 |
Diversified Small-Cap Growth | 650 | 681 | 983 | 650 | (e) | 650 | 681 | (e) | 658 | 673 |
Dividend Growth | 1,321 | 1,384 | 1,997 | 1,321 | (e) | 1,321 | 1,383 | (e) | 1,337 | 1,368 |
Emerging Europe | 854 | 894 | 1,292 | 854 | (e) | 854 | 897 | (e) | 864 | 885 |
Emerging Markets Bond | 1,725 | 1,808 | 2,608 | 1,725 | — | 1,725 | 1,806 | — | 1,746 | 1,787 |
Emerging Markets Bond Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
Emerging Markets Corporate Bond(b) | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 | 2,917 |
Emerging Markets Local Currency Bond(c) | 344 | 363 | 520 | 344 | — | 344 | 354 | — | 351 | 356 |
Emerging Markets Local Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
Emerging Markets Stock | 2,783 | 2,916 | 4,208 | 2,783 | (e) | 2,783 | 2,916 | (e) | 2,816 | 2,883 |
Equity Income | 5,199 | 5,447 | 7,861 | 5,199 | (e) | 5,199 | 5,447 | (e) | 5,261 | 5,385 |
Equity Index 500 | 5,199 | 5,447 | 7,861 | 5,199 | (e) | 5,199 | 5,447 | (e) | 5,261 | 5,385 |
European Stock | 885 | 927 | 1,339 | 885 | (e) | 885 | 928 | (e) | 896 | 917 |
Extended Equity Market Index | 729 | 763 | 1,101 | 729 | (e) | 729 | 763 | (e) | 737 | 755 |
Financial Services | 705 | 738 | 1,066 | 705 | (e) | 705 | 739 | (e) | 713 | 730 |
Floating Rate(d) | 241 | 256 | 364 | 241 | — | 241 | 244 | — | 248 | 249 |
Floating Rate Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
Georgia Tax-Free Bond | 649 | 680 | 982 | 649 | — | 649 | 680 | — | 657 | 673 |
Global Infrastructure | 595 | 623 | 899 | 595 | (e) | 595 | 623 | (e) | 602 | 616 |
Global Large-Cap Stock | 600 | 628 | 907 | 600 | (e) | 600 | 628 | (e) | 607 | 621 |
Global Real Estate | 595 | 623 | 900 | 595 | (e) | 595 | 623 | (e) | 602 | 616 |
Global Stock | 865 | 906 | 1,308 | 865 | (e) | 865 | 907 | (e) | 875 | 896 |
Global Technology | 771 | 808 | 1,166 | 771 | (e) | 771 | 808 | (e) | 780 | 799 |
GNMA | 1,216 | 1,274 | 1,839 | 1,216 | — | 1,216 | 1,274 | — | 1,231 | 1,260 |
TRP Government Reserve Investment | 1,108 | 1,159 | 1,675 | 1,108 | — | 1,108 | 1,163 | — | 1,120 | 1,147 |
Growth & Income | 1,027 | 1,076 | 1,553 | 1,027 | (e) | 1,027 | 1,077 | (e) | 1,039 | 1,064 |
61
Fund | Aggregate Compensation From Fund | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek | |
Growth Stock | 5,199 | 5,447 | 7,861 | 5,199 | (e) | 5,199 | 5,447 | (e) | 5,261 | 5,385 |
Health Sciences | 1,719 | 1,801 | 2,599 | 1,719 | (e) | 1,719 | 1,801 | (e) | 1,740 | 1,781 |
High Yield | 3,900 | 4,085 | 5,896 | 3,900 | — | 3,900 | 4,087 | — | 3,945 | 4,039 |
High Yield Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
Inflation Focused Bond | 1,645 | 1,724 | 2,487 | 1,645 | — | 1,645 | 1,722 | — | 1,665 | 1,704 |
Inflation Protected Bond | 738 | 773 | 1,116 | 738 | — | 738 | 772 | — | 747 | 764 |
Institutional Africa & Middle East | 626 | 656 | 946 | 626 | (e) | 626 | 656 | (e) | 633 | 648 |
Institutional Concentrated International Equity | 581 | 608 | 878 | 581 | (e) | 581 | 608 | (e) | 587 | 601 |
Institutional Core Plus | 639 | 669 | 966 | 639 | — | 639 | 669 | — | 646 | 662 |
Institutional Emerging Markets Bond | 657 | 688 | 993 | 657 | (e) | 657 | 688 | (e) | 665 | 681 |
Institutional Emerging Markets Equity | 905 | 948 | 1,368 | 905 | (e) | 905 | 948 | (e) | 916 | 937 |
Institutional Floating Rate | 1,203 | 1,261 | 1,818 | 1,203 | — | 1,203 | 1,257 | — | 1,218 | 1,245 |
Institutional Global Equity | 647 | 677 | 978 | 647 | (e) | 647 | 677 | (e) | 654 | 670 |
Institutional Global Large-Cap Equity | 601 | 629 | 908 | 601 | (e) | 601 | 629 | (e) | 608 | 622 |
Institutional Global Value Equity(f) | 200 | 214 | 287 | 200 | 200 | 200 | 200 | 200 | 207 | 207 |
Institutional High Yield | 1,167 | 1,224 | 1,765 | 1,167 | — | 1,167 | 1,222 | — | 1,182 | 1,209 |
Institutional International Bond | 661 | 692 | 999 | 661 | (e) | 661 | 693 | (e) | 668 | 684 |
Institutional International Core Equity | 579 | 607 | 876 | 579 | (e) | 579 | 607 | (e) | 586 | 600 |
Institutional International Growth Equity | 607 | 636 | 917 | 607 | (e) | 607 | 636 | (e) | 614 | 628 |
Institutional Large-Cap Core Growth | 676 | 708 | 1,022 | 676 | (e) | 676 | 708 | (e) | 684 | 700 |
Institutional Large-Cap Growth | 1,707 | 1,789 | 2,581 | 1,707 | (e) | 1,707 | 1,786 | (e) | 1,728 | 1,768 |
Institutional Large-Cap Value | 814 | 852 | 1,230 | 814 | (e) | 814 | 852 | (e) | 823 | 843 |
Institutional Mid-Cap Equity Growth | 1,187 | 1,245 | 1,795 | 1,187 | (e) | 1,187 | 1,241 | (e) | 1,203 | 1,230 |
Institutional Small-Cap Stock | 775 | 812 | 1,172 | 775 | (e) | 775 | 812 | (e) | 784 | 803 |
Institutional U.S. Structured Research | 809 | 847 | 1,223 | 809 | (e) | 809 | 848 | (e) | 818 | 838 |
International Bond | 2,702 | 2,832 | 4,086 | 2,702 | (e) | 2,702 | 2,830 | (e) | 2,735 | 2,799 |
International Discovery | 1,647 | 1,725 | 2,491 | 1,647 | (e) | 1,647 | 1,728 | (e) | 1,666 | 1,706 |
International Equity Index | 730 | 765 | 1,104 | 730 | (e) | 730 | 765 | (e) | 739 | 756 |
International Growth & Income | 2,145 | 2,248 | 3,244 | 2,145 | (e) | 2,145 | 2,246 | (e) | 2,172 | 2,222 |
International Stock | 3,301 | 3,458 | 4,990 | 3,301 | (e) | 3,301 | 3,457 | (e) | 3,341 | 3,419 |
Investment-Grade Corporate Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
Japan | 659 | 690 | 996 | 659 | (e) | 659 | 690 | (e) | 666 | 682 |
Latin America | 1,652 | 1,729 | 2,498 | 1,652 | (e) | 1,652 | 1,735 | (e) | 1,670 | 1,711 |
Maryland Short-Term Tax- | 676 | 708 | 1,022 | 676 | — | 676 | 708 | — | 684 | 700 |
62
Fund | Aggregate Compensation From Fund | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek | |
Free Bond |
|
|
|
|
|
|
|
|
|
|
Maryland Tax-Free Bond | 1,284 | 1,345 | 1,941 | 1,284 | — | 1,284 | 1,344 | — | 1,299 | 1,330 |
Maryland Tax-Free Money | 637 | 668 | 964 | 637 | — | 637 | 668 | — | 645 | 660 |
Media & Telecommunications | 1,385 | 1,450 | 2,094 | 1,385 | (e) | 1,385 | 1,451 | (e) | 1,401 | 1,434 |
Mid-Cap Growth | 5,199 | 5,447 | 7,861 | 5,199 | (e) | 5,199 | 5,447 | (e) | 5,261 | 5,385 |
Mid-Cap Value | 4,227 | 4,426 | 6,391 | 4,227 | (e) | 4,227 | 4,435 | (e) | 4,275 | 4,378 |
Mortgage-Backed Securities Multi-Sector Account Portfolio(a) | 0 | 0 | 0 | 0 | — | 0 | 0 | — | 0 | 0 |
New America Growth | 1,311 | 1,376 | 1,983 | 1,311 | (e) | 1,311 | 1,370 | (e) | 1,329 | 1,358 |
New Asia | 2,381 | 2,493 | 3,600 | 2,381 | (e) | 2,381 | 2,498 | (e) | 2,408 | 2,466 |
New Era | 2,839 | 2,971 | 4,292 | 2,839 | (e) | 2,839 | 2,980 | (e) | 2,869 | 2,940 |
New Horizons | 3,802 | 3,981 | 5,749 | 3,802 | (e) | 3,802 | 3,987 | (e) | 3,845 | 3,938 |
New Income | 5,199 | 5,447 | 7,861 | 5,199 | — | 5,199 | 5,447 | — | 5,261 | 5,385 |
New Jersey Tax-Free Bond | 675 | 707 | 1,020 | 675 | — | 675 | 707 | — | 683 | 699 |
New York Tax-Free Bond | 714 | 748 | 1,080 | 714 | — | 714 | 748 | — | 723 | 740 |
New York Tax-Free Money | 615 | 645 | 930 | 615 | — | 615 | 645 | — | 623 | 637 |
Overseas Stock | 1,848 | 1,938 | 2,794 | 1,848 | (e) | 1,848 | 1,933 | (e) | 1,872 | 1,914 |
Personal Strategy Balanced | 1,229 | 1,287 | 1,858 | 1,229 | (e) | 1,229 | 1,287 | (e) | 1,243 | 1,273 |
Personal Strategy Growth | 1,031 | 1,080 | 1,558 | 1,031 | (e) | 1,031 | 1,080 | (e) | 1,043 | 1,068 |
Personal Strategy Income | 962 | 1,008 | 1,455 | 962 | (e) | 962 | 1,008 | (e) | 974 | 997 |
Prime Reserve | 2,814 | 2,950 | 4,255 | 2,814 | — | 2,814 | 2,946 | — | 2,849 | 2,915 |
Real Assets | 618 | 647 | 934 | 618 | (e) | 618 | 647 | (e) | 625 | 640 |
Real Estate | 1,702 | 1,782 | 2,573 | 1,702 | (e) | 1,702 | 1,783 | (e) | 1,722 | 1,762 |
TRP Reserve Investment | 5,199 | 5,447 | 7,861 | 5,199 | — | 5,199 | 5,447 | — | 5,261 | 5,385 |
Retirement 2005 | 1,050 | 1,100 | 1,587 | 1,050 | (e) | 1,050 | 1,100 | (e) | 1,062 | 1,087 |
Retirement 2010 | 2,815 | 2,948 | 4,255 | 2,815 | (e) | 2,815 | 2,950 | (e) | 2,847 | 2,915 |
Retirement 2015 | 3,002 | 3,145 | 4,539 | 3,002 | (e) | 3,002 | 3,144 | (e) | 3,038 | 3,109 |
Retirement 2020 | 5,199 | 5,447 | 7,861 | 5,199 | (e) | 5,199 | 5,447 | (e) | 5,261 | 5,385 |
Retirement 2025 | 3,252 | 3,408 | 4,917 | 3,252 | (e) | 3,252 | 3,405 | (e) | 3,292 | 3,368 |
Retirement 2030 | 4,765 | 4,992 | 7,204 | 4,765 | (e) | 4,765 | 4,991 | (e) | 4,822 | 4,935 |
Retirement 2035 | 2,332 | 2,443 | 3,525 | 2,332 | (e) | 2,332 | 2,442 | (e) | 2,360 | 2,415 |
Retirement 2040 | 3,308 | 3,466 | 5,001 | 3,308 | (e) | 3,308 | 3,465 | (e) | 3,347 | 3,426 |
Retirement 2045 | 1,469 | 1,540 | 2,222 | 1,469 | (e) | 1,469 | 1,538 | (e) | 1,487 | 1,522 |
Retirement 2050 | 1,074 | 1,126 | 1,624 | 1,074 | (e) | 1,074 | 1,124 | (e) | 1,087 | 1,112 |
Retirement 2055 | 689 | 722 | 1,042 | 689 | (e) | 689 | 722 | (e) | 697 | 714 |
Retirement Income | 1,510 | 1,583 | 2,284 | 1,510 | (e) | 1,510 | 1,581 | (e) | 1,529 | 1,564 |
Science & Technology | 1,824 | 1,910 | 2,758 | 1,824 | (e) | 1,824 | 1,914 | (e) | 1,845 | 1,890 |
Short-Term Bond | 2,907 | 3,045 | 4,395 | 2,907 | — | 2,907 | 3,045 | — | 2,942 | 3,011 |
Small-Cap Stock | 3,379 | 3,538 | 5,109 | 3,379 | (e) | 3,379 | 3,545 | (e) | 3,417 | 3,500 |
Small-Cap Value | 3,432 | 3,593 | 5,189 | 3,432 | (e) | 3,432 | 3,600 | (e) | 3,470 | 3,555 |
63
Fund | Aggregate Compensation From Fund | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rodgers | Rouse | Schreiber | Tercek | |
Spectrum Growth | 1,880 | 1,969 | 2,842 | 1,880 | (e) | 1,880 | 1,971 | (e) | 1,901 | 1,947 |
Spectrum Income | 3,008 | 3,152 | 4,548 | 3,008 | (e) | 3,008 | 3,151 | (e) | 3,044 | 3,116 |
Spectrum International | 835 | 875 | 1,263 | 835 | (e) | 835 | 876 | (e) | 845 | 865 |
Strategic Income | 664 | 696 | 1,004 | 664 | — | 664 | 695 | — | 672 | 688 |
Summit Cash Reserves | 2,908 | 3,047 | 4,396 | 2,908 | — | 2,908 | 3,044 | — | 2,943 | 3,012 |
Summit GNMA | 648 | 679 | 980 | 648 | — | 648 | 679 | — | 656 | 672 |
Summit Municipal Income | 789 | 827 | 1,193 | 789 | — | 789 | 826 | — | 798 | 817 |
Summit Municipal Intermediate | 1,284 | 1,345 | 1,941 | 1,284 | — | 1,284 | 1,345 | — | 1,299 | 1,330 |
Summit Municipal Money Market | 662 | 694 | 1,002 | 662 | — | 662 | 694 | — | 670 | 686 |
Tax-Efficient Equity | 612 | 642 | 926 | 612 | (e) | 612 | 642 | (e) | 620 | 634 |
Tax-Exempt Money | 963 | 1,009 | 1,456 | 963 | — | 963 | 1,008 | — | 975 | 998 |
Tax-Free High Yield | 1,262 | 1,322 | 1,907 | 1,262 | — | 1,262 | 1,321 | — | 1,277 | 1,307 |
Tax-Free Income | 1,755 | 1,838 | 2,653 | 1,755 | — | 1,755 | 1,839 | — | 1,775 | 1,817 |
Tax-Free Short-Intermediate | 1,171 | 1,227 | 1,771 | 1,171 | — | 1,171 | 1,226 | — | 1,185 | 1,213 |
Total Equity Market Index | 798 | 836 | 1,207 | 798 | (e) | 798 | 836 | (e) | 807 | 827 |
U.S. Bond Enhanced Index | 927 | 973 | 1,401 | 927 | — | 927 | 968 | — | 939 | 960 |
U.S. Large-Cap Core | 591 | 619 | 894 | 591 | (e) | 591 | 619 | (e) | 598 | 612 |
U.S. Treasury Intermediate | 758 | 794 | 1,146 | 758 | — | 758 | 794 | — | 767 | 785 |
U.S. Treasury Long-Term | 702 | 736 | 1,062 | 702 | — | 702 | 735 | — | 711 | 727 |
U.S. Treasury Money | 1,305 | 1,368 | 1,973 | 1,305 | — | 1,305 | 1,367 | — | 1,321 | 1,352 |
Value | 5,196 | 5,443 | 7,855 | 5,196 | (e) | 5,196 | 5,443 | (e) | 5,257 | 5,381 |
Virginia Tax-Free Bond | 897 | 940 | 1,357 | 897 | — | 897 | 940 | — | 908 | 929 |
(a) Estimated for the period March 2, 2012, through December 31, 2012.
(b) Estimated for the period May 25, 2012, through December 31, 2012.
(c) For the period May 27, 2011, through December 31, 2011.
(d) For the period July 30, 2011, through December 31, 2011.
(e) Elected May 2, 2012.
(f) Estimated for the period July 27, 2012, through December 31, 2012.
Directors’ Holdings in the Price Funds
The following tables set forth the Price Fund holdings of the independent and inside directors, as of December 31, 2011, unless otherwise indicated.
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Africa & Middle East | None | None | None | None | None | None | None | over $100,000 | None | None |
Balanced | None | None | None | $50,001-$100,000 | None | None | None | over $100,000 | None | None |
64
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Blue Chip Growth | None | over $100,000 | None | $10,001-$50,000 | None | None | None | None | over $100,000 | None |
Blue Chip Growth Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Blue Chip Growth Fund–R Class | None | None | None | None | None | None | None | None | None | None |
California Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
California Tax-Free Money | over $100,000 | None | None | None | None | None | None | None | None | None |
Capital Appreciation | None | None | None | over $100,000 | None | None | None | over $100,000 | None | None |
Capital Appreciation Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Capital Opportunity | None | $50,001-$100,000 | None | None | None | None | None | None | None | None |
Capital Opportunity Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Capital Opportunity Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Corporate Income | None | over $100,000 | None | None | None | None | None | None | None | None |
Diversified Mid-Cap Growth | None | None | None | None | None | None | None | $50,001-$100,000 | None | None |
Diversified Small-Cap Growth | None | None | None | None | None | None | None | None | None | None |
Dividend Growth | None | None | None | $50,001-$100,000 | None | None | None | None | None | None |
Dividend Growth Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Emerging Europe | None | None | None | None | None | None | None | None | None | None |
Emerging Markets Bond | None | None | None | None | None | None | None | over $100,000 | None | None |
Emerging Markets Local Currency Bond | None | None | None | None | None | None | None | None | None | None |
Emerging Markets Local Currency Bond Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Emerging Markets Stock | None | $10,001-$50,000 | over $100,000 | None | None | None | None | over $100,000 | None | None |
Equity Income | $50,001-$100,000 | $50,001-$100,000 | over $100,000 | over $100,000 | None | None | None | None | None | None |
Equity Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Equity Income Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Equity Index 500 | None | None | None | None | None | None | None | None | None | None |
European Stock | None | None | None | None | None | None | None | None | None | None |
Extended Equity Market Index | None | None | None | None | None | None | None | $10,001-$50,000 | None | None |
Financial Services | None | None | None | None | None | None | None | None | None | None |
Floating Rate | None | None | None | None | None | None | None | None | None | None |
65
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Floating Rate Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Georgia Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
Global Infrastructure | None | None | None | None | None | None | None | over $100,000 | None | None |
Global Infrastructure Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Global Large-Cap Stock | None | None | None | None | None | None | None | None | None | None |
Global Large-Cap Stock Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Global Real Estate | None | None | None | None | None | None | None | None | None | None |
Global Real Estate Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Global Stock | None | None | over $100,000 | $50,001-$100,000 | None | None | None | None | None | None |
Global Stock Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Global Technology | None | None | over $100,000 | None | None | None | None | over $100,000 | None | None |
GNMA | None | None | None | None | None | None | None | None | over $100,000 | None |
TRP Government Reserve Investment | None | None | None | None | None | None | None | None | None | None |
Growth & Income | None | None | None | $1-$10,000 | None | None | None | None | over $100,000 | None |
Growth Stock | None | None | None | over $100,000 | None | None | None | over $100,000 | None | None |
Growth Stock Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Growth Stock Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Health Sciences | None | None | None | over $100,000 | None | None | None | over $100,000 | None | None |
High Yield | None | over $100,000 | None | over $100,000 | None | None | None | over $100,000 | over $100,000 | None |
High Yield Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Inflation Focused Bond | None | None | None | None | None | None | None | None | None | None |
Inflation Protected Bond | None | None | None | over $100,000 | None | None | None | None | None | None |
Institutional Africa & Middle East | None | None | None | None | None | None | None | None | None | None |
Institutional Concentrated International Equity | None | None | None | None | None | None | None | None | None | None |
Institutional Core Plus | None | None | None | None | None | None | None | None | None | None |
Institutional Core Plus Fund-F Class | None | None | None | None | None | None | None | None | None | None |
Institutional Emerging Markets Bond | None | None | None | None | None | None | None | None | None | None |
66
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Institutional Emerging Markets Equity | None | None | None | None | None | None | None | None | None | None |
Institutional Floating Rate | None | None | None | None | None | None | None | None | None | None |
Institutional Floating Rate Fund-F Class | None | None | None | None | None | None | None | None | None | None |
Institutional Global Equity | None | None | None | None | None | None | None | None | None | None |
Institutional Global Large-Cap Equity | None | None | None | None | None | None | None | None | None | None |
Institutional High Yield | None | None | None | None | None | None | None | None | None | None |
Institutional International Bond | None | None | None | None | None | None | None | None | None | None |
Institutional International Core Equity | None | None | None | None | None | None | None | None | None | None |
Institutional International Growth Equity | None | None | None | None | None | None | None | None | None | None |
Institutional Large-Cap Core Growth | None | None | None | None | None | None | None | None | None | None |
Institutional Large-Cap Growth | None | None | None | None | None | None | None | None | None | None |
Institutional Large-Cap Value | None | None | None | None | None | None | None | None | None | None |
Institutional Mid-Cap Equity Growth | None | None | None | None | None | None | None | None | None | None |
Institutional Small-Cap Stock | None | None | None | None | None | None | None | None | None | None |
Institutional U.S. Structured Research | None | None | None | None | None | None | None | None | None | None |
International Bond | None | None | None | None | None | None | None | None | None | None |
International Bond Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
International Discovery | None | $10,001-$50,000 | None | None | None | None | None | None | None | None |
International Equity Index | None | None | None | None | None | None | None | None | None | None |
International Growth & Income | None | None | None | None | None | None | None | None | None | None |
International Growth & Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
International Growth & Income Fund–R Class | None | None | None | None | None | None | None | None | None | None |
International Stock | None | None | None | None | None | None | None | None | None | None |
International Stock Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
International Stock Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Japan | None | None | None | None | None | None | None | None | over $100,000 | None |
Latin America | None | None | None | None | None | None | None | over $100,000 | None | None |
67
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Maryland Short-Term Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
Maryland Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
Maryland Tax-Free Money | None | None | None | None | None | None | None | None | None | None |
Media & Telecommunications | None | $10,001-$50,000 | None | None | None | None | None | over $100,000 | None | None |
Mid-Cap Growth | None | None | None | None | None | None | None | over $100,000 | None | None |
Mid-Cap Growth Fund–Advisor Class | None | None | None | None | $10,001-$50,000 | None | None | None | None | None |
Mid-Cap Growth Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Mid-Cap Value | None | None | None | None | None | None | None | None | None | None |
Mid-Cap Value Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Mid-Cap Value Fund–R Class | None | None | None | None | None | None | None | None | None | None |
New America Growth | None | None | None | None | None | None | None | $10,001-$50,000 | None | None |
New America Growth Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
New Asia | None | None | None | None | None | None | None | None | None | None |
New Era | None | None | None | None | None | None | None | over $100,000 | None | None |
New Horizons | $50,001-$100,000 | over $100,000 | None | None | None | None | None | None | None | None |
New Income | $10,001-$50,000 | over $100,000 | None | None | None | None | None | None | over $100,000 | None |
New Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
New Income Fund–R Class | None | None | None | None | None | None | None | None | None | None |
New Jersey Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
New York Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
New York Tax-Free Money | None | None | None | None | None | None | None | None | None | None |
Overseas Stock | None | None | None | None | None | None | None | None | None | None |
Personal Strategy Balanced | None | None | None | None | None | None | None | None | None | None |
Personal Strategy Growth | None | None | None | None | None | None | None | None | None | None |
Personal Strategy Income | None | None | None | None | None | None | None | None | None | None |
Prime Reserve | None | None | None | $1-$10,000 | None | None | None | over $100,000 | $10,001-$50,000 | None |
Real Assets | None | None | None | None | None | None | None | None | None | None |
Real Estate | None | over $100,000 | None | None | None | None | None | over $100,000 | None | None |
Real Estate Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
68
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
TRP Reserve Investment | None | None | None | None | None | None | None | None | None | None |
Retirement 2005 | None | None | None | None | None | None | None | None | None | None |
Retirement 2005 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2005 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2010 | None | None | None | None | None | None | None | None | None | None |
Retirement 2010 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2010 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2015 | None | None | None | None | None | over $100,000 | None | None | None | None |
Retirement 2015 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2015 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2020 | None | None | None | None | None | over $100,000 | None | None | None | None |
Retirement 2020 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2020 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2025 | None | None | None | None | None | None | None | None | None | None |
Retirement 2025 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2025 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2030 | None | None | None | None | None | None | None | None | None | None |
Retirement 2030 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2030 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2035 | None | None | None | None | None | None | None | None | None | None |
Retirement 2035 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2035 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2040 | None | None | None | None | None | None | None | None | None | None |
Retirement 2040 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2040 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2045 | None | None | None | None | None | None | None | None | None | None |
Retirement 2045 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2045 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2050 | None | None | None | None | None | None | None | None | None | None |
Retirement 2050 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2050 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2055 | None | None | None | None | None | None | None | None | None | None |
69
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Retirement 2055 Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement 2055 Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Retirement Income | None | None | None | None | None | None | None | None | None | None |
Retirement Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Retirement Income Fund–R Class | None | None | None | None | None | None | None | None | None | None |
Science & Technology | None | None | None | $1-$10,000 | None | None | None | $50,001-$100,000 | None | None |
Science & Technology Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Short-Term Bond | None | over $100,000 | None | over $100,000 | None | None | None | None | over $100,000 | None |
Short-Term Bond Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Small-Cap Stock | None | None | None | None | None | None | None | over $100,000 | None | None |
Small-Cap Stock Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Small-Cap Value | None | None | None | None | None | None | None | None | None | None |
Small-Cap Value Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Spectrum Growth | None | None | None | None | None | None | None | $10,001-$50,000 | None | None |
Spectrum Income | None | None | None | over $100,000 | None | None | None | None | None | None |
Spectrum International | None | None | None | None | None | None | None | None | None | None |
Strategic Income | None | None | None | None | None | None | None | None | None | None |
Strategic Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Summit Cash Reserves | None | None | None | over $100,000 | None | $10,001-$50,000 | None | None | $1-$10,000 | None |
Summit GNMA | None | None | None | None | None | None | None | None | None | None |
Summit Municipal Income | None | None | None | None | None | None | None | None | over $100,000 | None |
Summit Municipal Intermediate | None | None | None | None | None | None | None | None | over $100,000 | None |
Summit Municipal Money Market | None | None | None | None | None | None | None | None | $50,001-$100,000 | None |
Tax-Efficient Equity | None | None | None | None | None | None | None | None | None | None |
Tax-Exempt Money | None | None | None | None | None | None | None | None | $1-$10,000 | None |
Tax-Free High Yield | None | None | None | None | None | None | None | None | over $100,000 | None |
Tax-Free Income | None | None | None | None | None | None | None | None | over $100,000 | None |
Tax-Free Income Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Tax-Free Short-Intermediate | None | None | None | None | None | None | None | None | over $100,000 | None |
70
Aggregate Holdings, | Independent Directors | |||||||||
Brody | Casey | Deering | Dick | Gerrard | Horn | Rouse | Rodgers | Schreiber | Tercek | |
over $100,000 | over $100,000 | over $100,000 | over $100,000 | None | over $100,000 | None | over $100,000 | over $100,000 | None | |
Total Equity Market Index | None | None | None | None | None | None | None | None | None | None |
U.S. Bond Enhanced Index | None | None | None | None | None | None | None | None | None | None |
U.S. Large-Cap Core | None | None | None | None | None | None | None | None | None | None |
U.S. Large-Cap Core Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
U.S. Treasury Intermediate | None | None | None | $1-$10,000 | None | None | None | None | over $100,000 | None |
U.S. Treasury Long-Term | None | None | None | None | None | None | None | None | over $100,000 | None |
U.S. Treasury Money | None | None | None | None | None | None | None | None | $1-$10,000 | None |
Value | None | $50,001-$100,000 | None | None | None | None | None | None | over $100,000 | None |
Value Fund–Advisor Class | None | None | None | None | None | None | None | None | None | None |
Virginia Tax-Free Bond | None | None | None | None | None | None | None | None | None | None |
Aggregate Holdings, | Inside Directors | ||||||||
Bernard | Gitlin | Laporte | Rogers | ||||||
over $100,000 | over $100,000 | over $100,000 | over $100,000 | ||||||
Africa & Middle East | None | $10,001-$50,000 | None | None | |||||
Balanced | None | None | None | None | |||||
Blue Chip Growth | None | None | None | None | |||||
Blue Chip Growth Fund–Advisor Class | None | None | None | None | |||||
Blue Chip Growth Fund–R Class | None | None | None | None | |||||
California Tax-Free Bond | None | None | None | None | |||||
California Tax-Free Money | None | None | None | None | |||||
Capital Appreciation | None | None | over $100,000 | None | |||||
Capital Appreciation Fund–Advisor Class | None | None | None | None | |||||
Capital Opportunity | None | None | over $100,000 | None | |||||
Capital Opportunity Fund–Advisor Class | None | None | None | None | |||||
Capital Opportunity Fund–R Class | None | None | None | None | |||||
Corporate Income | None | None | None | None | |||||
Diversified Mid-Cap Growth | None | None | None | None | |||||
Diversified Small-Cap Growth | None | None | None | None | |||||
Dividend Growth | None | over $100,000 | None | None | |||||
Dividend Growth Fund–Advisor Class | None | None | None | None | |||||
Emerging Europe | None | None | None | None | |||||
Emerging Markets Bond | None | None | None | None | |||||
Emerging Markets Local Currency Bond | None | Over $100,000 | None | None | |||||
71
Aggregate Holdings, | Inside Directors | ||||||||
Bernard | Gitlin | Laporte | Rogers | ||||||
over $100,000 | over $100,000 | over $100,000 | over $100,000 | ||||||
Emerging Markets Local Currency Bond Fund–Advisor Class | None | None | None | None | |||||
Emerging Markets Stock | over $100,000 | None | over $100,000 | None | |||||
Equity Income | over $100,000 | None | None | over $100,000 | |||||
Equity Income Fund–Advisor Class | None | None | None | None | |||||
Equity Income Fund–R Class | None | None | None | None | |||||
Equity Index 500 | None | None | None | None | |||||
European Stock | None | None | $50,001-$100,000 | None | |||||
Extended Equity Market Index | None | None | None | None | |||||
Financial Services | None | $10,001-$50,000 | None | None | |||||
Floating Rate | None | $10,001-$50,000 | None | None | |||||
Floating Rate Fund–Advisor Class | None | None | None | None | |||||
Georgia Tax-Free Bond | None | None | None | None | |||||
Global Infrastructure | None | None | None | None | |||||
Global Infrastructure Fund-Advisor Class | None | None | None | None | |||||
Global Large-Cap Stock | None | None | None | None | |||||
Global Large-Cap Stock Fund–Advisor Class | None | None | None | None | |||||
Global Real Estate | None | None | None | None | |||||
Global Real Estate Fund–Advisor Class | None | None | None | None | |||||
Global Stock | over $100,000 | None | over $100,000 | over $100,000 | |||||
Global Stock Fund–Advisor Class | None | None | None | None | |||||
Global Technology | None | None | None | None | |||||
GNMA | None | None | None | None | |||||
TRP Government Reserve Investment | None | None | None | None | |||||
Growth & Income | None | None | None | None | |||||
Growth Stock | over $100,000 | None | over $100,000 | over $100,000 | |||||
Growth Stock Fund–Advisor Class | None | None | None | None | |||||
Growth Stock Fund–R Class | None | None | None | None | |||||
Health Sciences | None | None | None | None | |||||
High Yield | $10,001-$50,000 | over $100,000 | None | None | |||||
High Yield Fund–Advisor Class | None | None | None | None | |||||
Inflation Focused Bond | None | None | None | None | |||||
Inflation Protected Bond | None | None | None | None | |||||
Institutional Africa & Middle East | None | None | None | None | |||||
Institutional Concentrated International Equity | None | None | None | None | |||||
Institutional Core Plus | None | None | None | None | |||||
Institutional Core Plus Fund-F Class | None | None | None | None | |||||
Institutional Emerging Markets Bond | None | None | None | None | |||||
Institutional Emerging Markets Equity | None | None | None | None | |||||
Institutional Floating Rate | None | None | None | None | |||||
Institutional Floating Rate Fund-F Class | None | None | None | None | |||||
Institutional Global Equity | None | None | None | None | |||||
Institutional Global Large-Cap Equity | None | None | None | None | |||||
Institutional High Yield | None | None | None | None | |||||
72
Aggregate Holdings, | Inside Directors | ||||||||
Bernard | Gitlin | Laporte | Rogers | ||||||
over $100,000 | over $100,000 | over $100,000 | over $100,000 | ||||||
Institutional International Bond | None | None | None | None | |||||
Institutional International Core Equity | None | None | None | None | |||||
Institutional International Growth Equity | None | None | None | None | |||||
Institutional Large-Cap Core Growth | None | None | None | None | |||||
Institutional Large-Cap Growth | None | None | None | None | |||||
Institutional Large-Cap Value | None | None | None | None | |||||
Institutional Mid-Cap Equity Growth | None | None | None | None | |||||
Institutional Small-Cap Stock | None | None | None | None | |||||
Institutional U.S. Structured Research | None | None | None | None | |||||
International Bond | None | None | None | None | |||||
International Bond Fund–Advisor Class | None | None | None | None | |||||
International Discovery | $10,001-$50,000 | None | over $100,000 | None | |||||
International Equity Index | None | None | None | None | |||||
International Growth & Income | None | None | None | None | |||||
International Growth & Income Fund–Advisor Class | None | None | None | None | |||||
International Growth & Income Fund–R Class | None | None | None | None | |||||
International Stock | $50,0001-$100,000 | over $100,000 | over $100,000 | None | |||||
International Stock Fund–Advisor Class | None | None | None | None | |||||
International Stock Fund–R Class | None | None | None | None | |||||
Japan | None | None | None | over $100,000 | |||||
Latin America | None | None | None | None | |||||
Maryland Short-Term Tax-Free Bond | None | None | None | None | |||||
Maryland Tax-Free Bond | None | None | over $100,000 | None | |||||
Maryland Tax-Free Money | None | None | None | None | |||||
Media & Telecommunications | None | None | over $100,000 | over $100,000 | |||||
Mid-Cap Growth | over $100,000 | None | over $100,000 | None | |||||
Mid-Cap Growth Fund–Advisor Class | None | None | None | None | |||||
Mid-Cap Growth Fund–R Class | None | None | None | None | |||||
Mid-Cap Value | None | None | None | None | |||||
Mid-Cap Value Fund–Advisor Class | None | None | None | None | |||||
Mid-Cap Value Fund–R Class | None | None | None | None | |||||
New America Growth | None | None | over $100,000 | over $100,000 | |||||
New America Growth Fund–Advisor Class | None | None | None | None | |||||
New Asia | over $100,000 | None | over $100,000 | None | |||||
New Era | None | None | None | None | |||||
New Horizons | over $100,000 | None | over $100,000 | None | |||||
New Income | None | None | $50,001-$100,000 | $50,001-$100,000 | |||||
New Income Fund–Advisor Class | None | None | None | None | |||||
New Income Fund–R Class | None | None | None | None | |||||
New Jersey Tax-Free Bond | None | None | None | None | |||||
New York Tax-Free Bond | None | None | None | None | |||||
New York Tax-Free Money | None | None | None | None | |||||
73
Aggregate Holdings, | Inside Directors | ||||||||
Bernard | Gitlin | Laporte | Rogers | ||||||
over $100,000 | over $100,000 | over $100,000 | over $100,000 | ||||||
Overseas Stock | None | None | None | None | |||||
Personal Strategy Balanced | None | None | None | None | |||||
Personal Strategy Growth | None | None | None | None | |||||
Personal Strategy Income | None | None | None | None | |||||
Prime Reserve | over $100,000 | None | $50,001-$100,000 | $50,001-$100,000 | |||||
Real Assets | None | None | None | None | |||||
Real Estate | None | None | over $100,000 | None | |||||
Real Estate Fund–Advisor Class | None | None | None | None | |||||
TRP Reserve Investment | None | None | None | None | |||||
Retirement 2005 | None | None | None | None | |||||
Retirement 2005 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2005 Fund–R Class | None | None | None | None | |||||
Retirement 2010 | None | None | None | None | |||||
Retirement 2010 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2010 Fund–R Class | None | None | None | None | |||||
Retirement 2015 | None | over $100,000 | None | None | |||||
Retirement 2015 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2015 Fund–R Class | None | None | None | None | |||||
Retirement 2020 | None | None | None | None | |||||
Retirement 2020 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2020 Fund–R Class | None | None | None | None | |||||
Retirement 2025 | None | None | None | None | |||||
Retirement 2025 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2025 Fund–R Class | None | None | None | None | |||||
Retirement 2030 | None | over $100,000 | None | None | |||||
Retirement 2030 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2030 Fund–R Class | None | None | None | None | |||||
Retirement 2035 | None | $10,001-$50,000 | None | None | |||||
Retirement 2035 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2035 Fund–R Class | None | None | None | None | |||||
Retirement 2040 | None | None | None | None | |||||
Retirement 2040 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2040 Fund–R Class | None | None | None | None | |||||
Retirement 2045 | None | None | None | None | |||||
Retirement 2045 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2045 Fund–R Class | None | None | None | None | |||||
Retirement 2050 | None | None | None | None | |||||
Retirement 2050 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2050 Fund–R Class | None | None | None | None | |||||
Retirement 2055 | over $100,000 | None | None | None | |||||
Retirement 2055 Fund–Advisor Class | None | None | None | None | |||||
Retirement 2055 Fund–R Class | None | None | None | None | |||||
Retirement Income | None | None | None | None | |||||
74
Aggregate Holdings, | Inside Directors | ||||||||
Bernard | Gitlin | Laporte | Rogers | ||||||
over $100,000 | over $100,000 | over $100,000 | over $100,000 | ||||||
Retirement Income Fund–Advisor Class | None | None | None | None | |||||
Retirement Income Fund–R Class | None | None | None | None | |||||
Science & Technology | over $100,000 | None | over $100,000 | $50,001-$100,000 | |||||
Science & Technology Fund–Advisor Class | None | None | None | None | |||||
Short-Term Bond | None | None | None | None | |||||
Short-Term Bond Fund–Advisor Class | None | None | None | None | |||||
Small-Cap Stock | $10,001-$50,000 | None | None | None | |||||
Small-Cap Stock Fund–Advisor Class | None | None | None | None | |||||
Small-Cap Value | over $100,000 | None | None | None | |||||
Small-Cap Value Fund–Advisor Class | None | None | None | None | |||||
Spectrum Growth | over $100,000 | None | over $100,000 | None | |||||
Spectrum Income | $10,001-$50,000 | None | over $100,000 | over $100,000 | |||||
Spectrum International | $10,001-$50,000 | None | over $100,000 | None | |||||
Strategic Income | None | None | None | None | |||||
Strategic Income Fund–Advisor Class | None | None | None | None | |||||
Summit Cash Reserves | over $100,000 | $50,001-$100,000 | over $100,000 | over $100,000 | |||||
Summit GNMA | None | None | None | None | |||||
Summit Municipal Income | None | None | None | None | |||||
Summit Municipal Intermediate | None | None | None | None | |||||
Summit Municipal Money Market | None | over $100,000 | None | None | |||||
Tax-Efficient Equity | None | None | None | None | |||||
Tax-Exempt Money | None | None | None | None | |||||
Tax-Free High Yield | None | None | None | None | |||||
Tax-Free Income | None | None | None | None | |||||
Tax-Free Income Fund–Advisor Class | None | None | None | None | |||||
Tax-Free Short-Intermediate | None | None | None | None | |||||
Total Equity Market Index | None | None | over $100,000 | None | |||||
U.S. Bond Enhanced Index | None | None | over $100,000 | None | |||||
U.S. Large-Cap Core | None | None | None | None | |||||
U.S. Large-Cap Core–Advisor Class | None | None | None | None | |||||
U.S. Treasury Intermediate | None | None | None | None | |||||
U.S. Treasury Long-Term | None | None | None | None | |||||
U.S. Treasury Money | None | over $100,000 | None | None | |||||
Value | None | over $100,000 | over $100,000 | over $100,000 | |||||
Value Fund–Advisor Class | None | None | None | None | |||||
Virginia Tax-Free Bond | None | None | None | None | |||||
75
Portfolio Managers’ Holdings in the Price Funds
The following tables set forth the Price Fund holdings of each fund’s portfolio manager(s). The portfolio manager for each fund normally serves as chairman of the fund’s Investment Advisory Committee, and has day-to-day responsibility for managing the fund and executing the fund’s investment program.
Fund | Portfolio Manager | Range of Fund Holdings | All Funds |
Africa & Middle East | Oliver D.M. Bell | none | none |
Balanced | Charles M. Shriver | none | $500,001–$1,000,000 |
Blue Chip Growth | Larry J. Puglia | over $1,000,000 | over $1,000,000 |
Capital Appreciation | David R. Giroux | $500,001–$1,000,000 | over $1,000,000 |
Capital Opportunity | Anna M. Dopkin | over $1,000,000 | over $1,000,000 |
Corporate Income | David A. Tiberii | $50,001–$100,000 | over $1,000,000 |
Diversified Mid-Cap Growth | Donald J. Easley Donald J. Peters | $500,001–$1,000,000 $500,001–$1,000,000 | over $1,000,000 over $1,000,000 |
Diversified Small-Cap Growth | Sudhir Nanda | $100,001–$500,000 | $500,001–$1,000,000 |
Dividend Growth | Thomas J. Huber | $100,001–$500,000 | over $1,000,000 |
Emerging Europe | Leigh Innes | $10,001–$50,000 | $50,001–$100,000 |
Emerging Markets Bond | Michael J. Conelius | $100,001–$500,000 | over $1,000,000 |
Emerging Markets Corporate Bond | Michael J. Conelius | (b) | over $1,000,000 |
Emerging Markets Local Currency Bond | Andrew Keirle Christopher J. Rothery | none $10,001–$50,000 | none $10,001–$50,000 |
Emerging Markets Stock | Gonzalo Pangaro | over $1,000,000 | over $1,000,000 |
Equity Income | Brian C. Rogers | over $1,000,000 | over $1,000,000 |
Equity Index 500 | E. Frederick Bair | $10,001–$50,000 | $500,001–$1,000,000 |
European Stock | Dean Tenerelli | none | none |
Extended Equity Market Index | E. Frederick Bair Ken D. Uematsu | $10,001–$50,000 $1–$10,000 | $500,001–$1,000,000 $100,001–$500,000 |
Financial Services | Eric L. Veiel | $50,001–$100,000 | $100,001–$500,000 |
Floating Rate | Justin J. Gerbereux Paul M. Massaro | $10,001–$50,000 $10,001–$50,000 | $500,001–$1,000,000 $500,001–$1,000,000 |
Global Infrastructure | Susanta Mazumdar | none | none |
Global Large-Cap Stock | R. Scott Berg | $500,001–$1,000,000 | over $1,000,000 |
Global Real Estate | David M. Lee | $100,001–$500,000 | over $1,000,000 |
Global Stock | David J. Eiswert | (c) | (c) |
Global Technology | Joshua K. Spencer | (d) | (d) |
GNMA | Andrew C. McCormick | $100,001–$500,000 | $500,001–$1,000,000 |
Growth & Income | Thomas J. Huber | $100,001–$500,000 | over $1,000,000 |
Growth Stock | P. Robert Bartolo | over $1,000,000 | over $1,000,000 |
Health Sciences | Kris H. Jenner | $500,001–$1,000,000 | $500,001–$1,000,000 |
High Yield | Mark J. Vaselkiv | none | over $1,000,000 |
Inflation Protected Bond | Daniel O. Shackelford | $10,001–$50,000 | over $1,000,000 |
International Bond | Ian D. Kelson | $500,001–$1,000,000 | $500,001–$1,000,000 |
International Discovery | Justin Thomson | $100,001–$500,000 | over $1,000,000 |
International Equity Index | E. Frederick Bair Neil Smith | $10,001–$50,000 none | $500,001–$1,000,000 none |
International Growth & Income | Jonathan H.W. Matthews | none | none |
International Stock | Robert W. Smith | over $1,000,000 | over $1,000,000 |
Japan | M. Campbell Gunn | none | none |
Latin America | Jose Costa Buck | $50,001–$100,000 | $100,001–$500,000 |
Maryland Short-Term Tax-Free Bond | Charles B. Hill | $10,001–$50,000 | over $1,000,000 |
Maryland Tax-Free Bond | Hugh D. McGuirk | $500,001–$1,000,000 | over $1,000,000 |
76
Fund | Portfolio Manager | Range of Fund Holdings | All Funds |
Maryland Tax-Free Money | Joseph K. Lynagh | $1–$10,000 | over $1,000,000 |
Media & Telecommunications | Daniel Martino | $500,001–$1,000,000 | $500,001–$1,000,000 |
Mid-Cap Growth | Brian W.H. Berghuis | over $1,000,000 | over $1,000,000 |
Mid-Cap Value | David J. Wallack | over $1,000,000 | over $1,000,000 |
New America Growth | Joseph M. Milano | over $1,000,000 | over $1,000,000 |
New Asia | Anh Lu | none | none |
New Era | Timothy E. Parker | $100,001–$500,000 | $500,001–$1,000,000 |
New Horizons | Henry M. Ellenbogen | $100,001–$500,000 | over $1,000,000 |
New Income | Daniel O. Shackelford | $100,001–$500,000 | over $1,000,000 |
Overseas Stock | Raymond A. Mills | $500,001–$1,000,000 | over $1,000,000 |
Personal Strategy Balanced | Charles M. Shriver | $1-$10,000 | $500,001–$1,000,000 |
Personal Strategy Growth | Charles M. Shriver | $100,001–$500,000 | $500,001–$1,000,000 |
Personal Strategy Income | Charles M. Shriver | none | $500,001–$1,000,000 |
Prime Reserve | Joseph K. Lynagh | $10,001–$50,000 | over $1,000,000 |
Real Assets | Wyatt A. Lee | $1-$10,000 | over $1,000,000 |
Real Estate | David M. Lee | $100,001–$500,000 | over $1,000,000 |
Science & Technology | Kennard W. Allen | over $1,000,000 | over $1,000,000 |
Short-Term Bond | Edward A. Wiese | $500,001–$1,000,000 | over $1,000,000 |
Small-Cap Stock | Gregory A. McCrickard | over $1,000,000 | over $1,000,000 |
Small-Cap Value | Preston G. Athey | over $1,000,000 | over $1,000,000 |
Spectrum Growth | Charles M. Shriver | $100,001-$500,000 | $500,001–$1,000,000 |
Spectrum Income | Charles M. Shriver | $100,001-$500,000 | $500,001–$1,000,000 |
Spectrum International | Christopher D. Alderson | none | over $1,000,000 |
Strategic Income | Steven C. Huber | $100,001–$500,000 | $100,001–$500,000 |
Summit Cash Reserves | Joseph K. Lynagh | $10,001–$50,000 | over $1,000,000 |
Summit GNMA | Andrew C. McCormick | $100,001–$500,000 | $500,001–$1,000,000 |
Summit Municipal Income | Konstantine B. Mallas | $100,001–$500,000 | over $1,000,000 |
Summit Municipal Intermediate | Charles B. Hill | $500,001–$1,000,000 | over $1,000,000 |
Summit Municipal Money Market | Joseph K. Lynagh | none | over $1,000,000 |
Tax- Efficient Equity | Donald J. Peters | over $1,000,000 | over $1,000,000 |
Tax- Exempt Money | Joseph K. Lynagh | none | over $1,000,000 |
Tax- Free High Yield | James M. Murphy | $100,001–$500,000 | over $1,000,000 |
Tax- Free Income | Konstantine B. Mallas | $100,001–$500,000 | over $1,000,000 |
Tax- Free Short-Intermediate | Charles B. Hill | $10,001–$50,000 | over $1,000,000 |
Total Equity Market Index | E. Frederick Bair Ken D. Uematsu | $10,001–$50,000 $1-$10,000 | $500,001–$1,000,000 $100,001–$500,000 |
U.S. Bond Enhanced Index | Robert M. Larkins | $1-$10,000 | $100,001–$500,000 |
U.S. Large-Cap Core | Jeffrey Rottinghaus | over $1,000,000 | over $1,000,000 |
U.S. Treasury Intermediate | Brian J. Brennan | $10,001–$50,000 | $500,001–$1,000,000 |
U.S. Treasury Long-Term | Brian J. Brennan | $10,001–$50,000 | $500,001–$1,000,000 |
U.S. Treasury Money | Joseph K. Lynagh | $1–$10,000 | over $1,000,000 |
Value | Mark S. Finn | $100,001–$500,000 | over $1,000,000 |
(a) See table beginning on page 7 for the fiscal year of the funds. The range of fund holdings as of the fund’s fiscal year is updated concurrently with each fund’s prospectus date as shown in the table beginning on page 7.
(b) The fund incepted on May 24, 2012, therefore the range of fund holdings is not yet available.
(c) On October 1, 2012, David J. Eiswert became portfolio manager of the fund, therefore the range of holdings is not yet available.
(d) On June 1, 2012, Joshua K. Spencer became portfolio manager of the fund, therefore the range of fund holdings is not yet available.
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The following funds may be purchased only by institutional investors.
Fund | Portfolio Manager | Range of Fund Holdings as of Fund’s Fiscal Yeara | All Funds |
Institutional Africa & Middle East | Oliver D.M. Bell | none | none |
Institutional Concentrated International Equity | Federico Santilli | none | none |
Institutional Core Plus | Brian J. Brennan | none | $500,001–$1,000,000 |
Institutional Emerging Markets Bond | Michael J. Conelius | none | over $1,000,000 |
Institutional Emerging Markets Equity | Gonzalo Pangaro | none | over $1,000,000 |
Institutional Floating Rate | Justin J. Gerbereux Paul M. Massaro | $10,001–$50,000 $10,001–$50,000 | $500,001–$1,000,000 $500,001–$1,000,000 |
Institutional Global Equity | Robert N. Gensler | none | over $1,000,000 |
Institutional Global Large-Cap Equity | R. Scott Berg | none | over $1,000,000 |
Institutional Global Value Equity | Sebastien Mallet | (b) | (b) |
Institutional High Yield | Paul A. Karpers | none | over $1,000,000 |
Institutional International Bond | Ian D. Kelson | none | $500,001–$1,000,000 |
Institutional International Core Equity | Raymond A. Mills | none | over $1,000,000 |
Institutional International Growth Equity | Robert W. Smith | none | over $1,000,000 |
Institutional Large Cap Core Growth | Larry J. Puglia | None | over $1,000,000 |
Institutional Large-Cap Growth | Robert W. Sharps | $500,001–$1,000,000 | over $1,000,000 |
Institutional Large-Cap Value | Mark S. Finn John D. Linehan Brian C. Rogers | none $100,001–$500,000 none | over $1,000,000 over $1,000,000 over $1,000,000 |
Institutional Mid-Cap Equity Growth | Brian W.H. Berghuis | none | over $1,000,000 |
Institutional Small-Cap Stock | Gregory A. McCrickard | none | over $1,000,000 |
Institutional U.S. Structured Research | Anna M. Dopkin | none | over $1,000,000 |
(a) See table beginning on page 7 for the fiscal year of the funds. The range of fund holdings as of the fund’s fiscal year is updated concurrently with each fund’s prospectus date as shown in the table beginning on page 7.
(b) The fund incepted on July 26, 2012, therefore the range of fund holdings is not yet available.
The following funds are designed for persons residing in the indicated state. The portfolio managers reside in Maryland.
Fund | Portfolio Manager | Range of Fund Holdings | All Funds |
California Tax-Free Bond | Konstantine B. Mallas | none | over $1,000,000 |
California Tax-Free Money | Joseph K. Lynagh | none | over $1,000,000 |
Georgia Tax-Free Bond | Hugh D. McGuirk | none | over $1,000,000 |
New Jersey Tax-Free Bond | Konstantine B. Mallas | none | over $1,000,000 |
New York Tax-Free Bond | Konstantine B. Mallas | none | over $1,000,000 |
New York Tax-Free Money | Joseph K. Lynagh | none | over $1,000,000 |
Virginia Tax-Free Bond | Hugh D. McGuirk | none | over $1,000,000 |
(a) See table beginning on page 7 for the fiscal year of the funds. The range of fund holdings as of the fund’s fiscal year is updated concurrently with each fund’s prospectus date as shown in the table beginning on page 7.
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The following funds are designed such that a single individual would normally select one fund based on that person’s expected retirement date.
Fund | Portfolio Manager | Range of Fund Holdings | All Funds |
Retirement 2005 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2010 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2015 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2020 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2025 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2030 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2035 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2040 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2045 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2050 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement 2055 | Jerome A. Clark | none | $500,001–$1,000,000 |
Retirement Income | Jerome A. Clark | none | $500,001–$1,000,000 |
(a) See table beginning on page 7 for the fiscal year of the funds. The range of fund holdings as of the fund’s fiscal year is updated concurrently with each fund’s prospectus date as shown in the table beginning on page 7.
The following funds are not available for direct purchase by members of the public.
Fund | Portfolio Manager | Range of Fund Holdings | All Funds |
Emerging Markets Bond Multi-Sector Account Portfolio | Michael J. Conelius | none | over $1,000,000 |
Emerging Markets Local Multi-Sector Account Portfolio | Andrew Keirle Christopher J. Rothery | none none | none $10,001-50,000 |
Floating Rate Multi-Sector Account Portfolio | Justin J. Gerbereux Paul M. Massaro | none none | $500,001–$1,000,000 $500,001–$1,000,000 |
TRP Government Reserve Investment | Joseph K. Lynagh | none | over $1,000,000 |
High Yield Multi-Sector Account Portfolio | Mark J. Vaselkiv | none | over $1,000,000 |
Inflation Focused Bond | Daniel O. Shackelford | none | over $1,000,000 |
Investment-Grade Corporate Multi-Sector Account Portfolio | David A. Tiberii | none | over $1,000,000 |
Mortgage-Backed Securities Multi-Sector Account Portfolio | Andrew C. McCormick | none | $500,001–$1,000,000 |
TRP Reserve Investment | Joseph K. Lynagh | none | over $1,000,000 |
(a) See table beginning on page 7 for the fiscal year of the funds. The range of fund holdings as of the fund’s fiscal year is updated concurrently with each fund’s prospectus date as shown in the table beginning on page 7.
Portfolio Manager Compensation
Portfolio manager compensation consists primarily of a base salary, a cash bonus, and an equity incentive that usually comes in the form of a stock option grant. Occasionally, portfolio managers will also have the opportunity to participate in venture capital partnerships. Compensation is variable and is determined based on the following factors.
Investment performance over 1-, 3-, 5-, and 10-year periods is the most important input. The weightings for these time periods are generally balanced and are applied consistently across similar strategies. T. Rowe Price (and Price Hong Kong, Price Singapore, and T. Rowe Price International, as appropriate), evaluate performance in absolute, relative, and risk-adjusted terms. Relative performance and risk-adjusted
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performance are determined with reference to the broad-based index (e.g., S&P 500) and the Lipper index (e.g., Large-Cap Growth) set forth in the total returns table in the fund’s prospectus, although other benchmarks may be used as well. Investment results are also measured against comparably managed funds of competitive investment management firms. The selection of comparable funds is approved by the applicable investment steering committee (as described under the “Disclosure of Fund Portfolio Information” section) and are the same as those presented to the directors of the Price Funds in their regular review of fund performance. Performance is primarily measured on a pretax basis though tax efficiency is considered and is especially important for the Tax-Efficient Equity Fund. Compensation is viewed with a long-term time horizon. The more consistent a manager’s performance over time, the higher the compensation opportunity. The increase or decrease in a fund’s assets due to the purchase or sale of fund shares is not considered a material factor. In reviewing relative performance for fixed-income funds, a fund’s expense ratio is usually taken into account.
Contribution to T. Rowe Price’s overall investment process is an important consideration as well. Sharing ideas with other portfolio managers, working effectively with and mentoring younger analysts, and being good corporate citizens are important components of T. Rowe Price’s long-term success and are highly valued.
All employees of T. Rowe Price, including portfolio managers, participate in a 401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are eligible to purchase T. Rowe Price common stock through an employee stock purchase plan that features a limited corporate matching contribution. Eligibility for and participation in these plans is on the same basis as for all employees. Finally, all vice presidents of T. Rowe Price Group, including all portfolio managers, receive supplemental medical/hospital reimbursement benefits.
This compensation structure is used for all portfolios managed by the portfolio manager.
Assets Under Management
The following table sets forth the number and total assets of the mutual funds and accounts managed by the Price Funds’ portfolio managers as of the most recent fiscal year end of the funds they manage, unless otherwise indicated. All of the assets of the funds that have multiple portfolio managers are shown as being allocated to all managers of those funds. There are no accounts for which the advisory fee is based on the performance of the account.
Registered Investment | Other
Pooled Investment | Other Accounts | ||||
Portfolio Manager | Number | Total Assets | Number | Total Assets | Number | Total Assets |
Kennard Allen | 3 | $3,082,857,380 | — | — | — | — |
Christopher D. Alderson | 3 | 845,060,381 | 1 | $20,310,974 | — | — |
Preston G. Athey | 8 | 8,725,559,790 | 1 | 19,549,212 | 9 | 433,424,407 |
E. Frederick Bair | 8 | 16,992,722,324 | 2 | 2,361,026,752 | 1 | 825,444,402 |
P. Robert Bartolo | 11 | 30,950,460,970 | 1 | 194,183,737 | 7 | 881,745,283 |
Oliver D.M. Bell | 2 | 247,877,614 | 1 | 21,173,723 | — | — |
R. Scott Berg | 4 | 119,137,480 | 5 | 696,696,322 | 3 | 591,365,006 |
Brian W.H. Berghuis | 8 | 24,816,337,728 | 1 | 56,310,081 | 7 | 904,677,024 |
Brian J. Brennan | 5 | 1,303,180,399 | 4 | 2,283,100,437 | 8 | 2,323,114,824 |
Jerome A. Clark | 52 | 72,801,917,614 | 27 | 5,062,882,258 | 5 | 2,633,575,552 |
Michael J. Conelius | 10 | 3,861,688,659 | 5 | 8,277,822,480 | 1 | 37,863,703 |
Jose Costa Buck | 1 | 2,243,148,884 | 1 | 89,243,046 | 1 | 247,146,930 |
Anna M. Dopkin | 10 | 3,984,140,384 | 5 | 6,294,280,686 | 57 | 14,058,490,493 |
Henry M. Ellenbogen | 1 | 7,859,592,630 | 3 | 884,451,977 | 8 | 1,013,664,091 |
Donald J. Easley | — | — | — | — | 2 | 35,526,642 |
Mark S. Finn | 4 | 13,077,673,616 | — | — | — | — |
Robert N. Gensler | 10 | 3,733,065,068 | 25 | 4,487,058,461 | 15 | 7,150,225,214 |
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Registered Investment | Other Pooled Investment | Other Accounts | ||||
Portfolio Manager | Number | Total Assets | Number | Total Assets | Number | Total Assets |
Justin T. Gerbereux | 3 | 1,967,048,530 | — | — | — | — |
David R. Giroux | 3 | 12,822,350,626 | — | — | — | — |
M. Campbell Gunn | 1 | 179,526,130 | 2 | 187,943,279 | 2 | 1,359,258,636 |
Charles B. Hill | 3 | 3,986,359,022 | 2 | 298,141,023 | 6 | 1,479,530,074 |
Steven C. Huber | 1 | 253,479,910 | — | — | — | — |
Thomas J. Huber | 3 | 4,221,207,830 | 1 | 191,911,079 | — | — |
Leigh Innes | 1 | 495,499,092 | 1 | 13,003,573 | — | — |
Kris H. Jenner | 6 | 3,980,932,026 | — | — | 1 | 58,815,185 |
Paul A. Karpers | 1 | 2,576,491,972 | — | — | 2 | 811,350,754 |
Andrew Keirle | 2 | 63,268,977 | 1 | 12,558,000 | — | — |
Ian D. Kelson | 4 | 5,831,677,184 | 11 | 1,220,329,512 | 1 | 2,431,211 |
John H. Laporte | 2 | 4,238,068,702 | 3 | 194,848,652 | 9 | 594,450,745 |
Robert M. Larkins | 1 | 1,188,585,790 | 3 | 1,357,890,750 | 1 | 102,069,815 |
David M. Lee | 3 | 3,044,868,784 | — | — | 2 | 66,454,314 |
Wyatt A. Lee | 1 | 878,942,259 | — | — | 1 | 85,868,948 |
John D. Linehan | 5 | 4,266,527,308 | 3 | 724,589,806 | 25 | 2,531,414,416 |
Anh Lu | 1 | 4,127,109,997 | 2 | 187,752,632 | 1 | 377,440,763 |
Joseph K. Lynagh | 11 | 33,920,870,119 | 1 | 500,244,269 | 8 | 309,988,273 |
Konstantine B. Mallas | 5 | 4,657,296,373 | — | — | 4 | 86,761,369 |
Sebastien Mallet(a) | — | — | — | — | — | — |
Daniel Martino | 2 | 1,984,874,159 | — | — | — | — |
Paul M. Massaro | 3 | 1,967,048,530 | — | — | — | — |
Jonathan H.W. Matthews | 1 | 4,402,296,229 | 1 | 194,452,226 | — | — |
Susanta Mazumdar | 2 | 185,118,107 | — | — | 1 | 8,648,853 |
Andrew C. McCormick | 5 | 2,238,264,676 | — | — | 3 | 26,101,021 |
Gregory A. McCrickard | 4 | 7,350,859,623 | 2 | 403,113,247 | 4 | 324,734,735 |
Hugh D. McGuirk | 3 | 3,112,464,146 | — | — | 9 | 345,613,416 |
Joseph M. Milano | 2 | 2,678,656,095 | — | — | — | — |
Raymond A. Mills | 5 | 4,413,954,072 | 1 | 198,803,999 | 3 | 855,549,187 |
James M. Murphy | 1 | 2,032,346,131 | — | — | — | — |
Sudhir Nanda | 1 | 189,000,470 | — | — | — | — |
Gonzalo Pangaro | 3 | 6,425,958,045 | 6 | 5,251,953,207 | 6 | 2,937,108,505 |
Timothy E. Parker | 3 | 5,781,714,768 | 1 | 224,611,723 | 8 | 774,853,145 |
Donald J. Peters | 5 | 1,411,661,795 | — | — | 18 | 1,419,538,201 |
Larry J. Puglia | 10 | 17,820,175,070 | 2 | 218,649,928 | 16 | 3,629,699,230 |
Brian C. Rogers | 13 | 30,191,956,508 | 2 | 1,198,047,465 | 15 | 2,073,581,800 |
Christopher J. Rothery | 2 | 79,650,853 | — | — | 1 | 38,289,115 |
Jeffrey Rottinghaus | 2 | 141,444,384 | 2 | 170,508,788 | — | — |
Federico Santilli | 1 | 7,349,037 | — | — | — | — |
Daniel O. Shackelford | 7 | 23,797,380,189 | 4 | 2,693,055,126 | 16 | 3,090,011,382 |
Robert W. Sharps | 8 | 5,767,241,836 | 6 | 4,485,586,792 | 38 | 11,539,307,246 |
Charles M. Shriver | 18 | 18,365,018,824 | 6 | 1,583,488,601 | 20 | 1,016,137,666 |
Neil Smith | 1 | 354,016,138 | — | — | 1 | 166,161,566 |
Robert W. Smith | 4 | 7,630,984,891 | 1 | 214,040,077 | 2 | 235,089,430 |
Joshua K. Spencer(b) | — | — | — | — | — | — |
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Registered Investment | Other Pooled Investment | Other Accounts | ||||
Portfolio Manager | Number | Total Assets | Number | Total Assets | Number | Total Assets |
David Stanley | 1 | 136,533,140 | 2 | 27,440,550 | 2 | 7,835,204 |
Dean Tenerelli | 1 | 711,985,137 | 2 | 453,771,831 | — | — |
Justin Thomson | 1 | 2,425,760,938 | 1 | 12,118,853 | — | — |
David A. Tiberii | 4 | 738,639,559 | 3 | 1,092,841,543 | 6 | 2,202,050,109 |
Ken D. Uematsu | 5 | 1,057,104,308 | — | — | 1 | 670,031,395 |
Mark J. Vaselkiv | 7 | 10,162,081,720 | 7 | 2,941,278,274 | 18 | 5,010,141,535 |
Eric L. Veiel | 1 | 267,926,671 | — | — | — | — |
David J. Wallack | 3 | 9,529,084,816 | 1 | 54,203,742 | 2 | 172,388,184 |
Edward A. Wiese | 7 | 11,385,128,229 | 1 | 321,115,717 | 9 | 2,780,703,504 |
Ernest C. Yeung | 1 | 2,425,738,066 | — | — | — | — |
(a) This individual assumed portfolio management responsibility of a mutual fund on July 26, 2012. The information on accounts managed is not yet available.
(b) This individual assumed portfolio management responsibility of a mutual fund on June 1, 2012. The information on accounts managed is not yet available.
Conflicts of Interest
Portfolio managers at T. Rowe Price and its affiliates typically manage multiple accounts. These accounts may include, among others, mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), offshore funds and commingled trust accounts. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices, and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may purchase (or sell) securities for one portfolio and not another portfolio. T. Rowe Price and its affiliates have adopted brokerage and trade allocation policies and procedures which they believe are reasonably designed to address any potential conflicts associated with managing multiple accounts for multiple clients. Also, as disclosed under the “Portfolio Manager Compensation” section, our portfolio managers’ compensation is determined in the same manner with respect to all portfolios managed by the portfolio manager. Please see the “Portfolio Transactions” section of this SAI for more information on our brokerage and trade allocation policies.
T. Rowe Price funds may, from time to time, own shares of Morningstar, Inc. Morningstar is a provider of investment research to individual and institutional investors, and publishes ratings on mutual funds, including the Price Funds. T. Rowe Price manages the Morningstar retirement plan and T. Rowe Price and its affiliates pay Morningstar for a variety of products and services. In addition, Morningstar may provide investment consulting and investment management services to clients of T. Rowe Price or its affiliates.
As of the date indicated, the directors and executive officers of the funds, as a group, owned less than 1% of the outstanding shares of any fund, except for the funds shown in the following table.
Fund | %* |
Africa & Middle East | 1.3 |
Emerging Markets Local Currency Bond | 1.6 |
Institutional Floating Rate Fund–F Class | 4.0 |
Global Large-Cap Stock | 4.8 |
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Fund | %* |
Global Stock | 2.3 |
Maryland Short-Term Tax-Free Bond | 2.4 |
Maryland Tax-Free Money | 8.2 |
Summit Cash Reserves | 1.3 |
Tax-Exempt Money | 3.2 |
Tax-Efficient Equity | 3.4 |
U.S. Large-Cap Core | 3.8 |
* Based on December 31, 2011 data for the directors and August
31, 2012 data for
the executive officers.
As of August 31, 2012, the following shareholders of record owned more than 5% of the outstanding shares of the indicated funds and/or classes.
Fund | Shareholder | % |
Africa & Middle East | Charles Schwab & Company, Inc. National Financial Services for the Exclusive Benefit of University
of Arkansas Foundation, Inc. | 5.52 10.91 |
Balanced | T. Rowe
Price Trust Company | 40.30(c) |
Blue Chip Growth | Edward D. Jones & Company National
Financial Services for the Exclusive Benefit of T. Rowe Price Retirement Plan Services TR Blue Chip Growth Fund | 11.46 |
Blue Chip Growth Fund–Advisor Class | Charles Schwab & Company, Inc. National Financial Services for the Exclusive Benefit of Wells Fargo Bank Trustee FBO Various Fascore LLC 8515 East Orchard Road 2T2 Greenwood Village, Colorado 80111 | 13.44 |
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Fund | Shareholder | % |
Blue Chip Growth Fund–R Class | American United Life |